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| þ | ANNUAL      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT      OF 1934     |
|--------|---------------------------------------------------------------------------------------------------------|
|   |                                                                                                    |
|   | For      the fiscal year ended December 31, 2007                                                   |
|   |                                                                                                    |
|   | OR                                                                                                      |
|   |                                                                                                    |
| o      | TRANSITION      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT      OF 1934 |
|   |                                                                                                    |
|   | For      the transition period from                to |

| Massachusetts                                                                              |   | 04-2211809                               |
|--------------------------------------------------------------------------------------------|--------|------------------------------------------|
| (State      or other Jurisdiction of incorporation or organization)                        |   | (I.R.S.      EmployerIdentification No.) |
|                                                                                       |   |                                     |
| 60      Frontage Road, Andover, Massachusetts(Address      of Principal Executive Offices) |   | 01810-5498(Zip      Code)                |

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DYNAMICS RESEARCHCORPORATION

|                      | Page      |
|---------------------------|-----------|
|  PART I         |      |
|                      | ITEM      |   |
|                      |  1.  | Business | 3 |
|                      |  1A. | Risk Factors | 15 |
|                      |  1B. | Unresolved Staff Comments | 20 |
|                      |  2.  | Properties | 20 |
|                      |  3.  | Legal Proceedings | 20 |
|                      |  4.  | Submission of Matters to a Vote of Security      Holders | 20 |
|  PART       II  |      |
|                      | ITEM      |   |
|                      |  5.  | Market for Registrant’s Common Equity, Related Stockholder      Matters and Issuer Purchases of Equity Securities | 22 |
|                      |  6.  | Selected Financial Data | 24 |
|                      |  7.  | Management’s Discussion and Analysis of Financial Condition      and Results of Operations | 25 |
|                      |  7A. | Quantitative and Qualitative Disclosures About Market      Risk | 33 |
|                      |  8.  | Financial Statements and Supplementary    Data | 34 |
|                      |  9.  | Changes in and Disagreements With Accountants on Accounting      and Financial Disclosure | 66 |
|                      |  9A. | Controls and Procedures | 66 |
|                      |  9B. | Other Information | 67 |
|  PART       III |      |
|                      | ITEM      |   |
|                      |  10. | Directors, Executive Officers and Corporate      Governance | 68 |
|                      |  11. | Executive Compensation | 68 |
|                      |  12. | Security Ownership of Certain Beneficial Owners and      Management and Related Stockholder Matters | 68 |
|                      |  13. | Certain Relationships and Related Transactions,      and  Director Independence | 68 |
|                      |  14. | Principal Accounting Fees and Services | 68 |
|  PART       IV  |      |
|                      | ITEM      |   |
|                      |  15. | Exhibits and Financial Statement    Schedules | 69 |

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ITEM 1.  BUSINESS

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|   | •  | enterprise      architecture;                                                                                           |
|--------|---------------|-------------------------------------------------------------------------------------------------------------------------|
|   | •  | security;                                                                                                               |
|   | •  | training;                                                                                                               |
|   | •  | enterprise      resource management;                                                                                    |
|   | •  | business      process reengineering;                                                                                    |
|   | •  | IT      transformation and strategy;                                                                                    |
|   | •  | organizational      change leadership, and                                                                              |
|   | •  | enterprise      and program management office support (e.g. business case development and      performance management). |

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ITEM 1A. RISK FACTORS

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|   | •  | adequately      estimate the resources required to complete a project;                      |
|--------|---------------|---------------------------------------------------------------------------------------------|
|   | •  | properly      determine the scope of an engagement; or                                 |
|   | •  | complete      our contractual obligation in a manner consistent with the project      plan. |

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|   | •  | a      civil complaint filed by the U.S. Attorney in the U.S. District Court for      the District of Massachusetts on October 9, 2003.   The      U.S. Attorney is asserting claims against the Company, which are not      additive, based on the False Claims Act, the Anti-Kickback Act or breach      of contract, for which the government estimates damages at approximately      $24 million, $20 million and $10 million, respectively.  The      U.S. Attorney is also seeking recovery on certain common law claims,      costs, equitable claims, and interest on breach of contract      damages; |
|--------|---------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | •  | a      grand jury investigation by the Antitrust Division of the Department of      Justice which began on October 15, 2002; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | •  | a      suit characterized as a class action employee suit filed in the U.S.      District Court for the District of Massachusetts on June 28,      2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |

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|   | •  | the      number, size and timing of client projects commenced and completed during      a quarter; |
|--------|---------------|----------------------------------------------------------------------------------------------------|
|   | •  | contract      wins and losses;                                                                     |
|   | •  | changes      to existing contracts made by our customers;                                          |
|   | •  | bid      and proposal efforts undertaken;                                                          |
|   | •  | progress      on fixed-price projects during a given quarter;                                      |
|   | •  | employee      productivity and hiring, attrition and utilization  rates;                           |
|   | •  | rapid      changes in demand from our precision manufacturing    customers;                        |
|   | •  | accuracy      of estimates of resources required to complete ongoing      projects;                |
|   | •  | the      trend in interest rates, and                                                         |
|   | •  | general      economic conditions.                                                                  |

|   | •  | the      difficulty of assimilating the acquired operations and      personnel;                                                                             |
|--------|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | •  | the      potential disruption of our ongoing business and diversion of resources      and management time;                                                  |
|   | •  | the      potential failure to retain key personnel of the acquired      business;                                                                           |
|   | •  | the      difficulty of integrating systems, operations and      cultures; and                                                                          |
|   | •  | the      potential impairment of relationships with customers as a result of      changes in management or otherwise arising out of such      transactions. |

|   | • | decreases      in our earnings and revenue or quarterly operating  results; |
|--------|---------|-----------------------------------------------------------------------------|
|   | • | changes      in estimates by analysts;                                      |
|   | • | market      conditions in the industry;                                     |

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|   | • | announcements      and new developments by competitors; and |
|--------|---------|------------------------------------------------------------------|
|   | • | regulatory      reviews.                                         |

ITEM 1B.  UNRESOLVED STAFF COMMENTS

ITEM 2.  PROPERTIES

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS

|                                |                                                                                             |   |
|-------------------------------------|--------------------------------------------------------------------------------------------------|--------|
| Name      and Position              | Age                                                                                              |
|                                |                                                                                             |
| James      P. Regan                 | 67                                                                                               |
|                                | President,      Chairman and Chief Executive Officer                                             |   |
| Richard      A. Covel               | 61                                                                                               |
|                                | Vice      President, General Counsel and Secretary                                               |   |
| David      Keleher                  | 58                                                                                               |
|                                | Senior      Vice President and Chief Financial Officer                                           |   |
| Steven      P. Wentzell             | 61                                                                                               |
|                                | Senior      Vice President and General Manager, Human Resources                                  |   |
| Lawrence      H. O’Brien, Jr. | 56                                                                                               |
|                                | Senior      Vice President and General Manager, Business Solutions and Business      Development |   |

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ITEM5.  MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS ANDISSURER PURCHASES OF EQUITY SECURITIES

|                                                |   | High   |   |   | Low    |   |
|-----------------------------------------------------|--------|--------|--------|--------|--------|--------|
|  Fiscal      year ended December 31, 2007 |   |   |   |   |   |   |
|  First      quarter                            |   | $      | 12.50  |   |   | $      | 8.55 |   |
|  Second      quarter                           |   | $      | 14.72  |   |   | $      | 10.66 |   |
|  Third      quarter                            |   | $      | 14.04  |   |   | $      | 10.19 |   |
|  Fourth      quarter                           |   | $      | 12.98  |   |   | $      | 9.16 |   |
|                                                |   |   |   |   |   |   |   |   |
|  Fiscal      year ended December 31, 2006 |   |   |   |   |   |   |   |   |
|  First      quarter                            |   | $      | 15.64  |   |   | $      | 12.65 |   |
|  Second      quarter                           |   | $      | 15.65  |   |   | $      | 13.22 |   |
|  Third      quarter                            |   | $      | 14.00  |   |   | $      | 9.10 |   |
|  Fourth      quarter                           |   | $      | 10.17  |   |   | $      | 9.13 |   |

of usor any "affiliated purchaser," as defined in Rule 10b-18(a)(3) under theExchange Act, of shares of our common stock during each month in the fourthquarter of 2007.

|                                                  |   |              |   |   |          |   |   |              |   |   | Approximate              |   |
|-------------------------------------------------------|--------|-------------------|--------|--------|---------------|--------|--------|-------------------|--------|--------|--------------------------|--------|
|                                                  |   |              |   |   |          |   |   | Total Number |   |   | Dollar      Value        |   |
|                                                  |   |              |   |   |          |   |   | of      Shares    |   |   | of Shares that |   |
|                                                  |   |              |   |   |          |   |   | Purchased      as |   |   | May      Yet Be          |   |
|                                                  |   |              |   |   | Average       |   |   | Part      of      |   |   | Purchased                |   |
|                                                  |   | Total Number |   |   | Price         |   |   | Publicly          |   |   | Under      the           |   |
|                                                  |   | of      Shares    |   |   | Paid      Per |   |   | Announced         |   |   | Programs                 |   |
| Period                                                |   | Purchased(1)      |   |   | Share         |   |   | Programs          |   |   | (in      millions)       |   |
| October      1, 2007 to October 31, 2007              |   |              | 643    |   |          | $      | 11.64  |              |   |   | -                        |   |   | $ | - |   |
| November      1, 2007 to November 30, 2007            |   |              | 159    |   |          |   | 11.91  |              |   |   | -                        |   |   |   | - |   |
| December      1, 2007 to  December 31, 2007 |   |              | -      |   |          |   | -      |              |   |   | -                        |   |   |   | - |   |
| Total                                                 |   |              | 802    |   |          | $      | 11.69  |              |   |   | -                        |   |   | $ | - |   |

| (1)  | During      the three months ended December 31, 2007, we repurchased 802 shares that      were not part of a publicly announced share repurchase program,      representing shares repurchased to cover payroll withholding taxes in      connection with the vesting of restricted stock  awards. |
|-----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                               |   | December      31, |   |
|------------------------------------|--------|-------------------|--------|
|                               |   | 2002              |   |   | 2003 |   |   | 2004 |   |   | 2005 |   |   | 2006 |   |   | 2007 |   |
| Dynamics      Research Corporation |   | $                 | 100.00 |   |   | $ | 115.10 |   |   | $ | 127.30 |   |   | $ | 110.30 |   |   | $ | 69.60 |   |   | $ | 77.20 |   |
| NASDAQ      Composite U.S. Index   |   | $                 | 100.00 |   |   | $ | 149.50 |   |   | $ | 162.70 |   |   | $ | 166.20 |   |   | $ | 182.60 |   |   | $ | 198.00 |   |
| Peer      Group                    |   | $                 | 100.00 |   |   | $ | 139.30 |   |   | $ | 184.30 |   |   | $ | 170.00 |   |   | $ | 170.10 |   |   | $ | 186.20 |   |

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ITEM 6.  SELECTED FINANCIALDATA

|                                                                                            |   | Year      ended December 31, |    |
|-------------------------------------------------------------------------------------------------|--------|-----------------------------------|---------|
|                                                                                            |   | 2007                              |    |   | 2006 |   |   | 2005 |   |   | 2004(2) |   |   | 2003 |   |
| (in      thousands, except per share data)                                                      |   |                              |    |   |   |   |   |   |   |   |   | (Restated)(1) |   |
|  Revenue                                                                                   |   | $                                 | 229,577 |   |   | $ | 258,987 |   |   | $ | 300,440 |   |   | $ | 275,706 |   |   | $ | 244,808 |   |
| Gross      profit                                                                               |   | $                                 | 37,107  |   |   | $ | 35,116 |   |   | $ | 49,662 |   |   | $ | 42,983 |   |   | $ | 40,061 |   |
|  Operating      income                                                                     |   | $                                 | 12,679  |   |   | $ | 8,171 |   |   | $ | 21,305 |   |   | $ | 17,507 |   |   | $ | 15,389 |   |
|  Income      from continuing operations                                                    |   | $                                 | 7,102   |   |   | $ | 3,988 |   |   | $ | 11,433 |   |   | $ | 9,373 |   |   | $ | 9,204 |   |
|  Cumulative      benefit of accounting change                                              |   |                              | -       |   |   |   | 84 |   |   |   | - |   |   |   | - |   |   |   | - |   |
|  Loss      from discontinued operations                                                    |   |                              | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1,635 | ) |
|  Loss      on disposal of discontinued operations                                          |   |                              | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (348 | ) |
|  Net      income                                                                           |   | $                                 | 7,102   |   |   | $ | 4,072 |   |   | $ | 11,433 |   |   | $ | 9,373 |   |   | $ | 7,221 |   |
|                                                                                            |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Earnings      per share — Basic                                                |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Income      from continuing operations before cumulative effect of accounting      change |   | $                                 | 0.76    |   |   | $ | 0.44 |   |   | $ | 1.30 |   |   | $ | 1.10 |   |   | $ | 1.12 |   |
|  Cumulative      benefit of accounting change                                              |   |                              | -       |   |   |   | 0.01 |   |   |   | - |   |   |   | - |   |   |   | - |   |
|  Loss      from discontinued operations                                                    |   |                              | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (0.20 | ) |
|  Loss      on disposal of discontinued operations                                          |   |                              | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (0.04 | ) |
|  Net      earnings per share — Basic                                            |   | $                                 | 0.76    |   |   | $ | 0.45 |   |   | $ | 1.30 |   |   | $ | 1.10 |   |   | $ | 0.88 |   |
|                                                                                            |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Earnings      per share — Diluted                                              |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Income      from continuing operations before cumulative effect of accounting      change |   | $                                 | 0.74    |   |   | $ | 0.42 |   |   | $ | 1.24 |   |   | $ | 1.03 |   |   | $ | 1.04 |   |
|  Cumulative      benefit of accounting change                                              |   |                              | -       |   |   |   | 0.01 |   |   |   | - |   |   |   | - |   |   |   | - |   |
|  Loss      from discontinued operations                                                    |   |                              | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (0.18 | ) |
|  Loss      on disposal of discontinued operations                                          |   |                              | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (0.04 | ) |
|  Net      earnings per share — Diluted                                          |   | $                                 | 0.74    |   |   | $ | 0.43 |   |   | $ | 1.24 |   |   | $ | 1.03 |   |   | $ | 0.82 |   |
|                                                                                            |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Net      cash provided by operating activities — continuing      operations    |   | $                                 | 2,945   |   |   | $ | 17,584 |   |   | $ | 25,032 |   |   | $ | 3,961 |   |   | $ | 13,186 |   |
| Capital      expenditures                                                                       |   | $                                 | 1,788   |   |   | $ | 2,482 |   |   | $ | 4,571 |   |   | $ | 4,544 |   |   | $ | 8,163 |   |
| Depreciation                                                                                    |   | $                                 | 3,081   |   |   | $ | 3,203 |   |   | $ | 3,719 |   |   | $ | 3,624 |   |   | $ | 3,007 |   |
| EBITDA(4)                                                                                       |   | $                                 | 19,008  |   |   | $ | 14,772 |   |   | $ | 30,339 |   |   | $ | 23,815 |   |   | $ | 20,574 |   |

|                                                 |   | As      of December 31, |      |
|------------------------------------------------------|--------|------------------------------|-----------|
|                                                 |   | 2007                         |      |   | 2006 |   |   | 2005 |   |   | 2004(2) |   |   | 2003 |   |
| (in      thousands, except share and per share data) |   |                         |      |   | (Restated)(1) |   |   | (Restated)(1) |   |   | (Restated)(1) |   |   | (Restated)(1) |   |
| Total      assets                                    |   | $                            | 149,953   |   |   | $ | 159,852 |   |   | $ | 187,753 |   |   | $ | 205,134 |   |   | $ | 121,070 |   |
| Current      portion of long-term debt               |   | $                            | -         |   |   | $ | - |   |   | $ | 10,170 |   |   | $ | 18,357 |   |   | $ | 9,000 |   |
| Long-term      debt (less current portion)           |   | $                            | 7,737     |   |   | $ | 15,000 |   |   | $ | 15,242 |   |   | $ | 51,485 |   |   | $ | 7,750 |   |
| Stockholders’      equity                      |   | $                            | 96,504    |   |   | $ | 84,314 |   |   | $ | 74,736 |   |   | $ | 61,867 |   |   | $ | 49,200 |   |
| Return      on invested capital(3)                   |   |                         | 7.5       | % |   |   | 5.3 | % |   |   | 12.8 | % |   |   | 8.0 | % |   |   | 14.0 | % |
| Stockholders’      equity per share            |   | $                            | 10.15     |   |   | $ | 9.05 |   |   | $ | 8.22 |   |   | $ | 7.08 |   |   | $ | 5.83 |   |
| Return      on stockholders’ equity            |   |                         | 8.0       | % |   |   | 5.2 | % |   |   | 16.8 | % |   |   | 16.8 | % |   |   | 15.1 | % |
| Funded      backlog                                  |   | $                            | 116,471   |   |   | $ | 92,903 |   |   | $ | 144,571 |   |   | $ | 165,017 |   |   | $ | 123,895 |   |
| Number      of shares outstanding                    |   |                         | 9,509,849 |   |   |   | 9,314,962 |   |   |   | 9,096,893 |   |   |   | 8,737,562 |   |   |   | 8,443,082 |   |

| (1)  | Certain      amounts are restated as referenced in Note 1 of our “Notes to      Consolidated Financial Statements” in Part II, Item 8 of this      Form 10-K.                                                             |
|-----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)  | Amounts      include results of operations of Impact Innovations Group      LLC (acquired September 1, 2004) for the period subsequent to      our acquisition.                                                                                      |
| (3)  | Return      on invested capital is calculated by dividing operating income, net of      related income taxes, by the ending invested capital.  Invested      capital is the sum of outstanding debt and stockholders’ equity, minus      cash. |

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| (4) | Earnings      before interest, taxes, depreciation and amortization, or EBITDA, is      defined as GAAP income from continuing operations plus net interest      expense, income taxes, depreciation expense and amortization expense.      EBITDA as calculated by us may be calculated differently than EBITDA for      other companies. We have provided EBITDA because we believe it is a      commonly used measure of financial performance in comparable companies and      is provided to help investors evaluate performance and to enhance      investors’ understanding of our operating results. EBITDA should not be      construed as an alternative measure of net income, income from continuing      operations or cash flows. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                         |   | Year      ended December 31, |   |
|----------------------------------------------|--------|-----------------------------------|--------|
|                                         |   | 2007                              |   |   | 2006 |   |   | 2005 |   |   | 2004(2) |   |   | 2003 |   |
| (in      thousands)                          |   |                              |   |   |   |   |   |   |   |   |   |   |   | (Restated)(1) |   |
|  Income      from continuing operations |   | $                                 | 7,102  |   |   | $ | 3,988 |   |   | $ | 11,433 |   |   | $ | 9,373 |   |   | $ | 9,204 |   |
|  Interest      expense, net             |   |                              | 1,541  |   |   |   | 2,042 |   |   |   | 4,367 |   |   |   | 2,225 |   |   |   | 854 |   |
|  Provision      for income taxes        |   |                              | 4,682  |   |   |   | 2,730 |   |   |   | 7,781 |   |   |   | 6,269 |   |   |   | 5,785 |   |
|  Depreciation      expense              |   |                              | 3,081  |   |   |   | 3,203 |   |   |   | 3,719 |   |   |   | 3,624 |   |   |   | 3,007 |   |
|  Amortization      expense              |   |                              | 2,602  |   |   |   | 2,809 |   |   |   | 3,039 |   |   |   | 2,324 |   |   |   | 1,724 |   |
|  EBITDA                                 |   | $                                 | 19,008 |   |   | $ | 14,772 |   |   | $ | 30,339 |   |   | $ | 23,815 |   |   | $ | 20,574 |   |

ITEM7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF OPERATIONS

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|                                                           |   | Year      Ended December 31, |   |
|----------------------------------------------------------------|--------|------------------------------|--------|
|                                                           |   | 2007                         |   |   | 2006 |   |   | 2005 |   |
|                                                           |   | $(1)                         |   |   | %(2) |   |   | $(1) |   |   | %(2) |   |   | $(1) |   |   | %(2) |   |
|  Contract      revenue                                    |   | $                            | 224.7  |   |   |   | 97.9 | % |   | $ | 252.9 |   |   |   | 97.6 | % |   | $ | 293.7 |   |   |   | 97.7 | % |
|  Product      sales                                       |   |                         | 4.9    |   |   |   | 2.1 |   |   |   | 6.1 |   |   |   | 2.4 |   |   |   | 6.8 |   |   |   | 2.3 |   |
|  Total      revenue                                       |   | $                            | 229.6  |   |   |   | 100.0 | % |   | $ | 259.0 |   |   |   | 100.0 | % |   | $ | 300.4 |   |   |   | 100.0 | % |
|                                                           |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Gross      profit on contract revenue(3)                 |   | $                            | 37.2   |   |   |   | 16.5 | % |   | $ | 33.9 |   |   |   | 13.4 | % |   | $ | 48.1 |   |   |   | 16.4 | % |
|  Gross      profit on product sales(3)                    |   |                         | (0.1   | ) |   |   | (1.1 | )% |   |   | 1.2 |   |   |   | 19.7 | % |   |   | 1.6 |   |   |   | 23.1 | % |
|  Total      gross profit(3)                               |   |                         | 37.1   |   |   |   | 16.2 | % |   |   | 35.1 |   |   |   | 13.6 | % |   |   | 49.7 |   |   |   | 16.5 | % |
|                                                           |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Selling,      general and administrative                 |   |                         | 21.8   |   |   |   | 9.5 | % |   |   | 24.1 |   |   |   | 9.3 | % |   |   | 25.3 |   |   |   | 8.4 | % |
|  Amortization      of intangible assets                   |   |                         | 2.6    |   |   |   | 1.1 | % |   |   | 2.8 |   |   |   | 1.1 | % |   |   | 3.0 |   |   |   | 1.0 | % |
|  Operating      Income                                    |   |                         | 12.7   |   |   |   | 5.5 | % |   |   | 8.2 |   |   |   | 3.2 | % |   |   | 21.3 |   |   |   | 7.1 | % |
|  Interest      expense, net                               |   |                         | (1.5   | ) |   |   | (0.7 | )% |   |   | (2.0 | ) |   |   | (0.8 | )% |   |   | (4.4 | ) |   |   | (1.5 | )% |
|  Other      income, net                                   |   |                         | 0.6    |   |   |   | 0.3 | % |   |   | 0.6 |   |   |   | 0.2 | % |   |   | 2.3 |   |   |   | 0.8 | % |
|  Provision      for income taxes                          |   |                         | 4.7    |   |   |   | 39.7 | % |   |   | 2.7 |   |   |   | 40.6 | % |   |   | 7.8 |   |   |   | 40.5 | % |
|  Cumulative      benefit of accounting change, net of tax |   |                         | -      |   |   |   | 0.0 | % |   |   | 0.1 |   |   |   | 0.0 | % |   |   | - |   |   |   | 0.0 | % |
|  Net      income                                          |   | $                            | 7.1    |   |   |   | 3.1 | % |   | $ | 4.1 |   |   |   | 1.6 | % |   | $ | 11.4 |   |   |   | 3.8 | % |

| (1) | Totals      may not add due to rounding.                                                                                    |
|-----|-----------------------------------------------------------------------------------------------------------------------------|
| (2) | The      percentage for provision for income taxes relate to a percentage of income      before provision for income taxes. |
| (3) | These      amounts represent a percentage of contract revenues, product sales and      total revenues, respectively.        |

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|                                            |   | Year      Ended December 31, |   |
|-------------------------------------------------|--------|------------------------------|--------|
|                                            |   | 2007                         |   |   | 2006 |   |   | 2005 |   |
|                                            |   | $(1)                         |   |   | %(1) |   |   | $(1) |   |   | %(1) |   |   | $(1) |   |   | %(1) |   |
| National      defense and intelligence agencies |   | $                            | 179.1  |   |   |   | 79.7 | % |   | $ | 206.0 |   |   |   | 81.4 | % |   | $ | 233.9 |   |   |   | 79.7 | % |
| Federal      civilian agencies                  |   |                         | 31.3   |   |   |   | 13.9 |   |   |   | 30.6 |   |   |   | 12.1 |   |   |   | 33.8 |   |   |   | 11.5 |   |
| State      and local government agencies        |   |                         | 13.6   |   |   |   | 6.1 |   |   |   | 15.3 |   |   |   | 6.0 |   |   |   | 23.0 |   |   |   | 7.8 |   |
| Other                                           |   |                         | 0.7    |   |   |   | 0.3 |   |   |   | 1.1 |   |   |   | 0.4 |   |   |   | 3.0 |   |   |   | 1.0 |   |
| Total      contract revenue                     |   | $                            | 224.7  |   |   |   | 100.0 | % |   | $ | 252.9 |   |   |   | 100.0 | % |   | $ | 293.7 |   |   |   | 100.0 | % |

| (1) | Totals      may not add due to rounding. |
|-----|------------------------------------------|

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|                                                     |   | Year      Ended December 31, |   |
|----------------------------------------------------------|--------|------------------------------|--------|
|                                                     |   | 2007                         |   |   | 2006 |   |   | 2005 |   |
|  Time      and materials                            |   |                         | 57     | % |   |   | 62 | % |   |   | 56 | % |
|  Cost      reimbursable                             |   |                         | 22     |   |   |   | 19 |   |   |   | 20 |   |
|  Fixed      price, including service type contracts |   |                         | 21     |   |   |   | 19 |   |   |   | 24 |   |
|                                                     |   |                         | 100    | % |   |   | 100 | % |   |   | 100 | % |
|                                                     |   |                         |   |   |   |   |   |   |   |   |   |   |
|  Prime      contract                                |   |                         | 56     | % |   |   | 67 | % |   |   | 68 | % |
|  Sub-contract                                       |   |                         | 44     |   |   |   | 33 |   |   |   | 32 |   |
|                                                     |   |                         | 100    | % |   |   | 100 | % |   |   | 100 | % |

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|                               |   | Payments      due by period |   |
|------------------------------------|--------|-----------------------------|--------|
|                               |   |                        |   |   | Less      than |   |   | Two      to |   |   | Four      to |   |   |   |   |
|                               |   | Total                       |   |   | one      year |   |   | three      years |   |   | five      years |   |   | Thereafter |   |
| Long-term      debt                |   | $                           | 7.7    |   |   | $ | - |   |   | $ | 7.7 |   |   | $ | - |   |   | $ | - |   |
| Operating      leases              |   |                        | 33.7   |   |   |   | 7.5 |   |   |   | 12.9 |   |   |   | 5.9 |   |   |   | 7.4 |   |
| Letter      of credit              |   |                        | 1.0    |   |   |   | 1.0 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total      contractual obligations |   | $                           | 42.4   |   |   | $ | 8.5 |   |   | $ | 20.6 |   |   | $ | 5.9 |   |   | $ | 7.4 |   |

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUTMARKET RISK

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ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARYDATA

|                                                                                                                                                                | Page   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                |   |
|  Report of Independent Registered Public Accounting      Firm                                                                                                  | 35     |
|  Consolidated Balance Sheets as of December 31, 2007      and 2006                                                                                        | 36     |
|  Consolidated Statements of Operations for the years ended      December 31, 2007, 2006 and 2005                                                          | 37     |
|  Consolidated Statements of Changes in Stockholders’      Equity and Comprehensive Income for the years ended December 31,      2007, 2006 and 2005 | 38     |
|  Consolidated Statements of Cash Flows for the years ended      December 31, 2007, 2006 and 2005                                                          | 39     |
|  Notes to Consolidated Financial    Statements                                                                                                                 | 40     |
|  Schedule II — Valuation and Qualifying Accounts      and Reserves                                                                             | 65     |

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REPORT OFINDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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DYNAMICS RESEARCHCORPORATION

CONSOLIDATED BALANCESHEETS

|                                                                                                                                                                          |   | December      31, |    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|---------|
|                                                                                                                                                                          |   | 2007              |    |   | 2006 |   |
|                                                                                                                                                                          |   |              |    |   | (restated) |   |
|                                                                                                                                                                          |   |              |    |   | (See      Note 1) |   |
| Assets                                                                                                                                                                        |   |              |    |   |   |   |
| Current      assets                                                                                                                                                           |   |              |    |   |   |   |
| Cash      and cash equivalents                                                                                                                                                |   | $                 | 2,006   |   |   | $ | 7,887 |   |
| Contract      receivables, net                                                                                                                                                |   |              | 63,570  |   |   |   | 64,284 |   |
| Prepaid      expenses and other current assets                                                                                                                                |   |              | 2,508   |   |   |   | 2,933 |   |
| Total      current assets                                                                                                                                                     |   |              | 68,084  |   |   |   | 75,104 |   |
| Noncurrent      assets                                                                                                                                                        |   |              |    |   |   |   |   |   |
| Property      and equipment, net                                                                                                                                              |   |              | 10,182  |   |   |   | 11,509 |   |
| Goodwill                                                                                                                                                                      |   |              | 63,055  |   |   |   | 63,055 |   |
| Intangible      assets, net                                                                                                                                                   |   |              | 3,069   |   |   |   | 5,671 |   |
| Deferred      tax asset                                                                                                                                                       |   |              | 1,484   |   |   |   | 1,507 |   |
| Other      noncurrent assets                                                                                                                                                  |   |              | 4,079   |   |   |   | 3,006 |   |
| Total      noncurrent assets                                                                                                                                                  |   |              | 81,869  |   |   |   | 84,748 |   |
| Total      assets                                                                                                                                                             |   | $                 | 149,953 |   |   | $ | 159,852 |   |
| Liabilities      and stockholders' equity                                                                                                                                     |   |              |    |   |   |   |   |   |
| Current      liabilities                                                                                                                                                      |   |              |    |   |   |   |   |   |
| Accounts      payable                                                                                                                                                         |   | $                 | 12,163  |   |   | $ | 18,195 |   |
| Accrued      compensation and employee benefits                                                                                                                               |   |              | 13,728  |   |   |   | 14,473 |   |
| Deferred      taxes                                                                                                                                                           |   |              | 8,486   |   |   |   | 9,864 |   |
| Other      accrued expenses                                                                                                                                                   |   |              | 3,248   |   |   |   | 5,201 |   |
| Total      current liabilities                                                                                                                                                |   |              | 37,625  |   |   |   | 47,733 |   |
| Long-term      liabilities                                                                                                                                                    |   |              |    |   |   |   |   |   |
| Long-term      debt                                                                                                                                                           |   |              | 7,737   |   |   |   | 15,000 |   |
| Other      long-term liabilities                                                                                                                                              |   |              | 8,087   |   |   |   | 12,805 |   |
| Total      long-term liabilities                                                                                                                                              |   |              | 15,824  |   |   |   | 27,805 |   |
| Total      liabilities                                                                                                                                                        |   |              | 53,449  |   |   |   | 75,538 |   |
| Commitments      and contingencies                                                                                                                                            |   |              |    |   |   |   |   |   |
| Stockholders'      equity                                                                                                                                                     |   |              |    |   |   |   |   |   |
| Preferred      stock, $0.10 par value; 5,000,000 shares authorized; no shares      issued                                                                                     |   |              | -       |   |   |   | - |   |
| Common      stock, $0.10 par value; 30,000,000 shares authorized; 9,509,849 and      9,314,962 shares issued and outstanding at December 31, 2007 and 2006,      respectively |   |              | 951     |   |   |   | 931 |   |
| Capital      in excess of par value                                                                                                                                           |   |              | 50,251  |   |   |   | 47,644 |   |
| Accumulated      other comprehensive loss                                                                                                                                     |   |              | (6,745  | ) |   |   | (9,206 | ) |
| Retained      earnings                                                                                                                                                        |   |              | 52,047  |   |   |   | 44,945 |   |
| Total      stockholders' equity                                                                                                                                               |   |              | 96,504  |   |   |   | 84,314 |   |
| Total      liabilities and stockholders' equity                                                                                                                               |   | $                 | 149,953 |   |   | $ | 159,852 |   |

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DYNAMICS RESEARCHCORPORATION

CONSOLIDATEDSTATEMENTS OF OPERATIONS

|                                                            |   | Year      Ended December 31, |      |
|-----------------------------------------------------------------|--------|------------------------------|-----------|
|                                                            |   | 2007                         |      |   | 2006 |   |   | 2005 |   |
| Contract      revenue                                           |   | $                            | 224,676   |   |   | $ | 252,890 |   |   | $ | 293,662 |   |
| Product      sales                                              |   |                         | 4,901     |   |   |   | 6,097 |   |   |   | 6,778 |   |
| Total      revenue                                              |   |                         | 229,577   |   |   |   | 258,987 |   |   |   | 300,440 |   |
|                                                            |   |                         |      |   |   |   |   |   |   |   |   |   |
| Cost      of contract revenue                                   |   |                         | 187,516   |   |   |   | 218,976 |   |   |   | 245,566 |   |
| Cost      of product sales                                      |   |                         | 4,954     |   |   |   | 4,895 |   |   |   | 5,212 |   |
| Total      cost of  revenue                           |   |                         | 192,470   |   |   |   | 223,871 |   |   |   | 250,778 |   |
|                                                            |   |                         |      |   |   |   |   |   |   |   |   |   |
| Gross      profit on contract revenue                           |   |                         | 37,160    |   |   |   | 33,914 |   |   |   | 48,096 |   |
| Gross      profit on product sales                              |   |                         | (53       | ) |   |   | 1,202 |   |   |   | 1,566 |   |
| Total      gross profit                                         |   |                         | 37,107    |   |   |   | 35,116 |   |   |   | 49,662 |   |
|                                                            |   |                         |      |   |   |   |   |   |   |   |   |   |
| Selling,      general and administrative expenses               |   |                         | 21,826    |   |   |   | 24,136 |   |   |   | 25,318 |   |
| Amortization      of intangible assets                          |   |                         | 2,602     |   |   |   | 2,809 |   |   |   | 3,039 |   |
| Operating      income                                           |   |                         | 12,679    |   |   |   | 8,171 |   |   |   | 21,305 |   |
| Interest      expense, net                                      |   |                         | (1,541    | ) |   |   | (2,042 | ) |   |   | (4,367 | ) |
| Other      income                                               |   |                         | 646       |   |   |   | 589 |   |   |   | 2,276 |   |
| Income      before provision for income taxes                   |   |                         | 11,784    |   |   |   | 6,718 |   |   |   | 19,214 |   |
| Provision      for income taxes                                 |   |                         | 4,682     |   |   |   | 2,730 |   |   |   | 7,781 |   |
| Income      before cumulative effect of accounting change       |   |                         | 7,102     |   |   |   | 3,988 |   |   |   | 11,433 |   |
| Cumulative      benefit of accounting change, net of tax of $62 |   |                         | -         |   |   |   | 84 |   |   |   | - |   |
| Net      income                                                 |   | $                            | 7,102     |   |   | $ | 4,072 |   |   | $ | 11,433 |   |
|                                                            |   |                         |      |   |   |   |   |   |   |   |   |   |
| Earnings      per common share                                  |   |                         |      |   |   |   |   |   |   |   |   |   |
| Basic                                                           |   |                         |      |   |   |   |   |   |   |   |   |   |
| Income      before cumulative effect of accounting change       |   | $                            | 0.76      |   |   | $ | 0.44 |   |   | $ | 1.30 |   |
| Cumulative      effect of accounting change                     |   |                         | -         |   |   |   | 0.01 |   |   |   | - |   |
| Net      income                                                 |   | $                            | 0.76      |   |   | $ | 0.45 |   |   | $ | 1.30 |   |
|                                                            |   |                         |      |   |   |   |   |   |   |   |   |   |
| Diluted                                                         |   |                         |      |   |   |   |   |   |   |   |   |   |
| Income      before cumulative effect of accounting change       |   | $                            | 0.74      |   |   | $ | 0.42 |   |   | $ | 1.24 |   |
| Cumulative      effect of accounting change                     |   |                         | -         |   |   |   | 0.01 |   |   |   | - |   |
| Net      income                                                 |   | $                            | 0.74      |   |   | $ | 0.43 |   |   | $ | 1.24 |   |
|                                                            |   |                         |      |   |   |   |   |   |   |   |   |   |
| Weighted      average shares outstanding                        |   |                         |      |   |   |   |   |   |   |   |   |   |
| Basic                                                           |   |                         | 9,326,907 |   |   |   | 9,099,897 |   |   |   | 8,809,644 |   |
| Diluted                                                         |   |                         | 9,649,897 |   |   |   | 9,426,535 |   |   |   | 9,253,522 |   |

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DYNAMICS RESEARCHCORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY ANDCOMPREHENSIVE INCOME

|                                                                                                            |   |                     |   |   |           |   |   | Capital        |   |   |          |   |   | Accumulated |   |   |     |   |    |   |   |
|-----------------------------------------------------------------------------------------------------------------|--------|--------------------------|--------|--------|----------------|--------|--------|----------------|--------|--------|---------------|--------|--------|-------------|--------|--------|----------|--------|---------|--------|--------|
|                                                                                                            |   |                     |   |   |           |   |   | In      Excess |   |   |          |   |   | Other       |   |   |     |   |    |   |   |
|                                                                                                            |   | Common      Stock Issued |   |   | of      Par    |   |   | Unearned       |   |   | Comprehensive |   |   | Retained    |   |   |     |   |
|                                                                                                            |   | Shares                   |   |   | Par      value |   |   | Value          |   |   | Compensation  |   |   | Loss        |   |   | Earnings |   |    | Total  |   |
| Balance      at December 31, 2004, as previously reported                                                       |   |                     | 8,737  |   |           | $      | 874    |           |   | $      | 40,849        |   |   | $           | (1,572 | )      |     | $      | (7,724  | )      |   | $ | 28,891 |   |   | $ | 61,318 |   |
| Impact      of restatement (Note 1)                                                                             |   |                     | -      |   |           |   | -      |           |   |   | -             |   |   |        | -      |   |     |   | -       |   |   |   | 549 |   |   |   | 549 |   |
| Balance      December 31, 2004, as restated                                                                     |   |                     | 8,737  |   |           |   | 874    |           |   |   | 40,849        |   |   |        | (1,572 | )      |     |   | (7,724  | )      |   |   | 29,440 |   |   |   | 61,867 |   |
| Comprehensive      income:                                                                                      |   |                     |   |   |           |   |   |           |   |   |          |   |   |        |   |   |     |   |    |   |   |   |   |   |   |   |   |   |
| Net      income                                                                                                 |   |                     | -      |   |           |   | -      |           |   |   | -             |   |   |        | -      |   |     |   | -       |   |   |   | 11,433 |   |   |   | 11,433 |   |
| Other      comprehensive income, net of tax:                                                                    |   |                     |   |   |           |   |   |           |   |   |          |   |   |        |   |   |     |   |    |   |   |   |   |   |   |   |   |   |
| Minimum      pension liability adjustment                                                                       |   |                     | -      |   |           |   | -      |           |   |   | -             |   |   |        | -      |   |     |   | (1,509  | )      |   |   | - |   |   |   | (1,509 | ) |
| Unrealized      gains on investments, net of reclassification adjustment                                        |   |                     | -      |   |           |   | -      |           |   |   | -             |   |   |        | -      |   |     |   | (1,535  | )      |   |   | - |   |   |   | (1,535 | ) |
| Other      comprehensive income                                                                                 |   |                     | -      |   |           |   | -      |           |   |   | -             |   |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | (3,044 | ) |
| Comprehensive      income                                                                                       |   |                     | -      |   |           |   | -      |           |   |   | -             |   |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | 8,389 |   |
| Issuance      of common stock through stock option exercises and employee stock purchase      plan transactions |   |                     | 304    |   |           |   | 30     |           |   |   | 3,378         |   |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | 3,408 |   |
| Issuance      of restricted stock                                                                               |   |                     | 110    |   |           |   | 11     |           |   |   | 1,794         |   |   |        | (1,805 | )      |     |   | -       |   |   |   | - |   |   |   | - |   |
| Forfeiture      of restricted stock                                                                             |   |                     | (42    | )      |           |   | (4     | )              |   |   | (667          | )      |   |        | 671    |   |     |   | -       |   |   |   | - |   |   |   | - |   |
| Release      of restricted stock                                                                                |   |                     | (12    | )      |           |   | (1     | )              |   |   | (187          | )      |   |        | (9     | )      |     |   | -       |   |   |   | - |   |   |   | (197 | ) |
| Amortization      of unearned compensation                                                                      |   |                     | -      |   |           |   | -      |           |   |   | -             |   |   |        | 865    |   |     |   | -       |   |   |   | - |   |   |   | 865 |   |
| Tax      benefit from stock options exercised and employee stock purchase plan      transactions                |   |                     | -      |   |           |   | -      |           |   |   | 404           |   |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | 404 |   |
| Balance      at December 31, 2005, as restated                                                                  |   |                     | 9,097  |   |           |   | 910    |           |   |   | 45,571        |   |   |        | (1,850 | )      |     |   | (10,768 | )      |   |   | 40,873 |   |   |   | 74,736 |   |
| Comprehensive      income:                                                                                      |   |                     |   |   |           |   |   |           |   |   |          |   |   |        |   |   |     |   |    |   |   |   |   |   |   |   |   |   |
| Net      income                                                                                                 |   |                     | -      |   |           |   | -      |           |   |   | -             |   |   |        | -      |   |     |   | -       |   |   |   | 4,072 |   |   |   | 4,072 |   |
| Other      comprehensive income, net of tax:                                                                    |   |                     |   |   |           |   |   |           |   |   |          |   |   |        |   |   |     |   |    |   |   |   |   |   |   |   |   |   |
| Pension      liability adjustment                                                                               |   |                     | -      |   |           |   | -      |           |   |   | -             |   |   |        | -      |   |     |   | 1,562   |   |   |   | - |   |   |   | 1,562 |   |
| Comprehensive      income                                                                                       |   |                     | -      |   |           |   | -      |           |   |   | -             |   |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | 5,634 |   |
| Issuance      of common stock through stock option exercises and employee stock purchase      plan transactions |   |                     | 192    |   |           |   | 19     |           |   |   | 1,875         |   |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | 1,894 |   |
| Issuance      of restricted stock                                                                               |   |                     | 70     |   |           |   | 7      |           |   |   | (7            | )      |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | - |   |
| Forfeiture      of restricted stock                                                                             |   |                     | (30    | )      |           |   | (3     | )              |   |   | 3             |   |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | - |   |
| Release      of restricted stock                                                                                |   |                     | (14    | )      |           |   | (2     | )              |   |   | (191          | )      |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | (193 | ) |
| Share-based      compensation                                                                                   |   |                     | -      |   |           |   | -      |           |   |   | 2,082         |   |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | 2,082 |   |
| Tax      benefit from stock options exercised and employee stock purchase plan      transactions                |   |                     | -      |   |           |   | -      |           |   |   | 161           |   |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | 161 |   |
| Reversal      of unearned compensation upon adoption of FASB Statement No.      123(R)                          |   |                     | -      |   |           |   | -      |           |   |   | (1,850        | )      |   |        | 1,850  |   |     |   | -       |   |   |   | - |   |   |   | - |   |
| Balance      at December 31, 2006, as restated                                                                  |   |                     | 9,315  |   |           |   | 931    |           |   |   | 47,644        |   |   |        | -      |   |     |   | (9,206  | )      |   |   | 44,945 |   |   |   | 84,314 |   |
| Comprehensive      income:                                                                                      |   |                     |   |   |           |   |   |           |   |   |          |   |   |        |   |   |     |   |    |   |   |   |   |   |   |   |   |   |
| Net      income                                                                                                 |   |                     | -      |   |           |   | -      |           |   |   | -             |   |   |        | -      |   |     |   | -       |   |   |   | 7,102 |   |   |   | 7,102 |   |
| Other      comprehensive income, net of tax:                                                                    |   |                     |   |   |           |   |   |           |   |   |          |   |   |        |   |   |     |   |    |   |   |   |   |   |   |   |   |   |
| Pension      liability adjustment                                                                               |   |                     | -      |   |           |   | -      |           |   |   | -             |   |   |        | -      |   |     |   | 2,353   |   |   |   | - |   |   |   | 2,353 |   |
| Unrealized      gain on investment                                                                              |   |                     | -      |   |           |   | -      |           |   |   | -             |   |   |        | -      |   |     |   | 108     |   |   |   | - |   |   |   | 108 |   |
| Other      comprehensive income                                                                                 |   |                     | -      |   |           |   | -      |           |   |   | -             |   |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | 2,461 |   |
| Comprehensive      income                                                                                       |   |                     | -      |   |           |   | -      |           |   |   | -             |   |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | 9,563 |   |
| Issuance      of common stock through stock option exercises and employee stock purchase      plan transactions |   |                     | 135    |   |           |   | 14     |           |   |   | 1,166         |   |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | 1,180 |   |
| Issuance      of restricted stock                                                                               |   |                     | 99     |   |           |   | 10     |           |   |   | (10           | )      |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | - |   |
| Forfeiture      of restricted stock                                                                             |   |                     | (20    | )      |           |   | (2     | )              |   |   | 2             |   |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | - |   |
| Release      of restricted stock                                                                                |   |                     | (19    | )      |           |   | (2     | )              |   |   | (200          | )      |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | (202 | ) |
| Share-based      compensation                                                                                   |   |                     | -      |   |           |   | -      |           |   |   | 1,640         |   |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | 1,640 |   |
| Tax      benefit from stock options exercised and employee stock purchase plan      transactions                |   |                     | -      |   |           |   | -      |           |   |   | 77            |   |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | 77 |   |
| Tax      deficiencies on equity awards                                                                          |   |                     | -      |   |           |   | -      |           |   |   | (68           | )      |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | (68 | ) |
| Balance      at December 31, 2007                                                                               |   |                     | 9,510  |   |           | $      | 951    |           |   | $      | 50,251        |   |   | $           | -      |   |     | $      | (6,745  | )      |   | $ | 52,047 |   |   | $ | 96,504 |   |

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DYNAMICS RESEARCHCORPORATION

CONSOLIDATEDSTATEMENTS OF CASH FLOWS

|                                                                                                                                       |   | Year      Ended December 31, |     |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|----------|
|                                                                                                                                       |   | 2007                         |     |   | 2006 |   |   | 2005 |   |
| Cash      flows from operating activities:                                                                                                 |   |                         |     |   |   |   |   |   |   |
| Net      income                                                                                                                            |   | $                            | 7,102    |   |   | $ | 4,072 |   |   | $ | 11,433 |   |
| Adjustments      to reconcile net cash provided by operating activities:                                                                   |   |                         |     |   |   |   |   |   |   |   |   |   |
| Depreciation                                                                                                                               |   |                         | 3,081    |   |   |   | 3,203 |   |   |   | 3,719 |   |
| Amortization      of intangible assets                                                                                                     |   |                         | 2,602    |   |   |   | 2,809 |   |   |   | 3,039 |   |
| Share-based      compensation, including cumulative effect of accounting    change                                                         |   |                         | 1,640    |   |   |   | 2,082 |   |   |   | 865 |   |
| Non-cash      interest expense                                                                                                             |   |                         | 147      |   |   |   | 203 |   |   |   | 304 |   |
| Amortization      of deferred gain on sale of building                                                                                     |   |                         | (676     | ) |   |   | (676 | ) |   |   | (6 | ) |
| Investment      income from equity interest                                                                                                |   |                         | (516     | ) |   |   | (223 | ) |   |   | (166 | ) |
| Tax      benefit from stock options exercised and employee stock purchase plan      transactions, net of tax deficiencies on equity awards |   |                         | (9       | ) |   |   | (161 | ) |   |   | 404 |   |
| Deferred      (prepaid) income taxes                                                                                                       |   |                         | (2,972   | ) |   |   | (6,744 | ) |   |   | 1,869 |   |
| Loss      (gain) on sale of investments and long-lived assets, net                                                                         |   |                         | 32       |   |   |   | (192 | ) |   |   | (1,984 | ) |
| Change      in operating assets and liabilities:                                                                                           |   |                         |     |   |   |   |   |   |   |   |   |   |
| Contract      receivables, net                                                                                                             |   |                         | 714      |   |   |   | 30,260 |   |   |   | 1,647 |   |
| Prepaid      expenses and other current assets                                                                                             |   |                         | 604      |   |   |   | (1,341 | ) |   |   | 4,185 |   |
| Accounts      payable                                                                                                                      |   |                         | (6,032   | ) |   |   | (7,473 | ) |   |   | 5,118 |   |
| Accrued      compensation and employee benefits                                                                                            |   |                         | (745     | ) |   |   | (4,288 | ) |   |   | 847 |   |
| Other      accrued expenses                                                                                                                |   |                         | (1,166   | ) |   |   | (2,508 | ) |   |   | 1,246 |   |
| Other      long-term liabilities                                                                                                           |   |                         | (861     | ) |   |   | (1,439 | ) |   |   | (7,488 | ) |
| Net      cash provided by operating activities                                                                                             |   |                         | 2,945    |   |   |   | 17,584 |   |   |   | 25,032 |   |
| Net      cash used in discontinued operations                                                                                              |   |                         | -        |   |   |   | - |   |   |   | (422 | ) |
| Net      cash provided by operating activities                                                                                             |   |                         | 2,945    |   |   |   | 17,584 |   |   |   | 24,610 |   |
| Cash      flows from investing activities:                                                                                                 |   |                         |     |   |   |   |   |   |   |   |   |   |
| Additions      to property, plant and equipment                                                                                            |   |                         | (1,788   | ) |   |   | (2,482 | ) |   |   | (4,571 | ) |
| Proceeds      (payments) related to the sale of building, net                                                                              |   |                         | (980     | ) |   |   | - |   |   |   | 19,275 |   |
| Proceeds      from sale of investments and long-lived assets                                                                               |   |                         | 6        |   |   |   | 214 |   |   |   | 2,003 |   |
| Purchase      adjustment of business acquisition                                                                                           |   |                         | -        |   |   |   | - |   |   |   | (168 | ) |
| Dividends      from equity investment                                                                                                      |   |                         | 180      |   |   |   | 155 |   |   |   | 60 |   |
| Increase      in other assets                                                                                                              |   |                         | (170     | ) |   |   | (182 | ) |   |   | (92 | ) |
| Net      cash (used in) provided by investing activities                                                                                   |   |                         | (2,752   | ) |   |   | (2,295 | ) |   |   | 16,507 |   |
| Cash      flow from financing activities:                                                                                                  |   |                         |     |   |   |   |   |   |   |   |   |   |
| Borrowings      under revolving credit agreement                                                                                           |   |                         | 201,918  |   |   |   | 172,981 |   |   |   | 138,996 |   |
| Repayments      under revolving credit agreement                                                                                           |   |                         | (209,181 | ) |   |   | (157,981 | ) |   |   | (148,996 | ) |
| Principal      payments under loan agreements                                                                                              |   |                         | -        |   |   |   | (25,412 | ) |   |   | (34,430 | ) |
| Proceeds      from the exercise of stock options and employee stock purchase plan      transactions                                        |   |                         | 1,180    |   |   |   | 1,894 |   |   |   | 3,408 |   |
| Tax      benefit from stock options exercised and employee stock purchase plan      transactions, net of tax deficiencies on equity awards |   |                         | 9        |   |   |   | 161 |   |   |   | - |   |
| Payments      of deferred financing costs                                                                                                  |   |                         | -        |   |   |   | (65 | ) |   |   | - |   |
| Net      cash used in financing activities                                                                                                 |   |                         | (6,074   | ) |   |   | (8,422 | ) |   |   | (41,022 | ) |
| Net      increase (decrease) in cash and cash equivalents                                                                                  |   |                         | (5,881   | ) |   |   | 6,867 |   |   |   | 95 |   |
| Cash      and cash equivalents, beginning of period                                                                                        |   |                         | 7,887    |   |   |   | 1,020 |   |   |   | 925 |   |
| Cash      and cash equivalents, end of period                                                                                              |   | $                            | 2,006    |   |   | $ | 7,887 |   |   | $ | 1,020 |   |
|                                                                                                                                       |   |                         |     |   |   |   |   |   |   |   |   |   |
| Supplemental      disclosure of cash flow information:                                                                                     |   |                         |     |   |   |   |   |   |   |   |   |   |
| Cash      paid during the year for interest                                                                                                |   | $                            | 1,494    |   |   | $ | 2,078 |   |   | $ | 4,302 |   |
| Cash      paid during the year for income taxes, net of refunds                                                                            |   | $                            | 6,206    |   |   | $ | 12,486 |   |   | $ | (196 | ) |
| Supplemental      disclosure of noncash financing and investing activities:                                                                |   |                         |     |   |   |   |   |   |   |   |   |   |
| Issuance      of restricted stock                                                                                                          |   | $                            | 1,135    |   |   | $ | 1,000 |   |   | $ | 1,805 |   |
| Increase      (decrease) in pension liability                                                                                              |   | $                            | (3,899   | ) |   | $ | (2,588 | ) |   | $ | 2,485 |   |

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NOTE 1.  NATUREOF OPERATIONS ANDRESTATEMENT

|                                        |   | As      of December 31, 2006 |   |
|---------------------------------------------|--------|------------------------------|--------|
|                                        |   | Previously      Reported     |   |   | As      Restated |   |
| Changes      to Consolidated Balance Sheet: |   |                         |   |   |   |   |
| Deferred      income taxes                  |   | $                            | 11,698 |   |   | $ | 9,864 |   |
| Other      accrued expenses                 |   | $                            | 3,916  |   |   | $ | 5,201 |   |
| Total      current liabilities              |   | $                            | 48,282 |   |   | $ | 47,733 |   |
| Total      liabilities                      |   | $                            | 76,087 |   |   | $ | 75,538 |   |
| Retained      earnings                      |   | $                            | 44,396 |   |   | $ | 44,945 |   |
| Total      stockholders' equity             |   | $                            | 83,765 |   |   | $ | 84,314 |   |

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|                                                                                                   |   | December 31, |   |
|--------------------------------------------------------------------------------------------------------|--------|-------------------|--------|
|                                                                                                   |   | 2007              |   |   | 2006 |   |
| Contract      receivables, net:                                                                        |   |              |   |   |   |   |
| Billed      receivables                                                                                |   | $                 | 31,884 |   |   | $ | 27,865 |   |
| Unbilled      receivables:                                                                             |   |              |   |   |   |   |   |   |
| Revenues      recorded in excess of milestone billings on fixed price contract with      State of Ohio |   |              | 7,572  |   |   |   | 9,377 |   |
| Retainages      and fee withholdings                                                                   |   |              | 1,529  |   |   |   | 1,119 |   |
| Other      unbilled receivables                                                                        |   |              | 23,488 |   |   |   | 26,716 |   |
| Total      unbilled receivables                                                                        |   |              | 32,589 |   |   |   | 37,212 |   |
| Allowance      for doubtful accounts                                                                   |   |              | (903   | ) |   |   | (793 | ) |
| Contract      receivables, net                                                                         |   | $                 | 63,570 |   |   | $ | 64,284 |   |

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| Net      income, as reported                                                                                                                                 |   | $      | 11,433 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|
| Add:      Share-based employee compensation expense included in reported net income,      net of related tax effects                                         |   |   | 515    |   |
| Deduct:      Total share-based employee compensation expense determined under the fair      value based method for all awards, net of related tax    effects |   |   | (1,204 | )      |
| Pro      forma net income                                                                                                                                    |   | $      | 10,744 |   |
|                                                                                                                                                         |   |   |   |   |
| Earnings      per common share:                                                                                                                              |   |   |   |   |
| As      reported:                                                                                                                                            |   |   |   |   |
| Basic                                                                                                                                                        |   | $      | 1.30   |   |
| Diluted                                                                                                                                                      |   | $      | 1.24   |   |
| Pro      forma:                                                                                                                                              |   |   |   |   |
| Basic                                                                                                                                                        |   | $      | 1.22   |   |
| Diluted                                                                                                                                                      |   | $      | 1.16   |   |

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|                                        |   | December 31, |    |
|---------------------------------------------|--------|-------------------|---------|
|                                        |   | 2007              |    |   | 2006 |   |
| Property      and equipment, net:           |   |              |    |   |   |   |
| Production      equipment                   |   | $                 | 11,917  |   |   | $ | 11,942 |   |
| Software                                    |   |              | 11,052  |   |   |   | 11,283 |   |
| Furniture      and other equipment          |   |              | 6,862   |   |   |   | 8,792 |   |
| Leasehold      improvements                 |   |              | 2,375   |   |   |   | 2,137 |   |
| Property      and equipment                 |   |              | 32,206  |   |   |   | 34,154 |   |
| Less      accumulated depreciation          |   |              | (22,024 | ) |   |   | (22,645 | ) |
| Property      and equipment, net            |   | $                 | 10,182  |   |   | $ | 11,509 |   |
|                                        |   |              |    |   |   |   |   |   |
| Other      noncurrent assets:               |   |              |    |   |   |   |   |   |
| Deferred      compensation plan investments |   | $                 | 1,747   |   |   | $ | 1,627 |   |
| Equity      investment                      |   |              | 1,119   |   |   |   | 787 |   |
| Prepaid      pension asset                  |   |              | 718     |   |   |   | - |   |
| Other                                       |   |              | 495     |   |   |   | 592 |   |
| Other      noncurrent assets                |   | $                 | 4,079   |   |   | $ | 3,006 |   |

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|                                               |   | December 31, |   |
|----------------------------------------------------|--------|-------------------|--------|
|                                               |   | 2007              |   |   | 2006 |   |
| Accrued      compensation and employee benefits:   |   |              |   |   |   |   |
| Accrued      payroll and payroll  taxes  |   | $                 | 6,967  |   |   | $ | 5,956 |   |
| Accrued      vacation                              |   |              | 4,273  |   |   |   | 4,343 |   |
| Accrued      pension liability                     |   |              | -      |   |   |   | 2,000 |   |
| Other                                              |   |              | 2,488  |   |   |   | 2,174 |   |
| Accrued      compensation and employee benefits    |   | $                 | 13,728 |   |   | $ | 14,473 |   |
|                                               |   |              |   |   |   |   |   |   |
| Other      accrued expenses:                       |   |              |   |   |   |   |   |   |
| Deferred      gain on sale of building             |   | $                 | 676    |   |   | $ | 676 |   |
| Accrued      income taxes                          |   |              | 585    |   |   |   | 946 |   |
| Amount      outstanding under letter of credit     |   |              | 36     |   |   |   | 1,016 |   |
| Other                                              |   |              | 1,951  |   |   |   | 2,563 |   |
| Other      accrued expenses                        |   | $                 | 3,248  |   |   | $ | 5,201 |   |
|                                               |   |              |   |   |   |   |   |   |
| Other      long-term liabilities:                  |   |              |   |   |   |   |   |   |
| Deferred      gain on sale of building             |   | $                 | 4,733  |   |   | $ | 5,407 |   |
| Deferred      compensation plan liability          |   |              | 1,747  |   |   |   | 1,627 |   |
| Long-term      contract payments                   |   |              | -      |   |   |   | 2,700 |   |
| Accrued      pension liability                     |   |              | -      |   |   |   | 1,933 |   |
| Other                                              |   |              | 1,607  |   |   |   | 1,138 |   |
|    Other      long-term liabilities |   | $                 | 8,087  |   |   | $ | 12,805 |   |

| Year      ending December 31: |   |   |   |
|-------------------------------|--------|--------|--------|
| 2008                          |   | $      | 2,038  |   |
| 2009                          |   | $      | 1,031  |   |

|                                                                                                                                            |   | Year      ended December 31, |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|--------|
|                                                                                                                                            |   | 2007                              |   |   | 2006 |   |   | 2005 |   |
| Income      from operations                                                                                                                     |   | $                                 | 4,682  |   |   | $ | 2,730 |   |   | $ | 7,781 |   |
| Cumulative      benefit of accounting change                                                                                                    |   |                              | -      |   |   |   | 62 |   |   |   | - |   |
| Stockholders’      equity for compensation expense for tax purposes in excess of amounts      recognized for financial reporting purposes |   |                              | (77    | ) |   |   | (161 | ) |   |   | (404 | ) |
| Other      comprehensive income                                                                                                                 |   |                              | 1,617  |   |   |   | 1,026 |   |   |   | (1,969 | ) |
|                                                                                                                                            |   | $                                 | 6,222  |   |   | $ | 3,657 |   |   | $ | 5,408 |   |

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|                                  |   | Year      ended December 31, |   |
|---------------------------------------|--------|-----------------------------------|--------|
|                                  |   | 2007                              |   |   | 2006 |   |   | 2005 |   |
| Currently      payable                |   |                              |   |   |   |   |   |   |   |
| Federal                               |   | $                                 | 6,623  |   |   | $ | 8,041 |   |   | $ | 4,902 |   |
| State                                 |   |                              | 1,031  |   |   |   | 1,433 |   |   |   | 1,010 |   |
| Total      currently payable          |   |                              | 7,654  |   |   |   | 9,474 |   |   |   | 5,912 |   |
|                                  |   |                              |   |   |   |   |   |   |   |   |   |   |
| Deferred      (prepaid)               |   |                              |   |   |   |   |   |   |   |   |   |   |
| Federal                               |   |                              | (2,490 | ) |   |   | (5,174 | ) |   |   | 1,493 |   |
| State                                 |   |                              | (482   | ) |   |   | (1,570 | ) |   |   | 376 |   |
| Total      deferred (prepaid)         |   |                              | (2,972 | ) |   |   | (6,744 | ) |   |   | 1,869 |   |
|  Provision      for income taxes |   | $                                 | 4,682  |   |   | $ | 2,730 |   |   | $ | 7,781 |   |

|                                                |   | Year      ended December 31, |   |
|-----------------------------------------------------|--------|-----------------------------------|--------|
|                                                |   | 2007                              |   |   | 2006 |   |   | 2005 |   |
| Provision      at statutory rate                    |   | $                                 | 4,124  |   |   |   | 35.0 | % |   | $ | 2,351 |   |   |   | 35.0 | % |   | $ | 6,533 |   |   |   | 34.0 | % |
| State      income taxes, net of federal tax benefit |   |                              | 512    |   |   |   | 4.3 |   |   |   | 355 |   |   |   | 5.3 |   |   |   | 923 |   |   |   | 4.8 |   |
| Permanent      differences, net                     |   |                              | 166    |   |   |   | 1.4 |   |   |   | 177 |   |   |   | 2.6 |   |   |   | 170 |   |   |   | 0.9 |   |
| SFAS      123(R) expense                            |   |                              | 73     |   |   |   | 0.6 |   |   |   | 166 |   |   |   | 2.5 |   |   |   | - |   |   |   | - |   |
| Change      in deferred tax rate                    |   |                              | -      |   |   |   | - |   |   |   | 186 |   |   |   | 2.8 |   |   |   | - |   |   |   | - |   |
| Adjustments      to tax accruals and reserves       |   |                              | (201   | ) |   |   | (1.7 | ) |   |   | (266 | ) |   |   | (4.0 | ) |   |   | 127 |   |   |   | 0.7 |   |
| Tax      credits and state audits                   |   |                              | (82    | ) |   |   | (0.7 | ) |   |   | (226 | ) |   |   | (3.4 | ) |   |   | - |   |   |   | - |   |
| Other,      net                                     |   |                              | 90     |   |   |   | 0.8 |   |   |   | (13 | ) |   |   | (0.2 | ) |   |   | 28 |   |   |   | 0.1 |   |
| Provision      for income taxes                     |   | $                                 | 4,682  |   |   |   | 39.7 | % |   | $ | 2,730 |   |   |   | 40.6 | % |   | $ | 7,781 |   |   |   | 40.5 | % |

|                                          |   | December 31, |    |
|-----------------------------------------------|--------|-------------------|---------|
|                                          |   | 2007              |    |   | 2006 |   |
| Pension      liability                        |   | $                 | 4,465   |   |   | $ | 6,010 |   |
| Deferred      gain on sale of building        |   |              | 2,680   |   |   |   | 2,768 |   |
| Accrued      vacation                         |   |              | 1,152   |   |   |   | 1,163 |   |
| Accrued      expenses                         |   |              | 1,050   |   |   |   | 689 |   |
| Employee      share-based compensation        |   |              | 903     |   |   |   | 713 |   |
| Receivables      reserves                     |   |              | 477     |   |   |   | 314 |   |
| Other                                         |   |              | 5       |   |   |   | - |   |
| Deferred      tax assets                      |   |              | 10,732  |   |   |   | 11,657 |   |
|                                          |   |              |    |   |   |   |   |   |
| Unbilled      receivables                     |   |              | (7,476  | ) |   |   | (9,207 | ) |
| Pension      funding                          |   |              | (4,749  | ) |   |   | (5,675 | ) |
| Fixed      assets and intangibles             |   |              | (3,348  | ) |   |   | (3,052 | ) |
| Domestic      International Sales Corporation |   |              | (1,973  | ) |   |   | (1,961 | ) |
| Investment      available for sale            |   |              | (132    | ) |   |   | - |   |
| Other                                         |   |              | (56     | ) |   |   | (119 | ) |
| Deferred      tax liability                   |   |              | (17,734 | ) |   |   | (20,014 | ) |
| Deferred      tax liability, net              |   | $                 | (7,002  | ) |   | $ | (8,357 | ) |

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| Balance      at January 1, 2007                                       |   | $      | 291 |   |
|-----------------------------------------------------------------------|--------|--------|-----|--------|
| Additions      for current year tax positions                         |   |   | 237 |   |
| Reductions      for prior year tax positions                          |   |   | (9  | )      |
| Lapse      of statute of limitations                                  |   |   | (2  | )      |
| Balance      at December 31, 2007                                     |   |   | 517 |   |
| Interest      and penalties                                           |   |   | 115 |   |
| Total      unrecognized tax benefits, including interest andpenalties |   | $      | 632 |   |

|   | • | Any      failure by the Company and its subsidiaries to make any payment of      principal, interest and other sums due under the credit facility within      three (3) calendar days of the date when the payment is      due; |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | • | Any      breach by the Company or any of its subsidiaries of certain covenants,      representations and warranties;                                                                                                                 |
|   | • | Any      default and acceleration of any indebtedness owed by the Company or any of      its subsidiaries to any person (other than the bank group) which is in      excess of $1,000;                                               |

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|   | • | Any      final judgment against the Company or any of its subsidiaries in excess of      $1,000 which has not been insured to the reasonable satisfaction of Brown      Brothers Harriman & Co. as administrative agent; |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | • | Any      bankruptcy (voluntary or involuntary) of the Company or any of its      subsidiaries;                                                                                                                               |
|   | • | Any      material adverse change in the business or financial condition of the      Company and its subsidiaries; or                                                                                                         |
|   | • | A      change in control of the Company, as described in the credit      facility.                                                                                                                                           |

|                                    |   | Year      ended December 31, |   |
|-----------------------------------------|--------|-----------------------------------|--------|
|                                    |   | 2007                              |   |   | 2006 |   |   | 2005 |   |
| Interest      cost                      |   | $                                 | 3,955  |   |   | $ | 3,995 |   |   | $ | 3,937 |   |
| Expected      return on plan assets     |   |                              | (5,811 | ) |   |   | (5,117 | ) |   |   | (4,407 | ) |
| Recognized      actuarial loss          |   |                              | 1,104  |   |   |   | 1,717 |   |   |   | 1,503 |   |
| Net      periodic pension cost (income) |   | $                                 | (752   | ) |   | $ | 595 |   |   | $ | 1,033 |   |

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|                                                |   | December      31, |   |
|-----------------------------------------------------|--------|-------------------|--------|
|                                                |   | 2007              |   |   | 2006 |   |
| Change      in benefit obligation                   |   |              |   |   |   |   |
| Benefit      obligation at beginning of year        |   | $                 | 70,006 |   |   | $ | 70,761 |   |
| Curtailment                                         |   |              | -      |   |   |   | (3,012 | ) |
| Interest      cost                                  |   |              | 3,955  |   |   |   | 3,995 |   |
| Benefits      paid                                  |   |              | (2,760 | ) |   |   | (2,625 | ) |
| Actuarial      (gain) loss                          |   |              | (3,859 | ) |   |   | 887 |   |
| Benefit      obligation at end of year              |   |              | 67,342 |   |   |   | 70,006 |   |
| Change      in plan assets                          |   |              |   |   |   |   |   |   |
| Fair      value of plan assets at beginning of year |   |              | 66,073 |   |   |   | 56,260 |   |
| Actual      return on plan assets                   |   |              | 4,747  |   |   |   | 7,218 |   |
| Employer      contributions                         |   |              | -      |   |   |   | 5,220 |   |
| Benefits      paid                                  |   |              | (2,760 | ) |   |   | (2,625 | ) |
| Fair      value of plan assets at end of year       |   |              | 68,060 |   |   |   | 66,073 |   |
| Funded      status                                  |   | $                 | 718    |   |   | $ | (3,933 | ) |

|                                            |   | December      31, |   |
|-------------------------------------------------|--------|-------------------|--------|
|                                            |   | 2007              |   |   | 2006 |   |
| Other      noncurrent assets                    |   | $                 | 718    |   |   | $ | - |   |
| Accrued      compensation and employee benefits |   |              | -      |   |   |   | (2,000 | ) |
| Other      long-term liabilities                |   |              | -      |   |   |   | (1,933 | ) |
| Net      amount recognized                      |   | $                 | 718    |   |   | $ | (3,933 | ) |

|   |   | Beginning |   |   |         |   |   | Experience  |   |   | Effect      of |   |   | Ending  |   |
|--------|--------|-----------|--------|--------|--------------|--------|--------|-------------|--------|--------|----------------|--------|--------|---------|--------|
|   |   | Balance   |   |   | Amortization |   |   | Loss/(Gain) |   |   | Curtailment    |   |   | Balance |   |
| 2007   |   | $         | 15,159 |   |         | $      | (1,104 | )           |   | $      | (2,795         | )      |   | $       | -      |   |   | $ | 11,260 |   |
| 2006   |   | $         | 21,102 |   |         | $      | (1,717 | )           |   | $      | (1,214         | )      |   | $       | (3,012 | ) |   | $ | 15,159 |   |

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|                                              |   | December      31,                 |   |
|---------------------------------------------------|--------|-----------------------------------|--------|
|                                              |   | 2007                              |   |   | 2006 |   |
| Used      to determine benefit obligations        |   |                              |   |   |   |   |
| Discount      rate                                |   |                              | 6.25   | % |   |   | 5.75 | % |
| Rate      of compensation increase                |   |                              | N/A    |   |   |   | N/A |   |
|                                              |   |
|                                              |   | Year      Ended December 31, |   |
|                                              |   | 2007                              |   |   | 2006 |   |   | 2005 |   |
| Used      to determine net periodic benefit costs |   |                              |   |   |   |   |   |   |   |   |   |
| Discount      rate                                |   |                              | 5.75   | % |   |   | 5.75 | % |   |   | 6.00 | % |
| Expected      rate of return on assets            |   |                              | 9.00   | % |   |   | 9.00 | % |   |   | 9.00 | % |
| Rate      of compensation increase                |   |                              | N/A    |   |   |   | N/A |   |   |   | N/A |   |

|                   |   | Target     |   |   | December      31, |   |
|------------------------|--------|------------|--------|--------|-------------------|--------|
|                   |   | Allocation |   |   | 2007              |   |   | 2006 |   |
| Equity      securities |   |       | 60     | %      |              |   | 64 | % |   |   | 66 | % |
| Debt      securities   |   |       | 38     |   |              |   | 31 |   |   |   | 27 |   |
| Other                  |   |       | 2      |   |              |   | 5 |   |   |   | 7 |   |
|                   |   |       | 100    | %      |              |   | 100 | % |   |   | 100 | % |

| Year      ending December 31:                                   |   |   |   |
|-----------------------------------------------------------------|--------|--------|--------|
| 2008                                                            |   | $      | 3,315  |   |
| 2009                                                            |   | $      | 3,497  |   |
| 2010                                                            |   | $      | 3,665  |   |
| 2011                                                            |   | $      | 3,894  |   |
| 2012                                                            |   | $      | 4,182  |   |
| Five      subsequent fiscal years ending December 31, 2017 |   | $      | 23,595 |   |

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|                                        |   | Year      ended December 31, |   |
|---------------------------------------------|--------|------------------------------|--------|
|                                        |   | 2007                         |   |   | 2006 |   |   | 2005 |   |
| Cost      of products and services          |   | $                            | 605    |   |   | $ | 1,065 |   |   | $ | - |   |
| Selling,      general and administrative    |   |                         | 1,035  |   |   |   | 1,163 |   |   |   | 865 |   |
| Cumulative      effect of accounting change |   |                         | -      |   |   |   | (146 | ) |   |   | - |   |
| Total      share-based compensation expense |   | $                            | 1,640  |   |   | $ | 2,082 |   |   | $ | 865 |   |

|                                  |   |           |      |   |     |   |   | Weighted        |   |   |      |   |
|---------------------------------------|--------|----------------|-----------|--------|----------|--------|--------|-----------------|--------|--------|-----------|--------|
|                                  |   |           |      |   |     |   |   | Average         |   |   |      |   |
|                                  |   |           |      |   | Weighted |   |   | Remaining       |   |   |      |   |
|                                  |   |           |      |   | Average  |   |   | Contractual     |   |   | Aggregate |   |
|                                  |   | Number      of |      |   | Exercise |   |   | Term            |   |   | Intrinsic |   |
|                                  |   | Shares         |      |   | Price    |   |   | (in      years) |   |   | Value     |   |
| Outstanding      at December 31, 2006 |   |           | 1,140,679 |   |     | $      | 8.37   |            |   |   |      |   |   |   |   |   |
| Granted                               |   |           | -         |   |     | $      | -      |            |   |   |      |   |   |   |   |   |
| Exercised                             |   |           | (74,917   | )      |     | $      | 7.45   |            |   |   |      |   |   |   |   |   |
| Cancelled                             |   |           | (53,684   | )      |     | $      | 10.29  |            |   |   |      |   |   |   |   |   |
| Outstanding      at December 31, 2007 |   |           | 1,012,078 |   |     | $      | 8.34   |            |   |   | 3.0       |   |   | $ | 3,030 |   |
| Exercisable      at December 31, 2007 |   |           | 517,078   |   |     | $      | 7.76   |            |   |   | 2.7       |   |   | $ | 2,100 |   |

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|                                                           |   | Year      ended December 31, |   |
|----------------------------------------------------------------|--------|------------------------------|--------|
|                                                           |   | 2007                         |   |   | 2006 |   |   | 2005 |   |
| Amounts      realized or received from stock option exercises: |   |                         |   |   |   |   |   |   |   |
| Cash      proceeds received                                    |   | $                            | 558    |   |   | $ | 351 |   |   | $ | 1,635 |   |
| Intrinsic      value realized                                  |   | $                            | 279    |   |   | $ | 384 |   |   | $ | 1,147 |   |
| Income      tax benefit realized                               |   | $                            | 70     |   |   | $ | 134 |   |   | $ | 353 |   |

|                                |   |           |    |   | Weighted        |   |
|-------------------------------------|--------|----------------|---------|--------|-----------------|--------|
|                                |   |           |    |   | Average         |   |
|                                |   | Number      of |    |   | Grant-Date      |   |
|                                |   | Shares         |    |   | Fair      Value |   |
| Nonvested      at December 31, 2006 |   |           | 212,264 |   |            | $      | 12.86 |   |
| Granted                             |   |           | 99,300  |   |            | $      | 11.43 |   |
| Vested                              |   |           | (68,510 | )      |            | $      | 15.45 |   |
| Cancelled                           |   |           | (19,724 | )      |            | $      | 12.82 |   |
| Nonvested      at December 31, 2007 |   |           | 223,330 |   |            | $      | 11.43 |   |

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|                                                                       |   | Before |   |   | Tax       |   |   | Net      of |   |
|----------------------------------------------------------------------------|--------|--------|--------|--------|-----------|--------|--------|-------------|--------|
|                                                                       |   | Tax    |   |   | (Expense) |   |   | Tax         |   |
|                                                                       |   | Amount |   |   | Benefit   |   |   | Amount      |   |
| Year      ended December 31, 2005                                          |   |   |   |   |      |   |   |        |   |
| Minimum      pension liability adjustment                                  |   | $      | (2,485 | )      |      | $      | 976    |        |   | $ | (1,509 | ) |
| Unrealized      gains on investments:                                      |   |   |   |   |      |   |   |        |   |   |   |   |
| Unrealized      holding losses arising during the period                   |   |   | (531   | )      |      |   | 207    |        |   |   | (324 | ) |
| Less:      reclassification adjustment for gains realized in net    income |   |   | (1,997 | )      |      |   | 786    |        |   |   | (1,211 | ) |
| Net      unrealized gains                                                  |   |   | (2,528 | )      |      |   | 993    |        |   |   | (1,535 | ) |
| Other      comprehensive loss                                              |   | $      | (5,013 | )      |      | $      | 1,969  |        |   | $ | (3,044 | ) |
|                                                                       |   |   |   |   |      |   |   |        |   |   |   |   |
| Year      ended December 31, 2006                                          |   |   |   |   |      |   |   |        |   |   |   |   |
| Pension      liability adjustment                                          |   | $      | 2,588  |   |      | $      | (1,026 | )           |   | $ | 1,562 |   |
| Unrealized      gains on investments:                                      |   |   |   |   |      |   |   |        |   |   |   |   |
| Unrealized      holding gains arising during the period                    |   |   | 211    |   |      |   | (89    | )           |   |   | 122 |   |
| Less:      reclassification adjustment for gains realized in net    income |   |   | (211   | )      |      |   | 89     |        |   |   | (122 | ) |
| Net      unrealized gains                                                  |   |   | -      |   |      |   | -      |        |   |   | - |   |
| Other      comprehensive income                                            |   | $      | 2,588  |   |      | $      | (1,026 | )           |   | $ | 1,562 |   |
|                                                                       |   |   |   |   |      |   |   |        |   |   |   |   |
| Year      ended December 31, 2007                                          |   |   |   |   |      |   |   |        |   |   |   |   |
| Pension      liability adjustment                                          |   | $      | 3,899  |   |      | $      | (1,546 | )           |   | $ | 2,353 |   |
| Unrealized      holding gains arising during the period                    |   |   | 179    |   |      |   | (71    | )           |   |   | 108 |   |
| Other      comprehensive income                                            |   | $      | 4,078  |   |      | $      | (1,617 | )           |   | $ | 2,461 |   |

|                                                                    |   | Year      Ended December 31, |      |
|-------------------------------------------------------------------------|--------|-----------------------------------|-----------|
|                                                                    |   | 2007                              |      |   | 2006 |   |   | 2005 |   |
|  Weighted      average shares outstanding - Basic                  |   |                              | 9,326,907 |   |   |   | 9,099,897 |   |   |   | 8,809,644 |   |
|  Dilutive      effect of stock options and restricted stock grants |   |                              | 322,990   |   |   |   | 326,638 |   |   |   | 443,878 |   |
|  Weighted      average shares outstanding - Diluted                |   |                              | 9,649,897 |   |   |   | 9,426,535 |   |   |   | 9,253,522 |   |

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|                                         |   | Year      ended December 31, |    |
|----------------------------------------------|--------|-----------------------------------|---------|
|                                         |   | 2007                              |    |   | 2006 |   |   | 2005 |   |
| Revenues      from external customers        |   |                              |    |   |   |   |   |   |   |
| Systems      and Services                    |   | $                                 | 224,676 |   |   | $ | 252,890 |   |   | $ | 293,662 |   |
| Metrigraphics                                |   |                              | 4,901   |   |   |   | 6,097 |   |   |   | 6,778 |   |
|                                         |   | $                                 | 229,577 |   |   | $ | 258,987 |   |   | $ | 300,440 |   |
| Gross      margin                            |   |                              |    |   |   |   |   |   |   |   |   |   |
| Systems      and Services                    |   | $                                 | 37,160  |   |   | $ | 33,914 |   |   | $ | 48,096 |   |
| Metrigraphics                                |   |                              | (53     | ) |   |   | 1,202 |   |   |   | 1,566 |   |
|                                         |   | $                                 | 37,107  |   |   | $ | 35,116 |   |   | $ | 49,662 |   |
| Operating      income (loss)                 |   |                              |    |   |   |   |   |   |   |   |   |   |
| Systems      and Services                    |   | $                                 | 13,826  |   |   | $ | 8,066 |   |   | $ | 20,819 |   |
| Metrigraphics                                |   |                              | (1,147  | ) |   |   | 105 |   |   |   | 486 |   |
|                                         |   | $                                 | 12,679  |   |   | $ | 8,171 |   |   | $ | 21,305 |   |
| Depreciation      and amortization           |   |                              |    |   |   |   |   |   |   |   |   |   |
| Systems      and Services                    |   | $                                 | 4,755   |   |   | $ | 5,385 |   |   | $ | 5,821 |   |
| Metrigraphics                                |   |                              | 212     |   |   |   | 365 |   |   |   | 347 |   |
| Segment      depreciation and amortization   |   |                              | 4,967   |   |   |   | 5,750 |   |   |   | 6,168 |   |
| Corporate      depreciation and amortization |   |                              | 716     |   |   |   | 262 |   |   |   | 590 |   |
|                                         |   | $                                 | 5,683   |   |   | $ | 6,012 |   |   | $ | 6,758 |   |
| Capital      expenditures                    |   |                              |    |   |   |   |   |   |   |   |   |   |
| Systems      and Services                    |   | $                                 | 1,267   |   |   | $ | 2,243 |   |   | $ | 3,664 |   |
| Metrigraphics                                |   |                              | 112     |   |   |   | 17 |   |   |   | 63 |   |
| Segment      capital expenditures            |   |                              | 1,379   |   |   |   | 2,260 |   |   |   | 3,727 |   |
| Corporate      capital expenditures          |   |                              | 409     |   |   |   | 222 |   |   |   | 844 |   |
|                                         |   | $                                 | 1,788   |   |   | $ | 2,482 |   |   | $ | 4,571 |   |

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|                      |   | December 31, |    |
|---------------------------|--------|-------------------|---------|
|                      |   | 2007              |    |   | 2006 |   |
| Segment      assets       |   |              |    |   |   |   |
| Systems      and Services |   | $                 | 136,541 |   |   | $ | 143,793 |   |
| Metrigraphics             |   |              | 2,229   |   |   |   | 1,756 |   |
| Total      segment assets |   |              | 138,770 |   |   |   | 145,549 |   |
| Corporate      assets     |   |              | 11,183  |   |   |   | 14,303 |   |
|                      |   | $                 | 149,953 |   |   | $ | 159,852 |   |

|                                       |   | Year      Ended December 31, |   |
|--------------------------------------------|--------|-----------------------------------|--------|
|                                       |   | 2007                              |   |   | 2006 |   |   | 2005 |   |
|                                       |   | Revenue                           |   |   | % |   |   | Revenue |   |   | % |   |   | Revenue |   |   | % |   |
| Air      Force Aeronautical Systems Center |   | $                                 | 24,565 |   |   |   | 11 | % |   | $ | 47,870 |   |   |   | 18 | % |   | $ | 48,693 |   |   |   | 16 | % |

|                                       |   | December 31, |   |
|--------------------------------------------|--------|-------------------|--------|
|                                       |   | 2007              |   |   | 2006 |   |
| Air      Force Aeronautical Systems Center |   | $                 | 5,261  |   |   | $ | 5,433 |   |

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|                        |   | December 31, |   |
|-----------------------------|--------|-------------------|--------|
|                        |   | 2007              |   |   | 2006 |   |
| Contract      receivables   |   | $                 | 4,486  |   |   | $ | 1,837 |   |
| Other      receivables, net |   | $                 | 314    |   |   | $ | 110 |   |

|                         |   | Operating  |   |   |     |   |
|------------------------------|--------|------------|--------|--------|----------|--------|
|                         |   | Lease      |   |   | Sublease |   |
|                         |   | Commitment |   |   | Income   |   |
| Year      ended December 31: |   |       |   |   |     |   |
| 2008                         |   | $          | 7,462  |   |     | $      | 1,360 |   |
| 2009                         |   |       | 6,888  |   |     |   | 1,507 |   |
| 2010                         |   |       | 6,006  |   |     |   | 1,474 |   |
| 2011                         |   |       | 3,377  |   |     |   | 642 |   |
| 2012                         |   |       | 2,561  |   |     |   | - |   |
| 2013      and thereafter     |   |       | 7,388  |   |     |   | - |   |
|                         |   | $          | 33,682 |   |     | $      | 4,983 |   |

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|                                                                                       |   | First   |   |   | Second  |   |   | Third   |   |   | Fourth  |   |   | Fiscal |   |
|--------------------------------------------------------------------------------------------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|--------|--------|
|                                                                                       |   | Quarter |   |   | Quarter |   |   | Quarter |   |   | Quarter |   |   | Year   |   |
| 2007                                                                                       |   |    |   |   |    |   |   |    |   |   |    |   |   |   |   |
| Revenues                                                                                   |   | $       | 56,780 |   |    | $      | 58,010 |    |   | $      | 58,328  |   |   | $      | 56,459 |   |   | $ | 229,577 |   |
| Cost      of contract revenue and product sales                                            |   | $       | 48,081 |   |    | $      | 48,660 |    |   | $      | 49,020  |   |   | $      | 46,709 |   |   | $ | 192,470 |   |
| Gross      profit                                                                          |   | $       | 8,699  |   |    | $      | 9,350  |    |   | $      | 9,308   |   |   | $      | 9,750  |   |   | $ | 37,107 |   |
| Operating      income                                                                      |   | $       | 2,451  |   |    | $      | 2,936  |    |   | $      | 3,396   |   |   | $      | 3,896  |   |   | $ | 12,679 |   |
| Net      income                                                                            |   | $       | 1,123  |   |    | $      | 1,514  |    |   | $      | 1,919   |   |   | $      | 2,546  |   |   | $ | 7,102 |   |
| Earnings      per share:                                                                   |   |    |   |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |   |   |
| Basic(1)                                                                                   |   | $       | 0.12   |   |    | $      | 0.16   |    |   | $      | 0.21    |   |   | $      | 0.27   |   |   | $ | 0.76 |   |
| Diluted(1)                                                                                 |   | $       | 0.12   |   |    | $      | 0.16   |    |   | $      | 0.20    |   |   | $      | 0.26   |   |   | $ | 0.74 |   |
| 2006                                                                                       |   |    |   |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |   |   |
| Revenues                                                                                   |   | $       | 68,213 |   |    | $      | 67,278 |    |   | $      | 63,161  |   |   | $      | 60,335 |   |   | $ | 258,987 |   |
| Cost      of contract revenue and product sales                                            |   | $       | 58,243 |   |    | $      | 59,609 |    |   | $      | 54,973  |   |   | $      | 51,046 |   |   | $ | 223,871 |   |
| Gross      profit                                                                          |   | $       | 9,970  |   |    | $      | 7,669  |    |   | $      | 8,188   |   |   | $      | 9,289  |   |   | $ | 35,116 |   |
| Operating      income                                                                      |   | $       | 2,635  |   |    | $      | 930    |    |   | $      | 1,927   |   |   | $      | 2,679  |   |   | $ | 8,171 |   |
| Income      before cumulative effect of accounting change                                  |   | $       | 1,390  |   |    | $      | 176    |    |   | $      | 921     |   |   | $      | 1,501  |   |   | $ | 3,988 |   |
| Net      income                                                                            |   | $       | 1,474  |   |    | $      | 176    |    |   | $      | 921     |   |   | $      | 1,501  |   |   | $ | 4,072 |   |
| Earnings      per share on income before cumulative effect of accounting      change: |   |    |   |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |   |   |
| Basic(1)                                                                                   |   | $       | 0.15   |   |    | $      | 0.02   |    |   | $      | 0.10    |   |   | $      | 0.16   |   |   | $ | 0.44 |   |
| Diluted(1)                                                                                 |   | $       | 0.15   |   |    | $      | 0.02   |    |   | $      | 0.10    |   |   | $      | 0.16   |   |   | $ | 0.42 |   |
| Earnings      per share on net income:                                                |   |    |   |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |   |   |
| Basic(1)                                                                                   |   | $       | 0.16   |   |    | $      | 0.02   |    |   | $      | 0.10    |   |   | $      | 0.16   |   |   | $ | 0.45 |   |
| Diluted(1)                                                                                 |   | $       | 0.16   |   |    | $      | 0.02   |    |   | $      | 0.10    |   |   | $      | 0.16   |   |   | $ | 0.43 |   |

| (1)  | Basic      and diluted earnings per common share is computed independently for each      of the quarters presented; accordingly, the sum of the quarterly earnings      per common share may not equal the total computed for the      year. |
|-----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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DYNAMICS RESEARCHCORPORATION

|                                 |   |            |   |   | Additions       |   |   |            |   |   |       |   |
|--------------------------------------|--------|-----------------|--------|--------|-----------------|--------|--------|-----------------|--------|--------|------------|--------|
|                                 |   | Balance      at |   |   | Charged      to |   |   | Charged      to |   |   | Deductions |   |   | Balance      at |   |
|                                 |   | Beginning       |   |   | Costs      and  |   |   | Other           |   |   | and        |   |   | End      of |   |
|                                 |   | of      Period  |   |   | Expenses        |   |   | Accounts(A)     |   |   | Write-Offs |   |   | Period |   |
| Allowance      for doubtful accounts |   |            |   |   |            |   |   |            |   |   |       |   |   |   |   |
| Year      ended December 31,    |   |            |   |   |            |   |   |            |   |   |       |   |   |   |   |
| 2007                                 |   | $               | 793    |   |            | $      | 212    |            |   | $      | -          |   |   | $ | (102 | ) |   | $ | 903 |   |
| 2006                                 |   | $               | 588    |   |            | $      | 215    |            |   | $      | -          |   |   | $ | (10 | ) |   | $ | 793 |   |
| 2005                                 |   | $               | 644    |   |            | $      | 107    |            |   | $      | 70         |   |   | $ | (233 | ) |   | $ | 588 |   |

| (A)  | Recovery      of previously reserved amounts and other  adjustments. |
|-----------|----------------------------------------------------------------------|

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ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ONACCOUNTING AND FINANCIAL DISCLOSURE

ITEM 9A.  CONTROLS AND PROCEDURES

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ITEM 9B.  OTHERINFORMATION

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PART III

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATEGOVERNANCE

ITEM 11.  EXECUTIVE COMPENSATION

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS ANDMANAGEMENT AND RELATED STOCKHOLDER MATTERS

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,AND DIRECTOR INDEPENDENCE

ITEM 14.  PRINCIPAL ACCOUNTING FEES ANDSERVICES

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PART IV

ITEM 15.  EXHIBITS AND FINANCIAL STATEMENTSCHEDULE

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|                                 |                                                 |   |
|--------------------------------------|------------------------------------------------------|--------|
|                                 | DYNAMICS      RESEARCH CORPORATION                   |   |
|                                 |                                                 |   |
|  Date:      March 17, 2008 | /s/      James P. Regan                              |   |
|                                 | James      P. Regan                                  |   |
|                                 | President,      Chairman and Chief Executive Officer |   |

| /s/      James P. Regan                   |   | President,      Chairman and Chief Executive Officer (Principal Executive      Officer)                                    | March 17,      2008 |
|-------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------|--------------------------|
| James      P. Regan                       |   |                                                                                                                       |                     |
|                                      |   |                                                                                                                       |                     |
| /s/      David Keleher                    |   | Senior      Vice President and Chief Financial Officer (Principal Financial Officer      and Principal Accounting Officer) | March 17,      2008 |
| David      Keleher                        |   |                                                                                                                       |                     |
|                                      |   |                                                                                                                       |                     |
| /s/      John S. Anderegg, Jr.       |   | Director                                                                                                                   | March 17,      2008 |
| John      S. Anderegg, Jr.           |   |                                                                                                                       |                     |
|                                      |   |                                                                                                                       |                     |
| /s/      Francis J. Aguilar               |   | Director                                                                                                                   | March 17,      2008 |
| Francis      J. Aguilar                   |   |                                                                                                                       |                     |
|                                      |   |                                                                                                                       |                     |
| /s/      Gen. George T. Babbitt, Jr. |   | Director                                                                                                                   | March 17,      2008 |
| Gen.      George T. Babbitt, Jr.     |   |                                                                                                                       |                     |
|                                      |   |                                                                                                                       |                     |
| /s/      Kenneth F. Kames                 |   | Director                                                                                                                   | March 17,      2008 |
| Kenneth      F. Kames                     |   |                                                                                                                       |                     |
|                                      |   |                                                                                                                       |                     |
| /s/      Lt. Gen. Charles P. McCausland   |   | Director                                                                                                                   | March 17,      2008 |
| Lt.      Gen. Charles P. McCausland       |   |                                                                                                                       |                     |
|                                      |   |                                                                                                                       |                     |
| /s/      Nickolas Stavropoulos            |   | Director                                                                                                                   | March 17,      2008 |
| Nickolas      Stavropoulos                |   |                                                                                                                       |                     |

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|             |   |                                                                                                                                                                                              |   | Filed    |   | Incorporated      by Reference** |
|------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|----------------------------------|
| Exhibit      No. |   | Description                                                                                                                                                                                       |   | Herewith |   | Form                             |   | Date |
| 2.1              |   | Stock      Purchase Agreement, dated December 12, 2002, by and among Dynamics      Research Corporation, Andrulis Corporation and the individuals listed on      the signature page thereto. |   |     |   | 8-K                              |   | January      6, 2003 |
|             |   |                                                                                                                                                                                              |   |     |   |                             |   |   |
| 2.2              |   | Equity      Purchase Agreement among Dynamics Research Corporation and Impact      Innovations Group LLC and J3 Technology Services Corp., dated      August 2, 2004.                        |   |     |   | 8-K                              |   | September      8, 2004 |
|             |   |                                                                                                                                                                                              |   |     |   |                             |   |   |
| 3.1              |   | Restated      Articles of Organization of the Company, dated May 22,      1987.                                                                                                              |   |     |   | 10-Q                             |   | June      17, 1987 |
|             |   |                                                                                                                                                                                              |   |     |   |                             |   |   |
| 3.2              |   | By-Laws      of the Company, dated May 22, 1987.                                                                                                                                             |   |     |   | 10-Q                             |   | June      17, 1987 |
|             |   |                                                                                                                                                                                              |   |     |   |                             |   |   |
| 3.3              |   | Certificate      of Vote of Directors Establishing Series A Preferred Stock, dated      July 14, 1988.                                                                                  |   |     |   | 10-K                             |   | December      31, 2002 |
|             |   |                                                                                                                                                                                              |   |     |   |                             |   |   |
| 3.4              |   | Certificate      of Vote of Directors Establishing Series B Preferred Stock, dated      February 17, 1998.                                                                              |   |     |   | 8-A12G                           |   | June      25, 1998 |
|             |   |                                                                                                                                                                                              |   |     |   |                             |   |   |
| 3.5              |   | Amendment,      dated September 10, 1998, to the Certificate of Vote of Directors      Establishing Series B Preferred Stock.                                                           |   |     |   | 8-A12G/A                         |   | September      30, 1998 |
|             |   |                                                                                                                                                                                              |   |     |   |                             |   |   |
| 3.6              |   | Amendment,      dated April 28, 1998, to the restated Articles of Organization of the      Company.                                                                                          |   |     |   | 10-K                             |   | December      31, 2002 |
|             |   |                                                                                                                                                                                              |   |     |   |                             |   |   |
| 3.7              |   | Amendment,      dated April 25, 2000, to the restated Articles of Organization of the      Company.                                                                                          |   |     |   | 10-K                             |   | December      31, 2002 |
|             |   |                                                                                                                                                                                              |   |     |   |                             |   |   |
| 4.1              |   | Specimen      certificate for shares of the Company’s common stock.                                                                                                                         |   |     |   | S-8                              |   | April      27, 2001 |
|             |   |                                                                                                                                                                                              |   |     |   |                             |   |   |
| 4.2              |   | Rights      Agreement, dated February 17, 1998, between Dynamics Research      Corporation and the American Stock Transfer & Trust Company, as      Rights Agent.                   |   |     |   | 8-A12G                           |   | June      25, 1998 |
|             |   |                                                                                                                                                                                              |   |     |   |                             |   |   |
| 10.1             |   | Form      of indemnification agreement for directors of the Company.                                                                                                                              |   |     |   | 10-K                             |   | December      31, 1991 |
|             |   |                                                                                                                                                                                              |   |     |   |                             |   |   |
| 10.2*            |   | Severance      Agreement between John S. Anderegg, Jr. and the    Company.                                                                                                                   |   |     |   | 10-K                             |   | December      31, 1991 |
|             |   |                                                                                                                                                                                              |   |     |   |                             |   |   |
| 10.3*            |   | Deferred      Compensation Plan for Non-Employee Directors of the    Company.                                                                                                                     |   |     |   | 10-K                             |   | December      31, 1991 |
|             |   |                                                                                                                                                                                              |   |     |   |                             |   |   |
| 10.4*            |   | Form      of Supplemental Retirement Pension Agreement by and between the Company      and Albert Rand.                                                                                           |   |     |   | 10-Q                             |   | March      31, 1997 |
|             |   |                                                                                                                                                                                              |   |     |   |                             |   |   |
| 10.5*            |   | Amended      1993 Equity Incentive Plan.                                                                                                                                                          |   |     |   | 10-K                             |   | December      31, 1998 |
|             |   |                                                                                                                                                                                              |   |     |   |                             |   |   |
| 10.6*            |   | Amended      1995 Stock Option Plan for Non-Employee Directors.                                                                                                                                   |   |     |   | 10-Q                             |   | March      31, 1997 |
|             |   |                                                                                                                                                                                              |   |     |   |                             |   |   |
| 10.7*            |   | Employment      Agreement between the Company and James P. Regan.                                                                                                                                 |   |     |   | 10-K                             |   | December      31, 1999 |

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|             |   |                                                                                                                                                                                                                                                                                                                                                                    |   | Filed    |   | Incorporated      by Reference** |
|------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|----------------------------------|
| Exhibit      No. |   | Description                                                                                                                                                                                                                                                                                                                                                             |   | Herewith |   | Form                             |   | Date |
| 10.8*            |   | Change      of Control Agreement between the Company and James P.    Regan.                                                                                                                                                                                                                                                                                             |   |     |   | 10-K                             |   | December      31, 1999 |
|             |   |                                                                                                                                                                                                                                                                                                                                                                    |   |     |   |                             |   |   |
| 10.9*            |   | 2000      Incentive Plan.                                                                                                                                                                                                                                                                                                                                               |   |     |   | DEFS14A                          |   | December      6, 1999 |
|             |   |                                                                                                                                                                                                                                                                                                                                                                    |   |     |   |                             |   |   |
| 10.10*           |   | Form      of grant of stock options under the 2000 Incentive Plan.                                                                                                                                                                                                                                                                                                      |   |     |   | 10-Q                             |   | September      30, 2004 |
|             |   |                                                                                                                                                                                                                                                                                                                                                                    |   |     |   |                             |   |   |
| 10.11*           |   | Forms      of grant of restricted stock under the 2000 IncentivePlan.                                                                                                                                                                                                                                                                                                   |   |     |   | 10-K                             |   | December      31, 2005 |
|             |   |                                                                                                                                                                                                                                                                                                                                                                    |   |     |   |                             |   |   |
| 10.12*           |   | Non-qualified      Stock Option Agreement between the Company and James P.    Regan.                                                                                                                                                                                                                                                                                    |   |     |   | S-8                              |   | October      12, 2000 |
|             |   |                                                                                                                                                                                                                                                                                                                                                                    |   |     |   |                             |   |   |
| 10.13*           |   | 2000      Employee Stock Purchase Plan.                                                                                                                                                                                                                                                                                                                                 |   |     |   | S-8                              |   | April      27, 2001 |
|             |   |                                                                                                                                                                                                                                                                                                                                                                    |   |     |   |                             |   |   |
| 10.14*           |   | Special      Severance Plan.                                                                                                                                                                                                                                                                                                                                            |   |     |   | 10-K                             |   | December      31, 2001 |
|             |   |                                                                                                                                                                                                                                                                                                                                                                    |   |     |   |                             |   |   |
| 10.15*           |   | Senior      Management Deferred Compensation Plan.                                                                                                                                                                                                                                                                                                                      |   |     |   | 10-Q                             |   | March      31, 2002 |
|             |   |                                                                                                                                                                                                                                                                                                                                                                    |   |     |   |                             |   |   |
| 10.16            |   | Third      Amended and Restated Loan Agreement, as of September 29, 2006, by and      among Dynamics Research Corporation, DRC International Corporation and      H.J. Ford Associates, Inc. and Brown Brothers Harriman & Co., TD      Banknorth, N.A., Bank of America, N.A.                                                                                      |   |     |   | 8-K                              |   | October      4, 2006 |
|             |   |                                                                                                                                                                                                                                                                                                                                                                    |   |     |   |                             |   |   |
| 10.17*           |   | Dynamics      Research Corporation Special Severance Plan, as amended on May 14,      2003.                                                                                                                                                                                                                                                                        |   |     |   | 10-K                             |   | December      31, 2003 |
|             |   |                                                                                                                                                                                                                                                                                                                                                                    |   |     |   |                             |   |   |
| 10.18*           |   | 2003      Incentive Plan.                                                                                                                                                                                                                                                                                                                                               |   |     |   | 10-K                             |   | December      31, 2003 |
|             |   |                                                                                                                                                                                                                                                                                                                                                                    |   |     |   |                             |   |   |
| 10.19*           |   | Form      of grant of stock options under the 2003 Incentive Plan.                                                                                                                                                                                                                                                                                                      |   |     |   | 10-Q                             |   | September      30, 2004 |
|             |   |                                                                                                                                                                                                                                                                                                                                                                    |   |     |   |                             |   |   |
| 10.20*           |   | Form      of grant of restricted stock under the 2003 IncentivePlan.                                                                                                                                                                                                                                                                                                    |   |     |   | 10-Q                             |   | September      30, 2004 |
|             |   |                                                                                                                                                                                                                                                                                                                                                                    |   |     |   |                             |   |   |
| 10.21            |   | Master      Unlimited Guaranty, dated as of September 29, 2006, by each of Dynamics      Research Corporation, DRC International Corporation, and H.J. Ford      Associates Inc., in favor of Brown Brothers Harriman & Co., for itself      and as Administrative Agent for each of the Lenders which are and which      may become parties to the Loan Agreement. |   |     |   | 8-K                              |   | October      4, 2006 |
|             |   |                                                                                                                                                                                                                                                                                                                                                                    |   |     |   |                             |   |   |
| 10.22*           |   | Deferred      Stock Compensation Plan for Non-Employee Directors, as amended for      deferrals on or after January 1, 2005.                                                                                                                                                                                                                                       |   |     |   | 10-K                             |   | December      31, 2004 |
|             |   |                                                                                                                                                                                                                                                                                                                                                                    |   |     |   |                             |   |   |
| 10.23*           |   | Amendment      to Deferred Stock Compensation Plan for Non-Employee      Directors.                                                                                                                                                                                                                                                                                     |   |     |   | 10-K                             |   | December      31, 2004 |
|             |   |                                                                                                                                                                                                                                                                                                                                                                    |   |     |   |                             |   |   |
| 10.24*           |   | Beneficiary      Designation Form for the Deferred Compensation Plan for Non-Employee      Directors.                                                                                                                                                                                                                                                                   |   |     |   | 10-K                             |   | December      31, 2004 |
|             |   |                                                                                                                                                                                                                                                                                                                                                                    |   |     |   |                             |   |   |
| 10.25            |   | Purchase      and Sale Agreement, dated November 18, 2005, by and between Dynamics      Research Corporation and Direct Invest Property Acquisition,      LLC.                                                                                                                                                                                                     |   |     |   | 8-K                              |   | January      4, 2006 |

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|             |   |                                                                                                                                                                                                                                                       |   | Filed    |   | Incorporated      by Reference** |
|------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|----------------------------------|
| Exhibit      No. |   | Description                                                                                                                                                                                                                                                |   | Herewith |   | Form                             |   | Date |
| 10.26            |   | Amendment      to Purchase and Sale Agreement, dated December 28, 2005, by and      between Dynamics Research Corporation and Direct Invest Property      Acquisition, LLC.                                                                           |   |     |   | 8-K                              |   | January      4, 2006 |
|             |   |                                                                                                                                                                                                                                                       |   |     |   |                             |   |   |
| 10.27            |   | Lease,      dated December 28, 2005, by and between Dynamics Research Corporation      and Direct Invest-60 Frontage, LLC.                                                                                                                            |   |     |   | 8-K                              |   | January      4, 2006 |
|             |   |                                                                                                                                                                                                                                                       |   |     |   |                             |   |   |
| 10.28            |   | Consent,      Waiver and Amendment Agreement, dated December 28, 2005, by and among      Dynamics Research Corporation, Brown Brothers Harriman & Co.,      KeyBank National Association, TD Banknorth, N.A., and Bank of America,      N.A. |   |     |   | 8-K                              |   | January      4, 2006 |
|             |   |                                                                                                                                                                                                                                                       |   |     |   |                             |   |   |
| 21.1             |   | Subsidiaries      of the registrant.                                                                                                                                                                                                                       |   |     |   | 10-K                             |   | December      31, 2005 |
|             |   |                                                                                                                                                                                                                                                       |   |     |   |                             |   |   |
| 23.1             |   | Consent      of Independent Registered Public Accounting Firm (Grant Thornton      LLP).                                                                                                                                                                   |   | X        |   |                             |   |   |
|             |   |                                                                                                                                                                                                                                                       |   |     |   |                             |   |   |
| 31.1             |   | Certification      of the Chief Executive Officer pursuant to Rule 13a-14(a) under the      Securities Exchange Act of 1934, as adopted pursuant to Section 302      of the Sarbanes-Oxley Act of 2002.                                          |   | X        |   |                             |   |   |
|             |   |                                                                                                                                                                                                                                                       |   |     |   |                             |   |   |
| 31.2             |   | Certification      of the Chief Financial Officer pursuant to Rule 13a-14(a) under the      Securities Exchange Act of 1934, as adopted pursuant to Section 302      of the Sarbanes-Oxley Act of 2002.                                          |   | X        |   |                             |   |   |
|             |   |                                                                                                                                                                                                                                                       |   |     |   |                             |   |   |
| 32.1             |   | Certification      of the Chief Executive Officer pursuant to 18 U.S.C.      Section 1350, as adopted pursuant to Section 906 of the      Sarbanes-Oxley Act of 2002.                                                                       |   | X        |   |                             |   |   |
|             |   |                                                                                                                                                                                                                                                       |   |     |   |                             |   |   |
| 32.2             |   | Certification      of the Chief Financial Officer pursuant to 18 U.S.C.      Section 1350, as adopted pursuant to Section 906 of the      Sarbanes-Oxley Act of 2002.                                                                       |   | X        |   |                             |   |   |

|  *  | Management      contract or compensatory plan or arrangement.                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|---------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **       | In      accordance with Rule 12b-32 under the Securities Exchange Act of      1934, as amended, reference is made to the documents previously filed with      the Securities and Exchange Commission, which documents are hereby      incorporated by reference.  The dates listed for Forms 8-A12G,      Forms 8-K, Forms DEFS14A and Forms S-8 are dates the respective forms were      filed on, and dates listed for Forms 10-Q and Forms 10-K are for the      quarterly or annual period endeddates. |

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