UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

[X]                        Quarterly Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

                 FOR THE QUARTERLY PERIOD ENDED: MARCH 31, 2000

[ ]                        Transition Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

                         Commission file number: 1-8443

                                TELOS CORPORATION

             (Exact name of registrant as specified in its charter)


               Maryland                                     52-0880974
       (State of Incorporation)            (I.R.S. Employer Identification No.)


 19886 Ashburn Road, Ashburn, Virginia                       20147-2358
(Address of principal executive offices)                     (Zip Code)


                         Registrant's Telephone Number,
                       including area code: (703) 724-3800


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

                                 YES       X         NO
                                         ----            -----

As of May 1, 2000 the registrant had 21,241,980  shares of Class A Common Stock,
no par  value,  4,037,628  shares of Class B Common  Stock,  no par  value;  and
3,185,586 shares of 12% Cumulative  Exchangeable Redeemable Preferred Stock, par
value $.01 per share, outstanding.

No public market exists for the registrant's Common Stock.

Number of pages in this report (excluding exhibits): 16


<PAGE>



                       TELOS CORPORATION AND SUBSIDIARIES

                                      INDEX

                          PART I. FINANCIAL INFORMATION
                          ------ ---------------------

<TABLE>
<CAPTION>

<S>                                                                                                             <C>
Item 1.       Financial Statements:

     Condensed Consolidated Statements of Operations for the Three Months

       Ended March 31, 2000 and 1999 (Unaudited)................................................................3

     Condensed Consolidated Balance Sheets as of March 31, 2000 (Unaudited)
       and December 31, 1999....................................................................................4

     Condensed Consolidated Statements of Cash Flows for the Three Months
       Ended March 31, 2000 and 1999 (Unaudited)................................................................5

     Notes to Condensed Consolidated Financial Statements (Unaudited)...........................................6-10

Item 2.       Management's Discussion and Analysis of

              Financial Condition and Results of Operations....................................................11-14


                          PART II.   OTHER INFORMATION
                          -------    -----------------


Item 1.        Legal Proceedings...............................................................................15

Item 3.        Defaults Upon Senior Securities.................................................................15

Item 6.        Exhibits and Reports on Form 8-K................................................................15

SIGNATURES.....................................................................................................16


</TABLE>


<PAGE>
<TABLE>
<CAPTION>


                                                               PART I - FINANCIAL INFORMATION
                                                             TELOS CORPORATION AND SUBSIDIARIES
                                                     CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                          (UNAUDITED)

                                                                     (amounts in thousands)

                                                                       Three Months Ended
                                                                             March 31,
                                                                        ------------------
                                                                     2000                  1999
                                                                     ----                  ----
<S>                                                                <C>                   <C>
Sales

    Systems and Support Services                                   $19,161               $21,932
    Products                                                        12,933                16,699
                                                                    ------                ------
                                                                    32,094                38,631
Costs and expenses

    Cost of sales                                                   28,093                34,176
    Selling, general and administrative expenses                     4,210                 4,381
    Goodwill amortization                                               89                   132
                                                                    ------                ------
Operating loss                                                        (298)                  (58)
Other income (expenses)
    Other income                                                        20                    31
    Equity in net losses of Enterworks                                  --                (4,023)
    Interest expense                                                (1,137)               (1,550)
                                                                    -------               -------

Loss before taxes                                                   (1,415)               (5,600)
Income tax benefit                                                     487                 1,478
                                                                    ------                ------
Net loss                                                            $( 928)              $(4,122)
                                                                    =======              ========


</TABLE>














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


<PAGE>
<TABLE>
<CAPTION>

                                                           TELOS CORPORATION AND SUBSIDIARIES
                                                         CONDENSED CONSOLIDATED BALANCE SHEETS

                                                                  (amounts in thousands)
                                                                         (Unaudited)

                                                                            ASSETS


                                                          MARCH 31, 2000                DECEMBER 31, 1999
                                                          --------------                -----------------
<S>                                                           <C>                            <C>
Current assets
     Cash and cash equivalents (includes restricted cash of
        $54 at March 31, 2000 and December 31, 1999)          $    150                       $    315
     Accounts receivable, net                                   28,129                         27,030
     Inventories, net                                            4,311                          4,779
     Deferred income taxes, current                              5,001                          4,802
     Other current assets                                          184                             83
                                                                ------                         ------
         Total current assets                                   37,775                         37,009

Property and equipment, net of accumulated depreciation of
     $8,714 and $23,093, respectively                           12,280                         12,236
Goodwill                                                         4,195                          4,284
Investment in Enterworks                                            --                             --
Deferred income taxes, long term                                 3,266                          2,930
Other assets                                                       491                            427
                                                                ------                         ------
                                                              $ 58,007                      $  56,886
                                                                ======                         ======



                                                       LIABILITIES AND STOCKHOLDERS' INVESTMENT

Current liabilities

     Accounts payable                                          $ 8,126                        $13,792
     Other current liabilities                                   3,581                          3,421
     Unearned revenue                                            6,582                          5,183
     Accrued compensation and benefits                           7,165                          7,645
                                                                 -----                         ------
         Total current liabilities                              25,454                         30,041

Senior credit facility                                          23,241                         16,508
Senior subordinated notes                                        8,537                          8,537
Capital lease obligations                                       11,266                         11,362
                                                                ------                         ------
         Total liabilities                                      68,498                         66,448
                                                                                               ------

Redeemable preferred stock

     Senior redeemable preferred stock                           6,160                          6,054
     Redeemable preferred stock                                 37,360                         36,975
                                                                ------                         ------
         Total preferred stock                                  43,520                         43,029

Stockholders' investment

     Common stock                                                   78                             78
     Capital in excess of par                                       --                             --
     Retained deficit                                          (54,089)                       (52,669)
                                                               --------                        ------
         Total stockholders' investment                        (54,011)                       (52,591)
                                                                ------                         ------
                                                               $58,007                        $56,886
                                                               =======                         ======



</TABLE>



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


<PAGE>
<TABLE>
<CAPTION>

                                                             TELOS CORPORATION AND SUBSIDIARIES
                                                      CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                         (UNAUDITED)

                                                                    (amounts in thousands)


                                                                            Three Months
                                                                           Ended March 31,
                                                                       -----------------------
                                                                       2000               1999
                                                                       ----               ----
<S>                                                                    <C>           <C>
Operating activities:
     Net loss                                                          $ (928)       $ (4,122)
     Adjustments to reconcile net loss to
       cash (used in) provided by operating activities:
         Gain on sale of fixed assets                                      --             (88)
         Depreciation and amortization                                    415           1,027
         Goodwill amortization                                             89             132
         Other non-cash items                                             124             666
         Changes in assets and liabilities, net                        (6,119)         17,422
                                                                       -------         ------
         Cash (used in) provided by operating activities               (6,419)         15,037
                                                                       -------         ------

Investing activities:
     Proceeds from sale of fixed assets                                    --             171
     Purchase of property and equipment                                  (392)           (382)
     Investment in capitalized software and other assets                   --            (762)
         Cash used in investing activities                             ------            ----
                                                                         (392)           (973)
                                                                       ------            ----

Financing activities:
     Proceeds from (repayments of) senior credit
     facility, net                                                      6,733         (13,983)
     Payments under capital leases                                        (87)           (102)
                                                                       -------         ------
         Cash provided by (used in) financing activities                6,646         (14,085)
                                                                       ------          ------

Decrease in cash and cash equivalents                                    (165)            (21)
Cash and cash equivalents at beginning of period                          315             408
                                                                        -----          ------
Cash and cash equivalents at end of period                           $    150         $   387
                                                                     ========          ======


</TABLE>
















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



<PAGE>


                       TELOS CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                   (UNAUDITED)



NOTE 1.       GENERAL

         The  accompanying   condensed  consolidated  financial  statements  are
unaudited and include the accounts of Telos Corporation ("Telos") and its wholly
owned  subsidiaries,  Telos Corporation  (California),  and Telos  International
Corporation (collectively, the "Company"). Significant intercompany transactions
have been eliminated.  In the opinion of the Company, the accompanying financial
statements  reflect all  adjustments and  reclassifications  (which include only
normal  recurring   adjustments)   necessary  for  their  fair  presentation  in
conformity with generally accepted  accounting  principles.  Interim results are
not necessarily  indicative of fiscal year performance  because of the impact of
seasonal and short-term variations. These financial statements should be read in
conjunction  with  the  consolidated  financial  statements  and  notes  thereto
included in the  Company's  annual report on Form 10-K for the fiscal year ended
December 31, 1999.

     In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 133, "Accounting or Derivative Instruments and Hedging Activities." SFAS 133
establishes  accounting  and  reporting  standards for  derivative  instruments,
including derivative  instruments  embedded in other contracts,  and for hedging
activities.  SFAS 133,  as  amended  by SFAS  137,  "Accounting  for  Derivative
Instruments  and Hedging  Activities  - Deferral of the  effective  date of FASB
Statement No. 133, an amendment of FASB Statement No. 133", is effective for all
quarters of the Company's year ending  December 31, 2001. The Company  currently
does not engage or plan to engage in the use of derivative instruments, and does
not expect SFAS 133 to have a material impact on the results of operations.

     In December  1999,  the  Securities  and Exchange  Commission  issued Staff
Accounting  Bulletin 101 "Revenue  Recognition  in Financial  Statements"  ("SAB
101") to provide guidance regarding the recognition, presentation and disclosure
of  revenue  in the  financial  statements.  The  Company  expects  to adopt the
provisions of SAB 101 (as amended by SAB 101A which deferred the  implementation
date by one  quarter)  on April 1,  2000.  Management  does not  anticipate  the
adoption of SAB 101 to have a material  impact on its results of  operations  or
financial condition.

     In April 2000, the FASB issued FASB  Interpretation  No. 44 "Accounting for
Certain Transactions Involving Stock Compensation; Interpretation of APB Opinion
No.25" ("FIN 44"). The Company is evaluating the provisions of FIN 44.

     Certain  reclassifications  have been made to the  prior  year's  financial
statements to conform to the classifications used in the current period.

<PAGE>
                       TELOS CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                   (UNAUDITED)



NOTE 2.  DECONSOLIDATION OF ENTERWORKS, INC. SUBSIDIARY

         On December 30, 1999, Enterworks, Inc. ("Enterworks"), a majority-owned
subsidiary of the Company, completed a private placement of 21,739,127 shares of
Series A Convertible Preferred Stock ("Preferred Stock") at a price of $1.15 per
share.  The sale  generated  gross  proceeds of  $25,000,000.  In addition,  the
Company entered into a series of concurrent  transactions  pursuant to which the
Company's voting interest in Enterworks was reduced to approximately  34.8%. The
concurrent transactions were as follows:

1.   The Company converted approximately $7.6 million of its Senior Subordinated
     Notes,  Series B, C and D held by investors,  plus the accrued interest and
     the waiver of prepayment  premium  associated with these notes, into shares
     of Enterworks'  Common Stock  owned by the Company at an exchange  ratio of
     one share of  Enterworks' Common  Stock for  each $1.00 principal amount of
     notes  payable. These  subordinated notes had a maturity date of October 1,
     2000.

2.   Enterworks  purchased 5,000,000 shares of Enterworks' Common Stock owned by
     the  Company at a price of $1.00 per share.  This amount was reduced by 20%
     of the Agent's fee, the  Company's  pro rata share of the proceeds from the
     transaction.  The net amount received was $4.7 million.  This  transaction,
     together with the one described above,  resulted in an extraordinary  gain,
     net of tax of $5.3  million,  of $8.0  million,  which is  included  in the
     Company's statement of operations for the year ended December 31, 1999.

3.   Enterworks'  payable to the Company,  which was approximately $24.4 million
     at December 30, 1999, was cancelled in its entirety  before the issuance of
     Series A Preferred  Stock.  The  forgiveness  of the payable  increased the
     Company's  investment in Enterworks.  Funding required to cover Enterworks'
     working  capital  needs from  November  30, 1999 to the date of closing was
     funded  by  the  Company  and  will  be  repaid  through  collections  from
     Enterworks'  trade  accounts  receivable.  This funding  approximated  $2.0
     million.  This forgiveness of intercompany  debt is deemed by management to
     be a normal occurrence of a capital raising transaction.

4.   Enterworks  issued  4,000,000  shares of Enterworks'  Common Stock to Telos
     concurrent  with the issuance of Series A Preferred  Stock.  This  issuance
     increased the Company's investment in Enterworks as it increased the number
     of shares the Company owned in Enterworks.

5.   Enterworks issued a warrant to acquire 350,000 shares of Enterworks' Common
     Stock to  Telos'  primary  lender,  Bank of  America,  in  connection  with
     obtaining the necessary approvals for this offering.  The exercise price of
     the warrant equaled $1.15 per share, the same per share price of the Series
     A Preferred Stock.  This warrant was recorded at its fair market value as a
     charge to interest  expense and a reduction to the Company's  investment in
     Enterworks.

6.   Telos contributed 210,912 shares of Enterworks' Common Stock owned by Telos
     to  the  Enterworks  Treasury for  the  subsequent grant of warrants to the
     Agent, Deutsche Bank Alex. Brown.  This  issuance of warrants was also part
     of  the  Agent's  fee.  This  contribution  of  shares was also a charge to
     interest expense and a reduction to the Company's investment in Enterworks.

         As a result of the reduction of the Company's  ownership  percentage in
Enterworks  the Company  changed its method of accounting  for its investment in
Enterworks from the consolidation method to the equity method.  Pursuant to this
change the  Company's  interest in the losses of  Enterworks  have been reported
separately as "Equity in Net Losses of Enterworks" in the Company's consolidated
statement of operations for the three months ended March 31, 2000. Additionally,
the Company established an "Investment in Enterworks" account in accordance with
APB 18. As of March 31, 2000 and December 30, 1999, respectively, the balance is
zero in the Investment in Enterworks  account due to the fact that the Company's
share of cumulative losses exceeds its investment basis.
<PAGE>
                       TELOS CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                   (UNAUDITED)

NOTE 3.  SALE OF ASSETS

     On September 29, 1999, the Company sold  substantially all of the assets of
its computer  maintenance and service business,  Telos Field  Engineering,  Inc.
("TFE"), to TFE Technology Holdings, LLC ("TFE Holdings"),  an affiliate of Carr
& Company,  for $10 million.  As a result of this sale,  the Company  recorded a
gain of $4.7 million in its  consolidated  statement of operations  for the year
ended  December  31,  1999.  This gain  included a write-off  of $2.1 million of
goodwill allocated to TFE operations.  The Company and TFE Holdings entered into
a one-year corporate services agreement on the date of the sale. Under the terms
of the Agreement,  Telos will continue to provide certain administrative support
functions to TFE Holdings,  including but not limited to finance and  accounting
and human resources, in return for a monthly payment.

NOTE 4.  DEBT OBLIGATIONS

Senior Credit Facility

         The Company has a $35 million Senior Credit  Facility ("the  Facility")
with a bank which  matures on July 1, 2001.  Borrowings  under the  Facility are
collateralized  by  a  majority  of  the  Company's  assets  including  accounts
receivable,  inventory,  and  Telos'  stock in  Enterworks,  Inc.  The amount of
available borrowings fluctuates based on the underlying asset borrowing base. At
March 31,  2000,  the  Company  was not in  compliance  with  several  covenants
contained within the Facility, including covenants relating to certain leverage,
net worth, tangible capital and fixed charge coverage goals. The bank has waived
this non-compliance.

Senior Subordinated Notes

         In 1995 the Company  issued  Senior  Subordinated  Notes  ("Notes")  to
certain  shareholders.  The Notes are classified as either Series B or Series C.
Series B Notes are collateralized by fixed assets of the Company. Series C Notes
are  unsecured.  Both the Series B and  Series C Notes  have a maturity  date of
April 1, 2001 and have interest rates ranging from 14% to 17%.  Interest is paid
quarterly  on January 1, April 1, July 1, and October 1 of each year.  The Notes
can be  prepaid  at the  Company's  option.  Additionally,  these  Notes  have a
cumulative  payment  premium  of 13.5%  per  annum  payable  only  upon  certain
circumstances.  These  circumstances  include an initial public  offering of the
Company's  common  stock or a  significant  refinancing,  to the extent that net
proceeds from either of the above events are received and are  sufficient to pay
the premium. Due to the contingent nature of the premium payment, the associated
premium  expense  will only be recorded  after the  occurrence  of a  triggering
event.  At March 31,  2000,  the  prepayment  premium  that  would be due upon a
triggering event is $6.8 million.

         In conjunction with the Enterworks private placement offering (Note 2),
the  Company   retired  approximately  $1.0  million of Series B Notes, and $4.8
million of  Series C Notes in  exchange for  shares of Enterworks' common  stock
owned by  the Company  at an  exchange ratio  of one share of Enterworks' common
stock  for  each  $1.00  principal  amount of notes payable. In  addition to the
retirement of  these  notes,   accrued  interest of  approximately $300,000  was
forgiven and the  holders  of these notes waived their rights to the  prepayment
premium associated with these notes.

         The  balances of the Series B and Series C Notes were $5.5  million and
  $3.0 million, respectively, at March 31, 2000 and December 31, 1999.
<PAGE>
                       TELOS CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                   (UNAUDITED)

NOTE 5.       PREFERRED STOCK

SENIOR REDEEMABLE PREFERRED STOCK

         The components of the senior redeemable  preferred stock are Series A-1
and Series A-2, each with $.01 par value and 1,250 and 1,750 shares  authorized,
issued  and  outstanding,  respectively.  The  Series A-1 and Series A-2 carry a
cumulative  per annum  dividend  rate of 14.125% of their  liquidation  value of
$1,000  per  share.  The  dividends  are  payable  semi-annually  on June 30 and
December 31 of each year. The  liquidation  preference of the preferred stock is
the face amount of the Series A-1 and A-2 Stock  ($1,000  per  share),  plus all
accrued  and unpaid  dividends.  The  Company is  required  to redeem all of the
outstanding  shares of the stock on  December  31,  2001,  subject  to the legal
availability  of funds.  Mandatory  redemptions  are  required  from excess cash
flows,  as defined in the stock  agreements.  The Series A-1 and A-2  redeemable
preferred stock is senior to all other present and future equity of the Company.
The  Series  A-1 is senior to the  Series  A-2.  The  Company  has not  declared
dividends on its senior redeemable preferred stock since its issuance.  At March
31, 2000 and December 31, 1999 undeclared,  unpaid dividends  relating to Series
A-1 and A-2  redeemable  preferred  stock  totaled  $3,160,000  and  $3,054,000,
respectively.

12% CUMULATIVE EXCHANGEABLE REDEEMABLE PREFERRED STOCK

         A maximum of 6,000,000 shares of 12% Cumulative Exchangeable Redeemable
Preferred Stock (the "Public  Preferred  Stock"),  par value $.01 per share, has
been authorized for issuance.  The Company  initially issued 2,858,723 shares of
12% Cumulative  Exchangeable  Redeemable  Preferred Stock (the "Public Preferred
Stock")  pursuant to the acquisition of the Company during fiscal year 1990. The
Public Preferred Stock was recorded at fair value on the date of original issue,
November  21,  1989,  and the Company is making  periodic  accretions  under the
interest  method of the excess of the redemption  value over the recorded value.
Accretion  for the three months ended March 31, 2000 was  $385,000.  The Company
declared stock dividends totaling 736,863 shares in 1990 and 1991.

         In November  1998,  the Company  retired  410,000  shares of the Public
Preferred Stock held by certain shareholders.  The Company repurchased the stock
at $4.00 per share. The carrying value of these shares was determined to be $3.8
million,  and the $2.2 million excess of the carrying  amount of these shares of
Public Preferred Stock over the redemption price of $1.6 million was recorded as
an increase in capital in excess of par; there was no impact on income from this
transaction.

         The Public Preferred Stock has a 20 year maturity; however, the Company
must redeem, out of funds legally  available,  20% of the Public Preferred Stock
on the 16th, 17th, 18th and 19th anniversaries of November 21, 1989, leaving 20%
to be redeemed at  maturity.  On any dividend  payment  date after  November 21,
1991, the Company may exchange the Public  Preferred Stock, in whole or in part,
for  12%  Junior   Subordinated   Debentures  that  are  redeemable  upon  terms
substantially  similar to the Public  Preferred  Stock and  subordinated  to all
indebtedness for borrowed money and like obligations of the Company.

         The Public Preferred Stock accrues a semi-annual  dividend at an annual
rate of 12% ($1.20) per share,  based on the  liquidation  preference of $10 per
share, and is fully  cumulative.  Through November 21, 1995, the Company had the
option to pay dividends in additional shares of Preferred Stock in lieu of cash.
Dividends in additional shares of the Preferred Stock are paid at the rate of 6%
of a share of the  Preferred  Stock for each $.60 of such  dividends not paid in
cash.  Dividends  are payable by the  Company,  provided the Company has legally
available  funds  under  Maryland  law,  when and if  declared  by the  Board of
Directors,  commencing June 1, 1990, and on each six month anniversary  thereof.
For the years 1992 through 1994 and for the dividend  payable June 1, 1995,  the
Company has accrued  undeclared  dividends  in  additional  shares of  preferred
stock. These accrued dividends are valued at $3,950,000. Had the Company accrued
such  dividends  on a cash  basis,  the total  amount  accrued  would  have been
$15,101,000.  For the cash dividends payable since December 1, 1995, the Company
has accrued $18,677,000.

         The  Company  has not  declared or paid  dividends  since 1991,  due to
restrictions  and  ambiguities  relating to the payment of  dividends  contained
within its charter,  its working capital facility agreement,  and under Maryland
law.
<PAGE>
                       TELOS CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                   (UNAUDITED)

NOTE 6.  REPORTABLE BUSINESS SEGMENTS

         The Company  adopted SFAS No. 131,  "Disclosures  About  Segments of an
Enterprise and Related  Information",  in 1998 which changes the way the Company
reports information about its operating segments.

         At March 31, 2000, the Company has two reportable segments: Systems and
Support  Services and Products.  The Company  evaluates the  performance  of its
operating  segments  based on revenue,  gross profit and income before  goodwill
amortization, income taxes, non-recurring items and interest income or expense.

         Summarized  financial  information  concerning the Company's reportable
segments  for the three  months  ended  March 31,  2000 and 1999 is shown in the
following   table.  The  "other"  column  includes   corporate   related  items.
Enterworks,  Inc.  (Note 2) was disclosed as a segment in 1999 filed reports and
therefore it is still identified as a segment in the 1999 captions below.
<TABLE>
<CAPTION>

                                 Systems and
                                 Support Services      Products        Enterworks        Other            Total

       MARCH 31, 2000
<S>                                <C>                 <C>            <C>              <C>              <C>
External Revenues                  $ 19,161            $ 12,933       $      --        $     --         $ 32,094
Intersegment Revenues              $     --            $     --       $      --        $     --         $     --
Gross Profit                       $  2,704            $  1,297       $      --        $     --         $  4,001
Segment profit (loss)              $     44            $   (253)      $      --        $     --         $   (209)
Total assets                       $ 15,139            $ 18,940       $      --        $ 23,928         $ 58,007
Capital Expenditures               $    192            $      2       $      --        $    198         $    392
Depreciation & Amortization        $    131            $     69       $      --        $    304         $    504

       MARCH 31, 1999

External Revenues                  $ 21,932            $ 16,699       $      --        $     --         $ 38,631
Intersegment Revenues              $    151            $     --       $      --        $     --         $    151
Gross Profit                       $  3,637            $    818       $      --        $     --         $  4,455
Segment profit (loss)              $   (649)           $    723       $      --        $     --         $     74
Total assets                       $ 43,281            $  3,647       $   5,595        $ 18,517         $ 71,040
Capital Expenditures               $     34            $      6       $     302        $     40         $    382
Depreciation & Amortization        $    235            $     65       $     529        $    330         $  1,159
</TABLE>

         The  Company  does not have  material  international  revenues,  profit
(loss),  assets  or  capital   expenditures.   The  Company's  business  is  not
concentrated in a specific geographical area within the United States, as it has
12 separate facilities located in 4 states and Europe and Asia.


<PAGE>




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

GENERAL

         Sales for the first three months of 2000 were $32.1 million, a decrease
of $6.5 million or 16.9% as compared to the same 1999 period.  This decrease was
primarily  attributable  to a $2.8 million  decline in sales from the  Company's
Systems  and  Support  Services  Group,  which was  impacted  by the sale of the
Company's field engineering division ("TFE") in September 1999. The decrease was
also  attributable  to a decline in the  Company's  Product  Group sales of $3.7
million  which  was  primarily  due to the  protracted  start up  period  of its
Infrastructure  Solutions  1  contract  which  was the  follow-on  to the  Small
Multi-user Computer II ("SMCII") contract which expired in April 1999.

     Operating losses through the first three months of 2000 were  approximately
$298,000  as  compared  to an  operating  loss of  $58,000  during the same 1999
period.  Operating  profitability  declined  principally  because of the reduced
sales volume discussed above.

         Total backlog from existing contracts was approximately  $229.2 million
and $242.2 million as of March 31, 2000 and December 31, 1999, respectively.  As
of March 31, 2000, the funded backlog of the Company  totaled $56.8 million,  an
increase of $12.1  million from  December 31, 1999.  Funded  backlog  represents
aggregate  contract  revenues  remaining  to be earned by the Company at a given
time, but only to the extent, in the case of government  contracts,  funded by a
procuring government agency and allotted to the contracts.

RESULTS OF OPERATIONS

         The condensed consolidated statements of operations include the results
of operations of Telos Corporation and its wholly owned subsidiaries.  The major
elements of the  Company's  operating  expenses as a percentage of sales for the
three-month periods ended March 31, 2000 and 1999 were as follows:

<TABLE>
<CAPTION>
                                                                 Three Months Ended
                                                                      March 31,
                                                            -------------------------
                                                              2000              1999
                                                              ----              ----
<S>                                                         <C>                <C>
Sales                                                       100.0%             100.0%
Cost of sales                                               (87.5)             (88.5)
SG&A expenses                                               (13.1)             (11.3)
Goodwill amortization                                        (0.3)              (0.3)
                                                             -----             ------
Operating loss                                               (0.9)              (0.1)
Equity in net losses of Enterworks                              --             (10.4)
Other income                                                    --                --
Interest expense                                             (3.5)              (4.0)
                                                             -----             ------
Loss before taxes                                            (4.4)             (14.5)
Income tax benefit (provision)                                1.5                3.8
                                                             ----             ------
Net loss                                                     (2.9)%            (10.7)%
                                                             ======             ====

</TABLE>

<PAGE>


FINANCIAL DATA BY MARKET SEGMENT

         Sales,  gross profit,  and gross margin by market segment for the first
quarter of 2000 and 1999 were as follows:
<TABLE>
<CAPTION>

                                                                            Three Months Ended
                                                                                 MARCH 31,
                                                                            ------------------
                                                                         2000                   1999
                                                                         ----                   ----

                                                                          (amounts in thousands)
<S>                                                                    <C>                     <C>
Sales:
     Systems and Support Services                                      $19,161                 $21,932
     Products                                                           12,933                  16,699
                                                                        ------                  ------
         Total                                                         $32,094                 $38,631
                                                                        ======                  ======

Gross Profit:
     Systems and Support Services                                      $ 2,704                 $ 3,637
     Products                                                            1,297                     818
                                                                         -----                     ---
         Total                                                         $ 4,001                 $ 4,455
                                                                         =====                   =====
Gross Margin:
     Systems and Support Services                                         14.1%                   16.6%
     Products                                                             10.0%                    4.9%
         Total                                                            12.5%                   11.5%
</TABLE>

         For the  three-month  period ended March 31, 2000,  sales  decreased by
$6.5 million,  or 16.9%,  to $32.1 million from $38.6 million for the comparable
1999 period. Of the $6.5 million decrease,  $2.8 million was attributable to the
Systems  and  Support  Services  Group.  The Group's  comparable  revenues  were
impacted by the sale of the  Company's  field  engineering  division  ("TFE") in
September  1999. The TFE division  generated  sales of $8.3 million in the first
quarter of 1999.  The decrease in the Group's  revenue was  partially  offset by
increases in the Company's Ft.  Monmouth and Ft. Sill contracts and increases in
the  Company's  information  security and  advanced  messaging  businesses.  The
overall  decline in sales was also  attributable  to a decrease in the Company's
Product  Group Sales of $3.7 million  primarily due to the  protracted  start up
period of its Infrastructure Solutions 1 Contract.

         Cost of sales was 87.5% of sales the three-month period ended March 31,
2000, as compared to 88.5% in the comparable  1999 period.  The decrease in cost
of sales as a percentage  of sales  primarily  resulted from the increase of the
Company's new business area's portion of total Company sales.  The Company's new
businesses,  such as information security,  wireless,  enterprise management and
advanced messaging, have higher margin sales than all other groups.

         Gross profit decreased by  approximately  $500,000 in the first quarter
of 2000 to $4.0  million from $4.5  million in the  comparable  1999 period as a
result of the decline in sales discussed above. Total Company gross margins were
12.5% and 11.5%  for the  three-month  periods  ended  March 31,  2000 and 1999,
respectively.

         Selling, general and administrative costs decreased for the three-month
period by  approximately  $200,000 to $4.2  million in 2000 from $4.4 million in
1999.  This decrease is primarily due to the sale of TFE in September  1999. The
Company no longer funds the general and administrative effort for that division.
SG&A as a percentage of sales were 13.1% and 11.3% for the  three-month  periods
ended March 31, 2000 and 1999, respectively.

         Goodwill  amortization  expense was $89,000 for the three  months ended
March 31,  2000  compared  to $132,000  for the period  ended  March  1999.  The
decrease  in  goodwill  amortization  was a  result  of the  goodwill  write-off
associated with the sale of TFE.

         Operating  profitability  declined by $240,000  during the three months
ended March 31, 2000 to  approximately  $298,000 in operating  loss. The Company
had an operating loss of $58,000 in the comparable  period of 1999. The decrease
in operating profit resulted primarily from the aforementioned decline in sales.

     Interest expense decreased by approximately $400,000 to $1.1 million during
the three-month period ended March 31, 2000, from $1.5 million in the comparable
period of 1999. The decrease was attributable to decreased debt levels in 2000.
<PAGE>

     The  Company  recorded a tax  benefit of  approximately  $500,000  and $1.5
million for the three-month periods ended March 31, 2000 and 1999, respectively,
principally  due  to the  net  operating  loss  carryforwards  generated  by the
Company.


LIQUIDITY AND CAPITAL RESOURCES

         For the three  months  ended  March 31,  2000,  the  Company  used $6.4
million of cash in its  operating  activities.  This cash was used to reduce the
Company's  accounts  payable balance of $5.7 million and fund losses incurred in
operations. Cash used in investing activities was $392,000. Cash was provided by
financing  activities  during the quarter under  borrowings  under the Company's
credit facility of $6.7 million.

     At March  31,  2000,  the  Company  had  outstanding  debt  and  long  term
obligations  of $43.0  million,  consisting  of $23.2  million under the secured
senior credit facility,  $8.5 million in subordinated debt, and $11.3 million in
capital lease obligations. The Company believes it will generate enough funds in
the  ordinary  course of  business  during  the next  twelve  months to fund its
operations and service its debt and capital lease obligations.

         At March 31,  2000,  the  Company had an  outstanding  balance of $23.2
million on its $35 million Senior Credit Facility (the "Facility"). The Facility
matures on July 1, 2001 and is  collateralized  by a majority  of the  Company's
assets   (including   inventory,   accounts   receivable  and  Telos'  stock  in
Enterworks).  The amount of borrowings  fluctuates based on the underlying asset
borrowing base as well as the Company's working capital  requirements.  At March
31, 2000,  the Company,  under its borrowing  base formula,  had $1.4 million of
unused  availability.  The Facility has various  covenants that may, among other
things,  restrict the ability of the Company to merge with another entity,  sell
or transfer certain assets,  pay dividends and make other  distributions  beyond
certain  limitations.  The  Facility  also  requires the Company to meet certain
leverage,  net worth,  interest coverage and operating goals. At March 31, 2000,
the  Company was not in  compliance  with  several  covenants  contained  in the
Facility; however, the bank has waived this non-compliance.

NEW ACCOUNTING PRONOUNCEMENTS

     In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 133, "Accounting or Derivative Instruments and Hedging Activities." SFAS 133
establishes  accounting  and  reporting  standards for  derivative  instruments,
including derivative  instruments  embedded in other contracts,  and for hedging
activities.  SFAS 133,  as  amended  by SFAS  137,  "Accounting  for  Derivative
Instruments  and Hedging  Activities  - Deferral of the  effective  date of FASB
Statement No. 133, an amendment of FASB Statement No. 133", is effective for all
quarters of the Company's year ending  December 31, 2001. The Company  currently
does not engage or plan to engage in the use of derivative instruments, and does
not expect SFAS 133 to have a material impact on the results of operations.

     In December  1999,  the  Securities  and Exchange  Commission  issued Staff
Accounting  Bulletin 101 "Revenue  Recognition  in Financial  Statements"  ("SAB
101") to provide guidance regarding the recognition, presentation and disclosure
of  revenue  in the  financial  statements.  The  Company  expects  to adopt the
provisions of SAB 101 (as amended by SAB 101A which deferred the  implementation
date by one  quarter)  on April 1,  2000.  Management  does not  anticipate  the
adoption of SAB 101 to have a material  impact on its results of  operations  or
financial condition.

     In April 2000, the FASB issued FASB  Interpretation  No. 44 "Accounting for
Certain Transactions Involving Stock Compensation; Interpretation of APB Opinion
No.25" ("FIN 44"). The Company is evaluating the provisions of FIN 44.

FORWARD-LOOKING STATEMENTS

         This Quarterly Report on Form 10-Q contains forward-looking statements.
For this purpose,  any  statements  contained  herein that are not statements of
historical fact may be deemed to be forward-looking statements. Without limiting
the  foregoing,  the words  "believes,"  "anticipates,"  "plans,"  "expects" and
similar expressions are intended to identify forward-looking  statements.  There
are a number of important  factors that could cause the Company's actual results
to differ  materially from those indicated by such  forward-looking  statements.
These  factors  include,  without  limitation,  those set forth  below under the
caption "Certain Factors That May Affect Future Results."

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

         The  following  important  factors,  among  others,  could cause actual
results to differ materially from those indicated by forward-looking  statements
made in this Quarterly Report on Form 10-Q and presented elsewhere by management
from time to time.

         A number of uncertainties  exist that could affect the Company's future
operating results, including,  without limitation,  general economic conditions,
the timing and approval of the federal government's fiscal year budget, business
growth through obtaining new business and, once obtained,  the Company's ability
to successfully  perform at a profit,  the Company's ability to convert contract
backlog to  revenue,  the  Company's  ability  to secure  adequate  capital  and
financing  to support  continued  business  growth,  and the risk of the Federal
government  terminating  contracts  with the Company.  While the Company has not
experienced  contract  terminations  with the  Federal  government,  the Federal
government can terminate at its  convenience.  Should this occur,  the Company's
operating results could be adversely impacted.

         As a high percentage of the Company's  revenue is derived from business
with the federal government,  the Company's operating results could be adversely
impacted  should the Federal  government  not approve and  implement  its annual
budget in a timely fashion.
<PAGE>

  ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The  Company's  exposure to market  risk for changes in interest  rates
  relates primarily to the Company's long-term debt obligations.

         The Company is exposed to interest rate  volatility  with regard to its
  variable rate debt obligations under its Senior Credit Facility. This facility
  bears interest at 1.00%, subject to certain adjustments,  over the bank's base
  rate.  The weighted  average  interest  rate in 1999 was 9.89%.  This facility
  expires on July 1, 2001 and has an  outstanding  balance  of $23.2  million at
  March 31, 2000.

         The Company's other long-term debt at March 31, 2000 consists of Senior
  Subordinated Notes B and C which bear interest at fixed rates ranging from 14%
  to 17%. The Senior  Subordinated Notes mature as to principal in the aggregate
  amount of $8,537,000  on April 1, 2001.  The Company has no cash flow exposure
  due to rate changes for its Senior Subordinated Notes.


<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         The Company is party to various lawsuits arising in the ordinary course
of  business.  In the opinion of  management,  while the  results of  litigation
cannot be predicted with  certainty,  the final outcome of such matters will not
have a material adverse effect on the Company's consolidated financial position,
results of operations, or of cash flows.

ITEM 3.       DEFAULTS UPON SENIOR SECURITIES

SENIOR PREFERRED STOCK

         The  Company  has  not  declared  dividends  on its  Senior  Redeemable
Preferred Stock, Series A-1 and A-2, since its issuance. Total undeclared unpaid
dividends,  accrued for financial  reporting  purposes,  are  $3,160,000 for the
Series A-1, A-2 Preferred stock at March 31, 2000.

12% CUMULATIVE EXCHANGEABLE REDEEMABLE PREFERRED STOCK

         Through  November 21, 1995, the Company had the option to pay dividends
in additional shares of Preferred Stock in lieu of cash, (provided there were no
blocks on payment as further  discussed  below).  Dividends  are  payable by the
Company, provided the Company has legally available funds under Maryland law and
is able to pay dividends under its charter and other corporate  documents,  when
and if declared by the Board of Directors,  commencing June 1, 1990, and on each
six month anniversary  thereof.  Dividends in additional shares of the Preferred
Stock were paid at the rate of 6% of a share for each $.60 of such dividends not
paid in cash.  Cumulative  undeclared dividends as of March 31, 2000 accrued for
financial reporting purposes totaled $2.6 million.  Dividends for the years 1992
through  1994 and for the dividend  payable June 1, 1995 were accrued  under the
assumption  that the  dividend  will be paid in  additional  shares of preferred
stock and are valued at $3,950,000. Had the Company accrued these dividends on a
cash basis, the total amount accrued would have been  $15,101,000.  For the cash
dividends payable since December 1, 1995, the Company has accrued $18,677,000.

         The  Company  has not  declared or paid  dividends  since 1991,  due to
restrictions  and  ambiguities  relating to the payment of  dividends  contained
within its charter,  its working capital facility agreement,  and under Maryland
law.

ITEM 6.       EXHIBITS AND REPORTS ON FORM 8-K

        (a)   Exhibits:

                  27       Financial Data Schedule

        (b)   Reports on Form 8-K: Report on Form 8-K  filed  January  18,  2000
                                   concerning   the   deconsolidation   of   the
                                   Company's Enterworks subsidiary.


        Items 2, 4, and 5 are not applicable and have been omitted.


<PAGE>



                                   SIGNATURES

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

DATE:      MAY 15, 2000                                        TELOS CORPORATION


                                                          /S/  THOMAS J. FERRARA
                                                          ----------------------
                                                               Thomas J. Ferrara
                                                   (Principal Financial Officer)