Maryland
|
52-0880974
|
(State or other jurisdiction of
incorporation or organization
|
(I.R.S. Employer Identification No.)
|
19886 Ashburn Road, Ashburn, Virginia
|
20147
|
(Address of principal executive offices)
|
(Zip Code)
|
|
||
Page
|
||
PART I
|
||
Item 1.
|
3
|
|
Item 1A.
|
8
|
|
Item 1B.
|
11
|
|
Item 2.
|
11
|
|
Item 3.
|
12
|
|
Item 4.
|
12
|
|
PART II
|
||
Item 5.
|
12
|
|
Item 6.
|
12
|
|
Item 7.
|
13
|
|
Item 7A.
|
24
|
|
Item 8.
|
25
|
|
Item 9.
|
56
|
|
Item 9A
|
56
|
|
Item 9B.
|
57
|
|
PART III
|
||
Item 10.
|
58
|
|
Item 11.
|
58
|
|
Item 12.
|
58
|
|
Item 13.
|
58
|
|
Item 14.
|
58
|
|
PART IV
|
||
Item 15.
|
59
|
|
62
|
●
|
Cyber Operations and Defense:
|
o
|
Cyber Security – Solutions and services that assure the security of our customers' information, systems, and networks, including the Xacta IA Manager suite for IT governance, risk management, and compliance. Our information and cyber security consulting services include security assessments, digital forensics, and continuous compliance monitoring.
|
o
|
Secure Mobility – Design, engineering and delivery of secure solutions that empower the mobile and deployed workforce in business and government. Our solutions protect sensitive communication while delivering voice, data, and video at the point of work in classified and unclassified environments.
|
●
|
Identity Management – Solutions that establish trusted identities in order to ensure authenticated physical access to offices, workstations, and other facilities; secure digital access to databases, host systems, and other IT resources; and to protect people and organizations against insider threats.
|
●
|
IT and Enterprise Solutions – We have the experience with solution development and global integration to meet the requirements of business and government enterprises with secure IT solutions, from organizational messaging and data visualization to network construction and management.
|
● | Techniques: We employ development and production methodologies such as Agile and ISO 9001 to ensure predictability, repeatability, and quality. Techniques such as continuous integration are employed to accelerate the solution development and testing process while at the same time reducing cost and improving quality. We believe such techniques are critical for providing our customers with a high quality user experience. |
● | Architecture: The nature of our customers' missions requires our solutions to be highly secure and scalable. Aside from architecting our solutions with these core objectives in mind, we also employ open standards and technologies that afford a high degree of flexibility and interoperability needed to support web-based and netcentric operations. |
2015
|
2014
|
2013
|
||||||||||||||||||||||
(dollar amounts in thousands)
|
||||||||||||||||||||||||
Federal
|
$
|
117,328
|
97.3
|
%
|
$
|
122,549
|
96.1
|
%
|
$
|
203,917
|
98.3
|
%
|
||||||||||||
State & Local, and Commercial
|
3,306
|
2.7
|
%
|
5,013
|
3.9
|
%
|
3,477
|
1.7
|
%
|
|||||||||||||||
Total
|
$
|
120,634
|
100.0
|
%
|
$
|
127,562
|
100.0
|
%
|
$
|
207,394
|
100.0
|
%
|
· | impose specific and unique cost accounting practices that may differ from U.S. generally accepted accounting principles (GAAP) and therefore require reconciliation; |
· | restrict the use and dissemination of information classified for national security purposes and the export of certain products and technical data. |
●
|
we may expend substantial funds and time to prepare bids and proposals for contracts that may ultimately be awarded to one of our competitors;
|
●
|
we may be unable to accurately estimate the resources and costs that will be required to perform any contract we are awarded, which could result in substantial cost overruns;
|
●
|
we may encounter expense and delay if our competitors protest or challenge awards of contracts, and any such protest or challenge could result in a requirement to resubmit bids on modified specifications or in the termination, reduction or modification of the awarded contract. Additionally, the protest of contracts awarded to us may result in the delay of program performance and the generation of revenue while the protest is pending; and
|
●
|
if we are not given the opportunity to re-compete for U.S. government contracts previously awarded to us, we may incur expenses to protect such decision and ultimately may not succeed in competing for or winning such contract renewal.
|
●
|
diversion of management attention from running our existing business;
|
●
|
possible material weaknesses in internal control over financial reporting;
|
●
|
increased expenses including legal, administrative and compensation expenses related to newly hired or terminated employees;
|
●
|
increased costs to integrate the technology, personnel, customer base and business practices of the acquired company with us;
|
●
|
potential exposure to material liabilities not discovered in the due diligence process;
|
●
|
potential adverse effects on reported operating results due to possible write-down of goodwill and other intangible assets associated with acquisitions; and
|
●
|
unavailability of acquisition financing or unavailability of such financing on reasonable terms.
|
Years Ended December 31,
|
||||||||||||||||||||
2015
|
2014
|
2013
|
2012
|
2011
|
||||||||||||||||
(amounts in thousands)
|
||||||||||||||||||||
Sales
|
$
|
120,634
|
$
|
127,562
|
$
|
207,394
|
$
|
226,096
|
$
|
189,888
|
||||||||||
Operating (loss) income
|
(3,617
|
)
|
(11,644
|
)
|
6,111
|
17,700
|
12,687
|
|||||||||||||
(Loss) income before income taxes
|
(9,237
|
)
|
(16,600
|
)
|
867
|
16,725
|
6,741
|
|||||||||||||
Net (loss) income attributable to Telos Corporation
|
(15,940
|
)
|
(12,288
|
)
|
(2,618
|
)
|
7,435
|
1,454
|
As of December 31,
|
||||||||||||||||||||
2015
|
2014
|
2013
|
2012
|
2011
|
||||||||||||||||
(amounts in thousands)
|
||||||||||||||||||||
Total assets
|
$
|
59,964
|
$
|
73,820
|
$
|
88,609
|
$
|
79,156
|
$
|
89,837
|
||||||||||
Senior credit facility, long-term (1)
|
7,144
|
8,590
|
19,141
|
18,559
|
17,501
|
|||||||||||||||
Subordinated debt (1)
|
2,500
|
----
|
----
|
----
|
----
|
|||||||||||||||
Note payable (1)
|
----
|
----
|
----
|
----
|
12,056
|
|||||||||||||||
Capital lease obligations, long-term (2)
|
19,908
|
20,735
|
14,901
|
3,803
|
4,948
|
|||||||||||||||
Deferred income taxes, long-term (3)
|
3,199
|
----
|
----
|
----
|
----
|
|||||||||||||||
Senior redeemable preferred stock (4)
|
2,025
|
1,958
|
1,891
|
4,010
|
8,227
|
|||||||||||||||
Public preferred stock (4)
|
123,919
|
120,097
|
116,274
|
112,451
|
108,628
|
(1)
|
See Note 6 to the Consolidated Financial Statements in Item 8 regarding our debt obligations.
|
(2)
|
See Note 10 to the Consolidated Financial Statements in Item 8 regarding our capital lease obligations.
|
(3)
|
See Note 9 to the Consolidated Financial Statements in Item 8 regarding our income taxes.
|
(4)
|
See Note 7 to the Consolidated Financial Statements in Item 8 regarding our redeemable preferred stock.
|
●
|
Cyber Operations and Defense:
|
o
|
Cyber Security – Solutions and services that assure the security of our customers' information, systems, and networks, including the Xacta IA Manager suite for IT governance, risk management, and compliance. Our information and cyber security consulting services include security assessments, digital forensics, and continuous compliance monitoring.
|
o
|
Secure Mobility – Design, engineering and delivery of secure solutions that empower the mobile and deployed workforce in business and government. Our solutions protect sensitive communication while delivering voice, data, and video at the point of work in classified and unclassified environments.
|
●
|
Identity Management – Solutions that establish trusted identities in order to ensure authenticated physical access to offices, workstations, and other facilities; secure digital access to databases, host systems, and other IT resources; and protect people and organizations against insider threats.
|
●
|
IT and Enterprise Solutions – We have the experience with solution development and global integration to meet the requirements of business and government enterprises with secure IT solutions, from organizational messaging and data visualization to network construction and management.
|
Years Ended December 31,
|
||||||||||||||||||||||||
2015
|
2014
|
2013
|
||||||||||||||||||||||
(dollar amounts in thousands)
|
||||||||||||||||||||||||
Revenue
|
$
|
120,634
|
100.0
|
%
|
$
|
127,562
|
100.0
|
%
|
$
|
207,394
|
100.0
|
%
|
||||||||||||
Cost of sales
|
89,961
|
74.6
|
102,609
|
80.4
|
168,794
|
81.4
|
||||||||||||||||||
Selling, general and administrative expenses
|
34,290
|
28.4
|
36,597
|
28.7
|
32,489
|
15.7
|
||||||||||||||||||
Operating (loss) income
|
(3,617
|
)
|
(3.0
|
)
|
(11,644
|
)
|
(9.1
|
)
|
6,111
|
2.9
|
||||||||||||||
Other income (expenses):
|
||||||||||||||||||||||||
Non-operating income
|
19
|
----
|
414
|
0.3
|
239
|
0.1
|
||||||||||||||||||
Interest expense
|
(5,639
|
)
|
(4.6
|
)
|
(5,370
|
)
|
(4.2
|
)
|
(5,483
|
)
|
(2.6
|
)
|
||||||||||||
(Loss) income before income taxes
|
(9,237
|
)
|
(7.6
|
)
|
(16,600
|
)
|
(13.0
|
)
|
867
|
0.4
|
||||||||||||||
(Provision) benefit for income taxes
|
(4,265
|
)
|
(3.5
|
)
|
5,988
|
4.7
|
(1,678
|
)
|
(0.8
|
)
|
||||||||||||||
Net loss
|
(13,502
|
)
|
(11.1
|
)
|
(10,612
|
)
|
(8.3
|
)
|
(811
|
)
|
(0.4
|
)
|
||||||||||||
Less: Net income attributable to non-controlling interest
|
(2,438
|
)
|
(2.0
|
)
|
(1,676
|
)
|
(1.3
|
)
|
(1,807
|
)
|
(0.9
|
)
|
||||||||||||
Net loss attributable to Telos Corporation
|
$
|
(15,940
|
)
|
(13.1
|
)%
|
$
|
(12,288
|
)
|
(9.6
|
)%
|
$
|
(2,618
|
)
|
(1.3
|
)%
|
December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
(amounts in thousands)
|
||||||||||||
Commercial and subordinated note interest incurred
|
$
|
1,750
|
$
|
1,481
|
$
|
1,557
|
||||||
Preferred stock interest accrued
|
3,889
|
3,889
|
3,926
|
|||||||||
Total
|
$
|
5,639
|
$
|
5,370
|
$
|
5,483
|
Payments due by Period
|
||||||||||||||||||||
Total
|
2016
|
2017 - 2019
|
2020 - 2022
|
2023 and later
|
||||||||||||||||
Capital lease obligations (1)
|
$
|
29,105
|
$
|
1,854
|
$
|
5,842
|
$
|
6,291
|
$
|
15,118
|
||||||||||
Senior revolving credit facility (2)
|
8,544
|
1,400
|
7,144
|
----
|
----
|
|||||||||||||||
Subordinated debt
|
2,500
|
----
|
2,500
|
----
|
----
|
|||||||||||||||
Operating lease obligations
|
2,722
|
531
|
909
|
927
|
355
|
|||||||||||||||
$
|
42,871
|
$
|
3,785
|
$
|
16,395
|
$
|
7,218
|
$
|
15,473
|
|||||||||||
Senior preferred stock (3)
|
$
|
2,025
|
||||||||||||||||||
Public preferred stock (4)
|
123,919
|
|||||||||||||||||||
$
|
125,944
|
|||||||||||||||||||
Total
|
$
|
168,815
|
||||||||||||||||||
(1) Includes interest expense:
|
$
|
8,369
|
$
|
1,027
|
$
|
2,798
|
$
|
2,268
|
$
|
2,276
|
Page
|
|
Report of Independent Registered Public Accounting Firm
|
26
|
Consolidated Statements of Operations for the Years Ended December 31, 2015, 2014 and 2013
|
27
|
Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2015, 2014 and 2013
|
28
|
Consolidated Balance Sheets as of December 31, 2015 and 2014
|
29 - 30
|
Consolidated Statements of Cash Flows for the Years Ended December 31, 2015, 2014, and 2013
|
31 - 32
|
Consolidated Statements of Changes in Stockholders' Deficit for the Years Ended December 31, 2015, 2014, and 2013
|
33
|
Notes to Consolidated Financial Statements
|
34 – 55
|
Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Revenue (Note 5)
|
||||||||||||
Services
|
$
|
97,659
|
$
|
103,071
|
$
|
143,489
|
||||||
Products
|
22,975
|
24,491
|
63,905
|
|||||||||
120,634
|
127,562
|
207,394
|
||||||||||
Costs and expenses
|
||||||||||||
Cost of sales – Services
|
73,079
|
82,481
|
109,676
|
|||||||||
Cost of sales – Products
|
16,882
|
20,128
|
59,118
|
|||||||||
89,961
|
102,609
|
168,794
|
||||||||||
Selling, general and administrative expenses
|
34,290
|
36,597
|
32,489
|
|||||||||
Operating (loss) income
|
(3,617
|
)
|
(11,644
|
)
|
6,111
|
|||||||
Other income (expenses)
|
||||||||||||
Non-operating income
|
19
|
414
|
239
|
|||||||||
Interest expense
|
(5,639
|
)
|
(5,370
|
)
|
(5,483
|
)
|
||||||
(Loss) income before income taxes
|
(9,237
|
)
|
(16,600
|
)
|
867
|
|||||||
(Provision) benefit for income taxes (Note 9)
|
(4,265
|
)
|
5,988
|
(1,678
|
)
|
|||||||
Net loss
|
(13,502
|
)
|
(10,612
|
)
|
(811
|
)
|
||||||
Less: Net income attributable to non-controlling interest (Note 2)
|
(2,438
|
)
|
(1,676
|
)
|
(1,807
|
)
|
||||||
Net loss attributable to Telos Corporation
|
$
|
(15,940
|
)
|
$
|
(12,288
|
)
|
$
|
(2,618
|
)
|
Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Net loss
|
$
|
(13,502
|
)
|
$
|
(10,612
|
)
|
$
|
(811
|
)
|
|||
Other comprehensive loss:
|
||||||||||||
Foreign currency translation adjustments
|
(6
|
)
|
(3
|
)
|
(24
|
)
|
||||||
Actuarial loss on pension liability adjustments, net of tax
|
(2
|
)
|
--
|
--
|
||||||||
Total other comprehensive loss, net of tax
|
(8
|
)
|
(3
|
)
|
(24
|
)
|
||||||
Comprehensive income attributable to non-controlling interest
|
(2,438
|
)
|
(1,676
|
)
|
(1,807
|
)
|
||||||
Comprehensive loss attributable to Telos Corporation
|
$
|
(15,948
|
)
|
$
|
(12,291
|
)
|
$
|
(2,642
|
)
|
December 31,
|
||||||||
2015
|
2014
|
|||||||
Current assets (Note 6)
|
||||||||
Cash and cash equivalents
|
$
|
58
|
$
|
32
|
||||
Accounts receivable, net of reserve of $485 and $372, respectively (Note 5)
|
19,045
|
22,522
|
||||||
Inventories, net of obsolescence reserve of $1,457 and $1,366, respectively
|
2,901
|
3,345
|
||||||
Deferred program expenses
|
734
|
1,391
|
||||||
Other current assets
|
3,105
|
6,144
|
||||||
Total current assets
|
25,843
|
33,434
|
||||||
Property and equipment (Note 6)
|
||||||||
Furniture and equipment
|
7,381
|
11,623
|
||||||
Leasehold improvements
|
2,418
|
2,431
|
||||||
Property and equipment under capital leases
|
30,829
|
30,849
|
||||||
40,628
|
44,903
|
|||||||
Accumulated depreciation and amortization
|
(23,366
|
)
|
(25,990
|
)
|
||||
17,262
|
18,913
|
|||||||
Deferred income taxes - long-term (Note 9)
|
-
|
1,914
|
||||||
Goodwill (Note 3)
|
14,916
|
14,916
|
||||||
Other intangible assets (Note 3)
|
1,129
|
3,386
|
||||||
Other assets (Note 6)
|
814
|
1,257
|
||||||
Total assets
|
$
|
59,964
|
$
|
73,820
|
December 31,
|
||||||||
2015
|
2014
|
|||||||
Current liabilities
|
||||||||
Accounts payable and other accrued payables (Note 6)
|
$
|
12,678
|
$
|
17,816
|
||||
Accrued compensation and benefits
|
4,755
|
4,203
|
||||||
Deferred revenue
|
3,466
|
3,344
|
||||||
Senior credit facility – short-term (Note 6)
|
1,400
|
2,300
|
||||||
Capital lease obligations – short-term (Note 10)
|
827
|
772
|
||||||
Other current liabilities
|
1,644
|
1,774
|
||||||
Total current liabilities
|
24,770
|
30,209
|
||||||
Senior revolving credit facility (Note 6)
|
7,144
|
8,590
|
||||||
Subordinated debt (Note 6)
|
2,500
|
--
|
||||||
Capital lease obligations (Note 10)
|
19,908
|
20,735
|
||||||
Deferred income taxes (Note 9)
|
3,199
|
--
|
||||||
Senior redeemable preferred stock (Note 7)
|
2,025
|
1,958
|
||||||
Public preferred stock (Note 7)
|
123,919
|
120,097
|
||||||
Other liabilities
|
882
|
717
|
||||||
Total liabilities
|
184,347
|
182,306
|
||||||
Commitments, contingencies and subsequent events (Notes 10 and 13)
|
||||||||
Stockholders' deficit (Note 8)
|
||||||||
Telos stockholders' deficit
|
||||||||
Class A common stock, no par value, 50,000,000 shares authorized, 40,238,461 shares issued and outstanding
|
65
|
65
|
||||||
Class B common stock, no par value, 5,000,000 shares authorized, 4,037,628 shares issued and outstanding
|
13
|
13
|
||||||
Additional paid-in capital
|
3,229
|
3,229
|
||||||
Accumulated other comprehensive income
|
37
|
45
|
||||||
Accumulated deficit
|
(128,362
|
)
|
(112,422
|
)
|
||||
Total Telos stockholders' deficit
|
(125,018
|
)
|
(109,070
|
)
|
||||
Non-controlling interest in subsidiary (Note 2)
|
635
|
584
|
||||||
Total stockholders' deficit
|
(124,383
|
)
|
(108,486
|
)
|
||||
Total liabilities, redeemable preferred stock, and stockholders' deficit
|
$
|
59,964
|
$
|
73,820
|
Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Operating activities:
|
||||||||||||
Net loss
|
$
|
(13,502
|
)
|
$
|
(10,612
|
)
|
$
|
(811
|
)
|
|||
Adjustments to reconcile net loss to cash provided by operating activities:
|
||||||||||||
Gain on redemption of senior preferred stock
|
--
|
--
|
(222
|
)
|
||||||||
Stock-based compensation
|
--
|
12
|
43
|
|||||||||
Dividends of preferred stock as interest expense
|
3,889
|
3,890
|
3,926
|
|||||||||
Depreciation and amortization
|
4,291
|
4,251
|
3,817
|
|||||||||
Provision for inventory obsolescence
|
92
|
1,359
|
1
|
|||||||||
Provision for doubtful accounts receivable
|
113
|
51
|
2
|
|||||||||
Amortization of debt issuance costs
|
152
|
36
|
71
|
|||||||||
Deferred income tax provision (benefit)
|
5,113
|
(4,035
|
)
|
195
|
||||||||
Loss on disposal of fixed asssets
|
11
|
56
|
-
|
|||||||||
Changes in assets and liabilities:
|
||||||||||||
Decrease (increase) in accounts receivable
|
3,364
|
23,059
|
(11,755
|
)
|
||||||||
Decrease in inventories
|
352
|
181
|
5,391
|
|||||||||
Decrease (increase) in deferred program expenses
|
657
|
(815
|
)
|
4,705
|
||||||||
Decrease (increase) in other current assets and other assets
|
1,330
|
(3,192
|
)
|
259
|
||||||||
(Decrease) increase in accounts payable and other accrued payables
|
(3,840
|
)
|
(6,490
|
)
|
390
|
|||||||
Increase (decrease) in accrued compensation and benefits
|
552
|
(1,738
|
)
|
976
|
||||||||
Increase (decrease) in deferred revenue
|
122
|
576
|
(3,327
|
)
|
||||||||
Increase (decrease) in other current liabilities and other liabilities
|
27
|
(405
|
)
|
1,149
|
||||||||
Cash provided by operating activities
|
2,723
|
6,184
|
4,810
|
|||||||||
Investing activities:
|
||||||||||||
Purchases of property and equipment
|
(394
|
)
|
(665
|
)
|
(539
|
)
|
||||||
Cash used in investing activities
|
(394
|
)
|
(665
|
)
|
(539
|
)
|
||||||
Financing activities:
|
||||||||||||
Proceeds from senior credit facility
|
139,072
|
163,112
|
244,746
|
|||||||||
Repayments of senior credit facility
|
(139,118
|
)
|
(171,363
|
)
|
(243,476
|
)
|
||||||
Repayments of term loan
|
(2,300
|
)
|
(688
|
)
|
(375
|
)
|
||||||
(Decrease) increase in book overdrafts
|
(1,298
|
)
|
1,016
|
(238
|
)
|
|||||||
Proceeds from subordinated debt
|
2,500
|
--
|
--
|
|||||||||
Proceeds from assignment of purchase option under lease
|
--
|
1,669
|
--
|
|||||||||
Payments under capital lease obligations
|
(772
|
)
|
(779
|
)
|
(1,242
|
)
|
||||||
Redemption of senior preferred stock
|
--
|
--
|
(2,000
|
)
|
||||||||
Proceeds from sale of Telos ID 10% membership interest
|
2,000
|
3,000
|
--
|
|||||||||
Distributions to Telos ID Class B member – non-controlling interest
|
(2,387
|
)
|
(1,548
|
)
|
(1,821
|
)
|
||||||
Cash used in financing activities
|
(2,303
|
)
|
(5,581
|
)
|
(4,406
|
)
|
||||||
Increase (decrease) in cash and cash equivalents
|
26
|
(62
|
)
|
(135
|
)
|
|||||||
Cash and cash equivalents, beginning of the year
|
32
|
94
|
229
|
|||||||||
Cash and cash equivalents, end of year
|
$
|
58
|
$
|
32
|
$
|
94
|
Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Supplemental disclosures of cash flow information:
|
||||||||||||
Cash paid during the year for:
|
||||||||||||
Interest
|
$
|
1,523
|
$
|
1,497
|
$
|
1,533
|
||||||
Income taxes
|
$
|
65
|
$
|
879
|
$
|
849
|
||||||
Noncash:
|
||||||||||||
Interest on redeemable preferred stock
|
$
|
3,889
|
$
|
3,890
|
$
|
3,926
|
||||||
Financing of capital leases
|
$
|
--
|
$
|
5,680
|
$
|
11,712
|
||||||
Receivable from sale of Telos ID 10% membership interest
|
$
|
--
|
$
|
2,000
|
$
|
--
|
Telos Corporation
|
||||||||||||||||||||||||||||
Class A
Common
Stock
|
Class B
Common
Stock
|
Additional
Paid–in Capital
|
Accumulated
Other Comprehen-sive Income
|
Accumulated
Deficit
|
Non-Controlling Interest
|
Total
Stockholders'
Deficit
|
||||||||||||||||||||||
Balance December 31, 2012
|
$
|
65
|
$
|
13
|
$
|
103
|
$
|
72
|
$
|
(97,516
|
)
|
$
|
468
|
$
|
(96,795
|
)
|
||||||||||||
Net (loss) income for the year
|
--
|
--
|
--
|
--
|
(2,618
|
)
|
1,807
|
(811
|
)
|
|||||||||||||||||||
Foreign currency translation loss
|
--
|
--
|
--
|
(24
|
)
|
--
|
--
|
(24
|
)
|
|||||||||||||||||||
Stock-based compensation
|
--
|
--
|
43
|
--
|
--
|
--
|
43
|
|||||||||||||||||||||
Distributions
|
--
|
--
|
--
|
--
|
--
|
(1,821
|
)
|
(1,821
|
)
|
|||||||||||||||||||
Balance December 31, 2013
|
$
|
65
|
$
|
13
|
$
|
146
|
$
|
48
|
$
|
(100,134
|
)
|
$
|
454
|
$
|
(99,408
|
)
|
||||||||||||
Net (loss) income for the year
|
--
|
--
|
--
|
--
|
(12,288
|
)
|
1,676
|
(10,612
|
)
|
|||||||||||||||||||
Sale of Telos ID membership interest
|
--
|
--
|
3,071
|
--
|
--
|
2
|
3,073
|
|||||||||||||||||||||
Foreign currency translation loss
|
--
|
--
|
--
|
(3
|
)
|
--
|
--
|
(3
|
)
|
|||||||||||||||||||
Stock-based compensation
|
--
|
--
|
12
|
--
|
--
|
--
|
12
|
|||||||||||||||||||||
Distributions
|
--
|
--
|
--
|
--
|
--
|
(1,548
|
)
|
(1,548
|
)
|
|||||||||||||||||||
Balance December 31, 2014
|
$
|
65
|
$
|
13
|
$
|
3,229
|
$
|
45
|
$
|
(112,422
|
)
|
$
|
584
|
$
|
(108,486
|
)
|
||||||||||||
Net (loss) income for the year
|
--
|
--
|
--
|
--
|
(15,940
|
)
|
2,438
|
(13,502
|
)
|
|||||||||||||||||||
Foreign currency translation loss
|
--
|
--
|
--
|
(6
|
)
|
--
|
--
|
(6
|
)
|
|||||||||||||||||||
Pension liability adjustments
|
--
|
--
|
--
|
(2
|
)
|
--
|
--
|
(2
|
)
|
|||||||||||||||||||
Distributions
|
--
|
--
|
--
|
--
|
--
|
(2,387
|
)
|
(2,387
|
)
|
|||||||||||||||||||
Balance December 31, 2015
|
$
|
65
|
$
|
13
|
$
|
3,229
|
$
|
37
|
$
|
(128,362
|
)
|
$
|
635
|
$
|
(124,383
|
)
|
Balance
Beginning of
Year
|
Additions Charge to Costs and Expense
|
Recoveries
|
Balance
End of
Year
|
|||||||||||||
Year Ended December 31, 2015
|
$
|
1,366
|
$
|
92
|
$
|
(1
|
)
|
$
|
1,457
|
|||||||
Year Ended December 31, 2014
|
$
|
417
|
$
|
1,359
|
$
|
(410
|
)
|
$
|
1,366
|
|||||||
Year Ended December 31, 2013
|
$
|
416
|
$
|
1
|
$
|
--
|
$
|
417
|
Buildings
|
20 Years
|
Machinery and equipment
|
3-5 Years
|
Office furniture and fixtures
|
5 Years
|
Leasehold improvements
|
Lesser of life of lease or useful life of asset
|
●
|
Upon the occurrence of a change in control of the Class A member (as defined in the Operating Agreement, a "Change in Control"), the Class A member has the option to purchase the entire membership interest of the Class B member.
|
●
|
Upon the occurrence of the following events: (i) the involuntary termination of John B. Wood as CEO and chairman of the Class A member; (ii) the bankruptcy of the Class A member; or (iii) unless the Class A member exercises its option to acquire the entire membership interest of the Class B member upon a Change in Control of the Class A member, the transfer or issuance of more than fifty-one percent (51%) of the outstanding voting securities of the Class A member to a third party, the Class B member has the option to purchase the membership interest of the Class A member; provided, however, that in the event that the Class B member exercises the foregoing option, the Class A Member may then choose to purchase the entire interest of the Class B member.
|
●
|
In the event that more than fifty percent (50%) of the ownership interests in the Class B member are transferred to persons or individuals (other than members of the immediate family of the initial owners of the Class B member) without the consent of Telos ID, the Class A member has the option to purchase the entire membership interest of the Class B member.
|
●
|
The Class B member has the option to sell its interest to the Class A member at any time if there is not a letter of intent to sell Telos ID, a binding contract to sell all of the assets or membership interests in Telos ID, or a standstill for due diligence with respect to a sale of Telos ID. Notwithstanding the foregoing, the Class A member will not be obligated to purchase the interest of the Class B member if that purchase would constitute a violation of the Facility or if a Default or Event of Default (as each is defined in the Facility) would occur immediately after giving effect to that purchase and the Agent refuses to consent to that purchase or to waive such violation, Default, or Event of Default.
|
2015
|
2014
|
2013
|
||||||||||
Non-controlling interest, beginning of period
|
584
|
$
|
454
|
$
|
468
|
|||||||
Net income
|
2,438
|
1,676
|
1,807
|
|||||||||
Distributions
|
(2,387
|
)
|
(1,548
|
)
|
(1,821
|
)
|
||||||
Purchase of 10% membership interest
|
--
|
2
|
--
|
|||||||||
Non-controlling interest, end of period
|
$
|
635
|
$
|
584
|
$
|
454
|
December 31, 2015
|
December 31, 2014
|
|||||||||||||||
Cost
|
Accumulated Amortization
|
Cost
|
Accumulated Amortization
|
|||||||||||||
Other intangible assets
|
$
|
11,286
|
$
|
10,157
|
$
|
11,286
|
$
|
7,900
|
||||||||
$
|
11,286
|
$
|
10,157
|
$
|
11,286
|
$
|
7,900
|
December 31,
|
||||||||
2015
|
2014
|
|||||||
Billed accounts receivable
|
$
|
15,340
|
$
|
15,447
|
||||
Unbilled receivables
|
4,190
|
7,447
|
||||||
Allowance for doubtful accounts
|
(485
|
)
|
(372
|
)
|
||||
$
|
19,045
|
$
|
22,522
|
Balance Beginning
of Year
|
Bad Debt
Expenses (1)
|
Recoveries (2)
|
Balance
End
of Year
|
|||||||||||||
Year Ended December 31, 2015
|
$
|
372
|
$
|
113
|
$
|
--
|
$
|
485
|
||||||||
Year Ended December 31, 2014
|
$
|
321
|
$
|
51
|
$
|
--
|
$
|
372
|
||||||||
Year Ended December 31, 2013
|
$
|
319
|
$
|
2
|
$
|
--
|
$
|
321
|
2015
|
2014
|
2013
|
||||||||||||||||||||||
(dollar amounts in thousands)
|
||||||||||||||||||||||||
Federal
|
$
|
117,328
|
97.3
|
%
|
$
|
122,549
|
96.1
|
%
|
$
|
203,917
|
98.3
|
%
|
||||||||||||
State & Local, and Commercial
|
3,306
|
2.7
|
%
|
5,013
|
3.9
|
%
|
3,477
|
1.7
|
%
|
|||||||||||||||
Total
|
$
|
120,634
|
100.0
|
%
|
$
|
127,562
|
100.0
|
%
|
$
|
207,394
|
100.0
|
%
|
2016
|
2017
|
Total
|
||||||||||
Short-term:
|
||||||||||||
Term loan
|
$
|
1,400
|
$
|
--
|
$
|
1,400
|
1
|
|||||
Long-term:
|
||||||||||||
Term loan
|
$
|
--
|
$
|
1,800
|
$
|
1,800
|
1
|
|||||
Revolving credit
|
--
|
5,344
|
5,344
|
2
|
||||||||
Subtotal
|
$
|
--
|
$
|
7,144
|
$
|
7,144
|
||||||
Total
|
$
|
1,400
|
$
|
7,144
|
$
|
8,544
|
1 | The principal will be repaid in quarterly installments of $350,000, with a final installment of the unpaid principal amount payable on January 1, 2017. |
2 | Balance due represents balance as of December 31, 2015, with fluctuating balances based on working capital requirements of the Company. |
Number of Shares
(000's)
|
Weighted Average
Exercise Price
|
|||||||
2014 Stock Option Activity
|
||||||||
Outstanding at beginning of year
|
20
|
$
|
0.62
|
|||||
Granted
|
--
|
--
|
||||||
Exercised
|
(20
|
)
|
0.62
|
|||||
Canceled
|
--
|
--
|
||||||
Outstanding at end of year
|
--
|
--
|
||||||
Exercisable at end of year
|
--
|
--
|
||||||
2013 Stock Option Activity
|
||||||||
Outstanding at beginning of year
|
20
|
$
|
0.62
|
|||||
Granted
|
--
|
--
|
||||||
Exercised
|
--
|
--
|
||||||
Canceled
|
--
|
--
|
||||||
Outstanding at end of year
|
20
|
$
|
0.62
|
|||||
Exercisable at end of year
|
20
|
$
|
0.62
|
|||||
For the Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Current (benefit) provision
|
||||||||||||
Federal
|
$
|
(902
|
)
|
$
|
(1,759
|
)
|
$
|
1,219
|
||||
State
|
54
|
(194
|
)
|
264
|
||||||||
Total current
|
(848
|
)
|
(1,953
|
)
|
1,483
|
|||||||
Deferred provision (benefit)
|
||||||||||||
Federal
|
4,333
|
(3,820
|
)
|
133
|
||||||||
State
|
780
|
(215
|
)
|
62
|
||||||||
Total deferred
|
5,113
|
(4,035
|
)
|
195
|
||||||||
Total provision (benefit)
|
$
|
4,265
|
$
|
(5,988
|
)
|
$
|
1,678
|
For the Years Ended December 31,
|
|||||
2015
|
2014
|
2013
|
|||
Computed expected income tax provision
|
34.0%
|
35.0%
|
35.0%
|
||
State income taxes, net of federal income tax benefit
|
2.1
|
2.5
|
(17.3)
|
||
Change in valuation allowance for deferred tax assets
|
(61.3)
|
0.1
|
(0.3)
|
||
Cumulative deferred adjustments
|
(0.1)
|
(0.3)
|
(16.9)
|
||
Provision to return adjustments
|
1.3
|
1.1
|
(11.5)
|
||
Other permanent differences
|
(1.1)
|
(0.5)
|
(15.4)
|
||
Dividend and accretion on preferred stock
|
(11.3)
|
(7.5)
|
(146.0)
|
||
FIN 48 liability
|
(0.8)
|
(0.6)
|
(5.9)
|
||
R&D credit
|
1.6
|
3.0
|
--
|
||
Other
|
(0.9)
|
--
|
--
|
||
(36.5)%
|
32.8%
|
(178.3)%
|
December 31,
|
||||||||
2015
|
2014
|
|||||||
Deferred tax assets:
|
||||||||
Accounts receivable, principally due to allowance for doubtful accounts
|
$
|
176
|
$
|
137
|
||||
Allowance for inventory obsolescence and amortization
|
623
|
694
|
||||||
Accrued liabilities not currently deductible
|
2,218
|
2,196
|
||||||
Accrued compensation
|
840
|
535
|
||||||
Deferred rent
|
8,008
|
8,512
|
||||||
Net operating loss carryforwards - federal
|
524
|
--
|
||||||
Net operating loss carryforwards - state
|
344
|
180
|
||||||
R&D credit
|
202
|
--
|
||||||
Total gross deferred tax assets
|
12,935
|
12,254
|
||||||
Less valuation allowance
|
(9,027
|
)
|
(1,868
|
)
|
||||
Total deferred tax assets, net of valuation allowance
|
3,908
|
10,386
|
||||||
Deferred tax liabilities:
|
||||||||
Amortization and depreciation
|
(3,307
|
)
|
(4,650
|
)
|
||||
Unbilled accounts receivable, deferred for tax purposes
|
(589
|
)
|
(756
|
)
|
||||
Goodwill basis adjustment and amortization
|
(3,199
|
)
|
(3,021
|
)
|
||||
Telos ID basis difference
|
(12
|
)
|
(45
|
)
|
||||
Total deferred tax liabilities
|
(7,107
|
)
|
(8,472
|
)
|
||||
Net deferred tax (liabilities) assets
|
$
|
(3,199
|
)
|
$
|
1,914
|
Balance Beginning of Period
|
Additions
|
Recoveries
|
Balance End
of Period
|
|||||||||||||
December 31, 2015
|
$
|
1,868
|
$
|
7,159
|
$
|
--
|
$
|
9,027
|
||||||||
December 31, 2014
|
$
|
1,901
|
$
|
--
|
$
|
(33
|
)
|
$
|
1,868
|
|||||||
December 31, 2013
|
$
|
2,084
|
$
|
--
|
$
|
(183
|
)
|
$
|
1,901
|
2015
|
2014
|
2013
|
||||||||||
Unrecognized tax benefits, beginning of period
|
$
|
708
|
$
|
607
|
$
|
534
|
||||||
Gross increases—tax positions in prior period
|
92
|
105
|
55
|
|||||||||
Gross increases—tax positions in current period
|
38
|
47
|
18
|
|||||||||
Settlements
|
(35
|
)
|
(51
|
)
|
--
|
|||||||
Unrecognized tax benefits, end of period
|
$
|
803
|
$
|
708
|
$
|
607
|
Property
|
Equipment
|
Total
|
||||||||||
2016
|
$
|
1,853
|
1
|
1,854
|
||||||||
2017
|
1,899
|
1
|
1,900
|
|||||||||
2018
|
1,947
|
--
|
1,947
|
|||||||||
2019
|
1,995
|
--
|
1,995
|
|||||||||
2020
|
2,045
|
--
|
2,045
|
|||||||||
Remainder
|
19,364
|
--
|
19,364
|
|||||||||
Total minimum obligations
|
29,103
|
2
|
29,105
|
|||||||||
Less amounts representing interest (ranging from 5.0% to 18.8%)
|
(8,370
|
)
|
--
|
(8,370
|
)
|
|||||||
Net present value of minimum obligations
|
20,733
|
2
|
20,735
|
|||||||||
Less current portion
|
(826
|
)
|
(1
|
)
|
(827
|
)
|
||||||
Long-term capital lease obligations at December 31, 2015
|
$
|
19,907
|
$
|
1
|
$
|
19,908
|
2016
|
$
|
531
|
||
2017
|
319
|
|||
2018
|
298
|
|||
2019
|
292
|
|||
2020
|
300
|
|||
Remainder
|
982
|
|||
Total minimum lease payments
|
$
|
2,722
|
Balance
Beginning
of Year
|
Accruals
|
Warranty
Expenses
|
Balance
End
of Year
|
|||||||||||||
(amount in thousands)
|
||||||||||||||||
Year Ended December 31, 2015
|
$
|
189
|
$
|
125
|
$
|
(181
|
)
|
$
|
133
|
|||||||
Year Ended December 31, 2014
|
$
|
113
|
$
|
140
|
$
|
(64
|
)
|
$
|
189
|
|||||||
Year Ended December 31, 2013
|
$
|
226
|
$
|
70
|
$
|
(183
|
)
|
$
|
113
|
Quarters Ended
|
||||||||||||||||
March 31
|
June 30
|
Sept. 30
|
Dec. 31
|
|||||||||||||
2015
|
||||||||||||||||
Revenue
|
$
|
28,019
|
$
|
32,028
|
$
|
33,662
|
$
|
26,925
|
||||||||
Gross profit
|
6,778
|
7,170
|
8,674
|
8,051
|
||||||||||||
Loss before income taxes and non-controlling interest
|
(3,030
|
)
|
(2,564
|
)
|
(959
|
)
|
(2,684
|
)
|
||||||||
Net loss attributable to Telos Corporation (1)(2)
|
(2,746
|
)
|
(2,408
|
)
|
(1,406
|
)
|
(9,380
|
)
|
||||||||
2014
|
||||||||||||||||
Revenue
|
$
|
30,144
|
$
|
29,009
|
$
|
38,507
|
$
|
29,902
|
||||||||
Gross profit
|
6,442
|
5,396
|
7,504
|
5,611
|
||||||||||||
Loss before income taxes and non-controlling interest
|
(4,786
|
)
|
(5,384
|
)
|
(3,611
|
)
|
(2,819
|
)
|
||||||||
Net loss attributable to Telos Corporation (1)
|
(5,559
|
)
|
(4,346
|
)
|
(774
|
)
|
(1,609
|
)
|
(1)
|
Changes in net income are the result of several factors, including seasonality of the government year-end buying season, as well as the nature and timing of other deliverables.
|
(2)
|
A full valuation allowance was recorded against the Company's deferred tax assets in the fourth quarter of 2015.
|
Exhibit Number
|
Description
|
3.1
|
Articles of Amendment and Restatement of C3, Inc. (Incorporated by reference to the Company's Registration Statement No. 2-84171 filed June 2, 1983)
|
3.2
|
Articles of Amendment of C3, Inc. dated August 31, 1981 (Incorporated by reference to the Company's Registration Statement No. 2-84171 filed June 2, 1983)
|
3.3
|
Articles supplementary of C3, Inc. dated May 31, 1984 (Incorporated by reference to the Company's Form 10-K report for the fiscal year ended March 31, 1987)
|
3.4
|
Articles of Amendment of C3, Inc. dated August 18, 1988 (Incorporated by reference to the Company's Form 10-K report for the fiscal year ended March 31, 1989)
|
3.5
|
Articles of Amendment and Restatement Supplementary to the Articles of Incorporation dated August 3, 1990. (Incorporated by reference to C3, Inc. 10-Q for the quarter ended June 30, 1990)
|
3.6
|
Articles of Amendment of C3, Inc. dated April 13, 1995 (Incorporated by reference to Exhibit 3.7 filed with the Company's Form 10-K report for the year ended December 31, 1995)
|
3.7
|
Amended and Restated Bylaws of the Company, as amended on October 3, 2007 (Incorporated by reference to Exhibit 3.1 to the Company's Form 8-K filed on October 5, 2007)
|
10.1*
|
1996 Stock Option Plan (Incorporated by reference to Exhibit 10.74 filed with the Company's Form 10-Q report for the quarter ended March 31, 1996)
|
10.2*
|
Telos Corporation 2008 Omnibus Long-Term Incentive Plan (Incorporated by reference to Exhibit 10.21 filed with the Company's Form 10-K report for the year ended December 31, 2007)
|
10.3
|
Preferred Stockholders Standby Agreement between Wells Fargo Foothill, Inc. and North Atlantic Smaller Companies Investment Trust PLC, dated April 14, 2008 (Incorporated by reference to Exhibit 10.15 filed with the Company's Form 10-K report for the year ended December 31, 2008)
|
10.4
|
Series A-1 and Series A-2 Redeemable Preferred Stock Extension of Redemption Date – North Atlantic Smaller Companies Investment Trust PLC, dated April 6, 2008 (Incorporated by reference to Exhibit 10.17 filed with the Company's Form 10-K report for the year ended December 31, 2008)
|
10.5
|
Second Amended and Restated Loan and Security Agreement between the Company and Wells Fargo Capital Finance, Inc. dated May 17, 2010 (Incorporated by reference to Exhibit 99.1 filed with the Company's Form 8-K report on May 21, 2010)
|
10.6
|
Preferred Stockholders Standby Agreement between Wells Fargo Foothill, Inc. and Toxford Corporation, dated May 17, 2010 (Incorporated by reference to Exhibit 99.2 filed with the Company's Form 8- K report on May 21, 2010)
|
10.7
|
First Amendment of Second Amended and Restated Loan and Security Agreement between the Company and Wells Fargo Capital Finance, Inc. dated September 27, 2010 (Incorporated by reference to Exhibit 10.28 filed with the Company's Form 10-Q report for the quarter ended September 30, 2010)
|
10.8
|
Second Amendment to Second Amended and Restated Loan and Security Agreement between the Company and Wells Fargo Capital Finance, Inc. dated May 11, 2012 (Incorporated by reference to Exhibit 10 filed with the Company's Form 10-Q report for the quarter ended June 30, 2012)
|
10.9*
|
Second Amended Employment Agreement, dated as of November 12, 2012, between the Company and John B. Wood (Incorporated by reference to Exhibit 10.1 filed with the Company's Form 10-Q report for the quarter ended September 30, 2012)
|
10.10*
|
Second Amended Employment Agreement, dated as of November 12, 2012, between the Company and Edward L. Williams (Incorporated by reference to Exhibit 10.2 filed with the Company's Form 10-Q report for the quarter ended September 30, 2012)
|
10.11*
|
Second Amended Employment Agreement, dated as of November 12, 2012, between the Company and Michele Nakazawa (Incorporated by reference to Exhibit 10.3 filed with the Company's Form 10-Q report for the quarter ended September 30, 2012)
|
10.12*
|
Amendment to Employment Agreement, dated as of November 12, 2012, between the Company and Brendan D. Malloy (Incorporated by reference to Exhibit 10.4 filed with the Company's Form 10-Q report for the quarter ended September 30, 2012)
|
10.13*
|
Form of Employment Agreement between the Company and six of its executive officers (Incorporated by reference to Exhibit 10.5 filed with the Company's Form 10-Q report for the quarter ended September 30, 2012)
|
10.14*
|
Telos Corporation 2013 Omnibus Long-Term Incentive Plan (Incorporated by reference to Appendix A filed with the Company's Definitive Proxy Statement on Schedule 14A on April 16, 2013)
|
10.15*
|
Form Restricted Stock Agreement (Incorporated by reference to Exhibit 99.2 filed with the Company's Current Report on Form 8-K on May 15, 2013)
|
10.16
|
Third Amendment to Second Amended and Restated Loan and Security Agreement and First Amendment to Amended and Restated General Continuing Guaranty between the Company and Wells Fargo Capital Finance, LLC dated June 11, 2013 (Incorporated by reference to Exhibit 10.3 filed with the Company's Form 10-Q report for the quarter ended June 30, 2013)
|
10.17
|
Fourth Amendment to Second Amended and Restated Loan and Security Agreement between the Company and Wells Fargo Capital Finance, LLC dated July 31, 2013 (Incorporated by reference to Exhibit 99.1 filed with the Company's Current Report on Form 8-K on August 6, 2013)
|
10.18*
|
Telos Corporation Senior Officer Incentive Program (Incorporated by reference to Exhibit 10.27 filed with the Company's Form 10-K report for the year ended December 31, 2013)
|
10.19
|
Waiver and Fifth Amendment to Second Amended and Restated Loan and Security Agreement between the Company and Wells Fargo Capital Finance, Inc. dated March 27, 2014 (Incorporated by reference to Exhibit 10.28 filed with the Company's Form 10-K report for the year ended December 31, 2013)
|
10.20*
|
Employment Agreement, dated as of January 4th, between the Company and Jefferson V. Wright (Incorporated by reference to Exhibit 10.29 filed with the Company's Form 10-K report for the year ended December 31, 2013)
|
10.21
|
Sixth Amendment to Second Amended and Restated Loan and Security Agreement between the Company and Wells Fargo Capital Finance, LLC dated May 13, 2014 (Incorporated by reference to Exhibit 10.1 filed with the Company's Form 10-Q report for the quarter ended March 31, 2014)
|
10.22
|
Seventh Amendment to Second Amended and Restated Loan and Security Agreement between the Company and Wells Fargo Capital Finance, LLC dated June 26, 2014 (Incorporated by reference to Exhibit 10.1 filed with the Company's Form 10-Q report for the quarter ended June 30, 2014)
|
10.23
|
Eighth Amendment to Second Amended and Restated Loan and Security Agreement between the Company and Wells Fargo Capital Finance, LLC dated November 13, 2014 (Incorporated by reference to Exhibit 10.1 filed with the Company's Form 10-Q report for the quarter ended September 30, 2014)
|
10.24
|
Membership Interest Purchase Agreement, dated as of December 24, 2014, by and among Telos Corporation and Hoya ID Fund A, LLC (Incorporated by reference to Exhibit 99.1 filed with the Company's Current Report on Form 8-K on December 31, 2014)
|
10.25
|
Second Amended and Restated Operating Agreement of Telos Identity Management Solutions , LLC, dated December 24, 2014 (Incorporated by reference to Exhibit 99.2 filed with the Company's Current Report on Form 8-K on December 31, 2014)
|
10.26
|
Consent and Ninth Amendment to Second Amended and Restated Loan and Security Agreement, by and among Telos Corporation, XACTA Corporation, UBIQUITY.COM, Inc., Teloworks, Inc. and Wells Fargo Capital Finance, LLC, dated December 24, 2014 (Incorporated by reference to Exhibit 99.3 filed with the Company's Current Report on Form 8-K on December 31, 2014)
|
10.27
|
Tenth Amendment to Second Amended and Restated Loan and Security Agreement between the Company and Wells Fargo Capital Finance, LLC dated February 27, 2015 (Incorporated by reference to Exhibit 10.34 filed with the Company's Form 10-K/A report for the year ended December 31, 2014)
|
10.28
|
Eleventh Amendment to Second Amended and Restated Loan and Security Agreement between the Company and Wells Fargo Capital Finance, LLC dated March 19, 2015 (Incorporated by reference to Exhibit 10.35 filed with the Company's Form 10-K/A report for the year ended December 31, 2014)
|
10.29
|
Waiver and Twelfth Amendment to Second Amended and Restated Loan and Security Agreement between the Company and Wells Fargo Capital Finance, LLC dated March 31, 2015 (Incorporated by reference to Exhibit 10.36 filed with the Company's Form 10-K/A report for the year ended December 31, 2014)
|
10.30
|
Subordinated Loan Agreement between the Company and Porter Foundation Switzerland dated March 31, 2015 (Incorporated by reference to Exhibit 10.37 filed with the Company's Form 10-K/A report for the year ended December 31, 2014)
|
10.31
|
Subordinated Promissory Note between the Company and Porter Foundation Switzerland dated March 31, 2015 (Incorporated by reference to Exhibit 10.38 filed with the Company's Form 10-K/A report for the year ended December 31, 2014)
|
10.32
|
Subordinated Loan Agreement between the Company and JP Charitable Foundation Switzerland dated March 31, 2015 (Incorporated by reference to Exhibit 10.39 filed with the Company's Form 10-K/A report for the year ended December 31, 2014)
|
10.33
|
Subordinated Promissory Note between the Company and JP Charitable Foundation Switzerland dated March 31, 2015 (Incorporated by reference to Exhibit 10.40 filed with the Company's Form 10-K/A report for the year ended December 31, 2014)
|
10.34
|
Subordination and Intercreditor Agreement by and among the Company, Porter Foundation Switzerland, and Wells Fargo Capital Finance, LLC dated March 31, 2015 (Incorporated by reference to Exhibit 10.41 filed with the Company's Form 10-K/A report for the year ended December 31, 2014)
|
10.35
|
Subordination and Intercreditor Agreement by and among the Company, JP Charitable Foundation Switzerland, and Wells Fargo Capital Finance, LLC dated March 31, 2015 (Incorporated by reference to Exhibit 10.42 filed with the Company's Form 10-K/A report for the year ended December 31, 2014)
|
10.36+
|
Thirteenth Amendment to Second Amended and Restated Loan and Security Agreement between the Company and Wells Fargo Capital Finance, LLC dated April 23, 2015
|
10.37
|
Fourteenth Amendment to Second Amended and Restated Loan and Security Agreement between the Company and Wells Fargo Capital Finance, LLC dated August 12, 2015 (Incorporated by reference to Exhibit 10.1 filed with the Company's Form 10-Q report for the quarter ended June 30, 2015)
|
10.38
|
Fifteenth Amendment to Second Amended and Restated Loan and Security Agreement between the Company and Wells Fargo Capital Finance, LLC dated November 17, 2015 (Incorporated by reference to Exhibit 10.1 filed with the Company's Form 10-Q report for the quarter ended September 30, 2015)
|
10.39+
|
Sixteenth Amendment to Second Amended and Restated Loan and Security Agreement between the Company and Wells Fargo Capital Finance, LLC dated February 19, 2016
|
10.40+
|
Series A-1 and Series A-2 Redeemable Preferred Stock Extension of Redemption Date – Toxford Corporation, dated March 17, 2016
|
10.41+
|
Seventeenth Amendment to Second Amended and Restated Loan and Security Agreement between the Company and Wells Fargo Capital Finance, LLC dated March 30, 2016
|
21+
|
List of subsidiaries of Telos Corporation
|
31.1+
|
Certification pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934.
|
31.2+
|
Certification pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934.
|
32+
|
Certification pursuant to 18 USC Section 1350.
|
101.INS^
|
XBRL Instance Document
|
101.SCH^
|
XBRL Taxonomy Extension Schema
|
101.CAL^
|
XBRL Taxonomy Extension Calculation Linkbase
|
101.DEF^
|
XBRL Taxonomy Extension Definition Linkbase
|
101.LAB^
|
XBRL Taxonomy Extension Label Linkbase
|
101.PRE^
|
XBRL Taxonomy Extension Presentation Linkbase
|
TELOS CORPORATION
|
|||
By:
|
/s/ John B. Wood
|
||
John B. Wood
Chief Executive Officer and Chairman of the Board (Principal Executive Officer)
|
|||
Date:
|
March 30, 2016
|
||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of Telos Corporation and in the capacities and on the dates indicated.
|
|||
Signature
|
Title
|
Date
|
|
/s/ John B. Wood
|
Chief Executive Officer and Chairman of the Board (Principal Executive Officer)
|
March 30, 2016
|
|
John B. Wood
|
|||
/s/ Michele Nakazawa
|
Chief Financial Officer (Principal Financial and Accounting Officer)
|
March 30, 2016
|
|
Michele Nakazawa
|
|||
/s/ Bernard C. Bailey
|
Director
|
March 30, 2016
|
|
Bernard C. Bailey
|
|||
/s/ David Borland
|
Director
|
March 30, 2016
|
|
David Borland
|
|||
Director
|
|||
Seth W. Hamot
|
|||
/s/ Bruce R. Harris
|
Director
|
March 30, 2016
|
|
Bruce R. Harris, Lt. Gen., USA (Ret.)
|
|||
/s/ Charles S. Mahan
|
Director
|
March 30, 2016
|
|
Charles S. Mahan, Jr. Lt. Gen., USA (Ret)
|
|||
/s/ John W. Maluda
|
Director
|
March 30, 2016
|
|
John W. Maluda, Major Gen,, USAF (Ret)
|
|||
/s/ Robert J. Marino
|
Director
|
March 30, 2016
|
|
Robert J. Marino
|
|||
Director
|
|||
Andrew R. Siegel
|
|||
/s/ Jerry O. Tuttle
|
Director
|
March 30, 2016
|
|
Jerry O. Tuttle, Vice Admiral, USN (Ret.)
|
Name of Subsidiary
|
State/Country
of Incorporation
|
|
|
Ubiquity.com, Inc.
|
Delaware
|
Xacta Corporation
|
Delaware
|
Teloworks, Inc.
|
Delaware
|
Telos Identity Management Solutions, LLC (DBA Telos ID)
|
Delaware
|
Teloworks Philippines, Inc.
|
Philippines
|
Date:
March 30, 2016
|
/s/ John B. Wood
|
John B. Wood
|
Chief Executive Officer (Principal Executive Officer)
|
Date:
March 30, 2016
|
/s/ Michele Nakazawa
|
Michele Nakazawa
|
Chief Financial Officer (Principal Financial and Accounting Officer)
|
Date:
March 30, 2016
|
/s/ John B. Wood
|
John B. Wood
|
Chief Executive Officer (Principal Executive Officer)
|
Date:
March 30, 2016
|
/s/ Michele Nakazawa
|
Michele Nakazawa
|
Chief Financial Officer (Principal Financial and Accounting Officer)
|
(i)
|
The execution, delivery and performance by it of this Amendment, the IT Enterprise JV Documents and each of the other agreements, instruments and documents contemplated hereby are within its corporate power, have been duly authorized by all necessary corporate action, have received all necessary governmental approval (if any shall be required), and do not and will not contravene or conflict with any provision of law applicable to it, its articles of incorporation and by‑laws, any order, judgment or decree of any court or governmental agency, or any agreement, instrument or document binding upon it or any of its property;
|
(ii)
|
each of the Loan Agreement and the other Loan Documents, as amended by this Amendment, are the legal, valid and binding obligation of each Company party thereto enforceable against it in accordance with its terms, except as the enforcement thereof may be subject to (A) the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditor's rights generally, and (B) general principles of equity;
|
(iii)
|
the representations and warranties contained in the Loan Agreement and the other Loan Documents are true and accurate as of the date hereof with the same force and effect as if such had been made on and as of the date hereof; and
|
(iv)
|
each Company has performed all of its obligations under the Loan Agreement and the other Loan Documents to be performed by it on or before the date hereof and as of the date hereof, it is in compliance with all applicable terms and provisions of the Loan Agreement and each of the Loan Documents to be observed and performed by it and no Event of Default or Default has occurred.
|
AGENT AND LENDERS:
|
||
WELLS FARGO CAPITAL FINANCE, LLC.
(successor by merger to Wells Fargo Capital Finance, Inc.) as Agent and as a Lender
|
||
By
|
/s/ Jordan E. Hilliard
|
|
Name
|
Jordan E. Hilliard
|
|
Title
|
Vice President
|
|
BORROWERS:
|
||
TELOS CORPORATION
|
||
A Maryland corporation
|
||
By
|
/s/ Jefferson V. Wright
|
|
Title
|
Jefferson V. Wright, EVP, General Counsel
|
|
XACTA CORPORATION
|
||
A Delaware corporation
|
||
By
|
/s/ Jefferson V. Wright
|
|
Title
|
Jefferson V. Wright, EVP, General Counsel
|
|
CREDIT PARTIES:
|
||
UBIQUITY.COM, INC.
|
||
A Delaware corporation
|
||
By
|
/s/ Jefferson V. Wright
|
|
Title
|
Jefferson V. Wright, EVP, General Counsel
|
|
TELOWORKS, INC.
|
||
A Delaware corporation
|
||
By
|
/s/ David Easley
|
|
Title
|
David Easley, President
|
Applicable Amount
|
Applicable Period
|
($2,125,000)
|
For the three month period ending on March 31, 2015
|
($4,059,000)
|
For the six month period ending on June 30, 2015
|
($3,000,000)
|
For the nine month period ending on September 30, 2015
|
($4,300,000)
|
For the twelve month period ending on December 31, 2015
|
$195,000
|
For the twelve month period ending on March 31, 2016
|
$7,092,000 |
For the twelve month period ending on June 30, 2016 and the twelve month period ending on the last day of each fiscal quarter thereafter
|
(i)
|
The execution, delivery and performance by it of this Amendment and each of the other agreements, instruments and documents contemplated hereby are within its corporate power, have been duly authorized by all necessary corporate action, have received all necessary governmental approval (if any shall be required), and do not and will not contravene or conflict with any provision of law applicable to it, its articles of incorporation and by‑laws, any order, judgment or decree of any court or governmental agency, or any agreement, instrument or document binding upon it or any of its property;
|
(ii)
|
each of the Loan Agreement and the other Loan Documents, as amended by this Amendment, are the legal, valid and binding obligation of each Company party thereto enforceable against it in accordance with its terms, except as the enforcement thereof may be subject to (A) the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditor's rights generally, and (B) general principles of equity;
|
(iii)
|
the representations and warranties contained in the Loan Agreement and the other Loan Documents are true and accurate as of the date hereof with the same force and effect as if such had been made on and as of the date hereof; and
|
(iv)
|
each Company has performed all of its obligations under the Loan Agreement and the other Loan Documents to be performed by it on or before the date hereof and as of the date hereof, it is in compliance with all applicable terms and provisions of the Loan Agreement and each of the Loan Documents to be observed and performed by it and no Event of Default or Default has occurred.
|
AGENT AND LENDERS:
|
||
WELLS FARGO CAPITAL FINANCE, LLC.
(successor by merger to Wells Fargo Capital Finance, Inc.) as Agent and as a Lender
|
||
By
|
/s/ Jordan E. Hilliard
|
|
Name
|
Jordan E. Hilliard
|
|
Title
|
Vice President
|
|
BORROWERS:
|
||
TELOS CORPORATION
|
||
A Maryland corporation
|
||
By
|
/s/ John B. Wood
|
|
Title
|
Chairman & CEO
|
|
XACTA CORPORATION
|
||
A Delaware corporation
|
||
By
|
/s/ John B. Wood
|
|
Title
|
Chairman & CEO
|
|
CREDIT PARTIES:
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UBIQUITY.COM, INC.
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A Delaware corporation
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By
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/s/ John B. Wood
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Title
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Chairman & CEO
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TELOWORKS, INC.
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A Delaware corporation
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By
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/s/ David S. Easley
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Title
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President
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TOXFORD CORPORATION
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By:
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/s/Ariane Slinger, Javier Otero,Ariane Slinger, Jacqueline Nabih, Javier Otero
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Signature(s)
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Ariane Slinger, Javier Otero,
S.O. Clover Management Limited (signed by Ariane Slinger, Jacqueline Nabih, Javier Otero, authorized signatories for S.O. Clover Management Limited)
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Name(s)
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Directors
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Title(s)
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TELOS CORPORATION
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By:
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/s/ Jefferson V. Wright
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Name:
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Jefferson V. Wright
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Title:
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EVP & General Counsel
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Applicable Amount
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Applicable Period
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($4,300,000)
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For the twelve month period ending on December 31, 2015
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($3,667,000)
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For the twelve month period ending on March 31, 2016
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($1,780,000)
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For the twelve month period ending on June 30, 2016
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($2,070,000)
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For the twelve month period ending on September 30, 2016
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($4,340,000)
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For the twelve month period ending on December 31, 2016
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(i)
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The execution, delivery and performance by it of this Amendment and each of the other agreements, instruments and documents contemplated hereby are within its corporate power, have been duly authorized by all necessary corporate action, have received all necessary governmental approval (if any shall be required), and do not and will not contravene or conflict with any provision of law applicable to it, its articles of incorporation and by‑laws, any order, judgment or decree of any court or governmental agency, or any agreement, instrument or document binding upon it or any of its property;
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(ii)
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each of the Loan Agreement and the other Loan Documents, as amended by this Amendment, are the legal, valid and binding obligation of each Company party thereto enforceable against it in accordance with its terms, except as the enforcement thereof may be subject to (A) the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditor's rights generally, and (B) general principles of equity;
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(iii)
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the representations and warranties contained in the Loan Agreement and the other Loan Documents are true and accurate as of the date hereof with the same force and effect as if such had been made on and as of the date hereof; and
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(iv)
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each Company has performed all of its obligations under the Loan Agreement and the other Loan Documents to be performed by it on or before the date hereof and as of the date hereof, it is in compliance with all applicable terms and provisions of the Loan Agreement and each of the Loan Documents to be observed and performed by it and no Event of Default or Default has occurred.
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AGENT AND LENDERS:
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WELLS FARGO CAPITAL FINANCE, LLC.
(successor by merger to Wells Fargo Capital Finance, Inc.) as Agent and as a Lender
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By
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/s/ Jordan E. Hilliard
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Name
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Jordan E. Hilliard
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Title
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Vice President
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BORROWERS:
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TELOS CORPORATION
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A Maryland corporation
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By
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/s/ Jefferson V. Wright
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Title
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Jefferson V. Wright, EVP, General Counsel
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XACTA CORPORATION
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A Delaware corporation
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By
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/s/ Jefferson V. Wright
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Title
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Jefferson V. Wright, EVP, General Counsel
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CREDIT PARTIES:
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UBIQUITY.COM, INC.
|
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A Delaware corporation
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By
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/s/ Jefferson V. Wright
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Title
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Jefferson V. Wright, EVP, General Counsel
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TELOWORKS, INC.
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A Delaware corporation
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By
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/s/ David Easley
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Title
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David Easley, President
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Lender
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Revolver Commitment
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Term Loan Commitment*
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Total Commitment
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Wells Fargo Capital Finance, LLC
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$10,000,000
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$2,850,000
1
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$10,000,000
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All Lenders
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$10,000,000
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$2,850,000
1
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$10,000,000
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A.
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Wells Fargo Capital Finance, LLC (successor by merger to Wells Fargo Capital Finance, Inc., formerly known as Wells Fargo Foothill, Inc.) ("WFCF"), individually and as Agent ("Agent")
One Boston Place, 18th Floor Boston, Massachusetts 02108 Telephone: (617) 624-4438 Facsimile: (617) 523-1697 |
B.
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Telos Corporation ("Telos")
Xacta Corporation ("Xacta"; together with Telos, "Borrowers") 19886 Ashburn Road Ashburn, Virginia 20147 |
C.
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Ubiquity.com, Inc. ("Ubiquity")
Teloworks, Inc. ("Teloworks"; together with, Ubiquity, "Credit Parties") 19886 Ashburn Road Ashburn, Virginia 20147 |
A.
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WFCF:
Goldberg Kohn Ltd. 55 East Monroe Street Suite 3300 Chicago, Illinois 60603 Telephone: (312) 201-4000 Facsimile: (312) 332-2196 |
B.
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Borrowers and Credit Parties:
Helen Oh Assistant General Counsel Telos Corporation 19886 Ashburn Road Ashburn, Virginia 20147 Telephone: (703) 726-2270 Facsimile: (703) 724-1468 |
A. | Items pertaining to Borrowers and Credit Parties: |
1.
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Seventeenth Amendment to Second Amended and Restated Loan and Security Agreement
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2.
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Reaffirmation of Loan Documents
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i)
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Amended and Restated Guarantee of Credit Parties
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ii)
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Collateral Assignment of Business Interruption Insurance
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iii)
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Cash Management Agreements
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iv)
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Intercompany Subordination Agreement
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v)
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Telos Trademark Mortgage
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vi)
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Telos Copyright Mortgage
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vii)
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Telos Patent Mortgage
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viii)
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Telos Stock Pledge Agreement
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ix)
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Xacta Trademark Mortgage
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x)
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Ubiquity Stock Pledge Agreement
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3.
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Supplemental Fee Letter
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B. | Items Pertaining to Telos : |
4.
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Secretary's Certificate with respect to resolutions of directors, incumbency of officers, bylaws and certified Articles of Incorporation
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5.
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Certificate of good standing in its jurisdiction of organization
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C. | Items Pertaining to Xacta : |
6.
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Secretary's Certificate with respect to resolutions of directors, incumbency of officers, bylaws and certified Certificate of Incorporation
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7.
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Certificate of good standing in its jurisdiction of organization
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D. | Items Pertaining to Ubiquity : |
8.
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Secretary's Certificate with respect to resolutions of directors, incumbency of officers, bylaws and certified Certificate of Incorporation
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9.
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Certificate of good standing in its jurisdiction of organization
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E. | Items Pertaining to Teloworks : |
10.
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Secretary's Certificate with respect to resolutions of directors, incumbency of officers, bylaws and certified Certificate of Incorporation
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11.
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Certificate of good standing in its jurisdiction of organization
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G. | Other Items : |
12.
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Opinion of counsel to Borrowers and Credit Parties
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13.
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Extensions to standby agreements from holders of 70% of private preferred stock
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