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)
|
Large accelerated filer ◻
|
Accelerated filer ◻
|
Non-accelerated filer ☒
|
Smaller reporting company ◻
|
Emerging growth company ◻
|
|
||
Page
|
||
PART I
|
||
Item 1.
|
3
|
|
Item 1A.
|
9
|
|
Item 1B.
|
16
|
|
Item 2.
|
16
|
|
Item 3.
|
16
|
|
Item 4.
|
16
|
|
PART II
|
||
Item 5.
|
17
|
|
Item 6.
|
17
|
|
Item 7.
|
18
|
|
Item 7A.
|
31
|
|
Item 8.
|
32
|
|
Item 9.
|
68
|
|
Item 9A
|
68
|
|
Item 9B.
|
68
|
|
PART III
|
||
Item 10.
|
69
|
|
Item 11.
|
69
|
|
Item 12.
|
69
|
|
Item 13.
|
69
|
|
Item 14.
|
69
|
|
PART IV
|
||
Item 15.
|
69
|
|
Item 16.
|
71
|
|
72
|
● |
Cybersecurity – Today’s
enterprises need to understand and manage their cyber risk and reduce their cyber attack surfaces. Telos helps our customers assure the ongoing security, integrity, and compliance of their on-premises and cloud-based systems and to reduce
threats and vulnerabilities to foil cyber adversaries before they can attack. Our consultants assess our customers’ security environments and design, engineer, and operate the systems they need to strengthen their cybersecurity posture.
|
● |
Cloud Security – The cloud
as an organizational resource is more than two decades old, yet the needs of cloud users are constantly changing. Telos offers the specialized skills and experience needed to help our customers plan, engineer, and execute secure cloud
migration strategies and then assure ongoing management and security in keeping with the leading standards for cloud-based systems and workloads.
|
● |
Enterprise Security –
Securing the enterprise means protecting the essential and timeless elements common to every organization: Its people and processes, its supply chain and inventories, its finances and facilities, its information and communications. As ICT
and OT systems have become part of the organizational DNA, Telos has led with offerings that ensure personnel can work securely and productively across and beyond the enterprise.
|
● |
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.
|
2019
|
2018
|
2017
|
||||||||||||||||||||||
(dollar amounts in thousands)
|
||||||||||||||||||||||||
Federal
|
$
|
149,257
|
93.7
|
%
|
$
|
129,279
|
93.7
|
%
|
$
|
101,519
|
94.2
|
%
|
||||||||||||
State & Local, and Commercial
|
9,961
|
6.3
|
%
|
8,737
|
6.3
|
%
|
6,208
|
5.8
|
%
|
|||||||||||||||
Total
|
$
|
159,218
|
100.0
|
%
|
$
|
138,016
|
100.0
|
%
|
$
|
107,727
|
100.0
|
%
|
●
|
impose specific and unique cost accounting practices that may differ from Generally Accepted Accounting Principles (“GAAP”) in the
United States of America and therefore require reconciliation;
|
●
|
impose acquisition regulations that define reimbursable and non-reimbursable costs; and
|
●
|
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.
|
●
|
third party attempts to fraudulently induce employees or customers into disclosing sensitive information such as user names,
passwords or other information to gain access to our customers’ data, our data or our IT systems;
|
●
|
efforts by individuals or groups of hackers and sophisticated organizations, including state-sponsored organizations or
nation-states;
|
●
|
cyber-attacks on our internally built infrastructure;
|
●
|
vulnerabilities resulting from enhancements and updates to our existing solutions;
|
●
|
vulnerabilities in the products or components across the broad ecosystem that our services operate in or are dependent on;
|
●
|
vulnerabilities existing within newly acquired or integrated technologies and infrastructures;
|
●
|
attacks on, or vulnerabilities in, the many different underlying networks and services that power the internet that our products
depend on, most of which are not under our control or the control of our vendors, partners, or customers; and
|
●
|
employee or contractor errors or intentional acts that compromise our security systems.
|
● |
localization of our services, including translation into foreign languages and associated expenses;
|
● |
regulatory frameworks or business practices favoring local competitors;
|
● |
pressure on the creditworthiness of sovereign nations;
|
● |
evolving domestic and international tax environments;
|
● |
liquidity issues or political actions by sovereign nations, including nations with a controlled currency environment, which could
result in decreased values of these balances or potential difficulties protecting our foreign assets or satisfying local obligations;
|
● |
foreign currency fluctuations and controls, which may make our services more expensive for international customers and could add
volatility to our operating results;
|
● |
compliance with multiple, conflicting, ambiguous or evolving governmental laws and regulations, including employment, tax, privacy,
anti-corruption, import/export, antitrust, data transfer, storage and protection, and industry-specific laws and regulations, including rules related to compliance by our third-party resellers and our ability to identify and respond timely
to compliance issues when they occur;
|
● |
vetting and monitoring our third-party resellers in new and evolving markets to confirm they maintain standards consistent with our
brand and reputation;
|
● |
uncertainty regarding regulation, currency, tax, and operations resulting from the Brexit vote that could disrupt trade, the sale of
our services and commerce, and movement of our people between the United Kingdom, European Union, and locations;
|
● |
changes in the public perception of governments in the regions where we operate or plan to operate;
|
● |
regional data privacy laws and other regulatory requirements;
|
● |
treatment of revenue from international sources, intellectual property considerations and changes to tax codes, including being
subject to foreign tax laws and being liable for paying withholding income or other taxes in foreign jurisdictions;
|
● |
different pricing environments;
|
● |
difficulties in staffing and managing foreign operations;
|
● |
different or lesser protection of our intellectual property;
|
● |
longer accounts receivable payment cycles and other collection difficulties;
|
● |
natural disasters, acts of war, terrorism, pandemics or security breaches; and
|
● |
regional economic and political conditions.
|
Years Ended December 31,
|
||||||||||||||||||||
2019
|
2018
|
2017
|
2016
|
2015
|
||||||||||||||||
(amounts in thousands)
|
||||||||||||||||||||
Sales
|
$
|
159,218
|
$
|
138,016
|
$
|
107,727
|
$
|
134,868
|
$
|
120,634
|
||||||||||
Operating income (loss)
|
5,025
|
9,014
|
414
|
2,112
|
(3,617
|
)
|
||||||||||||||
(Loss) income before income taxes
|
(2,241
|
)
|
1,768
|
(6,265
|
)
|
(3,335
|
)
|
(9,237
|
)
|
|||||||||||
Net loss attributable to Telos Corporation
|
(6,401
|
)
|
(1,640
|
)
|
(5,833
|
)
|
(7,175
|
)
|
(15,940
|
)
|
As of December 31,
|
||||||||||||||||||||
2019
|
2018
|
2017
|
2016
|
2015
|
||||||||||||||||
(amounts in thousands)
|
||||||||||||||||||||
Total assets
|
$
|
77,692
|
$
|
74,489
|
$
|
74,421
|
$
|
56,799
|
$
|
59,964
|
||||||||||
Senior term loan (1)
|
16,335
|
10,984
|
10,786
|
----
|
----
|
|||||||||||||||
Senior credit facility, long-term (1)
|
----
|
----
|
----
|
----
|
7,144
|
|||||||||||||||
Subordinated debt, long-term (1)
|
2,927
|
2,597
|
2,289
|
----
|
2,500
|
|||||||||||||||
Finance lease obligations, long-term (2)
|
15,641
|
16,865
|
17,980
|
18,990
|
19,908
|
|||||||||||||||
Operating lease obligations, long-term (2)
|
1,553
|
----
|
----
|
----
|
----
|
|||||||||||||||
Deferred income taxes, long-term (3)
|
621
|
818
|
741
|
3,391
|
3,199
|
|||||||||||||||
Senior redeemable preferred stock (4)
|
----
|
----
|
----
|
2,092
|
2,025
|
|||||||||||||||
Public preferred stock (4)
|
139,210
|
135,387
|
131,565
|
127,742
|
123,919
|
(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 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.
|
● |
Cybersecurity – Today’s
enterprises need to understand and manage their cyber risk and reduce their cyber attack surfaces. Telos helps our customers assure the ongoing security, integrity, and compliance of their on-premises and cloud-based systems and to reduce
threats and vulnerabilities to foil cyber adversaries before they can attack. Our consultants assess our customers’ security environments and design, engineer, and operate the systems they need to strengthen their cybersecurity posture.
|
● |
Cloud Security – The cloud
as an organizational resource is more than two decades old, yet the needs of cloud users are constantly changing. Telos offers the specialized skills and experience needed to help our customers plan, engineer, and execute secure cloud
migration strategies and then assure ongoing management and security in keeping with the leading standards for cloud-based systems and workloads.
|
● |
Enterprise Security –
Securing the enterprise means protecting the essential and timeless elements common to every organization: Its people and processes, its supply chain and inventories, its finances and facilities, its information and communications. As ICT
and OT systems have become part of the organizational DNA, Telos has led with offerings that ensure personnel can work securely and productively across and beyond the enterprise.
|
2019
|
2018
|
2017
|
||||||||||
Federal
|
$
|
149,257
|
$
|
129,279
|
$
|
101,519
|
||||||
State & Local, and Commercial
|
9,961
|
8,737
|
6,208
|
|||||||||
Total
|
$
|
159,218
|
$
|
138,016
|
$
|
107,727
|
2019
|
2018
|
2017
|
||||||||||
Firm fixed-price
|
$
|
131,629
|
$
|
103,454
|
$
|
89,516
|
||||||
Time-and-materials
|
14,569
|
16,795
|
10,222
|
|||||||||
Cost plus fixed fee
|
13,020
|
17,767
|
7,989
|
|||||||||
Total
|
$
|
159,218
|
$
|
138,016
|
$
|
107,727
|
December 31,
|
||||||||
2019
|
2018
|
|||||||
Billed accounts receivable
|
$
|
11,917
|
$
|
18,848
|
||||
Unbilled receivables
|
16,745
|
16,000
|
||||||
Allowance for doubtful accounts
|
(720
|
)
|
(306
|
)
|
||||
Receivables – net
|
$
|
27,942
|
$
|
34,542
|
December 31,
|
||||||||
2019
|
2018
|
|||||||
Contract liabilities
|
$
|
6,338
|
$
|
5,232
|
|
Years Ended December 31,
|
|||||||||||||||||||||||
2019
|
2018
|
2017
|
||||||||||||||||||||||
(dollar amounts in thousands)
|
||||||||||||||||||||||||
Revenue
|
$
|
159,218
|
100.0
|
%
|
$
|
138,016
|
100.0
|
%
|
$
|
107,727
|
100.0
|
%
|
||||||||||||
Cost of sales
|
106,874
|
67.1
|
84,954
|
61.6
|
67,161
|
62.3
|
||||||||||||||||||
Selling, general and administrative expenses
|
47,319
|
29.7
|
44,048
|
31.9
|
40,152
|
37.3
|
||||||||||||||||||
Operating income
|
5,025
|
3.2
|
9,014
|
6.5
|
414
|
0.4
|
||||||||||||||||||
Other income (expenses):
|
||||||||||||||||||||||||
Non-operating income
|
201
|
0.1
|
12
|
----
|
11
|
----
|
||||||||||||||||||
Interest expense
|
(7,467
|
)
|
(4.7
|
)
|
(7,258
|
)
|
(5.2
|
)
|
(6,690
|
)
|
(6.2
|
)
|
||||||||||||
(Loss) income before income taxes
|
(2,241
|
)
|
(1.4
|
)
|
1,768
|
1.3
|
(6,265
|
)
|
(5.8
|
)
|
||||||||||||||
Benefit (provision) for income taxes
|
104
|
0.1
|
(31
|
)
|
----
|
2,767
|
2.6
|
|||||||||||||||||
Net (loss) income
|
(2,137
|
)
|
(1.3
|
)
|
1,737
|
1.3
|
(3,498
|
)
|
(3.2
|
)
|
||||||||||||||
Less: Net income attributable to non-controlling interest
|
(4,264
|
)
|
(2.7
|
)
|
(3,377
|
)
|
(2.4
|
)
|
(2,335
|
)
|
(2.2
|
)
|
||||||||||||
Net loss attributable to Telos Corporation
|
$
|
(6,401
|
)
|
(4.0
|
)%
|
$
|
(1,640
|
)
|
(1.1
|
)%
|
$
|
(5,833
|
)
|
(5.4
|
)%
|
December 31,
|
||||||||||||
2019
|
2018
|
2017
|
||||||||||
(amounts in thousands)
|
||||||||||||
Commercial and subordinated note interest incurred
|
$
|
3,644
|
$
|
3,436
|
$
|
2,848
|
||||||
Preferred stock interest accrued
|
3,823
|
3,822
|
3,842
|
|||||||||
Total
|
$
|
7,467
|
$
|
7,258
|
$
|
6,690
|
● |
The Company borrowed an additional $5 million from the Lenders, increasing the total amount of the principal to $16 million.
|
● |
The maturity date of the Credit Agreement was amended from January 25, 2022 to January 15, 2021.
|
● |
The prepayment price was amended as follows: (a) from January 26, 2019 through January 25, 2020, the prepayment price is 102% of the
principal amount, (b) from January 26, 2020 through October 14, 2020, the prepayment price is 101% of the principal amount, and (c) from October 15, 2020 to the maturity date, the prepayment price will be at par. However, the prepayment
price for the additional $5 million loan attributable to the Fourth Amendment will be at par.
|
● |
The following financial covenants, as defined in the Credit Agreement, were amended and updated: Consolidated Leverage Ratio,
Consolidated Senior Leverage Ratio, Consolidated Capital Expenditures, Minimum Fixed Charge Coverage Ratio, and Minimum Consolidated Net Working Capital.
|
● |
Any actual or potential non-compliance with the applicable provisions of the Credit Agreement were waived.
|
● |
The borrowing under the Credit Agreement continues to be collateralized by substantially all of the Company’s assets including
inventory, equipment and accounts receivable.
|
● |
The Company paid the Agent a fee of $110,000 in connection with the Fourth Amendment. We incurred immaterial third party transaction
costs which were expensed in the current period.
|
● |
The exit fee was increased from $825,000 to $1,200,000.
|
|
Payments due by Period
|
|||||||||||||||||||
Total
|
2020
|
2021 - 2023
|
2024 - 2026
|
2027 and later
|
||||||||||||||||
Finance lease obligations (1)
|
$
|
21,411
|
$
|
2,047
|
$
|
6,449
|
$
|
6,944
|
$
|
5,971
|
||||||||||
Senior term loan (2)
|
19,476
|
2,190
|
17,286
|
----
|
----
|
|||||||||||||||
Subordinated debt (3)
|
3,905
|
----
|
3,905
|
----
|
----
|
|||||||||||||||
Operating lease obligations (4)
|
2,443
|
768
|
1,647
|
28
|
----
|
|||||||||||||||
$
|
47,235
|
$
|
5,005
|
$
|
29,287
|
$
|
6,972
|
$
|
5,971
|
|||||||||||
Public preferred stock (5)
|
139,210
|
|||||||||||||||||||
Total
|
$
|
186,445
|
||||||||||||||||||
(1) Includes interest expense:
|
$
|
4,546
|
$
|
822
|
$
|
2,056
|
$
|
1,304
|
$
|
364
|
Page
|
|
33
|
|
34
|
|
35
|
|
36 - 37
|
|
38
|
|
39
|
|
40 - 67
|
|
Years Ended December 31,
|
|||||||||||
2019
|
2018
|
2017
|
||||||||||
Revenue (Note 5)
|
||||||||||||
Services
|
$
|
143,581
|
$
|
120,990
|
$
|
81,606
|
||||||
Products
|
15,637
|
17,026
|
26,121
|
|||||||||
159,218
|
138,016
|
107,727
|
||||||||||
Costs and expenses
|
||||||||||||
Cost of sales – Services
|
98,772
|
76,857
|
49,965
|
|||||||||
Cost of sales – Products
|
8,102
|
8,097
|
17,196
|
|||||||||
106,874
|
84,954
|
67,161
|
||||||||||
Selling, general and administrative expenses
|
47,319
|
44,048
|
40,152
|
|||||||||
Operating income
|
5,025
|
9,014
|
414
|
|||||||||
Other income (expenses)
|
||||||||||||
Non-operating income
|
201
|
12
|
11
|
|||||||||
Interest expense
|
(7,467
|
)
|
(7,258
|
)
|
(6,690
|
)
|
||||||
(Loss) income before income taxes
|
(2,241
|
)
|
1,768
|
(6,265
|
)
|
|||||||
Benefit (provision) for income taxes (Note 9)
|
104
|
(31
|
)
|
2,767
|
||||||||
Net (loss) income
|
(2,137
|
)
|
1,737
|
(3,498
|
)
|
|||||||
Less: Net income attributable to non-controlling interest (Note 2)
|
(4,264
|
)
|
(3,377
|
)
|
(2,335
|
)
|
||||||
Net loss attributable to Telos Corporation
|
$
|
(6,401
|
)
|
$
|
(1,640
|
)
|
$
|
(5,833
|
)
|
|
Years Ended December 31,
|
|||||||||||
2019
|
2018
|
2017
|
||||||||||
Net (loss) income
|
$
|
(2,137
|
)
|
$
|
1,737
|
$
|
(3,498
|
)
|
||||
Other comprehensive (loss) income, net of tax:
|
||||||||||||
Foreign currency translation adjustments
|
(11
|
)
|
(15
|
)
|
7
|
|||||||
Comprehensive income attributable to non-controlling interest
|
(4,264
|
)
|
(3,377
|
)
|
(2,335
|
)
|
||||||
Comprehensive loss attributable to Telos Corporation
|
$
|
(6,412
|
)
|
$
|
(1,655
|
)
|
$
|
(5,826
|
)
|
|
December 31,
|
|||||||
2019
|
2018
|
|||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$
|
6,751
|
$
|
72
|
||||
Accounts receivable, net of reserve of $720 and $306, respectively (Note 5)
|
27,942
|
34,542
|
||||||
Inventories, net of obsolescence reserve of $860 and $520, respectively (Note 1)
|
1,965
|
4,389
|
||||||
Deferred program expenses
|
673
|
244
|
||||||
Other current assets
|
2,914
|
1,985
|
||||||
Total current assets
|
40,245
|
41,232
|
||||||
Property and equipment (Note 1)
|
||||||||
Furniture and equipment
|
18,709
|
12,756
|
||||||
Leasehold improvements
|
2,536
|
2,503
|
||||||
Property and equipment under finance leases
|
30,792
|
30,832
|
||||||
52,037
|
46,091
|
|||||||
Accumulated depreciation and amortization
|
(32,470
|
)
|
(28,665
|
)
|
||||
19,567
|
17,426
|
|||||||
Operating lease right-of-use assets
|
1,979
|
--
|
||||||
Goodwill (Note 3)
|
14,916
|
14,916
|
||||||
Other assets
|
985
|
915
|
||||||
Total assets
|
$
|
77,692
|
$
|
74,489
|
December 31,
|
||||||||
2019
|
2018
|
|||||||
Current liabilities
|
||||||||
Accounts payable and other accrued liabilities (Note 6)
|
$
|
15,050
|
$
|
21,779
|
||||
Accrued compensation and benefits
|
12,187
|
9,082
|
||||||
Contract liabilities
|
6,337
|
5,232
|
||||||
Finance lease obligations – short-term (Note 10)
|
1,224
|
1,115
|
||||||
Other current liabilities
|
2,505
|
1,895
|
||||||
Total current liabilities
|
37,303
|
39,103
|
||||||
Senior term loan, net of unamortized discount and issuance costs (Note 6)
|
16,335
|
10,984
|
||||||
Subordinated debt (Note 6)
|
2,927
|
2,597
|
||||||
Finance lease obligations - long-term (Note 10)
|
15,641
|
16,865
|
||||||
Operating lease obligations - long-term (Note 10)
|
1,553
|
--
|
||||||
Deferred income taxes (Note 9)
|
621
|
818
|
||||||
Public preferred stock (Note 7)
|
139,210
|
135,387
|
||||||
Other liabilities (Note 9)
|
724
|
838
|
||||||
Total liabilities
|
214,314
|
206,592
|
||||||
Commitments and contingencies (Notes 10 and 13)
|
--
|
--
|
||||||
Stockholders’ deficit (Note 8)
|
||||||||
Telos stockholders’ deficit
|
||||||||
Class A common stock, no par value, 50,000,000 shares authorized, 45,143,460 and 45,158,460 shares issued and
outstanding, respectively
|
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
|
4,310
|
4,310
|
||||||
Accumulated other comprehensive income
|
6
|
17
|
||||||
Accumulated deficit
|
(145,530
|
)
|
(139,129
|
)
|
||||
Total Telos stockholders’ deficit
|
(141,136
|
)
|
(134,724
|
)
|
||||
Non-controlling interest in subsidiary (Note 2)
|
4,514
|
2,621
|
||||||
Total stockholders’ deficit
|
(136,622
|
)
|
(132,103
|
)
|
||||
Total liabilities, redeemable preferred stock, and stockholders’ deficit
|
$
|
77,692
|
$
|
74,489
|
Years Ended December 31,
|
||||||||||||
2019
|
2018
|
2017
|
||||||||||
Operating activities:
|
||||||||||||
Net (loss) income
|
$
|
(2,137
|
)
|
$
|
1,737
|
$
|
(3,498
|
)
|
||||
Adjustments to reconcile net (loss) income to cash provided by (used in) operating activities:
|
||||||||||||
Stock-based compensation
|
--
|
--
|
50
|
|||||||||
Dividends from preferred stock recorded as interest expense
|
3,823
|
3,822
|
3,843
|
|||||||||
Depreciation and amortization
|
4,972
|
3,028
|
1,999
|
|||||||||
Provision for inventory obsolescence
|
376
|
30
|
73
|
|||||||||
Provision (benefit) for doubtful accounts receivable
|
414
|
(105
|
)
|
(18
|
)
|
|||||||
Amortization of debt issuance costs
|
461
|
198
|
160
|
|||||||||
Deferred income tax (benefit) provision
|
(197
|
)
|
77
|
(2,710
|
)
|
|||||||
Loss on disposal of fixed asssets
|
15
|
3
|
4
|
|||||||||
Changes in assets and liabilities:
|
||||||||||||
Decrease (increase) in accounts receivable
|
6,186
|
(9,917
|
)
|
(5,415
|
)
|
|||||||
Decrease (increase) in inventories
|
2,048
|
9,101
|
(10,041
|
)
|
||||||||
(Increase) decrease in deferred program expenses
|
(429
|
)
|
1,828
|
(1,886
|
)
|
|||||||
(Increase) decrease in other current assets and other assets
|
(3,576
|
)
|
(465
|
)
|
1,086
|
|||||||
(Decrease) increase in accounts payable and other accrued payables
|
(6,730
|
)
|
(3,914
|
)
|
10,376
|
|||||||
Increase (decrease) in accrued compensation and benefits
|
3,105
|
1,626
|
(615
|
)
|
||||||||
Increase (decrease) in contract liabilities
|
1,106
|
(960
|
)
|
5,173
|
||||||||
Increase in other current liabilities and other liabilities
|
2,379
|
179
|
828
|
|||||||||
Cash provided by (used in) operating activities
|
11,816
|
6,268
|
(591
|
)
|
||||||||
Investing activities:
|
||||||||||||
Capitalized software development costs
|
(2,442
|
)
|
(1,649
|
)
|
(1,481
|
)
|
||||||
Purchases of property and equipment
|
(4,090
|
)
|
(2,465
|
)
|
(748
|
)
|
||||||
Cash used in investing activities
|
(6,532
|
)
|
(4,114
|
)
|
(2,229
|
)
|
||||||
Financing activities:
|
||||||||||||
Proceeds from senior term loan
|
4,881
|
--
|
9,439
|
|||||||||
Redemption of senior preferred stock
|
--
|
--
|
(2,112
|
)
|
||||||||
Payments under finance lease obligations
|
(1,115
|
)
|
(1,013
|
)
|
(915
|
)
|
||||||
Distributions to Telos ID Class B member – non-controlling interest
|
(2,371
|
)
|
(1,669
|
)
|
(3,651
|
)
|
||||||
Cash provided by (used in) financing activities
|
1,395
|
(2,682
|
)
|
2,761
|
||||||||
Increase (decrease) in cash and cash equivalents
|
6,679
|
(528
|
)
|
(59
|
)
|
|||||||
Cash and cash equivalents, beginning of the year
|
72
|
600
|
659
|
|||||||||
Cash and cash equivalents, end of year
|
$
|
6,751
|
$
|
72
|
$
|
600
|
||||||
Supplemental disclosures of cash flow information:
|
||||||||||||
Cash paid during the year for:
|
||||||||||||
Interest
|
$
|
3,299
|
2,483
|
2,395
|
||||||||
Income taxes
|
$
|
40
|
19
|
26
|
||||||||
Noncash:
|
||||||||||||
Dividends from preferred stock recorded as interest expense
|
$
|
3,823
|
$
|
3,822
|
$
|
3,843
|
||||||
Debt issuance costs and prepayment of interest on senior term loan
|
$
|
119
|
$
|
--
|
$
|
1,561
|
||||||
Gain on extinguishment of subordinated debt
|
$
|
--
|
$
|
--
|
$
|
1,031
|
|
Telos Corporation
|
|||||||||||||||||||||||||||
Class A Common
Stock
|
Class B
Common
Stock
|
Additional
Paid–in Capital
|
Accumulated
Other Comprehensive Income
|
Accumulated
Deficit
|
Non-Controlling Interest
|
Total
Stockholders’
Deficit
|
||||||||||||||||||||||
Balance December 31, 2016
|
$
|
65
|
$
|
13
|
$
|
3,229
|
$
|
25
|
$
|
(135,537
|
)
|
$
|
2,229
|
$
|
(129,976
|
)
|
||||||||||||
Net (loss) income
|
--
|
--
|
--
|
--
|
(5,833
|
)
|
2,335
|
(3,498
|
)
|
|||||||||||||||||||
Gain on extinguishment of subordinated debt
|
--
|
--
|
1,031
|
--
|
--
|
--
|
1,031
|
|||||||||||||||||||||
Stock based compensation
|
--
|
--
|
50
|
--
|
--
|
--
|
50
|
|||||||||||||||||||||
Foreign currency translation gain
|
--
|
--
|
--
|
7
|
--
|
--
|
7
|
|||||||||||||||||||||
Distributions
|
--
|
--
|
--
|
--
|
--
|
(3,651
|
)
|
(3,651
|
)
|
|||||||||||||||||||
Balance December 31, 2017
|
$
|
65
|
$
|
13
|
$
|
4,310
|
$
|
32
|
$
|
(141,370
|
)
|
$
|
913
|
$
|
(136,037
|
)
|
||||||||||||
Net (loss) income
|
--
|
--
|
--
|
--
|
(1,640
|
)
|
3,377
|
1,737
|
||||||||||||||||||||
Cumulative effect adjustment due to change in accounting policy
|
--
|
--
|
--
|
--
|
3,881
|
--
|
3,881
|
|||||||||||||||||||||
Foreign currency translation loss
|
--
|
--
|
--
|
(15
|
)
|
--
|
--
|
(15
|
)
|
|||||||||||||||||||
Distributions
|
--
|
--
|
--
|
--
|
--
|
(1,669
|
)
|
(1,669
|
)
|
|||||||||||||||||||
Balance December 31, 2018
|
$
|
65
|
$
|
13
|
$
|
4,310
|
$
|
17
|
$
|
(139,129
|
)
|
$
|
2,621
|
$
|
(132,103
|
)
|
||||||||||||
Net (loss) income
|
--
|
--
|
--
|
--
|
(6,401
|
)
|
4,264
|
(2,137
|
)
|
|||||||||||||||||||
Foreign currency translation loss
|
--
|
--
|
--
|
(11
|
)
|
--
|
--
|
(11
|
)
|
|||||||||||||||||||
Distributions
|
--
|
--
|
--
|
--
|
--
|
(2,371
|
)
|
(2,371
|
)
|
|||||||||||||||||||
Balance December 31, 2019
|
$
|
65
|
$
|
13
|
$
|
4,310
|
$
|
6
|
$
|
(145,530
|
)
|
$
|
4,514
|
$
|
(136,622
|
)
|
2019
|
2018
|
2017
|
||||||||||
Federal
|
$
|
149,257
|
$
|
129,279
|
$
|
101,519
|
||||||
State & Local, and Commercial
|
9,961
|
8,737
|
6,208
|
|||||||||
Total
|
$
|
159,218
|
$
|
138,016
|
$
|
107,727
|
|
2019
|
2018
|
2017
|
|||||||||
Firm fixed-price
|
$
|
131,629
|
$
|
103,454
|
$
|
89,516
|
||||||
Time-and-materials
|
14,569
|
16,795
|
10,222
|
|||||||||
Cost plus fixed fee
|
13,020
|
17,767
|
7,989
|
|||||||||
Total
|
$
|
159,218
|
$
|
138,016
|
$
|
107,727
|
December 31,
|
||||||||
2019
|
2018
|
|||||||
Billed accounts receivable
|
$
|
11,917
|
$
|
18,848
|
||||
Unbilled receivables
|
16,745
|
16,000
|
||||||
Allowance for doubtful accounts
|
(720
|
)
|
(306
|
)
|
||||
Receivables – net
|
$
|
27,942
|
$
|
34,542
|
December 31,
|
||||||||
2019
|
2018
|
|||||||
Contract liabilities
|
$
|
6,337
|
$
|
5,232
|
|
Balance
Beginning of
Year
|
Additions Charge to Costs and Expense
|
Recoveries
|
Balance
End of
Year
|
||||||||||||
Year Ended December 31, 2019
|
$
|
520
|
$
|
376
|
$
|
(36
|
)
|
$
|
860
|
|||||||
Year Ended December 31, 2018
|
$
|
1,484
|
$
|
30
|
$
|
(994
|
)
|
$
|
520
|
|||||||
Year Ended December 31, 2017
|
$
|
1,672
|
$
|
73
|
$
|
(261
|
)
|
$
|
1,484
|
Furniture and equipment
|
3-5 Years
|
Leasehold improvements
|
Lesser of life of lease or useful life of asset
|
Property and equipment under finance leases
|
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 any existing line of credit available to the Company after giving effect to that purchase and the applicable lender refuses to consent to that
purchase or to waive such violation.
|
|
2019
|
2018
|
2017
|
|||||||||
Non-controlling interest, beginning of period
|
$
|
2,621
|
$
|
913
|
$
|
2,229
|
||||||
Net income
|
4,264
|
3,377
|
2,335
|
|||||||||
Distributions
|
(2,371
|
)
|
(1,669
|
)
|
(3,651
|
)
|
||||||
Non-controlling interest, end of period
|
$
|
4,514
|
$
|
2,621
|
$
|
913
|
|
December 31,
|
|||||||
2019
|
2018
|
|||||||
Billed accounts receivable
|
$
|
11,917
|
$
|
18,848
|
||||
Unbilled receivables
|
16,745
|
16,000
|
||||||
Allowance for doubtful accounts
|
(720
|
)
|
(306
|
)
|
||||
Total
|
$
|
27,942
|
$
|
34,542
|
|
Balance Beginning
of Year
|
Bad Debt
Expenses (1)
|
Recoveries (2)
|
Balance
End
of Year
|
||||||||||||
Year Ended December 31, 2019
|
$
|
306
|
$
|
414
|
$
|
--
|
$
|
720
|
||||||||
Year Ended December 31, 2018
|
$
|
411
|
$
|
(105
|
)
|
$
|
--
|
$
|
306
|
|||||||
Year Ended December 31, 2017
|
$
|
429
|
$
|
(18
|
)
|
$
|
--
|
$
|
411
|
(1)
|
Accounts receivable reserves and reversal of allowance for subsequent collections, net
|
(2)
|
Accounts receivable written-off and subsequent recoveries, net
|
|
2019
|
2018
|
2017
|
|||||||||||||||||||||
(dollar amounts in thousands)
|
||||||||||||||||||||||||
Federal
|
$
|
149,257
|
93.7
|
%
|
$
|
129,279
|
93.7
|
%
|
$
|
101,519
|
94.2
|
%
|
||||||||||||
State & Local, and Commercial
|
9,961
|
6.3
|
%
|
8,737
|
6.3
|
%
|
6,208
|
5.8
|
%
|
|||||||||||||||
Total
|
$
|
159,218
|
100.0
|
%
|
$
|
138,016
|
100.0
|
%
|
$
|
107,727
|
100.0
|
%
|
● |
The Company borrowed an additional $5 million from the Lenders, increasing the total amount of the principal to $16 million.
|
● |
The maturity date of the Credit Agreement was amended from January 25, 2022 to January 15, 2021.
|
● |
The prepayment price was amended as follows: (a) from January 26, 2019 through January 25, 2020, the prepayment price is 102% of the
principal amount, (b) from January 26, 2020 through October 14, 2020, the prepayment price is 101% of the principal amount, and (c) from October 15, 2020 to the maturity date, the prepayment price will be at par. However, the prepayment
price for the additional $5 million loan attributable to the Fourth Amendment will be at par.
|
● |
The following financial covenants, as defined in the Credit Agreement, were amended and updated: Consolidated Leverage Ratio,
Consolidated Senior Leverage Ratio, Consolidated Capital Expenditures, Minimum Fixed Charge Coverage Ratio, and Minimum Consolidated Net Working Capital.
|
● |
Any actual or potential non-compliance with the applicable provisions of the Credit Agreement were waived.
|
● |
The borrowing under the Credit Agreement continues to be collateralized by substantially all of the Company’s assets including
inventory, equipment and accounts receivable.
|
● |
The Company paid the Agent a fee of $110,000 in connection with the Fourth Amendment. We incurred immaterial third party transaction
costs which were expensed in the current period.
|
● |
The Company paid the Agent a fee of $110,000 in connection with the Fourth Amendment. We incurred immaterial third party transaction
costs which were expensed in the current period.
|
● |
The exit fee was increased from $825,000 to $1,200,000.
|
|
December 31,
|
|||||||
2018
|
2017
|
|||||||
Senior term loan principal, including exit fee
|
$
|
17,200
|
$
|
11,825
|
||||
Less: Unamortized discount, debt issuance costs, and lender fees
|
(865
|
)
|
(841
|
)
|
||||
Senior term loan, net
|
$
|
16,335
|
$
|
10,984
|
|
December 31,
|
|||||||||||
2019
|
2018
|
2017
|
||||||||||
(number of shares)
|
||||||||||||
Outstanding at beginning of year
|
4,920,000
|
4,975,000
|
--
|
|||||||||
Granted
|
--
|
--
|
5,005,000
|
|||||||||
Forfeited
|
(15,000
|
)
|
(55,000
|
)
|
(30,000
|
)
|
||||||
Outstanding at end of year
|
4,905,000
|
4,920,000
|
4,975,000
|
|
For the Years Ended December 31,
|
|||||||||||
2019
|
2018
|
2017
|
||||||||||
Current provision (benefit)
|
||||||||||||
Federal
|
$
|
25
|
$
|
(29
|
)
|
$
|
(86
|
)
|
||||
State
|
68
|
(17
|
)
|
29
|
||||||||
Total current
|
93
|
(46
|
)
|
(57
|
)
|
|||||||
Deferred (benefit) provision
|
||||||||||||
Federal
|
88
|
15
|
(2,622
|
)
|
||||||||
State
|
(285
|
)
|
62
|
(88
|
)
|
|||||||
Total deferred
|
(197
|
)
|
77
|
(2,710
|
)
|
|||||||
Total (benefit) provision
|
$
|
(104
|
)
|
$
|
31
|
$
|
(2,767
|
)
|
|
For the Years Ended December 31,
|
|||||||||||
2019
|
2018
|
2017
|
||||||||||
Computed expected income tax provision
|
21.0
|
%
|
21.0
|
%
|
34.0
|
%
|
||||||
State income taxes, net of federal income tax benefit
|
(0.2
|
)
|
(20.9
|
)
|
0.9
|
|||||||
Change in valuation allowance for deferred tax assets
|
(8.5
|
)
|
47.7
|
(26.9
|
)
|
|||||||
Cumulative deferred adjustments
|
(0.4
|
)
|
--
|
--
|
||||||||
Provision to return adjustments
|
0.5
|
1.8
|
--
|
|||||||||
Other permanent differences
|
(3.7
|
)
|
(12.2
|
)
|
(1.3
|
)
|
||||||
Dividend and accretion on preferred stock
|
(12.3
|
)
|
(49.9
|
)
|
(15.2
|
)
|
||||||
FIN 48 liability
|
(1.3
|
)
|
(4.6
|
)
|
(0.9
|
)
|
||||||
R&D credit
|
6.5
|
27.7
|
4.6
|
|||||||||
Impact of Tax Act
|
--
|
(12.5
|
)
|
35.5
|
||||||||
Other
|
--
|
--
|
1.5
|
|||||||||
1.6
|
%
|
(1.9
|
)%
|
32.2
|
%
|
|
December 31,
|
|||||||
2019
|
2018
|
|||||||
Deferred tax assets:
|
||||||||
Accounts receivable, principally due to allowance for doubtful accounts
|
$
|
185
|
$
|
79
|
||||
Allowance for inventory obsolescence and amortization
|
316
|
281
|
||||||
Accrued liabilities not currently deductible
|
1,649
|
1,634
|
||||||
Accrued compensation
|
1,655
|
1,206
|
||||||
Deferred rent
|
4,808
|
4,750
|
||||||
Section 163(j) interest limitation
|
804
|
246
|
||||||
Net operating loss carryforwards - federal
|
2,583
|
1,956
|
||||||
Net operating loss carryforwards - state
|
796
|
653
|
||||||
Federal tax credit
|
1,326
|
983
|
||||||
Total gross deferred tax assets
|
14,122
|
11,788
|
||||||
Less valuation allowance
|
(7,206
|
)
|
(6,652
|
)
|
||||
Total deferred tax assets, net of valuation allowance
|
6,916
|
5,136
|
||||||
Deferred tax liabilities:
|
||||||||
Amortization and depreciation
|
(2,623
|
)
|
(2,237
|
)
|
||||
Unbilled accounts receivable, deferred for tax purposes
|
(1,611
|
)
|
(955
|
)
|
||||
Goodwill basis adjustment and amortization
|
(2,886
|
)
|
(2,713
|
)
|
||||
Telos ID basis difference
|
(417
|
)
|
(49
|
)
|
||||
Total deferred tax liabilities
|
(7,537
|
)
|
(5,954
|
)
|
||||
Net deferred tax liabilities
|
$
|
(621
|
)
|
$
|
(818
|
)
|
|
Balance Beginning of Period
|
Additions
|
Recoveries
|
Balance End
of Period
|
||||||||||||
December 31, 2019
|
$
|
6,652
|
$
|
554
|
$
|
--
|
$
|
7,206
|
||||||||
December 31, 2018
|
$
|
7,219
|
$
|
--
|
$
|
(567
|
)
|
$
|
6,652
|
|||||||
December 31, 2017
|
$
|
10,499
|
$
|
--
|
$
|
(3,280
|
)
|
$
|
7,219
|
|
2019
|
2018
|
2017
|
|||||||||
Unrecognized tax benefits, beginning of period
|
$
|
648
|
$
|
677
|
$
|
762
|
||||||
Gross decreases — tax positions in prior period
|
(39
|
)
|
(63
|
)
|
(127
|
)
|
||||||
Gross increases — tax positions in current period
|
101
|
92
|
77
|
|||||||||
Settlements
|
(37
|
)
|
(58
|
)
|
(35
|
)
|
||||||
Unrecognized tax benefits, end of period
|
$
|
673
|
$
|
648
|
$
|
677
|
Operating Leases
|
Finance Leases
|
|||||||
2020
|
$
|
710
|
$
|
2,046
|
||||
2021
|
715
|
2,097
|
||||||
2022
|
564
|
2,149
|
||||||
2023
|
368
|
2,203
|
||||||
2024
|
28
|
2,258
|
||||||
After 2024
|
--
|
10,658
|
||||||
Total minimum lease payments
|
2,385
|
21,411
|
||||||
Less imputed interest
|
(230
|
)
|
(4,546
|
)
|
||||
Net present value of minimum lease payments
|
2,155
|
16,865
|
||||||
Less current portion
|
(602
|
)
|
(1,224
|
)
|
||||
Long-term lease obligations at December 31, 2019
|
$
|
1,553
|
$
|
15,641
|
|
Year Ended December 31, 2019
|
|||
Operating lease cost
|
$
|
597
|
||
Short-term lease cost (1)
|
147
|
|||
Finance lease cost
|
||||
Amortization of finance lease assets
|
1,221
|
|||
Interest on finance lease liabilities
|
881
|
|||
Total finance lease cost
|
2,102
|
|||
Total lease costs
|
$
|
2,846
|
(1)
|
Leases that have terms of 12 months or less.
|
Year Ended December 31, 2019
|
||||
Cash paid for amounts included in the measurement of lease liabilities:
|
||||
Cash flows from operating activities - operating leases
|
$
|
604
|
||
Cash flows from operating activities - finance leases
|
$
|
1,995
|
||
Operating lease right-of-use assets obtained in exchange for operating lease liabilities
|
$
|
488
|
|
Balance
Beginning
of Year
|
Accruals
|
Warranty
Expenses
|
Balance
End
of Year
|
||||||||||||
(amount in thousands)
|
||||||||||||||||
Year Ended December 31, 2019
|
$
|
30
|
$
|
--
|
$
|
--
|
$
|
30
|
||||||||
Year Ended December 31, 2018
|
$
|
30
|
$
|
--
|
$
|
--
|
$
|
30
|
||||||||
Year Ended December 31, 2017
|
$
|
51
|
$
|
--
|
$
|
(21
|
)
|
$
|
30
|
|
Quarters Ended
|
|||||||||||||||
March 31
|
June 30
|
Sept. 30
|
Dec. 31
|
|||||||||||||
2019
|
||||||||||||||||
Revenue
|
$
|
31,166
|
$
|
36,048
|
$
|
45,531
|
$
|
46,473
|
||||||||
Gross profit
|
8,976
|
10,015
|
16,313
|
17,040
|
||||||||||||
(Loss) income before income taxes and non-controlling interest
|
(3,137
|
)
|
(1,974
|
)
|
3,708
|
(838
|
)
|
|||||||||
Net (loss) income attributable to Telos Corporation (1)(2)
|
(3,413
|
)
|
(1,741
|
)
|
2,233
|
(3,480
|
)
|
|||||||||
2018
|
||||||||||||||||
Revenue
|
$
|
32,401
|
$
|
34,943
|
$
|
34,695
|
$
|
35,977
|
||||||||
Gross profit
|
10,232
|
12,078
|
16,287
|
14,465
|
||||||||||||
(Loss) income before income taxes and non-controlling interest
|
(1,693
|
)
|
450
|
4,722
|
(1,711
|
)
|
||||||||||
Net (loss) income attributable to Telos Corporation (1)(3)
|
(1,986
|
)
|
(87
|
)
|
4,113
|
(3,680
|
)
|
(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) |
Net income for the third quarter of 2019 is attributable to $2.6 million in proprietary software sales which carry lower cost of sales.
|
(3) |
Net income for the third quarter of 2018 included $5.6 million of revenue accruals for multiple contracts as a result of several years of cumulative
indirect rate adjustments which did not include direct costs in Secure Mobility and Network Management/Defense Enterprise deliverables.
|
(1)
|
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of
the company;
|
(2) |
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S.
generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
|
(3) |
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that
could have a material effect on the financial statements.
|
4.9
|
Amended and Restated Subordinated Promissory Note, dated April 18, 2017, by Telos Corporation in favor of Porter Foundation Switzerland (Incorporated by reference to Exhibit 4.7 filed with the Company’s Current Report on Form 8-K on April 24, 2017)
|
4.10
|
Third Amendment to Credit Agreement and Waiver, dated March 30, 2018, among Telos Corporation, Xacta Corporation, ubIQuity.com, Inc., Teloworks, Inc., Enlightenment Capital Solutions Fund II, L.P., and the lenders
party thereto (Incorporated by reference to Exhibit 4.10 filed with the Company’s Form 10-K report for the year ended December 31, 2017)
|
4.11
|
Fourth Amendment to Credit Agreement and Waiver; First Amendment to Fee Letter between Telos Corporation and Enlightenment Capital Solutions Fund II, L.P. dated July 19, 2019 (Incorporated by reference to Exhibit 99.1 filed with the Company’s Current Report on Form 8-K on July 23, 2019)
|
4.12
|
Fifth Amendment to Credit Agreement and Second Amendment to Fee Letter between Telos Corporation and Enlightenment Capital Solutions Fund II, L.P. dated March 26, 2020 (Incorporated by reference to Exhibit 99.1 filed with the Company’s Current Report on Form 8-K on March 30, 2020)
|
10.1*
|
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)
|
10.2*
|
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)
|
10.3*
|
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)
|
10.4*
|
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)
|
10.5*
|
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)
|
10.6*
|
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)
|
10.7*
|
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)
|
10.8*
|
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)
|
10.9*
|
Employment Agreement, dated as of January 4, 2013, 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)
|
10.10
|
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)
|
10.11
|
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)
|
10.12
|
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)
|
10.13
|
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)
|
10.14
|
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)
|
10.15
|
Accounts Receivable Purchase Agreement between Telos Corporation and Republic Capital Access, LLC dated July 15, 2016 (Incorporated by reference to Exhibit 99.1 filed with the Company’s Current Report on Form 8-K on July 21, 2016)
|
10.16
|
Financing and Security Agreement between Telos Corporation and Action Capital Corporation, dated July 15, 2016
(Incorporated by reference to Exhibit 99.2 filed with the Company’s Current Report on Form 8-K on July 21, 2016)
|
10.17*
|
Telos Corporation 2016 Omnibus Long-Term Incentive Plan (Incorporated by reference to Exhibit 10.3 filed with the
Company’s Form 10-Q report for the quarter ended June 30, 2016)
|
10.18*
|
Notice of Grant of Restricted Stock (Incorporated by reference to Exhibit 10.4 filed with the Company’s Form 10-Q
report for the quarter ended June 30, 2016)
|
10.19
|
Amendment to Financing and Security Agreement Between the Company and Action Capital Corporation dated September 6, 2016 (Incorporated by reference to Exhibit 99.1 filed with the Company’s Current Report on Form 8-K on September 9, 2016)
|
10.20*
|
Telos ID Sale Bonus Plan (Incorporated by reference to Exhibit 10.48 filed with the Company’s Form 10-K report
for the year ended December 31, 2016)
|
10.21
|
First Amendment to Accounts Receivable Purchase Agreement between Telos Corporation and Republic Capital Access, LLC dated March 2, 2018 (Incorporated by reference to Exhibit 10.48 filed with the Company’s Form 10-K report for the year ended December
31, 2017)
|
10.22*
|
Telos Corporation Senior Officer Incentive Program, Adopted as Revised March 29, 2018 (Incorporated by reference to Exhibit 10.49 filed with the Company’s Form 10-K report for the year ended December 31, 2017)
|
10.23
|
Amendment to Financing and Security Agreement Between Telos Corporation and Action Capital Corporation dated August 13, 2018 (Incorporated by reference to Exhibit 10.1 filed with the Company’s Form 10-Q report for the quarter ended June 30, 2018)
|
10.24+
|
|
21+
|
|
31.1+
|
|
31.2+
|
|
32+
|
|
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:
|
April 10, 2020
|
||
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)
|
April 10, 2020
|
|
John B. Wood
|
|||
/s/ Michele Nakazawa
|
Chief Financial Officer (Principal Financial and Accounting Officer)
|
April 10, 2020
|
|
Michele Nakazawa
|
|||
Director
|
|||
William H. Alderman
|
|||
/s/ Bernard C. Bailey
|
Director
|
April 10, 2020
|
|
Bernard C. Bailey
|
|||
/s/ David Borland
|
Director
|
April 10, 2020
|
|
David Borland
|
|||
/s/ Bruce R. Harris
|
Director
|
April 10, 2020
|
|
Bruce R. Harris, Lt. Gen., USA (Ret.)
|
|||
/s/ Charles S. Mahan, Jr.
|
Director
|
April 10, 2020
|
|
Charles S. Mahan, Jr. Lt. Gen., USA (Ret)
|
|||
/s/ John W. Maluda
|
Director
|
April 10, 2020
|
|
John W. Maluda, Major Gen., USAF (Ret)
|
|||
/s/ Robert J. Marino
|
Director
|
April 10, 2020
|
|
Robert J. Marino
|
|||
Director
|
|||
Andrew R. Siegel
|
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
|
Telos APAC Pte. Ltd.
|
Singapore |
Date: April 10, 2020
|
/s/ John B. Wood
|
John B. Wood
|
Chief Executive Officer (Principal Executive Officer)
|
Date: April 10, 2020
|
/s/ Michele Nakazawa
|
Michele Nakazawa
|
Chief Financial Officer (Principal Financial and Accounting Officer)
|
Date: April 10, 2020
|
/s/ John B. Wood
|
John B. Wood
|
Chief Executive Officer (Principal Executive Officer)
|
Date: April 10, 2020
|
/s/ Michele Nakazawa
|
Michele Nakazawa
|
Chief Financial Officer (Principal Financial and Accounting Officer)
|
1.1
|
The definition of Availability Period is amended to mean June 30, 2022.
|
2.1
|
Seller has the power and authority and legal right to execute and deliver this Amendment and to perform and observe the
terms of this Amendment. The execution, delivery and performance of this Amendment by Seller have been duly authorized by Seller by all necessary action and Seller has duly executed and delivered this Amendment.
|
2.2
|
This Amendment constitutes the legal, valid and binding obligation of Seller, enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors’ rights generally and by general equitable principles (whether enforcement
is sought by proceedings in equity or at law).
|
2.3
|
No Event of Default has occurred and is continuing under the Agreement, both before and immediately after giving effect to
this Amendment.
|
2.4
|
Since June 30, 2019, no event or events have occurred which have had or could reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect under the Agreement.
|
3.1
|
From and after the Amendment Effective Date, all references to the Agreement shall, unless otherwise specifically provided,
be references to the Agreement as amended by this Amendment and as the same may be amended, supplemented or otherwise modified from time to time.
|
3.2
|
Seller hereby ratifies and reaffirms all of its obligations, contingent or otherwise, under the Agreement. Seller hereby
acknowledges that, except as expressly modified herein, the Agreement remains in full force and effect and is hereby ratified and reaffirmed.
|
3.3
|
This Amendment may be executed by the Parties on any number of separate counterparts (including by facsimile or other
electronic transmission), and all of said counterparts taken together shall be deemed to constitute one and
|
3.4
|
THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF VIRGINIA WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW THEREOF WHICH WOULD REQUIRE THE APPLICATION OF THE LAW OF ANY OTHER JURISDICTION.
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3.5
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If any one or more of the covenants, agreements, provisions or terms of this Amendment shall for any reason whatsoever be
held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Amendment and shall in no way affect the validity or enforceability of the
other provisions of this Amendment or rights of any party hereto; provided, that in case any provision in or obligation under this Amendment should
be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected
or impaired thereby. The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the
invalid, illegal or unenforceable provisions.
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3.6
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Section headings used herein are for convenience of reference only, are not part of this Amendment and are not to affect the
construction of, or to be taken into consideration in interpreting, this Amendment.
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REPUBLIC CAPITAL ACCESS, LLC
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By:
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/s/ Timothy J. Gilmore
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Name:
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Timothy J. Gilmore
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Title:
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Chief Financial Officer
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TELOS CORPORATION
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By:
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/s/ Michele Nakazawa
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Name:
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Michele Nakazawa
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Title:
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CFO
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