TELOS CORP

Our primary sources of liquidity are cash on hand, future operating cash flows, and, if needed, borrowings under our $30.0 million revolving credit facility, with an available expansion feature of up to $30.0 million of additional revolver facility. While a variety of factors related to sources and uses of cash, such as timeliness of accounts receivable collections, vendor credit terms, or significant collateral requirements, ultimately impact our liquidity, such factors may or may not have a direct impact on our liquidity.

As of March 31, 2024, we had cash and cash equivalents of $93.9 million and our working capital was $92.7 million.

We place a strong emphasis on liquidity management. This focus gives us the flexibility for capital deployment while preserving a strong balance sheet to position us for future opportunities. We believe we have adequate funds on hand to execute our financial and operating strategy. Our overall financial position and liquidity are strong. Although no assurances can be given, we believe the available cash balances and access to our revolving credit facility are sufficient to maintain the liquidity we require to meet our operating, investing and financing needs for the next 12 months.

Cash Flow

Net cash used in operating activities for the three months ended March 31, 2024 was $0.4 million, an increase of $0.3 million compared to the same period in 2023. The change is primarily driven by the Company's operating losses, the timing of receipts of customer payments, the timing of payments to vendors and employees, and the timing of inventory turnover, adjusted for certain non-cash items that do not impact cash flows from operating activities.

Net cash used in investing activities for the three months ended March 31, 2024 slightly decreased by $0.4 million, compared to the same period of the prior year, primarily due to the decreases in capital expenditures in 2024 and a $0.6 million payment for the DFT holdback in February 2023, with no similar payment in 2024. This was partially offset by the purchase of an investment of $0.9 million in 2024, with no similar transaction in 2023.

Net cash used in financing activities for the three months ended March 31, 2024 decreased by $1.3 million, compared to the same period in 2023. This is primarily attributable to the decreases in payment of tax withholding related to net share settlement of equity awards of $0.4 million in the first quarter of 2024 compared with $1.5 million in the same period of 2023.