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 September 30, 2025, we had cash and cash equivalents of $59.1 million and our working capital was $65.6 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 provided by operating activities for the nine months ended September 30, 2025, was $22.2 million, an increase of $37.6 million compared to the same period in 2024. The increase is attributable to favorable changes in working capital, primarily driven by timing of receipts from customers and the timing of payments to vendors, coupled with higher cash earnings (i.e., net loss, excluding non-cash items that do not impact cash flows from operating activities).

Net cash used in investing activities for the nine months ended September 30, 2025, decreased by $5.3 million, compared to the same period of the prior year, primarily due to the cash outflow from the purchase of an investment of $3.0 million in 2024, with no similar transaction in 2025, coupled by a decrease of $2.3 million in capital expenditures in 2025.

Net cash used in financing activities for the nine months ended September 30, 2025, increased by $8.9 million, compared to the same period in 2024. This is primarily attributable to the repurchase of common stock for $7.6 million in 2025 under the share repurchase program (See Note 12 – Share Repurchases), with no similar activity in 2024, and an increase in payment of tax withholding related to net share settlement of equity awards by $1.1 million in fiscal year 2025.