TELOS CORP

Our primary sources of liquidity are cash on hand, future operating cash flows, and, if needed, borrowings under our $15.0 million senior secured revolving credit facility, with an expansion feature of up to $15.0 million of additional revolver capacity, maturing on December 30, 2026. 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 December 31, 2025, we had cash and cash equivalents of $53.2 million and our working capital was $57.6 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 are sufficient to maintain the liquidity we require to meet our operating, investing and financing needs for the next 12 months.

For the year ended December 31, 2025, net cash provided by operating activities was $30.2 million, compared with net cash used in operating activities of $25.9 million in 2024, an increase of $56.1 million compared year over year. The change in cash flow from operating activities is attributable to the favorable changes in working capital, primarily driven by timing of receipts from customer 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 year ended December 31, 2025, decreased by $7.8 million in cash outflow compared to the same period in 2024, 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 $4.8 million in capital expenditures in 2025.

For the year ended December 31, 2025, net cash used in financing activities was $22.7 million, compared to $2.0 million in 2024. This is primarily attributable to the repurchases of common stock for $13.6 million in 2025 under the share repurchase program, with no similar activity in 2024, and an increase in payments of tax withholding related to the net share settlement of equity awards of $7.3 million in 2025, compared with $0.5 million in 2024.

Commitments from Contractual Obligations

The Company does not have any other material cash requirements from contractual obligations. As of December 31, 2025, we had contractual commitments to make payments under existing lease obligations on various office space and equipment under non-cancelable operating and finance leases, and an obligation under a service agreement. We reported current and long-term lease liabilities; see Note 12 - Leases in the consolidated financial statements within this 10-K.

There were no outstanding commitments that were considered material for capital expenditures on December 31, 2025.

From time to time, we may be subject to various audits, reviews, investigations, lawsuits and claims related to our business. See Note 18 - Commitments, Contingencies and Subsequent Events to the consolidated financial statements within this 10-K for further discussion of other commitments and contingencies.

Revolving Credit Facility

On December 30, 2022, we entered into a senior secured credit facility with JPMorgan Chase Bank, N.A. ("Credit Agreement") that provided for a $30.0 million senior secured revolving credit facility, with the option of issuing letters of credits thereunder and with an uncommitted expansion feature of up to $30.0 million of additional revolver capacity, with a maturity date on December 30, 2025. On April 12, 2023, we amended our Credit Agreement and revised certain provisions on the terms of the covered collateral. On December 30, 2025, we amended our Credit Agreement to extend the maturity date to December 30, 2026. The amendment also modifies the revolving commitment to $15.0 million, with an expansion feature of up to $15.0 million of additional credit capacity. See Note 9 -Revo lving Credit Facility to the consolidated financial statements contained within this 10-K for additional information.

The Credit Agreement contains customary terms and conditions, including certain covenant requirements. As of December 31, 2025, there were no outstanding balances under the revolving credit facility and we were in compliance with all covenants contained in the Credit Agreement.