NASDAQ: TLS

Security Solutions Segment:

The Security Solutions segment delivers cybersecurity, cloud, identity, and secure messaging solutions that help government and commercial customers protect critical systems, manage cyber risk, and operate securely in complex and regulated environments. This segment combines cyber GRC solutions, secure cloud services, identity and biometric technologies, and secure messaging platforms to support mission-critical requirements for government and commercial customers operating in highly regulated and security-sensitive environments.

Security Solutions represented 90.8% and 70.9% of total revenues for fiscal years 2025 and 2024, respectively.

The Security Solutions segment offers the following solutions and services:

•Xacta: Deployed at some of the world's most security-conscious organizations, Xacta is a cyber GRC automation platform designed to help its customers meet the complex challenges of managing cyber risk and security compliance by automating processes for assessment and authorization, remediation, and continuous monitoring.

Xacta is a premier platform delivering automated cyber risk management and continuous compliance processes for systems based in the cloud, on-premises, and in hybrid environments. It supports a wide-range of frameworks and regulatory content, including National Institute of Standards and Technology ("NIST") Risk Management Framework ("RMF"), the Cybersecurity Risk Management Construct for Department of War ("DoW") IT, the NIST Cybersecurity Framework, the Federal Risk and Authorization Management Program ("FedRAMP") and the DoW's Cybersecurity Maturity Model Certification ("CMMC") program, across all industries with no-code customization options for tailoring content to fit the organization's needs.

Recently, Telos launched Xacta.aiTM, the artificial intelligence ("AI") capability at the core of the Xacta cyber GRC platform, dramatically reducing compliance time and effort. Xacta.ai delivers expert-level guidance and real-time insights, empowering organizations to move from reactive compliance to proactive risk management.

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•Cybersecurity Services: We offer solutions and services for the full cybersecurity lifecycle, including RMF consulting services, security assessment and compliance, engineering and evaluation, operations, penetration testing, and digital forensics. With a pedigree in cybersecurity and information assurance that spans three decades, our multi-certified cybersecurity personnel provide services and solutions that deliver continuous security assurance for business, government, and public sector critical infrastructure.

•Telos Automated Message Handling System ("Telos AMHS™"): Telos AMHS is a web-based organizational message distribution and management solution for mission-critical communications; the recognized gold standard for organizational messaging in the U.S. government. Telos AMHS is used by military field operatives for critical communications on the battlefield using the Defense Information System Agency's Organizational Messaging Service and its specialized communications protocols. Telos AMHS is also used by the Intelligence Community ("IC") for timely situational awareness and assessment reporting utilizing the Director of National Intelligence's Information Transport Service, Organizational Messaging data standards and computing infrastructure. Because Telos AMHS supports timely and reliable delivery for authoritative communications, its uses include terrorist warnings, "eyes-only" messages, military execution orders, intelligence information, overflight clearances, and Emergency Action Messages for nuclear command and control. Information exchanged at this level and for these purposes requires operational requirements for time-sensitive, guaranteed delivery, precedence, high availability, and reliability.

•Telos Identity Solutions: Telos provides a portfolio of identity solutions that support secure identity verification, biometric enrollment, and trusted identity services for government and commercial customers. These solutions address requirements related to Know Your Customer (“KYC”), identity proofing, access control, insider threat mitigation, and regulatory compliance, and are deployed across large-scale environments supporting millions of identity transactions through workstations, kiosks, laptops, mobile devices, and access control systems.

Built on secure, enterprise-grade platforms certified and operational across multiple U.S. federal agencies, these offerings enable organizations to deploy modular, scalable services supporting both business-to-business and business-to-consumer identity use cases. Telos supports major digital identity programs in the U.S., including those serving the military, transportation, healthcare, law enforcement, financial services, and civil service organizations. Telos maintains key government certifications and designations, including recognition as a TSA PreCheck enrollment provider, Aviation Channeling Services provider, Federal Bureau of Investigation ("FBI") approved Channeler, and Florida Department of Law Enforcement Registered Live Scan Service Provider.

Telos’ identity offerings include TSA PreCheck enrollment services, IDVetting®, and Aviation Channeling Services (“ACS”), which provide identity enrollment, FBI background check submission, and biometric services for government agencies, transportation security programs, and regulated industries. Through these services, Telos supports high-assurance identity verification and vetting processes for millions of individuals annually in compliance with federal and industry requirements. Telos also offers ONYX®, a proprietary touchless fingerprint biometric technology designed to enable secure and scalable biometric authentication across mobile and enterprise environments.

Secure Networks Segment:

With a focus on enterprise security, the Secure Networks segment provides secure networking architectures and solutions to our customers through secure mobility solutions and network management and defense services. Our net-centric solutions enable collaboration and connectivity to increase efficiency, reduce costs, and improve mission outcomes. Telos provides an extensive range of wired and wireless, fixed and deployable, classified and unclassified voice, data, and video secure network solutions and services to support defense and civilian missions. Our capabilities include network design, operations and sustainment, system integration and engineering, network security and compliance, deployable communications, service desk, defensive cyber operations, and program management.

Secure Networks represented 9.2% and 29.1% of total revenues for fiscal years ended December 31, 2025, and 2024, respectively.

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The Secure Networks segment offers the following solutions and services:

•Secure Mobility: We offer solutions for business and government that enable work off-premise and minimize operational and security concerns across and beyond the enterprise. Our secure mobility team brings credentials to every engagement, supplying deep expertise and experience, highly desirable clearances and industry-recognized certifications for network engineering, mobility, and security. We also offer secure mobility professional services, such as consulting and deployment services, to deliver integrated communications solutions that meet even the most complex needs of civilian, defense, and commercial customers.

•Network Management and Defense: We provide the complete spectrum of managed services and solutions needed for operating, maintaining, and defending complex enterprise networks. Our managed network services reduce the total cost of ownership while also ensuring system and network availability, information protection and assured information delivery.

Telos employs a robust group of network engineers, system administrators, help desk, cybersecurity specialists, and program managers who are experienced with advanced DoW and federal networks, and are certified in the leading tools, technologies, and best practices for network management and administration. We ensure the consistency and continuity of network management services required in today's mission-critical network environments.

Our Customers

Our primary customers include the U.S. federal government, large commercial businesses, state and local governments, and international customers. Our consolidated revenues are largely attributable to prime contracts or subcontracts with our contractors engaged in work for the U.S. federal government. In fiscal year 2025, we generated approximately 91.0% of our revenues from the U.S. federal government, with the remaining attributable to state and local governments, and commercial markets.

Our U.S. federal government customers include the DoW, the intelligence community ("IC"), and multiple civilian and public sector agencies, including the U.S. Department of Homeland Security ("DHS"), the U.S. Department of Justice, the U.S. Department of Energy, the U.S. General Services Administration, the U.S. Department of the Interior, the U.S. Social Security Administration, the U.S. Environment Protection Agency, and more. These customers have a number of subsidiary agencies with separate budgets and procurement functions. Our contracts may be with the highest level of these agencies or with the subsidiary agencies of these customers.

Our commercial customers include some of the largest technology, communications, and professional services companies in the U.S.

Competition

We operate in a competitive market for cybersecurity, governance, risk and compliance software, secure network solutions, and digital identity services. The market is fragmented, with no single company or small group of companies holding a dominant position. Our competitors include large defense contractors that offer overlapping capabilities across multiple service areas, as well as smaller specialty firms focused on risk and compliance management, organizational messaging, information security consulting, and secure network solutions.

Competition for U.S. federal government contracts is particularly intense due to the competitive bidding process that governs both initial contract awards and renewals. Many government contracts require contractors to hold security clearances and employ personnel with specified levels of experience and clearance, which can limit the pool of qualified competitors but may also constrain our ability to scale rapidly.

The markets in which we operate are characterized by evolving technology requirements and changing customer needs. For example, and without limitation, in the identity and biometric solutions market, industry standards and compatible technologies continue to develop rapidly. We compete primarily on the basis of our technical capabilities, our experience serving security-conscious government and commercial customers, our ability to obtain and maintain required security clearances, the quality and reliability of our solutions, and our capacity to anticipate and respond to emerging technological requirements.

Sales and Marketing

As part of our sales and marketing investments, we make corporate investments in functional areas such as contracts, solution architects, and operations to ensure our back-office systems and processes scale for business growth.

Sales

We sell our products and services leveraging a direct sales approach, with a small subset being executed through a handful of partner organizations. Our customer acquisition success extends to commercial customers and vendors seeking to do business with the U.S. federal government; however, our largest portion of revenue lies with the U.S. federal government itself.

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Our sales strategy is to establish a customer foothold with one of our solutions and work to achieve rapid success. We then leverage this customer relationship to generate interest in other solutions from the Telos portfolio. We have a variety of upsell opportunities that allow us to expand our presence within a customer account.

Much of our business is awarded through the submission of formal competitive bids; however, a portion of our revenue is awarded through limited competition or sole-source contracts.

Partner Organizations

Our sales team works with partner organizations like Amazon Web Services ("AWS") to pursue mutual customers and leverage their marketplace platforms and marketing programs.

Marketing

We build market awareness of Telos and our solutions through a variety of marketing programs, including briefings with industry analysts, public relations activities, trade show exhibitions, speaking engagements, and digital marketing. We will continue investing in these activities and targeting additional vertical-specific content creation, targeted advertising campaigns, and search engine marketing. Our sales team works hand-in-hand with our marketing team to develop targeted awareness campaigns for our various solutions that generate valuable leads and contacts.

Research and Development

We developed proprietary software-based solutions in various platforms related to security and cyber risk management. We invest substantial resources in research and development to innovate new solutions, enhance our offerings and grow opportunities by developing new features and modules for our existing platforms. See Note 2 - Summary of Significant Accounting Policies (under the caption "Research and Development") included in our notes to consolidated financial statements.

We are leveraging our improved agile innovation and rapid automated development practices to rapidly establish prototypes that we can fully test for suitability and to pre-establish enterprise risk level across a variety of government networks and cloud environments. We are committed to and view our continued investment in research and development as a key factor to our long-term business success.

Human Capital Resources

As of December 31, 2025, we had 525 employees, of which 509 were full-time employees. As of December 31, 2025, approximately 90.1% of our workforce was located in the United States. Approximately 309 of our U.S.-based employees held U.S. security clearances, and 23.0% self-identified as veterans of U.S. military service as of that date. Our employees are not represented by a labor union or covered by a collective bargaining agreement. We have not experienced any work stoppages, and we consider relations with our employees to be good.

Telos places a strong emphasis on supporting our people. Our management team is committed to maintaining a corporate culture that fosters mutual respect and job satisfaction for our people while delivering innovation and value to customers and shareholders. This commitment is reflected in our core values:

Always with integrity, at Telos we:

Build trusted relationships,

Work hard together,

Design and deliver superior solutions, and

Have fun doing it.

These values are woven throughout the fabric of Telos; they are reflected in our hiring practices, reinforced regularly, and reviewed during appraisals. Employees are encouraged to challenge themselves and each other to exhibit the core values in all activities.

Our employees are provided with multiple reporting channels should they observe activities inconsistent with our core values. While employees are encouraged first to speak openly about any issues, a 24/7 hotline provides an opportunity to express concerns anonymously.

We consider the foundational value of integrity to be a non-negotiable requirement of employment, and an expectation of suppliers, partners, and our customers. We guard our reputation and will take necessary action to protect it. An essential part of our brand promise is always to engage employees, customers, partners, suppliers, and investors with integrity.

As part of our effort to improve our disclosures around human capital issues, we provided a public report pursuant to the Sustainability Accounting Standards Board ("SASB") Software & IT Service Standard, which addresses, in part, metrics relating to recruiting and managing a global, diverse and skilled workforce.

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Talent Acquisition and Retention

We operate in a very competitive environment for talent. To ensure we can attract the most well-qualified employees, we employ strategic sourcing methods, innovative recruitment campaigns, and outreach initiatives to attract a diverse pool of candidates. This involves leveraging various channels, such as job boards, job fairs, social media platforms, and diversity-focused partnerships, to engage with candidates from different backgrounds and experiences.

We continuously enhance our employee value proposition by offering a range of benefits and supplemental programs that support our employees' physical, mental, and financial well-being. In addition, we are strengthening our performance management program to ensure employees receive meaningful feedback, opportunities for growth, and recognition for their contributions, fostering both individual and organizational success.

In addition, at Telos, we help our employees succeed by providing flexibility in where and how they work. The employees' ability to work remotely or in a hybrid arrangement is a strategy that helps us attract, hire and retain the best people, regardless of their specific location. This strategy increases employee empowerment and satisfaction, drives efficiency, and enables us to hire from a broad and diverse talent pool.

We are committed to providing a work environment free of discrimination and harassment, where our employees can do their best work, bring their whole selves to work, feel supported, and in turn, support others. We strive to create a working environment where everyone feels included and respected and has an equal opportunity to contribute. We promote collaboration and encourage employees to maximize their potential by bringing varied views, experiences, and perspectives to their work. Our objective is to continue to improve our hiring, development, training, advancement, and retention of talent and to foster a synergistic environment at Telos.

Seasonality

We generally experience seasonality due to our key customers' fiscal year ends and procurement cycles. We derive a substantial portion of our revenue from the U.S. federal government, whose fiscal year ends on September 30 of each year, which may impact our third fiscal quarter. In addition, our quarterly results may be impacted by the number of working days in a given quarter. See "Risk Factors — We are subject to the seasonality of U.S. federal government spending."

U.S. Federal Government Contracts, Regulation, and Legislation

Our business is heavily regulated, and we must comply with and are affected by laws and regulations relating to the formation, administration and performance of U.S. federal government and other contracts. U.S. federal government contracts generally are subject to the Federal Acquisition Regulation ("FAR") and Defense Federal Acquisition Regulation Supplement ("DFARS"), which sets forth policies, procedures and requirements for acquiring goods and services by the U.S. federal government, and agency-specific regulations that implement or supplement the FAR or DFARS. These regulations impose a broad range of requirements, many of which are unique to government contracting, including various procurement, security, contract pricing and cost, contract termination, and adjustments and audit requirements. Among other things, these laws and regulations:

•Impose specific and unique cost accounting practices that may differ from Generally Accepted Accounting Principles in the United States of America ("U.S. GAAP" or "GAAP") and therefore require reconciliation;

•Define allowable and unallowable costs and otherwise govern our right to reimbursement under various cost-type U.S. federal government contracts;

•Require compliance with U.S. federal government Cost Accounting Standards;

•Require reviews by the Defense Contract Audit Agency, Defense Contract Management Agency and other U.S. federal government agencies for compliance with government requirements for a contractor's business system; and

•Restrict the use and dissemination of, and require the protection of, unclassified contract-related information and information classified for national security purposes and the export of certain products and technical data.

U.S. federal government customers employ several contracting methods to purchase services and products. Budgetary pressures and reforms in the procurement process have caused many U.S. federal government customers to increasingly purchase services and products using contracting methods that allow them to select multiple contract winners or pre-qualify certain contractors to provide services or products on established general terms and conditions rather than through single-award contracts. The predominant contracting methods through which U.S. federal government agencies procure services and products include definitive award contracts, IDIQ contracts, Blanket Purchase Agreements ("BPAs"), U.S. General Service Administration ("GSA") schedule contracts and other transactional agreements ("OTAs").

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Government contracts are subject to congressional funding. Consequently, at the outset of a program, a contract is usually partially funded, and Congress annually determines if additional funds are to be appropriated to the contract. All of our government customers have the right to terminate their contract with us at their convenience or in the event that we default. Most of our contracts have cancellation terms that permit us to recover all or a portion of our incurred costs and fees for work performed where the U.S. federal government issues a termination for convenience.

A portion of our business is classified by the U.S. federal government and cannot be specifically described. The operating results of these classified programs are included in our consolidated financial statements.

We also actively monitor legislative initiatives and carefully follow legislative and contracting trends and activities, and evolve our strategies to take these into consideration and respond to opportunities as they develop. These regulations and risks are described in more detail below under Item 1A, "Risk Factors" in this Annual Report on Form 10-K.

Environmental, Social, and Governance Matters

We strive to operate our business in an environmentally responsible manner and in support of sustainable long-term financial performance. Our Environmental, Social and Governance ("ESG") task force is charged with addressing climate and environmentally-related risks and opportunities, including our publicly-disclosed climate transition plan. The Company publicly reports certain climate change-related information via CDP and provides public sustainability disclosures using the SASB Software & IT Service Standard. By making these disclosures, however, we have not concluded that the information disclosed is material to our business and this information is not incorporated by reference into and is not a part of this Annual Report on Form 10-K. The Board of Directors authorized the Nominating and Corporate Governance Committee to oversee the Company's ESG efforts, which include climate-related risks and opportunities.

See Item 1A, "Risk Factors," for discussion of risks related to the global climate.

Company Website and Available Information

Our corporate headquarters is located at 19886 Ashburn Road, Ashburn, Virginia 20147, and our telephone number is (703) 724-3800. Our website can be accessed at www.telos.com, which contains information about our Company and operations. Through a link on the Investor Relations section of our website, copies of each of our filings with the U.S. Securities and Exchange Commission ("SEC") can be viewed and downloaded free of charge as soon as reasonably practicable after the reports and amendments are electronically filed with or furnished to the SEC. The information on our website is not incorporated by reference into and is not part of this Annual Report on Form 10-K.

The SEC also maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including Telos.

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