What changed in this filing

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Item 1. Financial Statements

2024-05-10 compared with 2023-11-09 · 169 added, 261 removed, 381 unchanged (53% of the section changed)

2 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended For the Nine Months Ended

September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

For the Three Months Ended

March 31, 2024 March 31, 2023

(in thousands, except per share amounts)

2 unchanged sentences

Total revenue 29,619 35,222

Cost of sales – services (exclusive of depreciation and amortization shown separately below) 20,683 36,555 58,613 97,311

Cost of sales – products (exclusive of depreciation and amortization shown separately below) 545 5,902 4,561 10,886

Cost of sales – services (excluding depreciation and amortization) 17,059 19,092

Cost of sales – products (excluding depreciation and amortization) 321 2,472

Depreciation and amortization 1,278 176

1 unchanged sentence

Gross profit 10,961 13,482

Research and development expenses 3,170 2,833

Selling, general and administrative expenses 16,229 23,619

Sales and marketing 1,728 3,042 5,164 13,035

Research and development 3,154 3,981 8,633 13,900

General and administrative 17,824 22,706 57,187 72,997

Total selling, general and administrative expenses 22,706 29,729 70,984 99,932

Operating loss ( 8,438 ) ( 12,970 )

13 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

For the Three Months Ended For the Nine Months Ended

September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

For the Three Months Ended

March 31, 2024 March 31, 2023

(in thousands)

2 unchanged sentences

Foreign currency translation adjustments ( 35 ) 13

Actuarial loss on pension liability adjustment ( 30 ) —

Comprehensive loss $ ( 7,443 ) $ ( 10,733 )

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

(in thousands, except per share amount and share data)

18 unchanged sentences

Operating lease obligations – current portion 195 97

Other financing obligations – current portion — 1,247

Other current liabilities 2,032 2,324

1 unchanged sentence

Finance lease obligations – non-current portion 9,066 9,518

Operating lease liabilities – non-current portion 65 27

Other financing obligations – non-current portion — 7,211

Operating lease obligations – non-current portion 576 123

Deferred income taxes 825 813

3 unchanged sentences

Stockholders’ equity:

Common stock, $ 0.001 par value, 250,000,000 shares authorized, 69,623,209 shares and 67,431,632 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

Common stock, $ 0.001 par value, 250,000,000 shares authorized, 71,757,998 shares and 70,239,890 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

Additional paid-in capital 436,616 433,781

Accumulated other comprehensive income ( 24 ) ( 55 )

Accumulated other comprehensive loss ( 125 ) ( 60 )

Accumulated deficit ( 282,205 ) ( 274,827 )

4 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended

September 30, 2023 September 30, 2022

For the Three Months Ended

March 31, 2024 March 31, 2023

(in thousands)

1 unchanged sentence

Net loss $ ( 7,378 ) $ ( 10,746 )

Adjustments to reconcile net loss to cash flows from operations:

Adjustments to reconcile net loss to cash used in operating activities:

Stock-based compensation 2,984 9,499

14 unchanged sentences

Other current liabilities ( 306 ) ( 477 )

Net cash (used in)/provided by operating activities ( 3,367 ) 20,118

Net cash used in operating activities ( 350 ) ( 100 )

Cash flows from investing activities:

Capitalized software development costs ( 3,202 ) ( 3,800 )

Purchase of investment ( 850 ) —

Purchases of property and equipment ( 97 ) ( 223 )

Payment of DFT holdback amount — ( 564 )

Net cash used in investing activities ( 4,149 ) ( 4,587 )

3 unchanged sentences

Repurchase of common stock — ( 139 )

Payment of DFT holdback amount ( 564 ) —

Payments for debt issuance costs — ( 114 )

8 unchanged sentences

Capital Accumulated

Other Comprehensive Income Accumulated Deficit Total Stockholders’

Other Comprehensive Loss Accumulated Deficit Total Stockholders’

Shares Amount

(in thousands)

Balance at June 30, 2023 69,467 $ 108 $ 426,656 $ ( 53 ) $ ( 259,175 ) $ 167,536

Net loss — — — — ( 8,672 ) ( 8,672 )

Foreign currency translation gain — — — 29 — 29

Restricted stock unit awards vested, net of shares withheld to cover tax withholding 156 — ( 90 ) — — ( 90 )

Stock-based compensation — — 5,218 — — 5,218

Balance at September 30, 2023 69,623 $ 108 $ 431,784 $ ( 24 ) $ ( 267,847 ) $ 164,021

Balance at June 30, 2022 67,594 $ 106 $ 391,967 $ ( 9 ) $ ( 217,752 ) $ 174,312

Balance at December 31, 2023 70,240 $ 109 $ 433,781 $ ( 60 ) $ ( 274,827 ) $ 159,003

Net loss — — — — ( 7,378 ) ( 7,378 )

Foreign currency translation loss — — — ( 35 ) — ( 35 )

Actuarial loss on pension liability adjustment — — — ( 30 ) — ( 30 )

Restricted stock unit awards vested, net of shares withheld to cover tax withholding 1,148 1 ( 431 ) — — ( 430 )

Stock-based compensation — 1,648 — — 1,648

Repurchase of common stock ( 499 ) — ( 4,681 ) — — ( 4,681 )

Balance at September 30, 2022 67,300 $ 106 $ 403,164 $ ( 30 ) $ ( 226,207 ) $ 177,033

Common Stock Additional Paid-in

Capital Accumulated

Other Comprehensive Income Accumulated Deficit Total Stockholders’

Shares Amount

(in thousands)

Issuance of common stock for 401K match 370 — 1,618 — — 1,618

Balance at March 31, 2024 71,758 $ 110 $ 436,616 $ ( 125 ) $ ( 282,205 ) $ 154,396

Balance at December 31, 2022 67,431 $ 106 $ 412,708 $ ( 55 ) $ ( 240,405 ) $ 172,354

4 unchanged sentences

Issuance of common stock for 401K match 777 1 1,941 — — 1,942

Balance at September 30, 2023 69,623 $ 108 $ 431,784 $ ( 24 ) $ ( 267,847 ) $ 164,021

Balance at December 31, 2021 66,767 $ 105 $ 367,153 $ ( 27 ) $ ( 186,977 ) $ 180,254

Net loss — — — — ( 39,230 ) ( 39,230 )

Foreign currency translation loss — — — ( 3 ) — ( 3 )

Restricted stock unit awards vested, net of shares withheld to cover tax withholding 1,392 1 ( 3,136 ) — — ( 3,135 )

Stock-based compensation — — 46,830 — — 46,830

Repurchase of common stock ( 859 ) — ( 7,683 ) — — ( 7,683 )

Balance at September 30, 2022 67,300 $ 106 $ 403,164 $ ( 30 ) $ ( 226,207 ) $ 177,033

Balance at March 31, 2023 69,388 $ 108 $ 420,980 $ ( 42 ) $ ( 251,151 ) $ 169,895

See accompanying notes to the unaudited consolidated financial statements.

4 unchanged sentences

(a holding company for Xacta Corporation), and 100 % ownership interest in Telos Identity Management Solutions, LLC ("Telos ID"), Teloworks, Inc., and Telos APAC Pte.

("Telos APAC").

On March 13, 2024, the Board unanimously approved the dissolution of Telos APAC, a pre-operating foreign subsidiary, pursuant to a plan of complete liquidation and dissolution.

SIGNIFICANT ACCOUNTING POLICIES

9 unchanged sentences

We have continued to follow the accounting policies set forth in those financial statements.

Basis of Comparison - Revision of Previously Issued Interim Financial Statements

Basis of Comparison

Certain prior-period amounts have been reclassified to conform to the current period presentation.

In the current period, the Company reclassified and presented depreciation and amortization separately from the cost of sales line items.

The reclassification had no impact on the statement of operations.

During the course of preparing the Company's consolidated financial statements for the year ended December 31, 2022, we identified that stock-based compensation expense related to performance-based restricted stock unit (“PSU”) awards with market conditions was erroneously reversed when those PSUs were forfeited during the three and nine months ended September 30, 2022.

Although the Company has determined that the error did not have a material impact on its previously issued interim consolidated financial statements, it revised the previously reported interim financial information in conjunction with the issuance of its quarterly filings on Form 10-Q for the quarter ended September 30, 2023.

Further information regarding the misstatements and related revisions are included under Note 20 – Revision of Prior Year Interim Financial Statements to the unaudited consolidated financial statements.

Starting Q3 2023, we reclassified and presented depreciation and amortization separately from the cost of sales line items.

Starting Q1 2024, we reclassified sales and marketing expenses and general and administrative expenses to be presented together as selling, general and administrative expenses.

The reclassifications had no net impact on gross profit, total selling, general and administrative expenses or net loss in the unaudited consolidated statements of operations.

Use of Estimates

4 unchanged sentences

We base our estimates on historical experience, currently available information, and various other assumptions that we believe are reasonable under the circumstances.

Management evaluates these estimates and assumptions on an ongoing basis, including those relating to revenue recognition on cost estimation on certain contracts, allowance for credit losses, inventory obsolescence, valuation allowance for deferred tax assets, income taxes, certain assumptions related to stock-based compensation, valuation of intangible assets and goodwill, restructuring expenses accruals, and contingencies.

Management evaluates these estimates and assumptions on an ongoing basis, including those relating to revenue recognition on cost estimation on certain contracts, allowance for credit losses, inventory obsolescence, valuation allowance for deferred tax assets, income taxes, certain assumptions related to share-based compensation, valuation of intangible assets and goodwill, restructuring expenses accruals, and contingencies.

Actual results could differ from those estimates.

The impact of changes in estimates is recorded in the period in which they become known.

Stock-based Compensation

The Company grants stock-based compensation awards under the 2016 Omnibus Long-Term Incentive Plan, as amended (the "2016 LTIP").

Our 2016 LTIP provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, and dividend equivalent rights to our senior executives, directors, employees, and other eligible service providers.

The stock options granted under the 2016 LTIP expire no more than 10 years after the date of grant.

The service-based restricted stock units ("RSUs") generally vest in installments over a period of up to three years from the date of grant.

The PSUs vest upon the achievement of a defined performance target during a defined performance period.

The fair value of each RSU award is based on the closing stock price on the date of grant, while the fair value of the PSU awards with market condition is based on using a Monte Carlo simulation.

The Company estimates the fair value of stock options on the date of the grant using an option pricing model.

The option pricing model takes into consideration the current share price of the underlying common stock, exercise price of the option, expected term, risk-free interest rate and the volatility of share price.

These considerations directly affect the amount of compensation expense that will ultimately be recognized.

We recognized these stock-based payment transactions when services from the employees, directors and other eligible service providers are received and recognized a corresponding increase in additional paid-in capital in our unaudited consolidated balance sheets.

The measurement objective for these equity awards is the estimated fair value at the date of grant of the equity instruments that we are obligated to issue when the employees, directors and other eligible service providers have rendered the requisite service and satisfied any other conditions necessary to earn the right to benefit from the instruments.

The stock-based compensation expense for an award is recognized ratably over the requisite service period, which is generally the vesting period or if it is probable that the performance condition will be satisfied.

For the comparative periods, the stock-based payment transactions are recognized in accordance with ASC 718, "Compensation - Stock Compensation" and ASU 2018-07, "Compensation - Stock Compensation (Topic 718):

Improvements to Non-employee Share-Based Payment Accounting".

Selling, General and Administrative Expenses

Selling, general and administrative expenses include general and administrative expenses, as well as direct and indirect sales and marketing expenses.

These costs consists primarily of compensation and benefits (including incentive-based compensation), advertising, facilities, and certain types of depreciation and amortization.

Restructuring Expenses

6 unchanged sentences

These costs are recognized at fair value in the period in which the costs are incurred.

In the Company's Annual Report on Form 10-K for the year ended December 31, 2022, the Company estimated that the expected restructuring expenses were $ 2.8 million as of December 31, 2022.

In early 2023, the Company updated its total expected restructuring plan costs to $ 4.0 million, based on the Company's review of the restructuring plan for the remainder of 2023.

The restructuring expenses are recorded under "Selling, general and administrative expenses" in the Company's unaudited consolidated statements of operations.

The Company incurred a cumulative amount of $ 3.9 million of restructuring expenses, which is the total expected costs for this restructuring plan, as disclosed in the Company's recent Annual Report on Form 10-K for the year ended December 31, 2023.

The restructuring actions were substantially complete in fiscal year 2023.

The restructuring expenses (adjustments) are included within "Selling, general and administrative expenses" on the Company's unaudited consolidated statements of operations.

Restructuring Expenses (Adjustments)

For the Three Months Ended

March 31, 2024 March 31, 2023

(in thousands)

Severance and related benefit costs $ ( 10 ) $ ( 100 )

Other related costs — 1,300

Total restructuring (adjustments) expenses $ ( 10 ) $ 1,200

At each reporting date, the Company evaluates its restructuring expense accrual to determine if the liabilities reported are still appropriate.

2 unchanged sentences

Severance and related benefit costs (1)

Other related costs Total

(in thousands)

Balance at December 31, 2023 $ 400

(Adjustments)/charges ( 103 ) 1,300 1,197

Adjustments ( 10 )

Cash payments ( 283 )

Balance at September 30, 2023 $ 679 $ — $ 679

(1) Restructuring-related liabilities are reported as part of "Other current liabilities" in the Company's unaudited consolidated balance sheets, see Note 9 - Other Balance Sheet Components for further details.

Balance at March 31, 2024 $ 107

(1) Restructuring expenses accrual is included within "Other current liabilities" on the Company's unaudited consolidated balance sheets (see Note 9 - Other Balance Sheet Components for further details.)

Recent Accounting Pronouncements

From time to time, new accounting standards are issued by the Financial Accounting Standards Board or other standard-setting bodies and are adopted by the Company as of the specified accounting date.

In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures." ASU 2023-07 will affect how we report segment information, starting with our Form 10-K for the year ended December 31, 2024, and our quarterly reports on Form 10-Q starting with our quarterly report for the quarter ended March 31, 2025.

This standard requires that we provide disclosures of significant segment expenses and other segment items that are regularly provided to our chief operating decision maker ("CODM") and included in each reported measure of segment profit or loss.

We will also have to disclose other segment items by reportable segment (i.e.

the difference between reported segment revenues less the significant segment expenses (which are disclosed) less reported segment profit or loss).

We will disclose the CODM and their position within the Company and details about the information that they regularly review to make capital allocation and other operating decisions about each segment, as well as an explanation of how the CODM uses the reported measures and other disclosures.

We are currently evaluating these new segment disclosure requirements and the impact of their adoption on our unaudited consolidated financial statements.

Not Yet Adopted

In December 2024, the FASB issued ASU No.

2023-09, "Income Taxes (Topic 740):

Improvements to Income Tax Disclosure," which requires public entities, on an annual basis, (1) to disclosure specific categories in the rate reconciliation, and (2) to provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5% of the amount computed by multiplying pretax income (loss) by the applicable statutory income tax rate).

This ASU will be effective, for public entities, for the fiscal year beginning after December 15, 2024, with early adoption permitted.

We are currently assessing the impact of the adoption of this ASU on our unaudited consolidated financial statements.

In addition, from time to time, new accounting standards are issued by the Financial Accounting Standard Board or other standard-setting bodies and are adopted by the Company as of the specified accounting date.

Unless otherwise discussed, the Company believes that issued standards not yet effective will not have a material effect on its financial statements.

2 unchanged sentences

The majority of our revenue is recognized over time, as control is transferred continuously to our customers who receive and consume benefits as we perform.

Revenue transferred to customers over time accounted for 89 % of our revenue for the three and nine months ended September 30, 2023, and 87 % and 91 % of our revenue for the three and nine months ended September 30, 2022, respectively.

Revenue transferred to customers over time accounted for 81 % and 89 % of our revenue for the three months ended March 31, 2024 and 2023, respectively.

All of our business groups earn services revenue under a variety of contract types, including time and materials, firm-fixed price, firm-fixed price level of effort, and cost-plus fixed fee contract types, which may include variable consideration.

1 unchanged sentence

This coincides with the point in time the customer obtains control of the product or service, which typically occurs upon customer acceptance or receipt of the product or service, given that we maintain control of the product or service until that point.

Revenue transferred to customers at a point in time accounted for 11 % of our revenue for the three and nine months ended September 30, 2023, and 13 % and 9 % of our revenue for the three and nine months ended September 30, 2022, respectively.

Revenue transferred to customers at a point in time accounted for 19 % and 11 % of our revenue for the three months ended March 31, 2024 and 2023, respectively.

Orders for the sale of software licenses may contain multiple performance obligations, such as maintenance, training, or consulting services, which are typically delivered over time, consistent with the transfer of control disclosed above for the provision of services.

2 unchanged sentences

For certain performance obligations where we are not primarily responsible for fulfilling the promise to provide the goods or services to the customer, do not have inventory risk and have limited discretion in establishing the price for the goods or services, we recognize revenue on a net basis.

We provide for anticipated losses on contracts during the period when the loss is determined by recording an expense for the total expected costs that exceed the total estimated revenue for a performance obligation.

No contract losses were recorded during the three and nine months ended September 30, 2023, and 2022.

Our contracts may include various types of variable considerations and may include estimated amounts in the transaction price, based on all of the information available to us, and to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when any uncertainty associated with the variable consideration is resolved.

We evaluate and include these estimated amounts of variable consideration in the transaction price and as performance on these contracts is complete, we adjust our revenue, when deemed necessary.

No revenue adjustments were recorded during the three months ended March 31, 2024 and 2023.

We provide for anticipated losses on contracts during the period when the loss is determined by recording an expense for the total expected costs that exceeds the total estimated revenue for a performance obligation.

We recorded an immaterial contract loss during the three months ended March 31, 2024.

No contract loss was recorded during the three months ended March 31, 2023.

Disaggregated Revenues

1 unchanged sentence

We treat sales to U.S.

customers as sales within the U.S., regardless of where the services are performed.

Most of our revenues are generated from U.S.

customers as sales within the U.S.

regardless of where the services are performed.

Substantially most of our revenues are generated from U.S.

customers, while international customers are de minimis;

1 unchanged sentence

Revenue by Customer Type

For the Three Months Ended For the Nine Months Ended

September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Amount % Amount % Amount % Amount %

For the Three Months Ended

March 31, 2024 March 31, 2023

Amount % Amount %

(dollars in thousands)

3 unchanged sentences

Revenue by Contract Type

For the Three Months Ended For the Nine Months Ended

September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Amount % Amount % Amount % Amount %

For the Three Months Ended

March 31, 2024 March 31, 2023

Amount % Amount %

(dollars in thousands)

4 unchanged sentences

Revenue Concentration Greater than 10% of Total Revenue

For the Three Months Ended For the Nine Months Ended

September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

For the Three Months Ended

March 31, 2024 March 31, 2023

Department of Defense ("DoD") 56 % 68 %

Contract Balances

Balance Sheet Presentation September 30, 2023 December 31, 2022

Balance Sheet Presentation March 31, 2024 December 31, 2023

(in thousands)

5 unchanged sentences

(1) Net of allowance for credit losses.

The change in the Company's contract assets and contract liabilities during the current period was primarily the result of the timing differences between the Company's performance, invoicing and customer payments.

Revenue recognized for the three and nine months ended September 30, 2023, that was included in the contract liabilities balance at the beginning of each reporting period was $ 1.2 million and $ 5.3 million, respectively.

Revenue recognized for the three and nine months ended September 30, 2022, that was included in the contract liabilities balance at the beginning of each reporting period was $ 0.9 million and $ 5.0 million, respectively.

As of September 30, 2023, we had approximately $ 79.0 million of remaining performance obligations, which we also refer to as funded backlog.

The changes in the Company's contract assets and contract liabilities during the current period were primarily the result of the timing differences between the Company's performance, invoicing and customer payments.

Revenue recognized for the three months ended March 31, 2024 and 2023, that was included in the contract liabilities balance at the beginning of each reporting period was $ 2.7 million and $ 2.5 million, respectively.

As of March 31, 2024, we had approximately $ 36.1 million of remaining performance obligations, which we also refer to as funded backlog.

We expect to recognize approximately 89 % of our remaining performance obligations over the next 12 months, and the balance thereafter.

1 unchanged sentence

Details of Accounts Receivable, Net

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

(in thousands)

7 unchanged sentences

As our primary customer base includes agencies of the U.S.

government, we have a concentration of credit risk associated with our accounts receivable, as 91 % of our billed and unbilled accounts receivable as of September 30, 2023, were directly with U.S.

government, we have a concentration of credit risk associated with our accounts receivable, as 96 % and 91 % of our billed and unbilled accounts receivable as of March 31, 2024 and December 31, 2023, respectively, were directly with U.S.

government customers.

While we acknowledge the potential material and adverse risk of such a significant concentration of credit risk, our past experience collecting substantially all of such receivables provides us with an informed basis that such risk, if any, is manageable.

We perform ongoing credit evaluations of all of our customers and generally do not require collateral or other guarantee from our customers.

We perform ongoing credit evaluations of all of our customers and generally do not require collateral or other guarantees from our customers.

We maintain allowances for potential losses.

1 unchanged sentence

Details of Inventories, Net

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

(in thousands)

4 unchanged sentences

Details of Property and Equipment, Net

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Gross Carrying Amount Accumulated Depreciation and Amortization Net Carrying Value Gross Carrying Amount Accumulated Depreciation and Amortization Net Carrying Value

(in thousands)

Furniture and equipment $ 15,866 $ ( 13,539 ) $ 2,327 $ 16,213 $ ( 13,363 ) $ 2,850

Leasehold improvement 3,211 3,145

Property and equipment, at cost 18,870 19,178

Accumulated depreciation and amortization ( 15,480 ) ( 14,391 )

Property and equipment, net $ 3,390 $ 4,787

Leasehold improvements 3,211 ( 2,631 ) 580 3,211 ( 2,604 ) 607

Total $ 19,077 $ ( 16,170 ) $ 2,907 $ 19,424 $ ( 15,967 ) $ 3,457

Depreciation and Amortization Expense

For the Three Months Ended For the Nine Months Ended

September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

For the Three Months Ended

March 31, 2024 March 31, 2023

(in thousands)

Depreciation & amortization expense $ 548 $ 619 $ 1,700 $ 1,776

The goodwill balance was $ 17.9 million as of September 30, 2023, and December 31, 2022, of which $ 3.0 million is allocated to the Security Solutions segment and $ 14.9 million is allocated to the Secure Networks segment.

Depreciation and amortization expense $ 635 $ 573

The goodwill balance was $ 17.9 million as of March 31, 2024, and December 31, 2023, of which $ 3.0 million is allocated to the Security Solutions segment and $ 14.9 million is allocated to the Secure Networks segment.

Goodwill is subject to annual impairment tests and if triggering events are present in the interim before the annual tests, we will assess impairment.

No impairment charges to goodwill were recorded for the three and nine months ended September 30, 2023 and 2022 .

No impairment charges were recorded for the three months ended March 31, 2024 and 2023 .

INTANGIBLE ASSETS, NET

Details of Intangible Assets, Net

September 30, 2023

March 31, 2024

December 31, 2023

6 unchanged sentences

Subtotal 40,269 ( 15,497 ) 24,772 38,982 ( 13,385 ) 25,597

Software held for resale (2)

In-process software development costs (1)

15,758 — $ 15,758 14,019 — $ 14,019

Total $ 56,027 $ ( 15,497 ) $ 40,530 $ 53,001 $ ( 13,385 ) $ 39,616

(1) An impairment charge of $ 0.3 million was recorded against software development costs in the third quarter of 2023 related to the write-off of a certain software project.

(2) This amount is net of $ 0.6 million charged into cost for sales for the period ended December 31, 2022.

See Note 10 – Debt and Other Obligations for related details.

The Company evaluates its intangible assets for potential impairment whenever there is evidence that events or changes in circumstances indicate that the carrying value may not be recoverable.

As a result of the interim assessment, the Company identified conditions demonstrating an impairment of certain software development costs.

An impairment charge of $ 0.3 million was recorded under "Research and Development" expenses in the Company's unaudited consolidated statements of operations for the three and nine months ended September 30, 2023.

No similar impairment charges were recorded during the three and nine months ended September 30, 2022.

No impairment charges were recorded on other intangible assets during the three and nine months ended September 30, 2023, and 2022.

(1) In-process software development costs are costs for software that is not yet available for its intended use or general release to customers as of balance sheet date, thus not yet amortized.

Amortization Expense

For the Three Months Ended For the Nine Months Ended

September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

For the Three Months Ended

March 31, 2024 March 31, 2023

(in thousands)

1 unchanged sentence

Software development costs - cost of sales (1)

$ 1,767 $ — $ 1,767 $ —

Software development costs - research and development 837 303

1 unchanged sentence

Total $ 2,112 $ 420

(1) Amortization expense for software development costs related to assets to be sold, leased, or otherwise marketed are charged under cost of sales on the unaudited consolidated statements of operations.

(1) Amortization expense for software development costs related to assets to be sold, leased, or otherwise marketed is charged under cost of sales on the unaudited consolidated statements of operations.

OTHER BALANCE SHEET COMPONENTS

Details of Other Assets

March 31, 2024 December 31, 2023

(in thousands)

Investment (1)

Restricted cash 136 136

Other 662 749

Other assets $ 3,798 $ 885

(1) In March 2024, we made a $ 3.0 million investment in a privately held company via a simple agreement for future equity.

We paid $ 0.9 million in March 2024 and the remainder was paid in April 2024.

The Company elected to apply the fair value option on this investment, and we did not note any changes in the fair value during the three months ended March 31, 2024.

Details of Accounts Payable and Other Accrued Liabilities

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

(in thousands)

3 unchanged sentences

Details of Other Current Liabilities

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

(in thousands)

20 unchanged sentences

The Loan has various covenants that may, among other things, affect our ability to create, incur, assume or suffer any indebtedness, merge into or consolidate with another entity, acquire entity interests, sell or transfer certain assets, enter into certain arrangements (such as sale and leaseback and swap agreements) or restrictive agreements, pay dividends and make certain restricted payments, and amend material documents related to any subordinated indebtedness and corporate agreements.

The Credit Agreement also requires certain financial covenants to maintain a Senior Leverage Ratio (as defined in the Credit Agreement) on the last day of any fiscal quarter, no greater than 3 -to-1.

We were in compliance with all covenants as of September 30, 2023.

The Credit Agreement also requires certain financial covenants to maintain a Senior Leverage Ratio on the last day of any fiscal quarter, no greater than 3 to 1.

We were in compliance with all covenants as of March 31, 2024.

The occurrence of an event of default under the Credit Agreement could result in the Loan and other obligations becoming immediately due and payable and allow the Lenders to exercise all rights and remedies available to them under the Credit Agreement.

5 unchanged sentences

The DO payments assigned to the Buyer are billable to the customer at the beginning of the base period and for each option year exercised.

The underlying licenses were acquired for resale, see Note 8 – Intangible Assets, net for further details.

The underlying licenses were acquired for resale.

On February 9, 2023, the customer notified us that it would not exercise the first option period under the DO.

The MPA provides that, if the customer terminates the DO for non-renewal and the Buyer reasonably concludes that the customer's actions constitute grounds for filing a claim with the customer's contracting officer, the Buyer and Telos will cooperate in preparing such a claim, which would be filed in Telos' name.

The Buyer has notified Telos of its intent to pursue a claim against the customer.

The MPA provides that, if the customer terminates the DO for non-renewal and the Buyer reasonably concludes that the customer's actions constitute grounds for filing a claim with the customer's contracting officer, Buyer and Telos will cooperate in preparing such a claim, which would be filed in Telos' name.

Buyer has notified Telos of its intent to pursue a claim against the customer.

Concurrently, the Company transferred all the rights, title and interest in the underlying licenses in exchange for the extinguishment of the outstanding financing obligations.

1 unchanged sentence

The Company recorded the difference between the carrying value of the Company's debt instrument and the underlying licenses as a gain on early extinguishment of other financing obligations.

No gain was reported for the three months ended September 30, 2023.

For the nine months ended September 30, 2023, the Company reported a gain of $ 1.4 million, which was recorded as "Other income" in the unaudited consolidated statements of operations.

On July 30, 2021, the Company acquired the assets of Diamond Fortress Technologies ("DFT") and wholly-owned subsidiaries for a total purchase consideration of $ 6.7 million, inclusive of $ 0.3 million related to a pre-existing contractual arrangement with DFT.

Upon closing, $ 5.9 million of cash was paid with an additional $ 0.6 million payable to DFT 18 months after the close date (the "holdback").

The holdback amount has been discounted to its present value of $ 0.5 million using a discount rate relevant to the acquisition.

On February 2, 2023, the Company paid DFT the holdback amount of $ 0.6 million.

During the three months ended March 31, 2023, the Company reported a gain of $ 1.4 million, which was recorded as "Other income" in the unaudited consolidated statements of operations.

STOCK-BASED COMPENSATION

Stock-based compensation expense recognized for restricted stock units and stock options granted to employees and non-employees is included in the consolidated statement of operations.

There were no income tax benefits recognized on the stock-based compensation expense for both periods.

The Company grants stock-based compensation awards under the 2016 Omnibus Long-Term Incentive Plan, as amended (the "2016 LTIP").

We may grant restricted stock awards, restricted stock units with time-based vesting ("RSUs") and restricted stock units with performance-based vesting ("PSUs").

Awards granted under the 2016 LTIP vest over the periods determined by the Board of Directors or the Compensation Committee of the Board of Directors, which has the discretion to establish the terms, conditions and criteria of the various awards.

The RSUs granted to eligible employees generally vest in installments over a period of up to three years .

PSUs will vest upon the achievement of a defined performance target or market conditions for the Company's common stock, certain operational milestones over prescribed period, or at the end of the defined performance period from the date of grant.

There were no income tax benefits recognized on the share-based compensation expense for both periods.

Details of Stock Compensation Expense by Department

For the Three Months Ended For the Nine Months Ended

September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

For the Three Months Ended

March 31, 2024 March 31, 2023

(in thousands)

Cost of sales – services $ 257 $ 326

Sales and marketing 24 611 125 3,699

Research and development 428 770

General and administrative (1)

4,793 13,399 19,768 39,462

Selling, general and administrative 2,299 8,403

Total $ 2,984 $ 9,499

(1) During the three and nine months ended September 30, 2023, the stock-based compensation expense related to stock options was $ 0.1 million and $ 0.2 million, respectively, and is recorded as part of selling, general and administrative expenses.

There was no similar expense in 2022.

Restricted Stock

Restricted Stock Unit Activity

Restricted Stock Activity

Service-Based Performance-Based Total Shares Weighted-Average Grant Date Fair Value

3 unchanged sentences

Forfeited ( 15,000 ) — ( 15,000 ) 4.25

Unvested outstanding units as of September 30, 2023 3,109,148 265,608 3,374,756 $ 8.34

As of September 30, 2023, the intrinsic value of the RSUs and PSUs outstanding and vested or expected to vest was $ 8.1 million.

There were approximately $ 7.1 million of total compensation costs related to stock-based awards not yet recognized as of September 30, 2023, which is expected to be recognized on a straight-line basis over a weighted average remaining vesting period of 0.6 years.

Unvested outstanding units as of March 31, 2024 894,171 43,800 937,971 $ 5.68

As of March 31, 2024, the intrinsic value of the RSUs and PSUs outstanding, exercisable, and vested or expected to vest was $ 3.9 million.

There was approximately $ 2.1 million of total compensation costs related to stock-based awards not yet recognized as of March 31, 2024, which is expected to be recognized on a straight-line basis over a weighted-average remaining vesting period of 0.7 years.

Stock Options

The Company uses the Black-Scholes option pricing model to calculate the estimated fair value of stock options on the date of grant.

Option awards are generally granted with an exercise price equal to the market price of the Company's stock at the date of grant.

The following weighted-average assumptions are used in the Black-Scholes valuation model to estimate the fair value of stock option awards, as granted.

• Expected term of the option – For options granted to employees and directors, the Company estimates the term over which option holders are expected to hold their stock option by using the "simplified method" in accordance with Staff Accounting Bulletin ("SAB") No.

107, Share-Based Payments , and SAB No.

110, Simplified Method for Plain Vanilla Share Options , to calculate the expected term of stock options determined to be "plain vanilla." The Company's stock option exercise history does not provide a reasonable basis to compute the expected term for stock options.

Under this approach, the expected term is presumed to be a midpoint between the vesting date and the contractual end of the stock option grant.

For options granted to non-employees, the Company elected to use the contractual term as the expected term.

• Risk-free interest rate – Based on the daily yield curve rates for U.S.

Treasury obligations with terms that approximate the expected term of the stock options.

• Expected volatility – Due to the absence of the Company's historical price volatility for the expected contractual term of the stock options, the Company utilized the historical price volatility of a peer group.

• Expected dividend yield – The Company has not declared dividends, nor does it expect to in the foreseeable future.

Therefore, a zero value was assumed for the expected dividend yield.

Stock Options Fair Value and Weighted-Average Assumptions

For the Nine Months Ended

September 30, 2023 September 30, 2022

Weighted-average fair value of underlying stock options $ 1.06 $ —

Expected term (in years) 5.5 - 10.0

Risk-free interest rate 3.5 % — %

Expected volatility 30.7 % - 35.1 %

Expected dividend yield — % — %

Stock Option Activity

Stock Options Outstanding Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term

Aggregate Intrinsic Value

Stock Options Outstanding Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (in years) Aggregate Intrinsic Value

Outstanding option balance as of December 31, 2023 400,000 $ 1.80 9.4 $ 740,000

2 unchanged sentences

Forfeited, cancelled, or expired — — 0.0 —

Outstanding option balance as of September 30, 2023 400,000 $ 1.80 9.6 $ 236,000

Exercisable stock option as of September 30, 2023 — $ — 0.0 $ —

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock option awards and the quoted closing price of the Company's common stock as of September 30, 2023.

Outstanding option balance as of March 31, 2024 400,000 1.80 9.1 $ 944,000

Exercisable stock option as of March 31, 2024 — — 0 $ —

The fair value of the stock options is expensed on a straight-line basis over the vesting period of one year , including the stock options granted to directors, as the next annual stockholders meeting is expected to occur at the same approximate time each year.

As of September 30, 2023, there were approximately $ 0.3 million of unrecognized compensation costs related to non-vested stock options.

As of March 31, 2024, there were approximately $ 0.04 million of unrecognized compensation costs related to non-vested stock options.

SHARE REPURCHASES

2 unchanged sentences

The repurchase program has no expiration date and may be modified, suspended, or terminated at any time.

As of September 30, 2023, there was approximately $ 38.7 million of the authorization remaining for future common stock repurchases under the SRP.

Share Repurchase Program Activity

For the Three Months Ended For the Nine Months Ended

September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

(in thousands, except per share and share data)

Amount paid for shares repurchased (1)

$ — $ 4,681 $ — $ 7,683

Number of shares repurchased — 498,731 — 859,170

Average per share price paid (1)

$ — $ 9.38 $ — $ 8.94

(1) Includes commissions paid for repurchases on the open market.

There were no share purchases during the first quarter of 2024 and 2023.

As of March 31, 2024, there was approximately $ 38.7 million of the authorization remaining for future common stock repurchases under the SRP.

ACCUMULATED OTHER COMPREHENSIVE LOSS

Our functional currency is the U.S.

For one of our wholly-owned subsidiaries, the functional currency is the local currency.

1 unchanged sentence

dollars is performed for assets and liabilities using current foreign currency exchange rates in effect at the balance sheet date and for revenue and expense accounts using average foreign currency exchange rates during the periods presented.

Translation gains and losses are included in stockholders’ equity as a component of accumulated other comprehensive losses.

Details of Accumulated Other Comprehensive Loss

September 30, 2023 December 31, 2022

Translation gains and losses are included in stockholders’ equity as a component of accumulated other comprehensive (loss) income.

Details of Changes in Accumulated Other Comprehensive Loss by Category

Foreign currency translation adjustment Pension liability adjustment Total

(in thousands)

Cumulative foreign currency translation loss $ ( 131 ) $ ( 162 )

Cumulative actuarial gain on pension liability adjustment 107 107

Accumulated other comprehensive loss $ ( 24 ) $ ( 55 )

Balance as of December 31, 2023 $ ( 167 ) $ 107 $ ( 60 )

Other comprehensive loss before reclassification ( 35 ) ( 30 ) ( 65 )

Balance as of March 31, 2024 $ ( 202 ) $ 77 $ ( 125 )

LOSS PER SHARE

1 unchanged sentence

Potentially Dilutive Securities

For the Three Months Ended For the Nine Months Ended

September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

For the Three Months Ended

March 31, 2024 March 31, 2023

(in thousands)

Unvested restricted stock and restricted stock units 1,245 410

Total 667 833 522 435

For the three and nine months ended September 30, 2023, and 2022, the outstanding PSUs aggregating to 265,608 and 336,785 , respectively, have been excluded from the calculation of potentially dilutive securities above because the issuance of shares is contingent upon the satisfaction of certain conditions that were not satisfied by the end of the period.

For the three months ended March 31, 2024 and 2023, the outstanding PSUs aggregating to 43,800 and 265,608 , respectively, have been excluded from the calculation of potentially dilutive securities above because the issuance of shares is contingent upon the satisfaction of certain conditions which were not satisfied by the end of the period.

RELATED PARTY TRANSACTIONS

2 unchanged sentences

The amount paid to him as compensation for his remaining tenure in 2023 was $ 249,000 .

For the three and nine months ended September 30, 2022, the Company paid him $ 91,000 and $ 696,000 , respectively.

One of the Company’s directors serves as a consultant to the Company.

On January 1, 2023, the director and the Company amended the consulting agreement under which he provides services ("2023 consulting agreement"), extending his services through June 30, 2023, with the option to further extend for another six months by mutual agreement of the parties.

The Company, at its election, would pay the director's 2023 consultancy fees in a fixed amount, in the form of restricted stock units.

Consequently, on January 3, 2023, the Company granted the director 16,859 RSUs, one-half of which vested on March 3, 2023, and the other half vested on May 18, 2023, as compensation for the first half of his 2023 consulting services.

In July 2023, the director and the Company amended the 2023 consulting agreement, extending his services through December 31, 2023.

The amended 2023 consulting agreement stipulates a firm-fixed monthly retainer fee, plus additional fees and contingent bonus payments upon achievement of certain contract goals, payable in cash.

Cash payments made for his consulting services were $ 32,000 for the three and nine months ended September 30, 2023.

On February 1, 2022, the Company granted him 26,091 RSUs for his consulting services in 2022, which RSUs vested quarterly in four equal amounts through the end of the year.

No cash payments were made for the three months ended September 30, 2022, while the amounts paid in cash for his consulting services were $ 25,000 for the nine months ended September 30, 2022.

One of the Company’s directors served as a consultant to the Company under a consultancy agreement that expired on December 31, 2023.

The Company, at its election, paid the director's 2023 consultancy fees in a fixed amount, in the form of RSUs.

On January 3, 2023, the Company granted the director 16,859 RSUs for his consulting services through June 30, 2023, one-half of which vested on March 3, 2023, and the other half vested on May 18, 2023.

Beginning in July 2023, the director was paid a firm-fixed monthly retainer fee, plus additional fees and contingent bonus payments upon achievement of certain contract goals, payable in cash through the expiration of the agreement.

SEGMENT INFORMATION

2 unchanged sentences

These segments enable the alignment of our strategies and objectives and provide a framework for the timely and rational allocation of resources within the business lines.

• Our Security Solutions segment is primarily focused on cybersecurity, cloud and identity solutions, and secure messaging through Xacta ® , Telos Ghost ® , Telos Advanced Cyber Analytics ("Telos ACA"), Telos Automated Message Handling System ("AMHS") and Telos ID offerings.

We recognize revenue on contracts by providing various system platforms in the cloud, on-premises, and in hybrid cloud environments, as well as software sales or software-as-a-service.

Our Security Solutions segment is primarily focused on cybersecurity, cloud and identity solutions, and secure messaging through Xacta ® , Telos Ghost ® , Telos Advanced Cyber Analytics ("Telos ACA TM "), Telos Automated Message Handling System ("AMHS") and Telos ID offerings.

We recognize revenue on contracts from providing various system platforms in the cloud, on-premises, and in hybrid cloud environments, as well as software sales or software-as-a-service.

Revenue associated with the segment's custom solutions is recognized as work progresses or upon delivery of services and products.

1 unchanged sentence

The majority of the operating costs relate to labor, material, and overhead costs.

Software sales have immaterial operating costs associated with them, thus yielding higher margins.

Software sales have immaterial operation costs associated with them, thus yielding higher margins.

Gross profit and margin are a function of operational efficiency on security solutions and changes in the volume of software sales.

4 unchanged sentences

Results of Operations by Business Segment

For the Three Months Ended For the Nine Months Ended

September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

For the Three Months Ended

March 31, 2024 March 31, 2023

(in thousands)

5 unchanged sentences

Total gross profit 10,961 13,482

Research and development expenses 3,170 2,833

Selling, general and administrative expenses 16,229 23,619

12 unchanged sentences

Legal Proceedings

On February 7, 2022, Telos and certain of its current and former officers were named as defendants in a lawsuit filed in the United States District Court for the Eastern District of Virginia ("Court").

In the complaint, the Plaintiffs, who purported to represent a class of purchasers of Telos common stock between November 19, 2020, and March 16, 2022, alleged that the defendants violated securities laws by failing to disclose delays relating to the launch of certain contracts between Telos and the Transportation Security Administration ("TSA") and the Centers for Medicare and Medicaid Services and to take into account those delays when providing a financial forecast for the Company's 2021 performance.

On June 15, 2022, the Plaintiffs filed a consolidated complaint that added claims (i) concerning Telos' disclosure of revenue projections for these contracts, (ii) against the directors of Telos at the time of its initial public offering, and (iii) pursuant to Sections 11 and 15 of the Securities Act of 1933.

On February 1, 2023, the Court dismissed the lawsuit in its entirety for failure to state a claim.

The Court's order of dismissal provided the Plaintiffs the opportunity to file a motion for leave to file an amended complaint, should they have a good faith basis to do so.

On March 13, 2023, the Court granted the parties' consent motion permitting the filing of a consolidated amended class action complaint and establishing a briefing schedule for Telos' motion to dismiss that amended complaint.

On April 14, 2023, Telos moved to dismiss the consolidated amended class action complaint.

At the conclusion of a hearing held on June 21, 2023, the Court dismissed the consolidated amended class action complaint with prejudice.

No appeal from the order of dismissal was taken, and it is final.

From time to time, the Company may be a party to litigation or claims arising in the ordinary course of business.

Management does not believe that there are litigation or claims that would have a material adverse effect on the business, or the unaudited consolidated financial statements of the Company as of September 30, 2023.

From time to time, the Company may be a party to litigation or claims arising in the ordinary course of business, including those relating to employment matters, relationship with clients and contractors, intellectual property disputes, and other business matters.

These legal proceedings seek various remedies, including claims for monetary damages in varying amounts, none of which are considered material, or are unspecified as to amount.

Although the outcome of any such matter is inherently uncertain and may be materially adverse, based on current information, management believes that the outcome of such known matters will not have a material adverse effect on the Company's business or its unaudited consolidated financial statements as of March 31, 2024.

Other - Government Contracts

11 unchanged sentences

Details of Cash, Cash Equivalents, and Restricted Cash

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

(in thousands)

2 unchanged sentences

Cash, cash equivalents, and restricted cash $ 94,051 $ 99,396

(1) Restricted cash consists of a commercial money market account held as a deposit on the Ashburn lease and is recorded under "Other assets" on the unaudited consolidated balance sheets.

(1) Restricted cash consists of a commercial money market account held as a deposit on the Ashburn lease and is included within "Other assets" on the unaudited consolidated balance sheets.

Supplemental Cash Flow Information

For the Nine Months Ended

September 30, 2023 September 30, 2022

For the Three Months Ended

March 31, 2024 March 31, 2023

(in thousands)

1 unchanged sentence

Interest $ 146 $ 219

Income taxes 147 188

Non-cash investing and financing activities:

1 unchanged sentence

Capital expenditure activity in accounts payable and other accrued liabilities 154 273

Purchase of investment in accounts payable and other accrued liabilities 2,150 —

Issuance of common stock for 401K match 1,618 1,942

Intangible assets transferred to extinguish other financing obligations — 7,089

Common stock repurchases under SRP — 80

REVISION OF PRIOR YEAR INTERIM FINANCIAL STATEMENTS

During the course of preparing the Company's consolidated financial statements for the year ended December 31, 2022, we identified that stock-based compensation expense related to the PSU awards with market conditions was erroneously reversed when those PSUs were forfeited.

Due to the error, general and administrative expense was understated by $ 1.1 million and $ 4.6 million for the three and nine months ended September 30, 2022.

The errors had no net impact on cash flows from operating, investing or financing activities in the consolidated statement of cash flows.

The following tables set forth the effects of the revisions of previously issued unaudited quarterly consolidated financial statements to correct for prior period errors.

Impact of the Correction to the Unaudited Consolidated Statement of Operations

For the Three Months Ended September 30, 2022 For the Nine Months Ended September 30, 2022

As Previously Reported Adjustment As Revised As Previously Reported Adjustment As Revised

(in thousands, except per share data)

General and administrative $ 21,591 $ 1,115 $ 22,706 $ 68,379 $ 4,618 $ 72,997

Total selling, general and administrative expenses 28,614 1,115 29,729 95,314 4,618 99,932

Operating loss ( 7,669 ) ( 1,115 ) ( 8,784 ) ( 34,569 ) ( 4,618 ) ( 39,187 )

Loss before income taxes ( 7,332 ) ( 1,115 ) ( 8,447 ) ( 34,479 ) ( 4,618 ) ( 39,097 )

Net loss ( 7,340 ) ( 1,115 ) ( 8,455 ) ( 34,612 ) ( 4,618 ) ( 39,230 )

Net loss per share, basic $ ( 0.11 ) $ ( 0.02 ) $ ( 0.13 ) $ ( 0.51 ) $ ( 0.07 ) $ ( 0.58 )

Net loss per share, diluted ( 0.11 ) ( 0.02 ) ( 0.13 ) ( 0.51 ) ( 0.07 ) ( 0.58 )

Impact of the Correction to the Unaudited Consolidated Statement of Comprehensive Loss

For the Three Months Ended September 30, 2022 For the Nine Months Ended September 30, 2022

As Previously Reported Adjustment As Revised As Previously Reported Adjustment As Revised

(in thousands)

Net loss $ ( 7,340 ) $ ( 1,115 ) $ ( 8,455 ) $ ( 34,612 ) $ ( 4,618 ) $ ( 39,230 )

Comprehensive loss ( 7,361 ) ( 1,115 ) ( 8,476 ) ( 34,615 ) ( 4,618 ) ( 39,233 )

Impact of the Correction to the Unaudited Consolidated Statement of Changes in Stockholders' Equity

For the Three Months Ended September 30, 2022 For the Nine Months Ended September 30, 2022

As Previously Reported Adjustment As Revised As Previously Reported Adjustment As Revised

(in thousands)

Additional paid-in capital, beginning $ 388,464 $ 3,503 $ 391,967 $ 367,153 $ — $ 367,153

Stock-based compensation 15,012 1,115 16,127 42,212 4,618 46,830

Additional paid-in capital, end 398,546 4,618 403,164 398,546 4,618 403,164

Accumulated deficit, beginning $ ( 214,249 ) $ ( 3,503 ) $ ( 217,752 ) $ ( 186,977 ) $ — $ ( 186,977 )

Net loss ( 7,340 ) ( 1,115 ) ( 8,455 ) ( 34,612 ) ( 4,618 ) ( 39,230 )

Accumulated deficit, end ( 221,589 ) ( 4,618 ) ( 226,207 ) ( 221,589 ) ( 4,618 ) ( 226,207 )

Withholding tax on net share settlement under other current liabilities — 65

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements