REVISION OF UNAUDITED QUARTERLY FINANCIAL DATA

12 Months Ended

Dec. 31, 2022

Accounting Changes and Error Corrections [Abstract]

REVISION OF UNAUDITED QUARTERLY FINANCIAL DATA

Revisions of Previously Issued Quarterly 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 PRSU awards with market conditions was erroneously reversed when those PRSUs were forfeited during each of the quarters ended March 31, 2022, June 30, 2022 and September 30, 2022. Due to the errors, general and administrative expense was understated by $1.6 million in the first quarter of 2022, $1.9 million in the second quarter of 2022, and $1.1 million in the third quarter of 2022. Although the Company has determined that these errors did not have a material impact on its previously issued interim consolidated financial statements, it will revise the previously reported interim financial information in conjunction with the issuance of its quarterly filings on Form 10-Q for the quarters ended March 31, 2023, June 30, 2023 and September 30, 2023. 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.


Table 24.1. Revised Quarterly Financial Data for Fiscal Years 2022 and 2021
	For the Three Months Ended
	Fiscal Year 2022								Fiscal Year 2021
	March 31, 2022		June 30 2022		September 30, 2022		December 31, 2022		March 31, 2021		June 30, 2021		September 30, 2021		December 31, 2021

	(in thousands, except per share amounts)
Revenue- services	$	48,108	$	50,270	$	55,305	$	39,059	$	52,058	$	49,003	$	62,955	$	57,532
Revenue - products	2,052		5,521		8,288		8,284		3,699		4,641		6,026		6,519
Total revenue	50,160		55,791		63,593		47,343		55,757		53,644		68,981		64,051
Cost of sales – services	29,731		31,436		36,746		23,421		39,490		28,609		40,137		35,121
Cost of sales – products	1,558		3,426		5,902		5,624		1,798		2,501		3,967		4,781
Total cost of sales	31,289		34,862		42,648		29,045		41,288		31,110		44,104		39,902
Gross profit	18,871		20,929		20,945		18,298		14,469		22,534		24,877		24,149
Selling, general and administrative expenses:
Sales and marketing	5,252		4,741		3,042		3,547		3,826		5,043		5,363		5,423
Research and development	5,430		4,489		3,981		3,018		4,061		5,327		4,863		4,845
General and administrative	24,556		25,735		22,706		26,396		20,076		29,635		19,739		19,292
Total selling, general and administrative expenses	35,238		34,965		29,729		32,961		27,963		40,005		29,965		29,560
Operating loss	(16,367)		(14,036)		(8,784)		(14,663)		(13,494)		(17,471)		(5,088)		(5,411)
Other income	12		118		518		702		(1,054)		32		20		81
Interest expense	(190)		(187)		(181)		(316)		(196)		(192)		(195)		(194)
Loss before income taxes	(16,545)		(14,105)		(8,447)		(14,277)		(14,744)		(17,631)		(5,263)		(5,524)
(Provision for)/benefit from income taxes	(71)		(54)		(8)		79		(34)		(13)		41		34
Net loss (1)	$	(16,616)	$	(14,159)	$	(8,455)	$	(14,198)	$	(14,778)	$	(17,644)	$	(5,222)	$	(5,490)

Net loss per share: (2)
Basic	$	(0.25)	$	(0.21)	$	(0.13)	$	(0.21)	$	(0.23)	$	(0.26)	$	(0.08)	$	(0.08)
Diluted	$	(0.25)	$	(0.21)	$	(0.13)	$	(0.21)	$	(0.23)	$	(0.26)	$	(0.08)	$	(0.08)

(1) Net loss is equal to Net loss attributable to Telos Corporation.

(2) The sum of the quarterly net loss per share amounts may not equal the full year amount reported since per share amounts are computed independently for each quarter and for the full year based upon the respective weighted-average shares outstanding, basic and diluted.


Table 24.2. Consolidated Statement of Operations
	Three Months Ended March 31, 2022						Three Months Ended June 30, 2022						Three Months Ended September 30, 2022
	As Previously Reported		Adjustment		As Revised		As Previously Reported		Adjustment		As Revised		As Previously Reported		Adjustment		As Revised

	(in thousands, except per share amounts)
General and administrative	$	22,923	$	1,633	$	24,556	$	23,865	$	1,870	$	25,735	$	21,591	$	1,115	$	22,706
Total selling, general and administrative expenses	33,605		1,633		35,238		33,095		1,870		34,965		28,614		1,115		29,729
Operating loss	(14,734)		(1,633)		(16,367)		(12,166)		(1,870)		(14,036)		(7,669)		(1,115)		(8,784)
Loss before income taxes	(14,912)		(1,633)		(16,545)		(12,235)		(1,870)		(14,105)		(7,332)		(1,115)		(8,447)
Net loss	(14,983)		(1,633)		(16,616)		(12,289)		(1,870)		(14,159)		(7,340)		(1,115)		(8,455)

Net loss per share, basis	$	(0.22)	(0.03)		$	(0.25)	$	(0.18)	(0.03)		$	(0.21)	$	(0.11)	(0.02)		$	(0.13)
Net loss per share, diluted	(0.22)		(0.03)		(0.25)		(0.18)		(0.03)		(0.21)		(0.11)		(0.02)		(0.13)


Table 24.3. Consolidated Statement of Comprehensive Loss
	Three Months Ended March 31, 2022						Three Months Ended June 30, 2022						Three Months Ended September 30, 2022
	As Previously Reported		Adjustment		As Revised		As Previously Reported		Adjustment		As Revised		As Previously Reported		Adjustment		As Revised

	(in thousands)
Net loss	$	(14,983)	$	(1,633)	$	(16,616)	$	(12,289)	$	(1,870)	$	(14,159)	$	(7,340)	$	(1,115)	$	(8,455)
Comprehensive loss	(14,954)		(1,633)		(16,587)		(12,300)		(1,870)		(14,170)		(7,361)		(1,115)		(8,476)


Table 24.4. Consolidated Balance Sheet
	As of March 31, 2022						As of June 30, 2022						As of September 30, 2022
	As Previously Reported		Adjustment		As Revised		As Previously Reported		Adjustment		As Revised		As Previously Reported		Adjustment		As Revised

	(in thousands)
Additional paid-in capital	$	376,913	$	1,633	$	378,546	$	388,464	$	3,503	$	391,967	$	398,546	$	4,618	$	403,164
Accumulated deficit	(201,960)		(1,633)		(203,593)		(214,249)		(3,503)		(217,752)		(221,589)		(4,618)		(226,207)


Table 24.5. Consolidated Statement of Changes in Stockholders' Equity
	Three Months Ended March 31, 2022						Three Months Ended June 30, 2022						Three Months Ended September 30, 2022
	As Previously Reported		Adjustment		As Revised		As Previously Reported		Adjustment		As Revised		As Previously Reported		Adjustment		As Revised

	(in thousands)
Additional paid-in capital, beginning	$	367,153	$	—	$	367,153	$	376,913	$	1,633	$	378,546	$	388,464	$	3,503	$	391,967
Stock-based compensation	12,647		1,633		14,280		14,553		1,870		16,423		15,012		1,115		16,127
Additional paid-in capital, end	376,913		1,633		378,546		388,464		3,503		391,967		398,546		4,618		403,164

Accumulated deficit, beginning	$	(186,977)	$	—	$	(186,977)	$	(201,960)	$	(1,633)	$	(203,593)	$	(214,249)	$	(3,503)	$	(217,752)
Net loss	(14,983)		(1,633)		(16,616)		(12,289)		(1,870)		(14,159)		(7,340)		(1,115)		(8,455)
Accumulated deficit, end	(201,960)		(1,633)		(203,593)		(214,249)		(3,503)		(217,752)		(221,589)		(4,618)		(226,207)