320121--4/23/2007--TELOS

related topics

{regulation, government, change}

{system, service, information}

{customer, product, revenue}

{capital, credit, financial}

{regulation, change, law}

{control, financial, internal}

{acquisition, growth, future}

{property, intellectual, protect}

{competitive, industry, competition}

{financial, litigation, operation}

{cost, operation, labor}

{personnel, key, retain}

The Company s inability to maintain sufficient liquidity and access to capital markets, including the inability to successfully restructure its balance sheet may have a significant impact on its business. The Company depends on the U.S. Government for a significant portion of its sales and a significant decline in purchases by the U.S. Government could have an adverse impact on the Company s financial condition and results of operations. U.S. Government contracts generally are not fully funded at inception and are subject to termination, which places a significant portion of the Company s revenues at risk and could adversely impact the Company s earnings. The Company is subject to substantial oversight from federal agencies that have the authority to suspend the Company s ability to bid on contracts. The Company depends on third parties in order to fully perform under the Company s contracts and the failure of a third party to perform could have an adverse impact on the Company s earnings. The Company s future profitability depends, in part, on its ability to develop new technologies and maintain a qualified workforce to meet the needs of its customers. The business environment is highly competitive and may impair the Company s ability to achieve revenue growth. Some of the Company s security solutions have lengthy sales and implementation cycles, which could impact significantly the Company s results of operations if projected orders are not realized. If the Company is unable to protect its intellectual property, its revenues may be impacted adversely by the unauthorized use of its products and services. If the Company is unable to license third-party technology that is used in its products and services to perform key functions, the loss could have an adverse affect on the Company s revenues. Compliance with rules and regulations concerning corporate governance is costly and could harm the Company s business. Any potential future acquisitions, strategic investments, divestitures, mergers or joint ventures may subject the Company to significant risks, any of which could harm the Company s business. Investor confidence in the price of the Company s stock may be adversely affected if the Company is unable to comply with Section 404 of the Sarbanes-Oxley Act of 2002. The Company recently restated certain of its audited and unaudited consolidated financial statements.

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320121--4/23/2007--TELOS_CORP