0001140361-20-022542 | S-1 | XBRL Viewer

Selling, general and administrative expenses

$ 48,610

$ 36,048

$ 87,589

$ 67,214

$ 159,218

$ 138,016

$ 107,727

Costs and expenses

Total costs and expenses

31,037

26,033

57,774

48,223

106,874

84,954

67,161

12,507

10,437

24,346

20,795

47,319

44,048

40,152

Operating income (loss)

5,066

(422)

5,469

(1,804)

5,025

9,014

414

Other income (expense)

Other income

188

193

Interest expense

(1,996)

(1,740)

(4,013)

(3,500)

(7,467)

(7,258)

(6,690)

Income (loss) before income taxes

3,074

(1,974)

1,468

(5,111)

(2,241)

1,768

(6,265)

(Provision) benefit from income taxes

(2)

(20)

144

177

104

(31)

2,767

Net income (loss)

3,072

(1,994)

1,612

(4,934)

(2,137)

1,737

(3,498)

Less: Net (income) loss attributable to non-controlling interest (Note 2)

(2,806)

253

(3,590)

(220)

(4,264)

(3,377)

(2,335)

Net income (loss) attributable to Telos Corporation (1)(2)

$ 266

$ (1,741)

^[1]

$ (1,978)

$ (5,154)

(6,401)

(1,640)

(5,833)

Pro forma net earnings (loss) per share attributable to Telos Corporation, basic (unaudited) (in dollars per share)

$ 0

Pro forma weighted-average shares of common stock outstanding, basic (unaudited) (in shares)

Pro forma net earnings (loss) per share attributable to Telos Corporation, diluted (unaudited) (in dollars per share)

$ 0

Pro forma weighted-average shares of common stock outstanding, diluted (unaudited) (in shares)

Class A Common Stock [Member]

Other income (expense)

Net earnings (loss) per share attributable to Telos Corporation, basic (in dollars per share)

$ 0.01

$ (0.04)

$ (0.11)

Net earnings (loss) per share attributable to Telos Corporation, diluted (in dollars per share)

$ 0.01

$ (0.04)

$ (0.11)

Weighted-average shares of stock outstanding, basic (in shares)

44,580

43,394

44,259

43,064

Weighted-average shares of stock outstanding, diluted (in dollars per share)

46,279

43,394

44,259

43,064

Class B Common Stock [Member]

Other income (expense)

Net earnings (loss) per share attributable to Telos Corporation, basic (in dollars per share)

$ 0.01

$ (0.04)

$ (0.11)

Net earnings (loss) per share attributable to Telos Corporation, diluted (in dollars per share)

$ 0.01

$ (0.04)

$ (0.11)

Weighted-average shares of stock outstanding, basic (in shares)

4,038

Weighted-average shares of stock outstanding, diluted (in dollars per share)

4,038

Service [Member]

Revenue

$ 45,486

$ 34,377

$ 80,044

$ 62,414

143,581

120,990

81,606

Costs and expenses

Total costs and expenses

29,378

25,203

54,243

45,394

98,772

76,857

49,965

Product [Member]

Revenue

3,124

1,671

7,545

4,800

15,637

17,026

26,121

Costs and expenses

Total costs and expenses

$ 1,659

$ 830

$ 3,531

$ 2,829

$ 8,102

$ 8,097

$ 17,196

[1]	Changes in net income are the result of several factors, including seasonality of the government year-end buying season, as well as the nature and timing of other deliverables.

Commitments and Contingencies (FY) (Details)				12 Months Ended
Commitments and Contingencies (FY) (Details)	Mar. 26, 2020 USD ($) Extension	Nov. 20, 2017 USD ($)	Sep. 11, 2017 USD ($)	Dec. 31, 2017	Jun. 30, 2020 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Oct. 19, 2017 USD ($)
Financial Condition and Liquidity [Abstract]
Working capital					$ (12,800,000)	$ 2,900,000	$ 2,100,000
Legal proceedings [Abstract]
Litigation settlement amount awarded			$ 278,923
Preferred stock dividend rate per annum				12.00%
Possible loss for advance or indemnification of legal fees and expenses								$ 1,550,000
Subsequent Events [Member]
Legal proceedings [Abstract]
Number of quarterly maturity date extensions \| Extension	4
Amount of increase in quarterly exit fee payable	$ 250,000
Amount of increase in exit fee payable	1,000,000
Amendment fee and out-of-pocket costs and expenses	$ 100,000
Costa Brava [Member]
Legal proceedings [Abstract]
Percentage of public preferred stock owned						12.70%
Wynnefield [Member]
Legal proceedings [Abstract]
Percentage of public preferred stock owned						17.40%
Hamot [Member]
Legal proceedings [Abstract]
Legal fees and expenses		$ 1,450,000
Hamot [Member] \| Counts I and III [Member] \| Pending Appeal [Member]
Legal proceedings [Abstract]
Legal fees and expenses, entitled		750,000
Hamot [Member] \| Counts II and IV [Member]
Legal proceedings [Abstract]
Legal fees and expenses, entitled		$ 660,000
Percentage entitled for legal fees and expenses		91.00%
Hamot [Member] \| Third Amended Complaint [Member]
Legal proceedings [Abstract]
Legal fees and expenses		$ 100,000
Legal fees and expenses, entitled		$ 100,000

Related Party Transactions (Q2) (Details) - USD ($)		3 Months Ended			6 Months Ended		12 Months Ended
Related Party Transactions (Q2) (Details) - USD ($)	Mar. 31, 2015	Jun. 30, 2020	Jun. 30, 2019	Mar. 31, 2015	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Mar. 31, 2018	Apr. 18, 2017
Related party transactions compensation [Abstract]
Debt instrument, fixed interest rate								12.00%
Interest expense, related party									$ 292,000
Gain on extinguishment of subordinated debt							$ 0	$ 0	1,031,000
Emmett J. Wood [Member]
Related party transactions compensation [Abstract]
Compensation to related parties		$ 151,000	$ 76,000		$ 324,000	$ 234,000	$ 529,000	$ 552,000	$ 570,000
Emmett J. Wood [Member] \| Class A Common Stock [Member]
Related party transactions compensation [Abstract]
Number of shares held by related party (in shares)		810,000			810,000		810,000			50,000
Emmett J. Wood [Member] \| Class B Common Stock [Member]
Related party transactions compensation [Abstract]
Number of shares held by related party (in shares)		50,000			50,000		50,000
Porter [Member]
Related party transactions compensation [Abstract]
Proceeds from related party, debt				$ 2,500,000			$ 2,500,000
Debt instrument, fixed interest rate	12.00%			12.00%			6.00%				6.00%
Debt instrument, first interest payment due date					Aug. 20, 2015		Aug. 20, 2015
Debt instrument, last principal and interest payment date	Jul. 01, 2017				Jul. 25, 2022		Jul. 25, 2022	Jul. 01, 2017
Interest expense, related party		$ 88,000	$ 82,000		$ 175,000	$ 162,000	$ 330,000	$ 308,000
Gain on extinguishment of subordinated debt							1,000,000
Accrued interest payable		$ 1,200,000			$ 1,200,000		$ 1,100,000
Porter [Member] \| Class A Common Stock [Member]
Related party transactions compensation [Abstract]
Percentage of shares owned	35.00%			35.00%
Porter [Member] \| Series A-1 Redeemable Preferred Stock [Member]
Related party transactions compensation [Abstract]
Outstanding shares redeemed (in shares)											163
Porter [Member] \| Series A-2 Redeemable Preferred Stock [Member]
Related party transactions compensation [Abstract]
Outstanding shares redeemed (in shares)											228

Non-controlling Interests (Q2) (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Changes in Non-Controlling Interest

The following table details the changes in non-controlling interest for the three and six months ended June 30, 2020 and 2019 (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Non-controlling interest, beginning of period	$	5,298		$	2,378		$	4,514		$	2,621
Net income (loss)		2,806			(253	)		3,590			220
Distributions		(1,000	)		(268	)		(1,000	)		(984	)
Non-controlling interest, end of period	$	7,104		$	1,857		$	7,104		$	1,857

The following table details the changes in non-controlling interest for the years ended December 31, 2019, 2018, and 2017 (in thousands):

	2019			2018			2017
Non-controlling interest, beginning of period	$	2,621		$	913		$	2,229
Net income		4,264			3,377			2,335
Distributions		(2,371	)		(1,669	)		(3,651	)
Non-controlling interest, end of period	$	4,514		$	2,621		$	913

Non-controlling Interests (FY)

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Non-controlling Interests

Note 2. Non-controlling Interests

On April 11, 2007, Telos ID was formed as a limited liability company under the Delaware Limited Liability Company Act. We contributed substantially all of the assets of our Identity Management business line and assigned our rights to perform under our U.S. Government contract with the Defense Manpower Data Center (“DMDC”) to Telos ID at their stated book values. The net book value of assets we contributed totaled $17,000. Until April 19, 2007, we owned 99.999% of the membership interests of Telos ID and certain private equity investors (“Investors”) owned 0.001% of the membership interests of Telos ID. On April 20, 2007, we sold an additional 39.999% of the membership interests to the Investors in exchange for $6 million in cash consideration. In accordance with ASC 505, “Equity,” we recognized a gain of $5.8 million. As a result, we owned 60% of Telos ID, and therefore continued to account for the investment in Telos ID using the consolidation method.

On December 24, 2014 (the “Closing Date”), we entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) between the Company and the Investors, pursuant to which the Investors acquired from the Company an additional 10% membership interest in Telos ID in exchange for $5 million (the “Transaction”). In connection with the Transaction, the Company and the Investors entered into the Second Amended and Restated Operating Agreement (the “Operating Agreement”) governing the business, allocation of profits and losses and management of Telos ID. Under the Operating Agreement, Telos ID is managed by a board of directors comprised of five members (the “Telos ID Board”). The Operating Agreement provides for two classes of membership units, Class A (owned by the Company) and Class B (owned by the Investors). The Class A member (the Company) owns 50% of Telos ID, is entitled to receive 50% of the profits of Telos ID, and may appoint three members of the Telos ID Board. The Class B member (the Investors) owns 50% of Telos ID, is entitled to receive 50% of the profits of Telos ID, and may appoint two members of the Telos ID Board.

Despite the post-Transaction ownership of Telos ID being evenly split at 50% by each member, Telos maintains control of the subsidiary through its holding of three of the five Telos ID Board seats.

Under the Operating Agreement, the Class A and Class B members each have certain options with regard to the ownership interests held by the other party including the following:

●

Upon the occurrence of a change in control of the Class A member (as defined in the Operating Agreement, a “Change in Control”), the Class A member has the option to purchase the entire membership interest of the Class B member.

●

Upon the occurrence of the following events: (i) the involuntary termination of John B. Wood as CEO and chairman of the Class A member; (ii) the bankruptcy of the Class A member; or (iii) unless the Class A member exercises its option to acquire the entire membership interest of the Class B member upon a Change in Control of the Class A member, the transfer or issuance of more than 51% of the outstanding voting securities of the Class A member to a third party, the Class B member has the option to purchase the membership interest of the Class A member; provided, however, that in the event that the Class B member exercises the foregoing option, the Class A Member may then choose to purchase the entire interest of the Class B member.

●

In the event that more than 50% of the ownership interests in the Class B member are transferred to persons or individuals (other than members of the immediate family of the initial owners of the Class B member) without the consent of Telos ID, the Class A member has the option to purchase the entire membership interest of the Class B member.

●

The Class B member has the option to sell its interest to the Class A member at any time if there is not a letter of intent to sell Telos ID, a binding contract to sell all of the assets or membership interests in Telos ID, or a standstill for due diligence with respect to a sale of Telos ID. Notwithstanding the foregoing, the Class A member will not be obligated to purchase the interest of the Class B member if that purchase would constitute a violation of any existing line of credit available to the Company after giving effect to that purchase and the applicable lender refuses to consent to that purchase or to waive such violation.

If either the Class A member or the Class B member elects to sell its interest or buy the other member’s interest upon the occurrence of any of the foregoing events, the purchase price for the interest will be based on an appraisal of Telos ID prepared by a nationally recognized investment banker. If the Class A member fails to satisfy its obligation, subject to the restrictions in the Purchase Agreement, to purchase the interest of the Class B member under the Operating Agreement, the Class B member may require Telos ID to initiate a sales process for the purpose of seeking an offer from a third party to purchase Telos ID that maximizes the value of Telos ID. The Telos ID Board must accept any offer from a bona fide third party to purchase Telos ID if that offer is approved by the Class B member, unless the purchase of Telos ID would violate the terms of any existing line of credit available to the Company and the applicable lender does not consent to that purchase or waive the violation. The sale process is the sole remedy available to the Class B member if the Class A member does not purchase its membership interest. Under such a forced sale scenario, a sales process would result in both members receiving their proportionate membership interest share of the sales proceeds and both members would always be entitled to receive the same form of consideration.

As a result of the Transaction, the Class A and Class B members each own 50% of Telos ID, as mentioned above, and as such each was allocated 50% of the profits (loss), which was $2.8 million and $3.6 million for the three and six months ended June 30, 2020, respectively, and $(0.3) million and $0.2 million for the three and six months ended June 30, 2019, respectively. The Class B member is the non-controlling interest.

Distributions are made to the members only when and to the extent determined by Telos ID’s Board of Directors, in accordance with the Operating Agreement. The Class B member received a total distribution of $1.0 million during the three and six months ended June 30, 2020, and $0.3 million and $1.0 million during the three and six months ended June 30, 2019, respectively.

The following table details the changes in non-controlling interest for the three and six months ended June 30, 2020 and 2019 (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Non-controlling interest, beginning of period	$	5,298		$	2,378		$	4,514		$	2,621
Net income (loss)		2,806			(253	)		3,590			220
Distributions		(1,000	)		(268	)		(1,000	)		(984	)
Non-controlling interest, end of period	$	7,104		$	1,857		$	7,104		$	1,857

Note 2. Non-controlling Interests

On April 11, 2007, Telos ID was formed as a limited liability company under the Delaware Limited Liability Company Act. We contributed substantially all of the assets of our Telos ID Enterprise business line and assigned our rights to perform under our U.S. Government contract with the Defense Manpower Data Center (“DMDC”) to Telos ID at their stated book values. The net book value of assets we contributed totaled $17,000. Until April 19, 2007, we owned 99.999% of the membership interests of Telos ID and certain private equity investors (“Investors”) owned 0.001% of the membership interests of Telos ID. On April 20, 2007, we sold an additional 39.999% of the membership interests to the Investors in exchange for $6 million in cash consideration. In accordance with ASC 505, “Equity,” we recognized a gain of $5.8 million. As a result, we owned 60% of Telos ID, and therefore continued to account for the investment in Telos ID using the consolidation method.

Despite the post-Transaction ownership of Telos ID being evenly split at 50% by each member, Telos maintains control of the subsidiary through its holding of three of the five Telos ID Board seats.

Under the Operating Agreement, the Class A and Class B members each have certain options with regard to the ownership interests held by the other party including the following:

•	Upon the occurrence of a change in control of the Class A member (as defined in the Operating Agreement, a “Change in Control”), the Class A member has the option to purchase the entire membership interest of the Class B member.

•

As a result of the Transaction, the Class A and Class B members each own 50% of Telos ID, as mentioned above, and as such each was allocated 50% of the profits, which was $4.3 million, $3.4 million, and $2.3 million for 2019, 2018, and 2017, respectively. The Class B member is the non-controlling interest.

Distributions are made to the members only when and to the extent determined by Telos ID’s Board of Directors, in accordance with the Operating Agreement. During the years ended December 31, 2019, 2018, and 2017, the Class B member received a total of $2.4 million, $1.7 million, and $3.7 million, respectively, of such distributions.

The following table details the changes in non-controlling interest for the years ended December 31, 2019, 2018, and 2017 (in thousands):

	2019			2018			2017
Non-controlling interest, beginning of period	$	2,621		$	913		$	2,229
Net income		4,264			3,377			2,335
Distributions		(2,371	)		(1,669	)		(3,651	)
Non-controlling interest, end of period	$	4,514		$	2,621		$	913

Certain Relationships and Related Transactions (FY) (Details) - USD ($)		3 Months Ended			6 Months Ended		12 Months Ended
	Mar. 31, 2015	Jun. 30, 2020	Jun. 30, 2019	Mar. 31, 2015	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Mar. 31, 2018	Apr. 18, 2017
Related party transactions compensation [Abstract]
Gain on extinguishment of debt							$ 0	$ 0	$ 1,031,000
Interest expense, related party									292,000
Debt instrument, fixed interest rate								12.00%
Emmett Wood [Member]
Related party transactions compensation [Abstract]
Compensation to related parties		$ 151,000	$ 76,000		$ 324,000	$ 234,000	$ 529,000	$ 552,000	$ 570,000
Emmett Wood [Member] \| Class A Common Stock [Member]
Related party transactions compensation [Abstract]
Number of shares held by related party (in shares)		810,000			810,000		810,000			50,000
Emmett Wood [Member] \| Class B Common Stock [Member]
Related party transactions compensation [Abstract]
Number of shares held by related party (in shares)		50,000			50,000		50,000
Porter [Member]
Related party transactions compensation [Abstract]
Common stock held by related parties							35.00%
Accrued interest payable		$ 1,200,000			$ 1,200,000		$ 1,100,000
Gain on extinguishment of debt							1,000,000
Proceeds from related party, debt				$ 2,500,000			2,500,000
Interest expense, related party		$ 88,000	$ 82,000		$ 175,000	$ 162,000	$ 330,000	$ 308,000
Debt instrument, fixed interest rate	12.00%			12.00%			6.00%				6.00%
Debt instrument, last principal and interest payment date	Jul. 01, 2017				Jul. 25, 2022		Jul. 25, 2022	Jul. 01, 2017
Debt instrument, first interest payment due date					Aug. 20, 2015		Aug. 20, 2015
Porter [Member] \| Series A-1 Redeemable Preferred Stock [Member]
Related party transactions compensation [Abstract]
Number of senior redeemable preferred stock redeemed by the Company (in shares)											163
Porter [Member] \| Series A-2 Redeemable Preferred Stock [Member]
Related party transactions compensation [Abstract]
Number of senior redeemable preferred stock redeemed by the Company (in shares)											228

Summary of Significant Accounting Policies, Recent Accounting Pronouncements (FY) (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019	Dec. 31, 2018
Recent Accounting Pronouncements [Abstract]
Operating lease right-of-use assets	$ 1,777	$ 1,979	$ 0
Operating lease liabilities	$ 1,937	2,155
ASU 2016-02 [Member]
Recent Accounting Pronouncements [Abstract]
Operating lease right-of-use assets		2,000
Operating lease liabilities		$ 2,000

Non-controlling Interests (Q2) (Details)				1 Months Ended		3 Months Ended		6 Months Ended		12 Months Ended
Non-controlling Interests (Q2) (Details)	Dec. 24, 2014 USD ($) Director Class	Apr. 20, 2007 USD ($)	Apr. 19, 2007	Apr. 30, 2007 Director	Apr. 19, 2007	Jun. 30, 2020 USD ($)	Jun. 30, 2019 USD ($)	Jun. 30, 2020 USD ($)	Jun. 30, 2019 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Apr. 11, 2007 USD ($)
Changes in non-controlling interest [Abstract]
Non-controlling interest, beginning of period						$ 5,298,000	$ 2,378,000	$ 4,514,000	$ 2,621,000	$ 2,621,000	$ 913,000	$ 2,229,000
Net income (loss)						2,806,000	(253,000)	3,590,000	220,000	4,264,000	3,377,000	2,335,000
Distributions						(1,000,000)	(268,000)	(1,000,000)	(984,000)	(2,371,000)	(1,669,000)	(3,651,000)
Non-controlling interest, end of period						$ 7,104,000	$ 1,857,000	$ 7,104,000	$ 1,857,000	$ 4,514,000	$ 2,621,000	$ 913,000
Telos ID [Member]
Net book value of assets [Abstract]
Net book value of assets contributed													$ 17,000
Percentage of membership interest owned before			99.999%		99.999%
Owned membership interest from private equity investors			0.001%		0.001%
Percentage of membership interest sold to investor	10.00%	39.999%
Cash consideration received on sale of membership interest	$ 5,000,000	$ 6,000,000
Recognized gain on sale of membership interests to the Investors		$ 5,800,000
Percentage of ownership interest owned after transaction		60.00%
Number of members in board of director \| Director	5
Number of classes of membership units \| Class	2
Telos ID [Member] \| Class A Membership Unit [Member]
Net book value of assets [Abstract]
Percentage of ownership interest owned after transaction	50.00%			60.00%
Percentage of profit and loss allocated	50.00%
Number of directors entitled to appoint \| Director	3			3
Percentage of outstanding voting securities	51.00%
Telos ID [Member] \| Class B Membership Unit [Member]
Net book value of assets [Abstract]
Percentage of ownership interest owned after transaction	50.00%
Percentage of profit and loss allocated	50.00%
Number of directors entitled to appoint \| Director	2
Percentage of ownership interests	50.00%

Certain Relationships and Related Transactions (FY)	6 Months Ended	12 Months Ended
Certain Relationships and Related Transactions (FY)	Jun. 30, 2020	Dec. 31, 2019
Related Party Transactions [Abstract]
Certain Relationships and Related Transactions	Note 9. Related Party Transactions Emmett J. Wood, the brother of our Chairman and CEO, has been an employee of the Company since 1996. The amounts paid to this individual as compensation were $151,000 and $324,000 for the three and six months ended June 30, 2020, respectively, and $76,000 and $234,000 for the three and six months ended June 30, 2019, respectively. Additionally, as of June 30, 2020 and December 31, 2019, Mr. Wood owned 810,000 shares of the Company’s Class A Common Stock and 50,000 shares of the Company’s Class B Common Stock. On March 31, 2015, the Company entered into the Porter Notes. Mr. Porter and Toxford Corporation, of which Mr. Porter is the sole shareholder, own 35.0% of our Class A Common Stock. Under the terms of the Porter Notes, Porter lent the Company $2.5 million on or about March 31, 2015. According to the original terms of the Porter Notes, the outstanding principal sum bears interest at the fixed rate of 12% per annum which would be payable in arrears in cash on the 20th day of each May, August, November and February, with the first interest payment date due on August 20, 2015. The Porter Notes do not call for amortization payments and are unsecured. The Porter Notes, in whole or in part, may be repaid at any time without premium or penalty. The unpaid principal, together with interest, was originally due and payable in full on July 1, 2017. On April 18, 2017, we amended and restated the Porter Notes to reduce the interest rate from 12% to 6% per annum, to be accrued, and extended the maturity date from July 1, 2017 to July 25, 2022. Telos also entered into Intercreditor Agreements with Porter and EnCap, in which the Porter Notes are fully subordinated to the Credit Agreement and any subsequent senior lenders, and payments under the Porter Notes are permitted only if certain conditions are met. All other terms remain in full force and effect. We incurred interest expense in the amount of $88,000 and $175,000 for the three and six months ended June 30, 2020, respectively, and $82,000 and $162,000 for the three and six months ended June 30, 2019, respectively, on the Porter Notes. As of June 30, 2020, approximately $1.2 million of accrued interest was payable according to the stated interest rate of the Porter Notes.	Note 11. Certain Relationships and Related Transactions Information concerning certain relationships and related transactions between us and certain of our current shareholders and officers is set forth below. The brother of our Chairman and CEO, Emmett J. Wood, has been an employee of ours since 1996. The amounts paid to this individual as compensation for 2019, 2018, and 2017 were $529,000, $552,000, and $570,000, respectively. Additionally, Mr. Wood owned 810,000 shares of the Company’s Class A Common Stock as of December 31, 2019 and 2018, and 50,000 shares of the Company’s Class B Common Stock as of December 31, 2019 and 2018. On March 31, 2015, the Company entered into the Porter Notes. Mr. Porter and Toxford Corporation, of which Mr. Porter is the sole shareholder, own 35.0% of our Class A Common Stock. Under the terms of the Porter Notes, Porter lent the Company $2.5 million on or about March 31, 2015. According to the terms of the Porter Notes, the outstanding principal sum bears interest at the fixed rate of 12% per annum which would be payable in arrears in cash on the 20th day of each May, August, November and February, with the first interest payment date due on August 20, 2015. The Porter Notes do not call for amortization payments and are unsecured. The Porter Notes, in whole or in part, may be repaid at any time without premium or penalty. The unpaid principal, together with interest, was originally due and payable in full on July 1, 2017. On April 18, 2017, we amended and restated the Porter Notes to reduce the interest rate from 12% to 6% per annum, to be accrued, and extended the maturity date from July 1, 2017 to July 25, 2022. Telos also entered into Intercreditor Agreements with Porter and EnCap, in which the Porter Notes are fully subordinated to the Credit Agreement and any subsequent senior lenders (including Action Capital), and payments under the Porter Notes are permitted only if certain conditions are met. All other terms remain in full force and effect. We incurred interest expense in the amount of $330,000, $308,000, and $292,000 for the years ended December 31, 2019, 2018, and 2017, respectively, on the Porter Notes. As of December 31, 2019, approximately $1.1 million of accrued interest was payable according to the stated interest rate of the Porter Notes. As a result of the amendment and restatement of the Porter Notes, we recorded a gain on extinguishment of debt of approximately $1 million, which consisted of the remeasurement of the debt at fair value. As the extinguishment was with a related party, the transaction was deemed to be a capital transaction and the gain was recorded in the Company’s stockholders’ deficit as of December 31, 2017. On April 18, 2017, the Company redeemed all outstanding shares of the Senior Redeemable Preferred Stock, including 163 shares and 228 shares of Series A-1 and Series A-2 Redeemable Preferred Stock, respectively, held by Mr. Porter and Toxford.

Income Taxes (FY) (Tables)

12 Months Ended

Dec. 31, 2019

Income Taxes [Abstract]

Provision (Benefit) for Income Taxes

The provision (benefit) for income taxes attributable to income from operations includes the following (in thousands):

	For the Years Ended December 31,
	2019			2018			2017
Current provision (benefit)
Federal	$	25		$	(29	)	$	(86	)
State		68			(17	)		29
Total current		93			(46	)		(57	)

Deferred (benefit) provision
Federal		88			15			(2,622	)
State		(285	)		62			(88	)
Total deferred		(197	)		77			(2,710	)
Total (benefit) provision	$	(104	)	$	31		$	(2,767	)

Reconciliation of Effective Tax Rate

The provision for income taxes related to operations varies from the amount determined by applying the federal income tax statutory rate to the income or loss before income taxes, exclusive of net income attributable to non-controlling interest. The reconciliation of these differences is as follows:

	For the Years Ended December 31,
	2019			2018			2017
Computed expected income tax provision		21.0	%		21.0	%		34.0	%
State income taxes, net of federal income tax benefit		(0.2	)		(20.9	)		0.9
Change in valuation allowance for deferred tax assets		(8.5	)		47.7			(26.9	)
Cumulative deferred adjustments		(0.4	)		--			--
Provision to return adjustments		0.5			1.8			--
Other permanent differences		(3.7	)		(12.2	)		(1.3	)
Dividend and accretion on preferred stock		(12.3	)		(49.9	)		(15.2	)
FIN 48 liability		(1.3	)		(4.6	)		(0.9	)
R&D credit		6.5			27.7			4.6
Impact of Tax Act		--			(12.5	)		35.5
Other		--			--			1.5
		1.6	%		(1.9	)%		32.2	%

Deferred Tax Assets and Liabilities

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2019 and 2018 are as follows (in thousands):

	December 31,
	2019			2018
Deferred tax assets:
Accounts receivable, principally due to allowance for doubtful accounts	$	185		$	79
Allowance for inventory obsolescence and amortization		316			281
Accrued liabilities not currently deductible		1,649			1,634
Accrued compensation		1,655			1,206
Deferred rent		4,808			4,750
Section 163(j) interest limitation		804			246
Net operating loss carryforwards - federal		2,583			1,956
Net operating loss carryforwards - state		796			653
Federal tax credit		1,326			983
Total gross deferred tax assets		14,122			11,788
Less valuation allowance		(7,206	)		(6,652	)
Total deferred tax assets, net of valuation allowance		6,916			5,136
Deferred tax liabilities:
Amortization and depreciation		(2,623	)		(2,237	)
Unbilled accounts receivable, deferred for tax purposes		(1,611	)		(955	)
Goodwill basis adjustment and amortization		(2,886	)		(2,713	)
Telos ID basis difference		(417	)		(49	)
Total deferred tax liabilities		(7,537	)		(5,954	)
Net deferred tax liabilities	$	(621	)	$	(818	)

Components of Valuation Allowance

The components of the valuation allowance are as follows (in thousands):

	Balance Beginning of Period		Additions		Recoveries			Balance End of Period

December 31, 2019	$	6,652	$	554	$	--		$	7,206
December 31, 2018	$	7,219	$	--	$	(567	)	$	6,652
December 31, 2017	$	10,499	$	--	$	(3,280	)	$	7,219

Unrecognized Tax Benefits Roll Forward

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

	2019			2018			2017
Unrecognized tax benefits, beginning of period	$	648		$	677		$	762
Gross decreases — tax positions in prior period		(39	)		(63	)		(127	)
Gross increases — tax positions in current period		101			92			77
Settlements		(37	)		(58	)		(35	)
Unrecognized tax benefits, end of period	$	673		$	648		$	677

Summary of Selected Quarterly Financial Data (Unaudited) (FY) (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands

3 Months Ended

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Sep. 30, 2019

Jun. 30, 2019

Mar. 31, 2019

Dec. 31, 2018

Sep. 30, 2018

Jun. 30, 2018

Mar. 31, 2018

Jun. 30, 2020

Jun. 30, 2019

Dec. 31, 2019

Dec. 31, 2018

Dec. 31, 2017

Loss before income taxes and non-controlling interest

$ 48,610

$ 46,473

$ 45,531

$ 36,048

$ 31,166

$ 35,977

$ 34,695

$ 34,943

$ 32,401

$ 87,589

$ 67,214

$ 159,218

$ 138,016

$ 107,727

Gross profit

17,040

16,313

10,015

8,976

14,465

16,287

12,078

10,232

3,074

(838)

3,708

(1,974)

(3,137)

(1,711)

4,722

450

(1,693)

1,468

(5,111)

(2,241)

1,768

(6,265)

Net (loss) income attributable to Telos Corporation (1)(2)

$ 266

$ (3,480)

^[1]

$ 2,233

^[1],[2]

$ (1,741)

^[1]

$ (3,413)

^[1]

$ (3,680)

^[1]

$ 4,113

^[1],[3]

$ (87)

^[1]

$ (1,986)

^[1]

$ (1,978)

$ (5,154)

$ (6,401)

$ (1,640)

$ (5,833)

Common Class A [Member]

Weighted-average shares of stock outstanding, basic (in shares)

44,580

43,937

43,394

42,731

42,172

41,490

44,259

43,064

Weighted-average shares of stock outstanding, diluted (in dollars per share)

46,279

43,937

46,279

43,394

42,731

46,310

42,172

41,490

44,259

43,064

Net earnings (loss) per share attributable to Telos Corporation, basic (in dollars per share)

$ 0.01

$ (0.07)

$ 0.05

$ (0.04)

$ (0.07)

$ (0.08)

$ 0.09

$ 0

$ (0.04)

$ (0.11)

Net earnings (loss) per share attributable to Telos Corporation, diluted (in dollars per share)

$ 0.01

$ (0.07)

$ 0.04

$ (0.04)

$ (0.07)

$ (0.08)

$ 0.08

$ 0

$ (0.04)

$ (0.11)

Common Class B [Member]

Weighted-average shares of stock outstanding, basic (in shares)

4,038

Weighted-average shares of stock outstanding, diluted (in dollars per share)

4,038

Net earnings (loss) per share attributable to Telos Corporation, basic (in dollars per share)

$ 0.01

$ (0.07)

$ 0.05

$ (0.04)

$ (0.07)

$ (0.08)

$ 0.09

$ 0

$ (0.04)

$ (0.11)

Net earnings (loss) per share attributable to Telos Corporation, diluted (in dollars per share)

$ 0.01

$ (0.07)

$ 0.04

$ (0.04)

$ (0.07)

$ (0.08)

$ 0.08

$ 0

$ (0.04)

$ (0.11)

CO&D [Member]

Commitments, Contingencies and Subsequent Events [Abstract]

$ 5,600

[1]	Changes in net income are the result of several factors, including seasonality of the government year-end buying season, as well as the nature and timing of other deliverables.
[2]	Net income for the third quarter of 2019 is attributable to $2.6 million in proprietary software sales which carry lower cost of sales.
[3]	Net income for the third quarter of 2018 included $5.6 million of revenue accruals for multiple contracts as a result of several years of cumulative indirect rate adjustments which did not include direct costs in Secure Mobility and Network Management/Defense Enterprise Solutions deliverables.

Commitments (FY)

12 Months Ended

Dec. 31, 2019

Commitments

Note 10. Commitments

Leases

We lease office space and equipment under noncancelable operating and finance leases with various expiration dates, some of which contain renewal options.

Operating Leases

We account for leases in accordance with ASC Topic 842, “Leases,” which requires lessees to recognize a right-of-use asset and lease liability on the balance sheet and expands disclosures about leasing arrangements for both lessees and lessors, among other items, for most lease arrangements.

In accordance with the adoption of ASC 842 on January 1, 2019, we recorded operating lease right-of-use (“ROU”) assets, which represent our right to use an underlying asset for the lease term, and operating lease liabilities which represent our obligation to make lease payments. Generally, we enter into operating lease agreements for facilities. The amount of operating lease liabilities due within 12 months are recorded in other current liabilities, with the remaining operating lease liabilities recorded as non-current liabilities in our consolidated balance sheet based on their contractual due dates. The operating lease ROU assets and liabilities are recognized as of the lease commencement date at the present value of the lease payments over the lease term. Most of our leases do not provide an implicit rate that can readily be determined. Therefore, we use a discount rate based on our incremental borrowing rate which was 5.75% for all operating leases. Our operating lease agreements may include options to extend the lease term or terminate it early. We have included options to extend in the operating lease ROU assets and liabilities when we are reasonably certain that we will exercise such options. The weighted average remaining lease terms and discount rates for our operating leases were approximately 3.5 years and 5.75% at December 31, 2019. Operating lease expense is recognized as rent expense on a straight-line basis over the lease term. Some of our operating leases contain lease and non-lease components, which we account for as a single component. We evaluate ROU assets for impairment consistent with our property and equipment policy disclosure included in Note 1 – Summary of Significant Accounting Policies.

As of December 31, 2019, operating lease ROU assets were $2.0 million and operating lease liabilities were $2.2 million, of which $1.6 million were classified as noncurrent.

Finance Leases

On March 1, 1996, we entered into a 20-year capital lease for a building in Ashburn, Virginia that serves as our corporate headquarters. We had accounted for this transaction as a capital lease and had accordingly recorded assets and a corresponding liability of approximately $12.3 million. Effective November 1, 2013, this lease was terminated and we entered into a 13-year lease (the “2013 lease”) that would have expired in October 31, 2026. The 2013 lease was treated as a modification in accordance with ASC 840, “Leases”. As a result of the 2013 lease, the corresponding capital asset and liability increased by $11.7 million, resulting in a net book value of the capital asset of $13.1 million, and capital obligation of $15.5 million. The 2013 lease included an option to purchase, assign to, or designate a purchaser on June 1, 2014, which required notice of intent to exercise the option by not later than March 31, 2014.

On March 28, 2014, we entered into a definitive agreement with an unrelated third party to assign the purchase option to that third party in return for cash consideration of $1.7 million, payable upon the closing of the purchase transaction, and certain obligations under the agreement, including entering into a new 15-year lease with the third party upon the third party’s exercise of the purchase option and purchase of the building from the prior landlord. On March 28, 2014, we provided the prior landlord notice of our assignment and exercise of the purchase option. On May 28, 2014, the third party completed the purchase transaction and the 2013 lease was terminated, with no ongoing obligations, by mutual agreement between us and the prior landlord. On the same day we entered into a new lease (the “2014 lease”) with the third party that expires on May 31, 2029. The 2014 lease was treated as a modification of the prior lease on the property in accordance with ASC 840, and determined to be a capital lease. As a result of the 2014 lease, the corresponding capital asset increased by $5.7 million, resulting in a net book value of the capital asset of $18.3 million and the liability increased by $6.7 million, resulting in a capital obligation of $22.0 million. As part of this treatment, the net cash consideration received in connection with the definitive agreement was treated as a lease incentive that will be amortized over the life of the lease. The weighted average remaining lease terms and discount rates for finance leases were approximately 9.3 years and 5.04% at December 31, 2019. In accordance with the 2014 Lease, the basic rent increases by a fixed 2.5% escalation annually.

Accumulated amortization for property and equipment under finance leases at December 31, 2019 and 2018 was $18.7 million and $17.5 million, respectively.

Future minimum lease commitments at December 31, 2019 were as follows (in thousands):

	Operating Leases			Finance Leases
2020	$	710		$	2,046
2021		715			2,097
2022		564			2,149
2023		368			2,203
2024		28			2,258
After 2024		--			10,658
Total minimum lease payments		2,385			21,411
Less imputed interest		(230	)		(4,546	)
Net present value of minimum lease payments		2,155			16,865
Less current portion		(602	)		(1,224	)
Long-term lease obligations at December 31, 2019	$	1,553		$	15,641

The components of lease expense were as follows (in thousands):

	Year Ended December 31,2019
Operating lease cost	$	597
Short-term lease cost (1)		147
Finance lease cost
Amortization of finance lease assets		1,221
Interest on finance lease liabilities		881
Total finance lease cost		2,102
Total lease costs	$	2,846

(1)	Leases that have terms of 12 months or less.

Supplemental cash flow information related to leases was as follows (in thousands):

	Year Ended December 31,2019
Cash paid for amounts included in the measurement of lease liabilities:
Cash flows from operating activities - operating leases	$	604
Cash flows from operating activities - finance leases	$	1,995
Operating lease right-of-use assets obtained in exchange for operating lease liabilities	$	488

Rent expense charged to operations totaled $1.1 million, $1.6 million, and $1.6 million for 2019, 2018, and 2017, respectively.

Warranties

We provide product warranties for products sold through certain U.S. Government contract vehicles. We accrue a warranty liability at the time that we recognize revenue for the estimated costs that may be incurred in connection with providing warranty coverage. Warranties are valued using historical warranty usage trends; however, if actual product failure rates or service delivery costs differ from estimates, revisions to the estimated warranty liability may be required. Accrued warranties are reported as other current liabilities on the consolidated balance sheets.

	Balance Beginning of Year		Accruals		Warranty Expenses			Balance End of Year
	(amount in thousands)

Year Ended December 31, 2019	$	30	$	--	$	--		$	30
Year Ended December 31, 2018	$	30	$	--	$	--		$	30
Year Ended December 31, 2017	$	51	$	--	$	(21	)	$	30

Current Liabilities and Debt Obligations (Q2) (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Current Liabilities and Debt Obligations [Abstract]

Carrying Amount of the Credit Agreement

The carrying amount of the Credit Agreement consisted of the following (in thousands):

	June 30, 2020			December 31, 2019
Senior term loan principal, including exit fee	$	17,200		$	17,200
Less: Unamortized discount, debt issuance costs, and lender fees		(512	)		(865	)
Senior term loan, net	$	16,688		$	16,335

The carrying amount of the Credit Agreement consisted of the following (in thousands):

	December 31,
	2019			2018
Senior term loan principal, including exit fee	$	17,200		$	11,825
Less: Unamortized discount, debt issuance costs, and lender fees		(865	)		(841	)
Senior term loan, net	$	16,335		$	10,984

We incurred interest expense in the amount of $2.2 million, $1.7 million and $1.5 million for the years ended December 31, 2019, 2018 and 2017, respectively, under the Credit Agreement.

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

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Summary of Selected Quarterly Financial Data (Unaudited) [Abstract]

Goodwill (FY) (Details) - USD ($) $ in Thousands	12 Months Ended
Goodwill (FY) (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Jun. 30, 2020	Dec. 31, 2018
Goodwill [Abstract]
Goodwill	$ 14,916	$ 14,916	$ 14,916
Asset impairment charges	0
Other Intangible Assets [Abstract]
Cost	11,286		11,286
Accumulated Amortization	11,286		10,157
Other Intangible Assets [Member]
Other Intangible Assets [Abstract]
Cost	11,286		11,286
Accumulated Amortization	$ 11,286		$ 10,157

Fair Value Measurements (FY) (Details) - USD ($) $ / shares in Units, $ in Millions	6 Months Ended	12 Months Ended
	Jun. 30, 2020	Dec. 31, 2019	Dec. 31, 2017	Dec. 31, 1991	Dec. 31, 2018	Apr. 18, 2017
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Abstract]
Redemption amount of senior redeemable preferred stock						$ 2.1
Preferred stock dividend rate per annum			12.00%
Public Preferred Stock [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Abstract]
Preferred stock dividend rate per annum	12.00%	12.00%		6.00%
Public preferred stock par value (in dollar per share)	$ 0.01	$ 0.01
Carrying value of public preferred stock		$ 139.2			$ 135.4
Estimate of Fair Value, Fair Value Disclosure [Member] \| Public Preferred Stock [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Abstract]
Public preferred stock	$ 68.5	$ 60.5			$ 41.4

Summary of Selected Quarterly Financial Data (Unaudited) (FY) (Tables)

12 Months Ended

Dec. 31, 2019

Selected Quarterly Financial Data

The following is a summary of selected quarterly financial data for the previous two fiscal years (in thousands):

	Quarters Ended
	March 31			June 30			Sept. 30		Dec. 31
2019
Revenue	$	31,166		$	36,048		$	45,531	$	46,473
Gross profit		8,976			10,015			16,313		17,040
(Loss) income before income taxes and non-controlling interest		(3,137	)		(1,974	)		3,708		(838	)
Net (loss) income attributable to Telos Corporation (1)(2)		(3,413	)		(1,741	)		2,233		(3,480	)
Weighted Average Common Shares Outstanding, Class A, Basic		42,731			43,394			43,937		43,937
Weighted Average Common Shares Outstanding, Class B, Basic		4,038			4,038			4,038		4,038
Weighted Average Common Shares Outstanding, Class A, Diluted		42,731			43,394			46,279		43,937
Weighted Average Common Shares Outstanding, Class B, Diluted		4,038			4,038			4,038		4,038
Earnings per Share, Class A - Basic		(0.07	)		(0.04	)		0.05		(0.07	)
Earnings per Share, Class B - Basic		(0.07	)		(0.04	)		0.05		(0.07	)
Earnings per Share, Class A - Diluted		(0.07	)		(0.04	)		0.04		(0.07	)
Earnings per Share, Class B - Diluted		(0.07	)		(0.04	)		0.04		(0.07	)

2018
Revenue	$	32,401		$	34,943		$	34,695	$	35,977
Gross profit		10,232			12,078			16,287		14,465
(Loss) income before income taxes and non-controlling interest		(1,693	)		450			4,722		(1,711	)
Net (loss) income attributable to Telos Corporation (1)(3)		(1,986	)		(87	)		4,113		(3,680	)
Weighted Average Common Shares Outstanding, Class A, Basic		41,490			42,172			42,731		42,731
Weighted Average Common Shares Outstanding, Class B, Basic		4,038			4,038			4,038		4,038
Weighted Average Common Shares Outstanding, Class A, Diluted		41,490			42,172			46,310		42,731
Weighted Average Common Shares Outstanding, Class B, Diluted		4,038			4,038			4,038		4,038
Earnings per Share, Class A - Basic		(0.04	)		(0.00	)		0.09		(0.08	)
Earnings per Share, Class B - Basic		(0.04	)		(0.00	)		0.09		(0.08	)
Earnings per Share, Class A - Diluted		(0.04	)		(0.00	)		0.08		(0.08	)
Earnings per Share, Class B - Diluted		(0.04	)		(0.00	)		0.08		(0.08	)

(1)	Changes in net income are the result of several factors, including seasonality of the government year-end buying season, as well as the nature and timing of other deliverables.

(2)	Net income for the third quarter of 2019 is attributable to $2.6 million in proprietary software sales which carry lower cost of sales.

(3)	Net income for the third quarter of 2018 included $5.6 million of revenue accruals for multiple contracts as a result of several years of cumulative indirect rate adjustments which did not include direct costs in Secure Mobility and Network Management/Defense Enterprise Solutions deliverables.

Stockholders' Deficit, Option Plans, and Employee Benefit Plan (FY) (Details)	1 Months Ended	3 Months Ended	6 Months Ended	12 Months Ended
	May 31, 2017 shares	Jun. 30, 2020 shares	Jun. 30, 2020 shares	Dec. 31, 2019 USD ($) Vote shares	Dec. 31, 2018 USD ($) shares	Dec. 31, 2017 USD ($) shares
Common Stock [Abstract]
Number of votes per share \| Vote				1
Restricted Stock Grants [Rollforward]
Outstanding at beginning of year (in shares)			4,905,000	4,920,000	4,975,000	0
Granted	5,005,000	100,000		0	0	5,005,000
Forfeited				(15,000)	(55,000)	(30,000)
Outstanding at end of year (in shares)				4,905,000	4,920,000	4,975,000
Restricted stock remained subject to vesting (in shares)				1,198,750
Telos Shared Savings Plan [Abstract]
Shares held in defined contribution employee savings plan (in shares)				3,658,536
Maximum contribution percentage				2.00%
Annual vesting percentage				20.00%
Vesting period of stock options				5 years
Contributions to the Plan \| $				$ 861,000	$ 721,000	$ 617,000
Telos ID [Member]
Telos Shared Savings Plan [Abstract]
Maximum contribution percentage				2.00%
Contributions to the Plan \| $				$ 151,000	$ 125,000	$ 105,000
Unvested Restricted Stock [Member]
Restricted Stock Grants [Rollforward]
Restricted stock remained subject to vesting (in shares)		75,000	75,000
Restricted stock vested on date of grant			25.00%	25.00%
Restricted stock vest on anniversary of the date of grant			25.00%	25.00%

Current Liabilities and Debt Obligations, Enlightenment Capital Credit Agreement (Q2) (Details)							3 Months Ended		6 Months Ended		12 Months Ended
	Mar. 26, 2020 USD ($) Extension	Jul. 19, 2019 USD ($)	Jul. 18, 2019 USD ($)	Mar. 31, 2018	Jan. 25, 2017 USD ($) $ / shares shares	Mar. 31, 2015	Jun. 30, 2020 USD ($) $ / shares shares	Jun. 30, 2019 USD ($)	Jun. 30, 2020 USD ($) $ / shares shares	Jun. 30, 2019 USD ($)	Dec. 31, 2019 USD ($) $ / shares	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Apr. 18, 2017 USD ($)
Accounts Payable and Other Accrued Payables [Abstract]
Trade account payables							$ 14,800,000		$ 14,800,000		$ 13,500,000	$ 18,500,000
Accrued trade payables							$ 4,800,000		$ 4,800,000		$ 1,500,000	3,300,000
Enlightenment Capital Credit Agreement [Abstract]
Warrants exercise price (in dollars per share) \| $ / shares							$ 1.321		$ 1.321		$ 1.321
Senior term loan principal, including exit fee											$ 17,200,000	11,825,000
Less: Unamortized discount, debt issuance costs, and lender fees											(865,000)	(841,000)
Senior term loan, net							$ 0		$ 0		$ 16,335,000	10,984,000
Credit Agreement [Member]
Enlightenment Capital Credit Agreement [Abstract]
Increase in interest rate							1.00%
Effective interest rate							15.00%		15.00%		15.00%
Credit agreement transaction costs									$ 374,000		$ 374,000
Senior term loan principal, including exit fee							$ 17,200,000		17,200,000		17,200,000
Less: Unamortized discount, debt issuance costs, and lender fees							(512,000)		(512,000)		(865,000)
Senior term loan, net							16,688,000		16,688,000		16,335,000
Interest expense							700,000	$ 400,000	1,500,000	$ 800,000	2,200,000	$ 1,700,000	$ 1,500,000
Exit fee							$ 825,000		$ 825,000		$ 825,000
Class A Common Stock [Member]
Enlightenment Capital Credit Agreement [Abstract]
Common stock par value (in dollars per share) \| $ / shares											$ 0
Class A Common Stock [Member] \| Credit Agreement [Member]
Enlightenment Capital Credit Agreement [Abstract]
Number of shares held by chief executive officer (in shares) \| shares							50,000		50,000
Porter [Member]
Enlightenment Capital Credit Agreement [Abstract]
Maturity date						Jul. 01, 2017			Jul. 25, 2022		Jul. 25, 2022	Jul. 01, 2017
Aggregate redemption price														$ 2,112,000
Enlightenment Capital Solutions Fund, II L.P. [Member]
Enlightenment Capital Credit Agreement [Abstract]
Senior term loan		$ 16,000,000
Maturity date		Jan. 15, 2021	Jan. 25, 2022
Effective interest rate		17.30%
Additional borrowings		$ 5,000,000
Principal amount		$ 16,000,000
Prepayment price percentage for January 26, 2019 to January 25, 2020		102.00%
Prepayment price percentage for January 26, 2020 to October 14, 2020		101.00%
Agent fee		$ 110,000
Exit fee		$ 1,200,000	$ 825,000
Number of quarterly maturity date extensions \| Extension	4
Amount of increase in quarterly exit fee payable	$ 250,000
Amount of increase in exit fee payable	1,000,000
Amendment fee and out-of-pocket costs and expenses	$ 100,000
Enlightenment Capital Solutions Fund, II L.P. [Member] \| Class A Common Stock [Member]
Enlightenment Capital Credit Agreement [Abstract]
Warrants issued to purchase shares of common stock (in shares) \| shares					1,135,284.333
Common stock par value (in dollars per share) \| $ / shares					$ 0
Percentage of warrants issued of common equity interests					2.50%
Warrants exercise price (in dollars per share) \| $ / shares					$ 1.321
Warrants expiration date							Jan. 25, 2027		Jan. 25, 2027		Jan. 25, 2027
Term Loan [Member] \| Porter [Member]
Enlightenment Capital Credit Agreement [Abstract]
Increase in interest rate				1.00%
Term Loan [Member] \| Enlightenment Capital Solutions Fund, II L.P. [Member]
Enlightenment Capital Credit Agreement [Abstract]
Senior term loan					$ 11,000,000
Maturity date									Jan. 25, 2022		Jan. 25, 2022
Accrual rate					13.00%
Increase in interest rate					14.50%
Increase in interest rate in event of default					2.00%
Monthly accrued interest rate					10.00%
Monthly accrued interest rate during continuance of an Alternate Interest Rate Event					11.50%
Number of days prior written notice									30 days		30 days
Proceeds from loan prepayment					$ 1,100,000
Principal amount					$ 11,000,000
Term Loan [Member] \| Minimum [Member] \| Enlightenment Capital Solutions Fund, II L.P. [Member]
Enlightenment Capital Credit Agreement [Abstract]
Monthly accrued interest rate											10.00%

Revenue and Accounts Receivable (FY)

12 Months Ended

Dec. 31, 2019

Revenue and Accounts Receivable [Abstract]

Revenue and Accounts Receivable

Note 5. Revenue and Accounts Receivable

Revenue resulting from contracts and subcontracts with the U.S. Government accounted for 93.7%, 93.7%, and 94.2% of consolidated revenue in 2019, 2018, and 2017, respectively. 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 92.7% of our billed accounts receivable were directly with U.S. Government customers. While we acknowledge the potentially material and adverse risk of such a significant concentration of credit risk, our past experience of collecting substantially all of such receivables provide 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 maintain allowances for potential losses.

On July 15, 2016, the Company entered into an accounts receivable purchase agreement under which the Company sells certain accounts receivable to a third party, or the “Factor”, without recourse to the Company. The Factor initially pays the Company 90% of U.S. Federal government receivables or 85% of certain commercial prime contractors. The remaining payment is deferred and based on the amount the Factor receives from our customer, less a discount fee and a program access fee that is determined by the amount of time the receivable is outstanding before payment. The structure of the transaction provides for a true sale of the receivables transferred. Accordingly, upon transfer of the receivable to the Factor, the receivable is removed from the Company's consolidated balance sheet, a loss on the sale is recorded and the residual amount remains a deferred payment as an accounts receivable until payment is received from the Factor. The balance of the sold receivables may not exceed $10 million. During the years ended December 31, 2019 and 2018, the Company sold approximately $12.6 million and $18.1 million of accounts receivable, respectively, and recognized a related loss of approximately $0.1 million in selling, general and administrative expenses for the same periods. As of December 31, 2019, there were no outstanding sold accounts receivable. As of December 31, 2018, the balance of the sold accounts receivable was approximately $0.9 million, and the related deferred price was approximately $0.1 million.

The components of accounts receivable are as follows (in thousands):

	December 31,
	2019			2018
Billed accounts receivable	$	11,917		$	18,848
Unbilled receivables		16,745			16,000
Allowance for doubtful accounts		(720	)		(306	)
Total	$	27,942		$	34,542

The activities in the allowance for doubtful accounts are set forth below (in thousands):

	Balance Beginning of Year		Bad Debt Expenses (1)			Recoveries (2)		Balance End of Year

Year ended December 31, 2019	$	306	$	414		$	--	$	720
Year ended December 31, 2018	$	411	$	(105	)	$	--	$	306
Year ended December 31, 2017	$	429	$	(18	)	$	--	$	411

(1)	Accounts receivable reserves and reversal of allowance for subsequent collections, net

(2)	Accounts receivable written-off and subsequent recoveries, net

Revenue by Major Market and Significant Customers

We derived a substantial portion of our revenues from contracts and subcontracts with the U.S. Government. Revenue by customer sector for the last three fiscal years is as follows:

	2019				2018				2017
					(dollar amounts in thousands)

Federal	$	149,257	93.7	%	$	129,279	93.7	%	$	101,519	94.2	%
State & Local, and Commercial		9,961	6.3	%		8,737	6.3	%		6,208	5.8	%
Total	$	159,218	100.0	%	$	138,016	100.0	%	$	107,727	100.0	%

General and Basis of Presentation (Q2) (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

General and Basis of Presentation [Abstract]

Disaggregation of Revenue

The following tables disclose revenue (in thousands) by customer type and contract type for the periods presented.

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Federal	$	46,877	$	33,774	$	82,968	$	62,757
State & Local, and Commercial		1,733		2,274		4,621		4,457
Total	$	48,610	$	36,048	$	87,589	$	67,214

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Firm fixed-price	$	41,935	$	28,857	$	73,596	$	53,787
Time-and-materials		3,637		3,691		7,462		7,620
Cost plus fixed fee		3,038		3,500		6,531		5,807
Total	$	48,610	$	36,048	$	87,589	$	67,214

We have one reportable segment. We treat sales to U.S. customers as sales within the U.S. regardless of where the services are performed. Substantially all of our revenues are from U.S. customers as revenue derived from international customers is de minimus. The following tables disclose revenue (in thousands) by customer type and contract type for the periods presented. Prior period amounts have not been adjusted under the modified retrospective method.

	2019		2018		2017
Federal	$	149,257	$	129,279	$	101,519
State & Local, and Commercial		9,961		8,737		6,208
Total	$	159,218	$	138,016	$	107,727

	2019		2018		2017
Firm fixed-price	$	131,629	$	103,454	$	89,516
Time-and-materials		14,569		16,795		10,222
Cost plus fixed fee		13,020		17,767		7,989
Total	$	159,218	$	138,016	$	107,727

Contract Assets and Liabilities

The following table discloses accounts receivable and contract assets (in thousands):

	June 30, 2020			December 31, 2019
Billed accounts receivable	$	18,420		$	11,917
Unbilled receivables		20,689			16,745
Allowance for doubtful accounts		(738	)		(720	)
Receivables – net	$	38,371		$	27,942

The following table discloses contract liabilities (in thousands):

		June 30, 2020				December 31, 2019
Contract liabilities		$	6,682			$	6,337

The following table discloses accounts receivable and contract assets (in thousands):

	December 31,
	2019			2018
Billed accounts receivable	$	11,917		$	18,848
Unbilled receivables		16,745			16,000
Allowance for doubtful accounts		(720	)		(306	)
Receivables – net	$	27,942		$	34,542

The following table discloses contract liabilities (in thousands):

	December 31,
	2019		2018
Contract liabilities	$	6,337	$	5,232

Potentially Dilutive Securities not Included in Calculation of Diluted Net Loss per share

Potentially dilutive securities not included in the calculation of diluted net loss per share because to do so would be anti-dilutive are as follows (in common stock equivalent shares):

	Six Months Ended June 30,
	2020		2019
Non-controlling interest, beginning of period		75		1,206
Common Stock Warrants, exercisable at $1.321/share		1,135		1,135
Total		1,210		2,341

Potentially dilutive securities not included in the calculation of diluted net loss per share because to do so would be anti-dilutive are as follows (in common stock equivalent shares):

	2019		2018		2017
Unvested restricted stock		1,191		2,428		3,724
Common Stock Warrants, exercisable at $1.321/share		1,135		1,135		1,135
Total		2,326		3,563		4,859

Unaudited Pro Forma Net Income (Loss) per Share

The Pro Forma unaudited earnings (loss) per share is computed as follows:

	Six Months Ended June 30, 2020
Net Income (Loss) Attributable to Telos Corporation
Dividends from preferred stock recorded as interest expense
Net Income (loss) to Common Shareholders Pro forma adjustment to remove preferred dividends
Net income (loss) used to compute pro forma net earnings (loss) per share
Weighted average common shares outstanding, basic and diluted, effecting the conversation of Class A and class B common stock into common stock
Pro forma adjustment to reflect conversion of preferred shares
Weighted average common shares outstanding used in computing pro forma net earnings per share, basic and diluted
Pro forma net earnings (loss) per common share, basic and diluted

Pro forma unaudited net income (loss) reflects the conversion of the Class A and Class B common stock for common stock on a 1:1 basis and the conversion of our Redeemable Preferred Stock for common stock. The pro forma unaudited earnings (loss) per share is computed as follows:

		2019
Net Income (Loss) Attributable to Telos Corporation
Dividends from preferred stock recorded as interest expense
Net income used to compute pro forma net earnings (loss) per share

Weighted average common shares outstanding, basic and diluted reflecting the conversion of Class A and Class B common stock into common stock
Pro forma adjustment to reflect conversion of preferred shares
Weighted average common shares outstanding used in computing pro forma net earnings per share, basic and diluted

Pro forma net earnings (loss) per common share, basic and diluted

Accumulated Other Comprehensive Income

Accumulated other comprehensive income included within stockholders’ deficit consists of the following (in thousands):

	June 30, 2020			December 31, 2019
Cumulative foreign currency translation loss	$	(100	)	$	(101	)
Cumulative actuarial gain on pension liability adjustment		107			107
Accumulated other comprehensive income	$	7		$	6

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT (Unaudited) (Q2) - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Other Comprehensive Income [Member]	Accumulated Deficit [Member]	Noncontrolling Interest [Member]	Total
Beginning balance at Dec. 31, 2016		$ 3,229	$ 25	$ (135,537)	$ 2,229	$ (129,976)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income			0	(5,833)	2,335	(3,498)
Foreign currency translation gain		0	7	0	0	7
Distributions		0	0	0	(3,651)	(3,651)
Ending balance at Dec. 31, 2017		4,310	32	(141,370)	913	(136,037)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income		0	0	(1,640)	3,377	1,737
Foreign currency translation gain		0	(15)	0	0	(15)
Distributions		0	0	0	(1,669)	(1,669)
Ending balance at Dec. 31, 2018	$ 78	4,310	17	(139,129)	2,621	(132,103)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	0	0	0	(5,154)	220	(4,934)
Foreign currency translation gain	0	0	2	0	0	2
Distributions	0	0	0	0	(984)	(984)
Ending balance at Jun. 30, 2019	78	4,310	19	(144,283)	1,857	(138,019)
Beginning balance at Dec. 31, 2018	78	4,310	17	(139,129)	2,621	(132,103)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income		0	0	(6,401)	4,264	(2,137)
Foreign currency translation gain		0	(11)	0	0
Distributions		0	0	0	(2,371)	(2,371)
Ending balance at Dec. 31, 2019	78	4,310	6	(145,530)	4,514	(136,622)
Beginning balance at Mar. 31, 2019	78	4,310	19	(142,542)	2,378	(135,757)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	0	0	0	(1,741)	(253)	(1,994)
Distributions	0	0	0	0	(268)	(268)
Ending balance at Jun. 30, 2019	78	4,310	19	(144,283)	1,857	(138,019)
Beginning balance at Dec. 31, 2019	78	4,310	6	(145,530)	4,514	(136,622)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	0	0	0	(1,978)	3,590	1,612
Foreign currency translation gain	0	0	1	0	0	1
Distributions	0	0	0	0	(1,000)	(1,000)
Ending balance at Jun. 30, 2020	78	4,310	7	(147,508)	7,104	(136,009)
Beginning balance at Mar. 31, 2020	78	4,310	5	(147,774)	5,298	(138,083)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	0	0	0	266	2,806	3,072
Foreign currency translation gain	0	0	2	0	0	2
Distributions	0	0	0	0	(1,000)	(1,000)
Ending balance at Jun. 30, 2020	$ 78	$ 4,310	$ 7	$ (147,508)	$ 7,104	$ (136,009)

The consolidated profit or loss for the period, net of income taxes, including the portion attributable to the noncontrolling interest.

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Stockholders' Deficit, Option Plans, and Employee Benefit Plan [Abstract]

Stockholders' Deficit, Option Plans, and Employee Benefit Plan (FY)

12 Months Ended

Dec. 31, 2019

Stockholders' Deficit, Option Plans, and Employee Benefit Plan

Note 8. Stockholders' Deficit and Employee Benefit Plan

Common Stock

The relative rights, preferences, and limitations of the Class A common stock and the Class B common stock are in all respects identical. The holders of the common stock have one vote for each share of common stock held. Subject to the priority rights of the Public Preferred Stock, holders of Class A and Class B common stock are entitled to receive such dividends as may be declared.

Restricted Stock Grants

Since June 2008, we have issued restricted stock (Class A common) to our executive officers, directors and employees. In May 2017, we granted 5,005,000 shares of restricted stock to our executive officers and employees. Such stock is subject to a vesting schedule as follows: 25% of the restricted stock vests immediately on the date of grant, thereafter, an additional 25% will vest annually on the anniversary of the date of grant subject to continued employment or services. As of December 31, 2019, there were 1,198,750 shares of restricted stock that remained subject to vesting. In the event of death of the employee or a change in control, as defined by the Telos Corporation 2008 Omnibus Long-Term Incentive Plan, the 2013 Omnibus Long-Term Incentive Plan, or the 2016 Omnibus Long-Term Incentive Plan, all unvested shares shall automatically vest in full. In accordance with ASC 718, we recorded immaterial compensation expense for any of the issuances as the value of the common stock was nominal, based on the deduction of our outstanding debt, capital lease obligations, and preferred stock from an estimated enterprise value, which was estimated based on discounted cash flow analysis, comparable public company analysis, and comparable transaction analysis. Additionally, we determined that a significant change in the valuation estimate for common stock would not have a significant effect on the consolidated financial statements.

A summary of restricted stock activities for the years ended December 31, 2019, 2018 and 2017 is as follows:

	December 31,
	2019			2018			2017
	(number of shares)
Outstanding at beginning of year		4,920,000			4,975,000			--
Granted		--			--			5,005,000
Forfeited		(15,000	)		(55,000	)		(30,000	)
Outstanding at end of year		4,905,000			4,920,000			4,975,000

Telos Shared Savings Plan

We sponsor a defined contribution employee savings plan (the “Plan”) under which substantially all full-time employees are eligible to participate. The Plan holds 3,658,536 shares of Telos Class A common stock. Since no public market exists for Telos Class A common stock, the Trustees of the Plan and their professional advisors undertake an annual evaluation, based upon the most recent audited financial statements. To date, the Plan’s trustees have priced the stock at the exact midpoint of the evaluated range of the value of the stock. We match one-half of employee contributions to the Plan up to a maximum of 2% of such employee’s eligible annual base salary. Participant contributions vest immediately, and Company contributions vest at the rate of 20% each year, with full vesting occurring after completion of five years of service. Our total contributions to this Plan for 2019, 2018, and 2017 were $861,000, $721,000, and $617,000, respectively.

Additionally, Telos ID sponsors a defined contribution savings plan (the “Telos ID Plan”) under which substantially all full-time employees are eligible to participate. Telos ID matches one-half of employee contributions to the Telos ID Plan up to a maximum of 2% of such employee’s eligible annual base salary. The total 2019, 2018, and 2017 Telos ID contributions to this plan were $151,000, $125,000, and $105,000, respectively.

Summary of Significant Accounting Policies (FY)

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 1. General and Basis of Presentation

Telos Corporation, together with its subsidiaries (the “Company” or “Telos” or “We”), is an information technology solutions and services company addressing the needs of U.S. Government and commercial customers worldwide. Our principal offices are located at 19886 Ashburn Road, Ashburn, Virginia 20147. The Company was incorporated as a Maryland corporation in October 1971.

The accompanying condensed consolidated financial statements include the accounts of Telos and its subsidiaries, including Ubiquity.com, Inc., Xacta Corporation, Teloworks, Inc. and Telos APAC, Pte. Ltd., all of whose issued and outstanding share capital is owned by the Company. We have also consolidated the results of operations of Telos Identity Management Solutions, LLC (“Telos ID”) (see Note 2 – Non-controlling Interests). All intercompany transactions have been eliminated in consolidation.

The accompanying condensed consolidated financial statements reflect all adjustments (which include normal recurring adjustments) and reclassifications necessary for their fair presentation in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”). The presented interim results are not necessarily indicative of fiscal year performance for a variety of reasons including, but not limited to, the impact of seasonal and short-term variations. We have continued to follow the accounting policies (including the critical accounting policies) set forth in the consolidated financial statements included in our 2019 Annual Report on Form 10-K filed with the SEC. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

In March 2020, the coronavirus disease 2019 ("COVID-19") was declared a pandemic by the World Health Organization and a national emergency by the U.S. Government. The pandemic has negatively affected the U.S. and global economy, disrupted global supply chains and financial markets, and resulted in significant travel restrictions, including mandated facility closures and shelter-in-place orders in numerous jurisdictions around the world. We are taking prudent measures to protect the health and safety of our employees, such as practicing social distancing and enabling our employees to work from home where possible. While we have experienced certain internal disruptions in adapting our operations as described above to the changed and evolving conditions, the majority of our program operations have not been adversely impacted, or we have implemented alternative means to support requirements. The financial impact of the COVID-19 pandemic cannot be reasonably estimated at this time as its impact depends on future developments, which are highly uncertain and cannot be predicted. New information may emerge concerning the scope, severity and duration of the COVID-19 pandemic, actions to contain its spread or treat its impact, and governmental, business and individuals’ actions taken in response to the pandemic (including restrictions and limitations on travel and transportation) among others.

In preparing these condensed consolidated financial statements, we have evaluated subsequent events through the date that these condensed consolidated financial statements were issued.

Segment Reporting

Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker (“CODM”), or decision making group, in deciding how to allocate resources and assess performance. We currently operate in one operating and reportable business segment for financial reporting purposes. Our Chief Executive Officer is the CODM. The CODM only evaluates profitability based on consolidated results.

Recent Accounting Pronouncements

Recent Accounting Pronouncements Adopted

In June 2016, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which introduces new guidance for estimating credit losses on certain types of financial instruments based on expected losses and the timing of the recognition of such losses. This standard is effective for interim and annual reporting periods beginning after December 15, 2019, which made this standard effective for us on January 1, 2020. The adoption of this ASU did not have a material impact on our condensed consolidated financial position, results of operations and cash flows.

In January 2017, the FASB issued ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment," which eliminates Step 2 of the current goodwill impairment test that requires a hypothetical purchase price allocation to measure goodwill impairment. A goodwill impairment loss instead is measured at the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the recorded amount of goodwill. The provisions of this ASU are effective for years beginning after December 15, 2019, which made this standard effective for us on January 1, 2020. The adoption of this ASU did not have a material impact on our condensed consolidated financial position, results of operations and cash flows.

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement”, which modifies the disclosure requirement for fair value measurement under ASC 820 to improve the effectiveness of such disclosures. Those modifications include the removal and addition of disclosure requirements as well as clarifying specific disclosure requirements. This standard is effective for interim and annual reporting periods beginning after December 15, 2019, which made this standard effective for us on January 1, 2020. The adoption of this ASU did not have a material impact on our condensed consolidated financial position, results of operations and cash flows.

In August 2018, the FASB issued ASU 2018-15, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract,” which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This standard is effective for interim and annual reporting periods beginning after December 15, 2019, which made this standard effective for us on January 1, 2020. The adoption of this ASU did not have a material impact on our condensed consolidated financial position, results of operations and cash flows.

Recent Accounting Pronouncements Not Yet Adopted

In December 2019, the FASB issued ASU No. 2019-12, “Simplifying the Accounting for Income Taxes (Topic 740)”, which simplifies the accounting for income taxes. This standard will be effective for reporting periods beginning after December 15, 2020, with early adoption permitted. While we are currently assessing the impact of the adoption of this ASU, we do not believe the adoption of this ASU will have a material impact on our consolidated financial position, results of operations and cash flows.

Revenue Recognition

We account for revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers.” The unit of account in ASC 606 is a performance obligation, which is a promise in a contract with a customer to transfer a good or service to the customer. ASC 606 prescribes a five-step model for recognizing revenue that includes identifying the contract with the customer, determining the performance obligation(s), determining the transaction price, allocating the transaction price to the performance obligation(s), and recognizing revenue as the performance obligations are satisfied. Timing of the satisfaction of performance obligations varies across our businesses due to our diverse product and service mix, customer base, and contractual terms. Significant judgment can be required in determining certain performance obligations, and these determinations could change the amount of revenue and profit recorded in a given period. Our contracts may have a single performance obligation or multiple performance obligations. When there are multiple performance obligations within a contract, we allocate the transaction price to each performance obligation based on our best estimate of standalone selling price.

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, and is classified as services revenue. 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 as discussed further below. Revenue is recognized over time using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying our performance obligations. Incurred cost represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Contract costs include labor, material, subcontractor costs and indirect expenses. This continuous transfer of control to the customer is supported by clauses in our contracts with U.S. Government customers whereby the customer may terminate a contract for convenience and then pay for costs incurred plus a profit, at which time the customer would take control of any work in process. For non-U.S. Government contracts where we perform as a subcontractor and our order includes similar Federal Acquisition Regulation (FAR) provisions as the prime contractor’s order from the U.S. Government, continuous transfer of control is likewise supported by such provisions. For other non-U.S. Government customers, continuous transfer of control to such customers is also supported due to general terms in our contracts and rights to recover damages which would include, among other potential damages, the right to payment for our work performed to date plus a reasonable profit.

Due to the transfer of control over time, revenue is recognized based on progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the performance obligations. We generally use the cost-to-cost measure of progress on a proportional performance basis for our contracts because it best depicts the transfer of control to the customer which occurs as we incur costs on our contracts. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues are recorded proportionally as costs are incurred. Due to the nature of the work required to be performed on certain of our performance obligations, the estimation of total revenue and cost at completion is complex, subject to many variables and requires significant judgment. Contract estimates are based on various assumptions including labor and subcontractor costs, materials and other direct costs and the complexity of the work to be performed. A significant change in one or more of these estimates could affect the profitability of our contracts. We review and update our contract-related estimates regularly and recognize adjustments in estimated profit on contracts on a cumulative catch-up basis, which may result in an adjustment increasing or decreasing revenue to date on a contract in a particular period that the adjustment is identified. Revenue and profit in future periods of contract performance are recognized using the adjusted estimate.

Revenue that is recognized at a point in time is for the sale of software licenses in our Secure Mobility and Network Management/Defense Enterprise Solutions (formerly Secure Mobility Solutions in our Cyber Operations and Defense (“CO&D”) reporting unit) and Secure Communications Cyber and Enterprise Solutions (formerly IT & Enterprise Solutions) business groups and for the sale of resold products in Telos ID Enterprise Solutions (formerly Identity Management Solutions) and Cyber & Cloud Solutions (formerly CO&D’s Cyber Security Solutions), and is classified as product revenue. Revenue on these contracts is recognized when the customer obtains control of the transferred product or service, which is generally upon delivery of the product to the customer for their use, due to us maintaining control of the product until that point. 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. When an order contains multiple performance obligations, we allocate the transaction price to the performance obligations using our best estimate of standalone selling price.

Contracts are routinely and often modified to account for changes in contract requirements, specifications, quantities, or price. Depending on the nature of the modification, we determine whether to account for the modification as an adjustment to the existing contract or as a new contract. Generally, modifications are not distinct from the existing contract due to the significant interrelatedness of the performance obligations and are therefore accounted for as an adjustment to the existing contract, and recognized as a cumulative adjustment to revenue (as either an increase or reduction of revenue) based on the modification’s effect on progress toward completion of a performance obligation.

Our contracts may include various types of variable consideration, such as claims (for instance, indirect rate or other equitable adjustments) or incentive fees. We include estimated amounts in the transaction price based on all of the information available to us, including historical information and future estimations, 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 have revised and re-submitted several years of incurred cost submissions reflecting certain indirect rate structure changes as a result of regular Defense Contract Audit Agency (“DCAA”) audits of incurred cost submissions. This resulted in signed final rate agreement letters for fiscal years 2011 to 2013 and conformed incurred cost submissions for 2014 to 2015. We evaluated the resulting changes to revenue under the applicable cost plus fixed fee contracts for the years 2011 to 2015 as variable consideration, and determined the most likely amount to which we expect to be entitled, to the extent that no constraint exists that would preclude recognizing this revenue or result in a significant reversal of cumulative revenue recognized. We included these estimated amounts of variable consideration in the transaction price and as performance on these contracts is complete, we recognized revenue of $6.0 million during the year ended December 31, 2018.

Historically, most of our contracts do not include award or incentive fees. For incentive fees, we would include such fees in the transaction price to the extent we could reasonably estimate the amount of the fee. With limited historical experience, we have not included any revenue related to incentive fees in our estimated transaction prices. We may include in our contract estimates additional revenue for submitted contract modifications or claims against the customer when we believe we have an enforceable right to the modification or claim, the amount can be estimated reliably and its realization is probable. We consider the contractual/legal basis for the claim (in particular FAR provisions), the facts and circumstances around any additional costs incurred, the reasonableness of those costs and the objective evidence available to support such claims.

For our contracts that have an original duration of one year or less, we use the practical expedient applicable to such contracts and do not consider the time value of money. We capitalize sales commissions related to proprietary software and related services that are directly tied to sales. We do not elect the practical expedient to expense as incurred the incremental costs of obtaining a contract if the amortization period would have been one year or less. For the sales commissions that are capitalized, we amortize the asset over the expected customer life, which is based on recent and historical data.

Contract assets are amounts that are invoiced as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals or upon achievement of contractual milestones. Generally, revenue recognition occurs before billing, resulting in contract assets. These contract assets are referred to as unbilled receivables and are reported within accounts receivable, net of reserve on our consolidated balance sheets.

Billed receivables are amounts billed and due from our customers and are reported within accounts receivable, net of reserve on the consolidated balance sheets. The portion of the payments retained by the customer until final contract settlement is not considered a significant financing component due to the intent of the retainage being the customer’s protection with respect to full and final performance under the contract.

Contract liabilities are payments received in advance and milestone payments from our customers on selected contracts that exceed revenue earned to date, resulting in contract liabilities. Contract liabilities typically are not considered a significant financing component because they are generally satisfied within one year and are used to meet working capital demands that can be higher in the early stages of a contract. Contract liabilities are reported on our consolidated balance sheet on a net contract basis at the end of each reporting period.

We have one reportable segment. We treat sales to U.S. customers as sales within the U.S. regardless of where the services are performed. Substantially all of our revenues are from U.S. customers as revenue derived from international customers is de minims. The following tables disclose revenue (in thousands) by customer type and contract type for the periods presented.

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Federal	$	46,877	$	33,774	$	82,968	$	62,757
State & Local, and Commercial		1,733		2,274		4,621		4,457
Total	$	48,610	$	36,048	$	87,589	$	67,214

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Firm fixed-price	$	41,935	$	28,857	$	73,596	$	53,787
Time-and-materials		3,637		3,691		7,462		7,620
Cost plus fixed fee		3,038		3,500		6,531		5,807
Total	$	48,610	$	36,048	$	87,589	$	67,214

The following table discloses accounts receivable and contract assets (in thousands):

	June 30, 2020			December 31, 2019
Billed accounts receivable	$	18,420		$	11,917
Unbilled receivables		20,689			16,745
Allowance for doubtful accounts		(738	)		(720	)
Receivables – net	$	38,371		$	27,942

The following table discloses contract liabilities (in thousands):

		June 30, 2020				December 31, 2019
Contract liabilities		$	6,682			$	6,337

As of June 30, 2020 and December 31, 2019, we had $84.8 million and $112.4 million of remaining performance obligations, respectively, which we also refer to as funded backlog. We expect to recognize approximately 87.6% of our remaining performance obligations as revenue in 2020, an additional 11.4% in 2021, and the balance thereafter. We recognized revenue of $1.1 million and $3.5 million during the three and six months ended June 30, 2020, respectively, and $1.2 million and $3.1 million during the three and six months ended June 30, 2019, respectively, that was included in the contract liabilities balance at the beginning of each fiscal year.

Accounts Receivable

Accounts receivable are stated at the invoiced amount, less an allowance for doubtful accounts. Collectability of accounts receivable is regularly reviewed based upon management’s knowledge of the specific circumstances related to overdue balances. The allowance for doubtful accounts is adjusted based on such evaluation. Accounts receivable balances are written off against the allowance when management deems the balances uncollectible.

On July 15, 2016, the Company entered into an accounts receivable purchase agreement under which the Company sells certain accounts receivable to a third party, or the “Factor”, without recourse to the Company. The Factor initially pays the Company 90% of U.S. Federal government receivables or 85% of certain commercial prime contractors. The remaining payment is deferred and based on the amount the Factor receives from our customer, less a discount fee and a program access fee that is determined by the amount of time the receivable is outstanding before payment. The structure of the transaction provides for a true sale of the receivables transferred. Accordingly, upon transfer of the receivable to the Factor, the receivable is removed from the Company’s condensed consolidated balance sheet, a loss on the sale is recorded and the residual amount remains a deferred payment as an accounts receivable until payment is received from the Factor. The balance of the sold receivables may not exceed $10 million. There were no accounts receivable sold during the three and six months ended June 30, 2020. During the three and six months ended June 30, 2019, the Company sold approximately $4.4 million and $9.4 million of accounts receivable, respectively, and recognized a related loss of approximately $15,000 and $32,000 in selling, general and administrative expenses, respectively, for the same period. As of June 30, 2020 and December 31, 2019, there were no outstanding sold accounts receivable.

Inventories

Inventories are stated at the lower of cost or net realizable value, where cost is determined using the weighted average method. Substantially all inventories consist of purchased off-the-shelf hardware and software, and component computer parts used in connection with system integration services that we perform. An allowance for obsolete, slow-moving or nonsalable inventory is provided for all other inventory. This allowance is based on our overall obsolescence experience and our assessment of future inventory requirements. This charge is taken primarily due to the age of the specific inventory and the significant additional costs that would be necessary to upgrade to current standards as well as the lack of forecasted sales for such inventory in the near future. Gross inventory was $4.2 million and $2.8 million as of June 30, 2020 and December 31, 2019, respectively. As of June 30, 2020, it is management’s judgment that we have fully provided for any potential inventory obsolescence, which was $0.9 million as of June 30, 2020 and December 31, 2019.

Software Development Costs

Our policy on accounting for development costs of software to be sold is in accordance with ASC Topic 985-20, “Software – Costs of Software to be Sold, Leased, or Marketed” and ASC Topic 350-40 “Internal Use Software”, in so far as our Xacta products being available in various deployment modalities including on premises licenses and cloud-based Software as a Service (“SaaS”) as well as solutions developed within Telos ID. Under both standards, software development costs are expensed as incurred until technological feasibility is reached, at which time additional costs are capitalized until the product is available for general release to customers or is ready for its intended use, as appropriate. Technological feasibility is established when all planning, designing, coding and testing activities have been completed, and all risks have been identified. Beginning with the second quarter of 2017, software development costs are capitalized and amortized over the estimated product life of 2-3 years on a straight-line basis, depending on the solution. As of June 30, 2020 and December 31, 2019, we capitalized $8.7 million and $5.6 million of software development costs, respectively, which are included as a part of property and equipment. Amortization expense was $0.4 million and $0.9 million for the three and six months ended June 30, 2020, respectively, and $0.5 million and $0.9 million for the three and six months ended June 30, 2019, respectively. Accumulated amortization was $4.0 million and $3.1 million as of June 30, 2020 and December 31, 2019, respectively. The Company analyzes the net realizable value of capitalized software development costs on at least an annual basis and has determined that there is no indication of impairment of the capitalized software development costs as forecasted future sales are adequate to support amortization costs.

Income Taxes

We account for income taxes in accordance with ASC 740, “Income Taxes.” Under ASC 740, deferred tax assets and liabilities are recognized for the estimated future tax consequences of temporary differences and income tax credits. Deferred tax assets and liabilities are measured by applying enacted statutory tax rates that are applicable to the future years in which deferred tax assets or liabilities are expected to be settled or realized for differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. Any change in tax rates on deferred tax assets and liabilities is recognized in net income in the period in which the tax rate change is enacted. We record a valuation allowance that reduces deferred tax assets when it is "more likely than not" that deferred tax assets will not be realized. We are required to establish a valuation allowance for deferred tax assets if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Based on available evidence, realization of deferred tax assets is dependent upon the generation of future taxable income. We considered projected future taxable income, tax planning strategies, and reversal of taxable temporary differences in making this assessment. As such, we have determined that a full valuation allowance is required as of June 30, 2020 and December 31, 2019. As a result of a full valuation allowance against our deferred tax assets, a deferred tax liability related to goodwill remains on our condensed consolidated balance sheet at June 30, 2020 and December 31, 2019. Due to the tax reform enacted on December 22, 2017, net operating losses generated in taxable years beginning after December 31, 2017 will have an indefinite carryforward period, which will be available to offset future taxable income created by the reversal of temporary taxable differences related to goodwill. As a result, we have adjusted the valuation allowance on our deferred tax assets and liabilities at June 30, 2020 and December 31, 2019.

We follow the provisions of ASC 740 related to accounting for uncertainty in income taxes. The accounting estimates related to liabilities for uncertain tax positions require us to make judgments regarding the sustainability of each uncertain tax position based on its technical merits. If we determine it is more likely than not that a tax position will be sustained based on its technical merits, we record the impact of the position in our consolidated financial statements at the largest amount that is greater than 50% likely of being realized upon ultimate settlement. These estimates are updated at each reporting date based on the facts, circumstances and information available. We are also required to assess at each reporting date whether it is reasonably possible that any significant increases or decreases to our unrecognized tax benefits will occur during the next 12 months.

The provision for income taxes in interim periods is computed by applying the estimated annual effective tax rate against earnings before income tax expense for the period. In addition, non-recurring or discrete items are recorded during the period in which they occur.

Goodwill

We evaluate the impairment of goodwill in accordance with ASC 350, “Intangibles - Goodwill and Other,” which requires goodwill and indefinite-lived intangible assets to be assessed on at least an annual basis for impairment using a fair value basis. Between annual evaluations, if events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount, then impairment must be evaluated. Such circumstances could include, but are not limited to: (1) a significant adverse change in legal factors or business climate, or (2) a loss of key contracts or customers.

As the result of an acquisition, we record any excess purchase price over the net tangible and identifiable intangible assets acquired as goodwill. An allocation of the purchase price to tangible and intangible net assets acquired is based upon our valuation of the acquired assets. Goodwill is not amortized, but is subject to annual impairment tests. We complete our goodwill impairment tests as of December 31st each year. Additionally, we make evaluations between annual tests if events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The evaluation is based on the estimation of the fair values of our three reporting units, CO&D, Telos ID Enterprise Solutions, and Secure Communications Cyber and Enterprise Solutions, of which goodwill is housed in the CO&D reporting unit, in comparison to the reporting unit’s net asset carrying values. Our discounted cash flows required management’s judgment with respect to forecasted revenue streams and operating margins, capital expenditures and the selection and use of an appropriate discount rate. We utilized the weighted average cost of capital as derived by certain assumptions specific to our facts and circumstances as the discount rate. The net assets attributable to the reporting units are determined based upon the estimated assets and liabilities attributable to the reporting units in deriving its free cash flows. In addition, the estimate of the total fair value of our reporting units is compared to the market capitalization of the Company. The Company’s assessment resulted in a fair value that was greater than the Company’s carrying value, therefore the second step of the impairment test, as prescribed by the authoritative literature, was not required to be performed and no impairment of goodwill was recorded as of December 31, 2019. Subsequent reviews may result in future periodic impairments that could have a material adverse effect on the results of operations in the period recognized. Recent operating results have reduced the projection of future cash flow growth potential, which indicates that certain negative potential events, such as a material loss or losses on contracts, or failure to achieve projected growth could result in impairment in the future. We estimate fair value of our reporting unit and compare the valuation with the respective carrying value for the reporting unit to determine whether any goodwill impairment exists. If we determine through the impairment review process that goodwill is impaired, we will record an impairment charge in our consolidated statements of operations. Goodwill is amortized and deducted over a 15-year period for tax purposes.

Stock-Based Compensation

Compensation cost is recognized based on the requirements of ASC 718, “Stock Compensation,” for all share-based awards granted. Since June 2008, we have issued restricted stock (Class A common) to our executive officers, directors and employees. To date, 100,000 shares have been granted in 2020. Such stock is subject to a vesting schedule as follows: 25% of the restricted stock vests immediately on the date of grant, thereafter, an additional 25% will vest annually on the anniversary of the date of grant subject to continued employment or services. As of June 30, 2020, there were 75,000 shares of restricted stock that remained subject to vesting. In the event of death of the employee or a change in control, as defined by the Telos Corporation 2008 Omnibus Long-Term Incentive Plan, the 2013 Omnibus Long-Term Incentive Plan, or the 2016 Omnibus Long-Term Incentive Plan, all unvested shares shall automatically vest in full. In accordance with ASC 718, we recorded immaterial compensation expense for any of the issuances as the value of our common stock was nominal, based on the deduction of our outstanding debt, capital lease obligations, and preferred stock from an estimated enterprise value, which was estimated based on discounted cash flow analysis, comparable public company analysis, and comparable transaction analysis. Additionally, we determined that a significant change in the valuation estimate for common stock would not have a significant effect on the condensed consolidated financial statements.

Net Income (Loss) per Share

Basic net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding for the period, without consideration for potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock and dilutive common stock equivalents outstanding for the period determined using the treasury-stock and if-converted methods. Dilutive common stock equivalents are comprised of unvested restricted common stock. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding as inclusion of the potentially dilutive securities would be antidilutive.

Potentially dilutive securities not included in the calculation of diluted net loss per share because to do so would be anti-dilutive are as follows (in common stock equivalent shares):

	Six Months Ended June 30,
	2020		2019
Non-controlling interest, beginning of period		75		1,206
Common Stock Warrants, exercisable at $1.321/share		1,135		1,135
Total		1,210		2,341

Unaudited Pro Forma Net Income (Loss) per Share

Pro forma unaudited net income (loss) reflects the conversion of the Class A and Class B common stock for common stock on a 1:1 basis and the conversion of our Redeemable Preferred Stock for common stock. The Pro Forma unaudited earnings (loss) per share is computed as follows:

	Six Months Ended June 30, 2020
Net Income (Loss) Attributable to Telos Corporation
Dividends from preferred stock recorded as interest expense
Net Income (loss) to Common Shareholders Pro forma adjustment to remove preferred dividends
Net income (loss) used to compute pro forma net earnings (loss) per share
Weighted average common shares outstanding, basic and diluted, effecting the conversation of Class A and class B common stock into common stock
Pro forma adjustment to reflect conversion of preferred shares
Weighted average common shares outstanding used in computing pro forma net earnings per share, basic and diluted
Pro forma net earnings (loss) per common share, basic and diluted

Unaudited Pro Forma Balance Sheet Information

The unaudited Pro Forma balance sheet and statement of operations information as of June 30, 2020, reflects the conversion of the Public Preferred Stock into shares of the Company’s common stock and cash upon completion of the Company’s planned initial public offering. The shares of common stock issuable and the proceeds expected to be received in the IPO are excluded from such pro forma financial information.

Other Comprehensive Income (Loss)

Our functional currency is the U.S. Dollar. For one of our wholly owned subsidiaries, the functional currency is the local currency. For this subsidiary, the translation of its foreign currency into U.S. 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 period. Translation gains and losses are included in stockholders’ deficit as a component of accumulated other comprehensive income (loss).

Accumulated other comprehensive income included within stockholders’ deficit consists of the following (in thousands):

	June 30, 2020			December 31, 2019
Cumulative foreign currency translation loss	$	(100	)	$	(101	)
Cumulative actuarial gain on pension liability adjustment		107			107
Accumulated other comprehensive income	$	7		$	6

Note 1. Summary of Significant Accounting Policies

Business and Organization

Telos Corporation, together with its subsidiaries, (the “Company” or “Telos” or “We”), is an information technology solutions and services company addressing the needs of U.S. Government and commercial customers worldwide. We own all of the issued and outstanding share capital of Xacta Corporation, a subsidiary that develops, markets and sells government-validated secure enterprise solutions to government and commercial customers. We also own all of the issued and outstanding share capital of Ubiquity.com, Inc., a holding company for Xacta Corporation. We also have a 50% ownership interest in Telos Identity Management Solutions, LLC (“Telos ID”) and a 100% ownership interest in Teloworks, Inc. (“Teloworks”) and Telos APAC Pte. Ltd. (Telos APAC).

Principles of Consolidation and Basis of Presentation

The accompanying consolidated financial statements include the accounts of Telos and its subsidiaries, including Ubiquity.com, Inc., Xacta Corporation, Teloworks, and Telos APAC, all of whose issued and outstanding share capital is owned by the Company. We have also consolidated the results of operations of Telos ID (see Note 2 – Non-controlling Interests). Intercompany transactions have been eliminated in consolidation.

In preparing these consolidated financial statements, we have evaluated subsequent events through the date that these consolidated financial statements were issued.

Segment Reporting

Use of Estimates

The preparation of consolidated financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions used in the preparation of our consolidated financial statements include revenue recognition, allowance for doubtful accounts receivable, allowance for inventory obsolescence, the valuation allowance for deferred tax assets, income taxes, contingencies and litigation, potential impairments of goodwill and estimated pension-related costs for our foreign subsidiaries. Actual results could differ from those estimates.

Revenue Recognition

We account for revenue in accordance with ASC Topic 606, “Revenue from Contracts with Customers.” The unit of account in ASC 606 is a performance obligation, which is a promise in a contract with a customer to transfer a good or service to the customer. ASC 606 prescribes a five-step model for recognizing revenue that includes identifying the contract with the customer, determining the performance obligation(s), determining the transaction price, allocating the transaction price to the performance obligation(s), and recognizing revenue as the performance obligations are satisfied. Timing of the satisfaction of performance obligations varies across our businesses due to our diverse product and service mix, customer base, and contractual terms. Significant judgment can be required in determining certain performance obligations, and these determinations could change the amount of revenue and profit recorded in a given period. Our contracts may have a single performance obligation or multiple performance obligations. When there are multiple performance obligations within a contract, we allocate the transaction price to each performance obligation based on our best estimate of standalone selling price.

We account for a contract after it has been approved by the parties to the contract, the rights and the payment terms of the parties are identified, the contract has commercial substance and collectability is probable, which is presumed for our U.S. Government customers and prime contractors for which we perform as subcontractors to U.S. Government end-customers.

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, and is classified as services revenue. 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 as discussed further below. Revenue is recognized over time using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying our performance obligations. Incurred cost represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Contract costs include labor, material, subcontractor costs and indirect expenses. This continuous transfer of control to the customer is supported by clauses in our contracts with U.S. Government customers whereby the customer may terminate a contract for convenience and then pay for costs incurred plus a profit, at which time the customer would take control of any work in process. For non-U.S. Government contracts where we perform as a subcontractor and our order includes similar Federal Acquisition Regulation (the FAR) provisions as the prime contractor’s order from the U.S. Government, continuous transfer of control is likewise supported by such provisions. For other non-U.S. Government customers, continuous transfer of control to such customers is also supported due to general terms in our contracts and rights to recover damages which would include, among other potential damages, the right to payment for our work performed to date plus a reasonable profit.

Revenue that is recognized at a point in time is for the sale of software licenses in our Secure Mobility and Network Management/Defense Enterprise Solutions (formerly CO&D’s Secure Mobility Solutions) and Secure Communications Cyber and Enterprise Solutions (formerly IT & Enterprise Solutions) business groups and for the sale of resold products in Telos ID Enterprise Solutions (formerly Identity Management Solutions) and Cyber & Cloud Solutions (formerly CO&D’s Cyber Security Solutions), and is classified as product revenue. Revenue on these contracts is recognized when the customer obtains control of the transferred product or service, which is generally upon delivery of the product to the customer for their use, due to us maintaining control of the product until that point. 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. When an order contains multiple performance obligations, we allocate the transaction price to the performance obligations using our best estimate of standalone selling price.

Our contracts may include various types of variable consideration, such as claims (for instance, indirect rate or other equitable adjustments) or incentive fees. We include estimated amounts in the transaction price based on all of the information available to us, including historical information and future estimations, 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 have revised and re-submitted several years of incurred cost submissions reflecting certain indirect rate structure changes as a result of regular DCAA audits of incurred cost submissions. This resulted in signed final rate agreement letters for fiscal years 2011 to 2013 and conformed incurred cost submissions for 2014 to 2015. We evaluated the resulting changes to revenue under the applicable cost plus fixed fee contracts for the years 2011 to 2015 as variable consideration, and determined the most likely amount to which we expect to be entitled, to the extent that no constraint exists that would preclude recognizing this revenue or result in a significant reversal of cumulative revenue recognized. We included these estimated amounts of variable consideration in the transaction price and as performance on these contracts is complete, we have recognized revenue of $6.0 million during the year ended December 31, 2018.

	2019		2018		2017
Federal	$	149,257	$	129,279	$	101,519
State & Local, and Commercial		9,961		8,737		6,208
Total	$	159,218	$	138,016	$	107,727

	2019		2018		2017
Firm fixed-price	$	131,629	$	103,454	$	89,516
Time-and-materials		14,569		16,795		10,222
Cost plus fixed fee		13,020		17,767		7,989
Total	$	159,218	$	138,016	$	107,727

The following table discloses accounts receivable and contract assets (in thousands):

	December 31,
	2019			2018
Billed accounts receivable	$	11,917		$	18,848
Unbilled receivables		16,745			16,000
Allowance for doubtful accounts		(720	)		(306	)
Receivables – net	$	27,942		$	34,542

The following table discloses contract liabilities (in thousands):

	December 31,
	2019		2018
Contract liabilities	$	6,337	$	5,232

As of December 31, 2019 and 2018, we had $112.4 million and $79.3 million of remaining performance obligations, respectively, which we also refer to as funded backlog. We expect to recognize approximately 98.4% of our remaining performance obligations as revenue in 2020, an additional 1.1% by 2021 and the balance thereafter. For the years ended December 31, 2019 and 2018, the amount of revenue recognized during the year that was included in the opening contract liabilities balance was $4.2 million and $5.5 million, respectively.

Cash and Cash Equivalents

We consider all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. Our cash management program utilizes zero balance accounts. Accordingly, all book overdraft balances have been reclassified to accounts payable and other accrued liabilities.

Accounts Receivable

Accounts receivable are stated at the invoiced amount, less an allowance for doubtful accounts. Collectability of accounts receivable is regularly reviewed based upon managements’ knowledge of the specific circumstances related to overdue balances. The allowance for doubtful accounts is adjusted based on such evaluation. Accounts receivable balances are written off against the allowance when management deems the balances uncollectible.

Inventories

Inventories are stated at the lower of cost or net realizable value, where cost is determined using the weighted average method. Substantially all inventories consist of purchased customer off-the-shelf hardware and software, and component computer parts used in connection with system integration services that we perform. An allowance for obsolete, slow-moving or nonsalable inventory is provided for all other inventory. This allowance is based on our overall obsolescence experience and our assessment of future inventory requirements. This charge is taken primarily due to the age of the specific inventory and the significant additional costs that would be necessary to upgrade to current standards as well as the lack of forecasted sales for such inventory in the near future. Gross inventory was $2.8 million and $4.9 million at December 31, 2019 and 2018, respectively. As of December 31, 2019, it is management’s judgment that we have fully provided for any potential inventory obsolescence.

The components of the allowance for inventory obsolescence are set forth below (in thousands):

	Balance Beginning of Year		Additions Charge to Costs and Expense		Recoveries			Balance End of Year

Year Ended December 31, 2019	$	520	$	376	$	(36	)	$	860
Year Ended December 31, 2018	$	1,484	$	30	$	(994	)	$	520
Year Ended December 31, 2017	$	1,672	$	73	$	(261	)	$	1,484

Property and Equipment

Property and equipment is recorded at cost. Depreciation is provided using the straight-line method at rates based on the estimated useful lives of the individual assets or classes of assets as follows:

Furniture and equipment	3-5 Years
Leasehold improvements	Lesser of life of lease or useful life of asset
Property and equipment under finance leases	Lesser of life of lease or useful life of asset

Leased property meeting certain criteria is capitalized at the present value of the related minimum lease payments. Amortization of property and equipment under finance leases is computed using the straight-line method over the lesser of the term of the related lease and the useful life of the related asset.

Upon sale or retirement of property and equipment, the costs and related accumulated depreciation are eliminated from the accounts and any gain or loss on such disposition is reflected in the consolidated statements of operations. For the years ended December 31, 2019, 2018, and 2017, such amounts are negligible. Expenditures for repairs and maintenance are charged to operations as incurred.

Long-lived assets, such as fixed assets, are reviewed for impairment whenever circumstances indicate that the carrying amount of the asset exceeds its estimated fair value. Considerable management judgment is necessary to estimate its fair value. Accordingly, actual results could differ from such estimates. No events have been identified that caused an evaluation of the recoverability of long-lived assets.

Depreciation and amortization expense related to property and equipment, including property and equipment under finance leases was $5.0 million, $3.0 million, and $2.0 million for the years ended December 31, 2019, 2018, and 2017, respectively.

Software Development Costs

Our policy on accounting for development costs of software to be sold is in accordance with ASC Topic 985-20, “Software – Costs of Software to be Sold, Leased, or Marketed” and ASC Topic 350-40 “Internal Use Software” in so far as our Xacta products being available in various deployment modalities including on premises licenses and cloud-based Software as a Service (“SaaS”). Under both standards, software development costs are expensed as incurred until technological feasibility is reached, at which time additional costs are capitalized until the product is available for general release to customers or is ready for its intended use, as appropriate. Technological feasibility is established when all planning, designing, coding and testing activities have been completed, and all risks have been identified. Beginning with the second quarter of 2017, software development costs are capitalized and amortized over the estimated product life of 2 years on a straight-line basis. As of December 31, 2019 and 2018, we capitalized $5.6 million and $3.1 million of software development costs, respectively, which are included as a part of property and equipment. Amortization expense was $1.8 million and $1.1 million for the year ended December 31, 2019 and 2018, respectively. Accumulated amortization was $3.1 million and $1.3 million as of December 31, 2019 and 2018, respectively. The Company analyzes the net realizable value of capitalized software development costs on at least an annual basis and has determined that there is no indication of impairment of the capitalized software development costs as forecasted future sales are adequate to support amortization costs. During 2019, 2018 and 2017, we incurred salary costs for research and development of approximately $4.2 million, $3.5 million and $3.2 million, respectively, which were included as part of the selling, general and administrative expense in the consolidated statements of operations.

Income Taxes

We account for income taxes in accordance with ASC 740, “Income Taxes.” Under ASC 740, deferred tax assets and liabilities are recognized for the estimated future tax consequences of temporary differences and income tax credits. Deferred tax assets and liabilities are measured by applying enacted statutory tax rates that are applicable to the future years in which deferred tax assets or liabilities are expected to be settled or realized for differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. Any change in tax rates on deferred tax assets and liabilities is recognized in net income in the period in which the tax rate change is enacted. We record a valuation allowance that reduces deferred tax assets when it is “more likely than not” that deferred tax assets will not be realized. We are required to establish a valuation allowance for deferred tax assets if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Based on available evidence, realization of deferred tax assets is dependent upon the generation of future taxable income. We considered projected future taxable income, tax planning strategies, and reversal of taxable temporary differences in making this assessment. As such, we have determined that a full valuation allowance is required as of December 31, 2019 and 2018. As a result of a full valuation allowance against our deferred tax assets, a deferred tax liability related to goodwill remains on our consolidated balance sheet at December 31, 2019 and 2018. Due to the tax reform enacted on December 22, 2017, net operating losses generated in taxable years beginning after December 31, 2017 will have an indefinite carryforward period, which will be available to offset future taxable income created by the reversal of temporary taxable differences related to goodwill. As a result, we have adjusted the valuation allowance on our deferred tax assets and liabilities at December 31, 2019 and 2018. See additional information on tax reform and its impact on our income taxes in Note 9 – Income Taxes.

Goodwill

We evaluate the impairment of goodwill in accordance with ASC 350, which requires goodwill and indefinite-lived intangible assets to be assessed on at least an annual basis for impairment using a fair value basis. Between annual evaluations, if events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount, then impairment must be evaluated. Such circumstances could include, but are not limited to: (1) a significant adverse change in legal factors or business climate, or (2) a loss of key contracts or customers.

As the result of an acquisition, we record any excess purchase price over the net tangible and identifiable intangible assets acquired as goodwill. An allocation of the purchase price to tangible and intangible net assets acquired is based upon our valuation of the acquired assets. Goodwill is not amortized, but is subject to annual impairment tests. We complete our goodwill impairment tests as of December 31st each year. Additionally, we make evaluations between annual tests if events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The evaluation is based on the estimation of the fair values of our three reporting units, Cyber Operations and Defense (“CO&D”), Telos ID Enterprise Solutions, and Secure Communications Cyber and Enterprise Solutions, of which goodwill is housed in the CO&D reporting units, in comparison to the reporting unit’s net asset carrying values. Our discounted cash flows required management’s judgment with respect to forecasted revenue streams and operating margins, capital expenditures and the selection and use of an appropriate discount rate. We utilized the weighted average cost of capital as derived by certain assumptions specific to our facts and circumstances as the discount rate. The net assets attributable to the reporting units are determined based upon the estimated assets and liabilities attributable to the reporting units in deriving its free cash flows. In addition, the estimate of the total fair value of our reporting units is compared to the market capitalization of the Company. The Company’s assessment resulted in a fair value that was greater than the Company’s carrying value, therefore the second step of the impairment test, as prescribed by the authoritative literature, was not required to be performed and no impairment of goodwill was recorded as of December 31, 2019. Subsequent reviews may result in future periodic impairments that could have a material adverse effect on the results of operations in the period recognized. Recent operating results have reduced the projection of future cash flow growth potential, which indicates that certain negative potential events, such as a material loss or losses on contracts, or failure to achieve projected growth could result in impairment in the future. We estimate fair value of our reporting unit and compare the valuation with the respective carrying value for the reporting unit to determine whether any goodwill impairment exists. If we determine through the impairment review process that goodwill is impaired, we will record an impairment charge in our consolidated statements of operations. Goodwill is amortized and deducted over a 15-year period for tax purposes.

Stock-Based Compensation

Compensation cost is recognized based on the requirements of ASC 718, “Stock Compensation,” for all share-based awards granted. Since June 2008, we have issued restricted stock (Class A common) to our executive officers, directors and employees. In May 2017, we granted 5,005,000 shares of restricted stock to our executive officers and employees. Such stock is subject to a vesting schedule as follows: 25% of the restricted stock vests immediately on the date of grant, thereafter, an additional 25% will vest annually on the anniversary of the date of grant subject to continued employment or services. As of December 31, 2019, there were 1,198,750 shares of restricted stock that remained subject to vesting. In the event of death of the employee or a change in control, as defined by the Telos Corporation 2008 Omnibus Long-Term Incentive Plan, the 2013 Omnibus Long-Term Incentive Plan, or the 2016 Omnibus Long-Term Incentive Plan, all unvested shares shall automatically vest in full. In accordance with ASC 718, we recorded immaterial compensation expense for any of the issuances as the value of the common stock was nominal, based on the deduction of our outstanding debt, capital lease obligations, and preferred stock from an estimated enterprise value, which was estimated based on discounted cash flow analysis, comparable public company analysis, and comparable transaction analysis. Additionally, we determined that a significant change in the valuation estimate for common stock would not have a significant effect on the consolidated financial statements.

Earnings (Loss) per Share

Basic net earnings (loss) per share is computed by dividing the net loss by the weighted-average number of common shares outstanding for the period, without consideration for potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock and dilutive common stock equivalents outstanding for the period determined using the treasury-stock and if-converted methods. Dilutive common stock equivalents are comprised of unvested restricted common stock and common stock warrants. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding as inclusion of the potentially dilutive securities would be antidilutive.

Potentially dilutive securities not included in the calculation of diluted net loss per share because to do so would be anti-dilutive are as follows (in common stock equivalent shares):

	2019		2018		2017
Unvested restricted stock		1,191		2,428		3,724
Common Stock Warrants, exercisable at $1.321/share		1,135		1,135		1,135
Total		2,326		3,563		4,859

Unaudited Pro Forma Net Income (Loss) per Share

		2019
Net Income (Loss) Attributable to Telos Corporation
Dividends from preferred stock recorded as interest expense
Net income used to compute pro forma net earnings (loss) per share

Weighted average common shares outstanding, basic and diluted reflecting the conversion of Class A and Class B common stock into common stock
Pro forma adjustment to reflect conversion of preferred shares
Weighted average common shares outstanding used in computing pro forma net earnings per share, basic and diluted

Pro forma net earnings (loss) per common share, basic and diluted

Comprehensive Loss

Comprehensive loss includes changes in equity (net assets) during a period from non-owner sources. Our accumulated other comprehensive income (loss) was comprised of a loss from foreign currency translation of $101,000 and $90,000 as of December 31, 2019 and 2018, respectively; and actuarial gain on pension liability adjustments in Teloworks of $107,000 as of December 31, 2019 and 2018.

Financial Instruments

We use various methods and assumptions to estimate the fair value of our financial instruments. Due to their short-term nature, the carrying value of cash and cash equivalents, accounts receivable and accounts payable approximates fair value. The fair value of long-term debt is based on the discounted cash flows for similar term borrowings based on market prices for the same or similar issues.

Fair value estimates are made at a specific point in time, based on relevant market information. These estimates are subjective in nature and involve matters of judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Recent Accounting Pronouncements Adopted

In February 2016, the FASB issued ASU 2016-02, “Leases (ASC Topic 842)”, which requires lessees to recognize a right-of-use asset and lease liability on the balance sheet and expands disclosures about leasing arrangements for both lessees and lessors, among other items, for most lease arrangements. The new standard is effective for fiscal years beginning after December 15, 2018, which made the new standard effective for us on January 1, 2019. In July 2018, the FASB issued ASU 2018-11, “Leases (ASC Topic 842): Targeted Improvements,” which allows for an additional transition method under the modified retrospective approach for the adoption of ASU 2016-02. The two permitted transition methods are (a) to apply the new lease requirements at the beginning of the earliest period presented (the Comparative Method) and (b) to apply the new lease requirements at the effective date (the Effective Date Method). Under both transition methods there is a cumulative effect adjustment. We adopted the standard on January 1, 2019 by applying the new lease requirements utilizing the Effective Date Method for all leases with terms greater than 12 months. We elected the package of practical expedients permitted under the transition guidance within the new standard, which included carrying forward historical assessments of: (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs. The adoption of this standard resulted in the recognition of right-of-use assets of $2.0 million and additional lease liabilities of $2.0 million as of January 1, 2019. The adoption of the standard did not have a material impact on our operating results or cash flows. The comparative periods have not been restated for the adoption of ASU 2016-02.

Recent Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which introduces new guidance for estimating credit losses on certain types of financial instruments based on expected losses and the timing of the recognition of such losses. This standard will be effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted. While we are currently assessing the impact the adoption of this ASU will have on our consolidated financial position, results of operations and cash flows, we do not believe the adoption of this ASU will have a material impact on our consolidated financial position, results of operations and cash flows.

In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” which eliminates Step 2 of the current goodwill impairment test that requires a hypothetical purchase price allocation to measure goodwill impairment. A goodwill impairment loss will instead be measured at the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the recorded amount of goodwill. The provisions of this ASU are effective for years beginning after December 15, 2019, with early adoption permitted for any impairment test performed on testing dates after January 1, 2017. The adoption of this ASU will not have a material impact on our consolidated financial position, results of operations and cash flows.

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement”, which modifies the disclosure requirement for fair value measurement under ASC 820 to improve the effectiveness of such disclosures. Those modifications include the removal and addition of disclosure requirements as well as clarifying specific disclosure requirements. This standard will be effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted. The adoption of this ASU will not have a material impact on our consolidated financial position, results of operations and cash flows.

In August 2018, the FASB issued ASU 2018-15, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract,” which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This standard will be effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted. The adoption of this ASU will not have a material impact on our consolidated financial position, results of operations and cash flows.

Income Taxes (Q2) (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
Income Taxes (Q2) (Details) - USD ($)	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Income Taxes [Abstract]
U.S. federal corporate tax rate					21.00%	21.00%	34.00%
(Provision) benefit from income taxes	$ (2,000)	$ (20,000)	$ 144,000	$ 177,000	$ 104,000	$ (31,000)	$ 2,767,000
Deferred income taxes (Note 7)	640,000		640,000		621,000	818,000
Unrecognized tax benefits	508,000		508,000		673,000	648,000	$ 677,000	$ 762,000
Interest and penalties	$ 229,000		$ 229,000		$ 304,000	$ 278,000

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

Summary of Significant Accounting Policies [Abstract]

Non-controlling Interests (FY) (Details)				1 Months Ended		3 Months Ended		6 Months Ended		12 Months Ended
Non-controlling Interests (FY) (Details)	Dec. 24, 2014 USD ($) Director Class	Apr. 20, 2007 USD ($)	Apr. 19, 2007	Apr. 30, 2007 Director	Apr. 19, 2007	Jun. 30, 2020 USD ($)	Jun. 30, 2019 USD ($)	Jun. 30, 2020 USD ($)	Jun. 30, 2019 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Apr. 11, 2007 USD ($)
Net book value of assets [Abstract]
Net (loss) income						$ 3,072,000	$ (1,994,000)	$ 1,612,000	$ (4,934,000)	$ (2,137,000)	$ 1,737,000	$ (3,498,000)
Changes in non-controlling interest [Abstract]
Non-controlling interest, beginning of period						5,298,000	2,378,000	4,514,000	2,621,000	2,621,000	913,000	2,229,000
Net income						2,806,000	(253,000)	3,590,000	220,000	4,264,000	3,377,000	2,335,000
Distributions						(1,000,000)	(268,000)	(1,000,000)	(984,000)	(2,371,000)	(1,669,000)	(3,651,000)
Non-controlling interest, end of period						$ 7,104,000	$ 1,857,000	$ 7,104,000	$ 1,857,000	4,514,000	2,621,000	913,000
Class A Membership Unit [Member]
Net book value of assets [Abstract]
Net (loss) income										$ 4,300,000	$ 3,400,000	$ 2,300,000
Telos ID [Member]
Net book value of assets [Abstract]
Net book value of assets contributed													$ 17,000
Percentage of membership interest owned before			99.999%		99.999%
Owned membership interest from private equity investors			0.001%		0.001%
Percentage of membership interest sold to investor	10.00%	39.999%
Cash consideration received on sale of membership interest	$ 5,000,000	$ 6,000,000
Recognized gain on sale of membership interests to the Investors		$ 5,800,000
Percentage of ownership interest owned after transaction		60.00%
Number of members in board of director \| Director	5
Number of classes of membership units \| Class	2
Telos ID [Member] \| Class A Membership Unit [Member]
Net book value of assets [Abstract]
Percentage of ownership interest owned after transaction	50.00%			60.00%
Percentage of profit and loss allocated	50.00%
Number of directors entitled to be appointed \| Director	3			3
Telos ID [Member] \| Class B Membership Unit [Member]
Net book value of assets [Abstract]
Percentage of ownership interest owned after transaction	50.00%
Percentage of profit and loss allocated	50.00%
Number of directors entitled to be appointed \| Director	2

Summary of Significant Accounting Policies (FY) (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Disaggregation of Revenue

The following tables disclose revenue (in thousands) by customer type and contract type for the periods presented.

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Federal	$	46,877	$	33,774	$	82,968	$	62,757
State & Local, and Commercial		1,733		2,274		4,621		4,457
Total	$	48,610	$	36,048	$	87,589	$	67,214

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Firm fixed-price	$	41,935	$	28,857	$	73,596	$	53,787
Time-and-materials		3,637		3,691		7,462		7,620
Cost plus fixed fee		3,038		3,500		6,531		5,807
Total	$	48,610	$	36,048	$	87,589	$	67,214

	2019		2018		2017
Federal	$	149,257	$	129,279	$	101,519
State & Local, and Commercial		9,961		8,737		6,208
Total	$	159,218	$	138,016	$	107,727

	2019		2018		2017
Firm fixed-price	$	131,629	$	103,454	$	89,516
Time-and-materials		14,569		16,795		10,222
Cost plus fixed fee		13,020		17,767		7,989
Total	$	159,218	$	138,016	$	107,727

Contract Assets and Liabilities

The following table discloses accounts receivable and contract assets (in thousands):

	June 30, 2020			December 31, 2019
Billed accounts receivable	$	18,420		$	11,917
Unbilled receivables		20,689			16,745
Allowance for doubtful accounts		(738	)		(720	)
Receivables – net	$	38,371		$	27,942

The following table discloses contract liabilities (in thousands):

		June 30, 2020				December 31, 2019
Contract liabilities		$	6,682			$	6,337

The following table discloses accounts receivable and contract assets (in thousands):

	December 31,
	2019			2018
Billed accounts receivable	$	11,917		$	18,848
Unbilled receivables		16,745			16,000
Allowance for doubtful accounts		(720	)		(306	)
Receivables – net	$	27,942		$	34,542

The following table discloses contract liabilities (in thousands):

	December 31,
	2019		2018
Contract liabilities	$	6,337	$	5,232

Allowance for Obsolescent Inventory

The components of the allowance for inventory obsolescence are set forth below (in thousands):

	Balance Beginning of Year		Additions Charge to Costs and Expense		Recoveries			Balance End of Year

Year Ended December 31, 2019	$	520	$	376	$	(36	)	$	860
Year Ended December 31, 2018	$	1,484	$	30	$	(994	)	$	520
Year Ended December 31, 2017	$	1,672	$	73	$	(261	)	$	1,484

Property and Equipment Useful Lives

Furniture and equipment	3-5 Years
Leasehold improvements	Lesser of life of lease or useful life of asset
Property and equipment under finance leases	Lesser of life of lease or useful life of asset

Potentially Dilutive Securities not Included in Calculation of Diluted Net Loss per share

Potentially dilutive securities not included in the calculation of diluted net loss per share because to do so would be anti-dilutive are as follows (in common stock equivalent shares):

	Six Months Ended June 30,
	2020		2019
Non-controlling interest, beginning of period		75		1,206
Common Stock Warrants, exercisable at $1.321/share		1,135		1,135
Total		1,210		2,341

Potentially dilutive securities not included in the calculation of diluted net loss per share because to do so would be anti-dilutive are as follows (in common stock equivalent shares):

	2019		2018		2017
Unvested restricted stock		1,191		2,428		3,724
Common Stock Warrants, exercisable at $1.321/share		1,135		1,135		1,135
Total		2,326		3,563		4,859

Unaudited Pro Forma Net Income (Loss) per Share

The Pro Forma unaudited earnings (loss) per share is computed as follows:

	Six Months Ended June 30, 2020
Net Income (Loss) Attributable to Telos Corporation
Dividends from preferred stock recorded as interest expense
Net Income (loss) to Common Shareholders Pro forma adjustment to remove preferred dividends
Net income (loss) used to compute pro forma net earnings (loss) per share
Weighted average common shares outstanding, basic and diluted, effecting the conversation of Class A and class B common stock into common stock
Pro forma adjustment to reflect conversion of preferred shares
Weighted average common shares outstanding used in computing pro forma net earnings per share, basic and diluted
Pro forma net earnings (loss) per common share, basic and diluted

		2019
Net Income (Loss) Attributable to Telos Corporation
Dividends from preferred stock recorded as interest expense
Net income used to compute pro forma net earnings (loss) per share

Weighted average common shares outstanding, basic and diluted reflecting the conversion of Class A and Class B common stock into common stock
Pro forma adjustment to reflect conversion of preferred shares
Weighted average common shares outstanding used in computing pro forma net earnings per share, basic and diluted

Pro forma net earnings (loss) per common share, basic and diluted

Commitments, Contingencies and Subsequent Events (Q2)	6 Months Ended	12 Months Ended
Commitments, Contingencies and Subsequent Events (Q2)	Jun. 30, 2020	Dec. 31, 2019
Commitments, Contingencies and Subsequent Events [Abstract]
Commitments, Contingencies and Subsequent Events	Note 8. Commitments and Contingencies Financial Condition and Liquidity As described in Note 5 – Current Liabilities and Debt Obligations, we maintain a Credit Agreement with EnCap and a Purchase Agreement with RCA. The willingness of RCA to purchase our accounts receivable under the Purchase Agreement, and our ability to obtain additional financing, may be limited due to various factors, including the eligibility of our receivables, the status of our business, global credit market conditions, and perceptions of our business or industry by EnCap, RCA, or other potential sources of financing. If we are unable to maintain the Purchase Agreement, we would need to obtain additional credit to fund our future operations. If credit is available in that event, lenders may impose more restrictive terms and higher interest rates that may reduce our borrowing capacity, increase our costs, or reduce our operating flexibility. The failure to maintain, extend, renew or replace the Purchase Agreement with a comparable arrangement or arrangements that provide similar amounts of liquidity for the Company would have a material negative impact on our overall liquidity, financial and operating results. While a variety of factors related to sources and uses of cash, such as timeliness of accounts receivable collections, vendor credit terms, or significant collateral requirements, ultimately impact our liquidity, such factors may or may not have a direct impact on our liquidity, based on how the transactions associated with such circumstances impact the availability under our credit arrangements. For example, a contractual requirement to post collateral for a duration of several months, depending on the materiality of the amount, could have an immediate negative effect on our liquidity, as such a circumstance would utilize cash resources without a near-term cash inflow back to us. Likewise, the release of such collateral could have a corresponding positive effect on our liquidity, as it would represent an addition to our cash resources without any corresponding near-term cash outflow. Similarly, a slow-down of payments from a customer, group of customers or government payment office would not have an immediate and direct effect on our availability unless the slowdown was material in amount and over an extended period of time. Any of these examples would have an impact on our cash resources, our financing arrangements, and therefore our liquidity: The Credit Agreement currently matures in January 2021, but we may extend the maturity to January 2022 at our election in accordance with the Fifth Amendment. Our ability to renew or refinance the Credit Agreement after January 2022 or to enter into a new credit facility to replace or supplement the Credit Agreement may be limited due to various factors, including the status of our business, global credit market conditions, and perceptions of our business or industry by sources of financing. In addition, if credit is available, lenders may seek more restrictive covenants and higher interest rates that may reduce our borrowing capacity, increase our costs, or reduce our operating flexibility. The failure to extend, renew or replace the Credit Agreement beyond the current or ultimate maturity date of January 2022 (assuming we exercise all options to extend as provided by the Fifth Amendment) with a comparable credit facility that provides similar amounts of liquidity for the Company would have a material negative impact on our overall liquidity, financial and operating results. Management may determine that, in order to reduce capital and liquidity requirements, planned spending on capital projects and indirect expense growth may be curtailed, subject to growth in operating results. Additionally, management may seek to put in place a credit facility with a commercial bank, although no assurance can be given that such a facility could be put in place under terms acceptable to the Company. Should management determine that additional capital is required, management would likely look first to the sources of funding discussed above to meet any requirements or may seek to raise additional capital by selling equity, although no assurances can be given that these investors would be able to invest or that the Company and the investors would agree upon terms for such investments. Our working capital was $(12.8) million and $2.9 million as of June 30, 2020 and December 31, 2019, respectively. Our current working capital deficit is due to the classification of the EnCap Credit Agreement as a current liability as discussed in Note 5 to the financial statements, although the Fifth Amendment to the Credit Agreement provides us the option to extend the maturity of the agreement. We intend to consider exercising the option at the appropriate time. Although no assurances can be given, we expect that our financing arrangements with EnCap and RCA, collectively, and funds generated from operations are sufficient to maintain the liquidity we require to meet our operating, investing and financing needs for the next 12 months. Legal Proceedings Hamot et al. v. Telos Corporation As previously disclosed in Note 13 of the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, 2019, beginning on August 2, 2007, Messrs. Seth W. Hamot (“Hamot”) and Andrew R. Siegel (“Siegel”), principals of Costa Brava Partnership III, L.P. (“Costa Brava”), were involved in litigation against the Company as Plaintiffs and Counter-defendants in the Circuit Court for Baltimore City, Maryland (the “Circuit Court”). Mr. Siegel is a Class D Director of the Company and Mr. Hamot was a Class D Director of the Company until his resignation on March 9, 2018. The Plaintiffs initially alleged that certain documents and records had not been provided to them promptly and were necessary to fulfill their duties as directors of the Company. Subsequently, Hamot and Siegel further alleged that the Company had failed to follow certain provisions concerning the noticing of Board committee meetings and the recording of Board meeting minutes and, additionally, that Mr. John Wood’s service as both CEO and Chairman of the Board was improper and impermissible under the Company’s Bylaws. On April 23, 2008, the Company filed a counterclaim against Hamot and Siegel for money damages and preliminary and injunctive relief based upon Hamot and Siegel’s interference with, and improper influence of, the Company’s independent auditors regarding, among other things, a specific accounting treatment. On June 27, 2008, the Circuit Court granted the Company’s motion for preliminary injunction and enjoined Hamot and Siegel from contacting the Company’s auditors until the completion of the Company’s Form 10-K for the preceding year, which injunction later expired by its own terms. As previously disclosed, trial on Hamot and Siegel’s claims and the Company’s counterclaims took place in July through September 2013, and the Court subsequently issued decisions on the various claims by way of memorandum opinions and orders dated September 11, 2017. The Company’s subsequent appeal of the amount of damages awarded to it for Hamot and Siegel’s intentional interference with the relationships with its former auditor was ultimately dismissed by way of the Mandate issued by the Court of Appeals of Maryland on October 11, 2019. Hamot (and later, his Estate) and Siegel at various times in this litigation have sought to be indemnified or to be awarded advancement of various attorney’s fees and expenses incurred by them in this litigation. No claim for indemnification is pending as of the reporting date. There have been no material developments in connection with this litigation during the three months ended June 30, 2020. At this stage of the litigation, it is impossible to reasonably determine the degree of probability related to the Company’s success in relation to any possible further claim by Hamot’s Estate and Siegel for indemnification for certain attorney’s fees and expenses incurred in this litigation. The Company intends to vigorously defend the matter and oppose any claim for indemnification were it to be pursued. Other Litigation In addition, the Company is a party to litigation arising in the ordinary course of business. In the opinion of management, while the results of such litigation cannot be predicted with any reasonable degree of certainty, the final outcome of such known matters will not, based upon all available information, have a material adverse effect on the Company's condensed consolidated financial position, results of operations or cash flows.	Note 13. Commitments, Contingencies and Subsequent Events Financial Condition and Liquidity As described in Note 6 – Current Liabilities and Debt Obligations, we maintain a Credit Agreement with EnCap and a Purchase Agreement with RCA. The willingness of RCA to purchase our accounts receivable under the Purchase Agreement, and our ability to obtain additional financing, may be limited due to various factors, including the eligibility of our receivables, the status of our business, global credit market conditions, and perceptions of our business or industry by EnCap, RCA, or other potential sources of financing. If we are unable to maintain the Purchase Agreement, we would need to obtain additional credit to fund our future operations. If credit is available in that event, lenders may impose more restrictive terms and higher interest rates that may reduce our borrowing capacity, increase our costs, or reduce our operating flexibility. The failure to maintain, extend, renew or replace the Purchase Agreement with a comparable arrangement or arrangements that provide similar amounts of liquidity for the Company would have a material negative impact on our overall liquidity, financial and operating results. While a variety of factors related to sources and uses of cash, such as timeliness of accounts receivable collections, vendor credit terms, or significant collateral requirements, ultimately impact our liquidity, such factors may or may not have a direct impact on our liquidity, based on how the transactions associated with such circumstances impact our availability under our credit arrangements. For example, a contractual requirement to post collateral for a duration of several months, depending on the materiality of the amount, could have an immediate negative effect on our liquidity, as such a circumstance would utilize cash resources without a near-term cash inflow back to us. Likewise, the release of such collateral could have a corresponding positive effect on our liquidity, as it would represent an addition to our cash resources without any corresponding near-term cash outflow. Similarly, a slow-down of payments from a customer, group of customers or government payment office would not have an immediate and direct effect on our availability unless the slowdown was material in amount and over an extended period of time. Any of these examples would have an impact on our cash resources, our financing arrangements, and therefore our liquidity. Management may determine that, in order to reduce capital and liquidity requirements, planned spending on capital projects and indirect expense growth may be curtailed, subject to growth in operating results. Additionally, management may seek to put in place a credit facility with a commercial bank, although no assurance can be given that such a facility could be put in place under terms acceptable to the Company. Should management determine that additional capital is required, management would likely look first to the sources of funding discussed above to meet any requirements, although no assurances can be given that these investors would be able to invest or that the Company and the investors would agree upon terms for such investments. Our working capital was $2.9 million and $2.1 million as of December 31, 2019 and 2018, respectively. Although no assurances can be given, we expect that our financing arrangements with EnCap and RCA, collectively, and funds generated from operations are sufficient to maintain the liquidity we require to meet our operating, investing and financing needs for the next 12 months. Legal Proceedings Costa Brava Partnership III, L.P. and Wynnefield Partners Small Cap Value, L.P. v. Telos Corporation, et al. As previously reported, on October 17, 2005, Costa Brava Partnership III, L.P. (“Costa Brava”), a holder of Public Preferred Stock, instituted litigation against the Company and certain past and present directors and officers (the “Telos Defendants”) in the Circuit Court for Baltimore City, Maryland (the “Circuit Court”). A second holder of the Company’s Public Preferred Stock, Wynnefield Partners Small Cap Value, L.P. (“Wynnefield”), subsequently intervened as a co-Plaintiff (Costa Brava and Wynnefield are hereinafter referred to as “Plaintiffs”). On February 27, 2007, Plaintiffs added, as an additional defendant, Mr. John R. C. Porter, a holder of the Company’s Class A Common Stock. In the litigation, Plaintiffs alleged, among other things, that the Company and its officers and directors engaged in tactics to avoid paying dividends on the Public Preferred Stock, that the Company made improper bonus payments or awards to officers and directors, that certain former and present officers and directors breached legal duties or the standard of care that they owed the Company, that the Company improperly paid consulting fees to and engaged in loan transactions with Mr. Porter, that the Company failed to improve on the Company’s purported insolvency, that the Company failed to redeem the Public Preferred Stock as allegedly required by the Company’s charter, and that Mr. Porter engaged in actions constituting shareholder oppression. On December 22, 2005, the Company’s Board of Directors established a special litigation committee (“Special Litigation Committee”), composed of certain independent directors, to review and evaluate the matters raised in the litigation. On August 30, 2006, Plaintiffs filed a motion with the Circuit Court to place the Company into a receivership following the resignations of six of the nine members of the Board of Directors on August 16, 2006. Within a week of the resignations, three new independent board members were added and two more new members were added in October 2006. Thus, the board and all board committees, including the Special Litigation Committee, were fully reconstituted. In an opinion dated November 29, 2006 the Circuit Court denied the motion for receivership. The Circuit Court concluded that the Plaintiffs’ holdings in the Public Preferred Stock represented a minority equity interest (and not debt or a fixed liability), and that their equity interests did not provide a guarantee to payment of dividends or redemption of their shares. The Circuit Court further concluded that the Plaintiffs’ alleged expectations to a status as debtors of the Company or to rights to current dividends were not objectively reasonable, and that the Plaintiffs in fact had not been denied any rights as defined by the proxy statement and prospectus forming the terms of the Public Preferred Stock. On July 20, 2007, the Special Litigation Committee, in its final report, concluded that the available evidence did not support Plaintiffs’ derivative claims and that it was not in the best interests of the Company to pursue such claims in the litigation. On August 24, 2007, the Company moved to dismiss Plaintiffs’ derivative claims based upon the report and to dismiss all remaining claims for failure to state a claim. Following an evidentiary hearing, the Circuit Court on January 7, 2008 dismissed all derivative claims based upon the recommendation of the Special Litigation Committee. On February 12, 2008, the Plaintiffs filed a Third Amended Complaint that included both new counts and previously dismissed counts. The new counts included a breach of contract claim (Count VIII), and claims for preliminary and permanent injunctions against the Company (Count IX) and for an accounting (Count X). Count VIII alleged there was a contractual obligation to pay paid-in-kind (or PIK) dividends and the Company’s reversal of position in 2006 to not pay PIK dividends was a breach of contract. The Company moved to dismiss or strike the Third Amended Complaint and, on April 15, 2008, the Circuit Court issued an order dismissing with prejudice all counts in the Third Amended Complaint that were not previously disposed of by motion or stipulation. Regarding Count VIII, the Circuit Court stated that “neither the Registration Statements, nor the company charter and Articles of Amendment and Restatement can be read to give rise to a contractual obligation to pay PIK dividends” and that “the law is clear that a corporate board may revoke stock dividends, even if they have already been declared, up until the time they are issued.” On December 2, 2008, the Company filed a motion for voluntary dismissal without prejudice of its counterclaim against Plaintiffs (for their interference with the Company’s relationship with the Company’s then senior lender, Wells Fargo). The Circuit Court granted that motion, over Plaintiffs’ opposition, on January 23, 2009. On February 23, 2009, the Plaintiffs filed a notice of appeal. In its brief, the Plaintiffs appealed the dismissal of their derivative claims and the shareholder oppression claim against Mr. Porter. The appeal did not include any challenge to the dismissal of other counts, including Count VIII regarding the alleged contractual obligation to pay PIK dividends. On September 7, 2012, the Court of Special Appeals of Maryland ruled that the Circuit Court applied an incorrect standard of review to evaluate the conclusions of the Special Litigation Committee. The Court of Special Appeals held that the Circuit Court’s dismissal of a shareholder oppression claim (asserted against Mr. Porter) raised an issue of first impression under Maryland law and required further briefing in the Circuit Court. The Court of Special Appeals vacated the decision of the Circuit Court that had been appealed, and remanded the case for further consideration and proceedings. On October 24, 2012, the Company filed a Petition for Writ of Certiorari in the Court of Appeals of Maryland, which was denied on January 22, 2013. On remand, the Defendants (excluding Mr. Porter) filed a Motion to Dismiss the derivative claims under the standard of review dictated by the opinion of the Court of Special Appeals as a result of the findings of the Special Litigation Committee in its final report of July 20, 2007 (“Defendants’ Motion to Dismiss”). Following full briefing by the parties, a hearing on the Defendants’ Motion to Dismiss was held on April 24, 2014 and the matter was taken under advisement by the Court. On September 17, 2013, the Plaintiffs filed a request for an entry of an order for default as to Mr. Porter, which was denied by the Circuit Court on November 8, 2013. Mr. Porter ultimately filed a motion to dismiss the claim against him on May 13, 2014, raising multiple grounds (“Mr. Porter’s Motion to Dismiss”). On January 31, 2018, certain former and current officers and directors filed a Motion to Reconsider the Court’s Orders Denying Motions to Dismiss for Lack of Personal Jurisdiction (“Motion to Reconsider”) with the Circuit Court. The Court had previously denied the Motions to Dismiss for Lack of Personal Jurisdiction on March 30, 2006. The Motion to Reconsider was precipitated by and based upon a newly decided Maryland appellate decision related to personal jurisdiction over directors of a Maryland corporation. Following full briefing by the parties, a hearing was held on December 19, 2018 on the Motion to Reconsider and on Mr. Porter’s Motion to Dismiss, and the matters were taken under advisement by the Court. On December 18, 2019, the Circuit Court filed three (3) Memorandum Opinions and entered four (4) Orders addressing all of the pending motions and open claims in the litigation and closing the case. First, the Circuit Court granted the Motion to Reconsider the Circuit Court’s March 30, 2006 order denying the Motions to Dismiss for Lack of Personal Jurisdiction filed by a number of the past and present directors and officers. The Circuit Court determined that the intervening appellate decision was binding legal precedent on a pertinent legal issue, and concluded that the Court lacked personal jurisdiction over the moving defendants. The Circuit Court entered an order dismissing the derivative claims against these defendants for lack of personal jurisdiction. Second, the Circuit Court granted the Defendants’ Motions to Dismiss the derivative claims. The Defendants’ Motion to Dismiss relied on the conclusions in the final report of the Special Litigation Committee (SLC) that the derivative claims lacked merit and that it was not in the best interests of the Company to pursue them. The Circuit Court found, among other things, that the Telos Defendants had sustained their burden of proof to show that (i) the SLC was independent, (ii) the legal counsel for the SLC was independent, (iii) the SLC acted in good faith in conducting its investigation and reaching its conclusions, and (iv) the SLC conducted a reasonable investigation with factually supported conclusions. The Circuit Court also determined that the procedural mechanism the Telos Defendants had utilized to present the issue to the Circuit Court — proceedings under Maryland Rule 2-502 — was an appropriate procedural vehicle to use for this issue. The Circuit Court entered an order granting the Defendants’ Motion to Dismiss and ordering the dismissal of the derivative claims on the merits. Third, the Circuit Court granted Mr. Porter’s Motion to Dismiss based on a lack of minimum contacts with the State of Maryland, and entered an order dismissing the claim for shareholder oppression against Mr. Porter for lack of jurisdiction. Finally, the Circuit Court entered a separate order concluding that all claims in the Third Amended Complaint had been dismissed by various orders of the Court dated June 6, 2007, January 7, 2008, April 15, 2008, and December 18, 2019, and further ordering the Clerk of the Court to close the case with costs to be paid by Plaintiffs. Costa Brava noted an appeal to the Court of Special Appeals of Maryland on January 17, 2020 from the Circuit Court’s final judgment which remains pending. Co-plaintiff Wynnefield elected not to note or pursue an appeal. As of December 31, 2019, Costa Brava and Wynnefield, directly and through affiliated funds, own 12.7% and 17.4%, respectively, of the outstanding Public Preferred Stock. At this stage of the litigation, it is impossible to reasonably determine the degree of probability related to Plaintiff Costa Brava’s success in relation to any of the assertions it will make on the pending appeal. Although there can be no assurance as to the ultimate outcome of the case, the Company and its present and former officers and directors strenuously deny Plaintiff Costa Brava’s allegations and continue to vigorously defend the matter and oppose all relief sought by Costa Brava. Hamot et al. v. Telos Corporation As previously reported, on August 2, 2007, Messrs. Seth W. Hamot (“Hamot”) and Andrew R. Siegel (“Siegel”), principals of Costa Brava Partnership III, L.P. (“Costa Brava”), instituted litigation against the Company as Plaintiffs in the Circuit Court for Baltimore City, Maryland (the “Circuit Court”). Mr. Siegel is a Class D Director of the Company and Mr. Hamot was a Class D Director of the Company until his resignation on March 9, 2018. The Plaintiffs initially alleged that certain documents and records had not been provided to them promptly and were necessary to fulfill their duties as directors of the Company. Subsequently, Hamot and Siegel further alleged that the Company had failed to follow certain provisions concerning the noticing of Board committee meetings and the recording of Board meeting minutes and, additionally, that Mr. Wood’s service as both CEO and Chairman of the Board was improper and impermissible under the Company’s Bylaws. By way of preliminary injunctions entered on August 28, 2007 and September 24, 2007, the Circuit Court ordered that Hamot and Siegel are entitled to responses and documents, within certain time frames established by the Court, in response to reasonable requests for information pertinent and necessary to perform their duties as members of the Board, but in light of the Costa Brava shareholder litigation, the Company is entitled to designate certain documents as “confidential” or “highly confidential” and to withhold certain documents from the Plaintiffs based upon the attorney work product doctrine or attorney-client privilege. On April 23, 2008, the Company filed a counterclaim against Hamot and Siegel for money damages and preliminary and injunctive relief based upon Hamot and Siegel’s interference with, and improper influence of, the Company’s independent auditors regarding, among other things, a specific accounting treatment. On June 27, 2008, the Circuit Court granted the Company’s motion for preliminary injunction and enjoined Hamot and Siegel from contacting the Company’s auditors until the completion of the Company’s Form 10-K for the preceding year. This preliminary injunction expired by its own terms and an appeal by Hamot and Siegel from that preliminary injunction order later was held to be moot by the Court of Special Appeals of Maryland. Trial on both the Plaintiffs’ books and records claims and the Company’s counterclaims related to auditor interference commenced on July 5, 2013, and continued on several days in July 2013. The evidentiary portion of the trial concluded on August 1, 2013, and post-trial briefing concluded on September 16, 2013. On September 11, 2017, the Circuit Court docketed two decisions in this matter. First, with respect to the Plaintiffs’ complaint related to access to books and records of the Company, the Circuit Court declined to grant permanent injunctive relief to the Plaintiffs but, instead, issued a declaratory order setting forth the pertinent standards the parties should follow as it relates to the Plaintiffs’ right to books and records. The Circuit Court found that the Plaintiffs have the right as directors to inspect and copy the records of the Company, subject to the Company’s right to determine that the materials requested were not reasonably related to the scope of their duties as directors or that their use of the materials may violate the duties they owe to the Company. The Circuit Court also determined that the scope of the inspection may also be limited if Telos establishes that the request creates an undue burden or expense. Second, with respect to the third amended counterclaim, the Circuit Court entered judgment in favor of the Company and against Hamot and Siegel on the counterclaim for tortious interference with the Company’s contractual relationship with its former auditors, Reznick Group (“Reznick”) (Count Two) and awarded damages against Hamot and Siegel in the amount of $278,923. The Circuit Court found that Hamot and Siegel’s threat of litigation against Reznick was the precipitating cause of Reznick’s resignation. In addition, the Circuit Court determined that the threats of litigation were made for an improper purpose – to influence the accounting treatment that Reznick would use on the Company’s financial statements, specifically as it relates to the 12% Exchangeable Redeemable Preferred Shares – and the resignation was a foreseeable consequence of Hamot and Siegel’s interference. The Circuit Court also entered judgment for Hamot and Siegel on the Company’s claims for interference with its relationship with its former auditor, Goodman and Company, LLP (“Goodman”) and on the Company’s claim seeking declaratory relief in connection with Plaintiffs’ claims for indemnification of attorney’s fees and costs in connection with the litigation. The Circuit Court determined that the resignation of Goodman as the Company’s auditor occurred upon the Plaintiffs’ election in 2007 to the Company’s board of directors, which the Circuit Court found itself was not independently wrongful and was the precipitating cause of the resignation, and not primarily due to the litigation against Goodman maintained by Costa Brava. The Circuit Court also entered judgment for Hamot and Siegel on the alternative claims for interference with the business relationships with Goodman and Reznick (Counts Three and Four), finding that it was not necessary to decide issues of liability under these claims since it determined that contracts with each of the audit firms existed. On September 27, 2017, the Company filed a Motion under Maryland Rule 2-535 to reconsider or revise two specific aspects of the Circuit Court’s judgment on Count Two of the third amended counterclaim: (1) to correct the amount of damages awarded on Count Two for audit expenses incurred for the audit year 2007, and (2) to amend or modify the order with respect to Count Five (the declaratory relief claim related to indemnification) to dismiss the claims instead of entering judgment in favor of Hamot and Siegel on it. A hearing on the motion was held on October 11, 2017. At the conclusion of the hearing, the Circuit Court denied the Company’s motion as to the damages awarded on Count Two, and granted the Company’s motion on the issue related to Count Five and entered a new order accordingly. The Company filed a notice with the Circuit Court appealing the judgment to the Court of Special Appeals of Maryland on October 11, 2017, and on October 17, 2017, Hamot and Siegel filed a notice of a cross-appeal, which they later withdrew. On or about July 6, 2018, the attorneys representing Mr. Hamot filed a Notice of Substitution of Party in the Circuit Court and the Court of Special Appeals, providing notice that Mr. Steven Tannenbaum was appointed and qualified as the Special Personal Representative of the Estate of Seth Hamot to represent the estate in the litigation. Oral argument on the appeal in the Court of Special Appeals on issues related to the damages awarded to the Company and against Messrs. Hamot and Siegel on its Counterclaim for interference with one of its prior auditor relationships was held on October 3, 2018. On November 28, 2018, the Court of Special Appeals issued an unpublished opinion affirming the judgment of the Circuit Court on the issues related to damages. On January 25, 2019, Telos filed a Petition for Writ of Certiorari with Court of Appeals of Maryland seeking review in that Court of issues related to the damage award, and on March 29, 2019, the Petition for Writ of Certiorari was granted. Following oral argument, the Court of Appeals issued a per curiam order on September 13, 2019 dismissing the appeal and entered its Mandate on October 11, 2019. Hamot and Siegel at various times in this litigation have sought to be indemnified or to be awarded advancement of various attorney’s fees and expenses incurred by them in this litigation. On April 12, 2010, the Plaintiffs filed a motion for the advancement of legal fees and expenses incurred in defense of the Company’s counterclaim and/or its motion for injunctive relief on which the Company was successful. On November 3, 2011, the Circuit Court denied the Plaintiffs’ motion. On May 21, 2012, the Circuit Court denied Plaintiffs’ motion for reconsideration of these decisions. Subsequently, on October 19, 2017, Hamot and Siegel submitted a letter to the Company, pursuant to Section 2-418 of the Maryland General Corporation Law, demanding that the Company advance and/or indemnify them for legal fees and expenses purportedly totaling $1,550,000 and incurred in pursuit of their books and records claim and in defense of the Company’s counterclaims for auditor interference, and ongoing expenses in the litigation. The Board addressed Hamot and Siegel’s demand for indemnification and/or advancement at its regularly scheduled meeting on November 13, 2017. The Board, by a vote of all members present for this portion of the meeting, and for a number of reasons, determined that the Company will not provide indemnification or advancement to Hamot and Siegel in response to their demand. On November 20, 2017, Hamot and Siegel filed a Motion for Advancement and Indemnification of Legal Fees and Expenses and Request for Hearing in the Circuit Court. Hamot and Siegel alleged that they incurred approximately $1,450,000 of legal fees and expenses in relation to the counterclaim proceedings and approximately $100,000 of legal fees and expenses incurred in relation to their affirmative claims in the Third Amended Complaint. Hamot and Siegel claimed that, since the Circuit Court ruled in their favor in Counts One and Three (related to Goodman), they were entitled to the $750,000 for legal fees and expenses incurred in defending those counts, plus legal fees and expenses incurred in the appeal. In addition, Hamot and Siegel claimed that they were entitled to approximately $660,000 (91% of the legal fees and expenses incurred in defending Counts Two and Four (related to Reznick)) plus the legal fees and expenses incurred in the appeal from the Circuit Court’s judgment. Lastly, Hamot and Siegel claimed that, since they allegedly received a successful ruling on their Third Amended Complaint, they were entitled to approximately $100,000 for legal fees and expenses incurred on this issue. The Company filed an opposition to Hamot and Siegel’s Motion, raising a number of reasons why the relief requested by Hamot and Siegel should not be granted. A hearing on this motion and the Company’s opposition was held on February 28, 2018. On June 27, 2018, the Circuit Court issued a decision on Hamot and Siegel’s Motion for Advancement and Indemnification of Legal Fees and Expenses. The Court, inter alia: (i) denied Hamot and Siegel’s request for indemnification as premature, given the pendency of the Company's then-appeal and Hamot and Siegel’s then-cross-appeal (subsequently withdrawn) from the judgment rendered against them after the trial on the merits; (ii) concluded that the evidence established a nexus between the claims against Hamot and Siegel in the Counterclaim and their service as directors; (iii) determined that indemnification was not available to Hamot and Siegel as a matter of law in connection with their right to inspect claim in their Third Amended Complaint; (iv) determined that Hamot and Siegel were not entitled to advancement of expenses incurred between May 21, 2012 and November 20, 2017, because this request seeks "reimbursement for fees relating to a proceeding that has concluded, and concluded with a ruling that definitively resolves the claims, at least at this juncture", and further determined that "[a]ccepting the extremely low good faith standard and providing advancement would require the court to ignore the findings that the court has made on the very claims that gave rise to the expenses that are the basis of the request"; and (v) determined that Hamot and Siegel were entitled to advancement of expenses related to the appeal of the Counterclaim, pending completion of the appellate proceedings, explaining that the "fact that this court found against Hamot and Siegel on the merits does not compel the conclusion that they could not entertain a good faith belief in the merits of their appeal" and that they met the low bar for showing their good faith belief that they will be successful on the issues related to the counterclaim on appeal. On September 21, 2018, Hamot and Siegel filed in the Circuit Court a Motion for Entry of Money Judgment of Advancement Fees and Expenses, or, in the Alternative, for Order that Telos Corporation Show Cause Why Telos Corporation Should Not be Held in Contempt for Failing to Comply with this Court’s June 27, 2018 Order Directing Telos Corporation to Pay Advancement Fees and Expenses (Motion for Entry of Monetary Judgment), the Company filed an opposition to the motion, and a hearing was held on the Plaintiffs’ Motion for Entry of Monetary Judgment on November 21, 2018. Effective on January 4, 2019, the parties entered into a partial settlement agreement with respect to certain issues related to Plaintiffs’ claim for advancement of fees and expenses on the appeal and certain other matters, and subsequently the Circuit Court issued an order on January 9, 2019 determining that the Motion for Entry of Monetary Judgment was moot. In connection with the partial settlement agreement, the Company provided advancement of a negotiated and compromised amount of expenses incurred by Hamot and Siegel in connection with the Company’s appeal of the damages awarded for auditor interference. At this stage of the litigation, it is impossible to reasonably determine the degree of probability related to the Company’s success in relation to any possible further claim by Hamot and Siegel for indemnification for certain attorney’s fees and expenses incurred in this litigation. No claim for indemnification is pending as of the reporting date. The Company intends to vigorously defend the matter and oppose any claim for indemnification if it is pursued. Other Litigation In addition, the Company is a party to litigation arising in the ordinary course of business. In the opinion of management, while the results of such litigation cannot be predicted with any reasonable degree of certainty, the final outcome of such known matters will not, based upon all available information, have a material adverse effect on the Company's consolidated financial position, results of operations or cash flows. Subsequent Events Enlightenment Capital Credit Agreement On March 26, 2020, the Credit Agreement was amended (the “Fifth Amendment”) to modify the financial covenants for 2020 through the maturity of the Credit Agreement to establish that the covenants will remain at the December 31, 2019 levels and to update the previously agreed-upon definition of certain financial covenants, specifically the amount of Capital Expenditures to be included in the measurement of the covenants. The Fifth Amendment also provides for the right for the Company to elect to extend the maturity date of the Credit Agreement which is currently scheduled to mature on January 15, 2021. The Fifth Amendment provides for four quarterly maturity date extensions, which would increase the Exit Fee payable under the Credit Agreement by $250,000 for each quarterly maturity date extension elected, for a total of $1 million increase to the Exit Fee were all four of the maturity date extensions to be elected. The Company paid EnCap an amendment fee of $100,000 and out-of-pocket costs and expenses in consideration for the Fifth Amendment. COVID-19 Pandemic In December 2019, an outbreak of the COVID-19 virus was reported in Wuhan, China. On March 11, 2020, the World Health Organization declared the COVID-19 virus a global pandemic and on March 13, 2020, President Donald J. Trump declared the virus a national emergency. This highly contagious disease has spread to most of the countries in the world and throughout the United States, creating a serious impact on customers, workforces, and suppliers, disrupting economies and financial markets, and potentially leading to a world-wide economic downturn. The full impact of the COVID-19 outbreak continues to evolve as of the date of this report. As such, it is uncertain as to the full magnitude that the pandemic will have on the Company’s financial condition, liquidity, and future results of operations. The Company is dependent on its workforce to deliver its solutions. Developments such as social distancing and stay-at-home orders from various jurisdictions may impact the Company’s ability to deploy its workforce effectively. While expected to be temporary, prolonged workforce disruptions could negatively impact sales in fiscal year 2020 and the Company’s overall liquidity. As of the date of this report, the Company’s suppliers and subcontractors have not notified the Company of inability to meet expected orders or of decreased production capacity. Management is actively monitoring the global situation on its financial condition, liquidity, operations, suppliers, industry, and workforce. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, the Company is not able to estimate any adverse effects of the COVID-19 outbreak on its results of operations, financial condition, or liquidity for fiscal year 2020.

Revenue and Accounts Receivable (FY) (Tables)

12 Months Ended

Dec. 31, 2019

Revenue and Accounts Receivable [Abstract]

Accounts Receivable Components

The components of accounts receivable are as follows (in thousands):

	December 31,
	2019			2018
Billed accounts receivable	$	11,917		$	18,848
Unbilled receivables		16,745			16,000
Allowance for doubtful accounts		(720	)		(306	)
Total	$	27,942		$	34,542

Allowance for Doubtful Accounts

The activities in the allowance for doubtful accounts are set forth below (in thousands):

	Balance Beginning of Year		Bad Debt Expenses (1)			Recoveries (2)		Balance End of Year

Year ended December 31, 2019	$	306	$	414		$	--	$	720
Year ended December 31, 2018	$	411	$	(105	)	$	--	$	306
Year ended December 31, 2017	$	429	$	(18	)	$	--	$	411

(1)	Accounts receivable reserves and reversal of allowance for subsequent collections, net

(2)	Accounts receivable written-off and subsequent recoveries, net

Revenue by Customer Sector

We derived a substantial portion of our revenues from contracts and subcontracts with the U.S. Government. Revenue by customer sector for the last three fiscal years is as follows:

	2019				2018				2017
					(dollar amounts in thousands)

Federal	$	149,257	93.7	%	$	129,279	93.7	%	$	101,519	94.2	%
State & Local, and Commercial		9,961	6.3	%		8,737	6.3	%		6,208	5.8	%
Total	$	159,218	100.0	%	$	138,016	100.0	%	$	107,727	100.0	%

Document and Entity Information	6 Months Ended
Document and Entity Information	Jun. 30, 2020
Cover [Abstract]
Entity Registrant Name	TELOS CORP
Entity Central Index Key	0000320121
Entity Filer Category	Non-accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Document Type	S-1
Amendment Flag	false

Current Liabilities and Debt Obligations (Q2)

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Current Liabilities and Debt Obligations [Abstract]

Current Liabilities and Debt Obligations

Note 5. Current Liabilities and Debt Obligations

Accounts Payable and Other Accrued Liabilities

As of June 30, 2020 and December 31, 2019, the accounts payable and other accrued liabilities consisted of $14.8 million and $13.5 million, respectively, in trade accounts payable and $4.8 million and $1.5 million, respectively, in accrued liabilities.

Contract Liabilities

Contract liabilities are payments received in advance and milestone payments from our customers on selected contracts that exceed revenue earned to date, resulting in contract liabilities. Contract liabilities typically are not considered a significant financing component because they are generally satisfied within one year and are used to meet working capital demands that can be higher in the early stages of a contract. Contract liabilities are reported on our condensed consolidated balance sheets on a net contract basis at the end of each reporting period. As of June 30, 2020 and December 31, 2019, the contract liabilities primarily related to product support services.

Enlightenment Capital Credit Agreement

On January 25, 2017, we entered into a Credit Agreement (the "Credit Agreement") with Enlightenment Capital Solutions Fund II, L.P., as agent (the "Agent") and the lenders party thereto (the "Lenders"), (together referenced as “EnCap”). The Credit Agreement provides for an $11 million senior term loan (the "Loan") with a maturity date of January 25, 2022, subject to acceleration in the event of customary events of default.

All borrowings under the Credit Agreement accrue interest at the rate of 13.0% per annum (the "Accrual Rate"). If, at the request of the Company, the Agent executes an intercreditor agreement with another senior lender under which the Agent and the Lenders subordinate their liens (an "Alternative Interest Rate Event"), the interest rate will increase to 14.5% per annum. After the occurrence and during the continuance of any event of default, the interest rate will increase 2.0%. The Company is obligated to pay accrued interest in cash on a monthly basis at a rate of not less than 10.0% per annum or, during the continuance of an Alternate Interest Rate Event, 11.5% per annum. The Company may elect to pay the remaining interest in cash, by payment-in-kind (by addition to the principal amount of the Loan) or by combination of cash and payment-in-kind. Upon thirty days prior written notice, the Company may prepay any portion or the entire amount of the Loan.

The Credit Agreement contains representations, warranties, covenants, terms and conditions customary for transactions of this type. In connection with the Credit Agreement, the Agent has been granted, for the benefit of the Lenders, a security interest in and general lien upon various property of the Company, subject to certain permitted liens and any intercreditor agreement. 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 or as a secured party under the UCC, in addition to all other rights and remedies available to them.

In connection with the Credit Agreement, on January 25, 2017, the Company issued warrants (each, a "Warrant") to the Agent and certain of the Lenders representing in the aggregate the right to purchase in accordance with their terms 1,135,284.333 shares of the Class A Common Stock of the Company, no par value per share, which is equivalent to approximately 2.5% of the common equity interests of the Company on a fully diluted basis. The exercise price is $1.321 per share and each Warrant expires on January 25, 2027. The value of the warrants was determined to be de minimis and no value was allocated to them on a relative fair value basis in accounting for the debt instrument.

The Credit Agreement also included an $825,000 exit fee, which was payable upon any repayment or prepayment of the loan. This amount had been included in the total principal due and treated as an unamortized discount on the debt, which would be amortized over the term of the loan, using the effective interest method at a rate of 15.0% at the time of the original loan. We incurred fees and transaction costs of approximately $374,000 related to the issuance of the Credit Agreement, which are being amortized over the life of the Credit Agreement.

Effective February 23, 2017, the Credit Agreement was amended to change the required timing of certain post-closing items to allow for more time to complete the legal and administrative requirements around such items. On April 18, 2017, the Credit Agreement was further amended (the “Second Amendment”) to incorporate the parties’ agreement to subordinate certain debt owed by the Company to the affiliated entities of Mr. John R. C. Porter (the “Subordinated Debt”) and to redeem all outstanding shares of the Series A-1 Redeemable Preferred Stock and the Series A-2 Redeemable Preferred Stock, including those owned by Mr. John R.C. Porter and his affiliates, for an aggregate redemption price of $2.1 million.

In connection with the Second Amendment and that subordination of debt, on April 18, 2017, we also entered into Subordination and Intercreditor Agreements (the “Intercreditor Agreements”) with affiliated entities of Mr. John R. C. Porter (together referenced as “Porter”), in which Porter agreed that the Subordinated Debt is fully subordinated to the amended Credit Agreement and related documents, and that required payments, if any, under the Subordinated Debt are permitted only if certain conditions are met.

On March 30, 2018, the Credit Agreement was amended (the “Third Amendment”) to waive any actual or potential non-compliance with covenants in 2017 and to reset the covenants for 2018 measurement periods to more accurately reflect the Company’s projected performance for the year. The measurement against the covenants for consolidated leverage ratio and consolidated fixed charge coverage ratio were agreed to not be measured as of December 31, 2017 and were reset for 2018 measurement periods. Additionally, a minimum revenue covenant and a net working capital covenant were added. In consideration of these amendments, the interest rate on the loan was increased by 1%, which will revert back to the original rate upon achievement of two consecutive quarters of a specified fixed charge coverage ratio as defined in the agreement. The Company may elect to pay the increase in interest expense in cash or by payment-in-kind (by addition to the principal amount of the Loan). The increase in interest expense has been paid in cash. Contemporaneously with the Third Amendment, Mr. John B. Wood agreed to transfer 50,000 shares of the Company’s Class A Common Stock owned by him to EnCap.

On July 19, 2019, we entered into the Fourth Amendment to Credit Agreement and Waiver; First Amendment to Fee Letter (“Fourth Amendment”) to amend the Credit Agreement. As a result of the Fourth Amendment, several terms of the Credit Agreement were amended, including the following:

●

The Company borrowed an additional $5 million from the Lenders, increasing the total amount of the principal to $16 million.

●

The maturity date of the Credit Agreement was amended from January 25, 2022 to January 15, 2021.

●

The prepayment price was amended as follows: (a) from January 26, 2019 through January 25, 2020, the prepayment price is 102% of the principal amount, (b) from January 26, 2020 through October 14, 2020, the prepayment price is 101% of the principal amount, and (c) from October 15, 2020 to the maturity date, the prepayment price will be at par. However, the prepayment price for the additional $5 million loan attributable to the Fourth Amendment will be at par.

●

The following financial covenants, as defined in the Credit Agreement, were amended and updated: Consolidated Leverage Ratio, Consolidated Senior Leverage Ratio, Consolidated Capital Expenditures, Minimum Fixed Charge Coverage Ratio, and Minimum Consolidated Net Working Capital.

●

Any actual or potential non-compliance with the applicable provisions of the Credit Agreement were waived.

●

The borrowing under the Credit Agreement continues to be collateralized by substantially all of the Company’s assets including inventory, equipment and accounts receivable.

●

The Company paid the Agent a fee of $110,000 in connection with the Fourth Amendment. We incurred immaterial third party transaction costs which were expensed in the current period.

●

The exit fee was increased from $825,000 to $1,200,000.

The exit fee has been included in the total principal due and treated as an unamortized discount on the debt, which is being amortized over the term of the loan using the effective interest method at a rate of 17.3% over the remaining term of the loan. For the measurement period ended June 30, 2020, we were in compliance with the Credit Agreement’s financial covenants, based on an agreement between the Company and EnCap on the definition of certain input factors that determine the measurement against the covenants.

On March 26, 2020, the Credit Agreement was amended (the “Fifth Amendment”) to modify the financial covenants for 2020 through the maturity of the Credit Agreement to establish that the covenants will remain at the December 31, 2019 levels and to update the previously agreed-upon definition of certain financial covenants, specifically the amount of Capital Expenditures to be included in the measurement of the covenants. The Fifth Amendment also provides for the right for the Company to elect to extend the maturity date of the Credit Agreement which is currently scheduled to mature on January 15, 2021. The Fifth Amendment provides for four quarterly maturity date extensions, which would increase the Exit Fee payable under the Credit Agreement by $250,000 for each quarterly maturity date extension elected, for a total of $1 million increase to the Exit Fee were all four of the maturity date extensions to be elected. The Company paid EnCap an amendment fee of $100,000 and out-of-pocket costs and expenses in consideration for the Fifth Amendment.

As the Company has not exercised the option(s) to extend the maturity of the Credit Agreement, the current maturity date remains January 15, 2021, which is within one year from the balance sheet date. Accordingly, the balance of the EnCap loan has been classified as a current liability. However, the options to extend the maturity provide the Company with the ability by contractual right to extend the maturity of the loan, which the Company will consider exercising at the appropriate time.

The carrying amount of the Credit Agreement consisted of the following (in thousands):

	June 30, 2020			December 31, 2019
Senior term loan principal, including exit fee	$	17,200		$	17,200
Less: Unamortized discount, debt issuance costs, and lender fees		(512	)		(865	)
Senior term loan, net	$	16,688		$	16,335

We incurred interest expense in the amount of $0.7 million and $1.5 million for the three and six months ended June 30, 2020, respectively, and $0.4 million and $0.8 million for the three and six months ended June 30, 2019, respectively, under the Credit Agreement.

Accounts Receivable Purchase Agreement

On July 15, 2016, we entered into an Accounts Receivable Purchase Agreement (the “Purchase Agreement”) with Republic Capital Access, LLC (“RCA” or “Buyer”), pursuant to which we may offer for sale, and RCA, in its sole discretion, may purchase, eligible accounts receivable relating to U.S. Government prime contracts or subcontracts of the Company (collectively, the “Purchased Receivables”). Upon purchase, RCA becomes the absolute owner of any such Purchased Receivables, which are payable directly to RCA, subject to certain repurchase obligations of the Company. The total amount of Purchased Receivables is subject to a maximum limit of $10 million of outstanding Purchased Receivables (the “Maximum Amount”) at any given time. On November 15, 2019, the term of the Purchase Agreement was extended to June 30, 2022.

The initial purchase price of a Purchased Receivable is equal to 90% of the face value of the receivable if the account debtor is an agency of the U.S. Government, and 85% if the account debtor is not an agency of the U.S. Government; provided, however, that RCA has the right to adjust these initial purchase price rates in its sole discretion. After collection by RCA of the portion of a Purchased Receivable in excess of the initial purchase price, RCA shall pay the Company the residual 10% or 15% of such Purchased Receivable, as appropriate, less (i) a discount factor equal to 0.30%, for federal government prime contracts (or 0.56% for non-federal government investment grade account obligors or 0.62% for non-federal government non-investment grade account obligors) of the face amounts of Purchased Receivables; (ii) a program access fee equal to 0.008% of the daily ending account balance for each day that Purchased Receivables are outstanding; (iii) a commitment fee equal to 1% per annum of the Maximum Amount minus the amount of Purchased Receivables outstanding; and (iv) fees, costs and expenses relating to the preparation, administration and enforcement of the Purchase Agreement and any other related agreements.

The Purchase Agreement provides that in the event, but only to the extent, that the conveyance of Purchased Receivables by the Company is characterized by a court or other governmental authority as a loan rather than a sale, the Company shall be deemed to have granted RCA, effective as of the date of the first purchase under the Purchase Agreement, a security interest in all of the Company’s right, title and interest in, to and under all of the Purchased Receivables, whether now or hereafter owned, existing or arising.

The Company provides a power of attorney to RCA to take certain actions in the Company’s stead, including (a) to sell, assign or transfer in whole or in part any of the Purchased Receivables; (b) to demand, receive and give releases to any account debtor with respect to amounts due under any Purchased Receivables; (c) to notify all account debtors with respect to the Purchased Receivables; and (d) to take any actions necessary to perfect RCA’s interests in the Purchased Receivables.

The Company is liable to the Buyer for any fraudulent statements and all representations, warranties, covenants, and indemnities made by the Company pursuant to the terms of the Purchase Agreement. It is considered an event of default if (a) the Company fails to pay any amounts it owes to RCA when due (subject to a cure period); (b) the Company has voluntary or involuntary bankruptcy proceedings commenced by or against it; (c) the Company is no longer solvent or is generally not paying its debts as they become due; (d) any voluntary liens, garnishments, attachments, or the like are issued against or attach to the Purchased Receivables; (e) the Company breaches any warranty, representation, or covenant (subject to a cure period); (f) the Company is not in compliance or has otherwise defaulted under any document or obligation in favor of RCA or an RCA affiliate; or (g) the Purchase Agreement or any material provision terminates (other than in accordance with the terms of the Purchase Agreement) or ceases to be effective or to be a binding obligation of the Company. If any such event of default occurs, then RCA may take certain actions, including ceasing to buy any eligible receivables, declaring any indebtedness or other obligations immediately due and payable, or terminating the Purchase Agreement.

Subordinated Debt

On March 31, 2015, the Company entered into Subordinated Loan Agreements and Subordinated Promissory Notes (“Porter Notes”) with affiliated entities of Mr. John R. C. Porter (together referenced as “Porter”). Mr. Porter and Toxford Corporation, of which Mr. Porter is the sole shareholder, own 35.0% of our Class A Common Stock. Under the terms of the Porter Notes, Porter lent the Company $2.5 million on or about March 31, 2015. Telos also entered into Subordination and Intercreditor Agreements (the “Subordination Agreements”) with Porter and a prior senior lender, in which the Porter Notes were fully subordinated to the financing provided by that senior lender, and payments under the Porter Notes were permitted only if certain conditions are met. According to the original terms of the Porter Notes, the outstanding principal sum bears interest at the fixed rate of 12% per annum which would be payable in arrears in cash on the 20th day of each May, August, November and February, with the first interest payment date due on August 20, 2015. The Porter Notes do not call for amortization payments and are unsecured. The Porter Notes, in whole or in part, may be repaid at any time without premium or penalty. The unpaid principal, together with interest, was originally due and payable in full on July 1, 2017.

On April 18, 2017, we amended and restated the Porter Notes to reduce the interest rate from 12% to 6% per annum, to be accrued, and extended the maturity date from July 1, 2017 to July 25, 2022. Telos also entered into Intercreditor Agreements with Porter and EnCap, in which the Porter Notes are fully subordinated to the Credit Agreement and any subsequent senior lenders, and payments under the Porter Notes are permitted only if certain conditions are met. All other terms remain in full force and effect. We incurred interest expense in the amount of $88,000 and $175,000 for the three and six months ended June 30, 2020, respectively, and $82,000 and $162,000 for the three and six months ended June 30, 2019, respectively, on the Porter Notes. As of June 30, 2020, approximately $1.2 million of accrued interest was payable according to the stated interest rate of the Porter Notes.

Note 6. Current Liabilities and Debt Obligations

Accounts Payable and Other Accrued Liabilities

As of December 31, 2019 and 2018, the accounts payable and other accrued payables consisted of $13.5 million and $18.5 million, respectively, in trade account payables and $1.5 million and $3.3 million, respectively, in accrued liabilities.

Contract Liabilities

Contract liabilities are payments received in advance and milestone payments from our customers on selected contracts that exceed revenue earned to date, resulting in contract liabilities. Contract liabilities typically are not considered a significant financing component because they are generally satisfied within one year and are used to meet working capital demands that can be higher in the early stages of a contract. Contract liabilities are reported on our consolidated balance sheets on a net contract basis at the end of each reporting period. As of December 31, 2019 and 2018, the contract liabilities primarily related to product support services.

Enlightenment Capital Credit Agreement

On January 25, 2017, we entered into a Credit Agreement (the "Credit Agreement") with Enlightenment Capital Solutions Fund II, L.P., as agent (the "Agent") and the lenders party thereto (the "Lenders") (together referenced as “EnCap”). The Credit Agreement provided for an $11 million senior term loan (the "Loan") with a maturity date of January 25, 2022, subject to acceleration in the event of customary events of default.

All borrowings under the Credit Agreement accrue interest at the rate of 13.0% per annum (the “Accrual Rate”). If, at the request of the Company, the Agent executes an intercreditor agreement with another senior lender under which the Agent and the Lenders subordinate their liens (an "Alternative Interest Rate Event"), the interest rate will increase to 14.5% per annum. After the occurrence and during the continuance of any event of default, the interest rate will increase 2.0%. The Company is obligated to pay accrued interest in cash on a monthly basis at a rate of not less than 10.0% per annum or, during the continuance of an Alternate Interest Rate Event, 11.5% per annum. The Company may elect to pay the remaining interest in cash, by payment-in-kind (by addition to the principal amount of the Loan) or by combination of cash and payment-in-kind. Upon thirty days prior written notice, the Company may prepay any portion or the entire amount of the Loan.

An amount of approximately $1.1 million was netted from the proceeds of the Loan as a prepayment of all interest due and payable at the Accrual Rate during the period from January 25, 2017 to October 31, 2017. A separate fee letter executed by the Company and the Agent, dated January 25, 2017, sets forth the fees payable to the Agent in connection with the Credit Agreement.

The Credit Agreement also included an $825,000 exit fee, which was payable upon any repayment or prepayment of the loan. This amount had been included in the total principal due and treated as an unamortized discount on the debt, which would be amortized over the term of the loan, using the effective interest method at a rate of 15.0%. We incurred fees and transaction costs of approximately $374,000 related to the issuance of the Credit Agreement, which are being amortized over the life of the Credit Agreement.

Effective February 23, 2017, the Credit Agreement was amended to change the required timing of certain post-closing items, to allow for more time to complete the legal and administrative requirements around such items. On April 18, 2017, the Credit Agreement was further amended (the “Second Amendment”) to incorporate the parties’ agreement to subordinate certain debt owed by the Company to the affiliated entities of Mr. John R. C. Porter (the “Subordinated Debt”) and to redeem all outstanding shares of the Series A-1 Redeemable Preferred Stock and the Series A-2 Redeemable Preferred Stock, including those owned by Mr. John R.C. Porter and his affiliates, for an aggregate redemption price of $2.1 million.

On March 30, 2018, the Credit Agreement was further amended (the “Third Amendment”) to waive certain covenant defaults and to reset the covenants for 2018 measurement periods to more accurately reflect the Company’s projected performance for the year. The measurement against the covenants for consolidated leverage ratio and consolidated fixed charge coverage ratio were agreed to not be measured as of December 31, 2017 and were reset for 2018 measurement periods. Additionally, a minimum revenue covenant and a net working capital covenant were added. In consideration of these amendments, the interest rate on the loan was increased by 1%, which will revert back to the original rate upon achievement of two consecutive quarters of a specified fixed charge coverage ratio as defined in the agreement. The Company may elect to pay the increase in interest expense in cash or by payment-in-kind (by addition to the principal amount of the Loan). The increase in interest expense has been paid in cash. Contemporaneously with the Third Amendment, Mr. John B. Wood agreed to transfer 50,000 shares of the Company’s Class A Common Stock owned by him to EnCap.

•	The Company borrowed an additional $5 million from the Lenders, increasing the total amount of the principal to $16 million.

•	The maturity date of the Credit Agreement was amended from January 25, 2022 to January 15, 2021.

•

•	The following financial covenants, as defined in the Credit Agreement, were amended and updated: Consolidated Leverage Ratio, Consolidated Senior Leverage Ratio, Consolidated Capital Expenditures, Minimum Fixed Charge Coverage Ratio, and Minimum Consolidated Net Working Capital.

•	Any actual or potential non-compliance with the applicable provisions of the Credit Agreement were waived.

•	The borrowing under the Credit Agreement continues to be collateralized by substantially all of the Company’s assets including inventory, equipment and accounts receivable.

•	The Company paid the Agent a fee of $110,000 in connection with the Fourth Amendment. We incurred immaterial third party transaction costs which were expensed in the current period.

•	The exit fee was increased from $825,000 to $1,200,000.

The exit fee has been included in the total principal due and treated as an unamortized discount on the debt, which will be amortized over the term of the loan using the effective interest method at a rate of 17.3% over the remaining term of the loan. For the measurement period ended December 31, 2019 we were in compliance with the Credit Agreement’s financial covenants, based on an agreement between the Company and EnCap on the definition of certain input factors that determine the measurement against the covenants.

The carrying amount of the Credit Agreement consisted of the following (in thousands):

	December 31,
	2019			2018
Senior term loan principal, including exit fee	$	17,200		$	11,825
Less: Unamortized discount, debt issuance costs, and lender fees		(865	)		(841	)
Senior term loan, net	$	16,335		$	10,984

We incurred interest expense in the amount of $2.2 million, $1.7 million and $1.5 million for the years ended December 31, 2019, 2018 and 2017, respectively, under the Credit Agreement.

Accounts Receivable Purchase Agreement

On July 15, 2016, we entered into an Accounts Receivable Purchase Agreement (the “Purchase Agreement”) with Republic Capital Access, LLC (“RCA” or “Buyer”), pursuant to which we may offer for sale, and RCA, in its sole discretion, may purchase, eligible accounts receivable relating to U.S. Government prime contracts or subcontracts of the Company (collectively, the “Purchased Receivables”). Upon purchase, RCA becomes the absolute owner of any such Purchased Receivables, which are payable directly to RCA, subject to certain repurchase obligations of the Company. The total amount of Purchased Receivables is subject to a maximum limit of $10 million of outstanding Purchased Receivables (the “Maximum Amount”) at any given time. The Purchase Agreement had an initial term expiring on June 30, 2018 and automatically renews for successive 12-month renewal periods unless terminated in writing by either the Company or RCA. On March 2, 2018, the term of the Purchase Agreement was extended to June 30, 2020. On November 15, 2019, the term of the Purchase Agreement was extended to June 30, 2022. No fee or consideration of any kind was paid in connection with these extensions.

Financing and Security Agreement

On July 15, 2016, we entered into a Financing and Security Agreement (the “Financing Agreement”) with Action Capital Corporation (“Action Capital”), pursuant to which Action Capital agreed to provide the Company with advances of up to 90% of the net amount of certain acceptable customer accounts of the Company that have been assigned as collateral to Action Capital (the “Acceptable Accounts”). The maximum outstanding principal amount of advances under the Financing Agreement was $5 million. The Financing Agreement had a term of two years, provided that the Company may terminate it at any time without penalty upon written notice. On August 13, 2018, the Financing Agreement was extended through January 2, 2019. No fee or consideration of any kind was paid in connection with this extension. The Financing Agreement was not extended beyond this date.

Subordinated Debt

On March 31, 2015, the Company entered into Subordinated Loan Agreements and Subordinated Promissory Notes (“Porter Notes”) with affiliated entities of Mr. John R. C. Porter (together referenced as “Porter”). Mr. Porter and Toxford Corporation, of which Mr. Porter is the sole shareholder, own 35.0% of our Class A Common Stock. Under the terms of the Porter Notes, Porter lent the Company $2.5 million on or about March 31, 2015. Telos also entered into Subordination and Intercreditor Agreements (the “Subordination Agreements”) with Porter and a prior senior lender, in which the Porter Notes were fully subordinated to the financing provided by that senior lender, and payments under the Porter Notes were permitted only if certain conditions are met. According to the original terms of the Porter Notes, the outstanding principal sum bears interest at the fixed rate of twelve percent (12%) per annum which would be payable in arrears in cash on the 20th day of each May, August, November and February, with the first interest payment date due on August 20, 2015. The Porter Notes do not call for amortization payments and are unsecured. The Porter Notes, in whole or in part, may be repaid at any time without premium or penalty. The unpaid principal, together with interest, was originally due and payable in full on July 1, 2017.

On April 18, 2017, we amended and restated the Porter Notes to reduce the interest rate from12% to6% per annum, to be accrued, and extended the maturity date from July 1, 2017 to July 25, 2022. Telos also entered into Intercreditor Agreements with Porter and EnCap, in which the Porter Notes are fully subordinated to the Credit Agreement and any subsequent senior lenders, and payments under the Porter Notes were permitted only if certain conditions are met. As a result of the amendment and restatement of the Porter Notes, we recorded a gain on extinguishment of debt of approximately $1 million, which consisted of the remeasurement of the debt at fair value. As the extinguishment was with a related party, the transaction was deemed to be a capital transaction and the gain was recorded in the Company’s stockholders’ deficit as of December 31, 2017. All other terms remain in full force and effect. We incurred interest expense in the amount of $330,000, $308,000, and $292,000 for 2019, 2018, and 2017, respectively, on the Porter Notes. As of December 31, 2019, approximately $1.1 million of accrued interest was payable according to the stated interest rate of the Porter Notes.

Redeemable Preferred Stock (FY)	6 Months Ended	12 Months Ended
Redeemable Preferred Stock (FY)	Jun. 30, 2020	Dec. 31, 2019
Redeemable Preferred Stock [Abstract]
Redeemable Preferred Stock	Note 6. Redeemable Preferred Stock Public Preferred Stock A maximum of 6,000,000 shares of the Public Preferred Stock, par value $.01 per share, has been authorized for issuance. We initially issued 2,858,723 shares of the Public Preferred Stock pursuant to the acquisition of the Company during fiscal year 1990. The Public Preferred Stock was recorded at fair value on the date of original issue, November 21, 1989, and we made periodic accretions under the interest method of the excess of the redemption value over the recorded value. We adjusted our estimate of accrued accretion in the amount of $1.5 million in the second quarter of 2006. The Public Preferred Stock was fully accreted as of December 2008. We declared stock dividends totaling 736,863 shares in 1990 and 1991. Since 1991, no other dividends, in stock or cash, have been declared. In November 1998, we retired 410,000 shares of the Public Preferred Stock. The total number of shares issued and outstanding at June 30, 2020 and December 31, 2019 was 3,185,586. The Public Preferred Stock is quoted as "TLSRP" on the OTCQB marketplace and the OTC Bulletin Board. Since 1991, no dividends were declared or paid on our Public Preferred Stock, based upon our interpretation of restrictions in our Articles of Amendment and Restatement, limitations in the terms of the Public Preferred Stock instrument, specific dividend payment restrictions in the various financing documents to which the Public Preferred Stock is subject, other senior obligations currently or previously in existence, and Maryland law limitations in existence prior to October 1, 2009. Subsequent to the 2009 Maryland law change, dividend payments have continued to be prohibited except under certain specific circumstances as set forth in Maryland Code Section 2-311. Pursuant to the terms of the Articles of Amendment and Restatement, we were scheduled, but not required, to redeem the Public Preferred Stock in five annual tranches during the years 2005 through 2009. However, due to our substantial senior obligations currently or previously in existence, limitations set forth in the covenants in the various financing documents to which the Public Preferred Stock is subject, foreseeable capital and operational requirements, and restrictions and prohibitions of our Articles of Amendment and Restatement, we were and remain unable to meet the redemption schedule set forth in the terms of the Public Preferred Stock as of the measurement dates. Moreover, the Public Preferred Stock is not payable on demand, nor callable, for failure to redeem the Public Preferred Stock in accordance with the redemption schedule set forth in the instrument. Therefore, we classify these securities as noncurrent liabilities in the condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019. On January 25, 2017, we became parties with certain of our subsidiaries to the Credit Agreement with EnCap. Under the Credit Agreement, we agreed that, until full and final payment of the obligations under the Credit Agreement, we would not make any distribution or declare or pay any dividends (other than common stock) on our stock, or purchase, acquire, or redeem any stock, or exchange any stock for indebtedness, or retire any stock. Additionally, the Porter Notes contain similar prohibitions on dividend payments or stock redemptions. Accordingly, as stated above, we will continue to classify the entirety of our obligation to redeem the Public Preferred Stock as a long-term obligation. Various financing documents to which the Public Preferred Stock is subject prohibit, among other things, the redemption of any stock, common or preferred, other than as described above. The Public Preferred Stock by its terms also cannot be redeemed if doing so would violate the terms of an agreement regarding the borrowing of funds or the extension of credit which is binding upon us or any of our subsidiaries, and it does not include any other provisions that would otherwise require any acceleration of the redemption of or amortization of payments with respect to the Public Preferred Stock. Thus, the Public Preferred Stock is not and will not be due on demand, nor callable, within 12 months from June 30, 2020. This classification is consistent with ASC 210, “Balance Sheet” and 470, “Debt” and the FASB ASC Master Glossary definition of “Current Liabilities.” ASC 210 and the FASB ASC Master Glossary define current liabilities as follows: The term current liabilities is used principally to designate obligations whose liquidation is reasonably expected to require the use of existing resources properly classifiable as current assets, or the creation of other current liabilities. As a balance sheet category, the classification is intended to include obligations for items which have entered into the operating cycle, such as payables incurred in the acquisition of materials and supplies to be used in the production of goods or in providing services to be offered for sale; collections received in advance of the delivery of goods or performance of services; and debts that arise from operations directly related to the operating cycle, such as accruals for wages, salaries, commissions, rentals, royalties, and income and other taxes. Other liabilities whose regular and ordinary liquidation is expected to occur within a relatively short period of time, usually twelve months, are also intended for inclusion, such as short-term debts arising from the acquisition of capital assets, serial maturities of long-term obligations, amounts required to be expended within one year under sinking fund provisions, and agency obligations arising from the collection or acceptance of cash or other assets for the account of third persons. ASC 470 provides the following: The current liability classification is also intended to include obligations that, by their terms, are due on demand or will be due on demand within one year (or operating cycle, if longer) from the balance sheet date, even though liquidation may not be expected within that period. It is also intended to include long-term obligations that are or will be callable by the creditor either because the debtor’s violation of a provision of the debt agreement at the balance sheet date makes the obligation callable or because the violation, if not cured within a specified grace period, will make the obligation callable. If, pursuant to the terms of the Public Preferred Stock, we do not redeem the Public Preferred Stock in accordance with the scheduled redemptions described above, the terms of the Public Preferred Stock require us to discharge our obligation to redeem the Public Preferred Stock as soon as we are financially capable and legally permitted to do so. Therefore, by its very terms, the Public Preferred Stock is not due on demand or callable for failure to make a scheduled payment pursuant to its redemption provisions and is properly classified as a noncurrent liability. We pay dividends on the Public Preferred Stock when and if declared by the Board of Directors. The Public Preferred Stock accrues a semi-annual dividend at the annual rate of 12% ($1.20) per share, based on the liquidation preference of $10 per share, and is fully cumulative. Dividends in additional shares of the Public Preferred Stock for 1990 and 1991 were paid at the rate of 6% per share for each $.60 of such dividends not paid in cash. For the cash dividends payable since December 1, 1995, we have accrued $109.3 million and $107.4 million as of June 30, 2020 and December 31, 2019, respectively. We accrued dividends on the Public Preferred Stock of $1.0 million and $1.9 million for each of the three and six months ended June 30, 2020 and 2019, respectively, which was recorded as interest expense. Prior to the effective date of ASC 480 on July 1, 2003, such dividends were charged to stockholders’ accumulated deficit.	Note 7. Redeemable Preferred Stock Public Preferred Stock A maximum of 6,000,000 shares of the Public Preferred Stock, par value $.01 per share, has been authorized for issuance. We initially issued 2,858,723 shares of the Public Preferred Stock pursuant to the acquisition of the Company during fiscal year 1990. The Public Preferred Stock was recorded at fair value on the date of original issue, November 21, 1989, and we made periodic accretions under the interest method of the excess of the redemption value over the recorded value. We adjusted our estimate of accrued accretion in the amount of $1.5 million in the second quarter of 2006. The Public Preferred Stock was fully accreted as of December 2008. We declared stock dividends totaling 736,863 shares in 1990 and 1991. Since 1991, no other dividends, in stock or cash, have been declared. In November 1998, we retired 410,000 shares of the Public Preferred Stock. The total number of shares issued and outstanding at December 31, 2019 and 2018, was 3,185,586. The Public Preferred Stock is quoted as “TLSRP” on the OTCQB marketplace and the OTC Bulletin Board. Since 1991, no dividends were declared or paid on our Public Preferred Stock, based upon our interpretation of restrictions in our Articles of Amendment and Restatement, limitations in the terms of the Public Preferred Stock instrument, specific dividend payment restrictions in the various financing agreements to which the Public Preferred Stock is subject, other senior obligations currently or previously in existence, and Maryland law limitations in existence prior to October 1, 2009. Subsequent to the 2009 Maryland law change, dividend payments continue to be prohibited except under certain specific circumstances as set forth in Maryland Code Section 2-311, which the Company did not satisfy as of the measurement dates. Pursuant to the terms of the Articles of Amendment and Restatement, we were scheduled, but not required, to redeem the Public Preferred Stock in five annual tranches during the period 2005 through 2009. However, due to our substantial senior obligations currently or previously in existence, limitations set forth in the covenants in the Credit Agreement and the Porter Notes, foreseeable capital and operational requirements, and restrictions and prohibitions of our Articles of Amendment and Restatement, we were and remain unable to meet the redemption schedule set forth in the terms of the Public Preferred Stock as of the measurement dates. Moreover, the Public Preferred Stock is not payable on demand, nor callable, for failure to redeem the Public Preferred Stock in accordance with the redemption schedule set forth in the instrument. Therefore, we classify these securities as noncurrent liabilities in the consolidated balance sheets as of December 31, 2019 and 2018. On January 25, 2017, we became parties with certain of our subsidiaries to the Credit Agreement with EnCap. Under the Credit Agreement, we agreed that, until full and final payment of the obligations under the Credit Agreement, we would not make any distribution or declare or pay any dividends (other than common stock) on our stock, or purchase, acquire, or redeem any stock, or exchange any stock for indebtedness, or retire any stock. Additionally, the Porter Notes contain similar prohibitions on dividend payments or stock redemptions. Accordingly, as stated above, we will continue to classify the entirety of our obligation to redeem the Public Preferred Stock as a long-term obligation. The Credit Agreement and the Porter Notes prohibit, among other things, the redemption of any stock, common or preferred, other than as described above. The Public Preferred Stock by its terms also cannot be redeemed if doing so would violate the terms of an agreement regarding the borrowing of funds or the extension of credit which is binding upon us or any of our subsidiaries, and it does not include any other provisions that would otherwise require any acceleration of the redemption of or amortization of payments with respect to the Public Preferred Stock. Thus, the Public Preferred Stock is not and will not be due on demand, nor callable, within 12 months from December 31, 2019. This classification is consistent with ASC 210, “Balance Sheet” and 470, “Debt” and the FASB ASC Master Glossary definition of “Current Liabilities.” ASC 210 and the FASB ASC Master Glossary define current liabilities as follows: The term current liabilities is used principally to designate obligations whose liquidation is reasonably expected to require the use of existing resources properly classifiable as current assets, or the creation of other current liabilities. As a balance sheet category, the classification is intended to include obligations for items which have entered into the operating cycle, such as payables incurred in the acquisition of materials and supplies to be used in the production of goods or in providing services to be offered for sale; collections received in advance of the delivery of goods or performance of services; and debts that arise from operations directly related to the operating cycle, such as accruals for wages, salaries, commissions, rentals, royalties, and income and other taxes. Other liabilities whose regular and ordinary liquidation is expected to occur within a relatively short period of time, usually twelve months, are also intended for inclusion, such as short-term debts arising from the acquisition of capital assets, serial maturities of long-term obligations, amounts required to be expended within one year under sinking fund provisions, and agency obligations arising from the collection or acceptance of cash or other assets for the account of third persons. ASC 470 provides the following: The current liability classification is also intended to include obligations that, by their terms, are due on demand or will be due on demand within one year (or operating cycle, if longer) from the balance sheet date, even though liquidation may not be expected within that period. It is also intended to include long-term obligations that are or will be callable by the creditor either because the debtor’s violation of a provision of the debt agreement at the balance sheet date makes the obligation callable or because the violation, if not cured within a specified grace period, will make the obligation callable. If, pursuant to the terms of the Public Preferred Stock, we do not redeem the Public Preferred Stock in accordance with the scheduled redemptions described above, the terms of the Public Preferred Stock require us to discharge our obligation to redeem the Public Preferred Stock as soon as we are financially capable and legally permitted to do so. Therefore, by its very terms, the Public Preferred Stock is not due on demand or callable for failure to make a scheduled payment pursuant to its redemption provisions and is properly classified as a noncurrent liability. We pay dividends on the Public Preferred Stock when and if declared by the Board of Directors. The Public Preferred Stock accrues a semi-annual dividend at the annual rate of 12% ($1.20) per share, based on the liquidation preference of $10 per share, and is fully cumulative. Dividends in additional shares of the Public Preferred Stock for 1990 and 1991 were paid at the rate of 6% per share for each $.60 of such dividends not paid in cash. For the cash dividends payable since December 1, 1995, we have accrued $107.4 million and $103.5 million as of December 31, 2019 and 2018, respectively. We accrued dividends on the Public Preferred Stock of $3.8 million for each of the years ended December 31, 2019, 2018, and 2017, which was recorded as interest expense. Prior to the effective date of ASC 480 on July 1, 2003, such dividends were charged to stockholders’ accumulated deficit. Senior Redeemable Preferred Stock The Senior Redeemable Preferred Stock was senior to all other outstanding equity of the Company, including the Public Preferred Stock. The Series A-1 ranked on a parity with the Series A-2. The components of the authorized Senior Redeemable Preferred Stock were 1,250 shares of Series A-1 and 1,750 shares of Series A-2 Senior Redeemable Preferred Stock, each with $.01 par value. The Senior Redeemable Preferred Stock carried a cumulative per annum dividend rate of 14.125% of its liquidation value of $1,000 per share. The dividends were payable semiannually on June 30 and December 31 of each year. We had not declared dividends on our Senior Redeemable Preferred Stock since its issuance, other than in connection with the redemptions from 2010 to 2013. The liquidation preference of the Senior Redeemable Preferred Stock was the face amount of the Series A-1 and A-2 ($1,000 per share), plus all accrued and unpaid dividends. Due to the terms of the Credit Agreement, the Porter Notes, other senior obligations currently or previously in existence, the Senior Redeemable Preferred Stock and applicable provisions of Maryland law governing the payment of distributions, we had been precluded from redeeming the Senior Redeemable Preferred Stock and paying any accrued and unpaid dividends on the Senior Redeemable Preferred Stock, other than the redemptions that occurred from 2010 to 2013. In addition, certain holders of the Senior Redeemable Preferred Stock had entered into standby agreements whereby, among other things, those holders would not demand any payments in respect of dividends or redemptions of their instruments and the maturity dates of the instruments have been extended. In accordance with the requirements of the Second Amendment to the EnCap Credit Agreement, we redeemed all outstanding shares of the Senior Redeemable Preferred Stock on April 18, 2017 for $2.1 million. We accrued dividends on the Senior Redeemable Preferred Stock of $0, $0, and $20,000 for the years ended December 31, 2019, 2018, and 2017, respectively, which were reported as interest expense. Prior to the effective date of ASC 480, “Distinguishing Liabilities from Equity,” on July 1, 2003, such dividends were charged to stockholders’ deficit.

Commitments, Contingencies and Subsequent Events (Q2) (Details) - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019	Dec. 31, 2018
Financial Condition and Liquidity [Abstract]
Working capital	$ (12.8)	$ 2.9	$ 2.1

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (FY) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) [Abstract]
Net (loss) income	$ 3,072	$ (1,994)	$ 1,612	$ (4,934)	$ (2,137)	$ 1,737	$ (3,498)
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	2	0	1	2	(11)	(15)	7
Less: Comprehensive income attributable to non-controlling interest	(2,806)	253	(3,590)	(220)	(4,264)	(3,377)	(2,335)
Comprehensive income (loss) attributable to Telos Corporation	$ 268	$ (1,741)	$ (1,977)	$ (5,152)	$ (6,412)	$ (1,655)	$ (5,826)

Amount after tax of increase (decrease) in equity from transactions and other events and circumstances from net income (loss) and other comprehensive income (loss), attributable to noncontrolling interests. Excludes changes in equity resulting from investments by owners and distributions to owners.

The consolidated profit or loss for the period, net of income taxes, including the portion attributable to the noncontrolling interest.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT (FY) - USD ($) $ in Thousands	Additional Paid-In Capital [Member]	Accumulated Other Comprehensive Income [Member]	Accumulated Deficit [Member]	Noncontrolling Interest [Member]	Total	Class A Common Stock [Member]	Class B Common Stock [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member] Additional Paid-In Capital [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member] Accumulated Other Comprehensive Income [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member] Accumulated Deficit [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member] Noncontrolling Interest [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member]
Beginning balance at Dec. 31, 2016	$ 3,229	$ 25	$ (135,537)	$ 2,229	$ (129,976)	$ 65	$ 13
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss		0	(5,833)	2,335	(3,498)
Gain on extinguishment of subordinated debt	1,031	0	0	0	1,031	0	0
Stock-based compensation	50	0	0	0	50
Foreign currency translation gain (loss)	0	7	0	0	7	0	0
Distributions	0	0	0	(3,651)	(3,651)
Ending balance at Dec. 31, 2017	4,310	32	(141,370)	913	(136,037)	65	13
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	0	0	(1,640)	3,377	1,737
Foreign currency translation gain (loss)	0	(15)	0	0	(15)
Distributions	0	0	0	(1,669)	(1,669)	0	0
Ending balance at Dec. 31, 2018	4,310	17	(139,129)	2,621	(132,103)	65	13	$ 0	$ 0	$ 3,881	$ 0	$ 3,881
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	0	0	(5,154)	220	(4,934)
Foreign currency translation gain (loss)	0	2	0	0	2
Distributions	0	0	0	(984)	(984)
Ending balance at Jun. 30, 2019	4,310	19	(144,283)	1,857	(138,019)
Beginning balance at Dec. 31, 2018	4,310	17	(139,129)	2,621	(132,103)	65	13	$ 0	$ 0	$ 3,881	$ 0	$ 3,881
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	0	0	(6,401)	4,264	(2,137)
Foreign currency translation gain (loss)	0	(11)	0	0		0	0
Distributions	0	0	0	(2,371)	(2,371)
Ending balance at Dec. 31, 2019	4,310	6	(145,530)	4,514	(136,622)	65	13
Beginning balance at Mar. 31, 2019	4,310	19	(142,542)	2,378	(135,757)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	0	0	(1,741)	(253)	(1,994)
Distributions	0	0	0	(268)	(268)
Ending balance at Jun. 30, 2019	4,310	19	(144,283)	1,857	(138,019)
Beginning balance at Dec. 31, 2019	4,310	6	(145,530)	4,514	(136,622)	$ 65	$ 13
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	0	0	(1,978)	3,590	1,612
Foreign currency translation gain (loss)	0	1	0	0	1
Distributions	0	0	0	(1,000)	(1,000)
Ending balance at Jun. 30, 2020	4,310	7	(147,508)	7,104	(136,009)
Beginning balance at Mar. 31, 2020	4,310	5	(147,774)	5,298	(138,083)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	0	0	266	2,806	3,072
Foreign currency translation gain (loss)	0	2	0	0	2
Distributions	0	0	0	(1,000)	(1,000)
Ending balance at Jun. 30, 2020	$ 4,310	$ 7	$ (147,508)	$ 7,104	$ (136,009)

General and Basis of Presentation [Abstract]

The consolidated profit or loss for the period, net of income taxes, including the portion attributable to the noncontrolling interest.

General and Basis of Presentation (Q2) (Policies)

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Segment Reporting

Recent Accounting Pronouncements

Recent Accounting Pronouncements Adopted

Recent Accounting Pronouncements Not Yet Adopted

Recent Accounting Pronouncements Adopted

Recent Accounting Pronouncements Not Yet Adopted

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement”, which modifies the disclosure requirement for fair value measurement under ASC 820 to improve the effectiveness of such disclosures. Those modifications include the removal and addition of disclosure requirements as well as clarifying specific disclosure requirements. This standard will be effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted. The adoption of this ASU will not have a material impact on our consolidated financial position, results of operations and cash flows.

In August 2018, the FASB issued ASU 2018-15, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract,” which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This standard will be effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted. The adoption of this ASU will not have a material impact on our consolidated financial position, results of operations and cash flows.

Revenue Recognition

We have one reportable segment. We treat sales to U.S. customers as sales within the U.S. regardless of where the services are performed. Substantially all of our revenues are from U.S. customers as revenue derived from international customers is de minims. The following tables disclose revenue (in thousands) by customer type and contract type for the periods presented.

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Federal	$	46,877	$	33,774	$	82,968	$	62,757
State & Local, and Commercial		1,733		2,274		4,621		4,457
Total	$	48,610	$	36,048	$	87,589	$	67,214

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Firm fixed-price	$	41,935	$	28,857	$	73,596	$	53,787
Time-and-materials		3,637		3,691		7,462		7,620
Cost plus fixed fee		3,038		3,500		6,531		5,807
Total	$	48,610	$	36,048	$	87,589	$	67,214

The following table discloses accounts receivable and contract assets (in thousands):

	June 30, 2020			December 31, 2019
Billed accounts receivable	$	18,420		$	11,917
Unbilled receivables		20,689			16,745
Allowance for doubtful accounts		(738	)		(720	)
Receivables – net	$	38,371		$	27,942

The following table discloses contract liabilities (in thousands):

		June 30, 2020				December 31, 2019
Contract liabilities		$	6,682			$	6,337

Revenue Recognition

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, and is classified as services revenue. 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 as discussed further below. Revenue is recognized over time using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying our performance obligations. Incurred cost represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Contract costs include labor, material, subcontractor costs and indirect expenses. This continuous transfer of control to the customer is supported by clauses in our contracts with U.S. Government customers whereby the customer may terminate a contract for convenience and then pay for costs incurred plus a profit, at which time the customer would take control of any work in process. For non-U.S. Government contracts where we perform as a subcontractor and our order includes similar Federal Acquisition Regulation (the FAR) provisions as the prime contractor’s order from the U.S. Government, continuous transfer of control is likewise supported by such provisions. For other non-U.S. Government customers, continuous transfer of control to such customers is also supported due to general terms in our contracts and rights to recover damages which would include, among other potential damages, the right to payment for our work performed to date plus a reasonable profit.

Our contracts may include various types of variable consideration, such as claims (for instance, indirect rate or other equitable adjustments) or incentive fees. We include estimated amounts in the transaction price based on all of the information available to us, including historical information and future estimations, 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 have revised and re-submitted several years of incurred cost submissions reflecting certain indirect rate structure changes as a result of regular DCAA audits of incurred cost submissions. This resulted in signed final rate agreement letters for fiscal years 2011 to 2013 and conformed incurred cost submissions for 2014 to 2015. We evaluated the resulting changes to revenue under the applicable cost plus fixed fee contracts for the years 2011 to 2015 as variable consideration, and determined the most likely amount to which we expect to be entitled, to the extent that no constraint exists that would preclude recognizing this revenue or result in a significant reversal of cumulative revenue recognized. We included these estimated amounts of variable consideration in the transaction price and as performance on these contracts is complete, we have recognized revenue of $6.0 million during the year ended December 31, 2018.

	2019		2018		2017
Federal	$	149,257	$	129,279	$	101,519
State & Local, and Commercial		9,961		8,737		6,208
Total	$	159,218	$	138,016	$	107,727

	2019		2018		2017
Firm fixed-price	$	131,629	$	103,454	$	89,516
Time-and-materials		14,569		16,795		10,222
Cost plus fixed fee		13,020		17,767		7,989
Total	$	159,218	$	138,016	$	107,727

The following table discloses accounts receivable and contract assets (in thousands):

	December 31,
	2019			2018
Billed accounts receivable	$	11,917		$	18,848
Unbilled receivables		16,745			16,000
Allowance for doubtful accounts		(720	)		(306	)
Receivables – net	$	27,942		$	34,542

The following table discloses contract liabilities (in thousands):

	December 31,
	2019		2018
Contract liabilities	$	6,337	$	5,232

Accounts Receivable

On July 15, 2016, the Company entered into an accounts receivable purchase agreement under which the Company sells certain accounts receivable to a third party, or the “Factor”, without recourse to the Company. The Factor initially pays the Company 90% of U.S. Federal government receivables or 85% of certain commercial prime contractors. The remaining payment is deferred and based on the amount the Factor receives from our customer, less a discount fee and a program access fee that is determined by the amount of time the receivable is outstanding before payment. The structure of the transaction provides for a true sale of the receivables transferred. Accordingly, upon transfer of the receivable to the Factor, the receivable is removed from the Company’s condensed consolidated balance sheet, a loss on the sale is recorded and the residual amount remains a deferred payment as an accounts receivable until payment is received from the Factor. The balance of the sold receivables may not exceed $10 million. There were no accounts receivable sold during the three and six months ended June 30, 2020. During the three and six months ended June 30, 2019, the Company sold approximately $4.4 million and $9.4 million of accounts receivable, respectively, and recognized a related loss of approximately $15,000 and $32,000 in selling, general and administrative expenses, respectively, for the same period. As of June 30, 2020 and December 31, 2019, there were no outstanding sold accounts receivable.

Accounts Receivable

Accounts receivable are stated at the invoiced amount, less an allowance for doubtful accounts. Collectability of accounts receivable is regularly reviewed based upon managements’ knowledge of the specific circumstances related to overdue balances. The allowance for doubtful accounts is adjusted based on such evaluation. Accounts receivable balances are written off against the allowance when management deems the balances uncollectible.

Inventories

Inventories are stated at the lower of cost or net realizable value, where cost is determined using the weighted average method. Substantially all inventories consist of purchased customer off-the-shelf hardware and software, and component computer parts used in connection with system integration services that we perform. An allowance for obsolete, slow-moving or nonsalable inventory is provided for all other inventory. This allowance is based on our overall obsolescence experience and our assessment of future inventory requirements. This charge is taken primarily due to the age of the specific inventory and the significant additional costs that would be necessary to upgrade to current standards as well as the lack of forecasted sales for such inventory in the near future. Gross inventory was $2.8 million and $4.9 million at December 31, 2019 and 2018, respectively. As of December 31, 2019, it is management’s judgment that we have fully provided for any potential inventory obsolescence.

The components of the allowance for inventory obsolescence are set forth below (in thousands):

	Balance Beginning of Year		Additions Charge to Costs and Expense		Recoveries			Balance End of Year

Year Ended December 31, 2019	$	520	$	376	$	(36	)	$	860
Year Ended December 31, 2018	$	1,484	$	30	$	(994	)	$	520
Year Ended December 31, 2017	$	1,672	$	73	$	(261	)	$	1,484

Software Development Costs

Our policy on accounting for development costs of software to be sold is in accordance with ASC Topic 985-20, “Software – Costs of Software to be Sold, Leased, or Marketed” and ASC Topic 350-40 “Internal Use Software” in so far as our Xacta products being available in various deployment modalities including on premises licenses and cloud-based Software as a Service (“SaaS”). Under both standards, software development costs are expensed as incurred until technological feasibility is reached, at which time additional costs are capitalized until the product is available for general release to customers or is ready for its intended use, as appropriate. Technological feasibility is established when all planning, designing, coding and testing activities have been completed, and all risks have been identified. Beginning with the second quarter of 2017, software development costs are capitalized and amortized over the estimated product life of 2 years on a straight-line basis. As of December 31, 2019 and 2018, we capitalized $5.6 million and $3.1 million of software development costs, respectively, which are included as a part of property and equipment. Amortization expense was $1.8 million and $1.1 million for the year ended December 31, 2019 and 2018, respectively. Accumulated amortization was $3.1 million and $1.3 million as of December 31, 2019 and 2018, respectively. The Company analyzes the net realizable value of capitalized software development costs on at least an annual basis and has determined that there is no indication of impairment of the capitalized software development costs as forecasted future sales are adequate to support amortization costs. During 2019, 2018 and 2017, we incurred salary costs for research and development of approximately $4.2 million, $3.5 million and $3.2 million, respectively, which were included as part of the selling, general and administrative expense in the consolidated statements of operations.

Net Income (Loss) per Share

We account for income taxes in accordance with ASC 740, “Income Taxes.” Under ASC 740, deferred tax assets and liabilities are recognized for the estimated future tax consequences of temporary differences and income tax credits. Deferred tax assets and liabilities are measured by applying enacted statutory tax rates that are applicable to the future years in which deferred tax assets or liabilities are expected to be settled or realized for differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. Any change in tax rates on deferred tax assets and liabilities is recognized in net income in the period in which the tax rate change is enacted. We record a valuation allowance that reduces deferred tax assets when it is “more likely than not” that deferred tax assets will not be realized. We are required to establish a valuation allowance for deferred tax assets if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Based on available evidence, realization of deferred tax assets is dependent upon the generation of future taxable income. We considered projected future taxable income, tax planning strategies, and reversal of taxable temporary differences in making this assessment. As such, we have determined that a full valuation allowance is required as of December 31, 2019 and 2018. As a result of a full valuation allowance against our deferred tax assets, a deferred tax liability related to goodwill remains on our consolidated balance sheet at December 31, 2019 and 2018. Due to the tax reform enacted on December 22, 2017, net operating losses generated in taxable years beginning after December 31, 2017 will have an indefinite carryforward period, which will be available to offset future taxable income created by the reversal of temporary taxable differences related to goodwill. As a result, we have adjusted the valuation allowance on our deferred tax assets and liabilities at December 31, 2019 and 2018. See additional information on tax reform and its impact on our income taxes in Note 9 – Income Taxes.

Goodwill

As the result of an acquisition, we record any excess purchase price over the net tangible and identifiable intangible assets acquired as goodwill. An allocation of the purchase price to tangible and intangible net assets acquired is based upon our valuation of the acquired assets. Goodwill is not amortized, but is subject to annual impairment tests. We complete our goodwill impairment tests as of December 31st each year. Additionally, we make evaluations between annual tests if events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The evaluation is based on the estimation of the fair values of our three reporting units, Cyber Operations and Defense (“CO&D”), Telos ID Enterprise Solutions, and Secure Communications Cyber and Enterprise Solutions, of which goodwill is housed in the CO&D reporting units, in comparison to the reporting unit’s net asset carrying values. Our discounted cash flows required management’s judgment with respect to forecasted revenue streams and operating margins, capital expenditures and the selection and use of an appropriate discount rate. We utilized the weighted average cost of capital as derived by certain assumptions specific to our facts and circumstances as the discount rate. The net assets attributable to the reporting units are determined based upon the estimated assets and liabilities attributable to the reporting units in deriving its free cash flows. In addition, the estimate of the total fair value of our reporting units is compared to the market capitalization of the Company. The Company’s assessment resulted in a fair value that was greater than the Company’s carrying value, therefore the second step of the impairment test, as prescribed by the authoritative literature, was not required to be performed and no impairment of goodwill was recorded as of December 31, 2019. Subsequent reviews may result in future periodic impairments that could have a material adverse effect on the results of operations in the period recognized. Recent operating results have reduced the projection of future cash flow growth potential, which indicates that certain negative potential events, such as a material loss or losses on contracts, or failure to achieve projected growth could result in impairment in the future. We estimate fair value of our reporting unit and compare the valuation with the respective carrying value for the reporting unit to determine whether any goodwill impairment exists. If we determine through the impairment review process that goodwill is impaired, we will record an impairment charge in our consolidated statements of operations. Goodwill is amortized and deducted over a 15-year period for tax purposes.

Stock-Based Compensation

Compensation cost is recognized based on the requirements of ASC 718, “Stock Compensation,” for all share-based awards granted. Since June 2008, we have issued restricted stock (Class A common) to our executive officers, directors and employees. In May 2017, we granted 5,005,000 shares of restricted stock to our executive officers and employees. Such stock is subject to a vesting schedule as follows: 25% of the restricted stock vests immediately on the date of grant, thereafter, an additional 25% will vest annually on the anniversary of the date of grant subject to continued employment or services. As of December 31, 2019, there were 1,198,750 shares of restricted stock that remained subject to vesting. In the event of death of the employee or a change in control, as defined by the Telos Corporation 2008 Omnibus Long-Term Incentive Plan, the 2013 Omnibus Long-Term Incentive Plan, or the 2016 Omnibus Long-Term Incentive Plan, all unvested shares shall automatically vest in full. In accordance with ASC 718, we recorded immaterial compensation expense for any of the issuances as the value of the common stock was nominal, based on the deduction of our outstanding debt, capital lease obligations, and preferred stock from an estimated enterprise value, which was estimated based on discounted cash flow analysis, comparable public company analysis, and comparable transaction analysis. Additionally, we determined that a significant change in the valuation estimate for common stock would not have a significant effect on the consolidated financial statements.

Potentially dilutive securities not included in the calculation of diluted net loss per share because to do so would be anti-dilutive are as follows (in common stock equivalent shares):

	Six Months Ended June 30,
	2020		2019
Non-controlling interest, beginning of period		75		1,206
Common Stock Warrants, exercisable at $1.321/share		1,135		1,135
Total		1,210		2,341

Unaudited Pro Forma Net Income (Loss) per Share

Pro forma unaudited net income (loss) reflects the conversion of the Class A and Class B common stock for common stock on a 1:1 basis and the conversion of our Redeemable Preferred Stock for common stock. The Pro Forma unaudited earnings (loss) per share is computed as follows:

	Six Months Ended June 30, 2020
Net Income (Loss) Attributable to Telos Corporation
Dividends from preferred stock recorded as interest expense
Net Income (loss) to Common Shareholders Pro forma adjustment to remove preferred dividends
Net income (loss) used to compute pro forma net earnings (loss) per share
Weighted average common shares outstanding, basic and diluted, effecting the conversation of Class A and class B common stock into common stock
Pro forma adjustment to reflect conversion of preferred shares
Weighted average common shares outstanding used in computing pro forma net earnings per share, basic and diluted
Pro forma net earnings (loss) per common share, basic and diluted

Unaudited Pro Forma Balance Sheet Information

Earnings (Loss) per Share

Potentially dilutive securities not included in the calculation of diluted net loss per share because to do so would be anti-dilutive are as follows (in common stock equivalent shares):

	2019		2018		2017
Unvested restricted stock		1,191		2,428		3,724
Common Stock Warrants, exercisable at $1.321/share		1,135		1,135		1,135
Total		2,326		3,563		4,859

Unaudited Pro Forma Net Income (Loss) per Share

		2019
Net Income (Loss) Attributable to Telos Corporation
Dividends from preferred stock recorded as interest expense
Net income used to compute pro forma net earnings (loss) per share

Weighted average common shares outstanding, basic and diluted reflecting the conversion of Class A and Class B common stock into common stock
Pro forma adjustment to reflect conversion of preferred shares
Weighted average common shares outstanding used in computing pro forma net earnings per share, basic and diluted

Pro forma net earnings (loss) per common share, basic and diluted

Other Comprehensive Income (Loss)

Accumulated other comprehensive income included within stockholders’ deficit consists of the following (in thousands):

	June 30, 2020			December 31, 2019
Cumulative foreign currency translation loss	$	(100	)	$	(101	)
Cumulative actuarial gain on pension liability adjustment		107			107
Accumulated other comprehensive income	$	7		$	6

Comprehensive Loss

Summary of Selected Quarterly Financial Data (Unaudited) (FY)

12 Months Ended

Dec. 31, 2019

Summary of Selected Quarterly Financial Data (Unaudited) [Abstract]

Summary of Selected Quarterly Financial Data (Unaudited)

Note 12. Summary of Selected Quarterly Financial Data (Unaudited)

The following is a summary of selected quarterly financial data for the previous two fiscal years (in thousands):

	Quarters Ended
	March 31			June 30			Sept. 30		Dec. 31
2019
Revenue	$	31,166		$	36,048		$	45,531	$	46,473
Gross profit		8,976			10,015			16,313		17,040
(Loss) income before income taxes and non-controlling interest		(3,137	)		(1,974	)		3,708		(838	)
Net (loss) income attributable to Telos Corporation (1)(2)		(3,413	)		(1,741	)		2,233		(3,480	)
Weighted Average Common Shares Outstanding, Class A, Basic		42,731			43,394			43,937		43,937
Weighted Average Common Shares Outstanding, Class B, Basic		4,038			4,038			4,038		4,038
Weighted Average Common Shares Outstanding, Class A, Diluted		42,731			43,394			46,279		43,937
Weighted Average Common Shares Outstanding, Class B, Diluted		4,038			4,038			4,038		4,038
Earnings per Share, Class A - Basic		(0.07	)		(0.04	)		0.05		(0.07	)
Earnings per Share, Class B - Basic		(0.07	)		(0.04	)		0.05		(0.07	)
Earnings per Share, Class A - Diluted		(0.07	)		(0.04	)		0.04		(0.07	)
Earnings per Share, Class B - Diluted		(0.07	)		(0.04	)		0.04		(0.07	)

2018
Revenue	$	32,401		$	34,943		$	34,695	$	35,977
Gross profit		10,232			12,078			16,287		14,465
(Loss) income before income taxes and non-controlling interest		(1,693	)		450			4,722		(1,711	)
Net (loss) income attributable to Telos Corporation (1)(3)		(1,986	)		(87	)		4,113		(3,680	)
Weighted Average Common Shares Outstanding, Class A, Basic		41,490			42,172			42,731		42,731
Weighted Average Common Shares Outstanding, Class B, Basic		4,038			4,038			4,038		4,038
Weighted Average Common Shares Outstanding, Class A, Diluted		41,490			42,172			46,310		42,731
Weighted Average Common Shares Outstanding, Class B, Diluted		4,038			4,038			4,038		4,038
Earnings per Share, Class A - Basic		(0.04	)		(0.00	)		0.09		(0.08	)
Earnings per Share, Class B - Basic		(0.04	)		(0.00	)		0.09		(0.08	)
Earnings per Share, Class A - Diluted		(0.04	)		(0.00	)		0.08		(0.08	)
Earnings per Share, Class B - Diluted		(0.04	)		(0.00	)		0.08		(0.08	)

(1)	Changes in net income are the result of several factors, including seasonality of the government year-end buying season, as well as the nature and timing of other deliverables.

(2)	Net income for the third quarter of 2019 is attributable to $2.6 million in proprietary software sales which carry lower cost of sales.

(3)	Net income for the third quarter of 2018 included $5.6 million of revenue accruals for multiple contracts as a result of several years of cumulative indirect rate adjustments which did not include direct costs in Secure Mobility and Network Management/Defense Enterprise Solutions deliverables.

Income Taxes (Q2)

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Income Taxes [Abstract]

Note 7. Income Taxes

The income tax provision for interim periods is determined using an estimated annual effective tax rate adjusted for discrete items, if any, which are taken into account in the quarterly period in which they occur. We review and update our estimated annual effective tax rate each quarter. We recorded an approximately $2,000 income tax provision and $144,000 income tax benefit for the three and six months ended June 30, 2020, respectively, and a $20,000 income tax provision and $177,000 income tax benefit for the three and six months ended June 30, 2019, respectively. For the three and six months ended June 30, 2020 and 2019, our estimated annual effective tax rate was primarily impacted by the overall valuation allowance position which reduced the net tax impact from taxable loss for all periods.

In March 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted. The CARES Act, among other things, includes certain changes to U.S. tax law that impact the Company, including deferment of employer social security payments, modifications to interest deduction limitation rules, a technical correction to tax depreciation methods for certain qualified improvement property, and alternative minimum tax credit refund.

We are required to establish a valuation allowance for deferred tax assets if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Based on available evidence, realization of deferred tax assets is dependent upon the generation of future taxable income. We considered projected future taxable income, tax planning strategies, and reversal of taxable temporary differences in making this assessment. As such, we have determined that a full valuation allowance is required as of June 30, 2020 and December 31, 2019. Under the Tax Cuts and Jobs Act of 2017 (“Tax Act”), we will be able to use our hanging credit deferred tax liabilities as a source of taxable income to support the indefinite-lived net operating losses created by the future reversal of our temporary differences. Accordingly, we have re-measured our existing deferred tax assets and liabilities using the enacted tax rate, and adjusted the valuation allowance on our deferred taxes. As a result, a deferred tax liability related to goodwill of $640,000 and $621,000 remains on our condensed consolidated balance sheet at June 30, 2020 and December 31, 2019, respectively. The income tax benefit recorded for the six months ended June 30, 2020 is primarily related to this change in deferred tax liability and is due to the release of FIN 48 liability on state nexus.

As a result of the Tax Act, we are subject to several provisions of the Tax Act including computations under Section 162(m) executive compensation limitation and Section 163(j) interest limitation rules. We have considered the impact of each of these provisions in our computation of income tax expense for the three and six months ended June 30, 2020 and 2019.

Under the provisions of ASC 740, we determined that there were approximately $508,000 and $673,000 of unrecognized tax benefits, including $229,000 and $304,000 of related interest and penalties, required to be recorded in other liabilities in the condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019, respectively. We believe that the total amounts of unrecognized tax benefits will not significantly increase or decrease within the next 12 months.

Note 9. Income Taxes

The provision (benefit) for income taxes attributable to income from operations includes the following (in thousands):

	For the Years Ended December 31,
	2019			2018			2017
Current provision (benefit)
Federal	$	25		$	(29	)	$	(86	)
State		68			(17	)		29
Total current		93			(46	)		(57	)

Deferred (benefit) provision
Federal		88			15			(2,622	)
State		(285	)		62			(88	)
Total deferred		(197	)		77			(2,710	)
Total (benefit) provision	$	(104	)	$	31		$	(2,767	)

	For the Years Ended December 31,
	2019			2018			2017
Computed expected income tax provision		21.0	%		21.0	%		34.0	%
State income taxes, net of federal income tax benefit		(0.2	)		(20.9	)		0.9
Change in valuation allowance for deferred tax assets		(8.5	)		47.7			(26.9	)
Cumulative deferred adjustments		(0.4	)		--			--
Provision to return adjustments		0.5			1.8			--
Other permanent differences		(3.7	)		(12.2	)		(1.3	)
Dividend and accretion on preferred stock		(12.3	)		(49.9	)		(15.2	)
FIN 48 liability		(1.3	)		(4.6	)		(0.9	)
R&D credit		6.5			27.7			4.6
Impact of Tax Act		--			(12.5	)		35.5
Other		--			--			1.5
		1.6	%		(1.9	)%		32.2	%

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2019 and 2018 are as follows (in thousands):

	December 31,
	2019			2018
Deferred tax assets:
Accounts receivable, principally due to allowance for doubtful accounts	$	185		$	79
Allowance for inventory obsolescence and amortization		316			281
Accrued liabilities not currently deductible		1,649			1,634
Accrued compensation		1,655			1,206
Deferred rent		4,808			4,750
Section 163(j) interest limitation		804			246
Net operating loss carryforwards - federal		2,583			1,956
Net operating loss carryforwards - state		796			653
Federal tax credit		1,326			983
Total gross deferred tax assets		14,122			11,788
Less valuation allowance		(7,206	)		(6,652	)
Total deferred tax assets, net of valuation allowance		6,916			5,136
Deferred tax liabilities:
Amortization and depreciation		(2,623	)		(2,237	)
Unbilled accounts receivable, deferred for tax purposes		(1,611	)		(955	)
Goodwill basis adjustment and amortization		(2,886	)		(2,713	)
Telos ID basis difference		(417	)		(49	)
Total deferred tax liabilities		(7,537	)		(5,954	)
Net deferred tax liabilities	$	(621	)	$	(818	)

The components of the valuation allowance are as follows (in thousands):

	Balance Beginning of Period		Additions		Recoveries			Balance End of Period

December 31, 2019	$	6,652	$	554	$	--		$	7,206
December 31, 2018	$	7,219	$	--	$	(567	)	$	6,652
December 31, 2017	$	10,499	$	--	$	(3,280	)	$	7,219

U.S. Tax Cuts and Jobs Act

On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Act”) was enacted. The Tax Act made significant changes to the U.S. Internal Revenue Code including a number of changes that impact the Company, most notably a reduction to the U.S. federal corporate tax rate from 35% to 21%, effective January 1, 2018, and an indefinite carryforward period for net operating losses generated in taxable years beginning after December 31, 2017. As a result, we will be able to use our hanging credit deferred tax liability as a source of taxable income to support the indefinite-lived net operating losses created by the future reversal of our temporary differences. Accordingly, we re-measured our existing deferred tax assets and liabilities using the enacted tax rate, and adjusted the valuation allowance on our deferred taxes and recorded a decrease in deferred tax liabilities of $3.0 million, with a corresponding adjustment to deferred tax benefit for the same amount for the year ended December 31, 2017.

On December 22, 2017, Staff Accounting Bulletin No. 118, “Income Tax Accounting Implications of the Tax Cuts and Jobs Act” was issued to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. We re-measured our deferred tax assets and liabilities and adjusted the valuation allowance related to the hanging credit deferred tax liability and included these amounts in our consolidated financial statements for the year ended December 31, 2017. As of December 31, 2018, we have completed the accounting for all income tax effects of the Tax Act and recorded a SAB 118 adjustment in the current period tax provision related to state conformity to the indefinite-lived net operating loss provision of the Tax Act.

Beginning January 1, 2018, we are subject to several provisions of the Tax Act including computations under Section 162(m) executive compensation limitation and Section 163(j) interest limitation rules and we have considered the impact of each of these provisions in our overall tax expense for the years ended December 31, 2019 and 2018.

At December 31, 2019, for federal income tax purposes there was approximately a $12.4 million net operating loss available to be carried forward to offset future taxable income. These net operating loss carryforwards expire in 2037. In addition, there was approximately $60,000 of alternative minimum tax credit available to be carried forward to reduce future regular tax liabilities until 2020, after which time it will be fully refundable in 2021, in accordance with the Tax Act.

Under the provisions of ASC 740, we determined that there were approximately $673,000 and $648,000 of unrecognized tax benefits, including $304,000 and $278,000 of related interest and penalties, required to be recorded in other liabilities as of December 31, 2019 and 2018, respectively. We believe that the total amounts of unrecognized tax benefits will not significantly increase or decrease within the next 12 months. The period for which tax years are open, 2016 to 2019, has not been extended beyond the applicable statute of limitations.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

	2019			2018			2017
Unrecognized tax benefits, beginning of period	$	648		$	677		$	762
Gross decreases — tax positions in prior period		(39	)		(63	)		(127	)
Gross increases — tax positions in current period		101			92			77
Settlements		(37	)		(58	)		(35	)
Unrecognized tax benefits, end of period	$	673		$	648		$	677

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

Fair Value Measurements (FY)	6 Months Ended	12 Months Ended
Fair Value Measurements (FY)	Jun. 30, 2020	Dec. 31, 2019
Fair Value Measurements [Abstract]
Fair Value Measurements	Note 4. Fair Value Measurements The accounting standard for fair value measurements provides a framework for measuring fair value and expands disclosures about fair value measurements. The framework requires the valuation of financial instruments using a three-tiered approach. The statement requires fair value measurement to be classified and disclosed in one of the following categories: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets and liabilities; Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; or Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported by little or no market activity). As of June 30, 2020 and December 31, 2019, we did not have any financial instruments with significant Level 3 inputs and we did not have any financial instruments that are measured at fair value on a recurring basis. As of June 30, 2020 and December 31, 2019, the carrying value of the Company’s Public Preferred Stock, par value $.01 per share, was approximately $141.1 million and $139.2 million, respectively, and the estimated fair market value was $68.5 million and $60.5 million, respectively, based on quoted market prices. For certain of our non-derivative financial instruments, including receivables, accounts payable and other accrued liabilities, the carrying amount approximates fair value due to the short-term maturities of these instruments. The estimated fair value of the Credit Agreement (as defined below) and long-term debt is based primarily on borrowing rates currently available to the Company for similar debt issues. The fair value approximates the carrying value of long-term debt.	Note 4. Fair Value Measurements The accounting standard for fair value measurements provides a framework for measuring fair value and expands disclosures about fair value measurements. The framework requires the valuation of investments using a three-tiered approach. The statement requires fair value measurement to be classified and disclosed in one of the following categories: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets and liabilities; Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; or Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported by little or no market activity). As of December 31, 2019 and 2018, we did not have any financial instruments with significant Level 3 inputs and we did not have any financial instruments that are measured at fair value on a recurring basis. As of December 31, 2019 and 2018, the carrying value of the Company’s 12% Cumulative Exchangeable Redeemable Preferred Stock, par value $.01 per share (the “Public Preferred Stock”) was $139.2 million and $135.4 million, respectively, and the estimated fair market value was $60.5 million and $41.4 million, respectively, based on quoted market prices. For certain of our non-derivative financial instruments, including receivables, accounts payable and other accrued liabilities, the carrying amount approximates fair value due to the short-term maturities of these instruments. The estimated fair value of the Credit Agreement (as defined below) and long-term debt is based primarily on borrowing rates currently available to the Company for similar debt issues. The fair value approximates the carrying value of long-term debt.

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

Commitments and Contingencies (FY)	6 Months Ended	12 Months Ended
Commitments and Contingencies (FY)	Jun. 30, 2020	Dec. 31, 2019
Commitments, Contingencies and Subsequent Events [Abstract]
Commitments, Contingencies and Subsequent Events	Note 8. Commitments and Contingencies Financial Condition and Liquidity As described in Note 5 – Current Liabilities and Debt Obligations, we maintain a Credit Agreement with EnCap and a Purchase Agreement with RCA. The willingness of RCA to purchase our accounts receivable under the Purchase Agreement, and our ability to obtain additional financing, may be limited due to various factors, including the eligibility of our receivables, the status of our business, global credit market conditions, and perceptions of our business or industry by EnCap, RCA, or other potential sources of financing. If we are unable to maintain the Purchase Agreement, we would need to obtain additional credit to fund our future operations. If credit is available in that event, lenders may impose more restrictive terms and higher interest rates that may reduce our borrowing capacity, increase our costs, or reduce our operating flexibility. The failure to maintain, extend, renew or replace the Purchase Agreement with a comparable arrangement or arrangements that provide similar amounts of liquidity for the Company would have a material negative impact on our overall liquidity, financial and operating results. While a variety of factors related to sources and uses of cash, such as timeliness of accounts receivable collections, vendor credit terms, or significant collateral requirements, ultimately impact our liquidity, such factors may or may not have a direct impact on our liquidity, based on how the transactions associated with such circumstances impact the availability under our credit arrangements. For example, a contractual requirement to post collateral for a duration of several months, depending on the materiality of the amount, could have an immediate negative effect on our liquidity, as such a circumstance would utilize cash resources without a near-term cash inflow back to us. Likewise, the release of such collateral could have a corresponding positive effect on our liquidity, as it would represent an addition to our cash resources without any corresponding near-term cash outflow. Similarly, a slow-down of payments from a customer, group of customers or government payment office would not have an immediate and direct effect on our availability unless the slowdown was material in amount and over an extended period of time. Any of these examples would have an impact on our cash resources, our financing arrangements, and therefore our liquidity: The Credit Agreement currently matures in January 2021, but we may extend the maturity to January 2022 at our election in accordance with the Fifth Amendment. Our ability to renew or refinance the Credit Agreement after January 2022 or to enter into a new credit facility to replace or supplement the Credit Agreement may be limited due to various factors, including the status of our business, global credit market conditions, and perceptions of our business or industry by sources of financing. In addition, if credit is available, lenders may seek more restrictive covenants and higher interest rates that may reduce our borrowing capacity, increase our costs, or reduce our operating flexibility. The failure to extend, renew or replace the Credit Agreement beyond the current or ultimate maturity date of January 2022 (assuming we exercise all options to extend as provided by the Fifth Amendment) with a comparable credit facility that provides similar amounts of liquidity for the Company would have a material negative impact on our overall liquidity, financial and operating results. Management may determine that, in order to reduce capital and liquidity requirements, planned spending on capital projects and indirect expense growth may be curtailed, subject to growth in operating results. Additionally, management may seek to put in place a credit facility with a commercial bank, although no assurance can be given that such a facility could be put in place under terms acceptable to the Company. Should management determine that additional capital is required, management would likely look first to the sources of funding discussed above to meet any requirements or may seek to raise additional capital by selling equity, although no assurances can be given that these investors would be able to invest or that the Company and the investors would agree upon terms for such investments. Our working capital was $(12.8) million and $2.9 million as of June 30, 2020 and December 31, 2019, respectively. Our current working capital deficit is due to the classification of the EnCap Credit Agreement as a current liability as discussed in Note 5 to the financial statements, although the Fifth Amendment to the Credit Agreement provides us the option to extend the maturity of the agreement. We intend to consider exercising the option at the appropriate time. Although no assurances can be given, we expect that our financing arrangements with EnCap and RCA, collectively, and funds generated from operations are sufficient to maintain the liquidity we require to meet our operating, investing and financing needs for the next 12 months. Legal Proceedings Hamot et al. v. Telos Corporation As previously disclosed in Note 13 of the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, 2019, beginning on August 2, 2007, Messrs. Seth W. Hamot (“Hamot”) and Andrew R. Siegel (“Siegel”), principals of Costa Brava Partnership III, L.P. (“Costa Brava”), were involved in litigation against the Company as Plaintiffs and Counter-defendants in the Circuit Court for Baltimore City, Maryland (the “Circuit Court”). Mr. Siegel is a Class D Director of the Company and Mr. Hamot was a Class D Director of the Company until his resignation on March 9, 2018. The Plaintiffs initially alleged that certain documents and records had not been provided to them promptly and were necessary to fulfill their duties as directors of the Company. Subsequently, Hamot and Siegel further alleged that the Company had failed to follow certain provisions concerning the noticing of Board committee meetings and the recording of Board meeting minutes and, additionally, that Mr. John Wood’s service as both CEO and Chairman of the Board was improper and impermissible under the Company’s Bylaws. On April 23, 2008, the Company filed a counterclaim against Hamot and Siegel for money damages and preliminary and injunctive relief based upon Hamot and Siegel’s interference with, and improper influence of, the Company’s independent auditors regarding, among other things, a specific accounting treatment. On June 27, 2008, the Circuit Court granted the Company’s motion for preliminary injunction and enjoined Hamot and Siegel from contacting the Company’s auditors until the completion of the Company’s Form 10-K for the preceding year, which injunction later expired by its own terms. As previously disclosed, trial on Hamot and Siegel’s claims and the Company’s counterclaims took place in July through September 2013, and the Court subsequently issued decisions on the various claims by way of memorandum opinions and orders dated September 11, 2017. The Company’s subsequent appeal of the amount of damages awarded to it for Hamot and Siegel’s intentional interference with the relationships with its former auditor was ultimately dismissed by way of the Mandate issued by the Court of Appeals of Maryland on October 11, 2019. Hamot (and later, his Estate) and Siegel at various times in this litigation have sought to be indemnified or to be awarded advancement of various attorney’s fees and expenses incurred by them in this litigation. No claim for indemnification is pending as of the reporting date. There have been no material developments in connection with this litigation during the three months ended June 30, 2020. At this stage of the litigation, it is impossible to reasonably determine the degree of probability related to the Company’s success in relation to any possible further claim by Hamot’s Estate and Siegel for indemnification for certain attorney’s fees and expenses incurred in this litigation. The Company intends to vigorously defend the matter and oppose any claim for indemnification were it to be pursued. Other Litigation In addition, the Company is a party to litigation arising in the ordinary course of business. In the opinion of management, while the results of such litigation cannot be predicted with any reasonable degree of certainty, the final outcome of such known matters will not, based upon all available information, have a material adverse effect on the Company's condensed consolidated financial position, results of operations or cash flows.	Note 13. Commitments, Contingencies and Subsequent Events Financial Condition and Liquidity As described in Note 6 – Current Liabilities and Debt Obligations, we maintain a Credit Agreement with EnCap and a Purchase Agreement with RCA. The willingness of RCA to purchase our accounts receivable under the Purchase Agreement, and our ability to obtain additional financing, may be limited due to various factors, including the eligibility of our receivables, the status of our business, global credit market conditions, and perceptions of our business or industry by EnCap, RCA, or other potential sources of financing. If we are unable to maintain the Purchase Agreement, we would need to obtain additional credit to fund our future operations. If credit is available in that event, lenders may impose more restrictive terms and higher interest rates that may reduce our borrowing capacity, increase our costs, or reduce our operating flexibility. The failure to maintain, extend, renew or replace the Purchase Agreement with a comparable arrangement or arrangements that provide similar amounts of liquidity for the Company would have a material negative impact on our overall liquidity, financial and operating results. While a variety of factors related to sources and uses of cash, such as timeliness of accounts receivable collections, vendor credit terms, or significant collateral requirements, ultimately impact our liquidity, such factors may or may not have a direct impact on our liquidity, based on how the transactions associated with such circumstances impact our availability under our credit arrangements. For example, a contractual requirement to post collateral for a duration of several months, depending on the materiality of the amount, could have an immediate negative effect on our liquidity, as such a circumstance would utilize cash resources without a near-term cash inflow back to us. Likewise, the release of such collateral could have a corresponding positive effect on our liquidity, as it would represent an addition to our cash resources without any corresponding near-term cash outflow. Similarly, a slow-down of payments from a customer, group of customers or government payment office would not have an immediate and direct effect on our availability unless the slowdown was material in amount and over an extended period of time. Any of these examples would have an impact on our cash resources, our financing arrangements, and therefore our liquidity. Management may determine that, in order to reduce capital and liquidity requirements, planned spending on capital projects and indirect expense growth may be curtailed, subject to growth in operating results. Additionally, management may seek to put in place a credit facility with a commercial bank, although no assurance can be given that such a facility could be put in place under terms acceptable to the Company. Should management determine that additional capital is required, management would likely look first to the sources of funding discussed above to meet any requirements, although no assurances can be given that these investors would be able to invest or that the Company and the investors would agree upon terms for such investments. Our working capital was $2.9 million and $2.1 million as of December 31, 2019 and 2018, respectively. Although no assurances can be given, we expect that our financing arrangements with EnCap and RCA, collectively, and funds generated from operations are sufficient to maintain the liquidity we require to meet our operating, investing and financing needs for the next 12 months. Legal Proceedings Costa Brava Partnership III, L.P. and Wynnefield Partners Small Cap Value, L.P. v. Telos Corporation, et al. As previously reported, on October 17, 2005, Costa Brava Partnership III, L.P. (“Costa Brava”), a holder of Public Preferred Stock, instituted litigation against the Company and certain past and present directors and officers (the “Telos Defendants”) in the Circuit Court for Baltimore City, Maryland (the “Circuit Court”). A second holder of the Company’s Public Preferred Stock, Wynnefield Partners Small Cap Value, L.P. (“Wynnefield”), subsequently intervened as a co-Plaintiff (Costa Brava and Wynnefield are hereinafter referred to as “Plaintiffs”). On February 27, 2007, Plaintiffs added, as an additional defendant, Mr. John R. C. Porter, a holder of the Company’s Class A Common Stock. In the litigation, Plaintiffs alleged, among other things, that the Company and its officers and directors engaged in tactics to avoid paying dividends on the Public Preferred Stock, that the Company made improper bonus payments or awards to officers and directors, that certain former and present officers and directors breached legal duties or the standard of care that they owed the Company, that the Company improperly paid consulting fees to and engaged in loan transactions with Mr. Porter, that the Company failed to improve on the Company’s purported insolvency, that the Company failed to redeem the Public Preferred Stock as allegedly required by the Company’s charter, and that Mr. Porter engaged in actions constituting shareholder oppression. On December 22, 2005, the Company’s Board of Directors established a special litigation committee (“Special Litigation Committee”), composed of certain independent directors, to review and evaluate the matters raised in the litigation. On August 30, 2006, Plaintiffs filed a motion with the Circuit Court to place the Company into a receivership following the resignations of six of the nine members of the Board of Directors on August 16, 2006. Within a week of the resignations, three new independent board members were added and two more new members were added in October 2006. Thus, the board and all board committees, including the Special Litigation Committee, were fully reconstituted. In an opinion dated November 29, 2006 the Circuit Court denied the motion for receivership. The Circuit Court concluded that the Plaintiffs’ holdings in the Public Preferred Stock represented a minority equity interest (and not debt or a fixed liability), and that their equity interests did not provide a guarantee to payment of dividends or redemption of their shares. The Circuit Court further concluded that the Plaintiffs’ alleged expectations to a status as debtors of the Company or to rights to current dividends were not objectively reasonable, and that the Plaintiffs in fact had not been denied any rights as defined by the proxy statement and prospectus forming the terms of the Public Preferred Stock. On July 20, 2007, the Special Litigation Committee, in its final report, concluded that the available evidence did not support Plaintiffs’ derivative claims and that it was not in the best interests of the Company to pursue such claims in the litigation. On August 24, 2007, the Company moved to dismiss Plaintiffs’ derivative claims based upon the report and to dismiss all remaining claims for failure to state a claim. Following an evidentiary hearing, the Circuit Court on January 7, 2008 dismissed all derivative claims based upon the recommendation of the Special Litigation Committee. On February 12, 2008, the Plaintiffs filed a Third Amended Complaint that included both new counts and previously dismissed counts. The new counts included a breach of contract claim (Count VIII), and claims for preliminary and permanent injunctions against the Company (Count IX) and for an accounting (Count X). Count VIII alleged there was a contractual obligation to pay paid-in-kind (or PIK) dividends and the Company’s reversal of position in 2006 to not pay PIK dividends was a breach of contract. The Company moved to dismiss or strike the Third Amended Complaint and, on April 15, 2008, the Circuit Court issued an order dismissing with prejudice all counts in the Third Amended Complaint that were not previously disposed of by motion or stipulation. Regarding Count VIII, the Circuit Court stated that “neither the Registration Statements, nor the company charter and Articles of Amendment and Restatement can be read to give rise to a contractual obligation to pay PIK dividends” and that “the law is clear that a corporate board may revoke stock dividends, even if they have already been declared, up until the time they are issued.” On December 2, 2008, the Company filed a motion for voluntary dismissal without prejudice of its counterclaim against Plaintiffs (for their interference with the Company’s relationship with the Company’s then senior lender, Wells Fargo). The Circuit Court granted that motion, over Plaintiffs’ opposition, on January 23, 2009. On February 23, 2009, the Plaintiffs filed a notice of appeal. In its brief, the Plaintiffs appealed the dismissal of their derivative claims and the shareholder oppression claim against Mr. Porter. The appeal did not include any challenge to the dismissal of other counts, including Count VIII regarding the alleged contractual obligation to pay PIK dividends. On September 7, 2012, the Court of Special Appeals of Maryland ruled that the Circuit Court applied an incorrect standard of review to evaluate the conclusions of the Special Litigation Committee. The Court of Special Appeals held that the Circuit Court’s dismissal of a shareholder oppression claim (asserted against Mr. Porter) raised an issue of first impression under Maryland law and required further briefing in the Circuit Court. The Court of Special Appeals vacated the decision of the Circuit Court that had been appealed, and remanded the case for further consideration and proceedings. On October 24, 2012, the Company filed a Petition for Writ of Certiorari in the Court of Appeals of Maryland, which was denied on January 22, 2013. On remand, the Defendants (excluding Mr. Porter) filed a Motion to Dismiss the derivative claims under the standard of review dictated by the opinion of the Court of Special Appeals as a result of the findings of the Special Litigation Committee in its final report of July 20, 2007 (“Defendants’ Motion to Dismiss”). Following full briefing by the parties, a hearing on the Defendants’ Motion to Dismiss was held on April 24, 2014 and the matter was taken under advisement by the Court. On September 17, 2013, the Plaintiffs filed a request for an entry of an order for default as to Mr. Porter, which was denied by the Circuit Court on November 8, 2013. Mr. Porter ultimately filed a motion to dismiss the claim against him on May 13, 2014, raising multiple grounds (“Mr. Porter’s Motion to Dismiss”). On January 31, 2018, certain former and current officers and directors filed a Motion to Reconsider the Court’s Orders Denying Motions to Dismiss for Lack of Personal Jurisdiction (“Motion to Reconsider”) with the Circuit Court. The Court had previously denied the Motions to Dismiss for Lack of Personal Jurisdiction on March 30, 2006. The Motion to Reconsider was precipitated by and based upon a newly decided Maryland appellate decision related to personal jurisdiction over directors of a Maryland corporation. Following full briefing by the parties, a hearing was held on December 19, 2018 on the Motion to Reconsider and on Mr. Porter’s Motion to Dismiss, and the matters were taken under advisement by the Court. On December 18, 2019, the Circuit Court filed three (3) Memorandum Opinions and entered four (4) Orders addressing all of the pending motions and open claims in the litigation and closing the case. First, the Circuit Court granted the Motion to Reconsider the Circuit Court’s March 30, 2006 order denying the Motions to Dismiss for Lack of Personal Jurisdiction filed by a number of the past and present directors and officers. The Circuit Court determined that the intervening appellate decision was binding legal precedent on a pertinent legal issue, and concluded that the Court lacked personal jurisdiction over the moving defendants. The Circuit Court entered an order dismissing the derivative claims against these defendants for lack of personal jurisdiction. Second, the Circuit Court granted the Defendants’ Motions to Dismiss the derivative claims. The Defendants’ Motion to Dismiss relied on the conclusions in the final report of the Special Litigation Committee (SLC) that the derivative claims lacked merit and that it was not in the best interests of the Company to pursue them. The Circuit Court found, among other things, that the Telos Defendants had sustained their burden of proof to show that (i) the SLC was independent, (ii) the legal counsel for the SLC was independent, (iii) the SLC acted in good faith in conducting its investigation and reaching its conclusions, and (iv) the SLC conducted a reasonable investigation with factually supported conclusions. The Circuit Court also determined that the procedural mechanism the Telos Defendants had utilized to present the issue to the Circuit Court — proceedings under Maryland Rule 2-502 — was an appropriate procedural vehicle to use for this issue. The Circuit Court entered an order granting the Defendants’ Motion to Dismiss and ordering the dismissal of the derivative claims on the merits. Third, the Circuit Court granted Mr. Porter’s Motion to Dismiss based on a lack of minimum contacts with the State of Maryland, and entered an order dismissing the claim for shareholder oppression against Mr. Porter for lack of jurisdiction. Finally, the Circuit Court entered a separate order concluding that all claims in the Third Amended Complaint had been dismissed by various orders of the Court dated June 6, 2007, January 7, 2008, April 15, 2008, and December 18, 2019, and further ordering the Clerk of the Court to close the case with costs to be paid by Plaintiffs. Costa Brava noted an appeal to the Court of Special Appeals of Maryland on January 17, 2020 from the Circuit Court’s final judgment which remains pending. Co-plaintiff Wynnefield elected not to note or pursue an appeal. As of December 31, 2019, Costa Brava and Wynnefield, directly and through affiliated funds, own 12.7% and 17.4%, respectively, of the outstanding Public Preferred Stock. At this stage of the litigation, it is impossible to reasonably determine the degree of probability related to Plaintiff Costa Brava’s success in relation to any of the assertions it will make on the pending appeal. Although there can be no assurance as to the ultimate outcome of the case, the Company and its present and former officers and directors strenuously deny Plaintiff Costa Brava’s allegations and continue to vigorously defend the matter and oppose all relief sought by Costa Brava. Hamot et al. v. Telos Corporation As previously reported, on August 2, 2007, Messrs. Seth W. Hamot (“Hamot”) and Andrew R. Siegel (“Siegel”), principals of Costa Brava Partnership III, L.P. (“Costa Brava”), instituted litigation against the Company as Plaintiffs in the Circuit Court for Baltimore City, Maryland (the “Circuit Court”). Mr. Siegel is a Class D Director of the Company and Mr. Hamot was a Class D Director of the Company until his resignation on March 9, 2018. The Plaintiffs initially alleged that certain documents and records had not been provided to them promptly and were necessary to fulfill their duties as directors of the Company. Subsequently, Hamot and Siegel further alleged that the Company had failed to follow certain provisions concerning the noticing of Board committee meetings and the recording of Board meeting minutes and, additionally, that Mr. Wood’s service as both CEO and Chairman of the Board was improper and impermissible under the Company’s Bylaws. By way of preliminary injunctions entered on August 28, 2007 and September 24, 2007, the Circuit Court ordered that Hamot and Siegel are entitled to responses and documents, within certain time frames established by the Court, in response to reasonable requests for information pertinent and necessary to perform their duties as members of the Board, but in light of the Costa Brava shareholder litigation, the Company is entitled to designate certain documents as “confidential” or “highly confidential” and to withhold certain documents from the Plaintiffs based upon the attorney work product doctrine or attorney-client privilege. On April 23, 2008, the Company filed a counterclaim against Hamot and Siegel for money damages and preliminary and injunctive relief based upon Hamot and Siegel’s interference with, and improper influence of, the Company’s independent auditors regarding, among other things, a specific accounting treatment. On June 27, 2008, the Circuit Court granted the Company’s motion for preliminary injunction and enjoined Hamot and Siegel from contacting the Company’s auditors until the completion of the Company’s Form 10-K for the preceding year. This preliminary injunction expired by its own terms and an appeal by Hamot and Siegel from that preliminary injunction order later was held to be moot by the Court of Special Appeals of Maryland. Trial on both the Plaintiffs’ books and records claims and the Company’s counterclaims related to auditor interference commenced on July 5, 2013, and continued on several days in July 2013. The evidentiary portion of the trial concluded on August 1, 2013, and post-trial briefing concluded on September 16, 2013. On September 11, 2017, the Circuit Court docketed two decisions in this matter. First, with respect to the Plaintiffs’ complaint related to access to books and records of the Company, the Circuit Court declined to grant permanent injunctive relief to the Plaintiffs but, instead, issued a declaratory order setting forth the pertinent standards the parties should follow as it relates to the Plaintiffs’ right to books and records. The Circuit Court found that the Plaintiffs have the right as directors to inspect and copy the records of the Company, subject to the Company’s right to determine that the materials requested were not reasonably related to the scope of their duties as directors or that their use of the materials may violate the duties they owe to the Company. The Circuit Court also determined that the scope of the inspection may also be limited if Telos establishes that the request creates an undue burden or expense. Second, with respect to the third amended counterclaim, the Circuit Court entered judgment in favor of the Company and against Hamot and Siegel on the counterclaim for tortious interference with the Company’s contractual relationship with its former auditors, Reznick Group (“Reznick”) (Count Two) and awarded damages against Hamot and Siegel in the amount of $278,923. The Circuit Court found that Hamot and Siegel’s threat of litigation against Reznick was the precipitating cause of Reznick’s resignation. In addition, the Circuit Court determined that the threats of litigation were made for an improper purpose – to influence the accounting treatment that Reznick would use on the Company’s financial statements, specifically as it relates to the 12% Exchangeable Redeemable Preferred Shares – and the resignation was a foreseeable consequence of Hamot and Siegel’s interference. The Circuit Court also entered judgment for Hamot and Siegel on the Company’s claims for interference with its relationship with its former auditor, Goodman and Company, LLP (“Goodman”) and on the Company’s claim seeking declaratory relief in connection with Plaintiffs’ claims for indemnification of attorney’s fees and costs in connection with the litigation. The Circuit Court determined that the resignation of Goodman as the Company’s auditor occurred upon the Plaintiffs’ election in 2007 to the Company’s board of directors, which the Circuit Court found itself was not independently wrongful and was the precipitating cause of the resignation, and not primarily due to the litigation against Goodman maintained by Costa Brava. The Circuit Court also entered judgment for Hamot and Siegel on the alternative claims for interference with the business relationships with Goodman and Reznick (Counts Three and Four), finding that it was not necessary to decide issues of liability under these claims since it determined that contracts with each of the audit firms existed. On September 27, 2017, the Company filed a Motion under Maryland Rule 2-535 to reconsider or revise two specific aspects of the Circuit Court’s judgment on Count Two of the third amended counterclaim: (1) to correct the amount of damages awarded on Count Two for audit expenses incurred for the audit year 2007, and (2) to amend or modify the order with respect to Count Five (the declaratory relief claim related to indemnification) to dismiss the claims instead of entering judgment in favor of Hamot and Siegel on it. A hearing on the motion was held on October 11, 2017. At the conclusion of the hearing, the Circuit Court denied the Company’s motion as to the damages awarded on Count Two, and granted the Company’s motion on the issue related to Count Five and entered a new order accordingly. The Company filed a notice with the Circuit Court appealing the judgment to the Court of Special Appeals of Maryland on October 11, 2017, and on October 17, 2017, Hamot and Siegel filed a notice of a cross-appeal, which they later withdrew. On or about July 6, 2018, the attorneys representing Mr. Hamot filed a Notice of Substitution of Party in the Circuit Court and the Court of Special Appeals, providing notice that Mr. Steven Tannenbaum was appointed and qualified as the Special Personal Representative of the Estate of Seth Hamot to represent the estate in the litigation. Oral argument on the appeal in the Court of Special Appeals on issues related to the damages awarded to the Company and against Messrs. Hamot and Siegel on its Counterclaim for interference with one of its prior auditor relationships was held on October 3, 2018. On November 28, 2018, the Court of Special Appeals issued an unpublished opinion affirming the judgment of the Circuit Court on the issues related to damages. On January 25, 2019, Telos filed a Petition for Writ of Certiorari with Court of Appeals of Maryland seeking review in that Court of issues related to the damage award, and on March 29, 2019, the Petition for Writ of Certiorari was granted. Following oral argument, the Court of Appeals issued a per curiam order on September 13, 2019 dismissing the appeal and entered its Mandate on October 11, 2019. Hamot and Siegel at various times in this litigation have sought to be indemnified or to be awarded advancement of various attorney’s fees and expenses incurred by them in this litigation. On April 12, 2010, the Plaintiffs filed a motion for the advancement of legal fees and expenses incurred in defense of the Company’s counterclaim and/or its motion for injunctive relief on which the Company was successful. On November 3, 2011, the Circuit Court denied the Plaintiffs’ motion. On May 21, 2012, the Circuit Court denied Plaintiffs’ motion for reconsideration of these decisions. Subsequently, on October 19, 2017, Hamot and Siegel submitted a letter to the Company, pursuant to Section 2-418 of the Maryland General Corporation Law, demanding that the Company advance and/or indemnify them for legal fees and expenses purportedly totaling $1,550,000 and incurred in pursuit of their books and records claim and in defense of the Company’s counterclaims for auditor interference, and ongoing expenses in the litigation. The Board addressed Hamot and Siegel’s demand for indemnification and/or advancement at its regularly scheduled meeting on November 13, 2017. The Board, by a vote of all members present for this portion of the meeting, and for a number of reasons, determined that the Company will not provide indemnification or advancement to Hamot and Siegel in response to their demand. On November 20, 2017, Hamot and Siegel filed a Motion for Advancement and Indemnification of Legal Fees and Expenses and Request for Hearing in the Circuit Court. Hamot and Siegel alleged that they incurred approximately $1,450,000 of legal fees and expenses in relation to the counterclaim proceedings and approximately $100,000 of legal fees and expenses incurred in relation to their affirmative claims in the Third Amended Complaint. Hamot and Siegel claimed that, since the Circuit Court ruled in their favor in Counts One and Three (related to Goodman), they were entitled to the $750,000 for legal fees and expenses incurred in defending those counts, plus legal fees and expenses incurred in the appeal. In addition, Hamot and Siegel claimed that they were entitled to approximately $660,000 (91% of the legal fees and expenses incurred in defending Counts Two and Four (related to Reznick)) plus the legal fees and expenses incurred in the appeal from the Circuit Court’s judgment. Lastly, Hamot and Siegel claimed that, since they allegedly received a successful ruling on their Third Amended Complaint, they were entitled to approximately $100,000 for legal fees and expenses incurred on this issue. The Company filed an opposition to Hamot and Siegel’s Motion, raising a number of reasons why the relief requested by Hamot and Siegel should not be granted. A hearing on this motion and the Company’s opposition was held on February 28, 2018. On June 27, 2018, the Circuit Court issued a decision on Hamot and Siegel’s Motion for Advancement and Indemnification of Legal Fees and Expenses. The Court, inter alia: (i) denied Hamot and Siegel’s request for indemnification as premature, given the pendency of the Company's then-appeal and Hamot and Siegel’s then-cross-appeal (subsequently withdrawn) from the judgment rendered against them after the trial on the merits; (ii) concluded that the evidence established a nexus between the claims against Hamot and Siegel in the Counterclaim and their service as directors; (iii) determined that indemnification was not available to Hamot and Siegel as a matter of law in connection with their right to inspect claim in their Third Amended Complaint; (iv) determined that Hamot and Siegel were not entitled to advancement of expenses incurred between May 21, 2012 and November 20, 2017, because this request seeks "reimbursement for fees relating to a proceeding that has concluded, and concluded with a ruling that definitively resolves the claims, at least at this juncture", and further determined that "[a]ccepting the extremely low good faith standard and providing advancement would require the court to ignore the findings that the court has made on the very claims that gave rise to the expenses that are the basis of the request"; and (v) determined that Hamot and Siegel were entitled to advancement of expenses related to the appeal of the Counterclaim, pending completion of the appellate proceedings, explaining that the "fact that this court found against Hamot and Siegel on the merits does not compel the conclusion that they could not entertain a good faith belief in the merits of their appeal" and that they met the low bar for showing their good faith belief that they will be successful on the issues related to the counterclaim on appeal. On September 21, 2018, Hamot and Siegel filed in the Circuit Court a Motion for Entry of Money Judgment of Advancement Fees and Expenses, or, in the Alternative, for Order that Telos Corporation Show Cause Why Telos Corporation Should Not be Held in Contempt for Failing to Comply with this Court’s June 27, 2018 Order Directing Telos Corporation to Pay Advancement Fees and Expenses (Motion for Entry of Monetary Judgment), the Company filed an opposition to the motion, and a hearing was held on the Plaintiffs’ Motion for Entry of Monetary Judgment on November 21, 2018. Effective on January 4, 2019, the parties entered into a partial settlement agreement with respect to certain issues related to Plaintiffs’ claim for advancement of fees and expenses on the appeal and certain other matters, and subsequently the Circuit Court issued an order on January 9, 2019 determining that the Motion for Entry of Monetary Judgment was moot. In connection with the partial settlement agreement, the Company provided advancement of a negotiated and compromised amount of expenses incurred by Hamot and Siegel in connection with the Company’s appeal of the damages awarded for auditor interference. At this stage of the litigation, it is impossible to reasonably determine the degree of probability related to the Company’s success in relation to any possible further claim by Hamot and Siegel for indemnification for certain attorney’s fees and expenses incurred in this litigation. No claim for indemnification is pending as of the reporting date. The Company intends to vigorously defend the matter and oppose any claim for indemnification if it is pursued. Other Litigation In addition, the Company is a party to litigation arising in the ordinary course of business. In the opinion of management, while the results of such litigation cannot be predicted with any reasonable degree of certainty, the final outcome of such known matters will not, based upon all available information, have a material adverse effect on the Company's consolidated financial position, results of operations or cash flows. Subsequent Events Enlightenment Capital Credit Agreement On March 26, 2020, the Credit Agreement was amended (the “Fifth Amendment”) to modify the financial covenants for 2020 through the maturity of the Credit Agreement to establish that the covenants will remain at the December 31, 2019 levels and to update the previously agreed-upon definition of certain financial covenants, specifically the amount of Capital Expenditures to be included in the measurement of the covenants. The Fifth Amendment also provides for the right for the Company to elect to extend the maturity date of the Credit Agreement which is currently scheduled to mature on January 15, 2021. The Fifth Amendment provides for four quarterly maturity date extensions, which would increase the Exit Fee payable under the Credit Agreement by $250,000 for each quarterly maturity date extension elected, for a total of $1 million increase to the Exit Fee were all four of the maturity date extensions to be elected. The Company paid EnCap an amendment fee of $100,000 and out-of-pocket costs and expenses in consideration for the Fifth Amendment. COVID-19 Pandemic In December 2019, an outbreak of the COVID-19 virus was reported in Wuhan, China. On March 11, 2020, the World Health Organization declared the COVID-19 virus a global pandemic and on March 13, 2020, President Donald J. Trump declared the virus a national emergency. This highly contagious disease has spread to most of the countries in the world and throughout the United States, creating a serious impact on customers, workforces, and suppliers, disrupting economies and financial markets, and potentially leading to a world-wide economic downturn. The full impact of the COVID-19 outbreak continues to evolve as of the date of this report. As such, it is uncertain as to the full magnitude that the pandemic will have on the Company’s financial condition, liquidity, and future results of operations. The Company is dependent on its workforce to deliver its solutions. Developments such as social distancing and stay-at-home orders from various jurisdictions may impact the Company’s ability to deploy its workforce effectively. While expected to be temporary, prolonged workforce disruptions could negatively impact sales in fiscal year 2020 and the Company’s overall liquidity. As of the date of this report, the Company’s suppliers and subcontractors have not notified the Company of inability to meet expected orders or of decreased production capacity. Management is actively monitoring the global situation on its financial condition, liquidity, operations, suppliers, industry, and workforce. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, the Company is not able to estimate any adverse effects of the COVID-19 outbreak on its results of operations, financial condition, or liquidity for fiscal year 2020.

Goodwill (FY)	6 Months Ended	12 Months Ended
Goodwill (FY)	Jun. 30, 2020	Dec. 31, 2019
Goodwill [Abstract]
Goodwill	Note 3. Goodwill The goodwill balance was $14.9 million as of June 30, 2020 and December 31, 2019. Goodwill is subject to annual impairment tests and if triggering events are present before the annual tests, we will assess impairment. As of June 30, 2020 and December 31, 2019, no impairment charges were taken.	Note 3. Goodwill The goodwill balance was $14.9 million as of December 31, 2019 and 2018. Goodwill is subject to annual impairment tests and if triggering events are present before the annual tests, we will assess impairment. As of December 31, 2019 and 2018, no impairment charges were taken.

Income Taxes (FY)

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Income Taxes [Abstract]

Note 7. Income Taxes

Note 9. Income Taxes

The provision (benefit) for income taxes attributable to income from operations includes the following (in thousands):

	For the Years Ended December 31,
	2019			2018			2017
Current provision (benefit)
Federal	$	25		$	(29	)	$	(86	)
State		68			(17	)		29
Total current		93			(46	)		(57	)

Deferred (benefit) provision
Federal		88			15			(2,622	)
State		(285	)		62			(88	)
Total deferred		(197	)		77			(2,710	)
Total (benefit) provision	$	(104	)	$	31		$	(2,767	)

	For the Years Ended December 31,
	2019			2018			2017
Computed expected income tax provision		21.0	%		21.0	%		34.0	%
State income taxes, net of federal income tax benefit		(0.2	)		(20.9	)		0.9
Change in valuation allowance for deferred tax assets		(8.5	)		47.7			(26.9	)
Cumulative deferred adjustments		(0.4	)		--			--
Provision to return adjustments		0.5			1.8			--
Other permanent differences		(3.7	)		(12.2	)		(1.3	)
Dividend and accretion on preferred stock		(12.3	)		(49.9	)		(15.2	)
FIN 48 liability		(1.3	)		(4.6	)		(0.9	)
R&D credit		6.5			27.7			4.6
Impact of Tax Act		--			(12.5	)		35.5
Other		--			--			1.5
		1.6	%		(1.9	)%		32.2	%

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2019 and 2018 are as follows (in thousands):

	December 31,
	2019			2018
Deferred tax assets:
Accounts receivable, principally due to allowance for doubtful accounts	$	185		$	79
Allowance for inventory obsolescence and amortization		316			281
Accrued liabilities not currently deductible		1,649			1,634
Accrued compensation		1,655			1,206
Deferred rent		4,808			4,750
Section 163(j) interest limitation		804			246
Net operating loss carryforwards - federal		2,583			1,956
Net operating loss carryforwards - state		796			653
Federal tax credit		1,326			983
Total gross deferred tax assets		14,122			11,788
Less valuation allowance		(7,206	)		(6,652	)
Total deferred tax assets, net of valuation allowance		6,916			5,136
Deferred tax liabilities:
Amortization and depreciation		(2,623	)		(2,237	)
Unbilled accounts receivable, deferred for tax purposes		(1,611	)		(955	)
Goodwill basis adjustment and amortization		(2,886	)		(2,713	)
Telos ID basis difference		(417	)		(49	)
Total deferred tax liabilities		(7,537	)		(5,954	)
Net deferred tax liabilities	$	(621	)	$	(818	)

The components of the valuation allowance are as follows (in thousands):

	Balance Beginning of Period		Additions		Recoveries			Balance End of Period

December 31, 2019	$	6,652	$	554	$	--		$	7,206
December 31, 2018	$	7,219	$	--	$	(567	)	$	6,652
December 31, 2017	$	10,499	$	--	$	(3,280	)	$	7,219

U.S. Tax Cuts and Jobs Act

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

	2019			2018			2017
Unrecognized tax benefits, beginning of period	$	648		$	677		$	762
Gross decreases — tax positions in prior period		(39	)		(63	)		(127	)
Gross increases — tax positions in current period		101			92			77
Settlements		(37	)		(58	)		(35	)
Unrecognized tax benefits, end of period	$	673		$	648		$	677

Current Liabilities and Debt Obligations [Abstract]

CONSOLIDATED BALANCE SHEETS (FY) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Current assets
Cash and cash equivalents	$ 6,751	$ 72
Accounts receivable, net of reserve of $720 and $306, respectively (Note 1)	27,942	34,542
Inventories, net of obsolescence reserve of $860 and $520, respectively (Note 1)	1,965	4,389
Deferred program expenses	673	244
Other current assets	2,914	1,985
Total current assets	40,245	41,232
Property and equipment (Note 1)
Furniture and equipment	18,709	12,756
Leasehold improvements	2,536	2,503
Property and equipment under capital leases	30,792	30,832
Property and equipment, gross	52,037	46,091
Accumulated depreciation and amortization	(32,470)	(28,665)
Property and equipment, net	19,567	17,426
Operating lease right-of-use assets	1,979	0
Goodwill (Note 3)	14,916	14,916
Other assets	985	915
Total assets	77,692	74,489
Current liabilities
Senior term loan, net of unamortized discount and issuance costs - short-term (Note 5)	0
Accounts payable and other accrued liabilities (Note 6)	15,050	21,779
Accrued compensation and benefits	12,187	9,082
Contract liabilities	6,337	5,232
Finance lease obligations - short-term (Note 10)	1,224	1,115
Other current liabilities	2,505	1,895
Total current liabilities	37,303	39,103
Senior term loan, net of unamortized discount and issuance costs (Note 6)	16,335	10,984
Subordinated debt (Note 6)	2,927	2,597
Finance lease obligations - long-term (Note 10)	15,641	16,865
Operating lease obligations - long-term (Note 10)	1,553	0
Deferred income taxes (Note 9)	621	818
Public preferred stock (Note 7)	139,210	135,387
Other liabilities (Note 9)	724	838
Total liabilities	214,314	206,592
Commitments and contingencies (Notes 10 and 13)
Telos stockholders' deficit
Common stock	78
Additional paid-in capital	4,310	4,310
Accumulated other comprehensive income	6	17
Accumulated deficit	(145,530)	(139,129)
Total Telos stockholders' deficit	(141,136)	(134,724)
Non-controlling interest in subsidiary (Note 2)	4,514	2,621
Total stockholders' deficit	(136,622)	(132,103)
Total liabilities, redeemable preferred stock, and stockholders' deficit	77,692	74,489
Class A Common Stock [Member]
Telos stockholders' deficit
Common stock	65	65
Total stockholders' deficit	65	65
Class B Common Stock [Member]
Telos stockholders' deficit
Common stock	13	13
Total stockholders' deficit	$ 13	$ 13

Current Liabilities and Debt Obligations, Enlightenment Capital Credit Agreement (FY) (Details)							3 Months Ended		6 Months Ended		12 Months Ended
	Mar. 26, 2020 USD ($) Extension	Jul. 19, 2019 USD ($)	Jul. 18, 2019 USD ($)	Mar. 31, 2018 shares	Jan. 25, 2017 USD ($) $ / shares shares	Mar. 31, 2015	Jun. 30, 2020 USD ($) $ / shares shares	Jun. 30, 2019 USD ($)	Jun. 30, 2020 USD ($) $ / shares shares	Jun. 30, 2019 USD ($)	Dec. 31, 2019 USD ($) $ / shares shares	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Apr. 18, 2017 USD ($)
Accounts Payable and Other Accrued Payables [Abstract]
Trade account payables							$ 14,800,000		$ 14,800,000		$ 13,500,000	$ 18,500,000
Accrued trade payables							$ 4,800,000		$ 4,800,000		$ 1,500,000	3,300,000
Enlightenment Capital Credit Agreement [Abstract]
Warrants exercise price (in dollars per share) \| $ / shares							$ 1.321		$ 1.321		$ 1.321
Long-term Debt [Abstract]
Senior term loan principal, including exit fee											$ 17,200,000	11,825,000
Less: Unamortized discount, debt issuance costs, and lender fees											(865,000)	(841,000)
Senior term loan, net							$ 0		$ 0		16,335,000	10,984,000
Subsequent Events [Member]
Long-term Debt [Abstract]
Number of quarterly maturity date extensions \| Extension	4
Amount of increase in quarterly exit fee payable	$ 250,000
Amount of increase in exit fee payable	1,000,000
Amendment fee and out-of-pocket costs and expenses	$ 100,000
Credit Agreement [Member]
Enlightenment Capital Credit Agreement [Abstract]
Increase in interest rate							1.00%
Credit agreement exit fee							$ 825,000		$ 825,000		$ 825,000
Effective interest rate							15.00%		15.00%		15.00%
Credit agreement transaction costs									$ 374,000		$ 374,000
Long-term Debt [Abstract]
Senior term loan principal, including exit fee							$ 17,200,000		17,200,000		17,200,000
Less: Unamortized discount, debt issuance costs, and lender fees							(512,000)		(512,000)		(865,000)
Senior term loan, net							16,688,000		16,688,000		16,335,000
Interest expense							700,000	$ 400,000	1,500,000	$ 800,000	2,200,000	$ 1,700,000	$ 1,500,000
Exit fee							$ 825,000		$ 825,000		$ 825,000
Class A Common Stock [Member]
Enlightenment Capital Credit Agreement [Abstract]
Common stock, par value (in dollars per share) \| $ / shares											$ 0
Porter [Member]
Enlightenment Capital Credit Agreement [Abstract]
Maturity date						Jul. 01, 2017			Jul. 25, 2022		Jul. 25, 2022	Jul. 01, 2017
Aggregate redemption price														$ 2,112,000
Enlightenment Capital Solutions Fund II LP [Member]
Enlightenment Capital Credit Agreement [Abstract]
Senior term loan		$ 16,000,000
Maturity date		Jan. 15, 2021	Jan. 25, 2022
Credit agreement exit fee		$ 1,200,000	$ 825,000
Effective interest rate		17.30%
Long-term Debt [Abstract]
Additional borrowings		$ 5,000,000
Principal amount		$ 16,000,000
Prepayment price percentage for January 26, 2019 to January 25, 2020		102.00%
Prepayment price percentage for January 26, 2020 to October 14, 2020		101.00%
Agent fee		$ 110,000
Exit fee		$ 1,200,000	$ 825,000
Number of quarterly maturity date extensions \| Extension	4
Amount of increase in quarterly exit fee payable	$ 250,000
Amount of increase in exit fee payable	1,000,000
Amendment fee and out-of-pocket costs and expenses	$ 100,000
Enlightenment Capital Solutions Fund II LP [Member] \| Class A Common Stock [Member]
Enlightenment Capital Credit Agreement [Abstract]
Warrants issued to purchase shares of common stock (in shares) \| shares					1,135,284.333
Common stock, par value (in dollars per share) \| $ / shares					$ 0
Percentage of warrants issued of common equity interests					2.50%
Warrants exercise price (in dollars per share) \| $ / shares					$ 1.321
Warrants expiration date							Jan. 25, 2027		Jan. 25, 2027		Jan. 25, 2027
Emmett J. Wood [Member] \| Class A Common Stock [Member]
Long-term Debt [Abstract]
Number of shares held by related party (in shares) \| shares				50,000			810,000		810,000		810,000
Term loan [Member] \| Porter [Member]
Enlightenment Capital Credit Agreement [Abstract]
Increase in interest rate				1.00%
Term loan [Member] \| Enlightenment Capital Solutions Fund II LP [Member]
Enlightenment Capital Credit Agreement [Abstract]
Senior term loan					$ 11,000,000
Maturity date									Jan. 25, 2022		Jan. 25, 2022
Accrual rate					13.00%
Increase in interest rate					14.50%
Increase in interest rate in event of default					2.00%
Monthly accrued interest rate					10.00%
Monthly accrued interest rate during continuance of an Alternate Interest Rate Event					11.50%
Number of days prior written notice									30 days		30 days
Proceeds from loan prepayment					$ 1,100,000
Long-term Debt [Abstract]
Principal amount					$ 11,000,000
Term loan [Member] \| Enlightenment Capital Solutions Fund II LP [Member] \| Minimum [Member]
Enlightenment Capital Credit Agreement [Abstract]
Monthly accrued interest rate											10.00%

Redeemable Preferred Stock (Q2) (Details)		3 Months Ended		6 Months Ended	12 Months Ended
Redeemable Preferred Stock (Q2) (Details)	Nov. 30, 1998 shares	Jun. 30, 2020 USD ($) $ / shares shares	Jun. 30, 2006 USD ($)	Jun. 30, 2020 USD ($) Tranche $ / shares shares	Dec. 31, 2019 USD ($) $ / shares shares	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 1991 $ / shares shares	Dec. 31, 1990 Tranche shares	Apr. 18, 2017 USD ($)
Preferred stock [Abstract]
Preferred stock dividend rate per annum							12.00%
Senior Redeemable Preferred Stock [Abstract]
Redemption amount of senior redeemable preferred stock \| $										$ 2,100,000
Public Preferred Stock [Member]
Preferred stock [Abstract]
Preferred stock authorized (in shares) \| shares		6,000,000		6,000,000	6,000,000
Preferred stock par value (in dollars per share) \| $ / shares		$ 0.01		$ 0.01	$ 0.01
Preferred stock dividend rate per annum				12.00%	12.00%			6.00%
Dividends Payable \| $		$ 109,300,000		$ 109,300,000	$ 107,400,000	$ 103,500,000
Preferred stock issued and outstanding (in shares) \| shares		3,185,586		3,185,586	3,185,586				2,858,723
Preferred stock issued (in shares) \| shares									2,858,723
12% Cumulative Exchangeable Redeemable Preferred Stock [Abstract]
Adjusted accrued accretion of public preferred stock \| $			$ 1,500,000
Number of shares declared as dividend (in shares) \| shares								736,863
Number of annual tranches during the period \| Tranche				5					5
Period during which redeemable preferred stock not callable				12 months	12 months
Preferred stock dividend rate per annum (in dollars per share) \| $ / shares				$ 1.20	$ 1.20			$ 0.60
Preferred stock, liquidation preference (in dollars per share) \| $ / shares		$ 10		$ 10	$ 10
Dividends on preferred stock \| $		$ 1,000,000		$ 1,900,000	$ 3,800,000
Redemption of public preferred stock (in shares) \| shares	410,000
Senior Redeemable Preferred Stock [Member]
Senior Redeemable Preferred Stock [Abstract]
Accrued dividends reported as interest expenses \| $					$ 0	$ 0	$ 20,000

Goodwill (Q2) (Details) - USD ($) $ in Thousands	6 Months Ended
Goodwill (Q2) (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019	Dec. 31, 2018
Goodwill [Abstract]
Goodwill	$ 14,916	$ 14,916	$ 14,916
Asset impairment charges	$ 0

Current Liabilities and Debt Obligations (FY)

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Current Liabilities and Debt Obligations

Note 5. Current Liabilities and Debt Obligations

Accounts Payable and Other Accrued Liabilities

Contract Liabilities

Contract liabilities are payments received in advance and milestone payments from our customers on selected contracts that exceed revenue earned to date, resulting in contract liabilities. Contract liabilities typically are not considered a significant financing component because they are generally satisfied within one year and are used to meet working capital demands that can be higher in the early stages of a contract. Contract liabilities are reported on our condensed consolidated balance sheets on a net contract basis at the end of each reporting period. As of June 30, 2020 and December 31, 2019, the contract liabilities primarily related to product support services.

Enlightenment Capital Credit Agreement

●

The Company borrowed an additional $5 million from the Lenders, increasing the total amount of the principal to $16 million.

●

The maturity date of the Credit Agreement was amended from January 25, 2022 to January 15, 2021.

●

Any actual or potential non-compliance with the applicable provisions of the Credit Agreement were waived.

●

The borrowing under the Credit Agreement continues to be collateralized by substantially all of the Company’s assets including inventory, equipment and accounts receivable.

●

The Company paid the Agent a fee of $110,000 in connection with the Fourth Amendment. We incurred immaterial third party transaction costs which were expensed in the current period.

●

The exit fee was increased from $825,000 to $1,200,000.

The carrying amount of the Credit Agreement consisted of the following (in thousands):

	June 30, 2020			December 31, 2019
Senior term loan principal, including exit fee	$	17,200		$	17,200
Less: Unamortized discount, debt issuance costs, and lender fees		(512	)		(865	)
Senior term loan, net	$	16,688		$	16,335

Accounts Receivable Purchase Agreement

Subordinated Debt

Note 6. Current Liabilities and Debt Obligations

Accounts Payable and Other Accrued Liabilities

Contract Liabilities

Contract liabilities are payments received in advance and milestone payments from our customers on selected contracts that exceed revenue earned to date, resulting in contract liabilities. Contract liabilities typically are not considered a significant financing component because they are generally satisfied within one year and are used to meet working capital demands that can be higher in the early stages of a contract. Contract liabilities are reported on our consolidated balance sheets on a net contract basis at the end of each reporting period. As of December 31, 2019 and 2018, the contract liabilities primarily related to product support services.

Enlightenment Capital Credit Agreement

On January 25, 2017, we entered into a Credit Agreement (the "Credit Agreement") with Enlightenment Capital Solutions Fund II, L.P., as agent (the "Agent") and the lenders party thereto (the "Lenders") (together referenced as “EnCap”). The Credit Agreement provided for an $11 million senior term loan (the "Loan") with a maturity date of January 25, 2022, subject to acceleration in the event of customary events of default.

The Credit Agreement also included an $825,000 exit fee, which was payable upon any repayment or prepayment of the loan. This amount had been included in the total principal due and treated as an unamortized discount on the debt, which would be amortized over the term of the loan, using the effective interest method at a rate of 15.0%. We incurred fees and transaction costs of approximately $374,000 related to the issuance of the Credit Agreement, which are being amortized over the life of the Credit Agreement.

•	The Company borrowed an additional $5 million from the Lenders, increasing the total amount of the principal to $16 million.

•	The maturity date of the Credit Agreement was amended from January 25, 2022 to January 15, 2021.

•

•	The following financial covenants, as defined in the Credit Agreement, were amended and updated: Consolidated Leverage Ratio, Consolidated Senior Leverage Ratio, Consolidated Capital Expenditures, Minimum Fixed Charge Coverage Ratio, and Minimum Consolidated Net Working Capital.

•	Any actual or potential non-compliance with the applicable provisions of the Credit Agreement were waived.

•	The borrowing under the Credit Agreement continues to be collateralized by substantially all of the Company’s assets including inventory, equipment and accounts receivable.

•	The Company paid the Agent a fee of $110,000 in connection with the Fourth Amendment. We incurred immaterial third party transaction costs which were expensed in the current period.

•	The exit fee was increased from $825,000 to $1,200,000.

The carrying amount of the Credit Agreement consisted of the following (in thousands):

	December 31,
	2019			2018
Senior term loan principal, including exit fee	$	17,200		$	11,825
Less: Unamortized discount, debt issuance costs, and lender fees		(865	)		(841	)
Senior term loan, net	$	16,335		$	10,984

We incurred interest expense in the amount of $2.2 million, $1.7 million and $1.5 million for the years ended December 31, 2019, 2018 and 2017, respectively, under the Credit Agreement.

Accounts Receivable Purchase Agreement

On July 15, 2016, we entered into an Accounts Receivable Purchase Agreement (the “Purchase Agreement”) with Republic Capital Access, LLC (“RCA” or “Buyer”), pursuant to which we may offer for sale, and RCA, in its sole discretion, may purchase, eligible accounts receivable relating to U.S. Government prime contracts or subcontracts of the Company (collectively, the “Purchased Receivables”). Upon purchase, RCA becomes the absolute owner of any such Purchased Receivables, which are payable directly to RCA, subject to certain repurchase obligations of the Company. The total amount of Purchased Receivables is subject to a maximum limit of $10 million of outstanding Purchased Receivables (the “Maximum Amount”) at any given time. The Purchase Agreement had an initial term expiring on June 30, 2018 and automatically renews for successive 12-month renewal periods unless terminated in writing by either the Company or RCA. On March 2, 2018, the term of the Purchase Agreement was extended to June 30, 2020. On November 15, 2019, the term of the Purchase Agreement was extended to June 30, 2022. No fee or consideration of any kind was paid in connection with these extensions.

Financing and Security Agreement

Subordinated Debt

On March 31, 2015, the Company entered into Subordinated Loan Agreements and Subordinated Promissory Notes (“Porter Notes”) with affiliated entities of Mr. John R. C. Porter (together referenced as “Porter”). Mr. Porter and Toxford Corporation, of which Mr. Porter is the sole shareholder, own 35.0% of our Class A Common Stock. Under the terms of the Porter Notes, Porter lent the Company $2.5 million on or about March 31, 2015. Telos also entered into Subordination and Intercreditor Agreements (the “Subordination Agreements”) with Porter and a prior senior lender, in which the Porter Notes were fully subordinated to the financing provided by that senior lender, and payments under the Porter Notes were permitted only if certain conditions are met. According to the original terms of the Porter Notes, the outstanding principal sum bears interest at the fixed rate of twelve percent (12%) per annum which would be payable in arrears in cash on the 20th day of each May, August, November and February, with the first interest payment date due on August 20, 2015. The Porter Notes do not call for amortization payments and are unsecured. The Porter Notes, in whole or in part, may be repaid at any time without premium or penalty. The unpaid principal, together with interest, was originally due and payable in full on July 1, 2017.

On April 18, 2017, we amended and restated the Porter Notes to reduce the interest rate from12% to6% per annum, to be accrued, and extended the maturity date from July 1, 2017 to July 25, 2022. Telos also entered into Intercreditor Agreements with Porter and EnCap, in which the Porter Notes are fully subordinated to the Credit Agreement and any subsequent senior lenders, and payments under the Porter Notes were permitted only if certain conditions are met. As a result of the amendment and restatement of the Porter Notes, we recorded a gain on extinguishment of debt of approximately $1 million, which consisted of the remeasurement of the debt at fair value. As the extinguishment was with a related party, the transaction was deemed to be a capital transaction and the gain was recorded in the Company’s stockholders’ deficit as of December 31, 2017. All other terms remain in full force and effect. We incurred interest expense in the amount of $330,000, $308,000, and $292,000 for 2019, 2018, and 2017, respectively, on the Porter Notes. As of December 31, 2019, approximately $1.1 million of accrued interest was payable according to the stated interest rate of the Porter Notes.

Current Liabilities and Debt Obligations, Subordinated Debt (FY) (Details) - USD ($)		3 Months Ended			6 Months Ended		12 Months Ended
	Mar. 31, 2015	Jun. 30, 2020	Jun. 30, 2019	Mar. 31, 2015	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2015	Apr. 18, 2017
Subordinated Debt [Abstract]
Debt instrument, fixed interest rate								12.00%
Gain on extinguishment of subordinated debt							$ 0	$ 0	$ 1,031,000
Interest expense, related party									292,000
Porter [Member]
Subordinated Debt [Abstract]
Related party ownership percentage	35.00%			35.00%			35.00%
Proceeds from related party, debt	$ 2,500,000			$ 2,500,000
Debt instrument, fixed interest rate	12.00%			12.00%			6.00%				6.00%
Debt instrument, first interest payment due date					Aug. 20, 2015					Aug. 20, 2015
Debt instrument, last principal and interest payment date	Jul. 01, 2017				Jul. 25, 2022		Jul. 25, 2022			Jul. 01, 2017
Gain on extinguishment of subordinated debt							$ 1,000,000
Interest expense, related party		$ 88,000	$ 82,000		$ 175,000	$ 162,000	330,000	$ 308,000	$ 292,000
Accrued interest payable		$ 1,200,000			$ 1,200,000		$ 1,100,000

Non-controlling Interests (Q2)

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Non-controlling Interests

Note 2. Non-controlling Interests

Despite the post-Transaction ownership of Telos ID being evenly split at 50% by each member, Telos maintains control of the subsidiary through its holding of three of the five Telos ID Board seats.

Under the Operating Agreement, the Class A and Class B members each have certain options with regard to the ownership interests held by the other party including the following:

●

The following table details the changes in non-controlling interest for the three and six months ended June 30, 2020 and 2019 (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Non-controlling interest, beginning of period	$	5,298		$	2,378		$	4,514		$	2,621
Net income (loss)		2,806			(253	)		3,590			220
Distributions		(1,000	)		(268	)		(1,000	)		(984	)
Non-controlling interest, end of period	$	7,104		$	1,857		$	7,104		$	1,857

Note 2. Non-controlling Interests

Despite the post-Transaction ownership of Telos ID being evenly split at 50% by each member, Telos maintains control of the subsidiary through its holding of three of the five Telos ID Board seats.

Under the Operating Agreement, the Class A and Class B members each have certain options with regard to the ownership interests held by the other party including the following:

•	Upon the occurrence of a change in control of the Class A member (as defined in the Operating Agreement, a “Change in Control”), the Class A member has the option to purchase the entire membership interest of the Class B member.

•

The following table details the changes in non-controlling interest for the years ended December 31, 2019, 2018, and 2017 (in thousands):

	2019			2018			2017
Non-controlling interest, beginning of period	$	2,621		$	913		$	2,229
Net income		4,264			3,377			2,335
Distributions		(2,371	)		(1,669	)		(3,651	)
Non-controlling interest, end of period	$	4,514		$	2,621		$	913

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) (Q2) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) [Abstract]
Net income	$ 3,072	$ (1,994)	$ 1,612	$ (4,934)	$ (2,137)	$ 1,737	$ (3,498)
Other comprehensive income, net of tax:
Foreign currency translation adjustments	2	0	1	2	(11)	(15)	7
Less: Comprehensive (income) loss attributable to non-controlling interest	(2,806)	253	(3,590)	(220)	(4,264)	(3,377)	(2,335)
Comprehensive income (loss) attributable to Telos Corporation	$ 268	$ (1,741)	$ (1,977)	$ (5,152)	$ (6,412)	$ (1,655)	$ (5,826)

The consolidated profit or loss for the period, net of income taxes, including the portion attributable to the noncontrolling interest.

Commitments, Contingencies and Subsequent Events [Abstract]

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Q2) (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Current assets
Accounts receivable, reserve	$ 738	$ 720	$ 306	$ 411	$ 429
Inventories, obsolescence reserve	861	860	520	$ 1,484	$ 1,672
Property and equipment, accumulated depreciation	$ 34,673	$ 32,470	$ 28,665

Current Liabilities and Debt Obligations, Accounts Receivable Purchase Agreement & Financing and Security Agreement (FY) (Details) - USD ($) $ in Millions		12 Months Ended
	Jul. 15, 2016	Dec. 31, 2019	Sep. 06, 2016
Republic Capital Access LLC [Member] \| Accounts Receivable Purchase Agreement [Member]
Accounts Receivable Purchase Agreement [Abstract]
Limit of outstanding purchased receivables	$ 10
Automatic renewal term		12 months
Percentage of initial purchase price of purchased receivable	85.00%
Residual percentage of purchased receivable	15.00%
Percentage of discount factor for federal government prime contracts	0.30%
Percentage of discount factor for non-federal government investment grade account obligors	0.56%
Percentage of discount factor for non-federal government non-investment grade account obligors	0.62%
Percentage of program access fee	0.008%
Percentage of commitment fee	1.00%
Republic Capital Access LLC [Member] \| Accounts Receivable Purchase Agreement [Member] \| US Government Agency [Member]
Accounts Receivable Purchase Agreement [Abstract]
Percentage of initial purchase price of purchased receivable	90.00%
Residual percentage of purchased receivable	10.00%
Action Capital Corporation [Member] \| Financing and Security Agreement [Member]
Financing and Security Agreement [Abstract]
Percentage of advances	90.00%
Maximum outstanding principal amount of advances			$ 5
Financing agreement term		2 years

Commitments (FY) (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Future Minimum Lease Commitments

Future minimum lease commitments at June 30, 2020 were as follows (in thousands):

Year ending December 31,	Operating Leases			Finance Leases
2020 (excluding the six months ended June 30, 2020)	$	371		$	1,033
2021		752			2,097
2022		592			2,149
2023		373			2,203
2024		27			2,258
After 2024		--			10,658
Total lease payments		2,115			20,398
Less imputed interest		(178	)		(4,127	)
Total	$	1,937		$	16,271

Future minimum lease commitments at December 31, 2019 were as follows (in thousands):

	Operating Leases			Finance Leases
2020	$	710		$	2,046
2021		715			2,097
2022		564			2,149
2023		368			2,203
2024		28			2,258
After 2024		--			10,658
Total minimum lease payments		2,385			21,411
Less imputed interest		(230	)		(4,546	)
Net present value of minimum lease payments		2,155			16,865
Less current portion		(602	)		(1,224	)
Long-term lease obligations at December 31, 2019	$	1,553		$	15,641

Components of Lease Expense

The components of lease expense were as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Operating lease cost	$	182	$	147	$	360	$	294
Short-term lease cost (1)		30		42		57		84
Finance lease cost
Amortization of right-of-use assets		305		305		610		610
Interest on lease liabilities		208		222		419		447
Total finance lease cost		513		527		1,029		1,057
Total lease costs	$	725	$	716	$	1,446	$	1,435

(1) Leases that have terms of 12 months or less

The components of lease expense were as follows (in thousands):

	Year Ended December 31,2019
Operating lease cost	$	597
Short-term lease cost (1)		147
Finance lease cost
Amortization of finance lease assets		1,221
Interest on finance lease liabilities		881
Total finance lease cost		2,102
Total lease costs	$	2,846

(1)	Leases that have terms of 12 months or less.

Supplemental Cash Flow Information Related to Leases

Supplemental cash flow information related to leases was as follows (in thousands):

	Six Months Ended June 30,
	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Cash flows from operating activities - operating leases	$	375	$	279
Cash flows from operating activities - finance leases		1,012		987
Operating lease right-of-use assets obtained in exchange for operating lease liabilities		300		245

Supplemental cash flow information related to leases was as follows (in thousands):

	Year Ended December 31,2019
Cash paid for amounts included in the measurement of lease liabilities:
Cash flows from operating activities - operating leases	$	604
Cash flows from operating activities - finance leases	$	1,995
Operating lease right-of-use assets obtained in exchange for operating lease liabilities	$	488

Accrued Warranties

	Balance Beginning of Year		Accruals		Warranty Expenses			Balance End of Year
	(amount in thousands)

Year Ended December 31, 2019	$	30	$	--	$	--		$	30
Year Ended December 31, 2018	$	30	$	--	$	--		$	30
Year Ended December 31, 2017	$	51	$	--	$	(21	)	$	30

Goodwill (Q2)	6 Months Ended	12 Months Ended
Goodwill (Q2)	Jun. 30, 2020	Dec. 31, 2019
Goodwill [Abstract]
Goodwill	Note 3. Goodwill The goodwill balance was $14.9 million as of June 30, 2020 and December 31, 2019. Goodwill is subject to annual impairment tests and if triggering events are present before the annual tests, we will assess impairment. As of June 30, 2020 and December 31, 2019, no impairment charges were taken.	Note 3. Goodwill The goodwill balance was $14.9 million as of December 31, 2019 and 2018. Goodwill is subject to annual impairment tests and if triggering events are present before the annual tests, we will assess impairment. As of December 31, 2019 and 2018, no impairment charges were taken.

Revenue and Accounts Receivable (FY) (Details) - USD ($)

3 Months Ended

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Sep. 30, 2019

Jun. 30, 2019

Mar. 31, 2019

Dec. 31, 2018

Sep. 30, 2018

Jun. 30, 2018

Mar. 31, 2018

Jun. 30, 2020

Jun. 30, 2019

Dec. 31, 2019

Dec. 31, 2018

Dec. 31, 2017

Jun. 30, 2020

Dec. 31, 2019

Dec. 31, 2018

Percentage of initial payment by factor of U.S. Federal government receivables

90.00%

Percentage of initial payment by factor of commercial prime contractors

85.00%

Maximum limit of sold receivables

$ 10,000,000

Sold receivables during the period

$ 0

$ 4,400,000

$ 9,400,000

12,600,000

$ 18,100,000

Loss recognized in selling, general and administrative expenses

15,000

32,000

100,000

Balance of sold receivables

$ 0

$ 900,000

Deferred price related to sold receivables

100,000

Components of Accounts Receivable [Abstract]

Billed accounts receivable

11,917,000

18,848,000

Unbilled receivables

16,745,000

16,000,000

Allowance for doubtful accounts

(738,000)

$ (720,000)

$ (306,000)

$ (411,000)

(738,000)

(306,000)

(720,000)

(411,000)

$ (411,000)

$ (738,000)

(720,000)

(306,000)

Total accounts receivable

$ 27,942,000

$ 34,542,000

Activities in Allowance for Doubtful Accounts [Roll Forward]

Balance Beginning of Year

306,000

411,000

720,000

306,000

411,000

429,000

Bad Debt Expenses

^[1]

414,000

(105,000)

(18,000)

Deductions

^[2]

Balance End of Year

738,000

720,000

306,000

738,000

720,000

306,000

411,000

Revenue from Contracts and Subcontracts [Member]

48,610,000

$ 46,473,000

$ 45,531,000

36,048,000

$ 31,166,000

$ 35,977,000

$ 34,695,000

$ 34,943,000

$ 32,401,000

87,589,000

67,214,000

$ 159,218,000

$ 138,016,000

$ 107,727,000

100.00%

$ 159,218,000

$ 138,016,000

$ 107,727,000

Federal [Member]

Federal [Member] | Revenue from Contracts and Subcontracts [Member]

46,877,000

33,774,000

82,968,000

62,757,000

$ 149,257,000

$ 129,279,000

$ 101,519,000

93.70%

94.20%

Federal [Member] | Accounts Receivable [Member]

$ 149,257,000

$ 129,279,000

$ 101,519,000

State & Local, and Commercial [Member]

92.70%

State & Local, and Commercial [Member] | Revenue from Contracts and Subcontracts [Member]

$ 1,733,000

$ 2,274,000

$ 4,621,000

$ 4,457,000

$ 9,961,000

$ 8,737,000

$ 6,208,000

6.30%

5.80%

General and Basis of Presentation [Abstract]

$ 9,961,000

$ 8,737,000

$ 6,208,000

[1]	Accounts receivable reserves and reversal of allowance for subsequent collections, net
[2]	Accounts receivable written-off and subsequent recoveries, net

General and Basis of Presentation (Q2)

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

General and Basis of Presentation

Note 1. General and Basis of Presentation

In preparing these condensed consolidated financial statements, we have evaluated subsequent events through the date that these condensed consolidated financial statements were issued.

Segment Reporting

Recent Accounting Pronouncements

Recent Accounting Pronouncements Adopted

Recent Accounting Pronouncements Not Yet Adopted

Revenue Recognition

We have one reportable segment. We treat sales to U.S. customers as sales within the U.S. regardless of where the services are performed. Substantially all of our revenues are from U.S. customers as revenue derived from international customers is de minims. The following tables disclose revenue (in thousands) by customer type and contract type for the periods presented.

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Federal	$	46,877	$	33,774	$	82,968	$	62,757
State & Local, and Commercial		1,733		2,274		4,621		4,457
Total	$	48,610	$	36,048	$	87,589	$	67,214

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Firm fixed-price	$	41,935	$	28,857	$	73,596	$	53,787
Time-and-materials		3,637		3,691		7,462		7,620
Cost plus fixed fee		3,038		3,500		6,531		5,807
Total	$	48,610	$	36,048	$	87,589	$	67,214

The following table discloses accounts receivable and contract assets (in thousands):

	June 30, 2020			December 31, 2019
Billed accounts receivable	$	18,420		$	11,917
Unbilled receivables		20,689			16,745
Allowance for doubtful accounts		(738	)		(720	)
Receivables – net	$	38,371		$	27,942

The following table discloses contract liabilities (in thousands):

		June 30, 2020				December 31, 2019
Contract liabilities		$	6,682			$	6,337

Accounts Receivable

On July 15, 2016, the Company entered into an accounts receivable purchase agreement under which the Company sells certain accounts receivable to a third party, or the “Factor”, without recourse to the Company. The Factor initially pays the Company 90% of U.S. Federal government receivables or 85% of certain commercial prime contractors. The remaining payment is deferred and based on the amount the Factor receives from our customer, less a discount fee and a program access fee that is determined by the amount of time the receivable is outstanding before payment. The structure of the transaction provides for a true sale of the receivables transferred. Accordingly, upon transfer of the receivable to the Factor, the receivable is removed from the Company’s condensed consolidated balance sheet, a loss on the sale is recorded and the residual amount remains a deferred payment as an accounts receivable until payment is received from the Factor. The balance of the sold receivables may not exceed $10 million. There were no accounts receivable sold during the three and six months ended June 30, 2020. During the three and six months ended June 30, 2019, the Company sold approximately $4.4 million and $9.4 million of accounts receivable, respectively, and recognized a related loss of approximately $15,000 and $32,000 in selling, general and administrative expenses, respectively, for the same period. As of June 30, 2020 and December 31, 2019, there were no outstanding sold accounts receivable.

Inventories

Software Development Costs

Income Taxes

Goodwill

Stock-Based Compensation

Net Income (Loss) per Share

Potentially dilutive securities not included in the calculation of diluted net loss per share because to do so would be anti-dilutive are as follows (in common stock equivalent shares):

	Six Months Ended June 30,
	2020		2019
Non-controlling interest, beginning of period		75		1,206
Common Stock Warrants, exercisable at $1.321/share		1,135		1,135
Total		1,210		2,341

Unaudited Pro Forma Net Income (Loss) per Share

Pro forma unaudited net income (loss) reflects the conversion of the Class A and Class B common stock for common stock on a 1:1 basis and the conversion of our Redeemable Preferred Stock for common stock. The Pro Forma unaudited earnings (loss) per share is computed as follows:

	Six Months Ended June 30, 2020
Net Income (Loss) Attributable to Telos Corporation
Dividends from preferred stock recorded as interest expense
Net Income (loss) to Common Shareholders Pro forma adjustment to remove preferred dividends
Net income (loss) used to compute pro forma net earnings (loss) per share
Weighted average common shares outstanding, basic and diluted, effecting the conversation of Class A and class B common stock into common stock
Pro forma adjustment to reflect conversion of preferred shares
Weighted average common shares outstanding used in computing pro forma net earnings per share, basic and diluted
Pro forma net earnings (loss) per common share, basic and diluted

Unaudited Pro Forma Balance Sheet Information

Other Comprehensive Income (Loss)

Accumulated other comprehensive income included within stockholders’ deficit consists of the following (in thousands):

	June 30, 2020			December 31, 2019
Cumulative foreign currency translation loss	$	(100	)	$	(101	)
Cumulative actuarial gain on pension liability adjustment		107			107
Accumulated other comprehensive income	$	7		$	6

Note 1. Summary of Significant Accounting Policies

Business and Organization

Principles of Consolidation and Basis of Presentation

In preparing these consolidated financial statements, we have evaluated subsequent events through the date that these consolidated financial statements were issued.

Segment Reporting

Use of Estimates

Revenue Recognition

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, and is classified as services revenue. 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 as discussed further below. Revenue is recognized over time using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying our performance obligations. Incurred cost represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Contract costs include labor, material, subcontractor costs and indirect expenses. This continuous transfer of control to the customer is supported by clauses in our contracts with U.S. Government customers whereby the customer may terminate a contract for convenience and then pay for costs incurred plus a profit, at which time the customer would take control of any work in process. For non-U.S. Government contracts where we perform as a subcontractor and our order includes similar Federal Acquisition Regulation (the FAR) provisions as the prime contractor’s order from the U.S. Government, continuous transfer of control is likewise supported by such provisions. For other non-U.S. Government customers, continuous transfer of control to such customers is also supported due to general terms in our contracts and rights to recover damages which would include, among other potential damages, the right to payment for our work performed to date plus a reasonable profit.

Our contracts may include various types of variable consideration, such as claims (for instance, indirect rate or other equitable adjustments) or incentive fees. We include estimated amounts in the transaction price based on all of the information available to us, including historical information and future estimations, 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 have revised and re-submitted several years of incurred cost submissions reflecting certain indirect rate structure changes as a result of regular DCAA audits of incurred cost submissions. This resulted in signed final rate agreement letters for fiscal years 2011 to 2013 and conformed incurred cost submissions for 2014 to 2015. We evaluated the resulting changes to revenue under the applicable cost plus fixed fee contracts for the years 2011 to 2015 as variable consideration, and determined the most likely amount to which we expect to be entitled, to the extent that no constraint exists that would preclude recognizing this revenue or result in a significant reversal of cumulative revenue recognized. We included these estimated amounts of variable consideration in the transaction price and as performance on these contracts is complete, we have recognized revenue of $6.0 million during the year ended December 31, 2018.

	2019		2018		2017
Federal	$	149,257	$	129,279	$	101,519
State & Local, and Commercial		9,961		8,737		6,208
Total	$	159,218	$	138,016	$	107,727

	2019		2018		2017
Firm fixed-price	$	131,629	$	103,454	$	89,516
Time-and-materials		14,569		16,795		10,222
Cost plus fixed fee		13,020		17,767		7,989
Total	$	159,218	$	138,016	$	107,727

The following table discloses accounts receivable and contract assets (in thousands):

	December 31,
	2019			2018
Billed accounts receivable	$	11,917		$	18,848
Unbilled receivables		16,745			16,000
Allowance for doubtful accounts		(720	)		(306	)
Receivables – net	$	27,942		$	34,542

The following table discloses contract liabilities (in thousands):

	December 31,
	2019		2018
Contract liabilities	$	6,337	$	5,232

Cash and Cash Equivalents

Accounts Receivable

Accounts receivable are stated at the invoiced amount, less an allowance for doubtful accounts. Collectability of accounts receivable is regularly reviewed based upon managements’ knowledge of the specific circumstances related to overdue balances. The allowance for doubtful accounts is adjusted based on such evaluation. Accounts receivable balances are written off against the allowance when management deems the balances uncollectible.

Inventories

Inventories are stated at the lower of cost or net realizable value, where cost is determined using the weighted average method. Substantially all inventories consist of purchased customer off-the-shelf hardware and software, and component computer parts used in connection with system integration services that we perform. An allowance for obsolete, slow-moving or nonsalable inventory is provided for all other inventory. This allowance is based on our overall obsolescence experience and our assessment of future inventory requirements. This charge is taken primarily due to the age of the specific inventory and the significant additional costs that would be necessary to upgrade to current standards as well as the lack of forecasted sales for such inventory in the near future. Gross inventory was $2.8 million and $4.9 million at December 31, 2019 and 2018, respectively. As of December 31, 2019, it is management’s judgment that we have fully provided for any potential inventory obsolescence.

The components of the allowance for inventory obsolescence are set forth below (in thousands):

	Balance Beginning of Year		Additions Charge to Costs and Expense		Recoveries			Balance End of Year

Year Ended December 31, 2019	$	520	$	376	$	(36	)	$	860
Year Ended December 31, 2018	$	1,484	$	30	$	(994	)	$	520
Year Ended December 31, 2017	$	1,672	$	73	$	(261	)	$	1,484

Property and Equipment

Furniture and equipment	3-5 Years
Leasehold improvements	Lesser of life of lease or useful life of asset
Property and equipment under finance leases	Lesser of life of lease or useful life of asset

Software Development Costs

Our policy on accounting for development costs of software to be sold is in accordance with ASC Topic 985-20, “Software – Costs of Software to be Sold, Leased, or Marketed” and ASC Topic 350-40 “Internal Use Software” in so far as our Xacta products being available in various deployment modalities including on premises licenses and cloud-based Software as a Service (“SaaS”). Under both standards, software development costs are expensed as incurred until technological feasibility is reached, at which time additional costs are capitalized until the product is available for general release to customers or is ready for its intended use, as appropriate. Technological feasibility is established when all planning, designing, coding and testing activities have been completed, and all risks have been identified. Beginning with the second quarter of 2017, software development costs are capitalized and amortized over the estimated product life of 2 years on a straight-line basis. As of December 31, 2019 and 2018, we capitalized $5.6 million and $3.1 million of software development costs, respectively, which are included as a part of property and equipment. Amortization expense was $1.8 million and $1.1 million for the year ended December 31, 2019 and 2018, respectively. Accumulated amortization was $3.1 million and $1.3 million as of December 31, 2019 and 2018, respectively. The Company analyzes the net realizable value of capitalized software development costs on at least an annual basis and has determined that there is no indication of impairment of the capitalized software development costs as forecasted future sales are adequate to support amortization costs. During 2019, 2018 and 2017, we incurred salary costs for research and development of approximately $4.2 million, $3.5 million and $3.2 million, respectively, which were included as part of the selling, general and administrative expense in the consolidated statements of operations.

Income Taxes

We account for income taxes in accordance with ASC 740, “Income Taxes.” Under ASC 740, deferred tax assets and liabilities are recognized for the estimated future tax consequences of temporary differences and income tax credits. Deferred tax assets and liabilities are measured by applying enacted statutory tax rates that are applicable to the future years in which deferred tax assets or liabilities are expected to be settled or realized for differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. Any change in tax rates on deferred tax assets and liabilities is recognized in net income in the period in which the tax rate change is enacted. We record a valuation allowance that reduces deferred tax assets when it is “more likely than not” that deferred tax assets will not be realized. We are required to establish a valuation allowance for deferred tax assets if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Based on available evidence, realization of deferred tax assets is dependent upon the generation of future taxable income. We considered projected future taxable income, tax planning strategies, and reversal of taxable temporary differences in making this assessment. As such, we have determined that a full valuation allowance is required as of December 31, 2019 and 2018. As a result of a full valuation allowance against our deferred tax assets, a deferred tax liability related to goodwill remains on our consolidated balance sheet at December 31, 2019 and 2018. Due to the tax reform enacted on December 22, 2017, net operating losses generated in taxable years beginning after December 31, 2017 will have an indefinite carryforward period, which will be available to offset future taxable income created by the reversal of temporary taxable differences related to goodwill. As a result, we have adjusted the valuation allowance on our deferred tax assets and liabilities at December 31, 2019 and 2018. See additional information on tax reform and its impact on our income taxes in Note 9 – Income Taxes.

Goodwill

As the result of an acquisition, we record any excess purchase price over the net tangible and identifiable intangible assets acquired as goodwill. An allocation of the purchase price to tangible and intangible net assets acquired is based upon our valuation of the acquired assets. Goodwill is not amortized, but is subject to annual impairment tests. We complete our goodwill impairment tests as of December 31st each year. Additionally, we make evaluations between annual tests if events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The evaluation is based on the estimation of the fair values of our three reporting units, Cyber Operations and Defense (“CO&D”), Telos ID Enterprise Solutions, and Secure Communications Cyber and Enterprise Solutions, of which goodwill is housed in the CO&D reporting units, in comparison to the reporting unit’s net asset carrying values. Our discounted cash flows required management’s judgment with respect to forecasted revenue streams and operating margins, capital expenditures and the selection and use of an appropriate discount rate. We utilized the weighted average cost of capital as derived by certain assumptions specific to our facts and circumstances as the discount rate. The net assets attributable to the reporting units are determined based upon the estimated assets and liabilities attributable to the reporting units in deriving its free cash flows. In addition, the estimate of the total fair value of our reporting units is compared to the market capitalization of the Company. The Company’s assessment resulted in a fair value that was greater than the Company’s carrying value, therefore the second step of the impairment test, as prescribed by the authoritative literature, was not required to be performed and no impairment of goodwill was recorded as of December 31, 2019. Subsequent reviews may result in future periodic impairments that could have a material adverse effect on the results of operations in the period recognized. Recent operating results have reduced the projection of future cash flow growth potential, which indicates that certain negative potential events, such as a material loss or losses on contracts, or failure to achieve projected growth could result in impairment in the future. We estimate fair value of our reporting unit and compare the valuation with the respective carrying value for the reporting unit to determine whether any goodwill impairment exists. If we determine through the impairment review process that goodwill is impaired, we will record an impairment charge in our consolidated statements of operations. Goodwill is amortized and deducted over a 15-year period for tax purposes.

Stock-Based Compensation

Compensation cost is recognized based on the requirements of ASC 718, “Stock Compensation,” for all share-based awards granted. Since June 2008, we have issued restricted stock (Class A common) to our executive officers, directors and employees. In May 2017, we granted 5,005,000 shares of restricted stock to our executive officers and employees. Such stock is subject to a vesting schedule as follows: 25% of the restricted stock vests immediately on the date of grant, thereafter, an additional 25% will vest annually on the anniversary of the date of grant subject to continued employment or services. As of December 31, 2019, there were 1,198,750 shares of restricted stock that remained subject to vesting. In the event of death of the employee or a change in control, as defined by the Telos Corporation 2008 Omnibus Long-Term Incentive Plan, the 2013 Omnibus Long-Term Incentive Plan, or the 2016 Omnibus Long-Term Incentive Plan, all unvested shares shall automatically vest in full. In accordance with ASC 718, we recorded immaterial compensation expense for any of the issuances as the value of the common stock was nominal, based on the deduction of our outstanding debt, capital lease obligations, and preferred stock from an estimated enterprise value, which was estimated based on discounted cash flow analysis, comparable public company analysis, and comparable transaction analysis. Additionally, we determined that a significant change in the valuation estimate for common stock would not have a significant effect on the consolidated financial statements.

Earnings (Loss) per Share

Potentially dilutive securities not included in the calculation of diluted net loss per share because to do so would be anti-dilutive are as follows (in common stock equivalent shares):

	2019		2018		2017
Unvested restricted stock		1,191		2,428		3,724
Common Stock Warrants, exercisable at $1.321/share		1,135		1,135		1,135
Total		2,326		3,563		4,859

Unaudited Pro Forma Net Income (Loss) per Share

		2019
Net Income (Loss) Attributable to Telos Corporation
Dividends from preferred stock recorded as interest expense
Net income used to compute pro forma net earnings (loss) per share

Weighted average common shares outstanding, basic and diluted reflecting the conversion of Class A and Class B common stock into common stock
Pro forma adjustment to reflect conversion of preferred shares
Weighted average common shares outstanding used in computing pro forma net earnings per share, basic and diluted

Pro forma net earnings (loss) per common share, basic and diluted

Comprehensive Loss

Financial Instruments

Recent Accounting Pronouncements Adopted

Recent Accounting Pronouncements Not Yet Adopted

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement”, which modifies the disclosure requirement for fair value measurement under ASC 820 to improve the effectiveness of such disclosures. Those modifications include the removal and addition of disclosure requirements as well as clarifying specific disclosure requirements. This standard will be effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted. The adoption of this ASU will not have a material impact on our consolidated financial position, results of operations and cash flows.

In August 2018, the FASB issued ASU 2018-15, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract,” which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This standard will be effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted. The adoption of this ASU will not have a material impact on our consolidated financial position, results of operations and cash flows.

CONSOLIDATED STATEMENTS OF CASH FLOWS (FY) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Operating activities:
Net (loss) income	$ (2,137)	$ 1,737	$ (3,498)
Adjustments to reconcile net (loss) income to cash provided by (used in) operating activities:
Stock-based compensation	0	0	50
Dividends from preferred stock recorded as interest expense	3,823	3,822	3,843
Depreciation and amortization	4,972	3,028	1,999
Provision for inventory obsolescence	376	30	73
Provision (benefit) for doubtful accounts receivable	414	(105)	(18)
Amortization of debt issuance costs	461	198	160
Deferred income tax (benefit) provision	(197)	77	(2,710)
Loss on disposal of fixed assets	15	3	4
Changes in assets and liabilities:
Decrease (increase) in accounts receivable	6,186	(9,917)	(5,415)
Decrease (increase) in inventories	2,048	9,101	(10,041)
(Increase) decrease in deferred program expenses	(429)	1,828	(1,886)
(Increase) decrease in other current assets and other assets	(3,576)	(465)	1,086
(Decrease) increase in accounts payable and other accrued payables	(6,730)	(3,914)	10,376
Increase (decrease) in accrued compensation and benefits	3,105	1,626	(615)
Increase (decrease) in contract liabilities	1,106	(960)	5,173
Increase in other current liabilities	2,379	179	828
Cash provided by (used in) operating activities	11,816	6,268	(591)
Investing activities:
Capitalized software development costs	(2,442)	(1,649)	(1,481)
Purchases of property and equipment	(4,090)	(2,465)	(748)
Cash used in investing activities	(6,532)	(4,114)	(2,229)
Financing activities:
Proceeds from senior term loan	4,881	0	9,439
Redemption of senior preferred stock	0	0	(2,112)
Payments under finance lease obligations	(1,115)	(1,013)	(915)
Distributions to Telos ID Class B member - non-controlling interest	(2,371)	(1,669)	(3,651)
Cash provided by (used in) financing activities	1,395	(2,682)	2,761
Increase (decrease) in cash and cash equivalents	6,679	(528)	(59)
Cash and cash equivalents, beginning of period	72	600	659
Cash and cash equivalents, end of period	6,751	72	600
Cash paid during the year for:
Interest	3,299	2,483	2,395
Income taxes	40	19	26
Noncash:
Dividends from preferred stock recorded as interest expense	3,823	3,822	3,843
Debt issuance costs and prepayment of interest on senior term loan	119	0	1,561
Gain on extinguishment of subordinated debt	$ 0	$ 0	$ 1,031

Non-controlling Interests (FY) (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Changes in Non-Controlling Interest

The following table details the changes in non-controlling interest for the three and six months ended June 30, 2020 and 2019 (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Non-controlling interest, beginning of period	$	5,298		$	2,378		$	4,514		$	2,621
Net income (loss)		2,806			(253	)		3,590			220
Distributions		(1,000	)		(268	)		(1,000	)		(984	)
Non-controlling interest, end of period	$	7,104		$	1,857		$	7,104		$	1,857

The following table details the changes in non-controlling interest for the years ended December 31, 2019, 2018, and 2017 (in thousands):

	2019			2018			2017
Non-controlling interest, beginning of period	$	2,621		$	913		$	2,229
Net income		4,264			3,377			2,335
Distributions		(2,371	)		(1,669	)		(3,651	)
Non-controlling interest, end of period	$	4,514		$	2,621		$	913

Redeemable Preferred Stock (Q2)	6 Months Ended	12 Months Ended
Redeemable Preferred Stock (Q2)	Jun. 30, 2020	Dec. 31, 2019
Redeemable Preferred Stock [Abstract]
Redeemable Preferred Stock	Note 6. Redeemable Preferred Stock Public Preferred Stock A maximum of 6,000,000 shares of the Public Preferred Stock, par value $.01 per share, has been authorized for issuance. We initially issued 2,858,723 shares of the Public Preferred Stock pursuant to the acquisition of the Company during fiscal year 1990. The Public Preferred Stock was recorded at fair value on the date of original issue, November 21, 1989, and we made periodic accretions under the interest method of the excess of the redemption value over the recorded value. We adjusted our estimate of accrued accretion in the amount of $1.5 million in the second quarter of 2006. The Public Preferred Stock was fully accreted as of December 2008. We declared stock dividends totaling 736,863 shares in 1990 and 1991. Since 1991, no other dividends, in stock or cash, have been declared. In November 1998, we retired 410,000 shares of the Public Preferred Stock. The total number of shares issued and outstanding at June 30, 2020 and December 31, 2019 was 3,185,586. The Public Preferred Stock is quoted as "TLSRP" on the OTCQB marketplace and the OTC Bulletin Board. Since 1991, no dividends were declared or paid on our Public Preferred Stock, based upon our interpretation of restrictions in our Articles of Amendment and Restatement, limitations in the terms of the Public Preferred Stock instrument, specific dividend payment restrictions in the various financing documents to which the Public Preferred Stock is subject, other senior obligations currently or previously in existence, and Maryland law limitations in existence prior to October 1, 2009. Subsequent to the 2009 Maryland law change, dividend payments have continued to be prohibited except under certain specific circumstances as set forth in Maryland Code Section 2-311. Pursuant to the terms of the Articles of Amendment and Restatement, we were scheduled, but not required, to redeem the Public Preferred Stock in five annual tranches during the years 2005 through 2009. However, due to our substantial senior obligations currently or previously in existence, limitations set forth in the covenants in the various financing documents to which the Public Preferred Stock is subject, foreseeable capital and operational requirements, and restrictions and prohibitions of our Articles of Amendment and Restatement, we were and remain unable to meet the redemption schedule set forth in the terms of the Public Preferred Stock as of the measurement dates. Moreover, the Public Preferred Stock is not payable on demand, nor callable, for failure to redeem the Public Preferred Stock in accordance with the redemption schedule set forth in the instrument. Therefore, we classify these securities as noncurrent liabilities in the condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019. On January 25, 2017, we became parties with certain of our subsidiaries to the Credit Agreement with EnCap. Under the Credit Agreement, we agreed that, until full and final payment of the obligations under the Credit Agreement, we would not make any distribution or declare or pay any dividends (other than common stock) on our stock, or purchase, acquire, or redeem any stock, or exchange any stock for indebtedness, or retire any stock. Additionally, the Porter Notes contain similar prohibitions on dividend payments or stock redemptions. Accordingly, as stated above, we will continue to classify the entirety of our obligation to redeem the Public Preferred Stock as a long-term obligation. Various financing documents to which the Public Preferred Stock is subject prohibit, among other things, the redemption of any stock, common or preferred, other than as described above. The Public Preferred Stock by its terms also cannot be redeemed if doing so would violate the terms of an agreement regarding the borrowing of funds or the extension of credit which is binding upon us or any of our subsidiaries, and it does not include any other provisions that would otherwise require any acceleration of the redemption of or amortization of payments with respect to the Public Preferred Stock. Thus, the Public Preferred Stock is not and will not be due on demand, nor callable, within 12 months from June 30, 2020. This classification is consistent with ASC 210, “Balance Sheet” and 470, “Debt” and the FASB ASC Master Glossary definition of “Current Liabilities.” ASC 210 and the FASB ASC Master Glossary define current liabilities as follows: The term current liabilities is used principally to designate obligations whose liquidation is reasonably expected to require the use of existing resources properly classifiable as current assets, or the creation of other current liabilities. As a balance sheet category, the classification is intended to include obligations for items which have entered into the operating cycle, such as payables incurred in the acquisition of materials and supplies to be used in the production of goods or in providing services to be offered for sale; collections received in advance of the delivery of goods or performance of services; and debts that arise from operations directly related to the operating cycle, such as accruals for wages, salaries, commissions, rentals, royalties, and income and other taxes. Other liabilities whose regular and ordinary liquidation is expected to occur within a relatively short period of time, usually twelve months, are also intended for inclusion, such as short-term debts arising from the acquisition of capital assets, serial maturities of long-term obligations, amounts required to be expended within one year under sinking fund provisions, and agency obligations arising from the collection or acceptance of cash or other assets for the account of third persons. ASC 470 provides the following: The current liability classification is also intended to include obligations that, by their terms, are due on demand or will be due on demand within one year (or operating cycle, if longer) from the balance sheet date, even though liquidation may not be expected within that period. It is also intended to include long-term obligations that are or will be callable by the creditor either because the debtor’s violation of a provision of the debt agreement at the balance sheet date makes the obligation callable or because the violation, if not cured within a specified grace period, will make the obligation callable. If, pursuant to the terms of the Public Preferred Stock, we do not redeem the Public Preferred Stock in accordance with the scheduled redemptions described above, the terms of the Public Preferred Stock require us to discharge our obligation to redeem the Public Preferred Stock as soon as we are financially capable and legally permitted to do so. Therefore, by its very terms, the Public Preferred Stock is not due on demand or callable for failure to make a scheduled payment pursuant to its redemption provisions and is properly classified as a noncurrent liability. We pay dividends on the Public Preferred Stock when and if declared by the Board of Directors. The Public Preferred Stock accrues a semi-annual dividend at the annual rate of 12% ($1.20) per share, based on the liquidation preference of $10 per share, and is fully cumulative. Dividends in additional shares of the Public Preferred Stock for 1990 and 1991 were paid at the rate of 6% per share for each $.60 of such dividends not paid in cash. For the cash dividends payable since December 1, 1995, we have accrued $109.3 million and $107.4 million as of June 30, 2020 and December 31, 2019, respectively. We accrued dividends on the Public Preferred Stock of $1.0 million and $1.9 million for each of the three and six months ended June 30, 2020 and 2019, respectively, which was recorded as interest expense. Prior to the effective date of ASC 480 on July 1, 2003, such dividends were charged to stockholders’ accumulated deficit.	Note 7. Redeemable Preferred Stock Public Preferred Stock A maximum of 6,000,000 shares of the Public Preferred Stock, par value $.01 per share, has been authorized for issuance. We initially issued 2,858,723 shares of the Public Preferred Stock pursuant to the acquisition of the Company during fiscal year 1990. The Public Preferred Stock was recorded at fair value on the date of original issue, November 21, 1989, and we made periodic accretions under the interest method of the excess of the redemption value over the recorded value. We adjusted our estimate of accrued accretion in the amount of $1.5 million in the second quarter of 2006. The Public Preferred Stock was fully accreted as of December 2008. We declared stock dividends totaling 736,863 shares in 1990 and 1991. Since 1991, no other dividends, in stock or cash, have been declared. In November 1998, we retired 410,000 shares of the Public Preferred Stock. The total number of shares issued and outstanding at December 31, 2019 and 2018, was 3,185,586. The Public Preferred Stock is quoted as “TLSRP” on the OTCQB marketplace and the OTC Bulletin Board. Since 1991, no dividends were declared or paid on our Public Preferred Stock, based upon our interpretation of restrictions in our Articles of Amendment and Restatement, limitations in the terms of the Public Preferred Stock instrument, specific dividend payment restrictions in the various financing agreements to which the Public Preferred Stock is subject, other senior obligations currently or previously in existence, and Maryland law limitations in existence prior to October 1, 2009. Subsequent to the 2009 Maryland law change, dividend payments continue to be prohibited except under certain specific circumstances as set forth in Maryland Code Section 2-311, which the Company did not satisfy as of the measurement dates. Pursuant to the terms of the Articles of Amendment and Restatement, we were scheduled, but not required, to redeem the Public Preferred Stock in five annual tranches during the period 2005 through 2009. However, due to our substantial senior obligations currently or previously in existence, limitations set forth in the covenants in the Credit Agreement and the Porter Notes, foreseeable capital and operational requirements, and restrictions and prohibitions of our Articles of Amendment and Restatement, we were and remain unable to meet the redemption schedule set forth in the terms of the Public Preferred Stock as of the measurement dates. Moreover, the Public Preferred Stock is not payable on demand, nor callable, for failure to redeem the Public Preferred Stock in accordance with the redemption schedule set forth in the instrument. Therefore, we classify these securities as noncurrent liabilities in the consolidated balance sheets as of December 31, 2019 and 2018. On January 25, 2017, we became parties with certain of our subsidiaries to the Credit Agreement with EnCap. Under the Credit Agreement, we agreed that, until full and final payment of the obligations under the Credit Agreement, we would not make any distribution or declare or pay any dividends (other than common stock) on our stock, or purchase, acquire, or redeem any stock, or exchange any stock for indebtedness, or retire any stock. Additionally, the Porter Notes contain similar prohibitions on dividend payments or stock redemptions. Accordingly, as stated above, we will continue to classify the entirety of our obligation to redeem the Public Preferred Stock as a long-term obligation. The Credit Agreement and the Porter Notes prohibit, among other things, the redemption of any stock, common or preferred, other than as described above. The Public Preferred Stock by its terms also cannot be redeemed if doing so would violate the terms of an agreement regarding the borrowing of funds or the extension of credit which is binding upon us or any of our subsidiaries, and it does not include any other provisions that would otherwise require any acceleration of the redemption of or amortization of payments with respect to the Public Preferred Stock. Thus, the Public Preferred Stock is not and will not be due on demand, nor callable, within 12 months from December 31, 2019. This classification is consistent with ASC 210, “Balance Sheet” and 470, “Debt” and the FASB ASC Master Glossary definition of “Current Liabilities.” ASC 210 and the FASB ASC Master Glossary define current liabilities as follows: The term current liabilities is used principally to designate obligations whose liquidation is reasonably expected to require the use of existing resources properly classifiable as current assets, or the creation of other current liabilities. As a balance sheet category, the classification is intended to include obligations for items which have entered into the operating cycle, such as payables incurred in the acquisition of materials and supplies to be used in the production of goods or in providing services to be offered for sale; collections received in advance of the delivery of goods or performance of services; and debts that arise from operations directly related to the operating cycle, such as accruals for wages, salaries, commissions, rentals, royalties, and income and other taxes. Other liabilities whose regular and ordinary liquidation is expected to occur within a relatively short period of time, usually twelve months, are also intended for inclusion, such as short-term debts arising from the acquisition of capital assets, serial maturities of long-term obligations, amounts required to be expended within one year under sinking fund provisions, and agency obligations arising from the collection or acceptance of cash or other assets for the account of third persons. ASC 470 provides the following: The current liability classification is also intended to include obligations that, by their terms, are due on demand or will be due on demand within one year (or operating cycle, if longer) from the balance sheet date, even though liquidation may not be expected within that period. It is also intended to include long-term obligations that are or will be callable by the creditor either because the debtor’s violation of a provision of the debt agreement at the balance sheet date makes the obligation callable or because the violation, if not cured within a specified grace period, will make the obligation callable. If, pursuant to the terms of the Public Preferred Stock, we do not redeem the Public Preferred Stock in accordance with the scheduled redemptions described above, the terms of the Public Preferred Stock require us to discharge our obligation to redeem the Public Preferred Stock as soon as we are financially capable and legally permitted to do so. Therefore, by its very terms, the Public Preferred Stock is not due on demand or callable for failure to make a scheduled payment pursuant to its redemption provisions and is properly classified as a noncurrent liability. We pay dividends on the Public Preferred Stock when and if declared by the Board of Directors. The Public Preferred Stock accrues a semi-annual dividend at the annual rate of 12% ($1.20) per share, based on the liquidation preference of $10 per share, and is fully cumulative. Dividends in additional shares of the Public Preferred Stock for 1990 and 1991 were paid at the rate of 6% per share for each $.60 of such dividends not paid in cash. For the cash dividends payable since December 1, 1995, we have accrued $107.4 million and $103.5 million as of December 31, 2019 and 2018, respectively. We accrued dividends on the Public Preferred Stock of $3.8 million for each of the years ended December 31, 2019, 2018, and 2017, which was recorded as interest expense. Prior to the effective date of ASC 480 on July 1, 2003, such dividends were charged to stockholders’ accumulated deficit. Senior Redeemable Preferred Stock The Senior Redeemable Preferred Stock was senior to all other outstanding equity of the Company, including the Public Preferred Stock. The Series A-1 ranked on a parity with the Series A-2. The components of the authorized Senior Redeemable Preferred Stock were 1,250 shares of Series A-1 and 1,750 shares of Series A-2 Senior Redeemable Preferred Stock, each with $.01 par value. The Senior Redeemable Preferred Stock carried a cumulative per annum dividend rate of 14.125% of its liquidation value of $1,000 per share. The dividends were payable semiannually on June 30 and December 31 of each year. We had not declared dividends on our Senior Redeemable Preferred Stock since its issuance, other than in connection with the redemptions from 2010 to 2013. The liquidation preference of the Senior Redeemable Preferred Stock was the face amount of the Series A-1 and A-2 ($1,000 per share), plus all accrued and unpaid dividends. Due to the terms of the Credit Agreement, the Porter Notes, other senior obligations currently or previously in existence, the Senior Redeemable Preferred Stock and applicable provisions of Maryland law governing the payment of distributions, we had been precluded from redeeming the Senior Redeemable Preferred Stock and paying any accrued and unpaid dividends on the Senior Redeemable Preferred Stock, other than the redemptions that occurred from 2010 to 2013. In addition, certain holders of the Senior Redeemable Preferred Stock had entered into standby agreements whereby, among other things, those holders would not demand any payments in respect of dividends or redemptions of their instruments and the maturity dates of the instruments have been extended. In accordance with the requirements of the Second Amendment to the EnCap Credit Agreement, we redeemed all outstanding shares of the Senior Redeemable Preferred Stock on April 18, 2017 for $2.1 million. We accrued dividends on the Senior Redeemable Preferred Stock of $0, $0, and $20,000 for the years ended December 31, 2019, 2018, and 2017, respectively, which were reported as interest expense. Prior to the effective date of ASC 480, “Distinguishing Liabilities from Equity,” on July 1, 2003, such dividends were charged to stockholders’ deficit.

Current Liabilities and Debt Obligations (FY) (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Current Liabilities and Debt Obligations [Abstract]

Carrying Amount of the Credit Agreement

The carrying amount of the Credit Agreement consisted of the following (in thousands):

	June 30, 2020			December 31, 2019
Senior term loan principal, including exit fee	$	17,200		$	17,200
Less: Unamortized discount, debt issuance costs, and lender fees		(512	)		(865	)
Senior term loan, net	$	16,688		$	16,335

The carrying amount of the Credit Agreement consisted of the following (in thousands):

	December 31,
	2019			2018
Senior term loan principal, including exit fee	$	17,200		$	11,825
Less: Unamortized discount, debt issuance costs, and lender fees		(865	)		(841	)
Senior term loan, net	$	16,335		$	10,984

We incurred interest expense in the amount of $2.2 million, $1.7 million and $1.5 million for the years ended December 31, 2019, 2018 and 2017, respectively, under the Credit Agreement.

Weighted Average Remaining Lease Term [Abstract]

Leases (Q2) (Details) - USD ($)
$ in Thousands

3 Months Ended

6 Months Ended

12 Months Ended

Jun. 30, 2020

Jun. 30, 2019

Jun. 30, 2020

Jun. 30, 2019

Dec. 31, 2019

Dec. 31, 2018

3 years

3 years 6 months

Weighted Average Discount Rate [Abstract]

8 years 9 months 18 days

9 years 3 months 18 days

5.75%

Operating Leases, Right-of-Use Assets and Lease Liabilities [Abstract]

5.04%

Right-of-use asset

$ 1,777

$ 1,979

$ 0

Operating lease liabilities, non-current

1,274

1,553

$ 0

Future Minimum Lease Commitments [Abstract]

2020 (excluding the six months ended June 30, 2020)

371

2021

752

710

2022

592

715

2023

373

564

2024

368

After 2024

Total lease payments

2,115

2,385

(178)

(230)

Finance Lease Liabilities, Payments, Due [Abstract]

1,937

2,155

2019 (excluding the six months ended June 30, 2019)

1,033

2,097

2,149

2,203

2,258

10,658

20,398

21,411

(4,127)

(4,546)

Amortization of finance lease assets

16,271

16,865

Lease, Cost [Abstract]

Operating lease cost

182

$ 147

360

$ 294

597

Short-term lease cost

^[1]

147

^[1]

305

610

1,221

Interest on finance lease liabilities

208

222

419

447

881

Total finance lease cost

513

527

1,029

1,057

2,102

Total lease costs

$ 725

$ 716

1,446

1,435

2,846

Cash paid for amounts included in the measurement of lease liabilities: [Abstract]

Cash flows from operating activities - operating leases

375

279

604

Cash flows from operating activities - finance leases

1,012

987

1,995

Right-of-use assets obtained in exchange for lease obligations: [Abstract]

Operating lease right-of-use assets obtained in exchange for operating lease liabilities

$ 300

$ 245

$ 488

[1]	Leases that have terms of 12 months or less.

Commitments (FY) (Details) - USD ($)
$ in Thousands

3 Months Ended

6 Months Ended

12 Months Ended

Jun. 30, 2020

Jun. 30, 2019

Jun. 30, 2020

Jun. 30, 2019

Dec. 31, 2019

Dec. 31, 2018

Dec. 31, 2017

Dec. 31, 2014

Dec. 31, 2013

Dec. 31, 1996

Weighted Average Remaining Lease Term [Abstract]

3 years

3 years 6 months

Weighted Average Discount Rate [Abstract]

8 years 9 months 18 days

9 years 3 months 18 days

5.75%

Operating Leases, Right-of-Use Assets and Lease Liabilities [Abstract]

5.04%

Right-of-use asset

$ 1,777

$ 1,979

$ 0

Capital Lease Obligations [Abstract]

Term of lease

15 years

Capital leased property

30,792

30,832

Proceeds from assignment of purchase option under lease

$ 1,700

Increase in capital leased property

5,700

Capital lease obligations

22,000

Increase in capital lease obligations

6,700

Net book value of capital asset

$ 18,300

Future Minimum Lease Commitments [Abstract]

2020

752

710

2021

592

715

2022

373

564

368

2,115

2,385

(178)

(230)

Long-term lease obligations, Operating leases

1,937

2,155

Less current portion

(602)

1,274

1,553

Finance Lease Liabilities, Payments, Due [Abstract]

2,046

2,097

2,149

2,203

2,258

10,658

20,398

21,411

(4,127)

(4,546)

Long-term lease obligations, Finance leases

16,271

16,865

Less current portion

(1,224)

15,641

Lease, Cost [Abstract]

Operating lease cost

182

$ 147

360

$ 294

597

Short-term lease cost

^[1]

147

^[1]

Finance Lease Costs [Abstract]

Amortization of finance lease assets

305

610

1,221

Interest on finance lease liabilities

208

222

419

447

881

Total finance lease cost

513

527

1,029

1,057

2,102

Total lease costs

$ 725

$ 716

1,446

1,435

2,846

Cash paid for amounts included in the measurement of lease liabilities: [Abstract]

Cash flows from operating activities - operating leases

375

279

604

Cash flows from operating activities - finance leases

1,012

987

1,995

Operating lease right-of-use assets obtained in exchange for operating lease liabilities

300

245

488

Rent expense charged to operations

1,100

1,600

$ 1,600

Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward]

Balance Beginning of Year

$ 30

Accruals

Warranty Expenses

(21)

Balance End of Year

$ 30

Capital Lease Obligations [Member]

Capital Lease Obligations [Abstract]

Annual rent increase percentage

2.50%

Accumulated amortization for property and equipment under capital leases

$ 18,700

$ 17,500

Property [Member] | Capital Lease Obligations [Member]

Capital Lease Obligations [Abstract]

Term of lease

13 years

20 years

Capital leased property

$ 12,300

Increase in capital leased property

$ 11,700

Capital lease obligations

15,500

Net book value of capital asset

$ 13,100

[1]	Leases that have terms of 12 months or less.

Leases (Q2)

6 Months Ended

Jun. 30, 2020

Leases [Abstract]

Leases

Note 10 – Leases

The operating lease ROU assets and liabilities are recognized as of the lease commencement date at the present value of the lease payments over the lease term. Most of our leases do not provide an implicit rate that can readily be determined. Therefore, we use a discount rate based on our incremental borrowing rate which was 5.75% for all operating leases. Our operating lease agreements may include options to extend the lease term or terminate it early. We have included options to extend in the operating lease ROU assets and liabilities when we are reasonably certain that we will exercise such options. The weighted average remaining lease terms and discount rates for our operating leases were approximately 3.0 years and 5.75% and for our finance leases were approximately 8.8 years and 5.04% at June 30, 2020. Operating lease expense is recognized as rent expense on a straight-line basis over the lease term. Some of our operating leases contain lease and non-lease components, which we account for as a single component. We evaluate ROU assets for impairment consistent with our property and equipment policy disclosure included in our 2019 Form 10-K.

As of June 30, 2020, operating lease ROU assets were $1.8 million and operating lease liabilities were $1.9 million, of which $1.3 million were classified as noncurrent.

Future minimum lease commitments at June 30, 2020 were as follows (in thousands):

Year ending December 31,	Operating Leases			Finance Leases
2020 (excluding the six months ended June 30, 2020)	$	371		$	1,033
2021		752			2,097
2022		592			2,149
2023		373			2,203
2024		27			2,258
After 2024		--			10,658
Total lease payments		2,115			20,398
Less imputed interest		(178	)		(4,127	)
Total	$	1,937		$	16,271

The components of lease expense were as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Operating lease cost	$	182	$	147	$	360	$	294
Short-term lease cost (1)		30		42		57		84
Finance lease cost
Amortization of right-of-use assets		305		305		610		610
Interest on lease liabilities		208		222		419		447
Total finance lease cost		513		527		1,029		1,057
Total lease costs	$	725	$	716	$	1,446	$	1,435

(1) Leases that have terms of 12 months or less

Supplemental cash flow information related to leases was as follows (in thousands):

	Six Months Ended June 30,
	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Cash flows from operating activities - operating leases	$	375	$	279
Cash flows from operating activities - finance leases		1,012		987
Operating lease right-of-use assets obtained in exchange for operating lease liabilities		300		245

Leases (Q2) (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Leases [Abstract]

Future Minimum Lease Commitments

Future minimum lease commitments at June 30, 2020 were as follows (in thousands):

Year ending December 31,	Operating Leases			Finance Leases
2020 (excluding the six months ended June 30, 2020)	$	371		$	1,033
2021		752			2,097
2022		592			2,149
2023		373			2,203
2024		27			2,258
After 2024		--			10,658
Total lease payments		2,115			20,398
Less imputed interest		(178	)		(4,127	)
Total	$	1,937		$	16,271

Future minimum lease commitments at December 31, 2019 were as follows (in thousands):

	Operating Leases			Finance Leases
2020	$	710		$	2,046
2021		715			2,097
2022		564			2,149
2023		368			2,203
2024		28			2,258
After 2024		--			10,658
Total minimum lease payments		2,385			21,411
Less imputed interest		(230	)		(4,546	)
Net present value of minimum lease payments		2,155			16,865
Less current portion		(602	)		(1,224	)
Long-term lease obligations at December 31, 2019	$	1,553		$	15,641

Components of Lease Expense

The components of lease expense were as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Operating lease cost	$	182	$	147	$	360	$	294
Short-term lease cost (1)		30		42		57		84
Finance lease cost
Amortization of right-of-use assets		305		305		610		610
Interest on lease liabilities		208		222		419		447
Total finance lease cost		513		527		1,029		1,057
Total lease costs	$	725	$	716	$	1,446	$	1,435

(1) Leases that have terms of 12 months or less

The components of lease expense were as follows (in thousands):

	Year Ended December 31,2019
Operating lease cost	$	597
Short-term lease cost (1)		147
Finance lease cost
Amortization of finance lease assets		1,221
Interest on finance lease liabilities		881
Total finance lease cost		2,102
Total lease costs	$	2,846

(1)	Leases that have terms of 12 months or less.

Supplemental Cash Flow Information Related to Leases

Supplemental cash flow information related to leases was as follows (in thousands):

	Six Months Ended June 30,
	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Cash flows from operating activities - operating leases	$	375	$	279
Cash flows from operating activities - finance leases		1,012		987
Operating lease right-of-use assets obtained in exchange for operating lease liabilities		300		245

Supplemental cash flow information related to leases was as follows (in thousands):

	Year Ended December 31,2019
Cash paid for amounts included in the measurement of lease liabilities:
Cash flows from operating activities - operating leases	$	604
Cash flows from operating activities - finance leases	$	1,995
Operating lease right-of-use assets obtained in exchange for operating lease liabilities	$	488

Redeemable Preferred Stock (FY) (Details)		3 Months Ended		6 Months Ended	12 Months Ended
Redeemable Preferred Stock (FY) (Details)	Nov. 30, 1998 shares	Jun. 30, 2020 USD ($) $ / shares shares	Jun. 30, 2006 USD ($)	Jun. 30, 2020 USD ($) Tranche $ / shares shares	Dec. 31, 2019 USD ($) $ / shares shares	Dec. 31, 2018 USD ($) $ / shares	Dec. 31, 2017 USD ($) $ / shares shares	Dec. 31, 1991 $ / shares shares	Dec. 31, 1990 Tranche shares	Apr. 18, 2017 USD ($)
Preferred stock [Abstract]
Preferred stock dividend rate per annum							12.00%
Senior Redeemable Preferred Stock [Abstract]
Redemption amount of senior redeemable preferred stock \| $										$ 2,100,000
Public Preferred Stock [Member]
Preferred stock [Abstract]
Preferred stock authorized (in shares)		6,000,000		6,000,000	6,000,000
Preferred stock par value (in dollars per share) \| $ / shares		$ 0.01		$ 0.01	$ 0.01
Preferred stock dividend rate per annum				12.00%	12.00%			6.00%
Dividends Payable \| $		$ 109,300,000		$ 109,300,000	$ 107,400,000	$ 103,500,000
Public preferred stock, shares retired	410,000
Preferred stock issued and outstanding (in shares)		3,185,586		3,185,586	3,185,586				2,858,723
12% Cumulative Exchangeable Redeemable Preferred Stock [Abstract]
Adjusted accrued accretion of public preferred stock \| $			$ 1,500,000
Number of shares declared as dividend (in shares)								736,863
Number of annual tranches during the period \| Tranche				5					5
Period during which redeemable preferred stock not callable				12 months	12 months
Preferred stock dividend rate per annum (in dollars per share) \| $ / shares				$ 1.20	$ 1.20			$ 0.60
Preferred stock, liquidation preference (in dollars per share) \| $ / shares		$ 10		$ 10	$ 10
Dividends on preferred stock \| $		$ 1,000,000		$ 1,900,000	$ 3,800,000
Series A-1 Preferred Stock [Member]
Preferred stock [Abstract]
Preferred stock authorized (in shares)							1,250
Preferred stock par value (in dollars per share) \| $ / shares							$ 0.01
Preferred stock dividend rate per annum						14.125%
Senior Redeemable Preferred Stock [Abstract]
Redeemable preferred stock liquidation value (in dollar per share) \| $ / shares						$ 1,000
Series A-2 Preferred Stock [Member]
Preferred stock [Abstract]
Preferred stock authorized (in shares)							1,750
Senior Redeemable Preferred Stock [Member]
Senior Redeemable Preferred Stock [Abstract]
Accrued dividends reported as interest expenses \| $					$ 0	$ 0	$ 20,000

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Q2) - USD ($) $ in Thousands	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Current assets
Cash and cash equivalents	$ 2,405		$ 6,751			$ 72
Accounts receivable, net of reserve of $738 and $720, respectively (Note 1)	38,371		27,942			34,542
Inventories, net of obsolescence reserve of $861 and $860, respectively (Note 1)	3,336		1,965			4,389
Deferred program expenses	250		673			244
Other current assets	2,586		2,914			1,985
Total current assets	46,948		40,245			41,232
Property and equipment, net of accumulated depreciation of $34,673 and $32,470, respectively	20,683		19,567			17,426
Operating lease right-of-use assets	1,777		1,979			0
Goodwill (Note 3)	14,916		14,916			14,916
Other assets	1,066		985			915
Total assets	85,390		77,692			74,489
Current liabilities
Senior term loan, net of unamortized discount and issuance costs - short-term (Note 5)	16,688		0
Accounts payable and other accrued liabilities (Note 6)	19,638		15,050			21,779
Accrued compensation and benefits	12,275		12,187			9,082
Contract liabilities (Note 1 and 5)	6,682		6,337			5,232
Finance lease obligations - short-term (Note 10)	1,281		1,224			1,115
Other current liabilities	3,146		2,505			1,895
Total current liabilities	59,710		37,303			39,103
Senior term loan, net of unamortized discount and issuance costs (Note 5)	0		16,335			10,984
Subordinated debt (Note 5)	3,102		2,927			2,597
Finance lease obligations - long-term (Note 10)	14,990		15,641			16,865
Operating lease obligations - long-term (Note 10)	1,274		1,553			0
Deferred income taxes (Note 7)	640		621			818
Public preferred stock (Note 6)	141,121		139,210			135,387
Other liabilities (Note 9)	562		724			838
Total liabilities	221,399		214,314			206,592
Commitments and contingencies (Note 8)
Telos stockholders' deficit
Common stock	78		78
Additional paid-in capital	4,310		4,310			4,310
Accumulated other comprehensive income	7		6			17
Accumulated deficit	(147,508)		(145,530)			(139,129)
Total Telos stockholders' deficit	(143,113)		(141,136)			(134,724)
Non-controlling interest in subsidiary (Note 2)	7,104	$ 5,298	4,514	$ 1,857	$ 2,378	2,621	$ 913	$ 2,229
Total stockholders' deficit	(136,009)	$ (138,083)	(136,622)	$ (138,019)	$ (135,757)	(132,103)	$ (136,037)	$ (129,976)
Total liabilities, redeemable preferred stock, and stockholders' deficit	$ 85,390		$ 77,692			$ 74,489

Summary of Significant Accounting Policies (FY) (Policies)

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Summary of Significant Accounting Policies [Abstract]

Principles of Consolidation and Basis of Presentation

In preparing these consolidated financial statements, we have evaluated subsequent events through the date that these consolidated financial statements were issued.

Segment Reporting

Use of Estimates

Revenue Recognition

We have one reportable segment. We treat sales to U.S. customers as sales within the U.S. regardless of where the services are performed. Substantially all of our revenues are from U.S. customers as revenue derived from international customers is de minims. The following tables disclose revenue (in thousands) by customer type and contract type for the periods presented.

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Federal	$	46,877	$	33,774	$	82,968	$	62,757
State & Local, and Commercial		1,733		2,274		4,621		4,457
Total	$	48,610	$	36,048	$	87,589	$	67,214

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Firm fixed-price	$	41,935	$	28,857	$	73,596	$	53,787
Time-and-materials		3,637		3,691		7,462		7,620
Cost plus fixed fee		3,038		3,500		6,531		5,807
Total	$	48,610	$	36,048	$	87,589	$	67,214

The following table discloses accounts receivable and contract assets (in thousands):

	June 30, 2020			December 31, 2019
Billed accounts receivable	$	18,420		$	11,917
Unbilled receivables		20,689			16,745
Allowance for doubtful accounts		(738	)		(720	)
Receivables – net	$	38,371		$	27,942

The following table discloses contract liabilities (in thousands):

		June 30, 2020				December 31, 2019
Contract liabilities		$	6,682			$	6,337

Revenue Recognition

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, and is classified as services revenue. 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 as discussed further below. Revenue is recognized over time using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying our performance obligations. Incurred cost represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Contract costs include labor, material, subcontractor costs and indirect expenses. This continuous transfer of control to the customer is supported by clauses in our contracts with U.S. Government customers whereby the customer may terminate a contract for convenience and then pay for costs incurred plus a profit, at which time the customer would take control of any work in process. For non-U.S. Government contracts where we perform as a subcontractor and our order includes similar Federal Acquisition Regulation (the FAR) provisions as the prime contractor’s order from the U.S. Government, continuous transfer of control is likewise supported by such provisions. For other non-U.S. Government customers, continuous transfer of control to such customers is also supported due to general terms in our contracts and rights to recover damages which would include, among other potential damages, the right to payment for our work performed to date plus a reasonable profit.

Our contracts may include various types of variable consideration, such as claims (for instance, indirect rate or other equitable adjustments) or incentive fees. We include estimated amounts in the transaction price based on all of the information available to us, including historical information and future estimations, 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 have revised and re-submitted several years of incurred cost submissions reflecting certain indirect rate structure changes as a result of regular DCAA audits of incurred cost submissions. This resulted in signed final rate agreement letters for fiscal years 2011 to 2013 and conformed incurred cost submissions for 2014 to 2015. We evaluated the resulting changes to revenue under the applicable cost plus fixed fee contracts for the years 2011 to 2015 as variable consideration, and determined the most likely amount to which we expect to be entitled, to the extent that no constraint exists that would preclude recognizing this revenue or result in a significant reversal of cumulative revenue recognized. We included these estimated amounts of variable consideration in the transaction price and as performance on these contracts is complete, we have recognized revenue of $6.0 million during the year ended December 31, 2018.

	2019		2018		2017
Federal	$	149,257	$	129,279	$	101,519
State & Local, and Commercial		9,961		8,737		6,208
Total	$	159,218	$	138,016	$	107,727

	2019		2018		2017
Firm fixed-price	$	131,629	$	103,454	$	89,516
Time-and-materials		14,569		16,795		10,222
Cost plus fixed fee		13,020		17,767		7,989
Total	$	159,218	$	138,016	$	107,727

The following table discloses accounts receivable and contract assets (in thousands):

	December 31,
	2019			2018
Billed accounts receivable	$	11,917		$	18,848
Unbilled receivables		16,745			16,000
Allowance for doubtful accounts		(720	)		(306	)
Receivables – net	$	27,942		$	34,542

The following table discloses contract liabilities (in thousands):

	December 31,
	2019		2018
Contract liabilities	$	6,337	$	5,232

Cash and Cash Equivalents

Accounts Receivable

On July 15, 2016, the Company entered into an accounts receivable purchase agreement under which the Company sells certain accounts receivable to a third party, or the “Factor”, without recourse to the Company. The Factor initially pays the Company 90% of U.S. Federal government receivables or 85% of certain commercial prime contractors. The remaining payment is deferred and based on the amount the Factor receives from our customer, less a discount fee and a program access fee that is determined by the amount of time the receivable is outstanding before payment. The structure of the transaction provides for a true sale of the receivables transferred. Accordingly, upon transfer of the receivable to the Factor, the receivable is removed from the Company’s condensed consolidated balance sheet, a loss on the sale is recorded and the residual amount remains a deferred payment as an accounts receivable until payment is received from the Factor. The balance of the sold receivables may not exceed $10 million. There were no accounts receivable sold during the three and six months ended June 30, 2020. During the three and six months ended June 30, 2019, the Company sold approximately $4.4 million and $9.4 million of accounts receivable, respectively, and recognized a related loss of approximately $15,000 and $32,000 in selling, general and administrative expenses, respectively, for the same period. As of June 30, 2020 and December 31, 2019, there were no outstanding sold accounts receivable.

Accounts Receivable

Accounts receivable are stated at the invoiced amount, less an allowance for doubtful accounts. Collectability of accounts receivable is regularly reviewed based upon managements’ knowledge of the specific circumstances related to overdue balances. The allowance for doubtful accounts is adjusted based on such evaluation. Accounts receivable balances are written off against the allowance when management deems the balances uncollectible.

Inventories

Inventories are stated at the lower of cost or net realizable value, where cost is determined using the weighted average method. Substantially all inventories consist of purchased customer off-the-shelf hardware and software, and component computer parts used in connection with system integration services that we perform. An allowance for obsolete, slow-moving or nonsalable inventory is provided for all other inventory. This allowance is based on our overall obsolescence experience and our assessment of future inventory requirements. This charge is taken primarily due to the age of the specific inventory and the significant additional costs that would be necessary to upgrade to current standards as well as the lack of forecasted sales for such inventory in the near future. Gross inventory was $2.8 million and $4.9 million at December 31, 2019 and 2018, respectively. As of December 31, 2019, it is management’s judgment that we have fully provided for any potential inventory obsolescence.

The components of the allowance for inventory obsolescence are set forth below (in thousands):

	Balance Beginning of Year		Additions Charge to Costs and Expense		Recoveries			Balance End of Year

Year Ended December 31, 2019	$	520	$	376	$	(36	)	$	860
Year Ended December 31, 2018	$	1,484	$	30	$	(994	)	$	520
Year Ended December 31, 2017	$	1,672	$	73	$	(261	)	$	1,484

Property and Equipment

Furniture and equipment	3-5 Years
Leasehold improvements	Lesser of life of lease or useful life of asset
Property and equipment under finance leases	Lesser of life of lease or useful life of asset

Software Development Costs

Our policy on accounting for development costs of software to be sold is in accordance with ASC Topic 985-20, “Software – Costs of Software to be Sold, Leased, or Marketed” and ASC Topic 350-40 “Internal Use Software” in so far as our Xacta products being available in various deployment modalities including on premises licenses and cloud-based Software as a Service (“SaaS”). Under both standards, software development costs are expensed as incurred until technological feasibility is reached, at which time additional costs are capitalized until the product is available for general release to customers or is ready for its intended use, as appropriate. Technological feasibility is established when all planning, designing, coding and testing activities have been completed, and all risks have been identified. Beginning with the second quarter of 2017, software development costs are capitalized and amortized over the estimated product life of 2 years on a straight-line basis. As of December 31, 2019 and 2018, we capitalized $5.6 million and $3.1 million of software development costs, respectively, which are included as a part of property and equipment. Amortization expense was $1.8 million and $1.1 million for the year ended December 31, 2019 and 2018, respectively. Accumulated amortization was $3.1 million and $1.3 million as of December 31, 2019 and 2018, respectively. The Company analyzes the net realizable value of capitalized software development costs on at least an annual basis and has determined that there is no indication of impairment of the capitalized software development costs as forecasted future sales are adequate to support amortization costs. During 2019, 2018 and 2017, we incurred salary costs for research and development of approximately $4.2 million, $3.5 million and $3.2 million, respectively, which were included as part of the selling, general and administrative expense in the consolidated statements of operations.

Earnings (Loss) per Share

We account for income taxes in accordance with ASC 740, “Income Taxes.” Under ASC 740, deferred tax assets and liabilities are recognized for the estimated future tax consequences of temporary differences and income tax credits. Deferred tax assets and liabilities are measured by applying enacted statutory tax rates that are applicable to the future years in which deferred tax assets or liabilities are expected to be settled or realized for differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. Any change in tax rates on deferred tax assets and liabilities is recognized in net income in the period in which the tax rate change is enacted. We record a valuation allowance that reduces deferred tax assets when it is “more likely than not” that deferred tax assets will not be realized. We are required to establish a valuation allowance for deferred tax assets if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Based on available evidence, realization of deferred tax assets is dependent upon the generation of future taxable income. We considered projected future taxable income, tax planning strategies, and reversal of taxable temporary differences in making this assessment. As such, we have determined that a full valuation allowance is required as of December 31, 2019 and 2018. As a result of a full valuation allowance against our deferred tax assets, a deferred tax liability related to goodwill remains on our consolidated balance sheet at December 31, 2019 and 2018. Due to the tax reform enacted on December 22, 2017, net operating losses generated in taxable years beginning after December 31, 2017 will have an indefinite carryforward period, which will be available to offset future taxable income created by the reversal of temporary taxable differences related to goodwill. As a result, we have adjusted the valuation allowance on our deferred tax assets and liabilities at December 31, 2019 and 2018. See additional information on tax reform and its impact on our income taxes in Note 9 – Income Taxes.

Goodwill

As the result of an acquisition, we record any excess purchase price over the net tangible and identifiable intangible assets acquired as goodwill. An allocation of the purchase price to tangible and intangible net assets acquired is based upon our valuation of the acquired assets. Goodwill is not amortized, but is subject to annual impairment tests. We complete our goodwill impairment tests as of December 31st each year. Additionally, we make evaluations between annual tests if events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The evaluation is based on the estimation of the fair values of our three reporting units, Cyber Operations and Defense (“CO&D”), Telos ID Enterprise Solutions, and Secure Communications Cyber and Enterprise Solutions, of which goodwill is housed in the CO&D reporting units, in comparison to the reporting unit’s net asset carrying values. Our discounted cash flows required management’s judgment with respect to forecasted revenue streams and operating margins, capital expenditures and the selection and use of an appropriate discount rate. We utilized the weighted average cost of capital as derived by certain assumptions specific to our facts and circumstances as the discount rate. The net assets attributable to the reporting units are determined based upon the estimated assets and liabilities attributable to the reporting units in deriving its free cash flows. In addition, the estimate of the total fair value of our reporting units is compared to the market capitalization of the Company. The Company’s assessment resulted in a fair value that was greater than the Company’s carrying value, therefore the second step of the impairment test, as prescribed by the authoritative literature, was not required to be performed and no impairment of goodwill was recorded as of December 31, 2019. Subsequent reviews may result in future periodic impairments that could have a material adverse effect on the results of operations in the period recognized. Recent operating results have reduced the projection of future cash flow growth potential, which indicates that certain negative potential events, such as a material loss or losses on contracts, or failure to achieve projected growth could result in impairment in the future. We estimate fair value of our reporting unit and compare the valuation with the respective carrying value for the reporting unit to determine whether any goodwill impairment exists. If we determine through the impairment review process that goodwill is impaired, we will record an impairment charge in our consolidated statements of operations. Goodwill is amortized and deducted over a 15-year period for tax purposes.

Stock-Based Compensation

Compensation cost is recognized based on the requirements of ASC 718, “Stock Compensation,” for all share-based awards granted. Since June 2008, we have issued restricted stock (Class A common) to our executive officers, directors and employees. In May 2017, we granted 5,005,000 shares of restricted stock to our executive officers and employees. Such stock is subject to a vesting schedule as follows: 25% of the restricted stock vests immediately on the date of grant, thereafter, an additional 25% will vest annually on the anniversary of the date of grant subject to continued employment or services. As of December 31, 2019, there were 1,198,750 shares of restricted stock that remained subject to vesting. In the event of death of the employee or a change in control, as defined by the Telos Corporation 2008 Omnibus Long-Term Incentive Plan, the 2013 Omnibus Long-Term Incentive Plan, or the 2016 Omnibus Long-Term Incentive Plan, all unvested shares shall automatically vest in full. In accordance with ASC 718, we recorded immaterial compensation expense for any of the issuances as the value of the common stock was nominal, based on the deduction of our outstanding debt, capital lease obligations, and preferred stock from an estimated enterprise value, which was estimated based on discounted cash flow analysis, comparable public company analysis, and comparable transaction analysis. Additionally, we determined that a significant change in the valuation estimate for common stock would not have a significant effect on the consolidated financial statements.

Net Income (Loss) per Share

Potentially dilutive securities not included in the calculation of diluted net loss per share because to do so would be anti-dilutive are as follows (in common stock equivalent shares):

	Six Months Ended June 30,
	2020		2019
Non-controlling interest, beginning of period		75		1,206
Common Stock Warrants, exercisable at $1.321/share		1,135		1,135
Total		1,210		2,341

Unaudited Pro Forma Net Income (Loss) per Share

Pro forma unaudited net income (loss) reflects the conversion of the Class A and Class B common stock for common stock on a 1:1 basis and the conversion of our Redeemable Preferred Stock for common stock. The Pro Forma unaudited earnings (loss) per share is computed as follows:

	Six Months Ended June 30, 2020
Net Income (Loss) Attributable to Telos Corporation
Dividends from preferred stock recorded as interest expense
Net Income (loss) to Common Shareholders Pro forma adjustment to remove preferred dividends
Net income (loss) used to compute pro forma net earnings (loss) per share
Weighted average common shares outstanding, basic and diluted, effecting the conversation of Class A and class B common stock into common stock
Pro forma adjustment to reflect conversion of preferred shares
Weighted average common shares outstanding used in computing pro forma net earnings per share, basic and diluted
Pro forma net earnings (loss) per common share, basic and diluted

Unaudited Pro Forma Balance Sheet Information

Earnings (Loss) per Share

Potentially dilutive securities not included in the calculation of diluted net loss per share because to do so would be anti-dilutive are as follows (in common stock equivalent shares):

	2019		2018		2017
Unvested restricted stock		1,191		2,428		3,724
Common Stock Warrants, exercisable at $1.321/share		1,135		1,135		1,135
Total		2,326		3,563		4,859

Unaudited Pro Forma Net Income (Loss) per Share

		2019
Net Income (Loss) Attributable to Telos Corporation
Dividends from preferred stock recorded as interest expense
Net income used to compute pro forma net earnings (loss) per share

Weighted average common shares outstanding, basic and diluted reflecting the conversion of Class A and Class B common stock into common stock
Pro forma adjustment to reflect conversion of preferred shares
Weighted average common shares outstanding used in computing pro forma net earnings per share, basic and diluted

Pro forma net earnings (loss) per common share, basic and diluted

Comprehensive Income

Other Comprehensive Income (Loss)

Accumulated other comprehensive income included within stockholders’ deficit consists of the following (in thousands):

	June 30, 2020			December 31, 2019
Cumulative foreign currency translation loss	$	(100	)	$	(101	)
Cumulative actuarial gain on pension liability adjustment		107			107
Accumulated other comprehensive income	$	7		$	6

Comprehensive Loss

Financial Instruments

Recent Accounting Pronouncements

Recent Accounting Pronouncements Adopted

Recent Accounting Pronouncements Not Yet Adopted

Recent Accounting Pronouncements Adopted

Recent Accounting Pronouncements Not Yet Adopted

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement”, which modifies the disclosure requirement for fair value measurement under ASC 820 to improve the effectiveness of such disclosures. Those modifications include the removal and addition of disclosure requirements as well as clarifying specific disclosure requirements. This standard will be effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted. The adoption of this ASU will not have a material impact on our consolidated financial position, results of operations and cash flows.

In August 2018, the FASB issued ASU 2018-15, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract,” which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This standard will be effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted. The adoption of this ASU will not have a material impact on our consolidated financial position, results of operations and cash flows.

General and Basis of Presentation (Q2) (Details)	1 Months Ended	3 Months Ended									6 Months Ended		12 Months Ended
General and Basis of Presentation (Q2) (Details)	May 31, 2017 shares	Jun. 30, 2020 USD ($) $ / shares shares	Dec. 31, 2019 USD ($) $ / shares shares	Sep. 30, 2019 USD ($)	Jun. 30, 2019 USD ($)	Mar. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Sep. 30, 2018 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Jun. 30, 2020 USD ($) Segment Reportingunit $ / shares shares	Jun. 30, 2019 USD ($) shares	Dec. 31, 2019 USD ($) Segment $ / shares shares	Dec. 31, 2018 USD ($) $ / shares shares	Dec. 31, 2017 USD ($) $ / shares shares	Dec. 31, 2016 USD ($)
Segment Reporting [Abstract]
Number of reportable segments \| Segment											1		1
Disaggregation of Revenue [Abstract]
Revenue		$ 48,610,000	$ 46,473,000	$ 45,531,000	$ 36,048,000	$ 31,166,000	$ 35,977,000	$ 34,695,000	$ 34,943,000	$ 32,401,000	$ 87,589,000	$ 67,214,000	$ 159,218,000	$ 138,016,000	$ 107,727,000
Components of Accounts Receivable [Abstract]
Billed accounts receivable		18,420,000	11,917,000				18,848,000				18,420,000		11,917,000	18,848,000
Unbilled receivables		20,689,000	16,745,000				16,000,000				20,689,000		16,745,000	16,000,000
Allowance for doubtful accounts		(738,000)	(720,000)				(306,000)				(738,000)		(720,000)	(306,000)	(411,000)	$ (429,000)
Receivables - net		38,371,000	27,942,000				34,542,000				38,371,000		27,942,000	34,542,000
Components of Contract Liabilities [Abstract]
Contract liabilities		6,682,000	6,337,000				5,232,000				6,682,000		6,337,000	5,232,000
Revenue, Performance Obligation [Abstract]
Remaining performance obligation		84,800,000	112,400,000				79,300,000				84,800,000		112,400,000	79,300,000
Revenue recognized included in opening contract liabilities		1,100,000.0000000000			1,200,000						$ 3,500,000	3,100,000	$ 4,200,000	5,500,000
Accounts Receivable [Abstract]
Percentage of initial payment by factor of U.S. Federal government receivables											90.00%		90.00%
Percentage of initial payment by factor of commercial prime contractors											85.00%		85.00%
Maximum limit of sold receivables											$ 10,000,000		$ 10,000,000
Sold receivables during the period		0			4,400,000						0	9,400,000	12,600,000	18,100,000
Loss recognized in selling, general and administrative expenses					15,000							32,000	100,000
Balance of sold receivables		0	0				900,000				0		0	900,000
Deferred price related to sold receivables							100,000							100,000
Inventories [Abstract]
Gross inventory		4,200,000	2,800,000				4,900,000				4,200,000		2,800,000	4,900,000
Inventory obsolescence reserves		861,000	860,000				520,000				861,000		860,000	520,000	$ 1,484,000	$ 1,672,000
Software Development Costs [Abstract]
Capitalized software development costs		8,700,000	5,600,000				3,100,000				8,700,000		$ 5,600,000	3,100,000
Software development estimated useful life													2 years
Amortization expense		400,000			500,000						900,000	$ 900,000	$ 1,800,000	1,100,000
Accumulated amortization		$ 4,000,000	$ 3,100,000				1,300,000				$ 4,000,000		$ 3,100,000	$ 1,300,000
Goodwill [Abstract]
Number of reporting units \| Reportingunit											3
Goodwill amortization period for income tax purposes											15 years		15 years
Restricted Stock Grants [Abstract]
Restricted stock issued during the period (in shares) \| shares	5,005,000	100,000											0	0	5,005,000
Restricted stock remained subject to vesting (in shares) \| shares			1,198,750										1,198,750
Antidilutive Securities Excluded from Computation of Earnings Per Share [Abstract]
Antidilutive securities excluded from computation of earnings per share (in shares) \| shares											1,210,000	2,341,000	2,326,000	3,563,000	4,859,000
Warrants exercise price (in dollars per share) \| $ / shares		$ 1.321	$ 1.321								$ 1.321		$ 1.321
Stock conversion ratio													1
Unaudited Pro Forma Net Income (Loss) per Share [Abstract]
Weighted average common shares outstanding used in computing pro forma net earnings per share, basic and diluted (in shares) \| shares													0	0	0
Pro forma net earnings (loss) per common share, basic and diluted (in dollars per share) \| $ / shares													$ 0	$ 0	$ 0
Accumulated Other Comprehensive Income [Abstract]
Cumulative foreign currency translation loss		$ (100,000)	$ (101,000)								$ (100,000)		$ (101,000)
Cumulative actuarial gain on pension liability adjustment		107,000	107,000								107,000		107,000
Accumulated other comprehensive income		7,000	$ 6,000				$ 17,000				$ 7,000		$ 6,000	$ 17,000
Class A Common Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Abstract]
Stock conversion ratio											1
Unaudited Pro Forma Net Income (Loss) per Share [Abstract]
Weighted average common shares outstanding, basic and diluted, effecting the conversation of Class A and class B common stock into common stock (in shares) \| shares													43,504,000	42,285,000	41,041,000
Class B Common Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Abstract]
Stock conversion ratio											1
Unaudited Pro Forma Net Income (Loss) per Share [Abstract]
Weighted average common shares outstanding, basic and diluted, effecting the conversation of Class A and class B common stock into common stock (in shares) \| shares													4,038,000	4,038,000	4,038,000
ASC 606 [Member]
Revenue from Contract with Customer [Abstract]
Revenue accruals for multiple contracts as a result of cumulative indirect rate adjustments													$ 6,000,000
Firm Fixed-Price [Member]
Disaggregation of Revenue [Abstract]
Revenue		41,935,000			28,857,000						$ 73,596,000	$ 53,787,000	131,629,000	$ 103,454,000	$ 89,516,000
Time-and-Materials [Member]
Disaggregation of Revenue [Abstract]
Revenue		3,637,000			3,691,000						7,462,000	7,620,000	14,569,000	16,795,000	10,222,000
Cost Plus Fixed Fee [Member]
Disaggregation of Revenue [Abstract]
Revenue		$ 3,038,000			3,500,000						$ 6,531,000	5,807,000	$ 13,020,000	17,767,000	7,989,000
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01
Revenue, Performance Obligation [Abstract]
Remaining performance obligation percentage			98.40%										98.40%
Remaining performance obligation, expected timing of satisfaction, period			1 year										1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01
Revenue, Performance Obligation [Abstract]
Remaining performance obligation percentage		11.40%	1.10%								11.40%		1.10%
Remaining performance obligation, expected timing of satisfaction, period		1 year	2 years								1 year		2 years
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-06-30
Revenue, Performance Obligation [Abstract]
Remaining performance obligation percentage		87.60%									87.60%
Remaining performance obligation, expected timing of satisfaction, period		6 months									6 months
Minimum [Member]
Software Development Costs [Abstract]
Software development estimated useful life											2 years
Maximum [Member]
Software Development Costs [Abstract]
Software development estimated useful life											3 years
Federal [Member]
Disaggregation of Revenue [Abstract]
Revenue		$ 46,877,000			33,774,000						$ 82,968,000	62,757,000	$ 149,257,000	129,279,000	101,519,000
State & Local, and Commercial [Member]
Disaggregation of Revenue [Abstract]
Revenue		$ 1,733,000			$ 2,274,000						$ 4,621,000	$ 4,457,000	$ 9,961,000	$ 8,737,000	$ 6,208,000
Restricted Stock Grants [Member]
Restricted Stock Grants [Abstract]
Restricted stock remained subject to vesting (in shares) \| shares		75,000									75,000
Restricted stock vested on date of grant											25.00%		25.00%
Restricted stock vest on anniversary of the date of grant											25.00%		25.00%
Noncontrolling Interest [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Abstract]
Antidilutive securities excluded from computation of earnings per share (in shares) \| shares											75,000	1,206,000
Common Stock Warrants [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Abstract]
Antidilutive securities excluded from computation of earnings per share (in shares) \| shares											1,135,000	1,135,000	1,135,000	1,135,000	1,135,000

Income Taxes (FY) (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
Income Taxes (FY) (Details) - USD ($)	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Current provision [Abstract]
Federal					$ 25,000	$ (29,000)	$ (86,000)
State					68,000	(17,000)	29,000
Total current					93,000	(46,000)	(57,000)
Deferred provision (benefit) [Abstract]
Federal					88,000	15,000	(2,622,000)
State					(285,000)	62,000	(88,000)
Total deferred			$ 19,000	$ (215,000)	(197,000)	77,000	(2,710,000)
Total (benefit) provision	$ 2,000	$ 20,000	(144,000)	(177,000)	$ (104,000)	$ 31,000	$ (2,767,000)
Reconciliation of effective tax rate [Abstract]
U.S. federal corporate tax rate					21.00%	21.00%	34.00%
State income taxes, net of federal income tax benefit					(0.20%)	(20.90%)	0.90%
Change in valuation allowance for deferred tax assets, exclusive of impact of Tax Act					(8.50%)	47.70%	(26.90%)
Cumulative deferred adjustments					(0.40%)	0.00%	0.00%
Provision to return adjustments					0.50%	1.80%	0.00%
Other permanent differences					(3.70%)	(12.20%)	(1.30%)
Dividend and accretion on preferred stock					(12.30%)	(49.90%)	(15.20%)
FIN 48 liability					(1.30%)	(4.60%)	(0.90%)
R&D credit					6.50%	27.70%	4.60%
Impact of Tax Act					0.000	(0.125)	0.355
Other					0.00%	0.00%	1.50%
Effective income tax rate					1.60%	(1.90%)	32.20%
Deferred tax assets [Abstract]
Accounts receivable, principally due to allowance for doubtful accounts					$ 185,000	$ 79,000
Allowance for inventory obsolescence and amortization					316,000	281,000
Accrued liabilities not currently deductible					1,649,000	1,634,000
Accrued compensation					1,655,000	1,206,000
Deferred rent					4,808,000	4,750,000
Section 163(j) interest limitation					804,000	246,000
Net operating loss carryforwards - federal					2,583,000	1,956,000
Net operating loss carryforwards - state					796,000	653,000
Federal tax credit					1,326,000	983,000
Total gross deferred tax assets					14,122,000	11,788,000
Less valuation allowance					(7,206,000)	(6,652,000)
Total deferred tax assets, net of valuation allowance					6,916,000	5,136,000
Deferred tax liabilities [Abstract]
Amortization and depreciation					(2,623,000)	(2,237,000)
Unbilled accounts receivable, deferred for tax purposes					(1,611,000)	(955,000)
Goodwill basis adjustment and amortization					(2,886,000)	(2,713,000)
Telos ID basis difference					(417,000)	(49,000)
Total deferred tax liabilities					(7,537,000)	(5,954,000)
Net deferred tax liabilities					(621,000)	(818,000)
Movement in Valuation Allowances and Reserves [Roll Forward]
Decrease in deferred tax liabilities					(3,000,000)
Operating loss carryforwards					12,400,000
Alternate minimum tax credit carryforwards					60,000
Unrecognized tax benefits [Roll Forward]
Unrecognized tax benefits, beginning of period			673,000	648,000	648,000	677,000	$ 762,000
Gross decreases-tax positions in prior period					(39,000)	(63,000)	(127,000)
Gross increases-tax positions in current period					101,000	92,000	77,000
Settlements					(37,000)	(58,000)	(35,000)
Unrecognized tax benefits, end of period	508,000		508,000		673,000	648,000	677,000
Interest and penalties	$ 229,000		229,000		304,000	278,000
Valuation Allowance of Deferred Tax Assets [Member]
Movement in Valuation Allowances and Reserves [Roll Forward]
Balance Beginning of Period			$ 7,206,000	$ 6,652,000	6,652,000	7,219,000	10,499,000
Additions					554,000	0	0
Deductions					0	(567,000)	(3,280,000)
Balance End of Period					$ 7,206,000	$ 6,652,000	$ 7,219,000

Fair Value Measurements (Q2)	6 Months Ended	12 Months Ended
Fair Value Measurements (Q2)	Jun. 30, 2020	Dec. 31, 2019
Fair Value Measurements [Abstract]
Fair Value Measurements	Note 4. Fair Value Measurements The accounting standard for fair value measurements provides a framework for measuring fair value and expands disclosures about fair value measurements. The framework requires the valuation of financial instruments using a three-tiered approach. The statement requires fair value measurement to be classified and disclosed in one of the following categories: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets and liabilities; Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; or Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported by little or no market activity). As of June 30, 2020 and December 31, 2019, we did not have any financial instruments with significant Level 3 inputs and we did not have any financial instruments that are measured at fair value on a recurring basis. As of June 30, 2020 and December 31, 2019, the carrying value of the Company’s Public Preferred Stock, par value $.01 per share, was approximately $141.1 million and $139.2 million, respectively, and the estimated fair market value was $68.5 million and $60.5 million, respectively, based on quoted market prices. For certain of our non-derivative financial instruments, including receivables, accounts payable and other accrued liabilities, the carrying amount approximates fair value due to the short-term maturities of these instruments. The estimated fair value of the Credit Agreement (as defined below) and long-term debt is based primarily on borrowing rates currently available to the Company for similar debt issues. The fair value approximates the carrying value of long-term debt.	Note 4. Fair Value Measurements The accounting standard for fair value measurements provides a framework for measuring fair value and expands disclosures about fair value measurements. The framework requires the valuation of investments using a three-tiered approach. The statement requires fair value measurement to be classified and disclosed in one of the following categories: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets and liabilities; Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; or Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported by little or no market activity). As of December 31, 2019 and 2018, we did not have any financial instruments with significant Level 3 inputs and we did not have any financial instruments that are measured at fair value on a recurring basis. As of December 31, 2019 and 2018, the carrying value of the Company’s 12% Cumulative Exchangeable Redeemable Preferred Stock, par value $.01 per share (the “Public Preferred Stock”) was $139.2 million and $135.4 million, respectively, and the estimated fair market value was $60.5 million and $41.4 million, respectively, based on quoted market prices. For certain of our non-derivative financial instruments, including receivables, accounts payable and other accrued liabilities, the carrying amount approximates fair value due to the short-term maturities of these instruments. The estimated fair value of the Credit Agreement (as defined below) and long-term debt is based primarily on borrowing rates currently available to the Company for similar debt issues. The fair value approximates the carrying value of long-term debt.