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Wynnefield Capital Congratulates Telos on Contract Award; Renews Calls for Telos to Discharge Its Decades-Long Financial Liability to TLSRP Holders; Questions Management Bonus Payments for 2013

Wynnefield Capital, Inc. today congratulated Telos Corp. (OTCBB:TLSRP) on a recent contract award and renewed its calls for Telos to settle at the earliest possible time the principal and arrearages owed to the holders of its 12% Cumulative Exchangeable Redeemable Preferred Stock (“TLSRP”), including all payment-in-kind (“PIK”) dividend payments declared by the Telos Board of Directors for the period 1992 through June 1995. Wynnefield is a 20-year holder of approximately 12% percent of Telos’ TLSRP. If redeemed in full, the holders of the TLSRPs would receive a cash payment significantly in excess of two times the current trading price of the security.

“Wynnefield congratulates Telos on being one of the small businesses recently awarded a contract by the NETCENTS-2 Program Office, which provides the U.S. Air Force with a primary source of netcentric and IT products, services, and solutions. While the contract is of the indefinite delivery/indefinite quantity variety, it carries a tasty $5.8 billion program award ceiling,” said Nelson Obus, President of Wynnefield Capital. “Wynnefield additionally notes that Telos was one of the recipients of a contract for the 2004 original NETCENTS Program,” continued Mr. Obus. “Wynnefield now has renewed confidence that Telos will resolve the over 20-year liability due its holders of the TLSRPs by paying them out what they are owed -- a net amount that totals 100 cents on the dollar,” Mr. Obus added.

Wynnefield noted with concern that the Telos Management Development and Compensation Committee approved a total of $925,000 in short-term incentive bonuses to the Telos CEO and four other executives for fiscal 2013, despite the fact that 2013 EBITDA came in at only 38% of the target, thus falling well short of the requisite 60% EBITDA target to trigger a proportional payout under the relevant management incentive bonus plan. The $400,000 bonus paid to the CEO was in addition to his 2013 salary of $600,000 and other compensation. “In the current ‘pay for performance’ corporate management compensation world, Wynnefield believes that the short-term incentive bonuses need to be assessed more critically each and every year. Employees and representatives of Wynnefield serve on, or chair, numerous compensation committees for other issuers and we find the current compensation and governance practices extremely distressing. We are not aware of any case where bonuses were granted in years when management delivered less than 60% of plan,” Mr. Obus continued. “In our opinion, the Telos independent directors -- many who have distinguished military backgrounds -- need to attend a boot camp focusing on current appropriate compensation and governance practices. We believe that such internal largess should stiffen the resolve of the holders of TLSRPs to insist on being repaid all principal and arrearages owed them by Telos, including all Board-declared PIK payments,” Mr. Obus concluded.

ABOUT WYNNEFIELD CAPITAL, INC.

Wynnefield Capital is a 20-year holder of approximately 12% percent of Telos’ TLSRP. Established in 1992, Wynnefield Capital, Inc. is a value investor specializing in U.S. small cap situations that have company- or industry-specific catalysts.

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