The company had posted net income of $418,000 for the quarter in the same period a year earlier.
Telos said its profitability was hurt as the company moved from a mainframe-based business to a network business. It also was hit with increased costs for building up its infrastructure to support new contracts, the company said.
Revenues, meanwhile, increased to $57.8 million, compared with $56.1 million a year ago. Improvements in the company's systems integration and consulting groups were cited as the reason for driving up revenues.
Telos expects its fourth quarter performance to improve as a previous federal budget impasse restricting the flow of equipment contracts is lifted.