The following discussion and analysis of the financial condition and results of operations should be read in conjunction with the consolidated financial statements, related notes, and other detailed information included elsewhere in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2009 (this "Form 10-Q"). This Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are statements other than historical information or statements of current condition. We generally identify forward-looking statements by the use of terms such as "believe", "intend", "expect", "may", "should", "plan", "project", "contemplate", "anticipate", or other similar statements. Examples of forward looking statements in this Quarterly Report on Form 10-Q include, but are not limited to statements: (a) regarding our belief that our technology does not infringe the patents related to customer indemnification requests and that the resolution of certain patent infringement proceedings will not have a material effect on our consolidated results of operations, financial position or cash flows; (b) that we may realize license revenue as a result of infringement claims that we make in enforcing patents; (c) that the WWSS contract vehicle is expected to continue to contribute significant government systems sales through 2011; (d) as to the sufficiency of our capital resources to meet our anticipated cash operating expenses, working capital and capital expenditures and debt service needs for at least the next twelve months; (e) that we expect to realize approximately $158.2 million of backlog in the next twelve months; (f) that we believe that capitalized software development costs will be recoverable from future gross profits; (g) regarding our belief that we were in compliance with our loan covenants and that we believe that we will continue to comply with these covenants; (h) regarding our expectations with regard to income tax assumptions and future stock compensation expenses; (i) indicating our insurance policies should cover all of the costs of the claims in the IPO laddering class action lawsuit that we will be able to expand our LBS application platform by adding additional applications; (j) our statements regarding our relationships with certain carriers and LBS providers; and (k) our statements regarding enhancements to our LBS infrastructure platform due to our acquisition of the assets of LocationLogic.

These forward-looking statements relate to our plans, objectives and expectations for future operations. In light of the risks and uncertainties inherent in all such projected operational matters, the inclusion of forward-looking statements in this report should not be regarded as a representation by us or any other person that our objectives or plans will be achieved or that any of our operating expectations will be realized. Our actual financial results realized could differ materially from the statements made herein, depending in particular upon the risks and uncertainties described in our filings with the Securities and Exchange Commission. These include without limitation risks and uncertainties relating to our financial results and our ability to (i) reach and sustain profitability, (ii) continue to rely on our customers and other third parties to provide additional products and services that create a demand for our products and services, (iii) conduct our business in foreign countries, (iv) adapt and integrate new technologies into our products, (v) expand our sales and business offerings in the wireless communications industry, (vi) develop software without any errors or defects,
(vii) have sufficient capital resources to fund the Company's operations,
(viii) protect our intellectual property rights, (ix) implement our sales and marketing strategy, and (x) successfully integrate the assets and personnel obtained in our acquisitions. These factors should not be considered exhaustive; we undertake no obligation to release publicly the results of any future revisions we may make to forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. We caution you not to put undue reliance on these forward-looking statements.

The information in this "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" discusses our unaudited consolidated financial statements, which have been prepared in accordance with GAAP for interim financial information.

This "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" provides information that our management believes to be necessary to achieve a clear understanding of our financial statements and results of operations. You should read this "Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations" together with Item 1A "Risk Factors" and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2008 Form 10-K as well as the unaudited interim consolidated financial statements and the notes thereto located elsewhere in this Form 10-Q.

Critical Accounting Policies

The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We have identified our most critical accounting policies and estimates to be those related to the following:

- Revenue recognition,
- Stock compensation expense,
- Goodwill,
- Acquired intangible assets, and
- Income taxes.

This discussion and analysis should be read in conjunction with our consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2008 (the "2008 Form 10-K").

Overview

Our business is reported across two market segments: (i) the Commercial Segment, which consists principally of enhanced communication services to and from wireless phones, location application software, our E9-1-1 application and other hosted services, and (ii) the Government Segment, which includes the design, development and deployment of information processing and communication systems and related services to government agencies.

Recent Accounting Pronouncements

See Note 1 to the unaudited interim consolidated financial statements included elsewhere in this Form 10-Q for a list of the standards implemented for the nine-months ended September 30, 2009.

Recent Acquisitions

Effective November 2, 2009, we completed the purchase of all of the outstanding stock of Solvern Innovations, Inc., a communications technology solutions company that specializes in cyber security. The business will be reported as part of the Government Segment's services category.

Effective May 19, 2009, we completed the purchase of substantially all of the assets of LocationLogic, a provider of infrastructure, applications and services for carriers and enterprises to deploy location based services. Substantially all of the LocationLogic revenue stream is service revenue from hosted infrastructure software and location-based applications. We expect the acquisition to enhance our LBS infrastructure platform application portfolio beyond navigation, traffic, and points of interest by adding family locator, mobile resource management, and phone recovery and security applications. It also deepens our longstanding relationships with two of the largest North American carriers and leaders in LBS. The acquisition also added 11 patents and 19 patent applications that are complementary to our existing patent portfolio. The newly acquired business operations are combined with our Commercial

Segment. Pro-Forma financial information has not been provided as the acquisition did not meet the Securities and Exchange Commission's significance criteria.

Indicators of Our Financial and Operating Performance

Our management monitors and analyzes a number of key performance indicators in order to manage our business and evaluate our financial and operating performance. Those indicators include:

• Revenue and gross profit. We derive revenue from the sales of systems and services including recurring monthly service and subscriber fees, maintenance fees, software licenses and related service fees for the design, development, and deployment of software and communication systems, and products and services derived from the delivery of information processing and communication systems to governmental agencies.

• Gross profit represents revenue minus direct cost of revenue, including certain non-cash expenses. The major items comprising our cost of revenue are compensation and benefits, third-party hardware and software, amortization of software development costs, non-cash stock-based compensation, and overhead expenses. The costs of hardware and third-party software are primarily associated with the delivery of systems, and fluctuate from period to period as a result of the relative volume, mix of projects, level of service support required and the complexity of customized products and services delivered. Amortization of software development costs, including acquired technology, is associated with the recognition of systems revenue from our Commercial Segment.

• Operating expenses. Our operating expenses are primarily compensation and benefits, professional fees, facility costs, marketing and sales-related expenses, and travel costs as well as certain non-cash expenses such as non-cash stock compensation expense, depreciation and amortization of property and equipment, and amortization of acquired intangible assets.

• Liquidity and cash flows. The primary driver of our cash flows is the results of our operations. Other important sources of our liquidity are our Loan Agreement, lease financings secured for the purchase of equipment and potential borrowings under our credit lines.

• Balance sheet. We view cash, working capital, accounts receivable balances and days revenue in accounts receivable as important indicators of our financial health.

Results of Operations

Revenue and Cost of Revenue

The following discussion addresses the revenue, direct cost of revenue, and gross profit for our two business segments.

Commercial Segment:

                                                Three Months                                      Nine Months
                                                    Ended                                            Ended
                                                September 30,           2009 vs. 2008            September 30,            2009 vs. 2008
($ in millions)                               2009         2008          $           %         2009         2008           $           %

Services revenue                             $  23.6      $ 15.7     $     7.9        50 %    $  62.1      $ 47.8      $    14.3        30 %
Systems revenue                                  9.5         7.0           2.5        36 %       29.7        26.8            2.9        11 %

Commercial segment revenue                      33.1        22.7          10.4        46 %       91.8        74.6           17.2        23 %

Direct cost of services revenue                  8.8         8.1           0.7         9 %       25.3        24.0            1.3         5 %
Direct cost of systems revenue                   2.5         2.5             -         -          6.9         7.4           (0.5 )      (7 )%

Commercial segment cost of revenue              11.3        10.6           0.7         7 %       32.2        31.4            0.8         3 %

Services gross profit                           14.8         7.6           7.2        95 %       36.8        23.8           13.0        55 %
% of revenue                                      63 %        48 %                                 59 %        50 %
Systems gross profit                             7.0         4.5           2.5        56 %       22.8        19.4            3.4        18 %

% of revenue                                      74 %        64 %                                 77 %        72 %
Commercial segment gross profit1             $  21.8      $ 12.1     $     9.7        80 %    $  59.6      $ 43.2      $    16.4        38 %

% of revenue                                      66 %        53 %                                 65 %        58 %

1 See discussion of segment reporting in Note 6 to the accompanying unaudited consolidated financial statements

Commercial Services Revenue, Cost of Revenue, and Gross Profit:

Commercial services revenue increased 50% and 30%, respectively, for the three- and nine-months ended September 30, 2009 versus the comparable periods of 2008.

Our hosted offerings include our E9-1-1 service for wireless and Voice over Internet Protocol (VoIP) E9-1-1 service providers, hosted Position Determining Entity (PDE) service, and hosted Location Based Service (LBS) applications. Revenue from these offerings primarily consists of monthly recurring service fees and is recognized in the month earned. E9-1-1, PDE, VoIP and hosted LBS service fees are priced based on units served during the period, such as the number of customer cell sites served, the number of connections to Public Service Answering Points (PSAPs), or the number of customer subscribers served. Subscriber service revenue is generated by client software applications for wireless subscribers. Maintenance fees on our systems and software licenses are collected in advance and recognized ratably over the maintenance period. Unrecognized maintenance fees are included in deferred revenue. Custom software development, implementation and maintenance services may be provided under time and materials or fixed-fee contracts.

Commercial services revenue in the three- and nine-months ended September 30, 2009 was $7.9 million and $14.3 million higher, respectively, than the same periods for 2008 from increased subscriber revenue for LBS applications, service connection deployments of our E9-1-1 services for cellular and VoIP service providers, and an increase in software maintenance revenue, as well as about $4 and $6 million, respectively, for the three- and nine-months ended September 30, 2009, of additional subscriber service revenue under former LocationLogic customer contracts following the May 2009 acquisition of that business.

The direct cost of commercial services revenue consists primarily of compensation and benefits, network access, data feed and circuit costs, and equipment and software maintenance. The direct cost of maintenance revenue consists primarily of compensation and benefits expense. For the three- and nine-months ended September 30, 2009, the direct cost of services revenue was $0.7 million and $1.3 million higher, respectively, than the three- and nine-months ended September 30, 2008 primarily due to increase in labor and other direct costs related to the operations of the LocationLogic business. We also incurred an increase in labor and direct costs related to custom development efforts responding to customer requests and deployment requirements for VoIP. For both the three- and nine-months ended September 30, 2009, the cost of circuits and other data access costs accounted for approximately 12% of total direct costs of

our commercial service revenues. Such costs comprised approximately 13% of the total direct costs of our commercial service revenues for both the three- and nine-months ended September 30, 2008.

Commercial services gross profit for the three- and nine-months ended September 30, 2009 was approximately 95% and 55% higher, respectively, than the corresponding periods in 2008 as a result of higher revenue, improved operating efficiencies and the inclusion of LocationLogic subscriber-based services revenue for the full third quarter of 2009.

Commercial Systems Revenue, Cost of Revenue, and Gross Profit:

We sell communications systems incorporating our licensed software for enhanced services, including text messaging and location-based services, to wireless carriers. These systems are designed to incorporate our licensed software. We design our software to ensure that it is compliant with all applicable standards. Licensing fees for our carrier software are generally a function of the volume of its usage in our customers' networks. As a carrier's subscriber base or usage increases, the carrier must purchase additional licenses for capacity under its agreement and we receive additional system license revenue. We may also realize license revenues as a result of infringement claims that we successfully make in enforcing our patents.

Commercial systems revenue for the three-months ended September 30, 2009 was 36% higher than in the comparable period of 2008, due mainly to the purchases of increased licensed text messaging capacity by customers in the third quarter of 2009 compared to the third quarter of 2008. Commercial systems revenue was 11% higher for the nine-months ended September 30, 2009 than for the comparable nine-month period of 2008 primarily due to greater purchases of licensed text messaging software which was partly offset by reduced equipment revenue due to a customer hardware refresh in 2008 with no comparable hardware project in 2009.

The direct cost of our commercial systems consists primarily of compensation and benefits, purchased equipment, third-party hardware and software, travel expenses, consulting fees as well as the amortization of both acquired and capitalized software development costs for all reported periods. The direct cost of the license component of systems is normally very low, and the gross profit very high since the software development efforts were expensed in prior periods. During the three- and nine-months ended September 30, 2009, direct costs of systems included $0.8 million and $2.1 million, respectively, of amortization of software development costs. In the three- and nine-months ended September 30, 2008, the composition of the direct cost of our systems was about the same except for $0.6 million and $1.5 million, respectively, of amortization of software development costs. The decrease in the direct costs of systems in the three- and nine-months ended September 30, 2009 is due to the absence of a comparable hardware project during the same periods in 2008.

Our commercial systems gross profit as a percentage of revenue was 74% and 77%, respectively, in the three- and nine-month periods ended September 30, 2009 up from 64% and 72%, respectively, for the three- and nine-months ended September 30, 2008. The gross profit for the three- and nine-months ending September 30, 2009 was 80% and 38% higher, respectively, than the same period in 2008 as a result of an increase in higher-margin sales of licensed software capacity and offset by a decrease in lower-margin hardware revenue.

Government Segment:

                                           Three Months                                          Nine Months
                                               Ended                                                Ended
                                           September 30,             2009 vs. 2008              September 30,             2009 vs. 2008
($ in millions)                          2009         2008           $             %          2009         2008           $             %

Services revenue                        $  15.7      $  9.2      $     6.5          71 %     $  42.4      $ 24.2      $    18.2          75 %
Systems revenue                            22.8        24.6           (1.8 )        (7 )%       75.0        42.1           32.9          78 %

Government segment revenue                 38.5        33.8            4.7          14 %       117.4        66.3           51.1          77 %

Direct cost of services revenue            12.5         7.3            5.2          71 %        33.1        19.3           13.8          72 %
Direct cost of systems revenue             19.6        21.1           (1.5 )        (7 )%       60.4        34.0           26.4          78 %

Government segment cost of revenue         32.1        28.4            3.7          13 %        93.5        53.3           40.2          75 %

Services gross profit                       3.2         1.9            1.3          68 %         9.3         4.9            4.4          90 %
% of revenue                                 20 %        21 %                                     22 %        20 %
Systems gross profit                        3.2         3.5           (0.3 )        (9 )%       14.6         8.1            6.5          80 %

% of revenue                                 14 %        14 %                                     19 %        19 %
Government segment gross profit1        $   6.4      $  5.4      $     1.0          19 %     $  23.9      $ 13.0      $    10.9          84 %

% of revenue                                 17 %        16 %                                     20 %        20 %

1 See discussion of segment reporting in Note 6 to the accompanying unaudited consolidated financial statements

For the three- and nine-months ended September 30, 2009, Government Segment revenue increased 14% and 77%, respectively. During the third quarter of 2006, TCS was one of six vendors selected by the U.S. Army to provide secure satellite services and systems under a five year Worldwide Satellite Systems contract vehicle (the "WWSS"), with a possible maximum value of up to $5 billion for the six vendors. The WWSS contract vehicle is expected to continue to generate significant government systems sales through 2011. The Company's Government Segment has been awarded participation as a prime or sub-contractor to provide similar satellite-based technology under several other contract vehicles. The total potential value of all WWSS awards received by the Company to date is approximately $450 million of which $222.5 million has been funded.

Government Services Revenue, Cost of Revenue, and Gross Profit:

Government services revenue primarily consists of communications engineering, program management, help desk outsource, network design, and management for government agencies. Our Government Segment also operates teleport facilities for data connectivity via satellite including resale of satellite airtime. Government services revenue increased by approximately 71% and 75%, respectively, for the three- and nine-months ended September 30, 2009 versus the comparable period for 2008 as a result of new and expanded-scope contracts for professional services, satellite airtime services using our teleport facilities, and maintenance and field support associated with our systems. Direct cost of government services revenue consists of compensation, benefits and travel expenses incurred in delivering these services, as well as satellite space segment purchased for resale. These costs increased as a result of the increased volume of services.

Our gross profit from government services was $3.2 million in the three-months ended September 30, 2009 compared to $1.9 million for the same period of 2008. Gross profit was $9.3 million in the nine-months ended September 30, 2009 versus $4.9 million for the same period in 2008. Gross profit percentage in the three- and nine-months ended September 30, 2009 increased as a result of the increase in revenue for maintenance and satellite services without significant incremental costs due to improved utilization of our facilities and satellite air time.

Government Systems Revenue, Cost of Revenue, and Gross Profit:

We generate government systems revenue from the design, development, assembly and deployment of information processing and communication systems, primarily deployable satellite-based ground stations, and integration of those systems into customer networks. These are largely variations on our SwiftLink® product line, which are lightweight, secure, deployable communications systems, sold to units of the U.S. Department of Defense and other agencies.

Systems sales in our Government Segment were $22.8 million in the three-months ended September 30, 2009 versus $24.6 million in the same period of 2008, The decrease in sales is due to the timing of the fulfillment of task orders under the WWSS contract vehicle which was offset by an increase in low margin equipment pass through sales. Systems sales were $75.0 million for the nine-months ended September 30, 2009 compared to $42.1 million for the nine-months ended September 30, 2008. The increased sales in nine-months ended September 30, 2009 versus the same period in 2008 were due to increased sales of our SwiftLink® and deployable communication systems resulting from competitive wins, under the WWSS 5-year contract vehicle.

The cost of our government systems revenue consists of purchased system components, compensation, benefits, travel, and the costs of third-party contractors whom we engage. These costs have increased as a direct result of the increase in volume. These equipment and third-party costs are variable for our various types of products, and margins fluctuate between periods based on the respective product mixes.

Our government systems gross profit decreased $0.3 million for the three-months ended September 30, 2009 compared to the same period of 2008 as a direct result of the increase in lower margin equipment pass through sales. Government systems gross profit increased to $14.6 million in the nine-months ended September 30, 2009 compared to $8.1 million in the same period as 2008 mainly as a result of increased revenue.

Revenue Backlog

As of September 30, 2009 and 2008, we had unfilled orders, or funded backlog, as
follows:


                                                           September 30,             2009 vs. 2008
($ in millions)                                          2009         2008            $           %

Commercial Segment                                      $  90.6      $  68.5      $    22.1        32 %
Government Segment                                        109.0         87.0           22.0        25 %

Total funded contract backlog                           $ 199.6      $ 155.5      $    44.1        28 %

Commercial Segment                                      $  90.6      $  68.5      $    22.1        32 %
Government Segment                                        348.3        381.2          (32.9 )      (9 )%

Total backlog of orders and commitments, including
customer options                                        $ 438.9      $ 449.7      $   (10.8 )      (2 )%

Expected to be realized within the next 12 months       $ 158.2      $ 116.8      $    41.4        35 %

Funded contract backlog on September 30, 2009 and 2008 was approximately . . .