<SEC-DOCUMENT>0001144204-13-046023.txt : 20130814
<SEC-HEADER>0001144204-13-046023.hdr.sgml : 20130814
<ACCEPTANCE-DATETIME>20130814175547
ACCESSION NUMBER: 0001144204-13-046023
CONFORMED SUBMISSION TYPE: 8-K
PUBLIC DOCUMENT COUNT: 4
CONFORMED PERIOD OF REPORT: 20130813
ITEM INFORMATION: Results of Operations and Financial Condition
ITEM INFORMATION: Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers: Compensatory Arrangements of Certain Officers
ITEM INFORMATION: Financial Statements and Exhibits
FILED AS OF DATE: 20130814
DATE AS OF CHANGE: 20130814
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: Fortress International Group, Inc.
CENTRAL INDEX KEY: 0001320760
STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MANAGEMENT CONSULTING SERVICES [8742]
IRS NUMBER: 202027651
STATE OF INCORPORATION: NY
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 8-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-33627
FILM NUMBER: 131039325
BUSINESS ADDRESS:
STREET 1: 7226 LEE DEFOREST DRIVE,
STREET 2: SUITE 203
CITY: COLUMBIA
STATE: MD
ZIP: 21046
BUSINESS PHONE: (410) 312-9988
MAIL ADDRESS:
STREET 1: 7226 LEE DEFOREST DRIVE,
STREET 2: SUITE 203
CITY: COLUMBIA
STATE: MD
ZIP: 21046
FORMER COMPANY:
FORMER CONFORMED NAME: TSS, Inc.
DATE OF NAME CHANGE: 20130607
FORMER COMPANY:
FORMER CONFORMED NAME: Fortress International Group, Inc.
DATE OF NAME CHANGE: 20070131
FORMER COMPANY:
FORMER CONFORMED NAME: Fortress America Acquisition CORP
DATE OF NAME CHANGE: 20050315
</SEC-HEADER>
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<TYPE>8-K
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<DESCRIPTION>FORM 8-K
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>UNITED STATES</B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SECURITIES AND EXCHANGE COMMISSION</B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Washington, D.C. 20549</B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"> </P>
<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">FORM 8-K</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CURRENT REPORT</B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Pursuant to Section 13 or 15(d) of</B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>The Securities Exchange Act of 1934</B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>August 13, 2013</B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Date of Report (Date of earliest event reported)</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>TSS, INC.</B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Exact name of registrant as specified in
its charter)</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </P>
<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR>
<TD STYLE="vertical-align: bottom; width: 33%; font-size: 10pt; text-align: center"><FONT STYLE="font-size: 10pt"><B>Delaware</B></FONT></TD>
<TD STYLE="vertical-align: top; width: 34%; font-size: 10pt; text-align: center"><FONT STYLE="font-size: 10pt"><B>000-51426</B></FONT></TD>
<TD STYLE="vertical-align: bottom; width: 33%; font-size: 10pt; text-align: center"><FONT STYLE="font-size: 10pt"><B>20-2027651</B></FONT></TD></TR>
<TR>
<TD STYLE="vertical-align: bottom">
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(State or other jurisdiction of</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">incorporation)</P></TD>
<TD STYLE="vertical-align: top; font-size: 10pt; text-align: center"><FONT STYLE="font-size: 10pt">(Commission File Number)</FONT></TD>
<TD STYLE="vertical-align: bottom">
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(I.R.S. Employer</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Identification No.)</P></TD></TR>
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<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR>
<TD STYLE="vertical-align: bottom; width: 40%; font-weight: normal; layout-grid-mode: line; text-decoration: none; text-align: center; font-style: normal"><FONT STYLE="font-size: 10pt; text-underline-style: none"><B>7226 Lee DeForest Drive, Suite 104</B></FONT></TD>
<TD STYLE="vertical-align: top; width: 15%; font-weight: normal; layout-grid-mode: line; text-decoration: none; text-align: center; font-style: normal"></TD>
<TD STYLE="vertical-align: bottom; width: 45%; font-weight: normal; layout-grid-mode: line; text-decoration: none; text-align: center; font-style: normal"><FONT STYLE="font-size: 10pt"> </FONT></TD></TR>
<TR>
<TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font-size: 10pt"><B>Columbia, Maryland</B></FONT></TD>
<TD STYLE="vertical-align: top; text-align: center"> </TD>
<TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font-size: 10pt"><B>21046</B></FONT></TD></TR>
<TR>
<TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font-size: 10pt">(Address of principal executive offices)</FONT></TD>
<TD STYLE="vertical-align: top; text-align: center"> </TD>
<TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font-size: 10pt">(Zip Code)</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </P>
<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
<TD STYLE="width: 100%; text-align: center"><FONT STYLE="font-size: 10pt"><B>(410) 423-7438</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
<TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">(Registrant’s telephone number, including area code)</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </P>
<P STYLE="font: small-caps bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Not Applicable</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Former name, former address, and former
fiscal year, if changed since last report.)</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Check the appropriate box below if the
Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </P>
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<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Wingdings">¨</FONT></TD><TD STYLE="text-align: justify">Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425)</TD>
</TR></TABLE>
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<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Wingdings">¨</FONT></TD><TD STYLE="text-align: justify">Soliciting material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR 240.14a-12)</TD>
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<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Wingdings">¨</FONT></TD><TD STYLE="text-align: justify">Pre-commencement communications pursuant to Rule 14d-2(b)
under the Exchange Act (17 CFR 240.14d-2(b))</TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 13.5pt"> </P>
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<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Wingdings">¨</FONT></TD><TD STYLE="text-align: justify">Pre-commencement communications pursuant to Rule 13e-4(c)
under the Exchange Act (17 CFR 240.13e-4(c))</TD>
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<TD STYLE="width: 0in"></TD><TD STYLE="width: 1in; text-align: left"><B>Item 2.02.</B></TD><TD STYLE="text-align: justify"><B>Results of Operations and Financial Condition.</B></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On Wednesday, August 14, 2013, TSS, Inc.
(the “Company”), issued a press release reporting certain financial results of the Company for the three and six months
ended June 30, 2013.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">A copy of the press release is being furnished
herewith as Exhibit 99.1.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Company’s financial results contain
non-GAAP financial measures. Pursuant to the requirements of Regulation G, the Company has provided reconciliations within the
press release of the non-GAAP financial measures to the most directly comparable GAAP financial measures. Disclosure regarding
definitions of these measures used by the Company and why the Company’s management believes the measures provide useful information
to investors is also included in the press release.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Company will conduct a conference call
to discuss its financial results on Wednesday, August 14, 2013, at 4:30 p.m., Eastern Daylight Time.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The information in this Report, including
Exhibit 99.1 attached hereto, is furnished pursuant to Item 2.02 of this Current Report on Form 8-K. Such information shall not
be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated
by reference into any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in
such filing.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Statements contained in this report contain
“forward-looking statements,” within the meaning of the Private Securities Litigation Reform Act of 1995. <FONT STYLE="color: black">In
this context, forward-looking statements may address matters such as our expected future business and financial performance, and
often contain words such as “guidance,” “prospects,” “expects,” “anticipates,”
“intends,” “plans,” “believes,” “seeks,” “should,” or “will.”
Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Particular uncertainties
that could adversely or positively affect the Company's future results include: the Company's reliance on a significant portion
of its revenues from a limited number of customers; risks relating to operating in a highly competitive industry; actual or potential
conflicts of interest between the Company and members of the Company’s senior management; risk relating to rapid technological,
structural, and competitive changes affecting the industries the Company serves; the uncertainty as to whether the Company can
replace its backlog; risks involved in properly managing complex projects; risks relating to the possible cancellation of customer
contracts on short notice; risks relating to our ability to continue to implement our strategy, including having sufficient financial
resources to carry out that strategy; risks relating to our ability to meet all of the terms and conditions of our debt obligations
or maintain sufficient availability under our revolving credit facility; risks relating to the acquisition of businesses; uncertainty
related to current economic conditions and the related impact on demand for our services; and other risks and uncertainties disclosed
in the Company's filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K for the fiscal year
ended December 31, 2012. These uncertainties may cause the Company's actual future results to be materially different than those
expressed in the Company’s forward-looking statements. The Company does not undertake to update its forward-looking statements</FONT>.<FONT STYLE="color: black">
</FONT></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </P>
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<TD STYLE="width: 0in"></TD><TD STYLE="width: 1in; text-align: left"><B>Item 5.02.</B></TD><TD STYLE="text-align: justify"><B>Departure of Directors or Certain Officers; Election
of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.</B></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">	 </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On August 13, 2013, the Company entered
into an Amendment to an Executive Employment Agreement (the “Amendment”) with Gerard J. Gallagher, the President and
Chief Operating Officer of the Company, amending that certain Executive Employment Agreement, effective January 19, 2007, as amended
by Amendment No. 1, dated August 26, 2008, further amended by the Amendment to Executive Agreement, effective February 28, 2010,
further amended by the Amendment to Executive Employment Agreement, effective January 3, 2012, further amended by the Amendment
to Executive Employment Agreement, effective March 14, 2012, and further amended by the Amendment to Executive Agreement, effective
May 21, 2013 (collectively, the “Employment Agreement”).</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </P>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Amendment provides that either Mr. Gallagher
or the Company can terminate Mr. Gallagher’s employment with the Company upon thirty (30) days’ written notice. Additionally,
Mr. Gallagher’s position changes from President and Chief Operating Officer of the Company to Chief Technical Officer of
the Company, reporting to the Company’s Chief Executive Officer. If the Company terminates Mr. Gallagher’s employment
other than for “Cause” or Mr. Gallagher terminates his employment for “Good Reason” (as those terms are
defined in the Employment Agreement), the Company will pay Mr. Gallagher his base salary and a portion of any elected COBRA coverage
through December 31, 2013. Mr. Gallagher would only be entitled to receive his base salary through the date of termination upon
a termination of his employment after December 31, 2013. A copy of the Amendment is filed as Exhibit 99.2 to this Form 8-K and
is incorporated herein by reference.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Effective August 13, 2013, the Company’s
board of directors elected Anthony Angelini, the Chief Executive Officer of the Company, President of the Company.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </P>
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<TD STYLE="width: 0in"></TD><TD STYLE="width: 1in; text-align: left"><B>Item 9.01.</B></TD><TD STYLE="text-align: justify"><B>Financial Statements and Exhibits.</B></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </P>
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<TD STYLE="width: 8%"><FONT STYLE="font-size: 10pt">99.1</FONT></TD>
<TD STYLE="width: 2%"> </TD>
<TD STYLE="width: 90%"><FONT STYLE="font-size: 10pt">Press Release, dated August 14, 2013.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
<TD><FONT STYLE="font-size: 10pt">99.2</FONT></TD>
<TD> </TD>
<TD><FONT STYLE="font-size: 10pt">Amendment to Executive Employment Agreement, effective August 13, 2013, between the Company and Gerard J. Gallagher.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 66pt; text-indent: -66pt"> </P>
<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">SIGNATURES</P>
<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: -0.2pt">Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: -0.2pt"> </P>
<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify"> </TD>
<TD COLSPAN="2" STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">TSS, INC.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
<TD STYLE="width: 50%; text-align: justify"> </TD>
<TD STYLE="width: 5%; text-align: justify"> </TD>
<TD STYLE="width: 45%; text-align: justify"> </TD></TR>
<TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify"> </TD>
<TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">By:</FONT></TD>
<TD STYLE="border-bottom: windowtext 1pt solid; text-align: justify"><FONT STYLE="font-size: 10pt"><I>/s/ Maura McNerney</I></FONT></TD></TR>
<TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify"> </TD>
<TD STYLE="text-align: justify"> </TD>
<TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Maura McNerney</FONT></TD></TR>
<TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify"> </TD>
<TD STYLE="text-align: justify"> </TD>
<TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Chief Financial Officer</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Date: August 14, 2013</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </P>
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<TYPE>EX-99.1
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<FILENAME>v352977_ex99-1.htm
<DESCRIPTION>EXHIBIT 99.1
<TEXT>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B> </B></P>
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<TR STYLE="vertical-align: bottom; text-align: right">
<TD STYLE="width: 50%; font-size: 10pt; text-align: left"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><img src="tlogo.jpg"></FONT></TD>
<TD STYLE="width: 50%; text-align: right; font-size: 10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">7226 Lee DeForest Dr. </FONT><BR>
<FONT STYLE="font: 10pt Times New Roman, Times, Serif">Suite 104 </FONT><BR>
<FONT STYLE="font: 10pt Times New Roman, Times, Serif">Columbia, MD. 21046</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B> </B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Company Contact: </B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">TSS, Inc.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Maura McNerney, Chief Financial Officer</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Phone: (410) 423-7300</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B> </B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>TSS, INC. REPORTS SECOND QUARTER 2013
FINANCIAL RESULTS</B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B> </B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>GALLAGHER ASSUMES ROLE AS CHIEF TECHNICAL
OFFICER, ANGELINI AS PRESIDENT</B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B> </B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>COLUMBIA, MD – August 14, 2013 – TSS, Inc. (Other
OTC: TSSI)</B>,<B><I> </I></B>a mission critical data center and technology<FONT STYLE="font-size: 10pt"> </FONT>services company,
today announced financial results for the second quarter ended June 30, 2013.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Commenting on the quarterly results, Anthony Angelini, Chief
Executive Officer of TSS, stated, “The strategy we have articulated is to focus on higher margin and recurring business,
and to continue to develop but not rely on large construction projects. The second quarter was a slow period for both new construction
projects and modular data center installations. Despite slower activity we were able to grow our facilities management business.
The resulting shift in the mix of our sales yielded strong gross margin levels in the quarter. We expect increased levels of activity
during the second half of the year.”</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Angelini continued, “We accomplished a key strategic goal
of the quarter in the May acquisition of a systems integration business. We continue to execute on our strategic plan to provide
a full range of data center services for both traditional and modular centers. The integration of this business is on plan and
we are excited about its growth potential.”</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Angelini added, “As we continue to evolve the organization,
Jerry Gallagher will assume the role as CTO and I will assume his role as President in addition to CEO. This transition will allow
Jerry to focus on technology and further develop our leadership at the forefront of rapidly evolving data center technologies as
well as improve visibility of our technical capabilities.”</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B> </B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>Second Quarter 2013 Financial Highlights:</U></B></P>
<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 45pt; text-indent: -0.25in"> </P>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 27pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol">·</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Revenue of $7.0 million, compared with $15.5 million in the second
quarter of 2012.</FONT></TD></TR></TABLE>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 27pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol">·</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Gross profit of $2.0 million, compared with $2.3 million in the second
quarter of 2012.</FONT></TD></TR></TABLE>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 27.35pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol">·</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Normalized Adjusted EBITDA loss of $0.4 million, compared with Normalized
Adjusted EBITDA income of $0.2 million in the second quarter of 2012.</FONT></TD></TR></TABLE>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 27.35pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol">·</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Net loss of $1.0, or $0.07 per basic and diluted share, compared with
net loss of $2.3 million or $0.16 per basic and diluted share, in the second quarter of 2012. </FONT></TD></TR></TABLE>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 27pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol">·</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Closing of $6.0 million revolving line of credit with Bridge Bank</FONT></TD></TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><BR>
<BR>
</B></P>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B> </B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Quarterly Conference Call Details</B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company has scheduled a conference call to discuss the second
quarter 2013 financial results and its strategic vision for today at 4:30PM Eastern today.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">To participate on the conference call, please dial 1-877-941-8418
toll free from the U.S., or 1-480-629-9809 for international callers. Investors may also access a live audio web cast of this
conference call under the “events” tab on the investor relations section of the Company's website at <U>http://ir.totalsitesolutions.com/events.cfm</U>.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">An audio replay of the conference call will be available approximately
one hour after the conclusion of the call and will be made available until Wednesday, August 21, 2013. The audio replay can be
accessed by dialing 1 303 590 3030 locally or 1-800-406-7325 toll free then enter access ID number 4635629. Additionally, a replay
of the webcast will be available approximately two hours after the conclusion of the call, and will remain available for 90 calendar
days.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B> </B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>About Non-GAAP Financial Measures </B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black">Adjusted EBITDA
<FONT STYLE="text-underline-style: double">and Normalized Adjusted EBITDA are</FONT> supplemental financial <FONT STYLE="text-underline-style: double">measures
</FONT>not defined under Generally Accepted Accounting Principles (GAAP). We define <FONT STYLE="text-underline-style: double">Adjusted
</FONT>EBITDA as net income <FONT STYLE="text-underline-style: double">(loss) </FONT>before interest expense, income taxes, depreciation
and amortization, impairment loss on goodwill and other intangibles, stock-based compensation, <FONT STYLE="text-underline-style: double">and
</FONT>provision for bad debts. We present <FONT STYLE="text-underline-style: double">Adjusted</FONT> EBITDA because we believe
this supplemental measure of operating performance is helpful in comparing our operating results across reporting periods on a
consistent basis by excluding<FONT STYLE="text-underline-style: double"> non-cash</FONT> items that may, or could, have a disproportionate
positive or negative impact on our results of operations in any particular period. We also use <FONT STYLE="text-underline-style: double">Adjusted
</FONT>EBITDA as a factor in evaluating the performance of certain management personnel when determining incentive compensation.
</FONT></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; color: blue"><FONT STYLE="text-underline-style: double; color: Black"> </FONT></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; color: blue"><FONT STYLE="text-underline-style: double; color: Black">We
define Normalized Adjusted EBITDA as Adjusted EBITDA before restructuring charges, certain other non-recurring costs and acquisition
expenses. We present Normalized Adjusted EBITDA because we believe it is helpful in comparing our operating results across reporting
periods on a consistent basis by excluding from Adjusted EBITDA certain non-recurring items that do not directly correlate to
our business and may, or could, have a disproportionate positive or negative impact on our performance during a particular period.
Similar to Adjusted EBITDA, we also use Normalized Adjusted EBITDA as a factor in evaluating the performance of certain management
personnel when determining incentive compensation. </FONT></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; color: blue"><FONT STYLE="text-underline-style: double; color: Black"> </FONT></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="text-underline-style: double; color: Black">Adjusted
EBITDA and Normalized Adjusted EBITDA</FONT><FONT STYLE="color: Black"> may not be comparable to similarly titled measures reported
by other companies. Adjusted EBITDA<FONT STYLE="text-underline-style: double"> and Normalized Adjusted EBITDA</FONT>, while providing
useful information, should not be considered in isolation or as an alternative to net income or cash flows as determined under
GAAP. Consistent with Regulation G under the U.S. federal securities laws, <FONT STYLE="text-underline-style: double">Adjusted
</FONT>EBITDA <FONT STYLE="text-underline-style: double">and Normalized Adjusted EBITDA have</FONT> been reconciled to the nearest
GAAP measure, and this reconciliation is located under the heading "Normalized Adjusted EBITDA Reconciliation" following
the Consolidated Statements of Operations included in this press release.</FONT></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B> </B></P>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B> </B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>About TSS, Inc. </B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">TSS is a trusted single source provider of mission-critical
planning, design, system integration, deployment, maintenance and evolution of data center facilities and information infrastructure.
TSS specializes in customizable end to end solutions powered by industry experts and innovative services that include technology
consulting, engineering, design, construction, operations, facilities management, technology system installation and integration,
as well as maintenance for traditional and modular data centers. TSS is headquartered in Columbia, Md. For more information contact
us at <U>www.totalsitesolutions.com</U> or call 888-321-4877.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B> </B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Forward Looking Statements </B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">This press release may contain "forward-looking
statements" — that is, statements related to future — not past — events, plans, and prospects. In this context,
forward-looking statements may address matters such as our expected future business and financial performance, and often contain
words such as "guidance," "expects," "anticipates," "intends," "plans," "believes,"
"seeks," "should," or "will." Forward-looking statements by their nature address matters that are,
to different degrees, uncertain. Particular uncertainties that could adversely or positively affect the Company's future results
include: the Company's reliance on a significant portion of its revenues from a limited number of customers; risks relating to
operating in a highly competitive industry; actual or potential conflicts of interest between the Company and members of the Company’s
senior management; risks relating to rapid technological, structural, and competitive changes affecting the industries the Company
serves; the uncertainty as to whether the Company can replace its backlog; risks involved in properly managing complex projects;
risks relating the possible cancellation of customer contracts on short notice; risks relating our ability to continue to implement
our strategy, including having sufficient financial resources to carry out that strategy; risks relating to our ability to meet
all of the terms and conditions of our debt obligations or maintain sufficient availability under our revolving credit facility;
risks relating to the acquisition of businesses; uncertainty related to current economic conditions and the related impact on demand
for our services; and other risks and uncertainties disclosed in the Company's filings with the Securities and Exchange Commission,
including the Annual Report on Form 10-K for the fiscal year ended December 31, 2012. These uncertainties may cause the Company's
actual future results to be materially different than those expressed in the Company's forward-looking statements. The Company
does not undertake to update its forward-looking statements.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </P>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>TSS, Inc.</B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Condensed Consolidated Balance Sheets</B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B> </B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>
<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
<TD NOWRAP> </TD><TD NOWRAP STYLE="font-style: italic"> </TD>
<TD COLSPAN="2" NOWRAP STYLE="font-style: italic; text-align: center">(Unaudited)</TD><TD NOWRAP STYLE="font-style: italic"> </TD><TD NOWRAP> </TD>
<TD COLSPAN="2" NOWRAP STYLE="text-align: center"> </TD><TD NOWRAP> </TD></TR>
<TR STYLE="vertical-align: bottom">
<TD NOWRAP> </TD><TD NOWRAP> </TD>
<TD COLSPAN="2" NOWRAP STYLE="text-align: center">June 30,</TD><TD NOWRAP> </TD><TD NOWRAP> </TD>
<TD COLSPAN="2" NOWRAP STYLE="text-align: center">December 31,</TD><TD NOWRAP> </TD></TR>
<TR STYLE="vertical-align: bottom">
<TD NOWRAP> </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> </TD>
<TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">2013</TD><TD NOWRAP STYLE="padding-bottom: 1pt"> </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> </TD>
<TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt"> </TD></TR>
<TR STYLE="vertical-align: bottom">
<TD> </TD><TD> </TD>
<TD COLSPAN="2"> </TD><TD> </TD><TD> </TD>
<TD COLSPAN="2"> </TD><TD> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
<TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Current Assets:</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
<TD STYLE="width: 74%; text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Cash and cash equivalents</TD><TD STYLE="width: 1%"> </TD>
<TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">3,088,122</TD><TD STYLE="width: 1%; text-align: left"> </TD><TD STYLE="width: 1%"> </TD>
<TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">5,608,322</TD><TD STYLE="width: 1%; text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
<TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Contract and other receivables, net</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">6,104,714</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">7,525,340</TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
<TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Costs and estimated earnings in excess of billings on uncompleted contracts</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">700,816</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">813,348</TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
<TD STYLE="text-indent: -0.1in; padding-left: 16.2pt">Inventories</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">314,735</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
<TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 16.2pt">Prepaid expenses and other current assets</TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">779,525</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">429,089</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
<TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Total current assets</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">10,987,912</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">14,376,099</TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
<TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Fixed assets, net</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">320,682</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">273,451</TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
<TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Goodwill</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">1,830,316</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">1,768,861</TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
<TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Intangible assets, net</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">1,109,913</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">60,000</TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
<TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Other assets</TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">205,487</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">19,358</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
<TD STYLE="text-indent: -0.1in; padding-left: 0.1in"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
<TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.35in">Total assets</TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">14,454,310</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">16,497,769</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
<TD STYLE="text-indent: -0.1in; padding-left: 0.1in"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
<TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Current Liabilities:</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
<TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Convertible notes payable, current portion, net</TD><TD> </TD>
<TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">129,000</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">500,000</TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
<TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Borrowings under credit facility</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">2,000,000</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
<TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Accounts payable and accrued expenses</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">4,705,109</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">5,753,347</TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
<TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 16.2pt">Billings in excess of costs and estimated earnings on uncompleted contracts</TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,959,265</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,028,627</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
<TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Total current liabilities</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">8,793,374</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">9,281,974</TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
<TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Convertible notes, less current portion, net</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">742,343</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">1,957,301</TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
<TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Other liabilities</TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">37,275</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">52,626</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
<TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Total liabilities</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">9,572,992</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">11,291,901</TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
<TD STYLE="text-indent: -0.1in; padding-left: 0.1in"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
<TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Commitments and Contingencies</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
<TD STYLE="text-indent: -0.1in; padding-left: 0.1in"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
<TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Stockholders’ Equity:</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
<TD STYLE="text-indent: -0.1in; padding-left: 0.1in"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
<TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Preferred stock, $.0001 par value; 1,000,000 shares authorized at June 30, 2013 and December 31, 2012, respectively; none issued</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
<TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Common stock, $.0001 par value, 49,000,000 and 100,000,000 shares authorized at June 30, 2013 and December 31, 2012, respectively; 15,269,193 and 15,087,526 issued at June 30, 2013 and December 31, 2012, respectively</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">1,527</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">1,509</TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
<TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Additional paid-in capital</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">66,975,637</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">66,305,764</TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
<TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Accumulated deficit</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">(60,585,740</TD><TD STYLE="text-align: left">)</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">(59,597,909</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
<TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 16.2pt">Treasury stock 820,759 and 808,754 shares at cost at June 30, 2013 and December 31, 2012, respectively</TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,510,106</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,503,496</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
<TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.35in">Total stockholders' equity</TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,881,318</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,205,868</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
<TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.35in">Total liabilities and stockholders’ equity</TD><TD STYLE="padding-bottom: 2.5pt"> </TD>
<TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">14,454,310</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> </TD><TD STYLE="padding-bottom: 2.5pt"> </TD>
<TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">16,497,769</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> </TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </P>
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<DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%"> </TD></TR></TABLE></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>TSS, Inc. </B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Condensed Consolidated Statements of
Operations</B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B> </B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>
<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
<TD NOWRAP> </TD><TD NOWRAP STYLE="font-style: italic"> </TD>
<TD COLSPAN="6" NOWRAP STYLE="font-style: italic; text-align: center">(Unaudited)</TD><TD NOWRAP STYLE="font-style: italic"> </TD><TD NOWRAP STYLE="font-style: italic"> </TD>
<TD COLSPAN="6" NOWRAP STYLE="font-style: italic; text-align: center">(Unaudited)</TD><TD NOWRAP STYLE="font-style: italic"> </TD></TR>
<TR STYLE="vertical-align: bottom">
<TD NOWRAP> </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> </TD>
<TD COLSPAN="6" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Three Months Ended</TD><TD NOWRAP STYLE="padding-bottom: 1pt"> </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> </TD>
<TD COLSPAN="6" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Six Months Ended</TD><TD NOWRAP STYLE="padding-bottom: 1pt"> </TD></TR>
<TR STYLE="vertical-align: bottom">
<TD NOWRAP> </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> </TD>
<TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">June 30, 2013</TD><TD NOWRAP STYLE="padding-bottom: 1pt"> </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> </TD>
<TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">June 30, 2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt"> </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> </TD>
<TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">June 30, 2013</TD><TD NOWRAP STYLE="padding-bottom: 1pt"> </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> </TD>
<TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">June 30, 2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
<TD STYLE="width: 48%">Revenue</TD><TD STYLE="width: 1%"> </TD>
<TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">6,951,819</TD><TD STYLE="width: 1%; text-align: left"> </TD><TD STYLE="width: 1%"> </TD>
<TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">15,540,852</TD><TD STYLE="width: 1%; text-align: left"> </TD><TD STYLE="width: 1%"> </TD>
<TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">21,070,446</TD><TD STYLE="width: 1%; text-align: left"> </TD><TD STYLE="width: 1%"> </TD>
<TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">29,850,714</TD><TD STYLE="width: 1%; text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
<TD STYLE="padding-bottom: 1pt">Cost of revenue</TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,980,786</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">13,209,463</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">16,339,762</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">25,464,820</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
<TD STYLE="text-align: left; padding-left: 9pt">Gross profit</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">1,971,033</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">2,331,389</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">4,730,684</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">4,385,894</TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
<TD STYLE="text-align: left">Selling, general and administrative expenses</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">2,881,229</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">2,480,857</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">5,640,201</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">5,465,397</TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
<TD STYLE="text-align: left">Restructuring and other charges</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">279,286</TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
<TD STYLE="text-align: left; padding-bottom: 1pt">Impairment loss on goodwill</TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,071,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,071,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
<TD STYLE="text-align: left; padding-left: 9pt">Loss from operations</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">(910,196</TD><TD STYLE="text-align: left">)</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">(2,220,468</TD><TD STYLE="text-align: left">)</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">(909,517</TD><TD STYLE="text-align: left">)</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">(3,429,789</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
<TD STYLE="text-align: left">Other income (expense):</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
<TD STYLE="text-align: left; padding-left: 9pt">Interest expense, net</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">(39,483</TD><TD STYLE="text-align: left">)</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">(48,446</TD><TD STYLE="text-align: left">)</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">(63,314</TD><TD STYLE="text-align: left">)</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">(91,214</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
<TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Other expense</TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(15,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(15,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
<TD STYLE="text-align: left">Loss from operations before income taxes</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">(964,679</TD><TD STYLE="text-align: left">)</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">(2,268,914</TD><TD STYLE="text-align: left">)</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">(987,831</TD><TD STYLE="text-align: left">)</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">(3,521,003</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
<TD STYLE="text-align: left; padding-bottom: 1pt">Income tax provision</TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
<TD STYLE="text-align: left; padding-bottom: 2.5pt">Net loss</TD><TD STYLE="padding-bottom: 2.5pt"> </TD>
<TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(964,679</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt"> </TD>
<TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(2,268,914</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt"> </TD>
<TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(987,831</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt"> </TD>
<TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(3,521,003</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
<TD> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
<TD>Basic loss per share:</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
<TD STYLE="padding-bottom: 2.5pt">Loss per common share</TD><TD STYLE="padding-bottom: 2.5pt"> </TD>
<TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.07</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt"> </TD>
<TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.16</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt"> </TD>
<TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.07</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt"> </TD>
<TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.25</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
<TD STYLE="padding-bottom: 2.5pt">Weighted average common shares outstanding</TD><TD STYLE="padding-bottom: 2.5pt"> </TD>
<TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">14,385,713</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> </TD><TD STYLE="padding-bottom: 2.5pt"> </TD>
<TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">14,147,049</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> </TD><TD STYLE="padding-bottom: 2.5pt"> </TD>
<TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">14,368,354</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> </TD><TD STYLE="padding-bottom: 2.5pt"> </TD>
<TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">14,124,380</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
<TD> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
<TD>Diluted loss per share:</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right"> </TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
<TD STYLE="padding-bottom: 2.5pt">Loss per common share</TD><TD STYLE="padding-bottom: 2.5pt"> </TD>
<TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.07</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt"> </TD>
<TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.16</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt"> </TD>
<TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.07</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt"> </TD>
<TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.25</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
<TD STYLE="padding-bottom: 2.5pt">Weighted average common shares outstanding</TD><TD STYLE="padding-bottom: 2.5pt"> </TD>
<TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">14,385,713</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> </TD><TD STYLE="padding-bottom: 2.5pt"> </TD>
<TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">14,147,049</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> </TD><TD STYLE="padding-bottom: 2.5pt"> </TD>
<TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">14,368,354</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> </TD><TD STYLE="padding-bottom: 2.5pt"> </TD>
<TD STYLE="border-bottom: Black 2.5pt double; text-align: left"> </TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">14,124,380</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"> </TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </P>
<!-- Field: Page; Sequence: 5; Value: 1 -->
<DIV STYLE="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: right; width: 100%"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->5<!-- Field: /Sequence --></TD></TR></TABLE></DIV>
<DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%"> </TD></TR></TABLE></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B> </B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>TSS, Inc.</B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="background-color: white"><B>Normalized
Adjusted EBITDA Reconciliation</B></FONT></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="background-color: white"><B> </B></FONT></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>
<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
<TD NOWRAP> </TD><TD NOWRAP STYLE="font-style: italic"> </TD>
<TD COLSPAN="6" NOWRAP STYLE="font-style: italic; text-align: center">(Unaudited)</TD><TD NOWRAP STYLE="font-style: italic"> </TD><TD NOWRAP STYLE="font-style: italic"> </TD>
<TD COLSPAN="6" NOWRAP STYLE="font-style: italic; text-align: center">(Unaudited)</TD><TD NOWRAP STYLE="font-style: italic"> </TD></TR>
<TR STYLE="vertical-align: bottom">
<TD NOWRAP> </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> </TD>
<TD COLSPAN="6" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">For the Three Months Ended</TD><TD NOWRAP STYLE="padding-bottom: 1pt"> </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> </TD>
<TD COLSPAN="6" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">For the Six Months Ended</TD><TD NOWRAP STYLE="padding-bottom: 1pt"> </TD></TR>
<TR STYLE="vertical-align: bottom">
<TD NOWRAP> </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> </TD>
<TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">June 30, 2013</TD><TD NOWRAP STYLE="padding-bottom: 1pt"> </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> </TD>
<TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">June 30, 2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt"> </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> </TD>
<TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">June 30, 2013</TD><TD NOWRAP STYLE="padding-bottom: 1pt"> </TD><TD NOWRAP STYLE="padding-bottom: 1pt"> </TD>
<TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">June 30, 2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
<TD STYLE="width: 48%; text-align: left">Net income (loss)</TD><TD STYLE="width: 1%"> </TD>
<TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(964,679</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%"> </TD>
<TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(2,268,914</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%"> </TD>
<TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(987,831</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%"> </TD>
<TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(3,521,003</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
<TD STYLE="text-align: left">Interest (income) expense, net</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">39,483</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">48,446</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">63,314</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">91,214</TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
<TD STYLE="text-align: left; padding-bottom: 1pt">Depreciation and amortization</TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">61,541</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">81,356</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">111,675</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">158,261</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
<TD STYLE="padding-left: 9pt">EBITDA</TD><TD> </TD>
<TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(863,655</TD><TD STYLE="text-align: left">)</TD><TD> </TD>
<TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(2,139,112</TD><TD STYLE="text-align: left">)</TD><TD> </TD>
<TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(812,842</TD><TD STYLE="text-align: left">)</TD><TD> </TD>
<TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(3,271,528</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
<TD STYLE="text-align: left">Stock based compensation</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">117,242</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">67,388</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">224,855</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">164,754</TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
<TD STYLE="text-align: left">Impairment loss on goodwill</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">2,071,000</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">2,071,000</TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
<TD STYLE="text-align: left; padding-bottom: 1pt">Provision for bad debts</TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,705</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">55,290</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,705</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">55,290</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
<TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Adjusted EBITDA</TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(743,708</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">54,566</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(585,282</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(980,484</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
<TD STYLE="text-align: left">Restructuring charnges</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">279,286</TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
<TD STYLE="text-align: left">Other one-time (income) expense, net</TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">69,375</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">95,916</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">69,375</TD><TD STYLE="text-align: left"> </TD><TD> </TD>
<TD STYLE="text-align: left"> </TD><TD STYLE="text-align: right">340,525</TD><TD STYLE="text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
<TD STYLE="text-align: left; padding-bottom: 1pt">Acquisition expenses</TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">243,733</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">243,733</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left"> </TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
<TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Normalized adjusted EBITDA</TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(430,600</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">150,482</TD><TD STYLE="padding-bottom: 1pt; text-align: left"> </TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(272,174</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt"> </TD>
<TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(360,673</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
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<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>3
<FILENAME>v352977_ex99-2.htm
<DESCRIPTION>EXHIBIT 99.2
<TEXT>
<HTML>
<HEAD>
<TITLE></TITLE>
</HEAD>
<BODY STYLE="font: 10pt Times New Roman, Times, Serif">
<P STYLE="margin: 0"><B> </B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>AMENDMENT </B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>TO</B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>EXECUTIVE EMPLOYMENT AGREEMENT</B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This <B>AMENDMENT TO
EXECUTIVE EMPLOYMENT AGREEMENT </B>(this “<U>Amendment</U>”), is effective as of the 13th day of August 2013, by and
between TSS, INC., a Delaware corporation (f/k/a Fortress International Group, Inc.) (the “<U>Company</U>”), and Gerard
J. Gallagher (the “<U>Executive</U>”). Each of the Company and Executive are hereinafter individually referred to as
a “<U>Party</U>,” and collectively as the “<U>Parties</U>”.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>EXPLANATORY STATEMENTS</B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Parties are all
of the parties to that certain Executive Employment Agreement effective as of January 19, 2007, as amended by Amendment No. 1,
dated August 26, 2008, further amended by the Amendment to Executive Employment Agreement effective as of February 28, 2010, further
amended by the Amendment to Executive Employment Agreement effective as of January 3, 2012, further amended by the Amendment to
Executive Employment Agreement effective as of March 14, 2012, and further amended by the Amendment to Executive Employment Agreement
effective as of May 21, 2013, (collectively, the “<U>Employment Agreement</U>”). The Parties desire to amend certain
terms and conditions set forth in the Employment Agreement, all as further described and set forth in this Amendment.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>AGREEMENT</B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B>NOW, THEREFORE</B>,
in consideration of the foregoing and of other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties, intending to be legally bound, hereby agree as follows:</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">1. <B><U>Amendments
to the Employment Agreement</U></B>.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 1in">(a) <I><U>Employment
Period</U></I>. Section 2.1 is hereby deleted in its entirety and the following is substituted in lieu thereof:</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: 0.5in">2.1 <B>Employment
Period</B>. The Company hereby employs the Executive, and the Executive hereby accepts said employment and agrees to render services
to the Company, on the terms and conditions set forth in this Agreement, for the period (the “<U>Employment Period</U>”)
beginning on the date of the closing under the Purchase Agreement (the “<U>Closing Date</U>”) and ending when such
period is terminated by the Executive upon thirty (30) days’ written notice to the Company or by the Company upon thirty
(30) days’ written notice to the Executive.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 1in">(b) <I><U>Duties</U></I>.
Section 2.2 is hereby deleted in its entirety and the following is substituted in lieu thereof:</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"> </P>
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<DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%"> </TD></TR></TABLE></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: 0.5in"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: 0.5in">2.2. <B>Duties</B>.
During the Employment Period, the Executive’s title shall be Chief Technical Officer of the Company. During the Employment
Period, the Executive shall report to the Chief Executive Officer of the Company. The Executive shall perform such services for
the Company as is consistent with the Executive’s position and as lawfully directed, from time to time, by the Company’s
Chief Executive Officer. The Executive shall not, during the Employment Period, be employed or involved in any other business activity
for gain, profit or other pecuniary advantage. Notwithstanding the immediately foregoing sentence, the Executive may (a) volunteer
services for or on behalf of such religious, educational, non-profit and/or charitable organizations as the Executive may wish
to serve; (b) manage his personal, financial and legal affairs; and (c) participate as a director of, or own less than fifty percent<B>
</B>(50%) of the equity interest or voting rights in, any other business entity that does not directly or indirectly compete with
the business of the Company, so long as (1) the Executive provides the Audit Committee of the Board prior written notice of such
activities that describes such activities in reasonable detail (provided, however, that such notice shall not be required for any
investment by the Executive that would result in the Executive owning not more than five percent (5%) of the outstanding stock
or voting power of a business entity listed on a national securities exchange); (2) such activities do not interfere, or could
not reasonably be expected to interfere, with his duties and responsibilities to the Company as provided hereunder, (3) the Executive
is not actively involved in the management of such business entity, except to the extent the Executive serves on such business
entity’s board of directors or similar governing body; (4) such activities do not violate any of the terms of this Agreement
or any other agreement entered into with the Company (including, but not limited to, Sections 2.4 and 7 hereof), and (5) such activities
would not be the types of activities required, in the sole discretion of the Audit Committee, to be disclosed under Item 404 of
Regulation S-K promulgated by the Securities and Exchange Commission regardless of whether the Company is subject to such disclosure
requirements. The Executive acknowledges that the Executive may be required to travel on business in connection with the Executive’s
performance of the Executive’s duties hereunder, but that the Executive’s base will be the location of the Company’s
headquarters in Columbia, Maryland or such other location as determined by the Board.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: 0.5in"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 1in">(c) <I><U>Termination</U></I>.
Section 5.2 is hereby deleted in its entirety and the following is substituted in lieu thereof:</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: 0.5in">5.2. <B>Termination
by the Company Other Than for Death, Disability, or Cause or by Executive for a Good Reason</B>. In addition to the payment to
the Executive of the Executive’s Base Salary and reimbursement of any applicable expenses pursuant to <U>Section 4.2</U>
through the Date of Termination, if (a) the Employment Period is terminated prior to December 31, 2013, (i) by the Company for
reasons other than death, Disability, or Cause, or (ii) by the Executive for a Good Reason, and (b) the Executive executes a general
release in the form attached hereto as <B><U>Exhibit C</U></B> (the “<U>Release</U>”) on or before the effective Date
of Termination, and (c) the Executive has not breached the terms of the “Assignment Agreement” (as defined below);
<U>then</U> the Company shall pay the Executive an amount equal to the Executive’s Base Salary (at the rate in effect at
the Date of Termination) as though the Executive continued to be employed by the Company until December 31, 2013. Such amount shall
be payable in accordance with the Company’s normal payroll practices as though the Executive continued to be employed by
the Company until December 31, 2013. If the Executive elects and remains eligible for health coverage pursuant to Section 4980B
of the Internal Revenue Code of 1986, as amended (“<U>COBRA</U>”) (and subject to withholding pursuant to <U>Section
3.4</U> above), <U>then</U> commencing within fifteen (15) business days following the date on which the Release becomes effective
pursuant to its terms, the Company will, for a period commencing on the Date of Termination and continuing through December 31,
2013, pay a percentage of the premium for such COBRA health coverage equal to the percentage of the premium for health insurance
coverage paid by the Company on the Date of Termination. Notwithstanding the foregoing, if the Employment Period is terminated
for any reason after December 31, 2013, the Executive shall only be entitled to receive the Executive’s Base Salary through
the Date of Termination and the reimbursement of any applicable expenses pursuant to <U>Section 4.2</U> through the Date of Termination,
and the Executive shall have no right to any other compensation thereafter (other than pursuant to <U>Section 5.3</U>). The Executive
shall not be entitled to any other salary or compensation after termination of the Employment Period (other than as set forth in
this <U>Section 5.2</U> and <U>Section 5.3</U>), and no Person shall be entitled hereunder to participate in any employee benefit
plan after the Date of Termination if the Employment Period is terminated in connection with this <U>Section 5.2</U>, except as
otherwise specifically provided hereunder or as required by applicable law (i.e., COBRA) and <U>provided</U> that nothing herein
shall be interpreted to limit the Executive’s conversion rights, if any, under any of the Company’s employee benefit
plans. In furtherance of and not in limitation of the foregoing, the Executive may only be terminated by the affirmative vote of
a majority of the whole Board (excluding the Executive if he is a member of the Board).</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: 0.5in"> </P>
<!-- Field: Page; Sequence: 2 -->
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<DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%"> </TD></TR></TABLE></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: 0.5in"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">2. <B><U>Restrictive
Covenants</U></B>. Notwithstanding anything contrary set forth in the Employment Agreement, the Executive shall be subject to the
covenants set forth in <U>Section 7</U> of the Employment Agreement, including without limitation <U>Sections 7.1, 7.2, and 7.3</U>
of the Employment Agreement, for a Restrictive Period beginning on the Date of Termination through the first anniversary of the
Date ot Termination.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">3. <B><U>Effect
of Amendment</U></B>. Except as otherwise expressly provided herein, all provisions of the Employment Agreement shall remain in
full force and effect. This Amendment and the Employment Agreement contain the entire understanding of the Parties with respect
to the subject matter hereof and thereof, and supersede all prior oral or written communications, agreements and understandings
between the Parties with respect to the subject matter hereof and thereof. This Amendment is intended to modify the provisions
of the Employment Agreement; in the event that there is a conflict between the terms of this Amendment and the Employment Agreement,
the Parties intend that the provisions of this Amendment should govern their respective rights and obligations.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="color: black">4. <B><U>Miscellaneous</U></B>.
The Explanatory Statements </FONT>form a material basis for this Amendment and are expressly incorporated herein and made a part
hereof.<FONT STYLE="color: black"> All capitalized terms not otherwise defined in this Amendment shall have the meanings assigned
to them in the Employment Agreement. All questions concerning the construction, validity, and interpretation of this Amendment
and the performance of the obligations imposed by this Amendment will be governed by the laws of the State governing the Employment
Agreement, without reference to any conflict of laws rules that would apply the laws of another jurisdiction. This Amendment may
be executed simultaneously in multiple counterparts, each of which will be deemed to be an original copy of this Amendment and
all of which together will be deemed to constitute one and the same agreement. The exchange of copies of this Amendment and of
signature pages by facsimile transmission or e-mail delivery of a .pdf format data file shall constitute effective execution and
delivery of this Amendment as to the Parties and may be used in lieu of the original Amendment and signature pages thereof for
all purposes.</FONT></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </P>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B>IN WITNESS WHEREOF</B>,
the Parties have executed this Amendment as of the day and year first written above.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </P>
<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
<TD COLSPAN="2" STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; color: black"><B><U>COMPANY</U></B>:</FONT></TD>
<TD STYLE="text-align: justify"> </TD>
<TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; color: black"><B><U>EXECUTIVE</U></B>:</FONT></TD></TR>
<TR STYLE="vertical-align: top">
<TD COLSPAN="2"> </TD>
<TD> </TD>
<TD> </TD></TR>
<TR STYLE="vertical-align: top">
<TD COLSPAN="2"><FONT STYLE="font-family: Times New Roman, Times, Serif">TSS, INC.</FONT></TD>
<TD> </TD>
<TD> </TD></TR>
<TR STYLE="vertical-align: top">
<TD COLSPAN="2"> </TD>
<TD> </TD>
<TD> </TD></TR>
<TR STYLE="vertical-align: top">
<TD STYLE="padding-bottom: 1pt; width: 4%"><FONT STYLE="font-family: Times New Roman, Times, Serif">By:</FONT></TD>
<TD STYLE="border-bottom: windowtext 1pt solid; width: 44%"><FONT STYLE="font-family: Times New Roman, Times, Serif"><I>/s/ Anthony Angelini</I></FONT></TD>
<TD STYLE="width: 4%"><FONT STYLE="font-family: Times New Roman, Times, Serif"> </FONT></TD>
<TD STYLE="border-bottom: windowtext 1pt solid; width: 48%"><FONT STYLE="font-family: Times New Roman, Times, Serif"><I>/s/ Gerard J. Gallagher</I></FONT></TD></TR>
<TR STYLE="vertical-align: top">
<TD COLSPAN="2"><FONT STYLE="font-family: Times New Roman, Times, Serif">Name: Anthony Angelini</FONT></TD>
<TD> </TD>
<TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Gerard J. Gallagher</FONT></TD></TR>
<TR STYLE="vertical-align: top">
<TD COLSPAN="2" STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Title: Chief Executive Officer</FONT></TD>
<TD STYLE="text-align: justify"> </TD>
<TD STYLE="text-align: justify"> </TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </P>
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<SEQUENCE>4
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`
end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>