this proxy statement/prospectus carefully. You should also carefully consider the risk factors beginning on page 18.

Eric M. DeMarco Chief Executive Officer and President Kratos Defense & Security Solutions, Inc.		Clifton L. Cooke, Jr. Gary Ryan President and Chief Executive Officer and President SYSDigital Fusion, Inc.

        Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued in connection with the merger or determined if this Proxy Statementproxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

        This Proxy Statementproxy statement/prospectus is dated , 2008,[    •    ], 200[    •    ], and is first being mailed to stockholders of Kratos and SYSDigital Fusion on or about , 2008.[    •    ], 200[    •    ].

NOTICE OF ANNUALSPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON , 2008[    •    ]

To the Stockholders of Kratos Defense & Security Solutions, Inc.:

        An annualA special meeting of stockholders of Kratos Defense & Security Solutions, Inc. will be held at ,[    •    ] on , 2008[    •    ], 200[    •    ] at a.m.[    •    ] p.m., local time, for the following purposes:

        1.     To elect five directors for one-year terms or until their successors are elected and duly qualified.

         2.      To ratify the selection of Grant Thornton LLP as Kratos' independent auditors for the fiscal year ending December 28, 2008.

         3.      To approve an amendment to the Kratos 1999 Employee Stock Purchase Plan to increase the aggregate number of shares that may be issued under the plan by 1,500,000 shares.

         4.      To approve an amendment to the Kratos 2005 Equity Incentive Plan to increase the aggregate number of shares that may be issued under the plan by 3,000,000 shares.

         5.      To approve the issuance of [    •    ] shares of Kratos common stock par value $0.001 per share, pursuant to the Agreement and Plan of Merger, and Reorganization, dated as of February 20,November 21, 2008, by and among Kratos Defense & Security Solutions, Inc., White Shadow,Dakota Merger Sub, Inc., and SYS,Digital Fusion, Inc., as the same may be amended from time to time (the "Share Issuance").time.

        6.      To approve any motion to adjourn or postpone the annual meeting to a later date or dates, if necessary, to solicit additional proxies if there are insufficient votes at the time of the annual meeting to approve the first five proposals listed above.

         7.2.     To transact such other business as may properly come before the annualspecial meeting or any adjournment or postponement thereof.

        The accompanying Proxy Statementproxy statement/prospectus further describes the matters to be considered at the meeting. A copy of the Agreement and Plan of Merger referenced above has been included asAnnex A to the Proxy Statement.proxy statement/prospectus.

        The Kratos board of directors has set ,November 25, 2008 as the record date for the annualspecial meeting. Only holders of record of Kratos common stock at the close of business on ,November 25, 2008 will be entitled to notice of and to vote at the annualspecial meeting and any adjournments or postponements thereof. Any stockholder entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote on such stockholder's behalf.behalf at the special meeting and any adjournments and postponements thereof. Such proxy need not be a holder of Kratos common stock.To ensure your representation at the annualspecial meeting, please complete and return the enclosed proxy card or submit your proxy by telephone or through the Internet.Internet. Please vote promptly whether or not you expect to attend the annualspecial meeting. Submitting a proxy now will not prevent you from being able to vote at the annualspecial meeting by attending in person and casting a vote.

        The Kratos board of directors unanimously recommends that you vote FOR the proposal to elect five directors for one-year terms or until their successors are elected and duly qualified; FOR the proposal to ratify the selection of Grant Thornton LLP as Kratos' independent auditors for the fiscal year ending December 28, 2008; FOR the proposal to approve an amendment to the Kratos 1999 Employee Stock Purchase Plan to increase the aggregate number of shares that may be issued under the plan by 1,500,000 shares; FOR the proposal to approve an amendment to the Kratos 2005 Equity Incentive Plan to increase aggregate number of shares that may be issued under the plan by 3,000,000 shares; FOR the proposal to approve the Share Issuance; and FORissuance of Kratos common stock in the proposal to approve any motion to adjourn or postpone the annual meeting to a later date or dates if necessary to solicit additional proxies.merger.

By Order of the Kratos Board of Directors,

Eric M. DeMarco
President and Chief Executive Officer
San Diego, CA
                        , 2008

        PLEASE VOTE YOUR SHARES PROMPTLY. YOU CAN FIND INSTRUCTIONS FOR VOTING ON THE ENCLOSED PROXY CARD. IF YOU HAVE QUESTIONS ABOUT THE PROPOSALS OR ABOUT VOTING YOUR SHARES, PLEASE CALL KRATOS' PROXY SOLICITOR, GEORGESON INC., AT (800) 561-4162 (TOLL FREE).[    •    ].

NOTICE OF SPECIAL MEETING OF SHAREHOLDERSSTOCKHOLDERS TO BE HELD ON , 2008[    •    ]

To the ShareholdersStockholders of SYS:Digital Fusion, Inc.:

        A special meeting of shareholdersstockholders of SYSDigital Fusion, Inc. will be held at 5050 Murphy Canyon Road, Suite 200, San Diego, CA 92123,[    •    ], on , 2008[    •    ] at 11:00 a.m.,[    •    ], local time, for the following purposes:

        1.     To adopt and approve the Agreement and Plan of Merger, and Reorganization, dated as of February 20,November 21, 2008, by and among Kratos Defense & Security Solutions, Inc., White Shadow,Dakota Merger Sub, Inc., and SYS,Digital Fusion, Inc., as the same may be amended from time to time.

        2.     To approve any motion to adjourn or postpone the special meeting to a later date or dates, if necessary, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement.

        3.     To transact such other business as may properly come before the special meeting or any adjournment or postponement thereof.

        The accompanying Proxy Statementproxy statement/prospectus further describes the matters to be considered at the special meeting. A copy of the Agreement and Plan of Merger referenced above has been included asAnnex A to this Proxy Statement.proxy statement/prospectus.

        The SYSDigital Fusion board of directors has set ,[    •    ], 2008 as the record date for the special meeting. Only holders of record of shares of SYSDigital Fusion common stock at the close of business on ,[    •    ], 2008 will be entitled to notice of and to vote at the special meeting and any adjournments or postponements thereof.To ensure your representation at the special meeting, please complete and return the enclosed proxy card or submit your proxy by telephone or through the Internet.Internet. Please vote promptly whether or not you expect to attend the special meeting. Submitting a proxy now will not prevent you from being able to vote at the special meeting by attending in person and casting a vote.

        The board of directors of SYSDigital Fusion recommends that you vote FOR the proposal to adopt and approve the merger agreement and FOR the proposal to approve any motion to adjourn or postpone the special meeting to a later date or dates if necessary to solicit additional proxies.agreement.

By Order of the SYSDigital Fusion Board of Directors,

Clifton L. Cooke, Jr.
President and Chief Executive Officer
                        , 2008

        PLEASE VOTE YOUR SHARES PROMPTLY. YOU CAN FIND INSTRUCTIONS FOR VOTING ON THE ENCLOSED PROXY CARD. IF YOU HAVE QUESTIONS ABOUT THE PROPOSALS OR ABOUT VOTING YOUR SHARES, PLEASE CALL MICHAEL W. FINK[    •    ] AT 858-244-7393[    •    ] (TOLL FREE) OR VIA EMAIL AT [    •    ].

MFINK@SYSTECHNOLOGIES.COM.ADDITIONAL INFORMATION

        This joint proxy statement/prospectus incorporates important business and financial information about Kratos Defense & Security Solutions, Inc. that is not included in or being delivered with this joint proxy statement/prospectus. The incorporated information that is not included in or being delivered with this joint proxy statement/prospectus is available to you without charge upon your written or oral request. You can obtain any document that is incorporated by reference in this proxy statement/prospectus, excluding all exhibits that have not been specifically incorporated by reference, on the investor relations page of Kratos' website athttp://www.kratosdefense.com or by requesting it in writing or by telephone from Kratos at the following address or telephone number:

4810 Eastgate Mall
San Diego, CA 92121
(858) 812-7300
Attn.: Corporate Secretary
Website:www.kratosdefense.com

If you would like to request any documents, please do so by[    •    ], 200[    •    ] in order to receive them before the special meeting. See "Where You Can Find More Information."

        You should rely only on the information contained or incorporated by reference in this joint proxy statement/prospectus and the registration statement of which this joint proxy statement/prospectus is a part to vote on the proposals being presented at the special meetings. No one has been authorized to provide you with information that is different from what is contained in this document or in the incorporated documents.

TABLE OF CONTENTS

i

ii

iii

v

VOTING ELECTRONICALLY OR BY TELEPHONE

        Kratos stockholders of record on the close of business on                        , 2008, the record date for the Kratos annual meeting, may submit their proxies by telephone or Internet by following the instructions on their proxy card or voting form. If you have any questions regarding whether you are eligible to submit your proxy by telephone or by Internet, please contact Kratos' Proxy Solicitor, Georgeson, Inc. by telephone at (800) 561-4162 (toll free).

        SYS shareholders of record on the close of business on                        , 2008, the record date for the SYS special meeting, may submit their proxies by telephone or Internet by following the instructions on their proxy card or voting form. If you have any questions regarding whether you are eligible to submit your proxy by telephone or by Internet, please contact Michael W. Fink by telephone at 858-244-7393 or via email atmfink@systechnologies.com.

viiv

QUESTIONS AND ANSWERS ABOUT THE MEETINGSMERGER

        The following questions and answers briefly address some commonly asked questions about the Kratos and SYSDigital Fusion meetings. They may not include all the information that is important to holders of stock of Kratos and SYS.Digital Fusion. We urge stockholders to read carefully this entire Proxy Statement,proxy statement/prospectus, including the annexes and the other documents referred to herein.

Q:

Why am I receiving these materials?

A:

We are sending you these materials to help you decide how to vote your shares of Kratos or SYSDigital Fusion common stock with respect to their proposed merger. Additionally, if you are a Kratos stockholder, we are sending these materials to you to help you decide how to vote your shares of Kratos common stock with respect to the other proposals at the Kratos annual meeting.

The merger cannot be completed unless Kratos stockholders approve the issuance of Kratos common stock and SYS shareholdersDigital Fusion stockholders adopt and approve the merger agreement. Each of Kratos and SYSDigital Fusion is holding its meeting of holders of stockstockholders to vote on the proposals necessary to complete the merger. Information about these meetings, the merger and the other business to be considered by holders of stock is contained in this Proxy Statement.

proxy statement/prospectus.

We are delivering this document to you as both a joint proxy statement of Kratos and SYSDigital Fusion and a prospectus of Kratos. It is a joint proxy statement because each of our boards of directors is soliciting proxies from its stockholders. It is a prospectus because Kratos will exchange shares of its common stock for shares of SYSDigital Fusion in the merger.

Q:

What will stockholders receive in the merger?



A:

In the proposed merger, holders of SYSDigital Fusion common stock will receive 1.25821.7933 shares of Kratos common stock for each share of SYSDigital Fusion common stock. This exchange ratio is fixed and will not be adjusted to reflect stock price changes prior to the closing.

The stockholders of Kratos will continue to own their existing shares, which will not be affected by the merger.

Q:

When do Kratos and SYSDigital Fusion expect to complete the merger?



A:

Kratos and SYSDigital Fusion expect to complete the merger after all conditions to the merger in the merger agreement are satisfied or waived, including after stockholder approvals are received at the meetings oftheir respective stockholder meetings. Kratos and SYS and all required regulatory approvals are received. Kratos and SYSDigital Fusion currently expect to complete the merger during the first half of 2008.late 2008 or early 2009. However, it is possible that factors outside of either company's control could require Kratos and SYSDigital Fusion to complete the merger at a later time or not to complete it at all.



Q:

How do the boards of directors of Kratos and SYSDigital Fusion recommend that I vote?



A:

The Kratos board of directors unanimously recommends that holders of Kratos common stock vote FOR the proposal to approve the issuance of Kratos common stock in the merger.

The SYSDigital Fusion board of directors unanimously recommends that SYS shareholdersDigital Fusion stockholders vote FOR the proposal to approve the merger and adopt the merger agreement.

Q:

What do I need to do now?



A:

After carefully reading and considering the information contained in this Proxy Statement,proxy statement/prospectus, please vote your shares as soon as possible so that your shares will be represented at your respective company's meeting. Please follow the instructions set forth on the proxy card or on the voting instruction form provided by the record holder if your shares are held in the name of your broker or other nominee.




Q:

How do I vote?



A:

You may vote before your company's meeting in one of the following ways:



•

use the toll-free number shown on your proxy card;



•

visit the website shown on your proxy card to vote via the Internet; or



•

complete, sign, date and return the enclosed proxy card in the enclosed postage-paid envelope.envelope; or



You may also

•
cast your vote in person at your company's meeting.

If your shares are held in "street name" through a broker, bank or other nominee, that institution will send you separate instructions describing the procedure for voting your shares. "Street name" stockholders who wish to vote at the meeting will need to obtain a proxy form from the institution that holds their shares.

Q:

When and where are the Kratos and SYSDigital Fusion meetings of stockholders?



A:

The annualspecial meeting of Kratos stockholders will be held at 4810 Eastgate Mall, San Diego, CA,[    •    ] on , 2008[    •    ] at ,  a.m.,[    •    ], local time. Subject to space availability, allAll stockholders as of the record date, or their duly appointed proxies, may attend the meeting. Since seating is limited, admission to the meeting will be on a first-come, first-served basis. Registration and seating will begin at             a.m., local time.

The special meeting of SYS shareholdersDigital Fusion stockholders will be held at 5050 Murphy Canyon Road, Suite 200, San Diego, CA 92123,[    •    ], on , 2008[    •    ] at 11:00 a.m.,[    •    ], local time. Subject to space availability, allAll stockholders as of the record date, or their duly appointed proxies, may attend the meeting. Since seating is limited, admission to the meeting will be on a first-come, first-served basis. Registration and seating will begin at             a.m., local time.

Q:

If my shares are held in "street name" by a broker or other nominee, will my broker or nominee vote my shares for me?



A:

Your broker or other nominee does not have authority to vote on most of the proposals described in this Proxy Statement including the proposals related to the proposed merger.proxy statement/prospectus. Your broker or other nominee will vote your shares held by it in "street name" with respect to these matters ONLY if you provide instructions to it on how to vote. You should follow the directions your broker or other nominee provides.



Q:

What constitutes a quorum?

Stockholders who hold a majority in voting power of the Kratos common stock issued and outstanding as of the close of business on the record date and who are entitled to vote at the special meeting must be present or represented by proxy in order to constitute a quorum to conduct business at the Kratos annualspecial meeting.

Stockholders who hold a majority in voting power of the SYSDigital Fusion common stock issued and outstanding as of the close of business on the record date and who are entitled to vote at the special meeting must be present or represented by proxy in order to constitute a quorum to conduct business at the SYSDigital Fusion special meeting.

Q:

What vote is required to approve each proposal?



A:

For Kratos Stockholders:stockholders, the affirmative vote of a majority of the total votes represented in person or by proxy at the special meeting is required to approve the proposal to approve the issuance of Kratos common stock in the merger.

TheFor Digital Fusion stockholders, the affirmative vote of a majority of the outstanding shares of KratosDigital Fusion common stock entitled to vote at the meeting is required to approve all of the Kratos proposals, including the proposal tomerger agreement.




approve the issuance of Kratos common stock in the merger, which is referred to in this Proxy Statement as the Share Issuance.

For SYS Shareholders:

The affirmative vote of a majority of the outstanding shares of SYS common stock entitled to vote is required to approve the merger agreement, which is referred to in this Proxy Statement as the Merger Proposal.

Q:

What if I do not vote on the matters relating to the merger?



A:

If you are a Kratos stockholder and you fail to vote or fail to instruct your broker or other nominee how to vote on the Share Issuance,proposal to issue shares of common stock in the merger, it will have no effect on the same effect as a vote againstfor the Share Issuance. Similarly, ifproposal. If you respond with an "abstain" vote, your proxy will have the same effect as a vote against thisthe proposal. If you submit a proxy but do not indicate how you want to vote on the Share Issuance,proposal, your proxy will be counted as a vote in favor of the Share Issuanceproposal in accordance with the recommendation of the Kratos Board.board of directors.

If you are an SYS shareholdera Digital Fusion stockholder and you fail to vote or fail to instruct your broker or other nominee how to vote on the Merger Proposal,proposal to adopt and approve the merger agreement, it will have the same effect as a vote against the Merger Proposal.merger. If you respond with an "abstain" vote on the Merger Proposal,proposal, your proxy will have the same effect as a vote against the Merger Proposal.proposal. If you respond but do not indicate how you want to vote on the Merger Proposal,merger, your proxy will be counted as a vote in favor of the Merger Proposal.merger.

Q:

What if I hold shares in both Kratos and SYS?Digital Fusion?



A.

If you are a stockholder of both Kratos and SYS,Digital Fusion, you will receive two separate packages of proxy materials. A vote as a Kratos stockholder approving the issuance of Kratos common stock will not constitute a vote as an SYS shareholdera Digital Fusion stockholder for the Merger Proposal,merger, or vice versa. Therefore, please sign, date and return all proxy cards that you receive, whether from Kratos or SYS,Digital Fusion, or vote as both a Kratos and SYS shareholderDigital Fusion stockholder by telephone or via the Internet.



Q:

May I change my vote after I have delivered my proxy or voting instruction card?



A:

Yes. You may change your vote at any time before your proxy is voted at the applicable meeting. You may do this in one of four ways:



•

by sending a notice of revocation to the corporate secretary of Kratos or SYS,Digital Fusion, as applicable;



•

by sending a completed proxy card bearing a later date than your original proxy card;



•

by logging onto the Internet website specified on your proxy card in the same manner you would to submit your proxy electronically or by calling the telephone number specified on your proxy card, in each case if you are eligible to do so, and following the instructions on the proxy card; or



•

by attending the applicable meeting and voting in person. Your attendance alone will not revoke any proxy.

If you choose any of the first three methods, you must take the described action no later than the beginning of the applicable meeting.

If your shares are held in an account at a broker or other nominee, you should contact your broker or other nominee to change your vote.




Q:

What are the material United States federal income tax consequences of the merger?



A:

Kratos and SYSDigital Fusion intend for the merger to qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, which we refer to as the Code, for United States federal income tax purposes. Accordingly, a holder of SYSDigital Fusion common stock generally will not recognize any gain or loss for U.S. federal income tax purposes upon the exchange of the holder's shares of SYSDigital Fusion common stock for shares of Kratos common stock pursuant to the merger, except that an SYS shareholdera Digital Fusion stockholder will recognize a gain or loss with respect to any cash received in lieu of a fractional share of Kratos common stock.





Q:

Do I have appraisal rights?



A:

The holders of Kratos common stock will not be entitled to exercise any appraisal rights in connection with the merger. Pursuant to Section 1300262 of the California Corporations Code,Delaware General Corporation Law, or DGCL, the holders of SYSDigital Fusion common stock are entitled to appraisal rights if they do not vote in favor of the merger and otherwise comply with the requirements of Chapter 13 of the California General Corporation Law.DGCL. Digital Fusion stockholders who dissent from the merger and exercise their appraisal rights will recognize gain or loss with respect to cash received in exchange for their Digital Fusion common stock.



Q:

Should I send in my stock certificates now?



A:

No. Please do not send your stock certificates with your proxy card.

If you are a holder of SYSDigital Fusion common stock, you will receive written instructions from the exchange agent after the merger is completed on how to exchange your stock certificates for Kratos common stock. Kratos stockholders will not be exchanging their stock certificates in connection with the merger. Accordingly, Kratos stockholders holding stock certificates should keep their stock certificates both now and after the merger is completed.

Q:

What if I hold SYSDigital Fusion and Kratos stock options or other stock-based awards?warrants?



A:

Kratos stock options and other equity-based awards, including restricted stock units, will remain outstanding and will not be affected by the merger.

AllKratos will assume outstanding SYSoptions and warrants to purchase shares of Digital Fusion common stock optionsin the merger. Each outstanding option and warrant to acquire Digital Fusion common stock will become fully vested priorbe converted automatically at the effective time of the merger into an option or warrant to the closing. Theacquire Kratos common stock, options mayand will continue to be exercised for SYS shares ("cashless exercise" being permissible) at or prior to closing in accordance withgoverned by the terms of the relevant Digital Fusion stock plan and/or related agreements under which it was granted, except that the number of shares of Kratos common stock for which each option plans which shares would thenor warrant is exercisable and the exercise price of each option or warrant will be exchanged for Kratos shares in accordance withadjusted based on the exchange ratio. Any such stock option exercises may be subject to withholding taxes as a result. No outstanding SYS stock options will be assumed by or converted into options of Kratos.ratio in the merger.

Q:

Who should I contact if I have any questions about the merger, the proxy materials or voting power?



A:

If you have any questions about the merger or if you need assistance in submitting your proxy or voting your shares or need additional copies of the Proxy Statementproxy statement/prospectus or the enclosed proxy card, you should contact the company in which you hold shares.

If you are a Kratos stockholder, you should contact Georgenson,Georgeson Inc., the proxy solicitation agent for Kratos, at (800) 561-4162 (toll-free).[    •    ]. If you are an SYS shareholder,a Digital Fusion stockholder, you should contact Michael W. FinkJamie Brabston, Corporate Secretary, at 858-244-7393(256) 327-8100 or via email at mfink@systechnologies.com for SYS.jbrabston@digitalfusion.com. If your shares are held in a stock brokerage account or by a bank or other nominee, you should call your broker or other nominee for additional information.





SUMMARY


        This summary highlights selected information contained in this joint proxy statement/prospectus, referred to as this Proxy Statement,proxy statement/prospectus, and does not contain all the information that may be important to you. Kratos and SYSDigital Fusion urge you to read carefully this Proxy Statementproxy statement/prospectus in its entirety, including the annexes. Unless stated otherwise, all references in this Proxy Statementproxy statement/prospectus to Kratos refer to Kratos Defense & Security Solutions, Inc., a Delaware corporation, all references to SYSDigital Fusion refer to SYS,Digital Fusion, Inc., a CaliforniaDelaware corporation, all references to Merger Sub refer to White Shadow,Dakota Merger Sub, Inc., a CaliforniaDelaware corporation, and allreferences to the merger agreement refer to the Agreement and Plan of Merger, and Reorganization, dated as of February 20,November 21, 2008, by and among Kratos, White Shadow, Inc.,Merger Sub, and SYS,Digital Fusion, a copy of which is attached as Annex A to this Proxy Statement.proxy statement/prospectus.

The Merger

        Each of the boards of directors of Kratos and SYS has approved a strategic merger of Kratos and SYS. Kratos and SYS have entered into an Agreement and Plan of Merger and Reorganization pursuant to which SYS will merge with a newly formed, wholly-owned subsidiary of Kratos, with SYS surviving the merger as a wholly-owned subsidiary of Kratos. In the proposed merger, SYS shareholders will receive 1.2582 shares of Kratos common stock for each share of SYS common stock. This exchange ratio is fixed and will not be adjusted to reflect stock price changes prior to the closing. The stockholders of Kratos will continue to own their existing shares, which will not be affected by the merger.

The Parties

Kratos

Kratos
Kratos Defense & Security Solutions, Inc.
4810 Eastgate Mall
San Diego, CA 92121
(858) 812-7300


        Kratos is an innovative provider of mission critical engineering, IT services and warfighter solutions. Kratos performs work primarily for the U.S. government and government agencies, but also performs work for state and local agencies and commercial customers. As a result of its market focus, Kratos is organized into two primary operating segments:segments, the Kratos Government Solutions, or KGS, segment;segment and the Public Safety and Security, or PSS, segment. The principle services of Kratos include, but are not limited to, Command, Control, Communications, Computing, Combat Systems, Intelligence, Surveillance and Reconnaissance, or C5ISR; weapon systems life cycle support and extension; military range operations and technical services; missile, rocket and weapons systems test and evaluation; mission launch services; public safety; security and surveillance systems; advanced network engineering and IT services; and critical infrastructure design and integration services. Kratos offers its customers a range of solutions and technical expertise to support their mission-critical needs by leveraging skills across Kratos' core service areas.

        Kratos derives a substantial portion of its revenue from contracts performed for federal government agencies. Kratos believes its diversified and stable client base, strong client relationships, broad array of contracts, considerable employee base possessing government security clearances, extensive list of past performance qualifications, and significant management and operational capabilities provides a sizable advantage and positions the company for continued growth. Founded in 1994, Kratos is headquartered in San Diego and has offices in California, Washington D.C. and several other locations in the U.S.




        For more information regarding Kratos, visitwww.kratosdefense.com. The information on the Kratos' website is not a part of this proxy statement/prospectus.

Digital Fusion

SYSDigital Fusion, Inc.
        SYS5030 Bradford Drive
        5050 Murphy Canyon Road,Building 1, Suite 200210
        San Diego, CA 92123Huntsville, AL 35805
        (858) 244-7393(256) 327-8103

        SYSDigital Fusion is an information technology, research and engineering, and acquisition and business support services company that helps its subsidiaries provide information connectivity solutions that capture, analyze and present real-time informationcustomers make the most of technology to customers in the Department of Defense, Department of Homeland Security, other government agencies and commercial companies. Using interoperable communications software, sensors, digital video broadcast and surveillance technologies, wireless networks, network management, decision-support tools and Net-Centric technologies, SYS's technical experts enhance complex decision-making. Founded in 1966, SYS is headquartered in San Diego and has principal offices in California and Virginia.

        SYS delivers its solutions through two reportable segments, the Defense Solutions Group and the Public Safety, Security and Industrial Systems Group. The Defense Solutions Group focuses on engineering, technical and management services to Federal Government agencies. The Public Safety, Security and Industrial Systems Group focuses on providing "right-time" situation status and mission execution supportmeet their business needs. Digital Fusion's IT Services business unit provides solutions to both government and commercial customers. Historically, SYScustomers, focused in the following areas: Business Process Automation, Application Development and Data Management, Application Security, Web Portals and Digital Dashboards, System Integration, and IT Support. Digital Fusion's Research and Engineering Services business unit supports a variety of customers with state-of-the-art solutions that include: Systems Development and Engineering; Applied




Aerodynamics/ Computational Fluid Dynamics; Missile Engineering; Thermal-Structural Modeling; Program, Data and Financial Management Support; Modeling and Simulation; Control System Design and Analysis; Mechanical Design and Analysis; Optical Systems Design, Development and Test; Hardware-in-the-Loop Testing; and Test and Evaluation. Digital Fusion's Acquisition and Business Support Services business unit provides solutions focused on the following areas: Budget Integration and Analysis; Accounting Operations; Travel Management; SAP Expertise; Business System Development, Evaluation and Operation; Assessing Best Business Practices and Tools; Contracts Management and Administration; Purchasing Expertise; Procurement Documentation Generation and Evaluation; Price and Cost Analysis; Earned Value Management and Policy Evaluation and Support.

        Founded in 1995, Digital Fusion is incorporated in Delaware. Its main office is located in Huntsville, Alabama and it has generated revenues by providing information technology, systems integrationsatellite offices in Texas and program and financial management services under long term contracts for the Department of Defense and in particular the U.S. Navy. More recently, SYS has expanded and leveraged its technical engineering services with complementary products and has broadened its customer base to include commercial enterprises and other governmental agencies beyond the Department of Defense.

        These expanded products and services capabilities, together with SYS's longstanding expertise in situational awareness and systems engineering, have enabled SYS to develop a set of information technology solutions to complement SYS's services offerings for the Information Technology services and Public Safety and Security markets. SYS's customers in these markets such as federal, state and local governments, public safety first-responders, large corporations, schools and universities, all share a common need for decision support products and services that enhance or enable connecting real-time data to decision makers.

        SYS also provides solution lifecycle support with program, financial, test and logistical services, including classroom and online training.Washington, D.C.

        For additional information regarding SYS,Digital Fusion, visitwww.systechnologies.comwww.digitalfusion.com. The information on SYS'sDigital Fusion's website is not a part of this proxy statement/prospectus.

Merger Sub

        White Shadow,Dakota Merger Sub, Inc., or Merger Sub, a wholly-owned subsidiary of Kratos, is a CaliforniaDelaware corporation formed on February 19,November 13, 2008 for the sole purpose of effecting the merger. Upon completion of the merger, Merger Sub will merge with and into SYS,Digital Fusion, and SYSDigital Fusion will become a wholly-owned subsidiary of Kratos.

The Merger Sub

        Each of the boards of directors of Kratos and Digital Fusion has approved the strategic merger of Kratos and Digital Fusion. Kratos and Digital Fusion have entered into an Agreement and Plan of Merger pursuant to which Digital Fusion will merge with a newly formed, wholly-owned subsidiary of Kratos, with Digital Fusion surviving the merger as a wholly-owned subsidiary of Kratos. In the proposed merger, Digital Fusion stockholders will receive 1.7933 shares of Kratos common stock for each share of Digital Fusion common stock. This exchange ratio is fixed and will not conducted any activities other than those incidentalbe adjusted to its formation andreflect stock price changes prior to the matters contemplatedclosing. The stockholders of Kratos will continue to own their existing shares, which will not be affected by the merger agreement, including the preparation of applicable regulatory filings in connection with the merger.




The Merger Agreement

        A copy of the merger agreement is attached asAnnex A to this Proxy Statement.proxy statement/prospectus. Kratos and SYSDigital Fusion encourage you to read the entire merger agreement carefully because it is the principal document governing the merger. For more information on the merger agreement, see "The Merger Agreement"Agreement and Related Agreements" beginning on page     79.

What SYS shareholders Will Receive in the Merger.

        AtThe merger is expected to be completed during late 2008 or early 2009, subject to the effective timesatisfaction or waiver of the closing conditions. For a discussion of the timing of the merger, each outstandingsee "The Merger Agreement and Related Agreements—Closing and Effective Time of the Merger" beginning on page     .

Merger Consideration

        Each share of SYSDigital Fusion common stock, par value $0.01 per share, issued and outstanding immediately prior to the completion of the merger, will be converted into the right to receive 1.25821.7933 shares of Kratos common stock, in the merger, which number we refer to as the exchange ratio. Holdersfor an aggregate of SYS common stockapproximately 21.1 million shares, assuming no exercise or conversion of outstanding options. Kratos will not receiveissue any fractional Kratos shares in the merger. Instead, the total number of shares that each holder of SYS common stockDigital Fusion stockholders will receive cash (without interest) in the merger will be rounded down to the nearest whole number, and Kratos will pay cash for any resultinglieu of such fractional share, that an SYS shareholder otherwise would be entitled to receive. The amount of cash payable for aafter aggregating all fractional shareshares of Kratos common stock will beissuable to that holder, determined by multiplying thesuch fraction by the average closing price for Kratos common stock on The Nasdaq Global Select Stock Market during the three days prior to the date the merger becomes effective.

Example: If you currently own 25 shares of SYS common stock, absent the treatment of fractional shares described above, you would be entitled to receive 31.455 (25 × 1.2582) shares of Kratos common stock. Since fractional shares will not be issued, you will be entitled to 31 shares of Kratos common stock and a check for the market value of 0.455 shares of Kratos common stock based on the average closing price during the threefive trading days prior to date the merger becomes effective.

        The merger agreement provides for adjustments to the exchange ratio to reflect the effect of any stock split, stock dividend, reverse stock split, reclassification, recapitalization or other similar transaction with respect to Kratos common stock or SYS common stock that occursimmediately prior to the effective date of the merger.closing date.




        For a more complete description of the merger consideration, see "The Merger Agreement—Consideration to be Received inAgreement and Related Agreements—Terms of the Merger" beginning on page     80..

Treatment of SYS Subordinated Convertible NotesStock Options and Warrants

        SYS has $3,125,000 of convertible notes payableKratos will assume outstanding which we referoptions and warrants to as the Notes, which are unsecured, subordinate to its bank debt, bear interest at 10% per annum payable quarterly, are due February 14, 2009 and are convertible at any time intopurchase shares of Digital Fusion common stock at a conversion rate of $3.60 per share. These notes are being assumed by Kratos subjectin the merger. Each outstanding option and warrant to those same terms and conditions.

        If the Notes are not converted prior to the merger, following the merger the Notes will not be convertible into SYSacquire Digital Fusion common stock. Instead, theystock will be convertible intoconverted automatically at the merger consideration as if they had been converted into SYS common stock immediately prior to the merger.

        SYS has 508,401 warrants outstanding, which will be, following the merger, exercisable for merger consideration.

        Following the merger, the holders of these warrants shall have the right to receive, upon exercise of the warrants, the same amount and kind of securities, cash or property, as they would have been entitled to receive upon the occurrenceeffective time of the merger if they had been, immediately priorinto an option or warrant to acquire Kratos common stock, and will continue to be governed by the merger,terms of the holders ofrelevant Digital Fusion stock plan and/or related agreements under which it was granted, except that the number of shares of Kratos common stock for which each option or warrant shares then issuable uponis exercisable and the exercise price of each option or warrant will be adjusted based on the exchange ratio in full of these warrants.




the merger. For a more complete discussion of the treatment of SYS Subordinated Convertible Notes and Warrants, see "The Merger—Subordinated Convertible Notes" and "The Merger—Warrants," each beginning on page 68.

Treatment of Stock Options and Other Stock-Based Awards

        All outstanding SYS stock options will become fully vested and exercisable into SYS shares at or prior to closing in accordance with the terms of their respective stock option plans and may be subject to withholding taxes as a result. No SYS stock options will be assumed by or converted into options of Kratos.

        Effective February 20, 2008, the execution date of the merger agreement, SYS terminated the then current stock purchase period for its Employee Stock Purchase Plan, and Kratos is not assuming this plan.

        For a more complete discussion of the treatment of SYSDigital Fusion options and other stock-based awards, see "The Merger Agreement—Agreement and Related Agreements—Treatment of SYSDigital Fusion Stock Options" beginning on page     80.and "The Merger Agreement and Related Agreements—Treatment of Digital Fusion Warrants" beginning on page     .

Directors and Executive Management Following the Merger

        The directors and executive management of Kratos will remain unchanged at the effective time of the merger.

At the effective time of the merger, the directors and officers of Merger Sub will become the directors and officers of SYSDigital Fusion until each is replaced by his or her successor.

        For a more complete discussion of the directors and management of Kratos, see "The Merger—Composition of Kratos Board of Directors" beginning on page     66..

RecommendationsRecommendation of the Kratos Board of Directors

        After careful consideration, the Kratos board of directors unanimously recommends that holders of Kratos common stock voteFOR the issuance of Kratos common stock in connection with the merger.

        For a more complete description of the KratosKratos' reasons for the merger and the recommendations of the Kratos board of directors, see "The Merger—The Kratos Board of DirectorsDirectors' Recommendations and Reasons for the Merger" beginning on page     49..

Recommendation of the SYSDigital Fusion Board of Directors

        After careful consideration, the SYSDigital Fusion board of directors unanimously recommends that holders of SYSDigital Fusion common stock voteFORthe Merger Proposal.adoption of the merger agreement and approval of the merger.

        For a more complete description of SYS'sDigital Fusion's reasons for the merger and the recommendation of the SYSDigital Fusion board of directors, see "The Merger—The SYSDigital Fusion Board of Directors' Recommendation and Reasons for the Merger" beginning on page     51..




Opinions of Financial Advisors

Kratos Financial Advisor

        WachoviaIn connection with the transaction, Kratos' board of directors received a written opinion from Imperial Capital, Markets, LLC, which we referor Imperial Capital, Kratos' financial advisor, as to the fairness, from a financial point of view and as Wachovia,of the date of its opinion, of the exchange ratio in the transaction to Kratos. The full text of Imperial Capital's written opinion, dated November 19, 2008, is attached to this proxy statement asAnnex C. Holders of Kratos common stock are encouraged to read this opinion carefully in its entirety for a description of the assumptions made, procedures followed, matters considered and






limitations on the review undertaken.Imperial Capital's opinion was provided to Kratos' board of directors in connection with, and for the purposes of, its evaluation of the exchange ratio in the transaction from a financial point of view, does not address the merits of the underlying decision by Kratos to engage in the transaction or the relative merits of any alternatives discussed by Kratos' board of directors, does not constitute an opinion with respect to Kratos' underlying business decision to effect the transaction, any legal, tax or accounting issues concerning the transaction, or any terms of the transaction (other than the exchange ratio) and does not constitute a recommendation as to any action Kratos or any holder of Kratos common stock should take in connection with the transaction or any aspect thereof.

        For a more complete description of Imperial Capital's opinion, see "The Merger—Opinion of Financial Advisor to the Kratos Board of Directors" beginning on page     . See alsoAnnex C to this proxy statement/prospectus.

Digital Fusion Financial Advisor

        ISI Partners, LLC, or ISI, delivered an opinion to Kratos'Digital Fusion's board of directors that, subject to and based upon the assumptions made, procedures followed, matters considered and limitations on its review undertaken, as of FebruaryNovember 20, 2008, the exchange ratio in the merger agreement was fair from a financial point of view to Kratos.Digital Fusion. The full text of Wachovia'sISI's written opinion, dated FebruaryNovember 20, 2008, is attached asAnnex D to this Proxy Statement.proxy statement/prospectus. Holders of shares of KratosDigital Fusion common stock are urged to read the opinion carefully and in its entirety. Wachovia'sISI's opinion does not and shall not constitute a recommendation to any holders of shares of KratosDigital Fusion common stock as to how they should vote in connection with the Merger.merger. This summary of Wachovia'sISI's opinion contained in this Proxy Statementproxy statement/prospectus is qualified in its entirety by reference to the full text of the opinion.

        For a more complete description of Wachovia'sthe ISI opinion, see "The Merger—Opinion of Financial Advisor to the KratosDigital Fusion Board of Directors" beginning on page     53.. See alsoAnnex D to this Proxy Statement.

SYS Financial Advisor

        Imperial Capital, LLC, which is referred to as Imperial Capital, has rendered its opinion to the SYS board of directors to the effect that, as of February 19, 2008, and based upon and subject to the factors, assumptions, qualifications and limitations set forth therein, the exchange ratio of 1.2582 shares of Kratos common stock to be received for each share of SYS common stock pursuant to the merger agreement was fair from a financial point of view to the holders of such shares of SYS common stock.

        The full text of the written opinion of Imperial Capital, dated February 19, 2008, is attached asAnnex Eto this Proxy Statement and sets forth assumptions made, general procedures followed, factors considered and limitations and qualifications on the review undertaken by Imperial in connection with its opinion. Imperial Capital provided its opinion for the information and assistance of the SYS board of directors in connection with its consideration of the merger. The Imperial Capital opinion is not a recommendation as to how any holder of shares of SYS common stock should vote with respect to the merger.

        For a more complete description of the Imperial Capital opinion and engagement letter, see "The Merger—Opinion of Financial Advisor to the SYS Board of Directors" beginning on page 59. See alsoAnnex E to this Proxy Statement.proxy statement/prospectus.

Interests of SYSDigital Fusion Directors and Executive Officers in the Merger

        When you consider the unanimous recommendation of SYS'sDigital Fusion's board of directors that SYS shareholdersDigital Fusion stockholders approve the merger agreement the plan of merger and the merger, you should be aware that some SYSDigital Fusion officers and directors may have interests in the transaction that may be different from, or in addition, to their interests as shareholdersstockholders of SYS.Digital Fusion.

        For a further discussion of interests of directors and executive officers in the merger, see "The Merger—Interests of SYSDigital Fusion Directors and Executive Officers in the Merger" beginning on page     66..

Material United States Federal Income Tax Consequences of the Merger

        Kratos and SYSDigital Fusion intend for the merger to qualify as a reorganization within the meaning of Section 368(a) of the Code for U.S. federal income tax purposes. Accordingly, SYS shareholdersDigital Fusion stockholders generally will not recognize gain or loss for U.S. federal income tax purposes upon the receipt of Kratos common stock in the merger, except that an SYS shareholdera Digital Fusion stockholder will recognize gain or loss with respect to any cash received in lieu of a fractional share of Kratos common stock. It is a conditionDigital Fusion stockholders who exercise their appraisal rights will recognize gain or loss with respect to






completion of the merger that Kratos and SYS each receive a legal opinion from cash received in exchange for their respective counsel that the merger will constitute a reorganization within the meaning of Section 368 of the Code In the event that such counsel does not render this opinion, this condition shall be deemed to be satisfied if the other party's counsel delivers the opinion to both Kratos and SYS.Digital Fusion common stock.

        Tax matters are very complicated and the tax consequences of the merger to you, if you are an SYS shareholder,a Digital Fusion stockholder, will depend upon the facts of your situation. In addition, you may be






subject to state, local or foreign tax laws that are not addressed in this Proxy Statement.proxy statement/prospectus. You are urged to consult with your own tax advisors for a full understanding of the tax consequences of the merger to you.

        For a more complete description of the material U.S. federal income tax consequences of the merger, see "Material"The Merger—Material United States Federal Income Tax Consequences" beginning on page     76..

Accounting Treatment of the Merger

        The merger will be accounted for as an acquisition by Kratos of SYSDigital Fusion under the purchase method of accounting according to U.S. generally accepted accounting principles.

Dissenters' Rights and Regulatory Matters

        The parties are not aware of any governmental or regulatory approvals required in order to complete the transaction.

Appraisal Rights

        Under applicable law:

•

Kratos stockholders have no dissenters' or appraisal rights with respect to the merger under Section 262 of the Delaware General Corporate Law; and



•

SYS shareholders are entitled to dissenters' rights underCorporations Law, or DGCL.

        Under the California General Corporation Law in connection withDGCL, holders of Digital Fusion common stock who do not vote for the adoption of the merger agreement have the right to seek appraisal and receive cash for the fair value of their shares, but only if they comply with all requirements of the specific conditions set forthDGCL and at least one stockholder who properly exercised appraisal rights litigates an appraisal proceeding in the section entitledDelaware Court of Chancery to obtain the appraisal. See "The Merger—Dissenters' Rights and Appraisal Rights," which beginsRights" on page     71, are met.

.

Conditions to Completion of the Merger

        Kratos and SYSDigital Fusion expect to complete the merger after all the conditions to the merger in the merger agreement are satisfied or waived, including after the receipt of stockholder approvals at their respective stockholder meetings. In addition to obtaining such stockholder approvals, each of the annual meeting ofother closing conditions set forth in the merger agreement must be satisfied. Kratos and at the special meetings of SYS. Kratos and SYSDigital Fusion currently expect to complete the merger during the first half of 2008.late 2008 or early 2009. However, it is possible that factors outside of either company's control could cause the merger to be competed at a later time or not at all.

        Each party's obligation to complete the merger is subject to the satisfaction or waiver of various conditions, including the following:

•

the receipt of the required stockholder approvals;



•

the effectiveness of the registration statement of which this Proxy Statement is a part, and the registration statement not being subject to any stop order or threatened stop order;



•

the absence of any injunctions or legal prohibitions preventing the consummation of the merger;



•

the receipt of opinions of counsel relating to the U.S. federal income tax treatment of the merger;



•

the accuracy of the other party's representations and warranties in the merger agreement, including the other party's representation that no material adverse effect has occurred;



•

the other party's compliance in all material respects with its obligations under the merger agreement; and



•

the receipt of authorization from The Nasdaq Global Select Stock Market for listing of Kratos common stock to be issued in connection with the merger.




        Neither Kratos nor SYS is aware of the need to obtain any other material regulatory approvals in order to complete the merger.

The merger agreement provides that certain of these conditions may be waived, in whole or in part, by Kratos or SYS,Digital Fusion, to the extent legally allowed. Neither Kratos nor SYSDigital Fusion currently expects to waive any material condition to the completion of the merger. If either Kratos or SYSDigital Fusion determines to waive any condition to the merger that would result in a material and adverse change in the terms of the merger to Kratos or SYS shareholdersDigital Fusion stockholders (including any change in the tax consequences of the transaction to SYS shareholders)Digital Fusion stockholders), proxies would be resolicited from the Kratos or SYS shareholders,Digital Fusion stockholders, as applicable.

        For a more complete discussion of the conditions to the merger, see "The Merger Agreement—Agreement and Related Agreements—Conditions to Completion of the Merger" beginning on page     84..

Timing of the Merger

        The merger is expected to be completed during the first half of 2008, subject to the receipt of necessary regulatory approvals and the satisfaction or waiver of other closing conditions. For a discussion of the timing of the merger, see "The Merger Agreement—Closing and Effective Time of the Merger" beginning on page 79.

No Solicitation of Other Offers

        InThe merger agreement contains restrictions on the ability of Digital Fusion to solicit or engage in discussions or negotiations with a third party with respect to a proposal to acquire Digital Fusion's equity or assets. Notwithstanding these restrictions, the merger agreement SYS has agreedprovides that it will not directly or indirectly:under specified

•

solicit, initiate, or knowingly or intentionally encourage or facilitate, any inquiries, offers or proposals that constitute, or could reasonably be expected to lead to, any alternative acquisition proposal; or







•

enter into, continue or otherwise participate in any discussions or negotiations regarding, furnish to any person any non-public information with respect to, assist or participate in any effort or attempt by any person with respect to, or otherwise knowingly or intentionally cooperate in any way with, any alternative acquisition.

        The merger agreement does not, however, prohibit SYS from considering acircumstances, if Digital Fusion receives an unsolicited bona fide acquisition proposal from a third party if certain specified conditions are met.to acquire a significant interest in it that its board of directors determines in good faith is reasonably likely to lead to a proposal that is superior to the merger, Digital Fusion may furnish nonpublic information to that third party and engage in negotiations regarding an acquisition proposal with that third party.

        For a discussion of the prohibition on solicitation of acquisition proposals from third parties, see "The Merger Agreement—Agreement and Related Agreements—No Solicitation; Changes in Recommendations" beginning on page     85..

Termination

        Generally, the merger agreementKratos and Digital Fusion may be terminated and the merger may be abandonedmutually agree at any time prior to the completion of the merger (including after stockholder approval):

•

by mutual written consent of Kratos to terminate the merger agreement and SYS;



•

abandon the merger. In addition, the agreement may be terminated by either Kratos or SYS, if



•

Digital Fusion under certain circumstances or upon the merger is not consummatedoccurrence of certain events.

        See "The Merger Agreement and Related Agreements—Termination" beginning on or before August 20, 2008; except that such right is not available to any party whose failure to comply with the merger agreement has been a principal cause of, or resulted in, the merger not being consummated by such date and provided that this date (referred to herein as the "outside date") may be extended to February 20, 2009 by either Kratos or SYS;



•

a governmental entity issues an order, decree or ruling or takes any other nonappealable final action permanently restraining, enjoining or otherwise prohibiting the merger;




•

the required Kratos or SYS shareholder vote has not been obtained at the applicable stockholder meeting or any adjournment or postponement thereof (except that this right is not available to any party who is in material breach of or has materially failed to fulfill its obligations under the merger agreement);



•

the SYS board of directors changes its recommendation that its shareholders vote in favor of the merger proposal, or if SYS enters into an acquisition agreement relating to an alternative transaction; or



•

the other party breaches any of its agreements or representations in the merger agreement in such a way as would cause one or more of the conditions to closing not to be satisfied, and such breach is either incurable or is not cured after 30 days' written notice;



•

by Kratos, if:



•

SYS willfully and materially breaches its covenants with respect to non-solicitation of an alternative acquisition proposal or its obligations to hold its shareholders meeting and mail this Proxy Statement to its shareholders; or



•

SYS's board of directors determines to accept an alternative acquisition proposal for a change of control transaction, in which case SYS would be required to pay the applicable termination fee (as described below); or



•

by SYS to accept a proposal from a third party to acquire SYS that SYS's board of directors determines to be superior to the terms of Kratos' proposed acquisition of SYS, if SYS's board of directors changes or withdraws its recommendation of the merger in response to such superior proposal and pays the applicable termination fee (as described below)page     .

Termination Fees and Expenses

        Pursuant to the merger agreement, SYSDigital Fusion is required to pay a termination fee of $2,394,000 dollars$1,344,000 to Kratos in the event the merger agreement is terminated:

•

By Kratos, if



•

the SYS board of directors has failed to reconfirm its recommendation of approval of the SYS voting proposal after Kratos requests such reconfirmation pursuant to the terms of the merger agreement;



•

the SYS board of directors or any committee of the SYS board of directors has approved or recommended to the SYS shareholders an alternative acquisition transaction;



•

SYS enters into an alternative acquisition transaction; or



•

SYS has willfully breached its obligations under the merger agreement pertaining to non-solicitation of alternative acquisition proposals and the SYS shareholder meeting to approve the SYS Voting Agreement.



•

By SYS, if its board of directors or any committee thereof has made a recommendation to accept an alternative transaction proposal and SYS enters into an alternative acquisition agreement which was the subject of such adverse recommendation change.

        Whether or not the merger is completed, all costs and expenses incurredterminated by Digital Fusion in connection with the mergerentry into an agreement andfor a superior proposal. In addition, Digital Fusion is required to pay Kratos the transactions contemplated bytermination fee if Kratos terminates the merger agreement will be paid byunder certain conditions or in the party incurring those costsevent that Digital Fusion terminates the Merger Agreement and either enters into or expenses, except thatconsummates a takeover proposal, other than with Kratos, and SYS will share equally the expenses incurred in connection with the printing and mailingwithin 12 months of this Proxy Statement.such termination under certain circumstances.




        This termination fee could discourage other companies from seeking to acquire or merge with either SYSDigital Fusion or Kratos. See "The Merger Agreement—Termination," "—Agreement and Related Agreements—Termination Fees and Expenses" and "—Effect of Termination," beginning on pages     86, 87 and    88,, respectively.

Stockholder Agreements

        In order to induce Kratos to enter into the merger agreement, several Digital Fusion stockholders entered into stockholder agreements and irrevocable proxies with Kratos pursuant to which, among other things, each of these stockholders agreed, solely in its capacity as a stockholder, to vote all of its shares of Digital Fusion capital stock and other Digital Fusion securities in favor of the merger and the adoption of the merger agreement, against any action or agreement that would result in a breach of the merger agreement by Digital Fusion, and against any other action which, directly or indirectly, would reasonably be expected to prevent or materially delay the consummation of the merger or the transactions contemplated by the merger agreement. These Digital Fusion stockholders also granted Kratos an irrevocable proxy to their respective Digital Fusion capital stock and securities in accordance with the stockholder agreement.

        As of November 21, 2008, the stockholders of Digital Fusion that entered into stockholder agreements owned in the aggregate 3,999,567 shares of Digital Fusion stock, representing approximately 34% of the outstanding Digital Fusion stock.

        See "The Merger Agreement and Related Agreements—Stockholder Agreements" beginning on page     .

Comparison of the rightsRights of Kratos and SYS shareholdersDigital Fusion Stockholders

        The rights of SYS shareholdersDigital Fusion stockholders as Kratos stockholders after the merger will be governed by Kratos' certificate of incorporation and bylaws, each as amended, and the laws of the State of






Delaware. Those rights differ from the rights of SYS shareholdersDigital Fusion stockholders under SYS's articlesDigital Fusion's certificate of incorporation and bylaws and the lawsbylaws.

        See "Comparison of the State of California.

Matters to be Considered at the Meetings

Kratos

        Kratos stockholders will be asked to vote on the following six proposals:

        1.     To elect five directors for one-year terms or until their successors are elected and duly qualified.

        2.     To ratify the selection of Grant Thornton LLP as the independent auditorsRights of Kratos for the fiscal year ending December 28, 2008.

        3.     To approve an amendment to the Kratos 1999 Employee Stock Purchase Plan to increase the aggregate number of shares that may be issued under the Plan by 1,500,000 shares.

        4.     To approve an amendment to the Kratos 2005 Equity Incentive Plan to increase the aggregate number of shares that may be issued under the Plan by 3,000,000 shares.

        5.     To approve the issuance of Kratos common stock, par value $0.001 per share, pursuant to the Agreement and Plan of Merger and Reorganization, dated as of February 20, 2008, by and among Kratos Defense & Security Solutions, Inc., White Shadow, Inc., and SYS, as the same may be amended from time to time.

        6.     To approve any motion to adjourn or postpone the annual meeting to a later date or dates, if necessary, to solicit additional proxies if there are insufficient votes at the time of the annual meeting to approve the first five proposals listed above.

        7.     To transact such other business as may properly come before the annual meeting or any adjournment or postponement thereof.

        The Kratos board of directors unanimously recommends that Kratos stockholders vote FOR all of the proposals set forth above, as more fully described under "Kratos Annual Meeting"Digital Fusion Stockholders" beginning on page     142.

SYS

        SYS shareholders will be asked to vote on the following two proposals:

        1.     To adopt and approve the Agreement and Plan of Merger and Reorganization.

        2.     To approve any motion to adjourn or postpone the special meeting to a later date or dates, if necessary, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement.

        3.     To transact such other business as may properly come before the special meeting or any adjournment or postponement thereof.




        The SYS board of directors unanimously recommends that SYS shareholders vote FOR all of the proposals set forth above, as more fully described under "SYS Special Meeting" beginning on page 193..

Voting by Kratos and SYSDigital Fusion Directors and Executive Officers

        On ,[    •    ], 2008, the record date set by the KratosDigital Fusion board of directors, directors and executive officers of KratosDigital Fusion and their affiliates owned and were entitled to vote [    •    ] shares of KratosDigital Fusion common stock, or approximately %, of the total voting power[    •    ]% of the shares of Kratos common stock outstanding on that date.

        On                        , 2008, the record date set by the SYS board of directors, directors and executive officers of SYS and their affiliates owned and were entitled to vote                         shares of SYS common stock, or approximately                        % of the shares of SYSDigital Fusion common stock outstanding on that date. Stockholders of SYSDigital Fusion holding approximately 9.1%[    •    ]% of the shares of SYSDigital Fusion common stock outstanding on that date have executed voting agreements agreeing to vote in favor of the merger.





SELECTED HISTORICAL FINANCIAL DATA OF KRATOS


        The tables below present summary selected consolidated historical financial data below is derived from Kratos' audited consolidated financial statements as of KRATOS(and for each of the five years ended December 31, 2003 through 2007 contained in millionsKratos' annual reports on Form 10-K for the years ended December 31, 2003, 2004, 2005, 2006 and 2007, except for per sharethe financial data) prepared as of and for the nine months ended September 28, 2008, which is derived from Kratos' unaudited condensed consolidated financial statements contained in accordance with accounting principles generally accepted inKratos' quarterly report on Form 10-Q for the United States of America. Thisperiod ended September 28, 2008. The information is only a summary and should be read in conjunction with "INFORMATION RELATING TO KRATOS—KRATOS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS," "INFORMATION RELATING TO KRATOS—BUSINESS" and Kratos' consolidated financial statements, accompanying notes, "Certain Information Relating to Kratos—Management's Discussion and related notes,Analysis of Financial Condition and Results of Operations of Kratos," "Certain Information Relating to Kratos—Description of Business," included elsewhere in this proxy statement/prospectus.

						Year Ended December 31, (in millions)
						2003			2004			2005			2006			2007								Year ended December 31,															Nine months ended September 28, 2008
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
																										2003			2004			2005			2006			2007			Nine months ended September 28, 2008
																										(in millions, except per share amounts)
Consolidated Statement of Operations Data:																					Consolidated Statement of Operations Data:
Revenues	Revenues					$	43.4		$	116.9		$	152.3		$	153.1		$	193.6		Revenues					$	43.4		$	116.9		$	152.3		$	153.1		$	193.6		$	222.0
Operating costs and expenses:	Operating costs and expenses:																				Operating costs and expenses:
Costs of revenues	Costs of revenues						22.2			87.9			115.7			124.2			162.0		Costs of revenues						22.2			87.9			115.7			124.2			162.0			178.6
Selling, general and administrative expenses	Selling, general and administrative expenses						18.0			28.9			35.5			38.5			39.5		Selling, general and administrative expenses						18.0			28.9			35.5			38.5			39.5			37.7
Research and development																					Research and development						—			—			—			—			—			1.0
Stock option investigation and related fees	Stock option investigation and related fees						—			—			—			—			14.0		Stock option investigation and related fees						—			—			—			—			14.0			(1.0	)
Estimated cost for settlement of securities litigation	Estimated cost for settlement of securities litigation						—			—			—			—			4.9		Estimated cost for settlement of securities litigation						—			—			—			—			4.9			—
Loss (recovery) of unauthorized issuance of stock options	Loss (recovery) of unauthorized issuance of stock options						5.7			—			—			—			(3.4	)	Loss (recovery) of unauthorized issuance of stock options						5.7			—			—			—			(3.4	)		(0.6	)
Contingent acquisition consideration and restatement fees	Contingent acquisition consideration and restatement fees						—			13.9			(2.1	)		0.1			—		Contingent acquisition consideration and restatement fees						—			13.9			(2.1	)		0.1			—			—
Impairment and restructuring fees							0.1			—			—			21.8			1.2
Impairment, restructuring fees and adjustments to the liability for unused office space																					Impairment, restructuring fees and adjustments to the liability for unused office space						0.1			—			—			21.8			1.2			(0.3	)
		Total operating costs and expenses					46.0			130.7			149.1			184.6			218.2			Total operating costs and expenses					46.0			130.7			149.1			184.6			218.2			215.4
Operating income (loss) from continuing operations							(2.6	)		(13.8	)		3.2			(31.5	)		(24.6	)
Operating income (loss)																					Operating income (loss)						(2.6	)		(13.8	)		3.2			(31.5	)		(24.6	)		6.6
Other (income) expense:	Other (income) expense:																				Other (income) expense:
	Interest income (expense), net						0.9			0.2			0.1			(0.7	)		(1.2	)	Interest income (expense), net						0.9			0.2			0.1			(0.7	)		(1.2	)		(7.5	)
	Impairment of investments in unconsolidated subsidiaries						—			(2.9	)		—			—			(1.8	)	Impairment of investments in unconsolidated subsidiaries						—			(2.9	)		—			—			(1.8	)		—
	Other income and (expense), net						(0.1	)		(0.1	)		0.2			(0.2	)		0.7		Other income and (expense), net						(0.1	)		(0.1	)		0.2			(0.2	)		0.7			0.8
		Total other (income) expense					0.8			(2.8	)		0.3			(0.9	)		(2.3	)		Total other (income) expense					0.8			(2.8	)		0.3			(0.9	)		(2.3	)		(6.7	)
Income (loss) from continuing operations before income taxes	Income (loss) from continuing operations before income taxes						(1.8	)		(16.6	)		3.5			(32.4	)		(26.9	)	Income (loss) from continuing operations before income taxes						(1.8	)		(16.6	)		3.5			(32.4	)		(26.9	)		(0.1	)
Provision (benefit) for income taxes from continuing operations	Provision (benefit) for income taxes from continuing operations						(1.0	)		(8.4	)		(0.1	)		13.8			1.3		Provision (benefit) for income taxes from continuing operations						(1.0	)		(8.4	)		(0.1	)		13.8			1.3			1.4
Income (loss) from continuing operations	Income (loss) from continuing operations						(0.8	)		(8.2	)		3.6			(46.2	)		(28.2	)	Income (loss) from continuing operations						(0.8	)		(8.2	)		3.6			(46.2	)		(28.2	)		(1.5	)
Income (loss) from discontinued operations	Income (loss) from discontinued operations						2.7			23.2			(2.0	)		(11.7	)		(12.6	)	Income (loss) from discontinued operations						2.7			23.2			(2.0	)		(11.7	)		(12.6	)		0.2
Net income (loss)	Net income (loss)						1.9			15.0			1.6			(57.9	)		(40.8	)	Net income (loss)					$	1.9		$	15.0		$	1.6		$	(57.9	)	$	(40.8	)	$	(1.3	)
Preference dividend requirements							—			—			—			—			—
Net income (loss) applicable to common stock						$	1.9		$	15.0		$	1.6		$	(57.9	)	$	(40.8	)
Basic earnings (loss) per common share:	Basic earnings (loss) per common share:																				Basic earnings (loss) per common share:
			Continuing operations			$	(0.01	)	$	(0.12	)	$	0.05		$	(0.63	)	$	(0.38	)
			Discontinued operations				0.04			0.34			(0.03	)		(0.16	)		(0.17	)
																							Continuing operations			$	(0.01	)	$	(0.12	)	$	0.05		$	(0.63	)	$	(0.38	)	$	(0.02	)
				Net income (loss)		$	0.03		$	0.22		$	0.02		$	(0.79	)	$	(0.55	)			Discontinued operations				0.04			0.34			(0.03	)		(0.16	)		(0.17	)		0.00
																								Net income (loss)		$	0.03		$	0.22		$	0.02		$	(0.79	)	$	(0.55	)	$	(0.01	)
Diluted earnings (loss) per common share:	Diluted earnings (loss) per common share:																				Diluted earnings (loss) per common share:
			Continuing operations			$	(0.01	)	$	(0.12	)	$	0.05		$	(0.63	)	$	(0.38	)			Continuing operations			$	(0.01	)	$	(0.12	)	$	0.05		$	(0.63	)	$	(0.38	)	$	(0.02	)
			Discontinued operations				0.04			0.34			(0.03	)		(0.16	)		(0.17	)			Discontinued operations				0.04			0.34			(0.03	)		(0.16	)		(0.17	)		0.00
																								Net income (loss)		$	0.03		$	0.22		$	0.02		$	(0.79	)	$	(0.55	)	$	(0.01	)
				Net income (loss)		$	0.03		$	0.22		$	0.02		$	(0.79	)	$	(0.55	)
Weighted average common shares outstanding:	Weighted average common shares outstanding:																				Weighted average common shares outstanding:
	Basic						68.4			67.7			74.0			73.5			74.0		Basic						68.4			67.7			74.0			73.5			74.0			88.0
	Diluted						68.4			67.7			75.0			73.5			74.0		Diluted						68.4			67.7			75.0			73.5			74.0			88.0




		December 31, (in millions)
		2003			2004			2005			2006			2007
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents		$	75.8		$	58.0		$	7.7		$	5.4		$	8.6
Working capital			132.5			98.6			67.4			(3.8	)		23.4
Goodwill			5.5			57.1			94.4			129.9			194.5
Other intangible assets			1.9			6.4			7.4			13.4			19.9
Total assets			279.3			330.7			342.0			337.7			335.3
Long-term debt			—			—			—			—			74.0
Preferred stock			—			—			—			—			—
Stockholders' equity		$	191.9		$	219.6		$	229.7		$	187.1		$	167.2




		December 31,
																	September 28, 2008
		2003			2004			2005			2006			2007
		(in millions)
Consolidated Balance Sheet Data:
Cash and cash equivalents		$	75.8		$	58.0		$	7.7		$	5.4		$	8.6		$	2.5
Working capital			132.5			98.6			67.4			(3.8	)		23.4			32.2
Goodwill			5.5			57.1			94.4			129.9			194.5			237.3
Other intangible assets			1.9			6.4			7.4			13.4			19.9			25.0
Total assets			279.3			330.7			342.0			337.7			335.3			382.8
Total debt			0.7			1.9			0.7			51.4			76.7			83.8
Stockholders' equity			191.9			219.6			229.7			187.1			167.2			220.0





SELECTED HISTORICAL FINANCIAL DATA OF SYSDIGITAL FUSION


        The tables below present summary selected consolidated historical financial data below is derived from Digital Fusion's audited consolidated financial statements for each of SYS(in millionsthe five years ended December 31, 2003 through 2007, except for per sharefinancial data) prepared for the 38 weeks ended September 18, 2008, which is derived from Digital Fusion's unaudited condensed combined financial statements presented elsewhere in accordance with accounting principles generally accepted in the United States of America.this proxy statement/prospectus. This information is only a summary and should be read in conjunction with "INFORMATION RELATING TO SYS—SYS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS," "INFORMATION RELATING TO SYS—BUSINESS" and SYS'sDigital Fusion's consolidated financial statements, accompanying notes and related notes,"Certain Information Relating to Digital Fusion—Management's Discussion and Analysis of Financial Condition and Results of Operations of Digital Fusion" included elsewhere in this proxy statement/prospectus.

			Year Ended December 31,
																		Nine months ended September 19, 2008
			2003			2004			2005			2006			2007
			(All amounts except per share data in millions)
Consolidated Statements of Operations Data:
	Revenues		$	6.4		$	6.8		$	20.9		$	34.4		$	47.5		$	44.7
	Gross profit			1.5			0.8			3.5			5.1			7.1			6.3
	Selling, general and administrative			1.7			1.7			2.7			4.9			6.2			4.5
	Operating income (loss)			(0.2	)		(0.9	)		0.8			0.0			0.9			1.8
	Provision (benefit) for income taxes			(0.0	)		0.0			0.0			2.5			0.9			0.3
	Net income (loss)		$	(0.4	)	$	(1.0	)	$	0.0		$	1.3		$	1.6		$	1.4
Net income (loss) per common share:
	Basic		$	0.06		$	(0.13	)	$	0.00		$	0.11		$	0.14		$	0.12
	Diluted		$	0.06		$	(0.13	)	$	0.00		$	0.09		$	0.12		$	0.10
Weighted average shares:
	Basic			7.2			8.0			10.9			11.4			11.6			11.7
	Diluted			7.2			8.0			13.0			14.0			13.6			13.6

 The statement of income data for the six months ended December 28, 2007 and December 29, 2006, and the balance sheet data as of December 28, 2007 are unaudited but include,


			As of December 31,
																		Nine months ended September 19, 2008
			2003			2004			2005			2006			2007
			(All amounts in millions)
Consolidated Balance Sheet Data:
	Cash and cash equivalents		$	0.4		$	0.3		$	0.0		$	0.0		$	0.0		$	1.0
	Working capital			0.5			(0.3	)		(0.2	)		1.0			3.1			6.0
	Total assets			4.6			5.4			13.7			17.0			21.0			23.3
	Short-term debt			0.1			0.6			3.0			2.7			1.8			—
	Long-term debt			1.3			0.1			1.7			1.5			0.0			—
	Total stockholders' equity			2.3			3.4			5.7			8.6			12.3			14.9

        Certain amounts in the opinionselected consolidated financial data above have been reclassified to conform to the 2007 presentation. See Note 1 of managementNotes to Consolidated Financial Statements of SYS, all adjustments including normal recurring adjustments, necessary for a fair presentation of such information. Results for the six months ended December 28, 2007 and December 29, 2006 are not necessarily indicative of the results that may be expected for any other interim periods or for the fiscal year as a whole.Digital Fusion.

																					Six Months Ended
						Year Ended June 30,
																					December 29, 2006			December 28, 2007
						2003			2004			2005			2006			2007
						(In millions)															(Unaudited)
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenues						$	24.8		$	34.9		$	45.8		$	55.9		$	75.8		$	35.5		$	38.6
Operating costs and expenses:
Costs of revenues							20.6			28.8			37.4			44.6			58.0			27.2			28.4
Selling, general and administrative expenses							3.5			4.1			4.9			8.5			15.5			6.7			6.8
Research, engineering and development expenses							—			—			0.7			3.6			4.0			2.0			2.2
Legal settlement							1.0			—			—			—			—			—			—
Impairment charges							—			—			—			1.3			—			—			—
		Total operating costs and expenses					25.1			32.9			43.0			58.0			77.5			35.9			37.4
Income (loss) from operations							(0.3	)		2.0			2.8			(2.1	)		(1.7	)		(0.4	)		1.2
Other (income) expense:
	Other income						—			(0.1	)		(0.1	)		(0.2	)		(0.1	)		(0.1	)		(0.1	)
	Interest expense						0.2			0.3			0.5			0.5			0.8			0.4			0.2
		Total other income					0.2			0.2			0.4			0.3			0.7			0.3			0.1
Income (loss) from continuing operations before income taxes							(0.5	)		1.8			2.4			(2.4	)		(2.4	)		(0.7	)		1.1
Income tax (benefit) provision							(0.2	)		0.8			1.0			(0.7	)		(0.7	)		(0.3	)		0.5
Income (loss) from continuing operations							(0.3	)		1.0			1.4			(1.7	)		(1.7	)		(0.4	)		0.6
Loss from discontinued operations, net of taxes							(0.5	)		—			—			—			—			—			—
Net income (loss)							(0.8	)		1.0			1.4			(1.7	)		(1.7	)		(0.4	)		0.6
Net income (loss) applicable to common stock						$	(0.8	)	$	1.0		$	1.4			(1.7	)		(1.7	)		(0.4	)	$	0.6
Basic earnings (loss) per common share:
			Continuing operations			$	(0.06	)	$	0.15		$	0.16		$	(0.14	)	$	(0.10	)	$	(0.03	)	$	0.03
			Discontinued operations				(0.09	)		—			—			—			—			—			—
				Net income (loss)		$	(0.15	)	$	0.15		$	0.16		$	(0.14	)	$	(0.10	)	$	(0.03	)	$	0.03
Diluted earnings (loss) per common share:
			Continuing operations			$	(0.06	)	$	0.13		$	0.15		$	(0.14	)	$	(0.10	)	$	(0.03	)	$	0.03
			Discontinued operations				(0.09	)		—			—			—			—			—			—
				Net income (loss)		$	(0.15	)	$	0.13		$	0.15		$	(0.14	)	$	(0.10	)	$	(0.03	)	$	0.03
Weighted average common shares outstanding:
	Basic						5.2			6.7			8.7			12.7			17.6			16.5			19.4
	Diluted						5.2			8.5			11.2			12.7			17.6			16.5			19.5




		June 30,
																	December 28, 2007
		2003			2004			2005			2006			2007
																	(Unaudited)
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents		$	—		$	2.2		$	3.5		$	2.1		$	2.8		$	2.2
Working capital			3.2			5.2			8.1			7.3			8.2			10.7
Goodwill			—			5.5			7.3			18.6			23.5			23.1
Other intangible assets			—			0.6			1.2			3.4			6.1			5.6
Total assets			7.7			17.7			24.8			42.2			52.4			53.4
Long-term debt			1.2			3.6			2.4			3.9			3.6			3.6
Preference stock			0.1			—			—			—			—			—
Stockholders' equity			3.1			8.3			15.4			27.5			35.1			36.7





SUMMARYSELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA


        The following summary unaudited pro forma condensed combined financial information is designed to show how the merger of Kratos and SYSDigital Fusion might have affected historical financial statements if the merger had been completed at an earlier time and was prepared based on the historical financial results reported by Kratos, including Haverstick Consulting, Inc., SYS Technologies, and SYS.Digital Fusion. The unaudited pro forma condensed combined balance sheet gives effect to the merger as if it had occurred on September 28, 2008. The unaudited pro forma condensed combined income statements for the nine months ended September 28, 2008 and the year ended December 31, 2007, give effect to the merger as if the merger had become effective at January 1, 2007. The unaudited pro forma condensed combined financial statements assume the merger is completed on or before December 28, 2008. The merger will be accounted for under the purchase method of accounting in accordance with Statement of Financial Accounting Standards No. 141, "Business Combinations" with Kratos treated as the acquiring entity.

        If the merger is consummated on or after December 29, 2008, the merger will be accounted for under Statement of Financial Accounting Standards (revised 2007),Business Combinations (SFAS 141R). SFAS 141R would require that the purchase price be determined based on Kratos's closing stock price on the date the merger is consummated, and that contingent assets and liabilities be recorded at fair value. Further, SFAS 141R would require that merger-related transaction costs and exit and termination costs be recorded to expense as incurred rather than capitalized as part of goodwill.

        The following should be read in connection with "Unaudited Pro Forma Condensed Combined Financial Statements" beginning on page 197150 and the Kratos, SYSHaverstick and HaverstickDigital Fusion audited consolidated financial statements beginning on pages FI-1, FII-1, and FIII-1, respectively.

The pro forma condensed combined financial data is presented for illustrative purposes only and is not necessarily indicative of the financial condition or results of operations of future periods or the financial condition or results of operations that actually would have been realized had the entities been a single company during these periods.

			Year Ended December 31, 2007					Year ended December 31, 2007			Period ended September 28, 2008
			(In millions, except per share amounts)					(In millions, except per share amounts)
Statements of Operations Data:	Statements of Operations Data:					Statements of Operations Data:
Revenues	Revenues		$	366.8		Revenues		$	414.3		$	303.2
Operating loss				(20.6	)
Net loss from continuing operations				(34.0	)
Loss per common share:
Operating income (loss)						Operating income (loss)			(20.7	)		7.7
Loss from continuing operations						Loss from continuing operations			(34.7	)		(1.1	)
Loss per common share from continuing operations:						Loss per common share from continuing operations:
	Basic		$	(0.33	)	Basic		$	(0.27	)	$	(0.01	)
	Diluted		$	(0.33	)	Diluted		$	(0.27	)	$	(0.01	)
Weighted average common shares outstanding:	Weighted average common shares outstanding:					Weighted average common shares outstanding:
	Basic			104.6		Basic			130.0			130.1
	Diluted			104.6		Diluted			130.0			130.1