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Castellum, Inc.

Castellum, Inc.CTMEarnings & Financial Report

NYSE · Information Technology · Services-Management Consulting Services

Castellum, Inc. is a U.S.-based cybersecurity and information technology services provider. It caters to government defense agencies, public sector entities, and commercial enterprise clients, offering threat detection, data protection, cloud security, and managed IT solutions to help organizations mitigate cyber risks and safeguard critical digital infrastructure.

What changed in Castellum, Inc.'s 10-K — 2024 vs 2025

Top changes in Castellum, Inc.'s 2025 10-K

181 paragraphs added · 193 removed · 136 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

39 edited+12 added−10 removed38 unchanged
Congressional appropriations. Congress usually appropriates funds for a given program on a September 30 fiscal year basis, even though contract performance could take many years. As is common in the industry, we are subject to business risk, including changes in governmental appropriations, national defense policies, service modernization plans, and availability of funds.
Congress usually appropriates funds for a given program on a September 30 fiscal year basis, even though contract performance could take many years. As is common in the industry, we are subject to business risk, including changes in governmental appropriations, national defense policies, service modernization plans, and availability of funds.
Government and commercial customers typically base their decisions regarding contract awards on their assessment of the quality of past performance, compliance with proposal requirements, price, and other factors. The terms, conditions, and form of government contract bids, however, are in most cases specified by the customer.
Government customers typically base their decisions regarding contract awards on their assessment of the quality of past performance, compliance with proposal requirements, price, and other factors. The terms, conditions, and form of government contract bids, however, are in most cases specified by the customer.
Some of our key initiatives include the following: • Continue our unwavering commitment to our customers while supporting the communities in which we work and live; • Grow organic revenue across our large, addressable market; • Recruit and hire a world class workforce to execute on our growing backlog; and • Differentiate ourselves through our investment, including our strategic mergers and acquisitions which allow us to enhance our current capabilities and create new customer access points.
Some of our key initiatives include the following: • Continue our unwavering commitment to our customers while supporting the communities in which we work and live; • Grow organic revenue across our large, addressable market; • Recruit and hire a world class workforce to execute on our growing backlog; and • Differentiate ourselves through our investments, including our strategic mergers and acquisitions which allow us to enhance our current capabilities and create new customer access points.
Services include intelligence analysis, software development, software engineering, program management, strategic and mission planning, information assurance, cybersecurity and policy support, data analytics, and model based systems engineering (“MBSE”). These services are applicable to customers in the United States (“U.S.”) government (“USG”), financial services, healthcare, and other users of large data applications.
Services include intelligence analysis, software development, software engineering, program management, strategic and mission planning, information assurance, cybersecurity and policy support, data analytics, and model based systems engineering (“MBSE”). These services are applicable to customers in the United States (“U.S.”) government (“USG”), financial services, legal, and other users of large data applications.
Acquisition Strategy Castellum seeks acquisitions which fit one or more of the following criteria: (1) expands our capability in existing areas of expertise such as cybersecurity and electronic warfare; (2) broadens the scope of clients Castellum serves such as adding a new service branch or new government agency; (3) increases the scale of our business in existing areas to generate better operating profit margins and reduce the Company's fully burdened cost of labor, including direct and indirect costs or (i.e., the wrap rate); (4) increases the geographic footprint of Castellum in order to offer more capability to existing or new clients; (5) adds management talent to Castellum; (6) adds technological capability in new areas which we believe are high growth potential; and (7) fills a need within Castellum to be able to serve current customers such as adding a prime contract vehicle or the capability to win new prime contract vehicles.
Acquisition Strategy Castellum seeks acquisitions which fit one or more of the following criteria: (1) expands our capability in existing areas of expertise such as cybersecurity and electronic warfare; (2) broadens the scope of clients Castellum serves such as adding a new service branch or new government agency; (3) increases the scale of our business in existing areas to generate better operating profit margins and reduce the Company's fully burdened cost of labor, including direct and indirect costs or (i.e., the wrap rate); (4) increases the geographic footprint of Castellum in order to offer more capability to existing or new clients; (5) adds a new product or solution to our offerings; (6) adds technological capability in new areas which we believe are high growth potential; and (7) fills a need within Castellum to be able to serve current customers such as adding a prime contract vehicle or the capability to win new prime contract vehicles.
In all cases, Castellum seeks acquisitions which are immediately accretive on a revenue, earnings before interest, depreciation, and amortization (“EBITDA”) and net income per share basis, as well as positive from a net present value perspective and which fit the culture of Castellum.
In all cases, Castellum seeks acquisitions which are immediately accretive on revenue, earnings before interest, depreciation, and amortization (“EBITDA”) and net income per share bases, as well as positive from a net present value perspective and which fit the culture of Castellum.
Some significant laws and regulations that affect us include the following: • the Federal Acquisition Regulation (“FAR”) and agency regulations supplemental to FAR, which regulate the formation, administration, and performance of USG contracts; • the False Claims Act, which imposes civil and criminal liability for violations, including substantial monetary penalties for, among other things, presenting false or fraudulent claims for payments or approval; • the False Statements Act, which imposes civil and criminal liability for making false statements to the USG; 7 Table of Contents • the Truthful Cost or Pricing Data Statute (formerly known as the “Truth in Negotiations Act”), which requires certification and disclosure of cost and pricing data in connection with the negotiation of certain contracts, modifications, or task orders; • the Procurement Integrity Act, which regulates access to competitor bid and proposal information and certain internal government procurement sensitive information, and our ability to provide compensation to certain former government procurement officials; • laws and regulations restricting the ability of a contractor to provide gifts or gratuities to employees of the USG; • post-government employment laws and regulations, which restrict the ability of a contractor to recruit and hire current employees of the USG and deploy former employees of the USG; • laws, regulations, and executive orders restricting the handling, use, and dissemination of information classified for national security purposes or determined to be “controlled unclassified information” or “for official use only,” and the export of certain products, services, and technical data, including requirements regarding any applicable licensing of our employees involved in such work; • laws, regulations, and executive orders regulating the handling, use, and dissemination of personally identifiable information in the course of performing a USG contract; • international trade compliance laws, regulations, and executive orders that prohibit business with certain sanctioned entities and require authorization for certain exports or imports in order to protect national security and global stability; • laws, regulations, and executive orders governing organizational conflicts of interest that may restrict our ability to compete for certain USG contracts because of the work that we currently perform for the USG or may require that we take measures such as firewalling off certain employees or restricting their future work activities due to the current work that they perform under a USG contract; • laws, regulations, and executive orders that impose requirements on us to ensure compliance with requirements and protect the government from risks related to our supply chain, including compliance with Cybersecurity Maturity Model Certification (“CMMC”); • laws, regulations, and mandatory contract provisions providing protections to employees or subcontractors seeking to report alleged fraud, waste, and abuse related to a government contract; • the National Industrial Security Operating Manual and other laws and regulations concerning the maintenance of a facility security clearance and the safeguarding of classified materials; • the Contractor Business Systems rule, with authorizes DoD agencies to withhold a portion of our payments if we are determined to have a significant deficiency in our accounting, cost estimating, purchasing, earned value management, material management and accounting, and/or property management system; and • the Cost Accounting Standards and Cost Principles, which impose accounting and allowability requirements that govern our right to reimbursement under certain cost-based USG contracts and require consistency of accounting practices over time.
Some significant laws and regulations that affect us include the following: • the FAR and agency regulations supplemental to FAR, which regulate the formation, administration, and performance of USG contracts; 7 Table of Contents • the False Claims Act, which imposes civil and criminal liability for violations, including substantial monetary penalties for, among other things, presenting false or fraudulent claims for payments or approval; • the False Statements Act, which imposes civil and criminal liability for making false statements to the USG; • the Truthful Cost or Pricing Data Statute (formerly known as the “Truth in Negotiations Act”), which requires certification and disclosure of cost and pricing data in connection with the negotiation of certain contracts, modifications, or task orders; • the Procurement Integrity Act, which regulates access to competitor bid and proposal information and certain internal government procurement sensitive information, and our ability to provide compensation to certain former government procurement officials; • laws and regulations restricting the ability of a contractor to provide gifts or gratuities to employees of the USG; • post-government employment laws and regulations, which restrict the ability of a contractor to recruit and hire current employees of the USG and deploy former employees of the USG; • laws, regulations, and executive orders restricting the handling, use, and dissemination of information classified for national security purposes or determined to be “controlled unclassified information” or “for official use only,” and the export of certain products, services, and technical data, including requirements regarding any applicable licensing of our employees involved in such work; • laws, regulations, and executive orders regulating the handling, use, and dissemination of personally identifiable information in the course of performing a USG contract; • laws, regulations, and executive orders governing organizational conflicts of interest that may restrict our ability to compete for certain USG contracts because of the work that we currently perform for the USG or may require that we take measures such as firewalling off certain employees or restricting their future work activities due to the current work that they perform under a USG contract; • laws, regulations, and executive orders that impose requirements on us to ensure compliance with requirements and protect the government from risks related to our supply chain, including compliance with Cybersecurity Maturity Model Certification (“CMMC”); • laws, regulations, and mandatory contract provisions providing protections to employees or subcontractors seeking to report alleged fraud, waste, and abuse related to a government contract; • the National Industrial Security Operating Manual and other laws and regulations concerning the maintenance of a facility security clearance and the safeguarding of classified materials; • the Contractor Business Systems rule, with authorizes DoD agencies to withhold a portion of our payments if we are determined to have a significant deficiency in our accounting, cost estimating, purchasing, earned value management, material management and accounting, and/or property management system; and • the Cost Accounting Standards and Cost Principles, which impose accounting and allowability requirements that govern our right to reimbursement under certain cost-based USG contracts and require consistency of accounting practices over time.
Internationally, we are subject to special USG laws and regulations (such as The Foreign Corrupt Practices Act of 1977 (the “FCPA”)), local government regulations and procurement policies and practices, including regulations relating to import-export control, investments, exchange controls, and repatriation of earnings, as well as varying currency, political, and economic risks.
Internationally, we are subject to special USG laws and regulations (such as The Foreign Corrupt Practices Act of 1977 (the “FCPA”)), local government regulations and procurement policies and practices, including regulations relating to import-export control, 8 Table of Contents investments, exchange controls, and repatriation of earnings, as well as varying currency, political, and economic risks.
In addition, copies of our annual report will be made available, free of charge, upon written request. The SEC also maintains a website at www.sec.gov that contains reports, proxy statements, and other information regarding SEC registrants, including Castellum.
In addition, copies of our annual report will be made available, free of charge, upon written 9 Table of Contents request. The SEC also maintains a website at www.sec.gov that contains reports, proxy statements, and other information regarding SEC registrants, including Castellum.
The Opportunity Pipeline represents the revenue opportunity for the Company from potential future contracts obtained throug h organic growth from qualified customers based on the expected base year contract value plus the value of all option periods. Our primary customers are currently agencies and departments of the USG.
The Opportunity Pipeline represents the revenue opportunity for the Company from potential future contracts obtained through organic growth from qualified customers based on the expected base year contract value plus the value of all option periods. Our primary customers are currently agencies and departments of the USG.
We employ business development, capture, and proposal writer professionals who identify and qualify major contract opportunities, primarily in the USG market and submit bids for those opportunities. 4 Table of Contents Much of our business is won through submission of formal competitive bids.
We employ business development, capture, and proposal writer professionals who identify and qualify major contract opportunities, primarily in the USG market and submit bids for those opportunities. Much of our business is won through submission of formal competitive bids.
Unfunded backlog represents the revenue value of orders (including optional orders) for services under existing contracts for which funding has not been appropriated or otherwise authorized. • Priced Options .
Unfunded backlog represents the revenue value of orders (including optional orders) for services under existing contracts for which funding has not been appropriated or otherwise authorized. 6 Table of Contents • Priced Options .
To 8 Table of Contents ensure CMMC compliance, the Company has a senior executive on its management team whose responsibilities includes preparing the Company for CMMC certification. USG contracts are, by their terms, subject to termination by the USG either for convenience or default by the contractor. In addition, USG contracts are conditioned upon the continuing availability of U.S.
To ensure CMMC compliance, the Company has a senior executive on its management team whose responsibilities includes preparing the Company for CMMC certification. USG contracts are, by their terms, subject to termination by the USG either for convenience or default by the contractor. In addition, USG contracts are conditioned upon the continuing availability of U.S. Congressional appropriations.
In situations in which the customer-imposed contract type and/or terms appear to expose us to inappropriate risk or do not offer us a sufficient financial return, we may seek alternative arrangements or opt not to bid for the work.
In situations in which the customer-imposed contract type and/or terms appear to expose 4 Table of Contents us to inappropriate risk or do not offer us a sufficient financial return, we may seek alternative arrangements or opt not to bid for the work.
They can be delivered to on-premises enclaves or customers who rely upon cloud-based infrastructures. The Company has worked with multiple business brokers and contacts within their business network to identify potential acquisitions.
They can be delivered to on-premises enclaves or customers who rely upon cloud-based infrastructures. The Company routinely works with multiple business brokers and contacts within their business network to identify potential acquisitions.
Key characteristics of our industry include long operating cycles and intense competition, which is evident through the number of competitors bidding on program opportunities and the number of competitor protests of U.S. government procurement awards.
Key characteristics of our industry include long operating cycles and intense competition, which is evident through the number of competitors bidding on program opportunities and the number of competitor protests of USG procurement awards.
Item 1. Business Overview Castellum is focused on building a large, successful technology company in the areas of cybersecurity, IT, electronic warfare, information warfare, and information operations with businesses in the defense, federal, civilian, and commercial markets.
Item 1. Business Overview Castellum is focused on building a large, successful technology services, solutions, and products company in the areas of cybersecurity, IT, electronic warfare, information warfare, system modernization, and information operations with businesses in the defense, federal, civilian, and commercial markets.
Due to our success in completing seven acquisitions over the previous five years and given our executive officers’ and key managers’ networks of contacts in the IT, telecom, cybersecurity, and defense sectors, we believe that we are well positioned to continue to execute our business strategy.
Due to our success in completing seven acquisitions since 2019 and given our executive officers’ and key managers’ networks of contacts in the IT, telecom, cybersecurity, and defense sectors, we believe that we are well positioned to continue to execute our business strategy.
We also serve state and local agencies and commercial clients, working to solve their hardest and most sophisticated cyber challenges, and currently support one international client. Contract Backlog We define backlog to include the following three components: • Funded Backlog .
We also serve state and local agencies and commercial clients, working to solve their hardest and most sophisticated cyber challenges. Contract Backlog We define backlog to include the following three components: • Funded Backlog .
Our marketing and new business development is conducted by many of our officers and managers including the Chief Executive Officer (“CEO”), Chief Operating Officer (“COO”), Executive Vice-President of Strategy and General Counsel and other executive officers, and other key managers.
Our marketing and new business development is conducted by many of our officers and managers including the Chief Executive Officer (“CEO”), Chief Operating Officer (“COO”), Chief Financial Officer (“CFO”), and General Counsel, and other key managers.
The SEC allows us to disclose important information by referring to it in this manner. 9 Table of Contents Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements for our annual stockholders’ meetings and amendments to those reports are available free of charge on our website www.castellumus.com / i nvestor-relations.html , as soon as reasonably practical after we electronically file the material with, or furnish it to, the SEC.
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements for our annual stockholders’ meetings and amendments to those reports are available free of charge on our website www.castellumus.com / i nvestor-relations.html , as soon as reasonably practical after we electronically file the material with, or furnish it to, the SEC.
The amount of our funded backlog is also subject to change, due to, among other factors: changes in congressional appropriations that reflect changes in USG policies or priorities resulting from various military, political, economic, or international developments; changes in the use of USG contracting vehicles, and the provisions therein used to procure our services and adjustments to the scope of services, or cancellation of contracts, by the USG at any time.
Congressional appropriations that reflect changes in USG policies or priorities resulting from various military, political, economic, or international developments; changes in the use of USG contracting vehicles, and the provisions therein used to procure our services and adjustments to the scope of services, or cancellation of contracts, by the USG at any time.
Castellum helps ensure information superiority by delivering multi-domain C4 technology and networks. Our software-defined, full-spectrum cyber, electronic warfare, and C-UAS solutions provide electromagnetic spectrum advantage and deliver precision effects against national security threats.
Castellum helps ensure information superiority by delivering multi-domain C4 technology and networks. Our software-defined, full-spectrum cyber, electronic warfare, and Counter-Unmanned Aircraft Systems solutions provide electromagnetic spectrum advantage and deliver precision 3 Table of Contents effects against national security threats.
Although there can be no assurance that the Opportunity Pipeline can be converted to revenues, the Company believes that the total value of the Opportunity Pipeline to be approxima tely $635 million as of December 31, 2024.
Although there can be no assurance that the Opportunity Pipeline can be converted to revenues, the Company believes that the total value of the Opportunity Pipeline to be approximately $817 million as of December 31, 2025.
Castellum also has linguists and cultural advisors who provide clients with insights into the history, media consumption, and cultural nuances of target audiences to maximize the effectiveness of communications plans and ensure mission success. Strengths and Strategy Extensive Sector Knowledge and Advanced Technology .
Our intelligence support ensures continuous advances in collection, analysis, and dissemination to optimize decision-making. Castellum also has linguists and cultural advisors who provide clients with insights into the history, media consumption, and cultural nuances of target audiences to maximize the effectiveness of communications plans and ensure mission success. Strengths and Strategy Extensive Sector Knowledge and Advanced Technology .
We have strategic business relationships with several companies associated with the information technology (“IT”) industry which have business objectives compatible with ours and offer complementary products and services. We intend to continue development of these kinds of relationships wherever they support our growth objectives. Some of these business relationships have ultimately led to Castellum acquiring the teaming partner firm.
We have strategic business relationships with several companies associated with the IT and defense industry which have business objectives compatible with ours and offer complementary products and services. We continue to develop these types of relationships wherever they support our growth objectives. Some of these business relationships may lead to Castellum acquiring the teaming partner firm.
As of December 31, 2024, we employed 238 full and part-time employees with fifty-six percent (56%) of our employees holding degrees in science, technology, engineering, or mathematics fields, twenty-nine percent (29%) holding advanced degrees, and ninety-four percent (94%) of our employees holding security clearances. We also retain 17 independent contractors.
As of December 31, 2025, we employed 244 full and part-time employees with fifty-eight percent (58%) of our employees holding degrees in science, technology, engineering, or mathematics fields, twenty percent (20%) holding advanced degrees, and ninety-seven percent (97%) of our employees holding security clearances. We also retain nine independent contractors.
We generated $24,483,023 (55%), $25,631,786 (57%), and $25,302,224 (61%) of our total revenues from T&M contracts in the years ended December 31, 2024, 2023, and 2022, respectively. In the year ending December 31, 2024, the top three revenue-producing contracts, some of which consist of multiple task orders, accounted for forty-nine percent (49%) of our revenue, or $21,972,589.
We generated $16,987,361 (32%), $24,483,023 (55%), and $25,631,786 (57%) of our total revenues from T&M contracts in the years ended December 31, 2025, 2024, and 2023, respectively. In the year ending December 31, 2025, the top three revenue-producing contracts, some of which consist of multiple task orders, accounted for fifty-four percent (54%) of our revenue, or $28,341,498.
We are at the forefront of developing technologies that meet the challenges of 5G wireless communications both on and off the battlefield, millimeter wave, and the use of lasers for free space optical communications and long-range sensing. • Engineering Services.
We are at the forefront of developing policies that meet the challenges of 5G wireless communications both on and off the battlefield, millimeter wave, and the use of lasers for free space optical communications and long-range sensing. We support the development, qualification and deployment of specialty ISR sensors on military and commercial UAVs and aircraft.
Castellum provides platform integration, modernization, and sustainment; system engineering; naval architecture; training and simulation services; and logistics engineering to help our customers achieve a decisive tactical edge. We enhance platforms to improve situational awareness, mobility, interoperability, lethality, and survivability. We conduct software vulnerability analysis and harden technology to protect against malicious actors.
We independently test and/or evaluate complex ISR systems at our facilities. • Engineering Services. Castellum provides platform integration, modernization, and sustainment; system engineering; naval architecture; training and simulation services; and logistics engineering to help our customers achieve a decisive tactical edge. We enhance platforms to improve situational awareness, mobility, interoperability, lethality, and survivability.
We anticipate that issues related to budgetary priorities and defense spending levels, the debt ceiling, and the spending caps imposed by the Fiscal Responsibility Act of 2023 (“FRA”), particularly with respect to discretionary spending, will continue to be a subject of considerable debate, with a potentially significant impact on our programs and the Company. 5 Table of Contents Annual appropriations to fund the federal government for fiscal year 2025 have not yet been enacted.
We anticipate that issues related to budgetary priorities and defense spending levels, the debt ceiling, and the spending caps, particularly with respect to discretionary spending, will continue to be a subject of considerable debate, with a potentially significant impact on our programs and the Company.
The U.S. political environment may also impact defense budgets and priorities, issues related to the national debt, and government spending broadly and more specifically, the potential impact of the U.S. DOGE Service Temporary Organization (“DOGE”) on government spending and terminating contracts for convenience.
The U.S. political environment may also impact defense budgets 5 Table of Contents and priorities, issues related to the national debt, and government spending more broadly.
Castellum transforms how government does business. We modernize enterprise and agency-unique applications, enterprise infrastructure, and business processes to enhance productivity and increase user satisfaction. We use data analytics and visualization to provide insights and outcomes that optimize our customer’s operations. 3 Table of Contents • Command, Control, Communications, and Computer Intelligence Surveillance Reconnaissance (“C4ISR”), Cyber & Space.
Castellum transforms how government does business. We modernize enterprise and agency-unique applications, enterprise infrastructure, and business processes to enhance productivity, security, and increase user satisfaction. We transform data into actionable intelligence through advanced analytics and visualization, enabling our customers to improve performance and operational efficiency. • Command, Control, Communications, and Computer (“C4”) Intelligence Surveillance Reconnaissance (“C4ISR”), Cyber & Space.
Our principal executive offices are located at 1934 Old Gallows Road, Suite 350, Vienna, Virginia 22182. Our telephone number is (703) 752-6157 and our website address is www.castellumus.com . We make our website content available for information purposes only. It should not be relied upon for investment purposes, nor is it incorporated by reference into this Form 10-K.
Our telephone number is (703) 752-6157 and our website address is www.castellumus.com . We make our website content available for information purposes only. It should not be relied upon for investment purposes, nor is it incorporated by reference into this Form 10-K. Throughout this Form 10-K, we incorporate by reference information from parts of other documents filed with the U.S.
Castellum specializes in planning and intelligence support for information warfare and information operations (“IW/IO”). The Company develops IW/IO plans, exercises, doctrine, and training for the Military Services and the Combatant Commands in domestic and deployed overseas locations. Our intelligence support ensures continuous advances in collection, analysis, and dissemination to optimize decision-making.
We offer Risk Management Framework and Accreditation support services to obtain and maintain systems’ Authority to Operate (“ATO”). • Mission support. Castellum specializes in planning and intelligence support for information warfare and information operations (“IW/IO”). The Company develops IW/IO plans, exercises, doctrine, and training for the Military Services and the Combatant Commands in domestic and deployed overseas locations.
Our platform-agnostic, mission-first approach ensures optimal performance, so our nation’s forces can overmatch our adversaries. • Enterprise IT. Castellum amplifies efficiency with unmatched expertise and next-generation technology. We design, implement, protect, and manage secure enterprise IT solutions for the U.S. federal, state, and local agencies to optimize efficiency, enhance performance, and ensure end-user satisfaction. • Mission support.
Castellum amplifies efficiency with unmatched expertise and next-generation technology. We design, implement, protect, and manage secure enterprise IT solutions for the USG, state, and local agencies to optimize efficiency, enhance performance, and ensure end-user satisfaction. We implement Agile and DevSecOps methodologies supporting rapid, secure, and continuous delivery of mission-critical capabilities.
Our backlog does not include contracts that have been awarded but are currently under protest and also does not include any task orders under IDIQ contracts, except to the extent that task orders have been awarded to us under those contracts. 6 Table of Contents We cannot predict with any certainty the portion of our backlog that we expect to recognize as revenue in any future period and we cannot guarantee that we will recognize any revenue from our backlog.
Our backlog does not include (1) contracts that have been awarded but are currently under protest and (2) any task orders under IDIQ contracts, except to the extent that task orders have been awarded to us under those contracts.
We are subject matter experts in electronic and electromagnetic warfare. We perform advanced data analytics on litigation data in support of the Department of Justice (“DoJ”). Lastly, through the Company’s IW/IO operations, Castellum provides key services to governments of other nations. International Presence .
We are subject matter experts in electronic and electromagnetic warfare. We perform advanced data analytics on litigation data in support of the Department of Justice (“DOJ”). Deep-Seated Government Relationships .
Each of those contracts is associated with the Company’s areas of core expertise, as follows: (i) an annual contract with Naval Air Systems Command (“NAVAIR”) that contains multiple renewal options is a CPFF contract covering systems engineering, design/software engineering, and development expertise where the Company has developed software that manages the aircraft launch and recovery operations on aircraft carriers, (ii) an annual contract with Peraton, Inc. with multiple renewal option periods is a T&M contract which supports the cyber and Electronic Warfare (“EW”) work done at the Army Staff Level, and (iii) an annual contract with Naval Sea Systems Command (“NAVSEA”) that contains multiple renewal options is a CPFF contract covering engineering and technical services for the analysis, design, prototyping, test and evaluation, integration, project management, implementation, and documentation of various C4ISR sensor systems and subsystems for the U.S.
Each of those contracts is associated with the Company’s areas of core expertise. • An annual contract with Naval Air Systems Command (“NAVAIR”) Naval Air Warfare Center Aircraft Division (“NAWCAD”) that contains multiple renewal options is a CPFF contract providing cyber engineering, systems engineering, design/software engineering, development, and sustainment expertise.
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We currently support and have previously supported international clients in Australia and other foreign countries and believe that future opportunities for providing our services internationally are growing given current nominal levels of global spending on defense and the continued rising threat from cybersecurity breaches. Deep-Seated Government Relationships .
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We conduct software vulnerability analysis and harden technology to protect against malicious actors. Our platform-agnostic, mission-first approach ensures optimal performance, so our nation’s forces can overmatch our adversaries. We also specialize in Interactive Electronic Technical Manual (“IETM”) technical publication development with colorized graphics and interactive wiring diagrams with circuitry illumination. • IT Services.
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The continuing resolution (“CR”) enacted on December 21, 2024, extends federal funding at fiscal year 2024 levels through March 14, 2025. To prevent a government shutdown beyond this date, the U.S. Congress (“Congress”) and the President must either pass a full-year fiscal year 2025 appropriations bills or another CR.
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The Company is supporting a broad portfolio of mission-critical systems that enable carrier-based and expeditionary naval aviation operations for Aircraft Launch and Recovery Equipment. • An annual contract with Special Missions Management of On-Site Services (“MOSS”) in support of the Naval Air Systems Command (“NAVAIR”) Program Office 290 (“PMA-290”) Special Missions is a CPFF contract which consists of multiple Intelligence, Surveillance, Reconnaissance, and Targeting (“ISR&T”) programs.
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Government operations under an extended CR could have potential impacts on our programs and new contracts, in particular. We continuously review our operations in an attempt to identify programs potentially at risk from CRs so that we can consider appropriate contingency plans. We believe that less than 5% of our employees would be at risk due to a CR.
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These programs include, but are not limited to, the Maritime Patrol and Reconnaissance Force Family of Systems, P-8A Research and Development, SM Platforms, Minotaur Family of Services, P-8A Increment 3, P-8A Foreign Military Sales, MQ-4C Triton Multiple Intelligence, Mobile Quick Look, ground & mission support stations, and future capabilities. • An annual contract with Naval Sea Systems Command (“NAVSEA”) that contains multiple renewal options is a CPFF contract covering engineering and technical services for the analysis, design, prototyping, test and evaluation, integration, project management, implementation, and documentation of various C4ISR sensor systems and subsystems for the U.S.
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Our business depends on the U.S. government. A shutdown could lead to furloughs within agencies like the DoD, resulting in payment delays, disruptions to existing contracts, and potential impacts on future orders and operations. Additionally, the U.S. Treasury Department may face operational and payment disruptions during fiscal year 2025 if it exhausts extraordinary measures after reaching the debt limit.
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The majority of the U.S. federal government is currently funded through September 30, 2026 pursuant to Public Law 119-75, the Consolidated Appropriations Act, 2026 (H.R. 7148), which provides full-year appropriations for most major federal agencies, including the Department of Defense.
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U.S. government discretionary spending for fiscal year 2024 and fiscal year 2025, including defense, is capped under the FRA. If a CR remains in place on April 30, 2025, it will trigger a sequester under the FRA. These uncertainties, along with broader macroeconomic effects, could materially impact our programs, contracts, financial position, results of operations, and cash flows.
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Additional appropriations legislation enacted during fiscal year 2026 provided full-year funding for other federal agencies; however, the Department of Homeland Security (“DHS”) received only temporary funding through February 13, 2026 under a continuing resolution, resulting in a partial federal government shutdown beginning February 14, 2026. The Company currently does not maintain contracts with DHS.
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Castellum considers benefits a critical tool for employee recruitment and retention. Prior to acquiring Global Technology and Management Resources, Inc. (“GTMR”) in March 2023, Castellum migrated all employees from their legacy benefits programs to the ADP Professional Employer Organization (“PEO”). At the time of acquisition, GTMR employees remained under a separate legacy benefits program.
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The Presidential Administration (the “Administration”) has issued numerous executive orders affecting federal acquisition and defense procurement policies, including initiatives to modernize the Federal Acquisition Regulation (“FAR”), reform defense acquisition processes, and address contractor performance, production investment, and related incentive structures. Certain executive orders remain subject to legal challenges, and the scope and timing of implementation remain uncertain.
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Ahead of our annual benefits open enrollment process in the second quarter of 2024, Castellum transitioned to one benefit model, consolidating all employees under a unified benefits plan covering dental, vision, life insurance, disability coverage, legal assistance, financial planning, and other comprehensive services, effective June 1, 2024. In December 2024, we merged the company's 401(k) plans into a single plan.
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Changes in executive policy, regulatory requirements, federal budget priorities, debt ceiling actions, or broader geopolitical and economic conditions could create a more challenging or costly operating environment and may materially impact defense spending generally and the Company’s programs specifically.
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Available Information The Company was incorporated in Nevada on September 30, 2010 under the name Passionate Pet, Inc. and in January 2013, the Company changed its name to Firstin Wireless Technology, Inc. In March 2015, the Company changed its name to BioNovelus, Inc.
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We cannot predict with any certainty the portion of our backlog that we expect to recognize as revenue in any future period and we cannot guarantee that we will recognize any revenue from our backlog.
Removed
On June 12, 2019, the Company acquired Bayberry Acquisition Corporation, a Nevada corporation (“Bayberry” and, as context requires, the “Bayberry Acquisition”). On November 21, 2019, the Company acquired Corvus Consulting, LLC, (“Corvus”), a Delaware limited liability company. On December 26, 2019, following our acquisition of Corvus, we changed our name from BioNovelus, Inc. to Castellum, Inc.
Added
The amount of our funded backlog is also subject to change, due to, among other factors: changes in U.S.
Removed
Throughout this Form 10-K, we incorporate by reference information from parts of other documents filed with the U.S. Securities and Exchange Commission (“SEC”).
Added
Castellum considers employee benefits to be a critical component of its human capital strategy and its ability to attract, retain, and motivate highly qualified personnel in a competitive labor market. The Company offers a comprehensive benefits program, including a 401(k) retirement plan with employer matching contributions and a suite of fully insured health and welfare benefits.
Added
Management believes these programs promote employee engagement, support workforce stability, and contribute to operational effectiveness. The Company periodically reviews its benefits offerings to ensure they remain competitive and aligned with employee needs and industry practices. Available Information Our principal executive offices are located at 1934 Old Gallows Road, Suite 350, Vienna, Virginia 22182.
Added
Securities and Exchange Commission (“SEC”). The SEC allows us to disclose important information by referring to it in this manner.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

48 edited+1 added−21 removed144 unchanged
In the case of a company whose common stock sells for a low price per share for a substantial period of time, the NYSE American continued listing rules permit the exchange to de-list a listed company in the event it fails to effect a reverse split of such shares within a reasonable time after being notified that the exchange deems such action to be appropriate under the 20 Table of Contents circumstances.
In the case of a company whose common stock sells for a low price per share for a substantial period of time, the NYSE American continued listing rules permit the exchange to de-list a listed company in the event it fails to effect a reverse split 19 Table of Contents of such shares within a reasonable time after being notified that the exchange deems such action to be appropriate under the circumstances.
We have substantial investments in recorded goodwill as a result of prior acquisitions and a change in future business conditions could cause these investments to become impaired, requiring substantial write-downs that would reduce our operating income. Goodwill accounts for $10,676,834 of our recorded total assets as of December 31, 2024.
We have substantial investments in recorded goodwill as a result of prior acquisitions and a change in future business conditions could cause these investments to become impaired, requiring substantial write-downs that would reduce our operating income. Goodwill accounts for $10,676,834 of our recorded total assets as of December 31, 2025.
In addition, contract backlog includes orders under contracts for which the period of performance has expired, and we may not recognize revenue on the funded backlog that includes such orders due to, among other reasons, the tardy submission of invoices by our subcontractors and the expiration of the relevant appropriated funding in accordance with a predetermined expiration date such as the end of the USG's fiscal year.
In addition, contract backlog includes orders under contracts for which the period of performance has expired, and we may not recognize revenue on the funded backlog that includes 16 Table of Contents such orders due to, among other reasons, the tardy submission of invoices by our subcontractors and the expiration of the relevant appropriated funding in accordance with a predetermined expiration date such as the end of the USG's fiscal year.
Any systems failures, including network, software, or hardware failures, whether caused by us, a third-party service provider, unauthorized intruders and hackers, computer viruses, natural disasters, power shortages, or terrorist attacks, could cause loss of data or interruptions or delays in our business or that of our customers.
Any systems failures, including network, software, or hardware failures, whether caused by us, a third-party service provider, unauthorized intruders and hackers, computer viruses, natural disasters, power shortages, or terrorist attacks, 17 Table of Contents could cause loss of data or interruptions or delays in our business or that of our customers.
In the event any of those key employees would no longer be affiliated with the Company, and we did not replace them with 10 Table of Contents equally capable replacements, it may have a material detrimental impact on our ability to successfully operate our business.
In the event any of those key employees would no longer be affiliated with the Company, and we did not replace them with equally capable replacements, it may have a material detrimental impact on our ability to successfully operate our business.
The loss of qualified executives and key employees, or our inability to attract, retain, and motivate high-quality executives and employees required for the planned expansion of our business, may harm our operating results and impair our ability to grow. Effective July 1, 2024, Glen R.
The loss of qualified executives and key employees, or our inability to attract, retain, and motivate high-quality executives and employees required for the planned expansion of our business, may harm our operating results and impair our ability to grow. 10 Table of Contents Effective July 1, 2024, Glen R.
Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Company shall be deemed to have notice of and consented to the provisions of Article IX of our Amended and Restated Articles of Incorporation and Article XIII of our Amended and Restated Bylaws.
Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Company shall be deemed to have 21 Table of Contents notice of and consented to the provisions of Article IX of our Amended and Restated Articles of Incorporation and Article XIII of our Amended and Restated Bylaws.
The integration of these businesses into our operations may result in unforeseen operating 19 Table of Contents difficulties, absorb significant management attention, and require significant financial resources that would otherwise be available for the ongoing development of our business.
The integration of these businesses into our operations may result in unforeseen operating difficulties, absorb significant management attention, and require significant financial resources that would otherwise be available for the ongoing development of our business.
If we are subject to an enforcement action by the USG, it could materially and adversely affect our results of operations. 13 Table of Contents USG contracts contain numerous provisions that are unfavorable to us.
If we are subject to an enforcement action by the USG, it could materially and adversely affect our results of operations. USG contracts contain numerous provisions that are unfavorable to us.
As a result of such failures, we could also become subject to investigations by the NYSE American, the SEC, or other regulatory authorities, and become subject to litigation from investors and stockholders, which could harm our reputation, financial condition, or divert financial and management resources from our core business and would have a material adverse effect on our business, financial condition, and results of operations. 23 Table of Contents Item 1B.
As a result of such failures, we could also become subject to investigations by the NYSE American, the SEC, or other regulatory authorities, and become subject to litigation from investors and stockholders, which could harm our reputation, financial condition, or divert financial and management resources from our core business and would have a material adverse effect on our business, financial condition, and results of operations.
Some significant laws and regulations that affect us include the following: • the FAR, and agency regulations supplemental to FAR, which regulate the formation, administration, and performance of USG contracts; • the False Statements Act, which imposes civil and criminal liability for making false statements to the USG; • the Truthful Cost or Pricing Data Statute (formerly known as the “Truth in Negotiations Act”), which requires certification and disclosure of cost and pricing data in connection with the negotiation of certain contracts, modifications, or task orders; • the Procurement Integrity Act, which regulates access to competitor bid and proposal information and certain internal government procurement sensitive information, and our ability to provide compensation to certain former government procurement officials; • laws and regulations restricting the ability of a contractor to provide gifts or gratuities to employees of the USG, including the FCPA which prohibits U.S. citizens and entities from bribing foreign government officials to benefit their business interests; • post-government employment laws and regulations, which restrict the ability of a contractor to recruit and hire current employees of the USG and deploy former employees of the USG; 12 Table of Contents • laws, regulations, and executive orders restricting the handling, use, and dissemination of information classified for national security purposes or determined to be “controlled unclassified information” or “for official use only,” and the export of certain products, services, and technical data, including requirements regarding any applicable licensing of our employees involved in such work; • laws, regulations, and executive orders regulating the handling, use, and dissemination of personally identifiable information in the course of performing a USG contract; • international trade compliance laws, regulations, and executive orders that prohibit business with certain sanctioned entities and require authorization for certain exports or imports in order to protect national security and global stability, including The International Traffic in Arms Regulations that controls the manufacture, sale, and distribution of defense and space-related articles and services as defined in the United States Munitions List; • laws, regulations, and executive orders governing organizational conflicts of interest that may restrict our ability to compete for certain USG contracts because of the work that we currently perform for the USG or may require that we take measures such as firewalling off certain employees or restricting their future work activities due to the current work that they perform under a USG contract; • laws, regulations, and executive orders that impose requirements on us to ensure compliance with requirements and protect the USG from risks related to our supply chain such as compliance with CMMC; • laws, regulations, and mandatory contract provisions providing protections to employees or subcontractors seeking to report alleged fraud, waste, and abuse related to a USG contract; • the Contractor Business Systems rule, which authorizes DoD agencies to withhold a portion of our payments if we are determined to have a significant deficiency in our accounting, cost estimating, purchasing, earned value management, material management and accounting, and/or property management system; and • the Cost Accounting Standards and Cost Principles, which impose accounting and allowability requirements that govern our right to reimbursement under certain cost-based USG contracts and require consistency of accounting practices over time.
Some significant laws and regulations that affect us include the following: • the FAR, and agency regulations supplemental to FAR, which regulate the formation, administration, and performance of USG contracts; • the False Statements Act, which imposes civil and criminal liability for making false statements to the USG; • the Truthful Cost or Pricing Data Statute (formerly known as the “Truth in Negotiations Act”), which requires certification and disclosure of cost and pricing data in connection with the negotiation of certain contracts, modifications, or task orders; • the Procurement Integrity Act, which regulates access to competitor bid and proposal information and certain internal government procurement sensitive information, and our ability to provide compensation to certain former government procurement officials; • laws and regulations restricting the ability of a contractor to provide gifts or gratuities to employees of the USG, including the FCPA which prohibits U.S. citizens and entities from bribing foreign government officials to benefit their business interests; • post-government employment laws and regulations, which restrict the ability of a contractor to recruit and hire current employees of the USG and deploy former employees of the USG; • laws, regulations, and executive orders restricting the handling, use, and dissemination of information classified for national security purposes or determined to be “controlled unclassified information” or “for official use only,” and the export of certain products, services, and technical data, including requirements regarding any applicable licensing of our employees involved in such work; • laws, regulations, and executive orders regulating the handling, use, and dissemination of personally identifiable information in the course of performing a USG contract; • laws, regulations, and executive orders governing organizational conflicts of interest that may restrict our ability to compete for certain USG contracts because of the work that we currently perform for the USG or may require that we take measures such as firewalling off certain employees or restricting their future work activities due to the current work that they perform under a USG contract; • laws, regulations, and executive orders that impose requirements on us to ensure compliance with requirements and protect the USG from risks related to our supply chain such as compliance with CMMC; • laws, regulations, and mandatory contract provisions providing protections to employees or subcontractors seeking to report alleged fraud, waste, and abuse related to a USG contract; • the Contractor Business Systems rule, which authorizes DoD agencies to withhold a portion of our payments if we are determined to have a significant deficiency in our accounting, cost estimating, purchasing, earned value management, material management and accounting, and/or property management system; and 12 Table of Contents • the Cost Accounting Standards and Cost Principles, which impose accounting and allowability requirements that govern our right to reimbursement under certain cost-based USG contracts and require consistency of accounting practices over time.
The applicable courts may also reach different judgments or results than would other courts, including courts where a stockholder considering an action 22 Table of Contents may be located or would otherwise choose to bring the action, and such judgments or results may be more favorable to us than to our stockholders.
The applicable courts may also reach different judgments or results than would other courts, including courts where a stockholder considering an action may be located or would otherwise choose to bring the action, and such judgments or results may be more favorable to us than to our stockholders.
If we encounter such problems in the future, our actual results could differ materially and adversely from those anticipated. Our earnings and margins may vary based on the mix of our contracts and programs. As of December 31, 2024, our backlog included cost reimbursable, T&M, and FFP contracts.
If we encounter such problems in the future, our actual results could differ materially and adversely from those anticipated. 18 Table of Contents Our earnings and margins may vary based on the mix of our contracts and programs. As of December 31, 2025, our backlog included cost reimbursable, T&M, and FFP contracts.
Any further growth by us or our subsidiaries, or any increase in the number of our strategic relationships, will increase the strain on our managerial, 11 Table of Contents operational, and financial resources.
Any further growth by us or our subsidiaries, or any increase in the number of our strategic relationships, will increase the strain on our managerial, operational, and financial resources.
We generated 6% of our total revenue in the year ended December 31, 2024, 7% of our total revenue in the year ended December 31, 2023, and 8% of our total revenue in the year ended December 31, 2022, from FFP contracts. FFP contracts require us to price our contracts by predicting our expenditures in advance.
We generated 5% of our total revenue in the year ended December 31, 2025, 6% of our total revenue in the year ended December 31, 2024, and 7% of our total revenue in the year ended December 31, 2023, from FFP contracts. FFP contracts require us to price our contracts by predicting our expenditures in advance.
We had an accumulated deficit of $54,082,484 as of December 31, 2024, and we expect to continue to generate a net loss in the year ending December 31, 2025. As a result, we are incurring net losses, and it is possible that we may not be able to achieve the revenue levels necessary to achieve and sustain net profitability.
We had an accumulated deficit of $56,588,218 as of December 31, 2025, and we expect to continue to generate a net loss in the year ending December 31, 2025. As a result, we are incurring net losses, and it is possible that we may not be able to achieve the revenue levels necessary to achieve and sustain net profitability.
Any costs found to be improperly allocated or assigned to contracts will not be reimbursed, and any such costs already reimbursed 16 Table of Contents must be refunded and certain penalties may be imposed.
Any costs found to be improperly allocated or assigned to contracts will not be reimbursed, and any such costs already reimbursed must be refunded and certain penalties may be imposed.
During the third quarter of 2023, due to decline in stock price, Management determined that a triggering event occurred representing an indicator of goodwill impairment, resulting in a noncash charge of $6,919,094. No triggering events were identified during 2024.
During the third quarter of 2023, due to decline in stock price, Management determined that a triggering event occurred representing an indicator of goodwill impairment, resulting in a noncash charge of $0. No triggering events were identified during 2024 or 2025.
We may have difficulty raising additional capital, which could deprive us of necessary resources. We expect to continue to devote significant capital resources to fund our acquisition strategy. To support the initiatives envisioned in our business plan, we will need to raise additional funds through the sale of public or private debt or equity financing or other arrangements.
We expect to continue to devote significant capital resources to fund our acquisition strategy. To support the initiatives envisioned in our business plan, we will need to raise additional funds through the sale of public or private debt, equity financing, or other arrangements.
Considerable uncertainty exists regarding how future budget and program decisions will unfold. If annual appropriations bills are not timely enacted, the USG may continue to operate under a CR, (potentially of extended duration), restricting new contract or program starts, presenting resource allocation challenges and placing limitations on budgets.
If annual appropriations bills are not timely enacted, the USG may continue to operate under a CR, (potentially of extended duration), restricting new contract or program starts, presenting resource allocation challenges and placing limitations on budgets.
Significant judgments and estimates are required to be made in determining our provision for income taxes.
We are subject to income taxes in the U.S. Significant judgments and estimates are required to be made in determining our provision for income taxes.
If we are unable to consistently win new contract awards over any extended 15 Table of Contents period, our business and prospects will be adversely affected and that could cause our actual results to differ materially and adversely from those anticipated.
If we are unable to consistently win new contract awards over any extended period, our business and prospects will be adversely affected and that could cause our actual results to differ materially and adversely from those anticipated. If we are unable to win prime contracts, or acquire companies with prime contract vehicles, our business and prospects will be adversely affected.
We may take advantage of these reporting exemptions until we are no longer an “emerging growth company.” We will remain an “emerging growth company” until the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1,235,000,000 or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the completion of the public offering; (iii) the date on which we have issued more than $1,000,000,000 in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.
We may take advantage of these reporting exemptions until we are no longer an “emerging growth company.” We will remain an “emerging growth company” until the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1,235,000,000 or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the completion of the public offering; (iii) the date on which we have issued more than $1,000,000,000 in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC. 20 Table of Contents Unanticipated changes in our tax provisions or exposure to additional income tax liabilities could affect our financial condition and profitability and we may take tax positions that the Internal Revenue Service or other tax authorities may contest.
Changes in estimates of projected future operating results, loss of deductibility of items, recapture of prior deductions, limitations on our ability to utilize tax net operating losses in the future, or changes in assumptions regarding our ability to generate future taxable income could result in significant increases to our tax expense and liabilities that could adversely affect our financial condition and profitability. 21 Table of Contents We have in the past and may in the future take tax positions that the Internal Revenue Service (“IRS”) or other tax authorities may contest.
Changes in estimates of projected future operating results, loss of deductibility of items, recapture of prior deductions, limitations on our ability to utilize tax net operating losses in the future, or changes in assumptions regarding our ability to generate future taxable income could result in significant increases to our tax expense and liabilities that could adversely affect our financial condition and profitability.
In addition, pressures on, as well as laws and plans relating to the federal budget, potential changes in priorities and defense spending, the timing and substance of the appropriations process, use of continuing resolutions, and the federal debt limit (including a breach of the federal debt ceiling), could adversely affect the amount and timing of funding for individual programs and delay purchasing or payments by our customers. 14 Table of Contents The U.S. continues to face a changing geopolitical environment, along with substantial fiscal, economic, and security challenges, which affect funding and budgetary priorities.
In addition, pressures on, as well as laws and plans relating to the federal budget, potential changes in priorities and defense spending, the timing and substance of the appropriations process, use of continuing resolutions, and the federal debt limit (including a breach of the federal debt ceiling), could adversely affect the amount and timing of funding for individual programs and delay purchasing or payments by our customers.
Ives, the Company’s former chief operating officer (“COO”), was appointed as President and CEO, after which, on September 1, 2024, Andrew L. Merriman was promoted to COO. We depend on the continued services of our key personnel, including our CEO, David T. Bell, our Chief Financial Officer (“CFO”), our COO, and Jay O.
Ives, the Company’s former chief operating officer (“COO”), was appointed as President and CEO, after which, on September 1, 2024, Andrew L. Merriman was promoted to COO. Tammy L. Martin was appointed to serve as our General Counsel (“GC”) effective January 1, 2026. We depend on the continued services of our key personnel, including our CEO, CFO (David T.
Additionally, we have certain potential dilutive instruments, of which the conversion of these instruments could result in dilution to stockholders: As of March 10, 2025 the maximum potential dilution is 15,873,277 shares and includes Series A preferred stock convertible into approximately 587,500 shares of common stock, Series C preferred stock convertib le into 356,250 shares of common stock, options granted exercisable into 9,515,000 shares of common stock, and warrants granted exercisable into 5,664,527 shares of common stock.
Additionally, we have certain potential dilutive instruments, of which the conversion of these instruments could result in dilution to stockholders: As of March 6, 2026 the maximum potential dilution is 19,950,231 shares and includes Series A preferred stock convertible into approximately 587,500 shares of common stock, Series C preferred stock convertible into 356,250 shares of common stock, options granted exercisable into 13,352,500 shares of common stock, and warrants granted exercisable into 5,653,981 shares of common stock.
We are exposed to the credit risk of some of our teaming partners, which could result in material losses. Most of our sales for work performed for the USG are through our teaming partners and are on an open credit basis. We cannot assure an investor these programs will be effective in reducing our credit risks.
Most of our sales for work performed for the USG are through our teaming partners and are on an open credit basis. We cannot assure an investor these programs will be effective in reducing our credit risks. If we are unable to adequately control these risks, our business, results of operations, and financial condition could be harmed.
Our performance as a subcontractor on a government contract is dependent on our prime contractor’s ability to satisfactorily maintain its relationship with the applicable government agency and fulfill its obligations under their contract.
Our performance as a subcontractor on a government contract is dependent on our prime contractor’s ability to satisfactorily maintain its relationship with the applicable government agency and fulfill its obligations under their contract. 15 Table of Contents A failure by our prime contractor to fulfill its obligations under their contract could result in the termination of the prime contract, thereby resulting in the termination of our subcontract.
We are required by an IRS regulation to disclose particular tax positions to the IRS as part of our tax returns for that year and future years.
We have in the past and may in the future take tax positions that the Internal Revenue Service (“IRS”) or other tax authorities may contest. We are required by an IRS regulation to disclose particular tax positions to the IRS as part of our tax returns for that year and future years.
We also face indirect competition from certain government agencies that perform services for themselves similar to those marketed by us. If we are unable to anticipate or effectively react to these competitive challenges, our competitive position could weaken, and we could experience a decline in our growth rate or revenue that could adversely affect our business and results of operations.
If we are unable to anticipate or effectively react to these competitive challenges, our competitive position could weaken, and we could experience a decline in our growth rate or revenue that could adversely affect our business and results of operations.
Our existing contracts typically expire after some period of time and must be “re-competed.” There is no guarantee that we will win such re-compete efforts; • government certification requirements applicable to our products may change and in doing so restrict our ability to sell into the U.S. federal government sector until we have attained the revised certification; • government demand and payment for our products and services may be impacted by public sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our products and services; • governments can generally terminate our contracts “for convenience”, meaning we could lose part or all of our revenue on short notice, and more specifically, the potential impact of the U.S.
Our existing contracts typically expire after some period of time and must be “re-competed.” There is no guarantee that we will win such re-compete efforts; • government certification requirements applicable to our service may change and in doing so restrict our ability to sell into the USG sector until we have attained the revised certification; 11 Table of Contents • government demand and payment for our services may be impacted by public sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our products and services; • governments can generally terminate our contracts “for convenience”, meaning we could lose part or all of our revenue on short notice; • governments routinely investigate and audit government contractors’ administrative processes, and any unfavorable audit could result in the government refusing to continue buying our services, which would adversely impact our revenue and results of operations, or institute fines or civil or criminal liability if the audit uncovers improper or illegal activities; and • when we are a subcontractor, we have less control over the execution and success of the contract with the government.
Such a “fire sale” would materially and adversely affect the value of our common stock. Risks Related to our Common Stock and Preferred Stock Future sales or potential sales of our common stock in the public market could cause our share price to decline.
Risks Related to our Common Stock and Preferred Stock Future sales or potential sales of our common stock in the public market could cause our share price to decline. If the existing holders of our common stock sell a large number of shares, they could adversely affect the market price for our common stock.
It is uncertain at this time which of our programs’ funding could be reduced in future years or whether new legislation will be passed by Congress in the next fiscal year that could result in additional or alternative funding cuts.
It is uncertain at this time which of our programs’ funding could be reduced in future years or whether new legislation will be passed by Congress in the next fiscal year that could result in additional or alternative funding cuts. 14 Table of Contents If we fail to establish and maintain important relationships with government entities and agencies, our ability to successfully bid for new business may be adversely affected.
We are an “emerging growth company” and will be able to avail ourselves of reduced disclosure requirements applicable to emerging growth companies, which could make our common stock less attractive to investors.
Our Company’s reliance on such exemption would likely result in a reduction in transparency to shareholders on various governance matters which could negatively impact their investment decisions. We are an “emerging growth company” and will be able to avail ourselves of reduced disclosure requirements applicable to emerging growth companies, which could make our common stock less attractive to investors.
Wright, our Executive Vice-President of Strategy and General Counsel. Our work with each of these key personnel is subject to changes and/or termination, and our inability to effectively retain the services of our key management personnel, could materially and adversely affect our operating results and future prospects.
Bell), COO, and GC. Our work with each of these key personnel is subject to changes and/or termination, and our inability to effectively retain the services of our key management personnel could materially and adversely affect our operating results and future prospects. We may have difficulty raising additional capital, which could deprive us of necessary resources.
The USG’s appropriation process and other factors may delay the collection of our receivables, and our business may be adversely affected if we cannot collect our receivables in a timely manner. We depend on the timely collections of our receivables to generate cash flow, provide working capital, pay debt, and continue our business operations.
We depend on the timely collections of our receivables to generate cash flow, provide working capital, pay debt, and continue our business operations.
Depending upon the value of the matters affected, an OCI issue that precludes our participation in or performance of a program or contract could cause our actual results to differ materially and adversely from those anticipated.
Depending upon the value of the matters affected, an OCI issue that precludes our participation in or performance of a program or contract could cause our actual results to differ materially and adversely from those anticipated. 13 Table of Contents If we are unable to maintain successful relationships with our teaming partners, our ability to market, sell, and distribute our services will be limited, and our business, financial position, and results of operations will be harmed.
The budget and macroeconomic environment, global security environment, political instability, and uncertainty surrounding the appropriations processes and the debt ceiling, remain significant short and long-term risks. See “U.S. Political, Budgetary, and Regulatory Environment” in MD&A. In addition, high deficit levels and high debt servicing costs could drive cuts to federal spending.
The U.S. continues to face a changing geopolitical environment, along with substantial fiscal, economic, and security challenges, which affect funding and budgetary priorities. The budget and macroeconomic environment, global security environment, political instability, and uncertainty surrounding the appropriations processes and the debt ceiling, remain significant short and long-term risks. See “U.S. Political, Budgetary, and Regulatory Environment” in MD&A.
If we fail to establish and maintain important relationships with government entities and agencies, our ability to successfully bid for new business may be adversely affected. To facilitate our ability to prepare bids for new business, we rely in part on establishing and maintaining relationships with officials of various government entities and agencies.
To facilitate our ability to prepare bids for new business, we rely in part on establishing and maintaining relationships with officials of various government entities and agencies. These relationships enable us to provide informal input and advice to government entities and agencies prior to the development of a formal bid.
If we are unable to win prime contracts, or acquire companies with prime contract vehicles, our business and prospects will be adversely affected. In addition, upon the expiration of a contract, if the customer requires further services of the type provided by the contract, there is frequently a competitive rebidding process.
In addition, upon the expiration of a contract, if the customer requires further services of the type provided by the contract, there is frequently a competitive rebidding process.
Our annual revenue and operating results may fluctuate significantly and unpredictably in the future.
Our annual revenue and operating results could be volatile due to the unpredictability of the USG’s budgeting process and policy priorities. Our annual revenue and operating results may fluctuate significantly and unpredictably in the future.
If we are unable to prevent third parties from infringing or misappropriating our proprietary information, our competitive position could be harmed, and our actual results could differ materially and adversely from those anticipated. 18 Table of Contents Our annual revenue and operating results could be volatile due to the unpredictability of the USG’s budgeting process and policy priorities.
In addition, we may be unable to detect unauthorized use of our proprietary information in order to take appropriate steps to enforce our rights. If we are unable to prevent third parties from infringing or misappropriating our proprietary information, our competitive position could be harmed, and our actual results could differ materially and adversely from those anticipated.
The market for our products and services is intensely competitive and characterized by rapid changes in technology, customer requirements, industry standards, and frequent 17 Table of Contents new product introductions and improvements.
The market for our products and services is intensely competitive and characterized by rapid changes in technology, customer requirements, industry standards, and frequent new product introductions and improvements. We anticipate continued challenges from current competitors, which in many cases are more established and enjoy greater resources than we do, as well as by new entrants into the industry.
Our agreements with our teaming partners are generally non-exclusive, meaning our teaming partners may offer customers services from several different companies, including services that compete with ours. The loss of a substantial number of our teaming partners, our possible inability to replace them, or the failure to recruit additional teaming partners could materially and adversely affect our results of operations.
The loss of a substantial number of our teaming partners, our possible inability to replace them, or the failure to recruit additional teaming partners could materially and adversely affect our results of operations. We are exposed to the credit risk of some of our teaming partners, which could result in material losses.
A failure by our prime contractor to fulfill its obligations under their contract could result in the termination of the prime contract, thereby resulting in the termination of our subcontract. If any significant subcontract is terminated in this manner, it could cause our actual results to differ materially and adversely from those anticipated.
If any significant subcontract is terminated in this manner, it could cause our actual results to differ materially and adversely from those anticipated. The USG’s appropriation process and other factors may delay the collection of our receivables, and our business may be adversely affected if we cannot collect our receivables in a timely manner.
We anticipate continued challenges from current competitors, which in many cases are more established and enjoy greater resources than us, as well as by new entrants into the industry. Non-traditional players have entered the market and have established positions related to such areas as cloud computing, cyber, satellite operations, and business systems.
Non-traditional players have entered the market and have established positions related to such areas as cloud computing, cyber, satellite operations, and business systems. We also face indirect competition from certain government agencies that perform services for themselves similar to those marketed by us.
If we are unable to maintain successful relationships with our teaming partners, our ability to market, sell, and distribute our services will be limited, and our business, financial position, and results of operations will be harmed. We expect that sales through teaming partners will continue to be a significant percentage of our revenue.
We expect that sales through teaming partners will continue to be a significant percentage of our revenue. Our agreements with our teaming partners are generally non-exclusive, meaning our teaming partners may offer customers services from several different companies, including services that compete with ours.
Removed
Certain key members of our management team lack significant public company experience in their positions and our executive management team has limited time working together. The members of our team do not all have significant prior experience working in their roles for a public company, including our CEO, COO, and CFO.
Added
In addition, high deficit levels and high debt servicing costs could drive cuts to federal spending. Considerable uncertainty exists regarding how future budget and program decisions will unfold.
Removed
The management team also has limited experience working together as a team. The inability of any member of our management team to operate effectively in their position, or for the management team to effectively work together, could materially and adversely affect our operating results and future prospects.
Removed
DOGE Service Temporary Organization on government spending and terminating contracts for convenience; • governments routinely investigate and audit government contractors’ administrative processes, and any unfavorable audit could result in the government refusing to continue buying our services, which would adversely impact our revenue and results of operations, or institute fines or civil or criminal liability if the audit uncovers improper or illegal activities; and • when we are a subcontractor, we have less control over the execution and success of the contract with the government.
Removed
If we are unable to adequately control these risks, our business, results of operations, and financial condition could be harmed.
Removed
These relationships enable us to provide informal input and advice to government entities and agencies prior to the development of a formal bid.
Removed
In addition, we may be unable to detect unauthorized use of our proprietary information in order to take appropriate steps to enforce our rights.
Removed
Our self-insurance program may expose us to significant and unexpected costs and losses. To help control our overall long-term costs associated with employee health benefits, we began maintaining our employee medical insurance benefits on a self-insured basis effective June 1, 2024.
Removed
To limit our exposure, we have third party stop-loss insurance coverage which sets a limit on our liability for both individual and aggregate claim costs. We record a liability for our estimated cost of claims incurred but unpaid as of each balance sheets date.
Removed
Our estimated liability is based on assumptions we believe to be reasonable under the current circumstances and will be adjusted as warranted based on changing circumstances. It is possible, however, that our actual liabilities may exceed our estimates of losses.
Removed
We may also experience an unexpectedly large number of claims that result in costs or liabilities in excess of our projections, which could cause us to record additional expenses. Our self-insurance reserves could prove to be inadequate, resulting in liabilities in excess of our available insurance and self-insurance.
Removed
If a successful claim is made against us and is not covered by our insurance or exceeds our policy limits, our business may be negatively and materially impacted. These fluctuations could have a material adverse effect on our business, operating results, and financial condition.
Removed
Risks Related to our Indebtedness Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt. We have substantial indebtedness.
Removed
We have $10,399,944 of debt as of December 31, 2024, the majority of which originally matured in calendar year 2024 and the terms of which have been amended to extend the maturity date to calendar year 2026. See “Notes Payable under N ote 7 , Part II, Item 8., Financial Statements” on this Form 10-K.
Removed
Should our bus iness fail to generate cash flow from operations sufficient to service our debt and make necessary capital expenditures we may be required to adopt one or more alternatives, such as selling assets, restructuring debt, or obtaining equity capital on terms that may be onerous or highly dilutive.
Removed
If the existing holders of our common stock, particularly our directors, officers, and other 10% stockholders, sell a large number of shares, they could adversely affect the market price for our common stock.
Removed
Unanticipated changes in our tax provisions or exposure to additional income tax liabilities could affect our financial condition and profitability and we may take tax positions that the Internal Revenue Service or other tax authorities may contest. We are subject to income taxes in the U.S.
Removed
Our management collectively owns a substantial amount of our common stock. Collectively, our officers and directors own or exercise voting and investment control of approximately 35.5% of our outstanding common stock and control 35.1% of the voting power of the Company.
Removed
As a result, unless required by a stock exchange rule, investors may be prevented from affecting matters involving our Company, including: • the composition of our Board and, through it, any determination with respect to our business direction and policies, including the appointment and removal of officers; • any determination with respect to mergers or other business combinations; • our acquisition or disposition of assets; and • our corporate financing activities.
Removed
Furthermore, this concentration of voting power could have the effect of delaying, deterring, or preventing a change of control or other business combination that might otherwise be beneficial to our stockholders.
Removed
This significant concentration of share ownership may also adversely affect the trading price of our common stock because investors may perceive disadvantages in owning stock in a Company that is controlled by a small number of stockholders.
Removed
Our Company’s reliance on such exemption would likely result in a reduction in transparency to shareholders on various governance matters which could negatively impact their investment decisions.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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The Board is briefed on a periodic basis as to the nature of actions taken to mitigate risks from cyberattacks. Board of Directors Oversight The Audit Committee is central to the Board’s oversight of cybersecurity risks and bears the primary responsibility for this domain.
The Board is briefed on a periodic basis as to the nature of actions taken to mitigate risks from cyberattacks. Board Oversight The Audit Committee is central to the Board’s oversight of cybersecurity risks and bears the primary responsibility for this domain.
These briefings encompass a broad range of topics, including: ● Current cybersecurity landscape and emerging threats; ● Status of ongoing cybersecurity initiatives and strategies; 24 Table of Contents ● Incident reports and learnings from any cybersecurity events; and ● Compliance with regulatory requirements and industry standards.
These briefings encompass a broad range of topics, including: ● Current cybersecurity landscape and emerging threats; ● Status of ongoing cybersecurity initiatives and strategies; ● Incident reports and learnings from any cybersecurity events; and ● Compliance with regulatory requirements and industry standards. 23 Table of Contents
Managing Material Risks & Integrated Overall Risk Management Castellum strategically integrated cybersecurity risk management into our broader risk management framework to promote a company-wide culture of cybersecurity risk management. This integration ensures that cybersecurity considerations are an integral part of our decision-making processes at every level.
Managing Material Risks & Integrated Overall Risk Management Castellum strategically integrated cybersecurity risk management into our broader risk management framework to promote a company-wide culture of cybersecurity risk management. This integration ensures that cybersecurity considerations are 22 Table of Contents an integral part of our decision-making processes at every level.

Item 2. Properties

Properties — owned and leased real estate

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As of December 31, 2024, our subsidiaries lease property at the following locations: ● Augusta, Georgia ● Vienna, Virginia ● Toms River, New Jersey ● Hollywood, Maryland We believe our existing facilities are generally adequate to meet our current requirements; however, due to recent hires our location in Hollywood, Maryland currently has limited remaining space and we are therefore evaluating options for expansion.
As of December 31, 2025, our subsidiaries lease property at the following locations: ● Augusta, Georgia ● Toms River, New Jersey ● Hollywood, Maryland We believe our existing facilities are generally adequate to meet our current requirements; however, due to recent hires our location in Hollywood, Maryland currently has limited remaining space and we are therefore evaluating options for expansion.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Neither our Company nor any of our subsidiaries is a party to any legal proceeding that, individually or in the aggregate, we believe to be uncovered by insurance or otherwise material to our Company as a whole. Item 4 Mine Safety Disclosures Not applicable. 25 Table of Contents Part II
Neither our Company nor any of our subsidiaries is a party to any legal proceeding that, individually or in the aggregate, we believe to be uncovered by insurance or otherwise material to our Company as a whole. Item 4 Mine Safety Disclosures Not applicable. 24 Table of Contents Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Unregistered Sales of Securities Other than those unregistered securities previously disclosed in reports filed with the SEC during the period covered by this report, we have not sold any securities without registration under the Securities Act of 1933, as amended, during the period covered by this report, except as provided below.
Unregistered Sales of Securities Other than those unregistered securities previously disclosed in reports filed with the SEC during the period covered by this report, we have not sold any securities without registration under the Securities Act of 1933, as amended, during the period covered by this report.
Holders of Record As of March 10, 2025, there were 80,391,874 shares of common stock outstanding held by approximately 190 holders of record (not including an indeterminate number of beneficial holders of stock held in street name), and the last reported sale price of our common stock on the NYSE American on March 10, 2025 was $1.07.
Holders of Record As of March 6, 2026, there were 94,612,750 shares of common stock outstanding held by approximately 179 holders of record (not including an indeterminate number of beneficial holders of stock held in street name), and the last reported sale price of our common stock on the NYSE American on March 6, 2026 was $0.90.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Other income (expense) Other income (expense) increased by $279,178 or 11.7% to $(2,667,648) for the year ended December 31, 2024 from $(2,388,470) for the year ended December 31, 2023.
Other expense Other income (expense) increased by $279,178 or 11.7% to $(2,667,648) for the year ended December 31, 2024 from $(2,388,470) for the year ended December 31, 2023.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Deferred income taxes reflect the impact of temporary differences between assets and liabilities recognized for financial reporting purposes and the amounts recognized for income tax reporting purposes, net operating loss carryforwards, and other tax credits measured by applying currently enacted tax laws.
Deferred income taxes reflect the impact of temporary differences between assets and liabilities recognized for financial reporting purposes and the amounts recognized for income tax reporting purposes, net operating loss carryforwards, and other tax credits measured by applying currently enacted tax laws.
The shares are being offered pursuant to a shelf registration statement on Form S-3 (File No. 333-275840), which was declared effective by the SEC on December 12, 2023, and a related prospectus supplement, dated December 27, 2024, related to the Public Offering. 27 Table of Contents Pursuant to placement agency agreements dated as of December 22, 2024 and December 27, 2024, respectively, the Company engaged Maxim to act as the lead placement agent in connection with the Second Registered Offering and the Public Offering.
The shares are being offered pursuant to a shelf registration statement on Form S-3 (File No. 333-275840), which was declared effective by the SEC on December 12, 2023, and a related prospectus supplement, dated December 27, 2024, related to the Public Offering. 26 Table of Contents Pursuant to placement agency agreements dated as of December 22, 2024 and December 27, 2024, respectively, the Company engaged Maxim to act as the lead placement agent in connection with the Second Registered Offering and the Public Offering.
During the third quarter of 2023, due to decline in stock price, management determined that a triggering event occurred representing an indicator of goodwill impairment, resulting in a noncash charge of $6,919,094. During 2024, no triggering events were noted.
During the third quarter of 2023, due to decline in stock price, management determined that a triggering event occurred representing an indicator of goodwill impairment, resulting in a noncash charge of $6,919,094. During 2024 and 2025, no triggering events were noted.
This increase was primarily driven by the increase in deferred tax liabilities from the acquisition of GTMR and subsequent release of valuation allowance. 32 Table of Contents Contract Backlog We define backlog to include the following three components: • Funded Backlog .
This increase was primarily driven by the increase in deferred tax liabilities from the acquisition of GTMR and subsequent release of valuation allowance. 31 Table of Contents Contract Backlog We define backlog to include the following three components: • Funded Backlog .
Political, Budgetary, and Regulatory Environment.” Our backlog includes orders under contracts that in some cases extend for several years. Congress generally appropriates funds for our clients on a yearly basis, even though their contracts with us may call for performance that is expected to take a number of years to complete.
Political, Budgetary, and Regulatory Environment.” Our backlog includes orders under contracts that in some cases extend for several years. U.S. Congress (“Congress”) generally appropriates funds for our clients on a yearly basis, even though their contracts with us may call for performance that is expected to take a number of years to complete.
In 2024, it was determined that no goodwill impairment expense 30 Table of Contents was required, the expense was $6,919,094 in 2023, and the contingent earnout was agreed to and noted as a liability in Due to Seller in the Consolidated Balance Sheets, under Part II, Item 8, of this Form 10-K.
In 2024, it was determined that no goodwill impairment expense was required, the expense was $6,919,094 in 2023, and the contingent earnout was agreed to and noted as a liability in Due to Seller in the Consolidated Balance Sheets, under Part II, Item 8, of this Form 10-K.
As a result, contracts typically are only partially funded at any point during their term and all or some of the work to be performed under the contracts may remain unfunded unless and until the U.S. Congress (“Congress”) makes subsequent appropriations and the procuring agency allocates funding to the contract.
As a result, contracts typically are only partially funded at any point during their term and all or some of the work to be performed under the contracts may remain unfunded unless and until the Congress makes subsequent appropriations and the procuring agency allocates funding to the contract.
For T&M contracts, we use input progress measures to estimate revenue earned based on hours worked on contract performance at negotiated billing rates, plus direct costs and indirect cost burdens associated with materials and the direct expenses incurred in performance of the contract.
For T&M contracts, we use input progress measures to estimate revenue earned based on hours worked on contract performance at negotiated 27 Table of Contents billing rates, plus direct costs and indirect cost burdens associated with materials and the direct expenses incurred in performance of the contract.
We provide clients in the United States (“U.S.) government (“USG”), financial services, healthcare, and other users of large data applications with services which include intelligence analysis, software development, software engineering, program management, strategic and mission planning, information assurance, cybersecurity and policy support, data analytics, and model based systems engineering (“MBSE”).
We provide clients in the United States (“U.S.) government (“USG”), financial services, legal, and other users of large data applications with services which include intelligence analysis, software development, software engineering, system modernization, program management, strategic and mission planning, information assurance, cybersecurity and policy support, data analytics, and model based systems engineering (“MBSE”).
Investing activities Net cash provided by investing activities increased to $221,356, for the year ended December 31, 2024, from $(440,985), for the year ended December 31, 2023. The decrease in net cash used in investing activities was primarily due to the cash paid in the acquisition of GTMR during 2023.
Investing activities 33 Table of Contents Net cash provided by investing activities increased to $221,356, for the year ended December 31, 2024, from $(440,985), for the year ended December 31, 2023. The decrease in net cash used in investing activities was primarily due to the cash paid in the acquisition of GTMR during 2023.
The decrease in general and administrative (“G&A”) costs of $(3,369,214) was primarily driven by a reduction in salaries, achieved through the implementation of strategic cost-saving initiatives and the enhancement of operational efficiencies across all G&A support departments, and a decrease in noncash stock based compensation granted to certain employees of $2,068,783.
The decrease in G&A costs of $(3,369,214) was primarily driven by a reduction in salaries, achieved through the implementation of strategic cost-saving initiatives and the enhancement of operational efficiencies across all G&A support departments, and a decrease in noncash stock based compensation granted to certain employees of $2,068,783.
Business Overview We are a technology company focused on leveraging the power of information technology to help solve our nation’s most pressing national security challenges.
Business Overview We are a technology services and solutions company focused on leveraging the power of information technology to help solve our nation’s most pressing national security challenges.
The timing and revenue recognition in a period could vary if different judgments were made. 35 Table of Contents Goodwill and Intangible Assets We account for goodwill and intangible assets in accordance with ASC 350, Intangibles-Goodwill and Other (“ASC 350”).
The timing and revenue recognition in a period could vary if different judgments were made. Goodwill and Intangible Assets We account for goodwill and intangible assets in accordance with ASC 350, Intangibles-Goodwill and Other (“ASC 350”).
The following discussion should be read in conjunction with the audited consolidated financial statements and related notes included elsewhere in this document. 29 Table of Contents Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Year Ended December 31, Amount of Increase (Decrease) % Change 2024 2023 Revenues $ 44,764,852 $ 45,243,812 $ (478,960) (1.1) % Cost of revenues 26,498,437 26,568,485 (70,048) (0.3) % Gross profit 18,266,415 18,675,327 (408,912) (2.2) % Operating expenses: Indirect costs 9,275,688 8,935,113 340,575 3.8 % Overhead 1,906,682 1,884,059 22,623 1.2 % General and administrative expenses 14,328,672 17,697,886 (3,369,214) (19.0) % Goodwill impairment loss — 6,919,094 (6,919,094) (100.0) % (Gain) Loss from change in fair value of contingent earnout — (92,000) 92,000 (100.0) % Total operating expenses 25,511,042 35,344,152 (9,833,110) (27.8) % Loss from operations (7,244,627) (16,668,825) 9,424,198 (56.5) % Other expense (2,667,648) (2,388,470) (279,178) 11.7 % Loss before income taxes and preferred stock dividends (9,912,275) (19,057,295) 9,145,020 (48.0) % Income tax (expense) benefit (68,032) 1,257,117 (1,325,149) (105.4) % Net loss (9,980,307) (17,800,178) 7,819,871 (43.9) % Preferred stock dividend 119,277 118,152 1,125 1.0 % Net loss to common shareholders $ (10,099,584) $ (17,918,330) $ 7,818,746 (43.6) % Revenue Total revenues decreased by $(478,960) or (1.1)% to $44,764,852 for the year ended December 31, 2024 from $45,243,812 for the year ended December 31, 2023.
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Year Ended December 31, Amount of Increase (Decrease) % Change 2024 2023 Revenues $ 44,764,852 $ 45,243,812 $ (478,960) (1.1) % Cost of revenues 26,498,437 26,568,485 (70,048) (0.3) % Gross profit 18,266,415 18,675,327 (408,912) (2.2) % Operating expenses: Indirect costs 9,275,688 8,935,113 340,575 3.8 % Overhead 1,906,682 1,884,059 22,623 1.2 % General and administrative expenses 14,328,672 17,697,886 (3,369,214) (19.0) % Loss from change in fair value of contingent earnout — (92,000) 92,000 (100.0) % Total operating expenses 25,511,042 35,344,152 (9,833,110) (27.8) % Loss from operations (7,244,627) (16,668,825) 9,424,198 (56.5) % Other expense (2,667,648) (2,388,470) (279,178) 11.7 % Loss before income taxes and preferred stock dividends (9,912,275) (19,057,295) 9,145,020 (48.0) % Income tax benefit (expense) (68,032) 1,257,117 (1,325,149) (105.4) % Net loss (9,980,307) (17,800,178) 7,819,871 (43.9) % Preferred stock dividend 119,277 118,152 1,125 1.0 % Net loss to common shareholders $ (10,099,584) $ (17,918,330) $ 7,818,746 (43.6) % Revenues 30 Table of Contents Total revenues decreased by $(478,960) or (1.1)% to $44,764,852 for the year ended December 31, 2024 from $45,243,812 for the year ended December 31, 2023.
This decrease in revenue was mainly due to the sale of the Mainnerve Federal Services, Inc. dba MFSI Government Group, a Delaware corporation, entity on September 11, 2024. Cost of revenues Total cost of revenues decreased by $(70,048) or (0.3)% to $26,498,437 for the year ended December 31, 2024 from $26,568,485 for the year ended December 31, 2023.
This decrease in revenue was mainly due to the sale of the Company’s subsidiary, Mainnerve Federal Services, Inc. (MFSI”) dba MFSI Government Group on September 11, 2024. Cost of revenues Total cost of revenues decreased by $(70,048) or (0.3)% to $26,498,437 for the year ended December 31, 2024 from $26,568,485 for the year ended December 31, 2023.
The federal and state income tax returns of the Company are subject to examination by the Internal Revenue Service (“IRS’) and state taxing authorities, generally for three years after they were filed. We have filed our 2022 and 2023 federal and state tax returns.
The federal and state income tax returns of the Company are subject to examination by the Internal Revenue Service (“IRS’) and state taxing authorities, generally for three years after they were filed.
Including priced options that have been awarded but not yet scheduled of $19,330,955, our grand total backlog is $119,812,648. The remainder is expected to be recognized thereafter. As with all government contracts there is no guarantee the customer will have future funding or exercise their contract option in the out-years. Other budget risks are discussed in “Part I, Item1. U.S.
Including priced options that have been awarded but not yet scheduled of $7,215,912, our grand total backlog is $265,410,197. The remainder is expected to be recognized thereafter. As with all government contracts there is no guarantee the customer will have future funding or exercise their contract option in the out-years. Other budget risks are discussed in “Part I, Item1. U.S.
On December 1, 2023, the Company filed a universal shelf registration statement on Form S-3 (File No. 333-275840) which was declared effective by the SEC on December 12, 2023 pursuant to which the Company may offer and sell up to $10 million in the aggregate of equity securities.
Recent Developments On December 1, 2023, the Company filed a universal shelf registration statement on Form S-3 (File No. 333-275840) which was declared effective by the U.S. Securities and Exchange Commission (“SEC”) on December 12, 2023 and remains effective. Pursuant to this registration statement, the Company may offer and sell up to $10 million in the aggregate of equity securities.
Liquidity and Capital Resources Sources We have historically sourced our liquidity requirements with cash flows from operations, borrowings under our current credit facilities, and in October 2022, with an equity issuance through the listing of our common stock on the NYSE American.
Liquidity and Capital Resources Sources We have historically sourced our liquidity requirements with cash flows from operations, borrowings under our current credit facilities, and in October 2022, with an equity issuance through the listing of our common stock on the NYSE American. As of December 31, 2025, we had $14,884,778 of cash on hand.
This decrease was driven by changes in revenue noted above. Operating expenses Total operating expenses decreased by $(9,833,110) or (27.8)% to $25,511,042 for the year ended December 31, 2024 from $35,344,152 for the year ended December 31, 2023.
Operating expenses Total operating expenses decreased by $(9,833,110) or (27.8)% to $25,511,042 for the year ended December 31, 2024 from $35,344,152 for the year ended December 31, 2023.
ASC 350 requires that goodwill and other intangibles with indefinite lives be tested for impairment annually or on an interim basis if events or circumstances indicate that the fair value of an asset has decreased below its carrying value. Significant management judgment is required in determining whether an indicator of impairment exists and in projecting cash flows.
ASC 350 requires that goodwill and other intangibles with indefinite lives be tested for impairment annually or on an interim basis if events or circumstances indicate that the fair value of an asset has decreased below its carrying value.
Information about our cash flows is presented in our statements of cash flows and is summarized in the following table: Twelve Months Ended December 31, 2024 2023 2022 Net cash provided (used in) by: Operating activities $ 1,120,105 $ (2,264,447) $ 990,163 Investing activities 221,356 (440,985) (339,282) Financing activities $ 9,082,746 $ (104,623) $ 1,972,100 Comparison of the Years Ended December 31, 2024 and 2023 Operating activities 34 Table of Contents Net cash provided by operating activities increased to $1,120,105 for the year ended December 31, 2024, compared to $(2,264,447) used in operating activities for the year ended December 31, 2023.
Information about our cash flows is presented in our statements of cash flows and is summarized in the following table: Twelve Months Ended December 31, 2025 2024 2023 Net cash provided (used in) by: Operating activities $ (1,948,377) $ 1,120,105 $ (2,264,447) Investing activities (159,773) 221,356 (440,985) Financing activities $ 4,737,880 $ 9,082,746 $ (104,623) Comparison of the Years Ended December 31, 2025 and 2024 Operating activities Net cash used in operating activities was $(1,948,377) for the year ended December 31, 2025, compared to $1,120,105 provided by operating activities for the year ended December 31, 2024.
Excluding unscheduled options orders, as of December 31, 2024, the Company had $100,481,693 of funded, unfunded, and scheduled priced options. We expect to recognize approximately 28% of the remaining performance obligations over the next 12 months, and approximately 49% over the next 24 months.
Excluding unscheduled options orders, as of December 31, 2025, the Company had $258,194,285 of funded, unfunded, and scheduled priced options. We expect to recognize approximately 18% of the remaining performance obligations over the next 12 months, and approximately 52% over the next 24 months.
These assumptions can have a significant impact on the value of identifiable assets and accordingly can impact the value of goodwill recorded. Different assumptions could result in different values being attributed to assets and liabilities.
Assumptions may include discount rates, growth rates, cost of capital, tax rates, and remaining useful lives. These assumptions can have a significant impact on the value of identifiable assets and accordingly can impact the value of goodwill recorded. Different assumptions could result in different values being attributed to assets and liabilities.
This decrease was driven primarily by the sale of the Mainnerve Federal Services, Inc. dba MFSI Government Group, a Delaware corporation, entity on September 11, 2024. Gross Profit Total gross profit decreased by $(408,912) or (2.2)% to $18,266,415 for the year ended December 31, 2024 from $18,675,327 for the year ended December 31, 2023.
This decrease was driven primarily by the sale of MFSI on September 11, 2024. Gross profit Total gross profit decreased by $(408,912) or (2.2)% to $18,266,415 for the year ended December 31, 2024 from $18,675,327 for the year ended December 31, 2023. This decrease was driven by changes in revenue noted above.
The current charge for income tax expense is calculated in accordance with the relevant tax regulations applicable to the entity. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and for operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and for operating loss and tax credit carryforwards.
We believe our existing cash and cash equivalents provided by our ongoing operations, together with funds available through the transactions noted above, will be sufficient to meet our working capital, capital expenditures, and cash needs for the next 12 months and beyond.
We believe our existing cash provided by our ongoing operations, together with funds available from the transactions noted above, will be sufficient to meet our working capital, capital expenditures, and cash needs for the next 12 months and beyond. Uses Our material cash requirements from known contractual and other obligations primarily relate to payments on our credit facilities.
Uses Our material cash requirements from known contractual and other obligations primarily relate to payments on our credit facilities. For information related to these cash requirements, refer to Note 6 , Note 7 , Note 8 , and Note 9 , under Part II, Item 8., Financial Statements of this Form 10-K.
For information related to these cash requirements, refer to Note 6 , Note 7 , Note 8 , and Note 9 , under Part II, Item 8., Financial Statements of this Form 10-K.
Results of Operations The year to year comparisons of our results of operations have been prepared using the historical periods included in our audited consolidated financial statements.
We have filed our 2023 and 2024 federal and state tax returns. 28 Table of Contents Results of Operations The year to year comparisons of our results of operations have been prepared using the historical periods included in our audited consolidated financial statements.
The following table summarizes the value of our contract backlog as of December 31, 2024: Backlog Funded $ 12,742,938 Unfunded $ 15,373,290 Priced Options $ 72,365,465 Total Backlog $ 100,481,693 Our total backlog consists of remaining performance obligations, certain orders under contracts for which the original period of performance has expired, unexercised option periods, and other unexercised or unscheduled optional orders.
The following table summarizes the value of our contract backlog as of December 31, 2025: Backlog Funded $ 12,305,985 Unfunded $ 41,860,014 Priced Options $ 204,028,286 Total Backlog $ 258,194,285 Our total backlog consists of remaining performance obligations, certain orders under contracts for which the original period of performance has expired, unexercised option periods, and other unexercised or unscheduled optional orders.
We are responsible for determining the valuation of assets and liabilities and for the allocation of purchase price to assets acquired and liabilities assumed. Assumptions must be made in determining fair values, particularly where observable market values do not exist. Assumptions may include discount rates, growth rates, cost of capital, tax rates, and remaining useful lives.
The difference between the purchase price and the fair value of net assets acquired is recorded as goodwill. We are responsible for determining the valuation of assets and liabilities and for the allocation of purchase price to assets acquired and liabilities assumed. Assumptions must be made in determining fair values, particularly where observable market values do not exist.
In addition to constantly innovating and enhancing our organic capabilities, Castellum is executing strategic acquisitions of technology companies in the areas of cybersecurity, information technology (“IT”), electronic warfare, information warfare, and information operations with businesses in the defense, federal, civilian, and commercial markets that share our passionate commitment to U.S. national security and have a history of bringing exceptional value to their clients. 26 Table of Contents Recent Developments On October 17, 2022, the Company closed its public offering of 1,500,000 shares of common stock consisting of 1,350,000 shares sold by the Company and 150,000 shares sold by certain selling stockholders, at a public offering price of $2.00 per share.
In addition to constantly innovating and enhancing our organic capabilities, Castellum is executing strategic acquisitions of technology companies in the areas of cybersecurity, information technology (“IT”), electronic warfare, information warfare, and information operations with businesses in the defense, federal, civilian, and commercial markets 25 Table of Contents that share our passionate commitment to U.S. national security and have a history of bringing exceptional value to their clients.
Income tax (expense) benefit Income tax benefit (expense) increased by $2,076,713 or (253.4)% to $1,257,117 for the year ended December 31, 2023 from $(819,596) for the year ended December 31, 2022.
Income tax (expense) benefit Income tax benefit (expense) increased by $1,325,149 or (105.4)% to $(68,032) for the year ended December 31, 2024 from $1,257,117 for the year ended December 31, 2023.
Principles of Consolidation Refer to Note 1 of the notes to our audited consolidated financial statements included in Part II, Item 8., Financial Statements within this Form 10-K for a discussion of principles of consolidation. 36 Table of Contents Recently Issued Accounting Standards Refer to Note 1 of the notes to our audited consolidated financial statements included in Part II, Item 8., Financial Statements within this Form 10-K for our assessment of recently issued and adopted accounting standards.
Recently Issued Accounting Standards The Company adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances the Company’s income tax disclosures, including disaggregation of the effective tax rate reconciliation and income taxes paid. 35 Table of Contents Refer to Note 1 of the notes to our audited consolidated financial statements included in Part II, Item 8., Financial Statements within this Form 10-K for our assessment of other recently issued and adopted accounting standards.
Our acquisitions require the application of purchase accounting, which results in tangible and identifiable intangible assets and liabilities of the acquired entity being recorded at fair value. The difference between the purchase price and the fair value of net assets acquired is recorded as goodwill.
Significant management judgment is required in determining whether an indicator of impairment exists and in projecting cash flows. 34 Table of Contents Our acquisitions require the application of purchase accounting, which results in tangible and identifiable intangible assets and liabilities of the acquired entity being recorded at fair value.
Since share-based compensation expense can be material to our financial condition, different assumptions and estimates could have a material adverse effect on our financial statements.
Since share-based compensation expense can be material to our financial condition, different assumptions and estimates could have a material adverse effect on our financial statements. Principles of Consolidation Refer to Note 1 of the notes to our audited consolidated financial statements included in Part II, Item 8., Financial Statements within this Form 10-K for a discussion of principles of consolidation.
Income tax benefit (expense) Income tax benefit (expense) increased by $1,325,149 or (105.4)% to $(68,032) for the year ended December 31, 2024 from $1,257,117 for the year ended December 31, 2023. This increase was primarily driven by the increase in deferred tax liabilities from the acquisition of Global Technology Management Resources, Inc. (“GTMR”) and subsequent release of valuation allowance.
Income tax expense Income tax expense increased by $139,948 or 205.7% to $(207,980) for the year ended December 31, 2025 from $(68,032) for the year ended December 31, 2024. This increase was primarily driven by the increase in state taxes and the increase in valuation allowance.
During 2024, the Amended BCR Trust Note was extinguished resulting in a new note, the note payable to Crom and the Term Loan Promissory Note Payable were paid off, and the two promissory notes payable to Robert Eisiminger were combined into one note payable. 28 Table of Contents Income Tax (Provision) Benefit Income taxes are accounted for under the asset and liability method.
During 2025, the note payable with the Buckhout Charitable Remainder Trust and the two promissory notes payable to Robert Eisiminger were paid off. Income Tax (Provision) Benefit Income taxes are accounted for under the asset and liability method. The current charge for income tax expense is calculated in accordance with the relevant tax regulations applicable to the entity.
Gross Profit Total gross profit increased by $1,078,010 or 6.1% to $18,675,327 for the year ended December 31, 2023 from $17,597,317 for the year ended December 31, 2022. This increase was driven by changes in revenue noted above.
Gross profit Total gross profit increased by $1,102,442 or 6.0% to $19,368,857 for the year ended December 31, 2025 from $18,266,415 for the year ended December 31, 2024. This increase was driven by the changes in revenue and cost of revenues noted above; however, higher subcontractor and labor costs resulted in margin compression during the period.
Interest Expense, Net of Interest Income Interest expense consists of interest paid to servi ce our convertible promissory notes which include the amended trust note with the Buckhout Charitable Remainder Trust (the “Amended BCR Trust Note”), the term loan promissory note payable and revolving line of credit to the Live Oak Banking Company ("Live Oak Bank") (the “Term Loan Promissory Note Payable” and “Revolving Line of Credit,” respectively), two promissory notes payable to Robert Eisiminger, the note payable to Emil Kaunitz, and the note payable to Crom Cortana Fund LLC (“Crom”) net of interest earned from investments.
Interest Income (Expense) Interest income consists of interest earned from savings accounts, net of interest paid on the note payable between the Company and the Buckhout Charitable Remainder Trust, two promissory notes payable to Robert Eisiminger, and the related party note payable to Emil Kaunitz.
Removed
The Company’s registration statement on Form S-1, as amended (File No. 333-267249) relating to the offering was declared effective by the U.S. Securities and Exchange Commission (“SEC”) on October 12, 2022.
Added
On September 17, 2025, the Company filed a registration statement on Form S-8 (File No. 333-290331) to register an aggregate of 3,000,000 shares of the Company’s common stock to be issued pursuant to the Castellum, Inc. 2025 Employee Stock Purchase Plan (the “ESPP”).
Removed
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Year Ended December 31, Amount of Increase (Decrease) % Change 2023 2022 Revenues $ 45,243,812 $ 42,190,643 $ 3,053,169 7.2 % Cost of revenues 26,568,485 24,593,326 1,975,159 8.0 % Gross profit 18,675,327 17,597,317 1,078,010 6.1 % Operating expenses: Indirect costs 8,935,113 11,859,401 (2,924,288) (24.7) % Overhead 1,884,059 1,560,252 323,807 20.8 % General and administrative expenses 17,697,886 13,586,600 4,111,286 30.3 % Loss from change in fair value of contingent earnout (92,000) 555,000 (647,000) (116.6) % Total operating expenses 35,344,152 27,561,253 7,782,899 28.2 % Loss from operations (16,668,825) (9,963,936) (6,704,889) 67.3 % Other expense (2,388,470) (4,124,506) 1,736,036 (42.1) % Loss before income taxes and preferred stock dividends (19,057,295) (14,088,442) (4,968,853) 35.3 % Income tax benefit (expense) 1,257,117 (819,596) 2,076,713 (253.4) % Net loss (17,800,178) (14,908,038) (2,892,140) 19.4 % Preferred stock dividend 118,152 100,516 17,636 17.5 % Net loss to common shareholders $ (17,918,330) $ (15,008,554) $ (2,909,776) 19.4 % Revenues Total revenues increased by $3,053,169 or 7.2% to $45,243,812 for the year ended December 31, 2023 from $42,190,643 for the year ended December 31, 2022.
Added
The ESPP was adopted by the Company’s Board of Directors on March 11, 2025 and approved by the Company’s stockholders at the annual meeting held on May 28, 2025. The ESPP is a voluntary employee benefit program that permits eligible employees to contribute up to 5% of their eligible compensation through payroll deductions each pay period.
Removed
This increase in revenue was due to the acquisition of GTMR (“GTMR Acquisition”), partially offset by a reduction in revenue from lost positions on ongoing contracts principally at SSI and Corvus.
Added
Payroll deductions and purchases of Company common stock under the ESPP did not commence until 2026. Shares are purchased on behalf of participating employees on a quarterly basis at a price equal to 85% of the fair market value on the applicable purchase date.
Removed
Cost of revenues 31 Table of Contents Total cost of revenues increased by $1,975,159 or 8.0% to $26,568,485 for the year ended December 31, 2023 from $24,593,326 for the year ended December 31, 2022. This increase was driven primarily by the net increased level of effort on contracts proportionate to the changes in revenue noted above.
Added
The ESPP is intended to provide employees with an opportunity to acquire an ownership interest in the Company and is not a component of executive compensation.
Removed
Operating expenses Total operating expenses increased by $7,782,899 or 28.2% to $35,344,152 for the year ended December 31, 2023 from $27,561,253 for the year ended December 31, 2022. The decrease in indirect cost of $(2,924,288) was driven primarily by a reduction in acquisition based bonuses to certain executives from 2022, as well as cost savings implemented in 2023.
Added
On September 17, 2025, the Company filed a registration statement on Form S-8 (File No. 333-290332) to register an aggregate of 9,000,000 shares of the Company's common stock to be issued pursuant to the Castellum, Inc. Second Amended 2021 Stock Incentive Plan.
Removed
The increase in overhead costs of $323,807 is related to increases in lease expense due to the GTMR Acquisition.
Added
On March 19, 2025, the Company closed on the public offering (the "March 2025 Public Offering") of 4,500,000 units ("Unit(s)") at a public offering price of $1.00 per Unit. Each Unit consisted of one share of common stock and one warrant to purchase one share of common stock (the "March 2025 Warrants").
Removed
The increase in general and administrative costs of $4,111,286 consist of increases in noncash stock based compensation granted to certain employees, as well as increases in general and administrative salary expense as we in-sourced certain functions such as accounting and business development. The recognition of goodwill impairment resulted from a loss recorded during the third quarter of 2023.
Added
The March 2025 Warrants were immediately exercisable at $1.08 per share and expired 60 days from the date of issuance. The shares of common stock and 2025 Warrants were immediately separable and issued separately. Gross proceeds from the March 2025 Public Offering were approximately $4.5 million before deducting placement agent fees and offering expenses.
Removed
The decrease in the loss from change in fair value of contingent earnout is due to adjustments as we finalized the amount after the earnout period ended in late 2023. Other income (expense) Other income (expense) decreased by $1,736,036 or (42.1)% to $(2,388,470) for the year ended December 31, 2023 from $(4,124,506) for the year ended December 31, 2022.
Added
Castellum intends to use the net proceeds of the offering for working capital and general corporate purposes. Of the 4,500,000 March 2025 Warrants issued during the March Public Offering, 1,755,543 warrants were exercised at $1.08 per share prior to June 30, 2025 for gross proceeds of $1.90 million before deducting placement agent fees.
Removed
This decrease was primarily driven by decreases in the fair value of the derivative liability offset by an increase in interest expense due to rate increases during 2023 on our variable rate debt under our agreements with Live Oak Bank.
Added
The remaining 2,744,457 warrants expired on May 19, 2025. On June 13, 2025, the Company closed on the public offering (the "June 2025 Public Offering") of 4,166,667 units ("Unit(s)") at a public offering price of $1.20 per Unit.
Removed
As of December 31, 2024, we had $12,005,048 of cash and cash equivalents on hand and unused borrowing capacity of $0 from our revolving line of credit.
Added
Each Unit consisted of one share of common stock and one warrant to purchase one share of common stock (the "June 2025 Warrants"). The June 2025 Warrants were immediately exercisable at $1.22 per share and expired 60 days from the date of issuance. The shares of common stock and June 2025 Warrants were immediately separable and issued separately.
Removed
During the fiscal year 2024, we undertook the following significant equity and debt transactions that enhanced our liquidity and sources of funds: • In January 2024, after filing a universal shelf registration statement on Form S-3 with the SEC in December of 2023 allowing us to issue additional equity (“Security Offering”), we raised net proceeds of approximately $2,200,000. • In February 2024, we used cash on hand to pay the outstanding principal and accrued interest owed on a note payable to Crom in the amount of $847,000. • In February 2024, we agreed with Emil Kaunitz to extend the maturity date of a $400,000 note payable from December 31, 2024, to August 1, 2025, after which we will make monthly principal payments of $50,000 per month for eight months. • In February 2024, we entered into a new $4,000,000 revolving credit facility with Live Oak Bank which matures on February 22, 2025 (the “New Live Oak Revolver”).
Added
Gross proceeds from the June 2025 Public Offering were approximately $5.0 million before deducting placement agent fees and offering expenses. Castellum intends to use the net proceeds of the June 2025 Public Offering for working capital and general corporate purposes.
Removed
The New Live Oak Revolver replaces the $2,000,000 Revolving Line of Credit , and we rolled over the $625,000 outstanding principal balance on the Revolving Line 33 Table of Contents of Credit and was advanced an additional amount of $904,793.
Added
Of the 4,166,667 June 2025 Warrants issued during the June Public Offering, 3,673,666 warrants were exercised at $1.22 per share prior to September 30, 2025 for gross proceeds of $4.48 million before deducting placement agent fees. The remaining 493,001 warrants expired on August 12, 2025.
Removed
We also made payments of $1,209,617 to the holders of two notes payable noted below. • In February 2024, we agreed with Robert Eisiminger to extend the maturity dates of two notes payable totaling $6,000,000 from September 30, 2024, to August 31, 2026.
Added
The following discussion should be read in conjunction with the audited consolidated financial statements and related notes included elsewhere in this document.
Removed
The change in the terms of the two notes resulted in the debt extinguishment of both the old notes and resulted in the establishment of one note totaling $6,000,000.
Added
Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 Year Ended December 31, Amount of Increase (Decrease) % Change 2025 2024 Revenues $ 52,866,001 $ 44,764,852 $ 8,101,149 18.1 % Cost of revenues 33,497,144 26,498,437 6,998,707 26.4 % Gross profit 19,368,857 18,266,415 1,102,442 6.0 % Operating expenses: Indirect costs 9,424,331 9,275,688 148,643 1.6 % Overhead 2,063,342 1,906,682 156,660 8.2 % General and administrative expenses 10,695,746 14,328,672 (3,632,926) (25.4) % Total operating expenses 22,183,419 25,511,042 (3,327,623) (13.0) % Loss from operations (2,814,562) (7,244,627) 4,430,065 (61.1) % Other income (expense) 624,250 (2,667,648) 3,291,898 123.4 % Loss before income taxes and preferred stock dividends (2,190,312) (9,912,275) 7,721,963 (77.9) % Income tax expense (207,980) (68,032) (139,948) 205.7 % Net loss (2,398,292) (9,980,307) 7,582,015 (76.0) % Preferred stock dividend 107,442 119,277 (11,835) (9.9) % Net loss to common shareholders $ (2,505,734) $ (10,099,584) $ 7,593,850 (75.2) % Revenue Total revenues increased by $8,101,149 or 18.1% to $52,866,001 for the year ended December 31, 2025 from $44,764,852 for the year ended December 31, 2024.
Removed
We also accessed the New Live Oak Revolver to pay off a third note totaling $400,000. • In February 2024, we agreed with the Buckhout Charitable Remainder Trust to pay down and amend a convertible promissory note payable. We accessed the New Live Oak Revolver to pay down principal of $809,617.
Added
This increase in revenue was driven primarily by the award in March 2024, to the Company's subsidiary, Global Technologies Management Resources, Inc.
Removed
We simultaneously agreed to enter into a new note payable in the principal amount of $2,400,000 which matures on August 31, 2026, and may not be converted into common stock.
Added
(“GTMR”) of a $103.3 million, five and one-half year contract for Special Missions Management of On-Site Services in support of the Naval Air Systems Command (“NAVAIR”) Program Office 290 (“PMA-290”) Special Missions which ramped up during 2025 and additional direct labor growth on existing contracts.
Removed
Commencing in September 2024, we began making monthly principal payments of $100,000 for 24 months. • In May 2024, the Company entered in to a program to self-insure some of its healthcare risk up to a certain limit, with the use of a stop loss policy.
Added
Cost of revenues Total cost of revenues increased by $6,998,707 or 26.4% to $33,497,144 for the year ended December 31, 2025 from $26,498,437 for the year ended December 31, 2024. This increase generally followed the growth in revenue; however, the percentage increase exceeded revenue growth primarily due to higher subcontractor and labor costs associated with the PMA-290 contract.
Removed
In June 2024, the Company made an equity investment of $54,533 in a captive insurance company. To mitigate risks, the Company created a reserve as of December 31, 2024, of $79,217 based on six months of claims data. Additionally, the Company has engaged with a third-party actuarial firm to assist in providing reports related to claims incurred but not reported.
Added
Operating expenses 29 Table of Contents Total operating expenses decreased by $(3,327,623) or (13.0)% to $22,183,419 for the year ended December 31, 2025 from $25,511,042 for the year ended December 31, 2024. The increase in indirect cost of $148,643 was driven primarily by the increase costs of medical insurance year over year, offset by a decrease in bonus expense.
Removed
Losses will be accrued based on the Company's historical claims experience and reports provided by the actuaries. • On July 8, 2024, we repaid the balance owed on the Term Loan Promissory Note Payable of $252,678, that was due to mature on August 11, 2024.
Added
The increase in overhead of $156,660 was primarily driven by an expected increase in office costs due to the additional labor force and the standard compensation adjustments for overhead labor.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

0 edited+3 added−3 removed1 unchanged
Removed
These risks include the following: Interest Rate Risk The Company maintains a revolving line of credit with Live Oak Bank. The Live Oak Bank line of credit is a variable rate instrument with a per annum interest rate equal to the prime rate as quoted in the Wall Street Journal (the “Prime Rate”), plus two percentage points (2.75%).
Added
These risks include the following: Interest Rate Risk The Company is exposed to interest rate risk primarily through its cash held with financial institutions. These balances are maintained in interest-bearing accounts, and as a result, changes in market interest rates may affect the amount of interest income earned.
Removed
Rising interest rates would increase our interest expense in the future. Such additional cost would need to be funded out of existing cash or additional financing. Future increase in interest rates are not expected to materially impact our Company’s liquidity.
Added
As of December 31, 2025, the Company had no outstanding debt, with the exception of the fixed rate Note Payable - Related Party (noted in Note 8 , under Part II, Item 8, of this Form 10-K) or other interest-bearing obligations and, therefore, is not exposed to interest rate risk related to borrowings.
Removed
The Company has no other debt obligations tied to the Prime Rate, Secured Overnight Financing Rate, or London Interbank Offered Rate. 37 Table of Contents
Added
Management believes that fluctuations in interest rates will not have a material adverse effect on the Company’s financial condition, results of operations, or cash flows. 36 Table of Contents

Other CTM 10-K year-over-year comparisons