Castellum, Inc. (CTM) - Q1 2026 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended March 31, 2026. Castellum, Inc. is a technology and solutions company focused on information technology, electronic warfare, information warfare, and cybersecurity, primarily serving the U.S. government. The Company operates as a single reporting segment and is classified as a smaller reporting company and an emerging growth company.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Revenue | $14,291,961 | $11,664,365 |
| Gross Profit | $5,062,220 | $4,554,616 |
| Gross Margin | 35.4% | 39.0% |
| Operating Loss | $(697,998) | $(1,486,007) |
| Net Loss | $(351,274) | $(1,170,047) |
| Net Loss to Common Shareholders | $(378,093) | $(1,197,031) |
| Cash from Operations | $1,290,696 | $(2,502,640) |
| Cash and Equivalents (End of Period) | $15,772,974 | $13,289,600 |
| Total Debt | $0 | $0 |
Note: Total debt is $0 as of March 31, 2026, following the repayment of a related party note and the prior closure of the revolving credit facility.
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased by 23% ($2.63 million) year-over-year, driven by the ramp-up of a $103.3 million contract with NAVAIR (awarded to subsidiary GTMR) and a $66.2 million contract with NAWCAD (awarded to subsidiary SSI).
- Profitability Improvement: Net loss decreased by 68% to $378,093. Operating loss improved by 53% to $697,998, primarily due to reduced non-cash stock-based compensation and lower G&A expenses.
- Cash Flow Turnaround: Operating cash flow swung from a use of $2.5 million in Q1 2025 to a generation of $1.29 million in Q1 2026, driven by improved collections on accounts receivable.
- Debt Reduction: The Company fully repaid a $400,000 related party note in February 2026. The revolving credit facility was closed in February 2025 with no outstanding balance.
Guidance, Outlook, and Risks
Backlog: Total scheduled backlog stands at $273.26 million as of March 31, 2026. This includes $22.4 million in funded backlog, $38.3 million in unfunded backlog, and $212.6 million in priced options. Management expects to recognize approximately 16% of remaining performance obligations over the next 12 months.
Liquidity: With $15.77 million in cash and no outstanding debt, management believes current resources are sufficient to meet working capital and operational needs for the next 12 months.
Risks and Contingencies:
- Government Funding: Significant exposure to U.S. government spending levels, continuing resolutions, and potential shutdowns. The Company notes recent government shutdowns in late 2025 and early 2026, though it currently holds no contracts with the Department of Homeland Security (DHS).
- Customer Concentration: Three customers (all U.S. government entities) represented 71% of revenue for the quarter and 73% of accounts receivable.
- Regulatory Environment: Risks related to the "One Big Beautiful Bill Act" (OBBBA) and potential changes in defense spending priorities or executive compensation limits under federal contracts.
Investor Verification Checklist
- Backlog Realization: Verify the convertibility of the $212.6 million in priced options and unfunded backlog into actual revenue, given the uncertainty of future government appropriations.
- Margin Compression: Monitor gross margin trends as the Company ramps up lower-margin subcontractor-heavy contracts (e.g., PMA-290).
- Customer Concentration: Assess the impact of potential funding cuts or contract terminations from the top three government customers who comprise the majority of revenue.
- Equity Dilution: Review the status of outstanding warrants (5.65 million shares) and options (13.07 million shares) which could impact future earnings per share.
- Derivative Liability: Confirm the valuation and potential volatility of the remaining $10,000 derivative liability associated with 2022 Crom Warrants.