Castellum, Inc. (CTM) - 10-K Summary for Fiscal Year Ended December 31, 2025
Business Context and Reporting Period
Company: Castellum, Inc.
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended December 31, 2025
Business Overview: Castellum is a technology services and solutions provider focused on cybersecurity, IT, electronic warfare, and information operations. The company primarily serves U.S. federal, state, and local government agencies, including the Department of Defense (DoD). Its strategy involves organic growth and strategic acquisitions to expand capabilities in defense and intelligence sectors.
Key Financial Metrics
| Metric | 2025 | 2024 | Change |
|---|---|---|---|
| Revenue | $52,866,001 | $44,764,852 | +18.1% |
| Gross Profit | $19,368,857 | $18,266,415 | +6.0% |
| Gross Margin | 36.6% | 40.8% | -4.2 pts |
| Operating Loss | $(2,814,562) | $(7,244,627) | Improved 61.1% |
| Net Loss | $(2,398,292) | $(9,980,307) | Improved 76.0% |
| Net Loss to Common Shareholders | $(2,505,734) | $(10,099,584) | Improved 75.2% |
| Cash and Restricted Cash | $14,884,778 | $12,255,048 | +21.5% |
| Total Debt | $400,000 | $10,050,000 | Significant Reduction |
| Contract Backlog (Total) | $258,194,285 | N/A | N/A |
Note: Total Debt in 2025 consists solely of a $400,000 related-party note. All other significant debt obligations were repaid during 2025.
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased by $8.1 million (18.1%), driven primarily by the ramp-up of a $103.3 million contract awarded in March 2024 to subsidiary Global Technologies Management Resources, Inc. (GTMR) for Special Missions support to the Naval Air Systems Command (NAVAIR).
- Margin Compression: While gross profit increased, the gross margin declined from 40.8% to 36.6%. This was attributed to higher subcontractor and labor costs associated with the new NAVAIR contract.
- Operating Expense Reduction: Total operating expenses decreased by 13.0% to $22.2 million. This was largely due to a $3.6 million decrease in General and Administrative (G&A) expenses, driven by a reduction in non-cash stock-based compensation ($3.1 million decrease) and lower depreciation.
- Debt Elimination: The company significantly improved its balance sheet by fully repaying its revolving credit facility with Live Oak Bank and extinguishing other notes payable, leaving only a $400,000 related-party note outstanding.
- Divestiture: The company sold its subsidiary, Mainnerve Federal Services, Inc. (MFSI), in September 2024, which impacted the 2024 comparison baseline.
Guidance, Outlook, and Risks
Management Commentary & Outlook: Management expects to recognize approximately 18% of remaining performance obligations over the next 12 months and 52% over the next 24 months. The company maintains a strong liquidity position with $14.9 million in cash, sufficient to meet working capital needs for the next 12 months. The company continues to pursue an acquisition strategy to expand capabilities and market share.
Key Risks and Contingencies:
- Government Funding Dependence: Substantially all revenue is derived from U.S. government contracts, which are subject to annual appropriations, potential shutdowns, and termination for convenience.
- Customer Concentration: Three customers represented 73% of total revenue in 2025.
- Profitability History: The company has an accumulated deficit of $56.6 million and expects to continue generating net losses in the near term.
- Capital Requirements: Future growth and acquisitions may require additional capital, potentially leading to dilution of common stockholders.
- Regulatory Compliance: Subject to strict regulations including the False Claims Act, CMMC certification requirements, and DCAA audits.
Investor Verification Checklist
- Backlog Realization: Verify the funded vs. unfunded portion of the $258 million backlog and the likelihood of option exercises given the current political budgetary environment.
- Debt Status: Confirm the repayment schedule for the remaining $400,000 related-party note and ensure no new debt has been incurred post-filing.
- Margin Trends: Monitor if the margin compression from the new NAVAIR contract stabilizes or if subcontractor costs continue to outpace revenue growth.
- Stock Dilution: Review the impact of outstanding warrants (5.65 million) and options (13.35 million) on future earnings per share.
- Customer Concentration: Assess the risk associated with the top three customers accounting for 73% of revenue and the potential impact of contract non-renewal.