Castellum (NYSE American: CTM) reports $28.2M H1 revenue and $271.7M backlog
Castellum, Inc. reported higher six‑month 2026 revenue of $28.2 million, up 10% from the prior‑year period, while remaining unprofitable with a six‑month net loss to common shareholders of $1.43 million. Second‑quarter revenue was $13.9 million, down 1% year over year, and the quarterly net loss widened to $1.05 million as higher subcontractor usage and operating costs pressured margins.
Cash increased to $16.9 million at June 30, 2026, with total liabilities of $5.9 million after repaying a $400,000 related‑party note and closing a prior revolving credit facility. A large contract backlog of $271.7 million and an estimated $953.5 million opportunity pipeline underscore revenue visibility, but three U.S. government customers accounted for 81% of revenue and 75% of receivables, leaving results highly dependent on federal budgets, continuing resolutions, and procurement timing.
Positive
- None.
Negative
- None.
Filing Explained
Existing holders face documented issuance capacity, not a completed 13-million-share issuance, alongside 86,189 ESPP shares already issued.
This Form 10-Q is the unaudited quarterly report for the quarter ended
The 86,189 issued shares increase the common-share count and therefore reduce an existing holder’s percentage ownership absent offsetting changes. The available plan shares do not yet change the share count because registration and availability do not establish issuance.
As of
If exercised, those options and warrants would result in additional common shares and corresponding potential dilution, but that exercise had not occurred in this filing. Future disclosures under the Third Amended 2021 Stock Incentive Plan and the warrant schedule will show whether the remaining capacity or instruments produce further issuances.
Key Figures
Revenue H1 2026: $28,156,637
Net loss to common H1 2026: $1,431,510
Cash balance: $16,865,160
+5 more
8 metrics
Revenue H1 2026
$28,156,637
Six months ended June 30, 2026; up 10% from $25,688,455 in 2025
Net loss to common H1 2026
$1,431,510
Six months ended June 30, 2026; compared with $1,545,958 in 2025
Cash balance
$16,865,160
Cash as of June 30, 2026 on the consolidated balance sheet
Total assets
$41,826,807
Total assets as of June 30, 2026
Total liabilities
$5,942,035
Total liabilities as of June 30, 2026, down from $6,150,047 at year-end 2025
Contract backlog
$271,748,334
Funded, unfunded, and priced options backlog as of June 30, 2026
Opportunity Pipeline
$953.5 million
Estimated value of qualified business opportunities as of June 30, 2026
Customer concentration
81% of revenue
Three U.S. government customers for six months ended June 30, 2026
Key Terms
Cost Plus Fixed Fee (CPFF), Firm-fixed-price (FFP), Time and materials (T&M), backlog, +2 more
6 terms
Cost Plus Fixed Fee (CPFF) financial
"The Company currently generates its revenue from three different types of contractual arrangements: cost plus fixed fee"
Firm-fixed-price (FFP) financial
"The Company currently generates its revenue from three different types of contractual arrangements: Cost Plus Fixed Fee, Fixed Firm Price"
A firm-fixed-price (FFP) contract sets a single, unchanging price for goods or services regardless of the contractor’s actual costs, so the seller absorbs any cost overruns while the buyer gets price certainty. For investors, FFP deals signal predictable revenue from the buyer side but higher execution risk for the seller’s profit margin—similar to agreeing to a fixed fee for a home renovation where the contractor must cover any unexpected extra costs.
Time and materials (T&M) financial
"The Company currently generates its revenue from three different types of contractual arrangements: Cost Plus Fixed Fee, Fixed Firm Price, and Time and Materials"
A time and materials (T&M) arrangement is a contracting method where a buyer pays a provider for the actual hours worked plus the cost of materials used, like paying a contractor by the hour plus parts. For investors, T&M matters because revenue and profits can vary with how many hours are needed and what materials cost, making cash flow and margin less predictable than fixed-price deals and exposing earnings to scope changes.
backlog financial
"As of June 30, 2026, the Company had a total backlog of $271,748,334 which includes funded, unfunded, and scheduled priced options"
A backlog is the amount of work or orders that a company has received but hasn't completed yet. It’s like a restaurant with many dishes to serve; the backlog shows how many orders are still waiting to be finished. It matters because a large backlog can indicate strong demand or potential delays in delivering products or services.
continuing resolution (CR) regulatory
"When appropriations are not enacted, government agencies operate under continuing resolutions ("CRs"), temporary measures that fund operations"
derivative liability financial
"The value of the 2022 Crom Warrants is reflected in Derivative Liability on the Consolidated Balance Sheets"
A derivative liability is an obligation a company owes because of a derivatives contract—such as an option, future, swap, or forward—that has moved against it and now has negative value. Think of it like a settled bet that turned into a bill: if market moves go the other way, the company may have to pay cash or deliver assets. Investors care because these liabilities can create sudden losses, add leverage or counterparty risk, and change a company’s true financial exposure beyond its everyday operations.
AI-generated analysis. How Rhea-AI works. Not financial advice.
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FAQ
How did Castellum (CTM) perform financially in Q2 and H1 2026?
Castellum generated $13.9M in Q2 2026 revenue and $28.2M for the first half, a 10% year‑over‑year increase. The company posted a Q2 net loss to common of $1.05M and a six‑month net loss to common of $1.43M, modestly better than 2025.
What is Castellum (CTM)'s contract backlog and opportunity pipeline?
As of June 30, 2026, Castellum reported contract backlog of $271.7M, including funded, unfunded, and priced options. Management also cited an estimated $953.5M Opportunity Pipeline representing potential revenue from qualified future contract pursuits based on base years and option periods.
What is Castellum (CTM)'s cash and debt position as of June 30, 2026?
Castellum ended June 30, 2026 with $16.9M in cash and total liabilities of $5.94M. A $400,000 related‑party note payable was fully repaid in February 2026, and a prior revolving credit facility was paid down and closed in early 2025, leaving no outstanding borrowings under those instruments.
Which contracts are driving Castellum (CTM)'s recent revenue growth?
Revenue growth is primarily driven by two large defense awards: a $103.3M, five‑and‑a‑half‑year Special Missions contract for NAVAIR PMA‑290 via GTMR and a $66.2M, five‑year logistics and cyber support contract for NAWCAD Lakehurst via SSI. Both awards began ramping in 2025 and continued contributing in 2026.
How concentrated is Castellum (CTM)'s customer base?
Customer concentration is high: for the six months ended June 30, 2026, three customers, all components of the U.S. government, represented 81% of revenue. The same three customers comprised 75% of accounts receivable at June 30, 2026, so changes in their spending could significantly affect results.
What contract types does Castellum (CTM) use with U.S. government clients?
Castellum primarily performs under Cost Plus Fixed Fee (CPFF), Firm‑Fixed‑Price (FFP), and Time‑and‑Materials (T&M) contracts. For the six months ended June 30, 2026, CPFF contracts produced $19.8M of revenue, T&M contracts $7.7M, and FFP contracts $0.6M, with most revenue recognized over time.
What are the main risks highlighted for Castellum (CTM) going forward?
Key risks include dependence on U.S. government spending, potential budget cuts, continuing resolutions, and shutdowns that can delay awards and funding. Additional risks are customer concentration, competition for contracts, inflationary pressure on labor costs, and complex regulatory and cybersecurity requirements affecting federal contractors.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended June 30, 2026
Or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from ___ to ___
Commission File Number: 001-41526
(Exact Name of Registrant as Specified in Charter)
| NEVADA | |||||
| (STATE OF INCORPORATION) | (I.R.S Employer I.D.) | ||||
(703 ) 752-6157
(Address and telephone number of principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer o | Accelerated filer o | ||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Class | Outstanding as of August 5, 2026 | ||||
| Common Stock, par value $0.0001 per share | |||||
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CASTELLUM, INC.
FORM 10-Q
For the Quarter Ended June 30, 2026
INDEX
PART I | 5 | ||||
Item 1. Unaudited Consolidated Financial Statements | 5 | ||||
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 20 | ||||
Item 3. Quantitative and Qualitative Disclosures About Market Risk | 29 | ||||
Item 4. Controls and Procedures | 29 | ||||
PART II | 31 | ||||
Item 1. Legal Proceedings | 31 | ||||
Item 1A. Risk Factors | 31 | ||||
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 31 | ||||
Item 3. Defaults Upon Senior Securities | 31 | ||||
Item 4. Mine Safety Disclosures | 31 | ||||
Item 5. Other Information | 31 | ||||
Item 6. Exhibits | 32 | ||||
Signatures | 35 | ||||
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Explanatory Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the “Securities Act,” and Section 21E of the Securities Exchange Act of 1934, as amended, or the “Exchange Act,” which statements involve substantial risks and uncertainties. These statements do not relate strictly to historical or current facts. Forward-looking statements involve risks and uncertainties and include statements regarding, among other things, our projected revenue growth and profitability, our growth strategies and opportunity, anticipated trends in our market and our anticipated needs for working capital. They are generally identifiable by use of the words “may,” “will,” “should,” “anticipate,” “estimate,” “plans,” “potential,” “projects,” “continuing,” “ongoing,” “expects,” “management believes,” “we believe,” “we intend,” or the negative of these words or other variations on these words or comparable terminology. In particular, these statements relate to future actions, prospective products and services, market acceptance, future performance or results of current and anticipated products and services, sales efforts, expenses, and the outcome of contingencies such as legal proceedings and financial results.
Examples of forward-looking statements in this Quarterly Report on Form 10-Q include, but are not limited to, our expectations regarding our business strategy, business prospects, operating results, operating expenses, working capital, liquidity, and capital expenditure requirements. Important assumptions relating to the forward-looking statements include, among others, assumptions regarding demand for our products and services, the cost, terms, and availability of components, pricing levels, the timing and cost of capital expenditures, competitive conditions, and general economic conditions. These statements are based on our management’s expectations, beliefs, and assumptions concerning future events affecting us, which in turn are based on currently available information. These assumptions could prove inaccurate. Although we believe that the estimates and projections reflected in the forward-looking statements are reasonable, our expectations may prove to be incorrect.
Important factors that could cause actual results to differ materially from the results and events anticipated or implied by such forward-looking statements include, but are not limited to:
•overall levels of government spending on defense spending and spending on IT services, significant delays or reductions in appropriations for our programs or United States ("U.S.") government funding more broadly, including a prolonged continuing resolution, government shutdown, or breach of the debt ceiling, as well as the potential imposition of sequestration in the absence of an approved budget or continuing resolution;
•changes in political, economic, or regulatory conditions generally and in the markets in which we operate, and more specifically, the lingering effects on federal procurement processes resulting from the initiatives of the U.S. DOGE Service Temporary Organization, which formally terminated on July 4, 2026, including changes to agency staffing levels, contract and grant terminations, and modifications to acquisition and procurement procedures implemented across federal agencies during its operation, any of which could continue to affect the timing, scope, or award of government contracts;
•potential future net income losses and growth trajectory;
•our ability to retain and attract senior management and other employees with suitable experience leading a public company;
•our ability to attract, retain, and develop highly qualified personnel who possess the necessary security clearances to support the specialized and sensitive nature of our work;
•our ability to raise additional capital on acceptable terms;
•our ongoing relationships with government entities, agencies, and teaming partners;
•our ability to win new contracts amidst increased levels of competition in contract bidding process;
•delays due to the appropriation process, change in the procurement process, and audits or cost adjustments to our contracts;
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•our ability to successfully develop or commercialize new products and partner with companies that have complementary products and to successfully develop these offerings;
•our inability to receive full amounts authorized, or ongoing lack of funding, for contracts in our backlog;
•potential systems failures, security breaches, or the inability of Company employees to obtain required clearances;
•our ability successfully to execute additional acquisitions and integrate those operations into our ongoing businesses; and
•the volatility of our common stock share price.
We operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict all of those risks, nor can we assess the impact of all of those risks on our business or the extent to which any factor may cause actual results to differ materially from those contained in any forward-looking statement. The forward-looking statements in this Quarterly Report on Form 10-Q are based on assumptions management believes are reasonable. However, due to the uncertainties associated with forward-looking statements, you should not place undue reliance on any forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and unless required by law, we expressly disclaim any obligation or undertaking to publicly update any of them in light of new information, future events, or otherwise.
In this Quarterly Report on Form 10-Q, unless the context otherwise requires, all references to the “Company,” “our Company,” “we,” “our,” “us,” and “Castellum,” refer to Castellum, Inc., a Nevada corporation, and its wholly owned subsidiaries.
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Part I
Item 1. Unaudited Consolidated Financial Statements
Castellum, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
| June 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Current Assets: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounts receivable, net | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Contract asset | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Due from buyer | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Prepaid income taxes | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Prepaid expenses and other current assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total current assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fixed assets, net | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-Current Assets: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Due from buyer, net of current portion | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Right of use asset - operating lease | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment in joint ventures/captive insurance entity | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Intangible assets, net | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total non-current assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Assets | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities and Stockholders' Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Current Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounts payable and accrued expenses | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Accrued payroll and payroll related expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Current portion of lease liability – operating leases | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative liability | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes payable, related party | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total current liabilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-Current Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lease liability – operating leases, net of current portion | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total non-current liabilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Liabilities | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders' Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock, | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Series A Preferred stock, par value $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Series C Preferred stock, par value $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock, par value, $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Additional paid in capital | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated deficit | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Total stockholders' equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Liabilities and Stockholders' Equity | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||
See notes to unaudited consolidated financial statements.
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Castellum, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| Revenues | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
| Cost of Revenues | |||||||||||||||||||||||||||||||||||||||||||||||
| Gross Profit | |||||||||||||||||||||||||||||||||||||||||||||||
| Operating Expenses | |||||||||||||||||||||||||||||||||||||||||||||||
| Indirect costs | |||||||||||||||||||||||||||||||||||||||||||||||
| Overhead | |||||||||||||||||||||||||||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||||||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||||||||||||||||||||||||||
| Loss From Operations Before Other Income | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
| Other Income (Expense) | |||||||||||||||||||||||||||||||||||||||||||||||
| Gain from change in fair value of derivative liability | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest income (expense), net | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Total other income (expense) | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Loss Before Income Taxes and Preferred Stock Dividends | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
| Income tax (expense) benefit | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Net Loss | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
| Less: preferred stock dividends | |||||||||||||||||||||||||||||||||||||||||||||||
| Net Loss To Common Shareholders | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||||||||||||||
| Net Loss Per Share - Basic And Diluted | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||||||
| Weighted Average Shares Outstanding - Basic And Diluted | |||||||||||||||||||||||||||||||||||||||||||||||
See notes to unaudited consolidated financial statements.
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Castellum, Inc. and Subsidiaries
Consolidated Statement of Changes in Stockholders' Equity
(Unaudited)
| Series A Preferred | Series B Preferred | Series C Preferred | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance - December 31, 2024 | $ | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation - options | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock options exercised | — | — | — | — | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sale of common stock, net of filing fees | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Warrants exercised | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred stock conversion to common stock | — | — | — | — | ( | ( | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss for the period | — | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance - March 31, 2025 | $ | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation - options | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock options exercised | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sale of common stock, net of filing fees | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Warrants exercised | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance sheet reclassification adjustment | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss for the period | — | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance - June 30, 2025 | $ | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance - December 31, 2025 | $ | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation - options | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss for the period | — | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance - March 31, 2026 | $ | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation - options | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Employee stock purchase plan | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss for the period | — | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance - June 30, 2026 | $ | $ | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
See notes to unaudited consolidated financial statements.
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Castellum, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2026 and 2025
(Unaudited)
| 2026 | 2025 | ||||||||||
| Cash Flow From Operating Activities | |||||||||||
| Net loss before preferred stock dividends | $ | ( | $ | ( | |||||||
| Adjustments to reconcile net loss to net cash provided (used in) by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Stock-based compensation | |||||||||||
| Settlement of stock compensation in cash | ( | ||||||||||
| Lease cost | ( | ||||||||||
| Change in fair value of derivative liability | ( | ( | |||||||||
| Changes in assets and liabilities | |||||||||||
| Accounts receivable | ( | ||||||||||
| Prepaid expenses and other current assets | ( | ( | |||||||||
| Contract asset | ( | ||||||||||
| Accounts payable and accrued expenses | |||||||||||
| Lease liability | ( | ||||||||||
| Net cash provided by (used in) operating activities | ( | ||||||||||
| Cash Flows From Investing Activities | |||||||||||
| Sale of subsidiary, cash received from buyer | |||||||||||
| Purchases of fixed assets | ( | ( | |||||||||
| Net cash provided by (used in) investing activities | ( | ||||||||||
| Cash Flows From Financing Activities | |||||||||||
| Payment of revolving line of credit | ( | ||||||||||
| Payment of debt issuance costs | ( | ||||||||||
| Proceeds from issuance of common stock, prefunded warrants and regular warrants, net of issuance costs | |||||||||||
| Proceeds from issuance of common stock under employee stock plans | |||||||||||
| Preferred stock dividend | ( | ( | |||||||||
| Repayment of amounts due to seller | ( | ||||||||||
| Repayment of convertible note payable - related party | ( | ||||||||||
| Repayment of note payable | ( | ||||||||||
| Net cash (used in) provided by financing activities | ( | ||||||||||
| Net increase in cash | |||||||||||
| Cash - Beginning of Period | |||||||||||
| Cash - End of Period | $ | $ | |||||||||
| Supplemental Disclosures | |||||||||||
| Cash paid for interest expense | $ | $ | |||||||||
| Cash paid for income taxes | $ | $ | |||||||||
See notes to unaudited consolidated financial statements.
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Castellum, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2026 and 2025
Note 1: Nature of Operations
Castellum, Inc. (the “Company”) is focused on building a large, successful technology company in the areas of information technology, electronic warfare, information warfare and cybersecurity with businesses in the governmental and commercial markets. Services include intelligence analysis, software development, software engineering, program management, strategic planning, information assurance and cybersecurity and policy along with analysis support. These services, which largely focus on securing data and establishing related policies, are applicable to customers in the federal government, financial services, healthcare, and other users of large data applications. The services can be delivered to legacy, customer owned networks, or customers who rely upon cloud-based infrastructures. The Company is actively working with business brokers and contacts within their business network to identify potential acquisitions.
Since November 2019, the Company has made the following acquisitions that specialize in the areas noted above:
•Corvus Consulting, LLC (“Corvus”),
•Mainnerve Federal Services, Inc. dba MFSI Government Group (“MFSI"),
•Merrison Technologies, LLC ("Merrison"),
•Specialty Systems, Inc. (“SSI”),
•the business assets of Pax River from The Albers Group (“Pax River”),
•Lexington Solutions Group, LLC (“LSG”), and
•Global Technology and Management Resources, Inc. ("GTMR").
Note 2: Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements, including the notes, include the accounts of the Company and its wholly-owned subsidiaries and have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") and the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). All intercompany balances and transactions have been eliminated in consolidation.
Basis of Presentation for Interim Periods
Certain information and footnote disclosures normally included for the annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted for the interim periods presented. We believe that the unaudited interim financial statements include all adjustments (which are normal and recurring in nature) necessary to present fairly our financial position and the results of operations and cash flows for the periods presented.
The results of operations for the interim periods presented are not necessarily indicative of results that may be expected for the year or future periods. The financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto for the year ended December 31, 2025, included in our Annual Report on Form 10-K for the year then ended. We have continued to follow the accounting policies set forth in those financial statements.
Business Segments
Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. The Company’s CODM, the Chief Executive Officer, reviews consolidated results of operations to make decisions. The Company maintains one
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Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition
The Company accounts for revenue in accordance with ASC 606, Revenue from Contracts with Customers ("ASC 606"). The Company accounts for a contract with a customer that is within the scope of this Topic only when the five steps of revenue recognition under ASC 606 are met. The five core principles will be evaluated for each service provided by the Company and is further supported by applicable guidance in ASC 606 to support the Company’s recognition of revenue.
Revenue is derived primarily from services provided to the Federal government. The Company enters into agreements with customers that create enforceable rights and obligations and for which it is probable that the Company will collect the consideration to which it will be entitled as services and solutions are transferred to the customer. The Company also evaluates whether two or more agreements should be accounted for as one single contract.
When determining the total transaction price, the Company identifies both fixed and variable consideration elements within the contract. The Company estimates variable consideration as the most likely amount to which the Company expects to be entitled, limited to the extent that it is probable that a significant reversal will not occur in a subsequent period.
At contract inception, the Company determines whether the goods or services to be provided are to be accounted for as a single performance obligation or as multiple performance obligations. For most contracts, the customers require the Company to perform several tasks in providing an integrated output and, hence, each of these contracts are deemed as having only one performance obligation. When contracts are separated into multiple performance obligations, the Company allocates the total transaction price to each performance obligation based on the estimated relative standalone selling prices of the promised services underlying each performance obligation.
This evaluation requires professional judgment, and it may impact the timing and pattern of revenue recognition. If multiple performance obligations are identified, the Company generally uses the cost plus a margin approach to determine the relative standalone selling price of each performance obligation. The Company does not assess whether a contract contains a significant financing component if the Company expects, at contract inception, that the period between when payment by the client and the transfer of promised services to the client occur will be less than one year.
The Company currently generates its revenue from three different types of contractual arrangements: cost plus fixed fee (“CPFF”), firm-fixed-price (“FFP”), and time-and-materials (“T&M”) contracts. The Company generally recognizes revenue over time as control is transferred to the customer, based on the extent of progress towards satisfaction of the performance obligation. The selection of the method used to measure progress requires judgment and is dependent on the contract type and the nature of the goods or services to be provided.
For CPFF contracts, the Company uses input progress measures to derive revenue based on hours worked on contract performance as follows: direct costs plus Defense Contract Audit Agency (“DCAA”) approved provisional burdens plus a fee. The provisional indirect rates are adjusted and billed at actual at year end. Revenue from FFP contracts is generally recognized ratably over the contract term, using a time-based measure of progress, even if billing is based on other metrics or milestones, including specific deliverables. Certain FFP contracts require the use of an input method based on estimated costs to complete. For T&M contracts, the Company uses 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.
These arrangements generally qualify for the “right-to-invoice” practical expedient where revenue is recognized in proportion to billable consideration. FFP level-of-effort contracts are substantially similar to T&M contracts except that the Company is required to deliver a specified level-of-effort over a stated period. For these contracts, the Company estimates revenue earned using contract hours worked at negotiated bill rates as the Company delivers the contractually required services.
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Revenue generated by contract support service contracts is recognized over time as services are provided, based on the transfer of control to the customer. Revenue generated by FFP contracts is recognized over time as performance obligations are satisfied, based on the transfer of control to the customer, using an input method based on labor hours and costs incurred relative to total estimated costs. Most contracts do not contain variable consideration and contract modifications are generally minimal. For these reasons, there is not a significant impact of electing these transition practical expedients.
Revenue generated from contracts with Federal, state, and local governments is recorded over time, rather than at a point in time. Under contract support services contracts, the Company performs software design work as it is assigned by the customer, and bills the customer, generally semi-monthly, on either a CPFF or T&M basis, as labor hours are expended. Certain other government contracts for software development have specific deliverables and are structured as FFP contracts, which are generally billed as the performance obligations under the contract are met. Revenue recognition under FFP contracts requires judgment to allocate the transaction price to the performance obligations. Contracts may have terms of up to five years .
Contract accounting requires judgment relative to assessing risks and estimating contract revenue, as well as costs and assumptions for schedule and technical issues. Due to the size and nature of contracts, estimates of revenue and costs are subject to a number of variables. For contract change orders, claims, or similar items, judgment is required for estimating the amounts, assessing the potential for realization and determining whether realization is probable. Estimates of total contract revenue and costs are continuously monitored during the term of the contract and are subject to revision as the contract progresses. From time to time, facts develop that require revisions of revenue recognized or cost estimates. To the extent that a revised estimate affects the current or an earlier period, the cumulative effect of the revision is recognized in the period in which the facts requiring the revision become known.
The Company accounts for contract costs in accordance with the ASC 340-40, Other Assets and Deferred Costs - Contracts with Customers. The Company recognizes the cost of sales of a contract as an expense when incurred or at the time a performance obligation is satisfied. The Company recognizes an asset from the costs to fulfill a contract only if the costs relate directly to a contract, the costs generate or enhance resources that will be used in satisfying a performance obligation in the future, and the costs are expected to be recovered. The incremental costs of obtaining a contract are capitalized unless the costs would have been incurred regardless of whether the contract was obtained.
The following table disaggregates the Company’s revenue by contract type for the six months ended June 30:
| 2026 | 2025 | ||||||||||
| Revenue: | |||||||||||
| Time and material | $ | $ | |||||||||
| Firm fixed price | |||||||||||
| Cost plus fixed fee | |||||||||||
| Total | $ | $ | |||||||||
Accounting for Income Taxes
Income taxes are accounted for under the asset and liability method. We estimate our income taxes in each of the jurisdictions where the Company operates. This process involves estimating our current tax expense or benefit together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included in our consolidated balance sheets. 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. When assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some or all of the deferred tax assets will not be realized. In making this assessment, we consider the availability of loss carryforwards, projected reversals of deferred tax liabilities, projected future taxable income, and ongoing prudent and feasible tax planning strategies.
We are subject to income taxes in the federal and state tax jurisdictions based upon our business operations in those jurisdictions. Significant judgment is required in evaluating uncertain tax positions. The Company accounts for income taxes under ASC Topic 740, Income Taxes ("ASC 740"). We record uncertain tax positions in accordance with ASC 740-10 on the basis of a two-step process whereby (1) we determine whether it is more likely than not that the tax positions
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will be sustained based on the technical merits of the position, and (2) with respect to those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is greater than 50% likely to be realized upon ultimate settlement with the related tax authority. Management evaluates its tax positions on a quarterly basis.
The Company files income tax returns in the U.S. federal tax jurisdiction and various state tax jurisdictions. 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.
One Big Beautiful Bill Act On July 4, 2025, H.R.1, commonly referred to as the One Big Beautiful Bill Act ("OBBBA"), was enacted in the U.S. which includes a broad range of tax reform provisions, including extending and modifying certain key Tax Cuts and Jobs Act provisions (both domestic and international), and provisions allowing accelerated tax deductions for qualified property and research expenditures. The legislation has multiple effective dates, with certain provisions effective in 2025 and others to be implemented through 2027. The legislation's enactment did not materially impact our effective income tax rate or cash tax position.
The Company accounts for income taxes under ASC 740. ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized. ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an entity's unaudited condensed financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Based on the Company's evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company's unaudited condensed financial statements.
Recent Accounting Pronouncements
In September 2025, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2025-06, which makes targeted updates to the accounting and disclosure requirements for internal-use software under Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40). The standard becomes effective for the Company beginning in fiscal year 2029, including interim periods, and permits either prospective or retrospective adoption. We are currently assessing the impact on our financial statements.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires public business entities to disclose disaggregated information about specific categories of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) within relevant income statement expense captions, in interim and annual reporting periods. In January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. As clarified, the standard is effective for the Company for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The amendments may be applied either prospectively or retrospectively. We are currently assessing the impact on our financial statements and disclosures.
Other accounting standards updates adopted and/or issued, but not effective until after June 30, 2026, are not expected to have a material effect on the Company’s consolidated financial position, annual results of operations, and/or cash flows.
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Note 3: Fixed Assets
Fixed assets consisted of the following as of June 30, 2026, and December 31, 2025:
| June 30, 2026 | December 31, 2025 | ||||||||||
| Equipment and software | $ | $ | |||||||||
| Furniture | |||||||||||
| Automobiles | |||||||||||
| Leasehold improvements | |||||||||||
| Total fixed assets | |||||||||||
| Accumulated depreciation | ( | ( | |||||||||
| Fixed assets, net | $ | $ | |||||||||
Depreciation expense for the three and six months ended June 30, 2026, was $19,800 and $40,244 , respectively, and depreciation expense for the three and six months ended June 30, 2025, was $16,489 and $39,139 , respectively.
Note 4: Intangible Assets and Goodwill
Intangible assets consisted of the following as of June 30, 2026, and December 31, 2025:
| June 30, 2026 | December 31, 2025 | ||||||||||||||||
| Customer relationships | $ | $ | |||||||||||||||
| Tradename | |||||||||||||||||
| Trademark | |||||||||||||||||
| Backlog | |||||||||||||||||
| Non-compete agreement | |||||||||||||||||
| Accumulated amortization | ( | ( | |||||||||||||||
| Intangible assets, net | $ | $ | |||||||||||||||
The intangible assets with the exception of the trademarks were recorded as part of the acquisitions of Corvus, Merrison, SSI, LSG, and GTMR. Amortization expense for the three and six months ended June 30, 2026 was $304,546 and $609,092 , respectively, and amortization expense for the three and six months ended June 30, 2025 was $355,537 and $711,074 , respectively. The intangible assets are being amortized based on the estimated future lives as noted above.
Future amortization of the intangible assets for the next five years as of June 30 is as follows:
| Remainder of the year ending December 31, 2026 | $ | ||||
| Year ending 2027 | |||||
| Year ending 2028 | |||||
| Year ending 2029 | |||||
| Year ending 2030 | |||||
| Year ending 2031 and thereafter | |||||
| Total | $ | ||||
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The goodwill rollforward for the six months ended June 30, 2026, reflects no changes, as follows:
| Corvus | SSI | Total | |||||||||||||||||||||
| December 31, 2025 | $ | $ | $ | ||||||||||||||||||||
| June 30, 2026 | $ | $ | $ | ||||||||||||||||||||
Note 5: Notes Payable
There was no notes payable activity during the six months ended June 30, 2026.
Interest expense for the three and six months ended June 30, 2026 was $— and $— , respectively, and $126,110 and $279,918 for the three and six months ended June 30, 2025, respectively. There was no
Note 6: Note Payable – Related Party
The Company entered into a note payable with a related party in August 2021 with balances as of June 30, 2026 and December 31, 2025, as follows:
| June 30, 2026 | December 31, 2025 | ||||||||||
Note payable at | $ | $ | |||||||||
On February 11, 2026, the Company fully repaid the $400,000 note payable with the related party.
Interest expense for the three and six months ended June 30, 2026 was $2,301 and $2,301 , respectively, compared to $4,986 and $9,918 for the three and six months ended June 30, 2025, respectively.
Note 7: Revolving Credit Facility
On April 4, 2022, the Company obtained a $950,000 revolving credit facility with Live Oak Banking Company (“Live Oak Bank”), maturing March 28, 2029. On February 22, 2024, the Company replaced this facility with a new $4,000,000 revolving credit facility maturing February 22, 2025 ("New Live Oak Revolver"). The outstanding balance of approximately $625,000 was rolled over, and an additional $904,793 was advanced. As of December 31, 2025, $0 was outstanding under the new facility.
Effective August 15, 2024, the Company amended the New Live Oak Revolver, requiring a $250,000 collateral account, increasing borrowing base reporting to twice monthly, and reducing borrowing capacity from $4,000,000 to $2,000,000 . On February 13, 2025, the Company fully repaid the $1,999,944 balance plus interest, after which the line of credit was closed and the restricted cash released. No obligations remain under the facility.
Interest expense for the six months ended June 30, 2026 and 2025, was $— and $28,658 , respectively.
Note 8: Stockholders’ Equity
Preferred Stock
The Company has 50,000,000 shares of preferred stock authorized. The Company has designated a Series A Preferred Stock, a Series B Preferred Stock, and a Series C Preferred Stock.
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Series A Preferred Stock
The Company has designated 10,000,000 shares of Series A Preferred Stock, par value of $0.0001 . As of June 30, 2026 and December 31, 2025, the Company has 5,875,000 587,500 shares of the Company's common stock.
For the six months ended June 30, 2026 and 2025, the Company recognized $36,539 and $36,539 , respectively, in Series A dividends, all of which have been paid as of June 30, 2026.
Series B Preferred Stock
The Company has designated 10,000,000 shares of Series B Preferred Stock, par value of $0.0001 . As of June 30, 2026 and December 31, 2025, the Company has 0
Series C Preferred Stock
The Company has designated 10,000,000 shares of Series C Preferred Stock, par value of $0.0001 . As of June 30, 2026, the Company has 570,000 356,250 shares of the Company's common stock. As of December 31, 2025, the Company had 570,000
For the six months ended June 30, 2026 and 2025, the Company recognized $17,100 and $17,265 in Series C dividends, all of which have been paid as of June 30, 2026.
Common Stock
The Company has 3,000,000,000 shares of common stock, par value $0.0001 authorized. The Company has 94,698,939 94,612,750
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 ("ESPP"). 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. 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. 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. During the six months ended June 30, 2026, 86,189 shares of common stock were issued.
On June 1, 2026, the Company filed a registration statement on Form S-8 (File No.333-296389) to register an additional 4,000,000 shares of common stock for issuance under the Castellum, Inc. Third Amended 2021 Stock Incentive Plan. Following this filing, a total of 13,000,000 shares of common stock are registered and available for issuance under the plan.
Warrants
As of June 30, 2026, the Company had 5,653,981 warrants outstanding and exercisable, which were granted to officers, directors, and an investor of the Company between 2019 and 2023 and remain outstanding under their original terms. There was no warrant issuance, exercise, expiration, or cancellation activity during the six months ended June 30, 2026.
Separately, in 2024 the Company issued warrants in a private transaction, all of which were fully exercised in 2025. The Company also issued warrants in connection with registered offerings completed in the first half of 2025, all of which were either exercised or expired prior to December 31, 2025. No warrants from either of these transactions remained outstanding as of December 31, 2025. See Note 11 to the Company's Annual Report on Form 10-K for the year ended December 31, 2025, for additional information regarding these warrants.
The following table represents a summary of warrants for the six months ended June 30, 2026 and the year ended December 31, 2025:
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| Six Months Ended June 30, 2026 | Year Ended December 31, 2025 | ||||||||||||||||||||||
| Number | Weighted Average Exercise Price | Number | Weighted Average Exercise Price | ||||||||||||||||||||
| Beginning balance | $ | $ | |||||||||||||||||||||
| Granted | |||||||||||||||||||||||
| Exercised | ( | ||||||||||||||||||||||
| Expired | ( | ||||||||||||||||||||||
| Ending balance | $ | $ | |||||||||||||||||||||
| Warrants exercisable | |||||||||||||||||||||||
| Intrinsic value of warrants | $ | $ | |||||||||||||||||||||
| Weighted Average Remaining Contractual Life (Years) | |||||||||||||||||||||||
Options
On November 9, 2021, the Company approved the 2021 Stock Incentive Plan ("Stock Incentive Plan") that authorized the Company to issue up to 2,500,000 shares of common stock. Prior to this date, the granting of options was not done pursuant to the terms of a stock incentive plan. On November 9, 2023 the Board approved an amendment to the Stock Incentive Plan to increase the aggregate number of shares available for issuance from 2,500,000 to 6,000,000 (the "Amended Plan"), which was approved by the Company's shareholders at its annual meeting on May 29, 2024.
On March 11, 2025, the Board approved an amendment to the Amended Plan to further increase the aggregate number of shares available for issuance from 6,000,000 to 9,000,000 (the "Second Plan Amendment" and the "Second Amended Plan"), which was approved by the Company's stockholders at the Company's 2025 annual meeting of stockholders held on May 28, 2025. On March 6, 2026 the Board approved an additional amendment to the Second Amended Plan to increase the aggregate number of shares available for issuance by 4,000,000 shares (the "Third Plan Amendment" and the "Third Amended Plan"), resulting in an aggregate of 13,000,000 shares available for issuance under the Third Amended Plan, which was approved by the Company's stockholders at the Company's 2026 annual meeting of stockholders held on May 19, 2026. As of June 30, 2026, 8,212,500 stock options have been granted under the Third Amended Plan.
The following represents a summary of options granted under the terms of the Amended Plan and additional options granted outside of the Amended Plan, for the six months ended June 30, 2026 and the year ended December 31, 2025:
| Number | Weighted Average Exercise Price | Weighted-Average Remaining Contractual Term (in Years) | Weighted Average Fair Value | ||||||||||||||||||||
| Outstanding December 31, 2025 | $ | $ | |||||||||||||||||||||
| Granted | |||||||||||||||||||||||
| Exercised | |||||||||||||||||||||||
| Forfeited | ( | 0 | |||||||||||||||||||||
| Outstanding June 30, 2026 | $ | $ | |||||||||||||||||||||
| As of June 30, 2026 | |||||||||||||||||||||||
| Vested and exercisable | $ | $ | |||||||||||||||||||||
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During the six months ended June 30, 2026, the Company recognized $1,524,320 of noncash stock-based compensation related to the vesting of service-based stock options and the discount on the ESPP. No options were exercised during the six months ended June 30, 2026.
The fair value of each option is estimated using the Black-Scholes valuation model. Changes to these inputs could produce a significantly higher or lower fair value measurement. The following assumptions were used for the year ended December 31, 2025, no options were granted during three months ended June 30, 2026:
| Year Ended December 31, 2025 | |||||||||||
| Expected term | |||||||||||
| Expected volatility | |||||||||||
| Expected dividend yield | |||||||||||
| Risk-free interest rate | |||||||||||
Note 9: Fair Value
Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. U.S. GAAP sets forth a three-level fair value hierarchy, which prioritizes the inputs used in measuring fair value. The three levels are as follows:
Level 1 – defined as observable inputs, such as quoted market prices in active markets.
Level 2 – defined as inputs other than quoted prices in active markets that are either directly or indirectly observable.
Level 3 – defined as unobservable inputs in which little or no market data exists, therefore, requiring an entity to develop its own assumptions.
Our financial assets and liabilities subject to the three-level fair value hierarchy consist principally of cash, accounts receivable, accounts payable, contingent consideration, and derivative liabilities. The estimated fair value of cash and cash equivalents, accounts receivable, and accounts payable approximates their carrying value.
On April 4, 2022, the Company issued common stock, a convertible note, and warrants pursuant to a Stock Purchase Agreement ("SPA") with Crom (respectively, the "2022 Crom Note", the "2022 Crom Warrants, and the “2022 Crom SPA”). The Company had evaluated the conversion option liability in the 2022 Crom Note and the 2022 Crom Warrant to determine proper accounting treatment and determined them to be derivative liabilities (the "Derivative Liabilities").
On February 13, 2023, the 2022 Crom SPA was terminated through an induced conversion thereby extinguishing the conversion option liability associated with the 2022 Crom Note; the 2022 Crom Warrants were not affected. Refer to Note 8, “Stockholders’ Equity”, for more detail.
The Company recognized a liability for the estimated fair value of the 2022 Crom Warrants. The estimated fair value of the liability was calculated using a binomial pricing model with key input variables by an independent third party, as of the date of issuance, with changes in fair value recorded as gains or losses on revaluation in other income (expense). The Company determined that the significant inputs used to value the 2022 Crom Warrants fall within Level 3 of the fair value hierarchy. The value of the 2022 Crom Warrants is reflected in Derivative Liability on the Consolidated Balance Sheets.
On September 11, 2024, the Company entered into a stock purchase agreement with Lead-Risk Millenia, LLC for the sale of its subsidiary, MFSI (the "MFSI Divestiture"). In connection with the divestiture of MFSI, Management estimated the present value of future consideration to be received, using a probability-weighted analysis to determine the amount of the receivable and applying a discount rate that captures the risks associated with the duration of the consideration. The Company determined that the significant inputs used to value the Anticipated Receivable fall within Level 3 of the fair value hierarchy. The balance of the Anticipated Receivable is reflected in Due from Buyer on the Consolidated Balance Sheets.
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The following tables present the Company's financial instruments that are measured at fair value on a recurring basis:
| Fair Value Measurements at June 30, 2026 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Anticipated Receivable | $ | $ | $ | $ | |||||||||||||||||||
| 2022 Crom Warrants | $ | $ | $ | $ | |||||||||||||||||||
| Fair Value Measurements at December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||||||||||||||||||
| Anticipated Receivable | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||
| 2022 Crom Warrants | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||
Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of the 2022 Crom Warrants is estimated using a binomial valuation model. The following assumptions were used for the period as follows:
| June 30, 2026 | |||||
| Expected term - warrants | |||||
| Stock price as of measurement date | $ | ||||
| Volatility (observed) | |||||
| Incremental discount | % | ||||
| Selected volatility – post haircut | |||||
| Risk-free interest rate | |||||
Note 10: Defined Contribution Plan
Note 11: Concentrations
Concentration of Credit Risk. The Company’s customer base is concentrated with a relatively small number of customers. The Company does not generally require collateral or other security to support accounts receivable. To reduce credit risk, the Company performs ongoing credit evaluations on its customers’ financial condition. The Company establishes allowance for credit losses based upon factors surrounding the credit risk of customers, historical trends, and other information.
For the six months ended June 30, 2026 and 2025, the Company had three customers (all parts of the U.S. government) representing 81 % and 70 % of revenue earned, respectively. Any customer that represents 10% or greater of total revenue represents a risk. The Company also has three customers (all parts of the U.S. government) that represent 75 % and 65 % of the total accounts receivable as of June 30, 2026, and December 31, 2025, respectively.
Note 12: Income Taxes
The Company's quarterly provision for income taxes is measured using an estimated annual effective tax rate adjusted for discrete items that occur within the quarter. The effective income tax rate was (3.73 )% and 19.04 % for the three months
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Note 13: Subsequent Events
Subsequent to the quarter ended June 30, 2026, the Company amended the terms of the employment agreement dated July 1, 2024 by and between the Company and its President and Chief Executive Officer, Glen R. Ives, to among other things extend the term for an eighteen month period, expiring on December 31, 2027. The amended terms provided for an increase to base salary, terms for bonus amounts, and a grant of stock options effective July 1, 2026. This arrangement was previously disclosed in the Company's Current Report on Form 8-K filed on July 2, 2026. The agreement did not have a material impact on the Company's financial position as of the balance sheet date.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations is provided to enhance the understanding of, and should be read together with, our financial statements and related notes included in our Annual Report on Form 10-K for fiscal year 2025 filed with the Securities and Exchange Commission ("SEC") on March 9, 2026 and elsewhere in this Quarterly Report on Form 10-Q, as applicable.
Business Overview
Castellum, Inc. is a technology and solutions company focused on leveraging the power of information technology to help solve the nation’s most pressing national security challenges. The Company provides 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”). 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. The Company is actively working with business brokers and contacts within their business network to identify potential acquisitions.
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. Because of our executive officers’ and key managers’ prior experience growing businesses organically, we believe that we are well positioned to grow our existing business via internal growth as well. The Company has developed a qualified business opportunity (the “Opportunity Pipeline”). 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 $953.5 million as of June 30, 2026. 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.
Recent Developments
On June 1, 2026, the Company filed a registration statement on Form S-8 (File No.333-296389) to register an additional 4,000,000 shares of common stock for issuance under the Castellum, Inc. Third Amended 2021 Stock Incentive Plan. Following the filing, a total of 13,000,000 shares of common stock are registered and available for issuance under the plan.
Business Operations and Trends
We believe that the following trends and developments in the USG services industry and our markets may influence our future results of operations:
•budget deficits and the growing U.S. national debt increasing pressure on the USG to reduce federal spending across all federal agencies together with associated uncertainty about the size and timing of those reductions;
•cost-cutting and efficiency initiatives, current and future budget restrictions, and other efforts to reduce USG spending could cause clients to reduce or delay funding for orders for services or invest appropriated funds on a less consistent or rapid basis or not at all, particularly when considering long-term initiatives and in light of current uncertainty around Congressional efforts to craft a long-term agreement on the USG's ability to incur indebtedness in excess of its current limits, and generally in the current political environment, there is a risk that it will not issue task orders in sufficient volume to reach current contract ceilings, alter historical patterns of contract awards, including the typical increase in the award of task orders or completion of other contract actions by the USG in the period before the end of the USG's fiscal year on September 30, delay requests for new proposals and
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contract awards, rely on short-term extensions and funding of current contracts, or reduce staffing levels and hours of operation;
•government customers consolidation of smaller contract vehicles into larger contract vehicles could result in a lack of opportunity to re-compete for the existing business if the larger contract vehicle is not held by the Company;
•delays in the completion of USG’s budget processes for FY 2027, which has in the past and could in the future delay procurement of the products, services, and solutions we provide;
•changes in the relative mix of overall USG spending and areas of spending growth, with lower spending on homeland security, intelligence, defense-related programs as certain overseas operations end, and continued increased spending on cybersecurity, command, control, communications, computers, intelligence, surveillance, and reconnaissance, advanced analytics, technology integration, and healthcare, including as a result of the presidential and administration transition;
•consolidation of acquisition authority in areas directly related to the core business of the Company could limit access to new business and re-competing for existing business;
•increased inflationary pressure that could impact the cost of doing business and/or reduce customer buying power;
•risks related to a possible recession and volatility or instability of the global financial system, including bank failures and the resulting impact on counterparties and business conditions generally;
•legislative and regulatory changes, or shifts in regulatory priorities as a result of U.S. administration transitions, including limitations on the amount of allowable executive compensation permitted under flexibly priced contracts following implementation of interim rules adopted by federal agencies pursuant to the Bipartisan Budget Act of 2013, which substantially further reduce the amount of allowable executive compensation under these contracts and extend these limitations to a larger segment of our executives and our entire contract base;
•efforts by the USG to address organizational conflicts of interest and related issues and the impact of those efforts on us and our competitors;
•increased audit, review, and general scrutiny by USG agencies of government contractors' performance under USG contracts and compliance with the terms of those contracts and applicable laws, including the impact of Executive Order 14402 which was signed on April 30, 2026;
•the inability of the government to make timely awards on contracts for which the Company has submitted proposals could affect the rate of revenue growth;
•USG agencies awarding contracts on a technically acceptable/lowest cost basis, which could have a negative impact on our ability to win certain contracts;
•increased competition from other government contractors and market entrants seeking to take advantage of certain of the trends identified above, and an industry trend towards consolidation, which may result in the emergence of companies that are better able to compete against us;
•restrictions by the USG on the ability of federal agencies to use lead system integrators, in response to cost, schedule, and performance problems with large defense acquisition programs where contractors were performing the lead system integrator role; and
•increasingly complex requirements and enforcement and reporting landscapes of the Department of Defense including cybersecurity, managing federal health care cost growth, competition, and focus on reforming existing government regulation of various sectors of the economy, such as financial regulation and healthcare.
In the course of conducting our business operations, we are exposed to a variety of risks. Any of the risk factors we described in Part II, Item 1A. on this Quarterly Report on Form 10Q and Part I, Item 1A. of our Annual Report on Form
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10-K for the year ended December 31, 2025 filed on March 9, 2026 have affected or could materially adversely affect our business, prospects, operating results, and financial condition.
Budgetary Environment
The U.S. continues to face an uncertain and evolving political, budgetary, and regulatory environment, making it difficult to predict the future course of defense budgets. Ongoing conflicts in Ukraine and the Middle East, threats in the Pacific region, macroeconomic pressures, the national debt, and competing domestic priorities will continue to shape our customers' budgets and spending decisions. Executive branch cost reduction initiatives and the administration's focus on government efficiency and contract management add further uncertainty, and we anticipate that debates over budgetary priorities, the debt ceiling, and discretionary spending constraints will remain significant, with potentially meaningful impacts on our programs and the Company.
Despite the uncertainty and while we believe the underlying budget environment remains supportive of defense and national security spending with backing from both sides of the aisle, the timing of appropriations bills remains unpredictable. When appropriations are not enacted, government agencies operate under continuing resolutions ("CRs"), temporary measures that fund operations at prior-year levels, which can negatively affect our business through delays in new program starts and contract award decisions. If a CR expires without a new CR or appropriations bill being signed into law, the government must shut down except in limited circumstances, and we continuously review our operations to identify programs at risk and develop appropriate contingency plans.
On May 2, 2025, President Trump submitted the Government Fiscal Year 2026 ("GFY26") Presidential Budget Request ("PBR") to Congress, holding defense spending flat at the Government Fiscal Year 2025 ("GFY25") enacted level of $893 billion. On July 4, 2025, President Trump signed the One Big Beautiful Bill Act ("OBBBA"), a reconciliation measure separate from standard government appropriations legislation that provides approximately $156 billion in additional defense funding above the PBR. These funds remain available in GFY26 and beyond regardless of whether normal appropriations or a CR is enacted, or even in the event of a government shutdown.
The U.S. government entered a shutdown on October 1, 2025, which ended on November 12, 2025, when President Trump signed a CR restoring federal operations at GFY25 funding levels through January 30, 2026. Following the expiration of that CR, a partial shutdown occurred until February 3, 2026, when President Trump signed five of the six remaining GFY26 full-year appropriations bills along with a two-week CR for the Department of Homeland Security (DHS). The enacted defense appropriations bill provided full-year DoD funding of $838.7 billion. On February 14, 2026, DHS funding lapsed and the department entered a shutdown; on April 30, 2026, the President signed a bill ending the 75-day shutdown and funding most DHS operations through September 30, 2026, excluding funding for U.S. Immigration and Customs Enforcement ("ICE") and Border Security Operations. On June 10, 2026, the President signed a reconciliation bill providing the previously-excluded ICE and Border Security funding, completing the FY2026 appropriations cycle. As a result, all twelve regular FY2026 appropriations bills have now been enacted. The Company does not currently maintain contracts with DHS.
The Company continues to monitor the evolving appropriations environment and assess potential effects on its programs, operations, and liquidity. A prolonged failure to resolve outstanding appropriations disputes is expected to have a negative impact on our business, financial condition, and operating results.
Basis of presentation
We have presented results of operations, including the related discussion and analysis, for the following periods:
•the three months ended June 30, 2026 compared to the three months ended June 30, 2025.
•the six months ended June 30, 2026 compared to the six months ended June 30, 2025.
Key Components of Revenue and Expenses
Revenues
Our revenues are primarily derived from services provided to the U.S. Federal, state, and local governments. We currently generate our revenue from three different types of contractual arrangements: Cost Plus Fixed Fee (“CPFF”), Fixed Firm Price (“FFP”), and Time and Materials (“T&M”) contracts. The Company generally recognizes revenue over time as control is transferred to the customer, based on the extent of progress towards satisfaction of the performance obligation.
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For CPFF contracts, the Company uses input progress measures to derive revenue based on hours worked on contract performance as follows: direct costs plus Defense Contract Audit Agency ("DCAA") approved provisional burdens plus a fee. The provisional indirect rates are adjusted and billed at actual at year end. Revenue from FFP contracts is generally recognized ratably over the contract term, using a time-based measure of progress, even if billing is based on other metrics or milestones, including specific deliverables. Certain FFP contracts require the use of an input method based on labor hours or costs incurred relative to total estimated costs to complete. FFP Level-of-Effort contracts are substantially similar to T&M contracts, except that the Company is required to deliver a specified level of effort over a stated period; for these contracts, the Company estimates revenue earned using contract hours worked at negotiated bill rates as the Company delivers the contractually required workforce. For T&M contracts, the Company uses 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. These arrangements generally qualify for the "right-to-invoice" practical expedient, where revenue is recognized in proportion to billable consideration.
Cost of Revenues
Cost of Revenues include direct costs incurred to provide goods and services related to contracts, specifically labor, contracted labor, materials, and other direct costs, which includes rent, insurance, and software licenses. Cost of Revenues related to contracts is recognized as an expense when incurred or at the time a performance obligation is satisfied.
Gross Profit and Gross Profit Margin
Our gross profit comprises our revenues less our cost of revenues. Gross profit margin is our gross profit divided by our revenues.
Operating Expenses
Our operating expenses include indirect costs, overhead, and general and administrative expenses.
•Indirect costs consist of expenses generally associated with bonuses and fringe benefits, including employee health and medical insurance, 401(k) matching contributions, and payroll taxes.
•Overhead consists of expenses associated with the support of operations or production, including labor for management of contracts, operations, training, supplies, and certain facilities to perform customer work.
•General and administrative expenses consist primarily of corporate and administrative labor expenses, administrative bonuses, legal expenses, information technology ("IT") expenses, and insurance expenses.
Results of operations
The period to period comparisons of our results of operations have been prepared using the historical periods included in our unaudited consolidated financial statements. The following discussion should be read in conjunction with the unaudited consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q.
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Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025
| Three Months Ended June 30, | Change | ||||||||||||||||||||||
| 2026 | 2025 | Amount | % | ||||||||||||||||||||
| Revenues | $ | 13,864,676 | $ | 14,024,090 | $ | (159,414) | (1) | % | |||||||||||||||
| Cost of revenues | 9,145,257 | 8,963,643 | 181,614 | 2 | % | ||||||||||||||||||
| Gross Profit | 4,719,419 | 5,060,447 | (341,028) | (7) | % | ||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Indirect costs | 2,399,115 | 2,216,730 | 182,385 | 8 | % | ||||||||||||||||||
| Overhead | 545,009 | 497,307 | 47,702 | 10 | % | ||||||||||||||||||
| General and administrative expenses | 2,869,387 | 2,729,933 | 139,454 | 5 | % | ||||||||||||||||||
| Total operating expenses | 5,813,511 | 5,443,970 | 369,541 | 7 | % | ||||||||||||||||||
| Loss from operations: | (1,094,092) | (383,523) | (710,569) | 185 | % | ||||||||||||||||||
| Other income (expense), net | 104,444 | (14,357) | 118,801 | (827) | % | ||||||||||||||||||
| Loss before income taxes and preferred stock dividends | (989,648) | (397,880) | (591,768) | 149 | % | ||||||||||||||||||
| Income tax (expense) benefit | (36,949) | 75,773 | (112,722) | (149) | % | ||||||||||||||||||
| Preferred stock dividend | 26,819 | 26,820 | (1) | — | % | ||||||||||||||||||
| Net Loss | $ | (1,053,416) | $ | (348,927) | $ | (704,489) | 202 | % | |||||||||||||||
Revenue
Total revenue was $13,864,676 for the three months ended June 30, 2026 as compared to total revenue of $14,024,090 for the three months ended June 30, 2025. The decrease of $(159,414) or (1)%, was driven primarily by a decrease in revenue recognized on two firm-fixed-price (“FFP”) contracts, on which revenue was recognized in the second quarter of 2025 with less work performed during the same period in 2026, and a decrease in revenue under certain Corvus Consulting, LLC ("Corvus") subcontracts. These decreases were partially offset by revenue from the October 2025 award to the Company's Specialty Systems, Inc. ("SSI") subsidiary of a $66.2 million full and open, five-year contract for logistics, engineering, and cyber support services in support of the Naval Air Warfare Center Aircraft Division ("NAWCAD") Lakehurst ("LKE") Mission Operations & Integration ("MO&I") Department, the ramp-up of which is still in its early stages.
Cost of revenues
Total cost of revenues was $9,145,257 for the three months ended June 30, 2026 as compared to total cost of revenues of $8,963,643 for the three months ended June 30, 2025. The increase of $181,614, or 2%, was driven primarily by an increase in subcontractor costs, which typically carry a lower margin than direct labor, incurred on the Naval Air Systems Command ("NAVAIR") Maritime Patrol and Reconnaissance Aircraft Program Office ("PMA-290") Special Missions contract and on other large contracts, as well as an increase in the cost to complete the remaining work on the same two FFP contracts noted above.
Gross Profit
Total gross profit was $4,719,419 for the three months ended June 30, 2026 as compared to total gross profit of $5,060,447 for the three months ended June 30, 2025. The decrease of $(341,028), or (7)%, was driven primarily by the lower margin of increased subcontractor costs.
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Operating expenses
Total operating expenses were $5,813,511 for the three months ended June 30, 2026 as compared to total operating expenses of $5,443,970 for the three months ended June 30, 2025. The increase of $369,541, or 7%, was primarily driven by an increase in fringe expenses, reflecting an increase in headcount for business development capabilities and an expected rise in health insurance costs, as well as higher outside consultant costs, including fees related to acquisition activities and investor relations.
Total other income was $104,444 for the three months ended June 30, 2026 as compared to total other expense of $(14,357) for the three months ended June 30, 2025. The increase in other income of $118,801 or 827%, was primarily driven by the decrease in interest expense due to the overall decrease in debt.
Income tax (expense) benefit
Income tax expense was $(36,949) for the three months ended June 30, 2026, as compared to a benefit of $75,773 for the three months ended June 30, 2025. The increase in expense of $(112,722) or 149% was primarily related to the Company's change in taxable profits and state income taxes.
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
| Six Months Ended June 30, | Change | ||||||||||||||||||||||
| 2026 | 2025 | Amount | % | ||||||||||||||||||||
| Revenues | $ | 28,156,637 | $ | 25,688,455 | $ | 2,468,182 | 10 | % | |||||||||||||||
| Cost of revenues | 18,374,997 | 16,073,392 | 2,301,605 | 14 | % | ||||||||||||||||||
| Gross Profit | 9,781,640 | 9,615,063 | 166,577 | 2 | % | ||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Indirect costs | 4,860,255 | 4,602,274 | 257,981 | 6 | % | ||||||||||||||||||
| Overhead | 1,189,365 | 1,010,231 | 179,134 | 18 | % | ||||||||||||||||||
| General and administrative expenses | 5,524,109 | 5,872,088 | (347,979) | (6) | % | ||||||||||||||||||
| Total operating expenses | 11,573,729 | 11,484,593 | 89,136 | 1 | % | ||||||||||||||||||
| Loss from operations: | (1,792,089) | (1,869,530) | 77,441 | (4) | % | ||||||||||||||||||
| Other income (expense), net | 457,843 | 375,879 | 81,964 | 22 | % | ||||||||||||||||||
| Loss before income taxes and preferred stock dividends | (1,334,246) | (1,493,651) | 159,405 | (11) | % | ||||||||||||||||||
| Income tax (expense) benefit | (43,625) | 1,497 | (45,122) | (3014) | % | ||||||||||||||||||
| Preferred stock dividend | 53,639 | 53,804 | (165) | — | % | ||||||||||||||||||
| Net loss | $ | (1,431,510) | $ | (1,545,958) | $ | 114,448 | (7) | % | |||||||||||||||
Revenue
Total revenue was $28,156,637 for the six months ended June 30, 2026 as compared to total revenue of $25,688,455 for the six months ended June 30, 2025. The increase of $2,468,182 or 10%, was driven primarily by the award in March 2024 to the Company's subsidiary Global Technology and Management Resources, Inc. ("GTMR") of a $103.3 million, five and one-half year contract for Special Missions Management of On-Site Services in support of the NAVAIR PMA-290 Special Missions which ramped up in 2025 and the award in October 2025, to the Company's SSI subsidiary of a $66.2 million full and open, five-year contract for logistics, engineering, cyber support services needed in support of the NAWCAD LKE MO&I Department. This is partially offset by a decrease in revenue under certain Corvus subcontracts.
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Cost of revenues
Total cost of revenues was $18,374,997 for the six months ended June 30, 2026 as compared to total cost of revenues of $16,073,392 for the six months ended June 30, 2025. The increase of $2,301,605, or 14%, is in line with the change in revenue noted above, driven by additional labor and subcontractor costs for the PMA-290 award, which typically carry a lower margin than direct labor.
Gross Profit
Total gross profit was $9,781,640 for the six months ended June 30, 2026 as compared to total gross profit of $9,615,063 for the six months ended June 30, 2025. The increase of $166,577, or 2%, was driven primarily by the increase of revenue noted above offset by the lower margin of increased subcontractor costs.
Operating expenses
Total operating expenses were $11,573,729 for the six months ended June 30, 2026 as compared to total operating expenses of $11,484,593 for the six months ended June 30, 2025. The increase of $89,136, or 1%, was primarily driven by an increase in fringe expenses, reflecting an increase in headcount for business development capabilities and an expected rise in health insurance costs, as well as higher outside consultant costs, including fees related to acquisition activities and investor relations, offset by lower stock based compensation and amortization expenses.
Other income (expense)
Total other income was $457,843 for the six months ended June 30, 2026 as compared to total other expense of $375,879 for the six months ended June 30, 2025. The increase in other income of $81,964 or 22%, was primarily driven by the decrease in interest expense due to the overall decrease in debt offset by the decrease in expense due to the reduction in the fair value of derivative liability.
Income tax (expense) benefit
Income tax expense was $(43,625) for the six months ended June 30, 2026, as compared to a benefit of $1,497 for the six months ended June 30, 2025. The increase in expense of $(45,122) or (3014)% was primarily related to the Company's change in taxable profits and state income taxes.
Contract backlog
We define backlog to include the following three components:
•Funded Backlog - Funded backlog represents the revenue value of orders for services under existing contracts for which funding is appropriated or otherwise authorized less revenue previously recognized on these contracts.
•Unfunded Backlog - 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 - Priced contract options represent 100% of the potential revenue value of all scheduled future contract option periods or orders under existing contracts that may be exercised at our clients’ option and for which funding has not been appropriated or otherwise authorized.
Our backlog does not include contracts that have been awarded but are currently under protest and also does not include any task orders under indefinite delivery indefinite quantity contracts, except to the extent that task orders have been awarded to us under those contracts.
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Contract Backlog
| Funded | $ | 21,276,987 | |||
| Unfunded | 29,049,797 | ||||
| Priced Options | 221,421,550 | ||||
| Total Scheduled Backlog | $ | 271,748,334 | |||
Total backlog
Our total scheduled 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 optional orders. Excluding unscheduled options orders, as of June 30, 2026, the Company had a total backlog of $271,748,334 which includes funded, unfunded, and scheduled priced options. We expect to recognize approximately 16.0% of the remaining performance obligations over the next 12 months, and approximately 48.0% over the next 24 months. 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. 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. 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 makes subsequent appropriations and the procuring agency allocates funding to the contract.
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. The primary risks that could affect our ability to recognize such revenue on a timely basis or at all are: program schedule changes, contract modifications, and our ability to assimilate and deploy new consulting staff against funded backlog; cost-cutting initiatives and other efforts to reduce USG spending, which could reduce or delay funding for orders for services; and delayed funding of our contracts due to delays in the completion of the USG's budgeting process and the use of CR's by the USG to fund its operations. 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. In our recent experience, none of the following additional risks have had a material negative effect on our ability to realize revenue from our funded backlog: the unilateral right of the USG to cancel multi-year contracts and related orders or to terminate existing contracts for convenience or default; in the case of unfunded backlog, the potential that funding will not be made available; and, in the case of priced options, the risk that our clients will not exercise their options.
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.
We expect to recognize revenue from a substantial portion of funded backlog within the next 24 months. However, given the uncertainties discussed above, we can give no assurance that we will be able to convert our backlog into revenue in any particular period, if at all.
Liquidity and capital resources
Sources
We have historically sourced our liquidity requirements with cash flows from operations, borrowings under our previous credit facilities, and in October, 2022, with an equity issuance through the listing of our common stock on the NYSE American LLC. As of June 30, 2026, we had $16,865,160 of cash on hand.
We did not undertake any equity or debt transactions during the six months ended June 30, 2026. Our liquidity during the current period has been funded entirely through cash flows generated from operations.
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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
Management believes that cash flows from operating activities, existing cash on hand will be sufficient to meet our anticipated cash requirements for at least the next twelve months. Our primary uses of cash include:
•Compensation and employee-related costs, which represent the substantial majority of our operating expenses;
•Subcontractor and other direct contract costs;
•Working capital requirements to support organic revenue growth and new contract ramp-up;
•Capital expenditures, which have historically been minimal given the labor-intensive nature of our business; and
•Strategic acquisitions, which we continue to evaluate as part of our growth strategy.
Shares of our common stock included in our public float as of August 5, 2026 was 93,352,235 which excludes 1,346,704 shares held by officers, directors, and affiliates.
Cash flows
The following tables present a summary of cash flows from operating, investing, and financing activities for the following comparative periods.
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
| Six Months Ended June 30, 2026 | Change | ||||||||||||||||||||||
| 2026 | 2025 | Amount | % | ||||||||||||||||||||
| Net cash provided by (used in) operating activities | $ | 2,350,849 | $ | (2,288,422) | $ | 4,639,271 | -203 | % | |||||||||||||||
| Net cash provided by (used in) investing activities | 44,008 | (92,791) | $ | 136,799 | NM | ||||||||||||||||||
| Net cash provided by (used in) financing activities | (414,475) | 4,856,114 | $ | (5,270,589) | -109 | % | |||||||||||||||||
| Change in cash | $ | 1,980,382 | $ | 2,474,901 | $ | (494,519) | -20 | % | |||||||||||||||
| NM - Not Meaningful | |||||||||||||||||||||||
Operating activities
Net cash provided by operating activities was $2,350,849 for the six months ended June 30, 2026, compared to $(2,288,422) net cash used in for the six months ended June 30, 2025. This increase in net cash provided by operating activities was primarily driven by a decrease in accounts receivable for the six months ended June 30, 2026 due to collections on existing business.
Investing activities
Net cash provided by investing activities was $44,008 for the six months ended June 30, 2026, compared to $(92,791) net cash used in for the six months ended June 30, 2025. The increase in net cash provided by investing activities was primarily due to the cash received from the sale of Mainnerve Federal Services, Inc. dba MFSI Government Group (“MFSI").
Financing activities
Net cash used in financing activities was $(414,475), for the six months ended June 30, 2026, compared to $4,856,114 net cash provided by financing activities for the six months ended June 30, 2025. The increase in net cash used in financing activities was primarily due to the pay off of the related party note payable as detailed in Note 6, "Notes Payable - Related Party" in this Quarterly Report on Form 10-Q, as compared to the proceeds from the issuance of common stock and warrants issued in the public offerings in 2025.
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Critical Accounting Policies and Estimates
A summary of our critical accounting estimates is included in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year-ended December 31, 2025. There have been no material changes to the critical accounting estimates disclosed in our Annual Report on Form 10-K for the year-ended December 31, 2025.
Principles of Consolidation
Refer to Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year-ended December 31, 2025. There have been no material changes to our principles of consolidation disclosed in our Annual Report on Form 10-K for the year-ended December 31, 2025.
Recently Issued Accounting Standards
In September 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update ("ASU") 2025-06, which makes targeted updates to the accounting and disclosure requirements for internal-use software under Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40). The standard becomes effective for the Company beginning in fiscal year 2029, including interim periods, and permits either prospective or retrospective adoption. We are currently assessing the impact on our financial statements.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires public business entities to disclose disaggregated information about specific categories of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) within relevant income statement expense captions, in interim and annual reporting periods. In January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. As clarified, the standard is effective for the Company for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The amendments may be applied either prospectively or retrospectively. We are currently assessing the impact on our financial statements and disclosures.
Other accounting standards updates adopted and/or issued, but not effective until after June 30, 2026, are not expected to have a material effect on the Company’s consolidated financial position, annual results of operations, and/or cash flows.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. These risks include the following:
Interest rate and market risk
The Company has no debt obligations tied to the Prime Rate or the Secured Overnight Financing Rate.
Effects of inflation
U.S. inflation has begun to moderate after nearing a 40-year high in June 2022. Because costs rise faster than revenues during the early phase of inflation, we may need to give higher than normal raises to employees, start new employees at higher wages and/or have increased cost of employee benefits, but not be able to pass the higher costs through to the government due to competition and government pressures. Therefore, we may be adversely affected (i) with lower gross profit margins; (ii) by losing contracts which are lowest price technically acceptable where another bidder underbids the real rates and then has difficulty staffing the project; and (iii) by having difficulty maintaining our staff at current salaries. Given the long-term nature of the Company’s contracts, we may be unable to take sufficient action to mitigate inflationary pressures.
Item 4. Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 (the "Exchange Act") is
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recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in Company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), to allow timely decisions regarding required disclosure.
As required by Rules 13a-15 and 15d-15 under the Exchange Act, our CEO and CFO carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2026. Based upon their evaluation, our CEO and CFO concluded that our disclosure controls and procedures (as defined in Rules 13a- 15 (e) and 15d-15 (e) under the Exchange Act) were effective as of June 30, 2026.
Changes in Internal Control over Financial Reporting
There have been no changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the six months ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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Part II
Item 1. Legal Proceedings
As a commercial enterprise and employer, the Company and our subsidiaries are subject to threatened litigation and other legal actions in the ordinary course of business, including employee-related matters, inquiries, and administrative proceedings regarding our employment practices, technology, or other matters. 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 1A. Risk Factors
In the course of conducting our business operations, we are exposed to a variety of risks. Any of the risk factors we described in Part I, Item 1A. of our Annual Report on Form 10-K for the year ended December 31, 2025 filed on March 9, 2026 have affected or could materially adversely affect our business, prospects, operating results, and financial condition. There have been no material changes from the risk factors described in that report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a)Recent Sales of Unregistered Securities.
The Company had no recent sales of unregistered securities.
(b)Use of Proceeds from the Public Offering(s).
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
During the quarterly period ended June 30, 2026, no directors or officers adopted terminated
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Item 6. Exhibits
The documents listed in this Exhibit Index of this Quarterly Report on Form 10-Q are incorporated by reference or are filed with this Quarterly Report on Form 10-Q, in each case as indicated therein (numbered in accordance with Item 601 of Regulation S-K).
| Incorporated by Reference | ||||||||||||||||||||||||||||||||
| Exhibit Number | Form | File Number | Exhibit | Filing Date | ||||||||||||||||||||||||||||
| 2.1 | Agreement and Plan of Merger dated August 12, 2021, by and among Registrant, KC Holdings Company, Inc., Specialty Systems, Inc., and the Stockholders named herein | S-1 | 333-267249 | 2.5 | September 2, 2022 | |||||||||||||||||||||||||||
| 2.2 | Agreement and Plan of Merger dated as of March 22, 2023 by and among Castellum, Inc., GTMR Merger Sub., Inc., Global Technology and Management Resources, Inc. (“GTMR”), the stockholders of GTMR, and James Morton, as the representative of the stockholders | 8-K | 001-41526 | 2.1 | March 28, 2023 | |||||||||||||||||||||||||||
| 3.1 | Amended and Restated Articles of Incorporation of Registrant | S-1 | 333-267249 | 3.1 | September 2, 2022 | |||||||||||||||||||||||||||
| 3.2 | Amended and Restated Bylaws of Registrant | S-1/A | 333-267249 | 3.2 | October 4, 2022 | |||||||||||||||||||||||||||
| 3.3 | Certificate of Amendment to the Amended and Restated Articles of Incorporation of Registrant | 8-K | 001-41526 | 3.1 | October 18, 2022 | |||||||||||||||||||||||||||
| 3.4 | Certificate of Amendment to the Amended and Restated Articles of Incorporation of Registrant | 8-K | 001-41526 | 3.1 | April 6, 2023 | |||||||||||||||||||||||||||
| 4.1 | Form of Warrant to Purchase Common Stock of Registrant | S-1 | 333-267249 | 4.1 | September 2, 2022 | |||||||||||||||||||||||||||
| 4.2 | Common Stock Purchase Warrant dated April 4, 2022, by and between Registrant and Crom Cortana Fund LLC | S-1 | 333-267249 | 4.4 | September 2, 2022 | |||||||||||||||||||||||||||
| 4.3 | Form of Warrant to Purchase Common Stock of Registrant | 8-K | 001-41526 | 4.1 | March 18, 2025 | |||||||||||||||||||||||||||
| 4.4 | Form of Warrant to Purchase Common Stock of Registrant | 8-K | 001-41526 | 4.1 | June 13, 2025 | |||||||||||||||||||||||||||
| 10.1 | Business Acquisition Agreement dated February 11, 2022, by and between Registrant and Lexington Solutions Group, LLC | S-1 | 333-267249 | 10.8 | September 2, 2022 | |||||||||||||||||||||||||||
| 10.2+ | Registrant’s Third Amended 2021 Stock Incentive Plan | S-8 | 333-284205 | 10.1 | June 1, 2026 | |||||||||||||||||||||||||||
| 10.3+ | Registrant’s 2025 Employee Stock Purchase Plan | S-8 | 333-284205 | 10.1 | September 17, 2025 | |||||||||||||||||||||||||||
| 10.4+ | Form of Stock Option Agreement | S-1 | 333-267249 | 10.1 | September 02, 2022 | |||||||||||||||||||||||||||
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| 10.5+ | Employment Agreement executed on March 22, 2023 by and between James Morton and Castellum, Inc. | 8-K | 001-41526 | 10.1 | March 28, 2023 | |||||||||||||||||||||||||||
| 10.6+ | Form of Restrictive Covenant Agreement, by and among ____, individually, in favor of and for the benefit of Global Technology and Management Resources, Inc. and Castellum, Inc. | 8-K | 001-41526 | 10.2 | March 28, 2023 | |||||||||||||||||||||||||||
| 10.7+ | Employment Agreement dated July 1, 2024 by and between the Registrant and Glen R. Ives | 8-K | 001-41526 | 10.1 | July 3, 2024 | |||||||||||||||||||||||||||
| 10.8 | Lease Agreement dated January 11, 2018, between LTD Realty Investment, IV, LP, and Specialty Systems, Inc. | S-1 | 333-267249 | 10.15 | September 2, 2022 | |||||||||||||||||||||||||||
| 10.9 | Form of Director Agreement | S-1 | 333-267249 | 10.16 | September 2, 2022 | |||||||||||||||||||||||||||
| 10.10++ | Contract No. N0017819D7718 effective January 2, 2019 between Global Technology Management Services, Inc. and SeaPort NxG | 8-K | 001-41526 | 10.25 | February 28, 2025 | |||||||||||||||||||||||||||
| 10.11 | Form of Securities Purchase Agreement by and between Registrant and certain investors | 8-K | 001-41526 | 10.1 | March 18, 2025 | |||||||||||||||||||||||||||
| 10.12 | Placement Agency Agreement dated March 16, 2025 by and between Registrant and Maxim Group LLC | 8-K | 001-41526 | 10.2 | March 18, 2025 | |||||||||||||||||||||||||||
| 10.13 | Warrant Agent Agreement dated March 17, 2025 by and between Registrant and Nevada Agency and Transfer Company | 8-K | 001-41526 | 10.3 | March 18, 2025 | |||||||||||||||||||||||||||
| 10.14+ | Amendment dated April 3, 2025 to Employment Agreement dated July 1, 2024 with Glen R. Ives | 8-K | 001-41526 | 10.2 | April 4, 2025 | |||||||||||||||||||||||||||
| 10.15 | Form of Securities Purchase Agreement by and between Registrant and certain investors | 8-K | 001-41526 | 10.1 | June 13, 2025 | |||||||||||||||||||||||||||
| 10.16 | Placement Agency Agreement dated June 12, 2025 by and between Registrant and Maxim Group LLC | 8-K | 001-41526 | 10.2 | June 13, 2025 | |||||||||||||||||||||||||||
| 10.17 | Warrant Agency Agreement dated June 13, 2025 by and between Registrant and Nevada Agency and Transfer Company | 8-K | 001-41526 | 10.3 | June 13, 2025 | |||||||||||||||||||||||||||
| 10.18++ | Delivery Order N0042125F3003 under Contract No. N0017819D7718 effective February 27, 2025 between Global Technology and Management Resources, Inc. and NAVAIR Aircraft Division Pax River | 10-K | 001-41526 | 10.19 | March 9, 2026 | |||||||||||||||||||||||||||
| 10.19++ | Delivery Order N6833525F3003 under Contract No. N0017819D7718 effective September 18, 2025 between Global Technology and Management Resources, Inc. and NAVAIR Aircraft Division Lakehurst | 10-K | 001-41526 | 10.20 | March 9, 2026 | |||||||||||||||||||||||||||
| 23.1* | Consent of Independent Registered Public Accounting Firm | |||||||||||||||||||||||||||||||
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| 31.1* | Certification of Principal Executive Officer pursuant to Exchange Act Rules 13(a)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||||||||||||||||||||||||||||||
| 31.2* | Certification of Principal Financial Officer pursuant to Exchange Act Rules 13(a)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||||||||||||||||||||||||||||||
| 32.1* | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||||||||||||||||||||||||||
| 32.2* | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||||||||||||||||||||||||||
| 101 | The following financial information from Castellum, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2025 formatted in Inline XBRL (Extensible Business Reporting Language) includes: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Cash Flows, (iv) the Consolidated Statements of Changes in Stockholders’ Equity, and (v) Notes to the Consolidated Financial Statements. | |||||||||||||||||||||||||||||||
| 104 | Cover Page Interactive Data File - (formatted as Inline XBRL and contained in Exhibit 101) | |||||||||||||||||||||||||||||||
_______________________
* Filed herewith.
** The certifications attached as Exhibits 32.1 and 32.2 that accompany this Quarterly Report on Form 10-Q are not deemed filed with the SEC and not to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933, as amended, or the Exchange Act whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.
+ Management contract or compensatory plan.
++ Portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K because such information is (i) not material and (ii) the type of information the Company treats as confidential. The Company will furnish supplementally an unredacted copy of such exhibit to the SEC or its staff upon its request.
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: August 6, 2026 | CASTELLUM, INC. | ||||
| /s/ Glen R. Ives | |||||
| Glen R. Ives | |||||
| Chief Executive Officer (Principal Executive Officer) | |||||
| /s/ David T. Bell | |||||
| David T. Bell | |||||
| Chief Financial Officer (Principal Financial Officer) | |||||