CTM

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How CTM rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

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Business Overview Castellum is focused on building a large, successful technology services, solutions, and products company in the areas of cybersecurity, IT, electronic warfare, information warfare, system modernization, and information operations with businesses in the defense, federal, civilian, and commercial markets.
These services are applicable to customers in the United States (“U.S.”) government (“USG”), financial services, legal, and other users of large data applications.
The Company routinely works with multiple 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.
Although there can be no assurance that the Opportunity Pipeline can be converted to revenues, the Company believes that the total value of the Opportunity Pipeline to be approximately $817 million as of December 31, 2025.
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.
We modernize enterprise and agency-unique applications, enterprise infrastructure, and business processes to enhance productivity, security, and increase user satisfaction.
We transform data into actionable intelligence through advanced analytics and visualization, enabling our customers to improve performance and operational efficiency. • Command, Control, Communications, and Computer (“C4”) Intelligence Surveillance Reconnaissance (“C4ISR”), Cyber & Space.
Our software-defined, full-spectrum cyber, electronic warfare, and Counter-Unmanned Aircraft Systems solutions provide electromagnetic spectrum advantage and deliver precision effects against national security threats.
We are at the forefront of developing policies that meet the challenges of 5G wireless communications both on and off the battlefield, millimeter wave, and the use of lasers for free space optical communications and long-range sensing.
We support the development, qualification and deployment of specialty ISR sensors on military and commercial UAVs and aircraft.
We independently test and/or evaluate complex ISR systems at our facilities. • Engineering Services.
Our platform-agnostic, mission-first approach ensures optimal performance, so our nation’s forces can overmatch our adversaries.
We also specialize in Interactive Electronic Technical Manual (“IETM”) technical publication development with colorized graphics and interactive wiring diagrams with circuitry illumination. • IT Services.
We design, implement, protect, and manage secure enterprise IT solutions for the USG, state, and local agencies to optimize efficiency, enhance performance, and ensure end-user satisfaction.
We implement Agile and DevSecOps methodologies supporting rapid, secure, and continuous delivery of mission-critical capabilities.
We offer Risk Management Framework and Accreditation support services to obtain and maintain systems’ Authority to Operate (“ATO”). • Mission support.
We have strategic business relationships with several companies associated with the IT and defense industry which have business objectives compatible with ours and offer complementary products and services.
We continue to develop these types of relationships wherever they support our growth objectives.
Some of these business relationships may lead to Castellum acquiring the teaming partner firm.
Our marketing and new business development is conducted by many of our officers and managers including the Chief Executive Officer (“CEO”), Chief Operating Officer (“COO”), Chief Financial Officer (“CFO”), and General Counsel, and other key managers.
Government customers typically base their decisions regarding contract awards on their assessment of the quality of past performance, compliance with proposal requirements, price, and other factors.
We generated $16,987,361 (32%), $24,483,023 (55%), and $25,631,786 (57%) of our total revenues from T&M contracts in the years ended December 31, 2025, 2024, and 2023, respectively.
In the year ending December 31, 2025, the top three revenue-producing contracts, some of which consist of multiple task orders, accounted for fifty-four percent (54%) of our revenue, or $28,341,498.
Each of those contracts is associated with the Company’s areas of core expertise. • An annual contract with Naval Air Systems Command (“NAVAIR”) Naval Air Warfare Center Aircraft Division (“NAWCAD”) that contains multiple renewal options is a CPFF contract providing cyber engineering, systems engineering, design/software engineering, development, and sustainment expertise.
The Company is supporting a broad portfolio of mission-critical systems that enable carrier-based and expeditionary naval aviation operations for Aircraft Launch and Recovery Equipment. • An annual contract with Special Missions Management of On-Site Services (“MOSS”) in support of the Naval Air Systems Command (“NAVAIR”) Program Office 290 (“PMA-290”) Special Missions is a CPFF contract which consists of multiple Intelligence, Surveillance, Reconnaissance, and Targeting (“ISR&T”) programs.
These programs include, but are not limited to, the Maritime Patrol and Reconnaissance Force Family of Systems, P-8A Research and Development, SM Platforms, Minotaur Family of Services, P-8A Increment 3, P-8A Foreign Military Sales, MQ-4C Triton Multiple Intelligence, Mobile Quick Look, ground & mission support stations, and future capabilities. • An annual contract with Naval Sea Systems Command (“NAVSEA”) that contains multiple renewal options is a CPFF contract covering engineering and technical services for the analysis, design, prototyping, test and evaluation, integration, project management, implementation, and documentation of various C4ISR sensor systems and subsystems for the U.S.
Some of our key initiatives include the following: • Continue our unwavering commitment to our customers while supporting the communities in which we work and live; • Grow organic revenue across our large, addressable market; • Recruit and hire a world class workforce to execute on our growing backlog; and • Differentiate ourselves through our investments, including our strategic mergers and acquisitions which allow us to enhance our current capabilities and create new customer access points.
The U.S. political environment may also impact defense budgets and priorities, issues related to the national debt, and government spending more broadly.
We anticipate that issues related to budgetary priorities and defense spending levels, the debt ceiling, and the spending caps, particularly with respect to discretionary spending, will continue to be a subject of considerable debate, with a potentially significant impact on our programs and the Company.
The majority of the U.S. federal government is currently funded through September 30, 2026 pursuant to Public Law 119-75, the Consolidated Appropriations Act, 2026 (H.R. 7148), which provides full-year appropriations for most major federal agencies, including the Department of Defense.
Additional appropriations legislation enacted during fiscal year 2026 provided full-year funding for other federal agencies; however, the Department of Homeland Security (“DHS”) received only temporary funding through February 13, 2026 under a continuing resolution, resulting in a partial federal government shutdown beginning February 14, 2026.
The Company currently does not maintain contracts with DHS.
The Presidential Administration (the “Administration”) has issued numerous executive orders affecting federal acquisition and defense procurement policies, including initiatives to modernize the Federal Acquisition Regulation (“FAR”), reform defense acquisition processes, and address contractor performance, production investment, and related incentive structures.
Certain executive orders remain subject to legal challenges, and the scope and timing of implementation remain uncertain.
Changes in executive policy, regulatory requirements, federal budget priorities, debt ceiling actions, or broader geopolitical and economic conditions could create a more challenging or costly operating environment and may materially impact defense spending generally and the Company’s programs specifically.
Acquisition Strategy Castellum seeks acquisitions which fit one or more of the following criteria: (1) expands our capability in existing areas of expertise such as cybersecurity and electronic warfare; (2) broadens the scope of clients Castellum serves such as adding a new service branch or new government agency; (3) increases the scale of our business in existing areas to generate better operating profit margins and reduce the Company's fully burdened cost of labor, including direct and indirect costs or (i.e., the wrap rate); (4) increases the geographic footprint of Castellum in order to offer more capability to existing or new clients; (5) adds a new product or solution to our offerings; (6) adds technological capability in new areas which we believe are high growth potential; and (7) fills a need within Castellum to be able to serve current customers such as adding a prime contract vehicle or the capability to win new prime contract vehicles.
In all cases, Castellum seeks acquisitions which are immediately accretive on revenue, earnings before interest, depreciation, and amortization (“EBITDA”) and net income per share bases, as well as positive from a net present value perspective and which fit the culture of Castellum.
We also serve state and local agencies and commercial clients, working to solve their hardest and most sophisticated cyber challenges.
Our backlog does not include (1) contracts that have been awarded but are currently under protest and (2) any task orders under IDIQ contracts, except to the extent that task orders have been awarded to us under those contracts.

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Business Overview Castellum is focused on building a large, successful technology company in the areas of cybersecurity, IT, electronic warfare, information warfare, and information operations with businesses in the defense, federal, civilian, and commercial markets.
These services are applicable to customers in the United States (“U.S.”) government (“USG”), financial services, healthcare, and other users of large data applications.
The Company has worked with multiple business brokers and contacts within their business network to identify potential acquisitions.
Due to our success in completing seven acquisitions over the previous five years and given our executive officers’ and key managers’ networks of contacts in the IT, telecom, cybersecurity, and defense sectors, we believe that we are well positioned to continue to execute our business strategy.
Although there can be no assurance that the Opportunity Pipeline can be converted to revenues, the Company believes that the total value of the Opportunity Pipeline to be approxima tely $635 million as of December 31, 2024.
The Opportunity Pipeline represents the revenue opportunity for the Company from potential future contracts obtained throug h organic growth from qualified customers based on the expected base year contract value plus the value of all option periods.
We modernize enterprise and agency-unique applications, enterprise infrastructure, and business processes to enhance productivity and increase user satisfaction.
We use data analytics and visualization to provide insights and outcomes that optimize our customer’s operations. • Command, Control, Communications, and Computer Intelligence Surveillance Reconnaissance (“C4ISR”), Cyber & Space.
Our software-defined, full-spectrum cyber, electronic warfare, and C-UAS solutions provide electromagnetic spectrum advantage and deliver precision effects against national security threats.
We are at the forefront of developing technologies that meet the challenges of 5G wireless communications both on and off the battlefield, millimeter wave, and the use of lasers for free space optical communications and long-range sensing. • Engineering Services.
Our platform-agnostic, mission-first approach ensures optimal performance, so our nation’s forces can overmatch our adversaries. • Enterprise IT.
We design, implement, protect, and manage secure enterprise IT solutions for the U.S. federal, state, and local agencies to optimize efficiency, enhance performance, and ensure end-user satisfaction. • Mission support.
Lastly, through the Company’s IW/IO operations, Castellum provides key services to governments of other nations.
We currently support and have previously supported international clients in Australia and other foreign countries and believe that future opportunities for providing our services internationally are growing given current nominal levels of global spending on defense and the continued rising threat from cybersecurity breaches.
We have strategic business relationships with several companies associated with the information technology (“IT”) industry which have business objectives compatible with ours and offer complementary products and services.
We intend to continue development of these kinds of relationships wherever they support our growth objectives.
Some of these business relationships have ultimately led to Castellum acquiring the teaming partner firm.
Our marketing and new business development is conducted by many of our officers and managers including the Chief Executive Officer (“CEO”), Chief Operating Officer (“COO”), Executive Vice-President of Strategy and General Counsel and other executive officers, and other key managers.
Government and commercial customers typically base their decisions regarding contract awards on their assessment of the quality of past performance, compliance with proposal requirements, price, and other factors.
We generated $24,483,023 (55%), $25,631,786 (57%), and $25,302,224 (61%) of our total revenues from T&M contracts in the years ended December 31, 2024, 2023, and 2022, respectively.
In the year ending December 31, 2024, the top three revenue-producing contracts, some of which consist of multiple task orders, accounted for forty-nine percent (49%) of our revenue, or $21,972,589.
Each of those contracts is associated with the Company’s areas of core expertise, as follows: (i) an annual contract with Naval Air Systems Command (“NAVAIR”) that contains multiple renewal options is a CPFF contract covering systems engineering, design/software engineering, and development expertise where the Company has developed software that manages the aircraft launch and recovery operations on aircraft carriers, (ii) an annual contract with Peraton, Inc. with multiple renewal option periods is a T&M contract which supports the cyber and Electronic Warfare (“EW”) work done at the Army Staff Level, and (iii) an annual contract with Naval Sea Systems Command (“NAVSEA”) that contains multiple renewal options is a CPFF contract covering engineering and technical services for the analysis, design, prototyping, test and evaluation, integration, project management, implementation, and documentation of various C4ISR sensor systems and subsystems for the U.S.
Some of our key initiatives include the following: • Continue our unwavering commitment to our customers while supporting the communities in which we work and live; • Grow organic revenue across our large, addressable market; • Recruit and hire a world class workforce to execute on our growing backlog; and • Differentiate ourselves through our investment, including our strategic mergers and acquisitions which allow us to enhance our current capabilities and create new customer access points.
The U.S. political environment may also impact defense budgets and priorities, issues related to the national debt, and government spending broadly and more specifically, the potential impact of the U.S.
DOGE Service Temporary Organization (“DOGE”) on government spending and terminating contracts for convenience.
We anticipate that issues related to budgetary priorities and defense spending levels, the debt ceiling, and the spending caps imposed by the Fiscal Responsibility Act of 2023 (“FRA”), particularly with respect to discretionary spending, will continue to be a subject of considerable debate, with a potentially significant impact on our programs and the Company.
Annual appropriations to fund the federal government for fiscal year 2025 have not yet been enacted.
The continuing resolution (“CR”) enacted on December 21, 2024, extends federal funding at fiscal year 2024 levels through March 14, 2025.
To prevent a government shutdown beyond this date, the U.S.
Congress (“Congress”) and the President must either pass a full-year fiscal year 2025 appropriations bills or another CR.
Government operations under an extended CR could have potential impacts on our programs and new contracts, in particular.
We continuously review our operations in an attempt to identify programs potentially at risk from CRs so that we can consider appropriate contingency plans.
We believe that less than 5% of our employees would be at risk due to a CR.
Our business depends on the U.S. government.
A shutdown could lead to furloughs within agencies like the DoD, resulting in payment delays, disruptions to existing contracts, and potential impacts on future orders and operations.
Treasury Department may face operational and payment disruptions during fiscal year 2025 if it exhausts extraordinary measures after reaching the debt limit.
U.S. government discretionary spending for fiscal year 2024 and fiscal year 2025, including defense, is capped under the FRA.
If a CR remains in place on April 30, 2025, it will trigger a sequester under the FRA.
These uncertainties, along with broader macroeconomic effects, could materially impact our programs, contracts, financial position, results of operations, and cash flows.
Acquisition Strategy Castellum seeks acquisitions which fit one or more of the following criteria: (1) expands our capability in existing areas of expertise such as cybersecurity and electronic warfare; (2) broadens the scope of clients Castellum serves such as adding a new service branch or new government agency; (3) increases the scale of our business in existing areas to generate better operating profit margins and reduce the Company's fully burdened cost of labor, including direct and indirect costs or (i.e., the wrap rate); (4) increases the geographic footprint of Castellum in order to offer more capability to existing or new clients; (5) adds management talent to Castellum; (6) adds technological capability in new areas which we believe are high growth potential; and (7) fills a need within Castellum to be able to serve current customers such as adding a prime contract vehicle or the capability to win new prime contract vehicles.

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Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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