Item 9A. Controls and Procedures
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e), as amended) as of December 31, 2022, the end of the period covered by this Annual Report on Form 10-K. Based on that evaluation, our principal executive officer and principal financial officer have concluded that, as of the end of the period covered by this annual report, our disclosure controls and procedures were effective at the reasonable assurance level.
Remediation of Previously Identified Material Weakness in Internal Control Over Financial Reporting
We previously disclosed a material weakness in our internal control over financial reporting that existed as of December 31, 2021. We determined that we had a material weakness in our controls related to the review over complex accounting transactions. There were no misstatements as a result of this material weakness; however, it could have resulted in a misstatement of account balances or disclosures that would result in a material misstatement to the annual or interim financial statements that would not be prevented or detected.
With the oversight of senior management, we implemented remediation steps in 2022 including:
• Hiring the CFO, the VP of Finance and Controller, and the Senior Director of Accounting, each having expertise in complex accounting transactions, extensive internal control experience, and substantial backgrounds in public accounting.
• Implementing a process whereby each complex accounting transaction is researched and reviewed along with timely involvement of management’s specialists when necessary.
Management is satisfied that these remediation activities are sufficient to conclude that the material weakness identified during the year ended December 31, 2021 has been remediated as of December 31, 2022.
Changes in Internal Control Over Financial Reporting
Other than those to remediate the material weakness noted above, there were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act). The rules define internal control over financial reporting as a process designed by, or under the supervision of, the Company’s Chief Executive Officer and Chief Financial Officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Internal control over financial reporting is subject to inherent limitations. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system will be met.
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an assessment of the effectiveness of our internal control over financial reporting based on the framework in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, our management concluded that our internal control over financial reporting was effective as of December 31, 2022.
Attestation Report of the Registered Public Accounting Firm
72
Table of Contents
Pursuant to rules of the SEC that permit us to provide only our management’s report in this annual report on Form 10-K, an attestation report of our independent registered public accounting firm regarding internal control over financial reporting is not included in this Annual Report on Form 10-K.
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
73
Table of Contents
Part III
Certain information required in Part III is omitted from this report but is incorporated herein by reference from our Proxy Statement for the 2023 Annual Meeting of Stockholders (as amended or supplemented, the “2023 Proxy Statement”) to be filed with the Securities and Exchange Commission (the “SEC”). The 2023 Proxy Statement will be filed with the SEC within 120 days after the end of the fiscal year to which this report relates.
Item 10. Directors, Executive Officers and Corporate Governance
The information required by this Item 10 of this Annual Report on Form 10-K is incorporated herein by reference to our 2023 Proxy Statement.
Item 11. Executive Compensation
The information required by this Item 11 of this Annual Report on Form 10-K is incorporated herein by reference to our 2023 Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this Item 12 of this Annual Report on Form 10-K is incorporated herein by reference to our 2023 Proxy Statement.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this Item 13 of this Annual Report on Form 10-K is incorporated herein by reference to our 2023 Proxy Statement.
Item 14. Principal Accounting Fees and Services
The information required by this Item 14 of this Annual Report on Form 10K is incorporated herein by reference to our 2023 Proxy Statement.
74
Table of Contents
Part IV
Item 15. Exhibits and Financial Statement Schedules
(a) The following documents are filed as part of this Annual Report on Form 10-K:
(1) Consolidated Financial Statements
The consolidated financial statements are filed as part of this Annual Report on Form 10-K under “Item 8. Financial Statements and Supplementary Data.”
(2) Financial Statement Schedules
The financial statement schedules are omitted because they are either not applicable or the information required is presented in the financial statements and notes thereto under “Item 8. Financial Statements and Supplementary Data.”
(3) Exhibits
The documents listed in the following Exhibit Index of this Annual Report on Form 10-K are incorporated herein by reference or are filed with this Annual Report on Form 10-K, in each case as indicated therein (numbered in accordance with Item 601 of Regulation S-K):
75
Table of Contents
Incorporated by Reference
Exhibit Number Form File Number Exhibit Filing Date
2.1
Stock Purchase Agreement dated May 6, 2019, by and among BioNovelus, Inc., Bayberry Acquisition Corp., and all of the stockholders of Bayberry Acquisition Corp.
S-1
333-267249
2.1
September 2, 2022
2.2
First Amendment to Stock Purchase Agreement dated June 2, 2019 by and among BioNovelus, Inc., Bayberry Acquisition Corp., and all the stockholders of Bayberry Acquisi tion Corp.
S-1
333-267249
2.2
September 2, 2022
2.3
Second Amendment to Stock Purchase Agreement dated June 8, 2019, by and among BioNovelus, Inc., Bayberry Acquisition Corp., and all the stockholders of Bayberry Acquisit ion Corp.
S-1
333-267249
2.3
September 2, 2022
2.4
Securities Purchase Agreement dated November 21, 2019, by and among BioNovelus, Inc., Corvus Consulting, LLC, and the Buckhout Charitable Remainder Trust
S-1
333-267249
2.4
September 2, 2022
2.5
Agreement and Plan of Merger dated August 12, 2021, by and among Registrant , KC Holdings Company, Inc., Specialty Systems, Inc., and the Stockholders n amed h erein
S-1
333-267249
2.5
September 2, 2022
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
4.1
Form of Warrant to Purchase Common Stock of Registrant
S-1
333-267249
4.1
September 2, 2022
4.2
Amended Convertible Promissory Note Re-Issued as of February 1, 2021, by Corvus Consulting, LLC and Registrant to the Buckhout Charitable Remainder Trust
S-1
333-267249
4.2
September 2, 2022
4.3
Convertible Promissory Note Issued as of April 4, 2022 by Registrant to Crom Cortana Fund LLC
S-1
333-267249
4.3
September 2, 2022
4.4
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
4.5
Common Stock Purchase Warrant dated February 13, 2023 by and between Registrant and Crom Cortana Fund LLC
8-K
001-41526
4.1
February 16, 2023
4.6
Convertible Promissory Note dated February 13, 2023 by and between Registrant and Crom Cortana Fund LLC
8-K
001-41526
10.1
February 16, 2023
10.1
Amended and Restated P romissory Note Issued on August 10, 2021 by Corvus Consulting, LLC and BioNovelus, Inc. to Robert Eisiminger
S-1
333-267249
10.1
September 2, 2022
76
Table of Contents
10.2
Term Loan Promissory Note i ssued on August 11, 2021 by and between Registrant, Specialty Systems, Inc., Corvus Consulting, LLC, Mainnerve Federal Services, Inc., Merrison Technologies, LLC, and Live Oak Banking Company
S-1
333-267249
10.2
September 2, 2022
10.3
Term Loan and Security Agreement dated August 11, 2021, by and between Registrant, Specialty Systems, Inc., Corvus Consulting, LLC, Mainnerve Federal Services, Inc., Merrison Technologies, LLC and Live Oak Banking Company
S-1
333-267249
10.3
September 2, 2022
10.4
Promissory Note i ssued on August 12, 2021 by Special ty Systems, I n c. to Emil Kaunitz
S-1
333-267249
10.4
September 2, 2022
10.5
Promissory Note i ssued on February 28, 2022 by Corvus Consulting, LLC and Registrant to Robert Eisiminger
S-1
333-267249
10.5
September 2, 2022
10.6
Revolving Line of Credit Promissory Note Issued on March 28, 2022 by Registrant, Specialty Systems, Inc., Corvus Consulting, LLC, Mainnerve Federal Services, Inc., Merrison Technologies, LLC to Live Oak Banking Company
S-1
333-267249
10.6
September 2, 2022
10.7
Loan and Security Agreement dated March 28, 2022, by and between Registrant, Specialty Systems, Inc., Corvus Consulting, LLC, Mainnerve Federal Services, Inc., Merrison Technologies, LLC and Live Oak Banking Company
S-1
333-267249
10.7
September 2, 2022
10.8
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
10.9+
Registrant’s Stock Incentive Plan
S-1
333-267249
10.9
September 2, 2022
10.10+
Form of Stock Option Agreement
S-1
333-267249
10.10
September 2, 2022
10.11+
Employment Agreement dated April 1, 2020, by and between Registrant and Mark Fuller
S-1
333-267249
10.11
September 2, 2022
10.12+
Employment Agreement dated April 1, 2020, by and between Registrant and Jay Wright
S-1
333-267249
10.12
September 2, 2022
10.13+
Employment Agreement dated April 1, 2020, by and between Registrant and Glen Ives
S-1
333-267249
10.13
September 2, 2022
10.14+
Employment Agreement dated April 25, 2022, by and between Registrant and David T. Bell
S-1
333-267249
10.14
September 2, 2022
10.15+ Employment Agreement dated as of November 21, 2019 between Corvus Consulting, LLC and Laurie Buckhout 10-Q 001-41526 10.23 November 14, 2022
10.16
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
10.17
Form of Director Agreement
S-1
333-267249
10.16
September 2, 2022
10.18++
Labor Hour Subcontract Agreement between Corvus Consulting, LLC and CACI, Inc. - Federal
S-1
333-267249
10.17
September 2, 2022
77
Table of Contents
10.19++
Modification dated April 8, 2022 to Purchase Order No. P000096970 between Corvus Consulting, LLC and CACI, Inc.- Federal
S-1
333-267249
10.18
September 2, 2022
10.20++
Contract No. N00178-14D-7931 effective February 14, 2019 between Specialty Systems, Inc. and NAVAIR Aircraft Division Lakehurst
S-1
333-267249
10.19
September 2, 2022
10.2 1 ++
Modification No. 1 of Contract No. N6833521C0843 effective November 2, 2021 between Specialty Systems, Inc. and NAVAIR Aircraft Division Lakehurst
S-1
333-267249
10.20
September 2, 2022
10.22++
Time and Material Subcontract Number PO-0018098 dated June 3, 2019 between Perpsecta Engineering, Inc. and Corvus Consulting, LLC
S-1
333-267249
10.21
September 2, 2022
10.23++
Modification 13 to Time and Material Subcontract Number PO-0018098 dated May 31, 2022 between Perspecta Engineering, Inc. and Corvus Consulting, Inc.
S-1
333-267249
10.22
September 2, 2022
10.24
Convertible Promissory Note dated February 13, 2023 by and between Registrant and Crom Cortana Fund LLC
8-K
001-41526
10.1
February 16, 2023
10.25
Pay-Off Letter Agreement by and between Registrant and Crom Cortana Fund LLC dated February 13, 2023
8-K
001-41526
10.2
February 16, 2023
14.1
Code of Ethics and Business Conduct
S-1
333-267249
14.1
September 2, 2022
21.1
List of Subsidiaries
S-1
333-267249
21.1
September 2, 2022
24.1*
Power of Attorney (set forth on the signature page to this Annual Report on Form 10-K)
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.
78
Table of Contents
101 The following financial information from Castellum, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2022 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 Annual Report on Form 10-K 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 Annual Report on Form 10-K, 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 Securities and Exchange Commission or its staff upon its request.
(b) Financial statement schedules.
All schedules have been omitted because either they are not required, are not applicable or the information is otherwise set forth in the financial statements and related notes thereto.
Item 16. Form 10-K Summary
None.
79
Table of Contents
S IGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.
CASTELLUM, INC.
By : /s/ Mark C. Fuller
Date: March 17, 2023
Mark C. Fuller
Chief Executive Officer
(Principal Executive Officer)
Date: March 17, 2023
By: /s/ David T. Bell
David T. Bell
Chief Financial Officer and Treasurer
(Principal Financial Officer and Principal Accounting Officer)
80
Table of Contents
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Mark C. Fuller and David T. Bell, and each or any one of them, his or her lawful attorneys-in-fact and agents, for such person in any and all capacities, to sign any and and all amendments to this Annual Report on Form 10-K and to file the same, with all exhibits thereto and other documents in connection therewith with the Securities and Exchange Commission, hereby ratifying and confirming all that either of said attorney-in-fact and agent, or substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
Signature Title Date
/s/ Jay O. Wright General Counsel, Director March 17, 2023
Jay O. Wright
/s/ Mark S. Alarie Director March 17, 2023
Mark S. Alarie
/s/ Bernard S. Champoux Chair, Director March 17, 2023
Bernard S. Champoux
/s/ Laurie Buckhout Director March 17, 2023
Laurie Buckhout
/s/ John F. Campbell Director March 17, 2023
John F. Campbell
/s/ Patricia Frost Director March 17, 2023
Patricia Frost
/s/ Emil Kaunitz Director March 17, 2023
Emil Kaunitz
/s/ C. Thomas McMillen Director March 17, 2023
C. Thomas McMillen
81
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.