What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-03-09 compared with 2025-03-11 · 251 added, 260 removed, 694 unchanged (42% of the section changed)

11 unchanged sentences

We have audited the accompanying consolidated balance sheets of Castellum, Inc.

and its subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, stockholders’ equity (deficit) and cash flows for each of the three years in the period ended December 31, 2024, and the related notes to the consolidated financial statements (collectively, the financial statements).

and its subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes to the consolidated financial statements (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

34 unchanged sentences

Right of use asset – operating leases 800,069 1,075,982

Investment in captive insurance entity 52,110 —

Investment in joint ventures/captive insurance entity 100,250 52,110

Intangible assets, net 5,371,602 6,793,750

9 unchanged sentences

Obligation to issue common and preferred stock — 402,708

Contingent earnout — 380,000

Derivative liability 262,000 883,000

1 unchanged sentence

Notes payable, related party 400,000 250,000

Current portion of convertible promissory notes – related parties, net of discount — 238,212

Current portion of notes payable, net of discount — 1,200,000

1 unchanged sentence

Noncurrent liabilities:

Deferred tax liability — 6,292

Lease liability – operating leases, net of current portion 550,219 780,756

Contingent earnout, net of current portion — 340,000

Due to seller, net of current portion — 100,000

Convertible promissory notes – related parties, net of current portion — 2,000,000

Notes payable, net of current portion — 6,800,000

30 unchanged sentences

Goodwill impairment loss — — 6,919,094

(Gain) loss from change in fair value of contingent earnout — ( 92,000 ) 555,000

(Gain) from change in fair value of contingent earnout — — ( 92,000 )

Total operating expenses 22,183,419 25,511,042 35,344,152

6 unchanged sentences

Other income, net — — 106,419

Interest expense, net of interest income ( 1,158,435 ) ( 3,248,914 ) ( 3,992,809 )

Total other expense ( 2,667,648 ) ( 2,388,470 ) ( 4,124,506 )

Interest income (expense), net 3,250 ( 1,158,435 ) ( 3,248,914 )

Total other income (expense) 624,250 ( 2,667,648 ) ( 2,388,470 )

Loss from operations before (expense) benefit for income taxes ( 2,190,312 ) ( 9,912,275 ) ( 19,057,295 )

22 unchanged sentences

Gain on sale of reporting unit — ( 39,234 ) —

Gain on sale of fixed assets — — ( 303 )

Financing fee and bank charges for note payable and advances on revolving credit line — — 3,775

Goodwill impairment loss — — 6,919,094

Lease cost 275,913 286,572 218,314

Legal fees paid out of proceeds from note payable — — 30,000

Change in fair value of contingent earnout — — ( 92,000 )

5 unchanged sentences

Prepaid expenses and other current assets ( 118,594 ) ( 147,602 ) 75,614

Contract asset (liability) ( 109,498 ) 96,785 333,621

Contract asset and liabilities ( 298,558 ) ( 109,498 ) 96,785

Lease liabilities ( 270,049 ) ( 269,518 ) ( 185,261 )

Accounts payable and accrued expenses 128,338 861,366 ( 807,791 )

Net cash provided (used in) by operating activities 1,120,105 ( 2,264,447 ) 990,163

Net cash (used in) provided by operating activities ( 1,948,377 ) 1,120,105 ( 2,264,447 )

Cash flows from investing activities:

2 unchanged sentences

Cash paid to seller from factoring — — ( 411,975 )

Investment in Joint Ventures ( 100,250 ) — —

Acquisition of business, cash received from seller — — 475,000

1 unchanged sentence

Purchases of fixed assets ( 151,741 ) ( 3,317 ) ( 18,271 )

Net cash provided (used in) by investing activities 221,356 ( 440,985 ) ( 339,282 )

Net cash (used in) provided by investing activities ( 159,773 ) 221,356 ( 440,985 )

Cash flows from financing activities:

Proceeds from revolving credit line — 1,374,919 325,000

Payment of revolving line of credit ( 1,999,944 ) — —

Settlement of stock compensation in cash ( 128,207 ) — —

Payment of debt issuance costs ( 12,844 ) ( 64,219 ) ( 15,000 )

Proceeds from issuance of preferred and common stock 12,052,704 126,000 625,000

Proceeds from issuance of preferred and common stock, and regular warrants, net of issuance costs 15,299,817 12,052,704 126,000

Proceeds from note payable — — 1,200,000

Proceeds from exercise of stock options 26,500 — —

Proceeds from stock offering related to uplisting — — 2,000,756

Preferred stock dividend ( 107,442 ) ( 119,277 ) ( 118,152 )

3 unchanged sentences

Repayment of notes payable ( 8,000,000 ) ( 2,621,764 ) ( 1,642,471 )

Net cash provided (used in) by financing activities 9,082,746 ( 104,623 ) 1,972,100

Net cash (used in) provided by financing activities 4,737,880 9,082,746 ( 104,623 )

Net increase (decrease) in cash 2,629,730 10,424,207 ( 2,810,055 )

8 unchanged sentences

Debt discount on note payable $ — $ — $ 28,000

Partial conversion of note payable $ — $ — $ 160,000

Common shares issued for obligation to issue shares $ — $ — $ 533,750

Derivative liabilities incurred for note payable $ — $ — $ 421,000

Extinguishment of derivative liability $ — $ — $ 33,375

Gain on extinguishment of convertible note payable - related party $ — $ — $ 2,667,903

Adjustment to contingent consideration and customer relationships $ — $ — $ 275,000

Fair value adjustment recognized on issuance of common stock in Securities Purchase Agreement $ — $ — $ 93,000

Deferred issuance costs recognized for note payable $ — $ — $ 59,300

Conversion of Series B preferred shares to common stock $ — $ — $ 1,805

Derecognition of lease liability $ — $ 396,388 $ —

14 unchanged sentences

Stock-based compensation - shares issued for services and Restricted stock — — — — — — 462,244 45 423,614 — 423,659

Shares issued for uplisting, net of offering costs of approximately $$ 700,000

— — — — — — 1,351,231 135 2,000,621 — 2,000,756

Shares issued for exercise of stock options — — — — — — 15,000 2 11,998 — 12,000

Shares issued for cash including fair value adjustment — — — — — — 1,250,000 125 499,875 — 500,000

Subscription agreement — — — — 150,000 15 15,000 2 149,983 — 150,000

Debt discount recognized for obligation to issue common stock — — — — — — 0 — ( 100,000 ) — ( 100,000 )

Partial conversion of note payable — — — — — — 100,000 10 159,990 — 160,000

Shares issued to satisfy obligation to issue shares — — — — — — 132,500 13 533,737 — 533,750

Fair value adjustment on common stock for Crom — — — — — — 0 — 93,000 — 93,000

Deferred issuance costs — — — — — — 125,000 12 59,288 — 59,300

Conversion of Series B preferred shares to common stock — — ( 3,610,000 ) ( 361 ) — — 18,050,000 1,805 ( 1,444 ) — —

Net loss for the year — — — — — — — — — ( 15,008,554 ) ( 15,008,554 )

Balances at December 31, 2022 5,875,000 $ 588 — $ — 770,000 $ 77 41,699,363 $ 4,170 $ 43,621,651 $ ( 26,094,570 ) $ 17,531,916

Stock-based compensation - options — — — — — — — — 5,923,200 — 5,923,200

Stock-based compensation - warrants — — — — — — — — 1,076,969 — 1,076,969

Stock-based compensation - shares issued for services and Restricted stock — — — — — — 462,244 45 423,614 — 423,659

Shares issued in acquisition of GTMR — — — — — — 4,866,570 487 5,304,075 — 5,304,562

16 unchanged sentences

Balances at December 31, 2024 5,875,000 $ 588 — $ — 770,000 $ 77 77,076,129 $ 7,707 $ 74,256,138 $ ( 54,082,484 ) $ 20,182,026

On July 19, 2021, the Company filed a certificate of amendment with the State of Nevada to change the par value of all common and preferred stock to all be $ 0.0001 .

All changes to the par value dollar amount for these classes of stock and adjustment to additional paid in capital have been made retroactively.

On October 13, 2022, the Company effected a 1-for-20 reverse split of our authorized and outstanding shares of common stock (“Reverse Stock Split”).

As a result of the Reverse Stock Split, all authorized and outstanding common stock and per share amounts in this Annual Report on Form 10-K (“Form 10-K”), including but not limited to, the consolidated financial statements and footnotes included herein, have been adjusted to reflect the Reverse Stock Split for all periods presented.

Stock-based compensation - options — — — — — — — — 2,475,687 — 2,475,687

Exercise of stock options — — — — — — 235,028 23 26,477 — 26,500

Sale of common stock, net of filing fees — — — — — — 8,666,667 867 8,465,468 — 8,466,335

Private warrants issued to institutional investor — — — — — — 2,000,000 200 699,800 — 700,000

Warrants exercised, net of filing fees — — — — — — 6,509,926 651 6,132,831 — 6,133,482

Series C Conversion — — — — ( 200,000 ) ( 20 ) 125,000 13 8 — 1

Balance sheet reclassification adjustment (a) — — — — — — — — 274,500 — 274,500

Net loss — — — — — — — — — ( 2,505,734 ) ( 2,505,734 )

Balances at December 31, 2025 5,875,000 $ 588 — $ — 570,000 $ 57 94,612,750 $ 9,461 $ 92,330,909 $ ( 56,588,218 ) $ 35,752,797

(a) In the second quarter of 2023, the Company made an immaterial balance sheet reclassification to reduce additional paid in capital by $ 304,500 and to increase the obligation to issue common shares account and the accumulated deficit account by $ 274,500 and $ 30,000 , respectively.

12 unchanged sentences

Bayberry Acquisition Corporation (“Bayberry”) was a wholly owned subsidiary of the Company.

Jay Wright and Mark Fuller controlled and managed Bayberry and were named officers and directors of the Company upon the acquisition of Bayberry.

The transaction was accounted for as a reverse merger.

As a result, Bayberry was considered the accounting acquirer.

Following the acquisition, Bayberry’s management assumed leadership roles within the Company.

The transaction was accounted for as a reverse merger, and Bayberry was determined to be the accounting acquirer.

Corvus Consulting, LLC (“Corvus”), acquired in November 2019, is a wholly owned subsidiary of the Company.

20 unchanged sentences

GTMR is a government contractor based in Hollywood, Maryland near Naval Air Station Patuxent River.

On July 19, 2021, the Company filed a certificate of amendment with the State of Nevada to change the par value of all common and preferred stock to all be $ 0.0001 .

All changes to the par value dollar amount for these classes of stock and adjustment to additional paid in capital have been made retroactively.

On October 13, 2022, the Company completed a $ 3,000,000 public offering, a 1-for-20 Reverse Stock Split of its common shares, and an uplisting to the NYSE American LLC.

All share and per share figures related to the common stock have been retroactively adjusted in accordance with SEC Staff Accounting Bulletin (“SAB”) Topic 4C.

Summary of Significant Accounting Policies

7 unchanged sentences

Castellum, Inc.

owns 100 % of Corvus, MFSI (until sale of subsidiary on September 11, 2024), Merrison (until dissolved as of December 1, 2023), and SSI.

owns 100 % of GTMR, Corvus, MFSI (until its sale on September 11, 2024), Merrison (until dissolved as of December 1, 2023), and SSI.

The Company applies the guidance of Topic 805 Business Combinations of the Financial Accounting Standards Board Accounting Standards Codification (“ASC”).

The Company accounted for these acquisitions as business combinations and the difference between the consideration paid and the net assets acquired was first attributed to identified intangible assets and the remainder of the difference was applied to goodwill.

Reclassification

The Company has reclassified certain amounts in the 2022 financial statements to comply with the 2023 presentation.

These principally relate to classification of “Gain on Disposal of Fixed Assets” to “Other” on our consolidated statements of operations.

The reclassifications had no impact on total net loss or net cash flows for the years ended December 31, 2024 and 2023.

Business Segments

8 unchanged sentences

Cash consists of cash and demand deposits with an original maturity of three months or less.

The Company holds no cash equivalents as of December 31, 2024 and 2023, respectively.

The Company maintains cash balances in excess of the FDIC insured limit at a single bank.

The Company does not consider this risk to be material.

The Company holds $ 250,000 in a restricted cash account with Live Oak bank.

Effective August 15, 2024, the Company modified the terms of the New Live Oak Revolver with Live Oak Bank.

Under the terms of the modified agreement, the Company is required to (i) establish a collateral account with a balance of not less than $ 250,000 until such time as the senior debt service covenant is replaced by a total debt service covenant of 1.15 :1.00 at which time funds shall be released at lender's sole discretion, (ii) modified the frequency of the reporting of the borrowing base certificate from once a month to twice a month, and (iii) reduced the borrowing capacity from $ 4,000,000 to $ 2,000,000 .

Under the terms of the modified agreement, the Company was required to (i) establish a collateral account with a balance of not less than $ 250,000 until such time as the senior debt service covenant is replaced by a total debt service covenant of 1.15 :1.00 at which time funds shall be released at lender's sole discretion, (ii) modified the frequency of the reporting of the borrowing base certificate from once a month to twice a month, and (iii) reduced the borrowing capacity from $ 4,000,000 to $ 2,000,000 .

The Company held $ 250,000 in restricted cash as of December 31, 2024.

The Company fully repaid and terminated the New Live Oak Revolver in 2025 and holds $ 0 in restricted cash with Live Oak bank as of December 31, 2025.

Fixed Assets and Long-Lived Assets, Including Intangible Assets and Goodwill

20 unchanged sentences

Any excess of purchase consideration over the net fair value of the net assets acquired is recognized as goodwill.

Prior to 2022, the Company performed its annual goodwill and intangible asset impairment test at the end of the fourth quarter.

In 2022, the Company changed the date of its annual goodwill and intangible asset impairment assessment to the first day of the fourth quarter.

The Company believes this change does not represent a material change in method of applying an accounting principle.

This voluntary change is preferable under the circumstances as it results in better alignment with the timing of the Company’s long-range planning and forecasting process and provides the Company with additional time to complete its annual goodwill impairment testing in advance of its year-end reporting.

This change does not delay, accelerate, or avoid an impairment of goodwill.

During the third quarter of 2023, due to decline in stock price, Management determined that a triggering event occurred representing an indicator of goodwill impairment and requiring goodwill impairment testing for each of its reporting units as of September 30, 2023.

1 unchanged sentence

The impairment assessment resulted in a noncash goodwill impairment charge related to all three reporting units totaling $ 6,919,094 .

During 2024, the Company has noted no indicator or triggering events that demonstrate it is more-likely-than-not our goodwill may be impaired.

During 2024 and 2025, the Company has noted no indicator or triggering events that demonstrate it is more-likely-than-not our goodwill may be impaired.

Subsequent Events

26 unchanged sentences

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.

Revenue generated by Contract Support Service contracts is recognized over time as services are provided, based on the transfer of control.

Revenue generated by FFP contracts is recognized over time as performance obligations are satisfied.

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 the 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 require judgment to allocate the transaction price to the performance obligations.

Contracts may have terms up to five years.

For these contracts, the Company estimates revenue earned using contract hours worked at negotiated bill rates as the Company delivers the contractually required workforce.

Revenue generated from the Company’s FFP contracts is recognized over time as performance obligations are satisfied, based on the transfer of control to the customer.

Revenue is generally recognized using an input method based on labor hours or costs incurred relative to total estimated costs.

Most contracts do not include significant variable consideration, and contract modifications are generally minimal.

Accordingly, the Company’s election of available transition practical expedients did not have a material impact on revenue recognition.

Revenue generated from contracts with federal, state, and local governments is primarily recognized over time.

Under CPFF and time-and-materials T&M contracts, the Company performs services as directed by the customer and generally bills semi-monthly based on labor hours expended.

Certain government software development contracts include defined deliverables and are structured as FFP arrangements, which are generally billed as performance obligations are satisfied.

Revenue recognition under FFP contracts requires judgment in allocating the transaction price to performance obligations and estimating total expected costs.

Contract terms may extend up to five years .

Contract accounting requires judgment relative to assessing risks and estimating contract revenue and costs and assumptions for schedule and technical issues.

3 unchanged sentences

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.

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.

When estimates of total costs to be incurred on a contract exceed total revenue, a provision for the entire loss on the contract is recorded in the period in which the loss is determined.

12 unchanged sentences

Contract liabilities consist of billings in excess of costs and estimated earnings on uncompleted contracts.

Contract assets were $ 160,649 at January 1, 2024 and $ 270,147 at December 31, 2024.

Contract assets were $ 270,147 at January 1, 2025 and $ 568,705 at December 31, 2025.

The change in contract assets during the year primarily reflects the timing of billings compared to revenue recognition, including increased activity near period end and normal billing cycle differences.

Contract assets are transferred to accounts receivable when the Company’s right to consideration becomes unconditional.

In accordance with industry practice, contract assets and liabilities related to costs and estimated earnings in excess of billings on uncompleted contracts, and billings in excess of costs and estimated earnings on uncompleted contracts, have been classified as current.

7 unchanged sentences

Selection of these inputs involves management’s judgment and may impact net income (loss).

With the issuance of the July 2017 FASB ASU 2017-11, “ Earnings Per Share (Topic 260 ) Distinguishing Liabilities from Equity (Topic 480) Derivatives and Hedging (Topic 815 ) ,” which addresses the complexity of accounting for certain financial instruments.

Under current GAAP, an equity-linked financial instrument that otherwise is not required to be classified as a liability under the guidance Topic 480 is evaluated under the guidance in Topic 815, Derivatives and Hedging , to determine whether it meets the definition of a derivative.

Under current GAAP, an equity-linked financial instrument that otherwise is not required to be classified as a liability under the guidance Distinguishing Liabilities from Equity (Topic 480) is evaluated under the guidance in Topic 815, Derivatives and Hedging , to determine whether it meets the definition of a derivative.

If it meets that definition, the instrument (or embedded feature) is evaluated to determine whether it is indexed to an entity’s own stock as part of the analysis of whether it qualifies for a scope exception from derivative accounting.

14 unchanged sentences

The Company establishes allowances for credit losses based upon factors surrounding the credit risk of customers, historical trends, and other information.

For the years ended December 31, 2024, 2023, and 2022, the Company had two customers represent 47 %, and three representing 52 %, and 62 % of revenue earned, respectively.

For the years ended December 31, 2025, 2024, and 2023, the Company had three customers represent 73 %, 47 %, and 52 % of revenue earned, respectively.

Any customer that represents 10% or greater of total revenue represents a risk.

The Company also has four customers that represent 65 % of the total accounts receivable as of December 31, 2024 and three customers that represented 54 % of the total accounts receivable as of December 31, 2023.

The Company has three customers that represent 73 % of the total accounts receivable as of December 31, 2025 and four customers that represented 65 % of the total accounts receivable as of December 31, 2024.

Investment in Joint Ventures/Captive Insurance Entity

In May 2024, the Company entered in to a program to self-insure some of its healthcare risk up to a certain limit, with the use of a stop loss policy.

In June 2024, the Company made an equity investment in a captive insurance company.

In June 2025, the Company transitioned to a fully insured healthcare model.

The equity investment is expected to be returned to the Company and is included in Accounts Receivable on the Consolidated Balance Sheets.

During 2025, the Company made a cash investment of $ 100,000 in a joint venture in which it holds a minority ownership interest.

In addition, the Company made an immaterial investment of $ 250 in a separate joint venture.

The Company does not control either entity and accounts for these investments under the equity method of accounting in accordance with ASC 323, Investments — Equity Method and Joint Ventures.

As of December 31, 2025, the carrying value of the Company’s investments in joint ventures was $ 100,250 , which is included in Investment in Joint Ventures/Captive Insurance Entity on the Consolidated Balance Sheets.

The Company has no obligation to provide additional funding and has not guaranteed any obligations of the joint ventures.

Accounting for Income Taxes

13 unchanged sentences

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 Topic 740, Income Taxes ("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.

Share-Based Compensation

14 unchanged sentences

Basic net loss per common share is computed using the weighted average number of common shares outstanding, as well as a warrant to purchase 1,080,717 shares of common stock for a total aggregate exercise price of $ 1 granted in connection with the $ 5,600,000 note payable maturing August 31, 2026, as the cash consideration for the holder/grantee to receive common shares was determined to be nonsubstantive.

As of December 31, 2025, these warrants have been fully exercised and are no longer included in the calculation.

Diluted earnings per share (“EPS”) include additional dilution from common stock equivalents, such as convertible notes, preferred stock, stock issuable pursuant to the exercise of stock options and all other warrants.

2 unchanged sentences

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes (“Topic 740”):

Improvements to Income Tax Disclosures.

This update requires disaggregated information about a reporting entity’s effective tax rate reconciliations as well as information on income taxes paid.

This update is effective for annual periods beginning in our fiscal year ending December 31, 2025.

Early adoption is permitted.

We are currently evaluating the impact that this update will have on our financial statement disclosures.

On November 4, 2024, the FASB issued ASU No.

1 unchanged sentence

ASU 2024-03 requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements.

ASU 2024-03 will be effective for annual periods beginning January 1, 2027 and interim periods beginning January 1, 2028 and will be applied on a prospective basis with the option to apply the standard

retrospectively.

We are evaluating the disclosure impact of ASU 2023-09;

however, we do not expect the standard will have a material impact on the company’s consolidated financial position, results of operations, and/or cash flows.

Other accounting standards updates adopted and/or issued, but not effective until after December 31, 2024, are not expected to have a material effect on the Company’s consolidated financial position, annual results of operations, and/or cash flows.

The Company continually assesses new accounting pronouncements to determine their applicability.

When it is determined that a new accounting pronouncement affects the Company's financial reporting, the Company undertakes a study to determine the consequences of such change to its Financial Statements and assures that there are proper controls in place to ascertain that the Company's Financial Statements properly reflect the change.

Recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future financial statements.

Acquisition and Disposition

1 unchanged sentence

On March 22, 2023, the Company entered into an agreement and plan of merger with GTMR.

This acquisition was accounted for as a business combination whereby GTMR became a 100 % owned subsidiary of the Company.

This acquisition was accounted for as a business combination whereby GTMR became a 100 % owned subsidiary of the Company (the “GTMR Acquisition”).

The Company acquired GTMR to expand our capabilities, increase market share, gain access to new contracts, and achieve cost efficiencies through synergies and economies of scale.

41 unchanged sentences

These measurement period adjustments were subsequently identified as a result of the completion of third party accounting assistance.

For all acquisitions disclosed, there were no transaction costs that were not recognized as an expense.

Revenue attributable to the GTMR acquisition included in our consolidated statement of operations for the year ended December 31, 2023, was $ 7,779,478 and $ 10,858,762 in December 31, 2024.

On September 11, 2024, the Company entered into a stock purchase agreement with Lead-Risk Millenia, LLC (the "Buyer") for the sale of one of its subsidiaries, MFSI (the "MFSI Divestiture").

7 unchanged sentences

The balance of the Anticipated Receivable, accounts receivable in excess of $ 150,000 , and any payments made by the Company on behalf of the Buyer, are reflected in Due from Buyer on the Consolidated Balance Sheets.

As of December 31, 2025, the balance of the Anticipated Receivable was $ 135,466 reflecting payments received to date.

After considering qualitative and quantitative aspects of MFSI and its sale relative to the Guidance of ASC 205-20, Presentation of Financial Statements - Discontinued Operations, Management concluded MFSI should not be reported or disclosed as a discontinued operation.

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The intangible assets, with the exception of the trademarks, were recorded as part of the acquisitions of Corvus, MFSI, Merrison, LSG, SSI, and GTMR.

The intangible assets associated with MFSI were properly derecognized upon the sale of MFSI.

Amortization expense for the years ended December 31, 2025, 2024, and 2023 was $ 1,422,148 , $ 2,062,809 , and $ 2,380,303 respectively, and the intangible assets are being amortized based on the estimated future lives as noted above.

2 unchanged sentences

2027 1,014,558

Thereafter 1,790,147

1 unchanged sentence

The following table presents changes to goodwill for the years ended December 31, 2025 and 2024 for each reporting unit:

Corvus SSI MFSI Merrison Total

December 31, 2022 $ 6,387,741 $ 8,461,150 $ 685,073 $ — $ 15,533,964

Goodwill acquired through acquisition — 2,102,037 — — 2,102,037

Merrison subsumed into Corvus ( 4,429,000 ) ( 1,845,094 ) ( 645,000 ) — ( 6,919,094 )

Corvus SSI MFSI Total

December 31, 2023 $ 1,958,741 $ 8,718,093 $ 40,073 $ 10,716,907

1 unchanged sentence

December 31, 2024 1,958,741 8,718,093 — 10,676,834

December 31, 2025 $ 1,958,741 $ 8,718,093 $ — $ 10,676,834

Convertible Promissory Notes – Related Party

The Company entered into convertible promissory notes – related party as follows as of December 31:

Convertible note payable with a trust related to one of the Company’s former directors, convertible at $ 0.260 per share, at 5 % interest, (extinguished on April 4, 2022 for new note)

$ — $ 3,209,617

Total Convertible Notes Payable – Related Party $ — $ 3,209,617

Debt discount — ( 971,405 )

$ — $ 2,238,212

The Company has no convertible promissory notes with related parties as of December 31, 2025 and 2024.

Interest expense which includes amortization of discount and premium for the years ended December 31, 2025, 2024 and 2023 was $ — , $ 209,622 , and $ 1,399,262 , respectively.

The amount of the debt discount recorded related to the conversion feature granted to the note holder was evaluated for characteristics of liability or equity and was determined to be equity under ASC 470 and ASC 480.

The Company recognized this as additional paid in capital, and the discount is being amortized over the life of the note.

The Company recognized this as additional paid in capital, and the discount was being amortized over the life of the note.

On February 22, 2024, the Company entered into an agreement to amend the related party convertible promissory note with the Buckhout Charitable Remainder Trust (Laurie Buckhout – Trustee) (the “BCRT”), resulting in the elimination of the convertible discount feature, change in the interest rate, extension of the term, and change in the payoff schedule.

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The Company entered into notes payable as follows as of December 31:

Note payable at 7 % originally due November 2023, maturing September 30, 2024 (a)

$ — $ 5,600,000

Note payable at 10 % interest dated February 22, 2022 and matures the earlier of (i) September 30, 2024 or (ii) the acceleration of the obligations as contemplated under the promissory note including the successful completion of an equity offering of at least $ 15,000,000 (b)

Note payable at 7.5 % dated February 22, 2024, maturing August 31, 2026 (c)

Note payable at 12 % interest dated April 6, 2023 and matures the earlier of (i) September 30, 2024 or (ii) the acceleration of the obligations as contemplated under the promissory note (d)

Convertible note payable, convertible at $ 1.20 per share, at 10 %, maturing February 13, 2024 (e)

Promissory note payable (f) 2,000,000 —

Term note payable, at prime plus 3 % interest, applied on a deferred basis ( 8.50 % at December 31, 2023 and 6.25 % at December 31, 2022) maturing August 11, 2024 (g)

Note payable at 7.5 % dated February 22, 2024, maturing August 31, 2026 (a)

Promissory note payable (b) — 2,000,000

Total Notes Payable $ — $ 8,000,000

Debt Discount — ( 146,989 )

$ 8,000,000 $ 8,074,775

(a) On August 12, 2021, the note payable was amended to extend the maturity date to September 30, 2024 (the "Eisiminger Note 1").

It was determined that under ASC 470, the debt amendment was considered a modification.

The amount of the debt discount recorded related to the warrants granted to the note holder was evaluated for characteristics of liability or equity and was determined to be equity under ASC 470 and ASC 480 and the entire balance was fully amortized as of December 31, 2023.

On February 22, 2024, the Company entered into an agreement to amend the Eisiminger Note 1, resulting in a change to the interest rate and an extension of the maturity date.

The amended note was evaluated for characteristics of debt modification or extinguishment and it was determined that under ASC 470, the debt amendment was considered an extinguishment.

As a result of the amendment, the Eisiminger Note 1 was combined with Eisiminger Note 2 as defined and described in (b) below, resulting in a new note, (the "2024 Eisiminger Note").

See (c) below.

(b) On February 28, 2022, the Company was obligated to issue 125,000 shares of common stock as further consideration for making this loan to the Company (the "Eisiminger Note 2").

The shares were issued in April 2022.

On February 22, 2024, the Company entered into an agreement to amend the Eisiminger Note 2 resulting in a change to the interest rate and an extension of the maturity date.

The Eisiminger Note 2 was evaluated for characteristics of debt modification or extinguishment and it was determined that under ASC 470, the debt amendment was considered an extinguishment.

Therefore, the remaining unamortized debt discount balance of $ 61,263 was recorded as a loss in the income statement.

As a result of the amendment, the principal balances of the Eisiminger Note 2 was combined with the Eisiminger Note 1 as described in (a) above, resulting in the 2024 Eisiminger Note.

See (c) below.

(c) On February 22, 2024, as a result of amending the Eisiminger Note 1 and the Eisiminger Note 2, the Company entered into the 2024 Eisiminger Note, with a principal balance of $ 6,000,000 , maturing on August 31, 2026, and bearing interest at 7.5 % per annum until February 1, 2025, after which the interest rate will increase to 8 % per annum.

(d) On April 6, 2023, the Company entered into a promissory note with a principal balance of $ 400,000 bearing interest at 12 % per annum (the "Eisiminger Note 3").

On February 22, 2024, the Company paid the outstanding principal and accrued interest owed on the Eisiminger Note 3.

(e) On February 13, 2023, the Company entered into a series of transactions with Crom Cortana Fund LLC (“Crom”), the primary purpose of which was related to the GTMR Acquisition entered into on March 22, 2023.

In connection therewith, the Company and Crom entered into an agreement to pay off the amount owed to Crom under the terms of the convertible promissory note in the original principal amount of $ 1,050,000 due April 4,

2023 ("Prior Crom Note").

In consideration of a $ 300,000 cash payment and 556,250 shares of common stock representing conversion of the remaining principal balance thereunder, the Company’s obligations under the Prior Crom Note was deemed satisfied reducing the balance to zero ;

we induced conversion of the debt, which effectively extinguished the debt.

Simultaneously therewith, the parties entered into a securities purchase agreement (the “2023 SPA”) pursuant to which Crom purchased (a) a convertible promissory note in the principal amount of $ 840,000 (the “2023 Note Payable”), which matured February 13, 2024 and bears interest at a per annum rate equal to 10 % to be paid monthly, and (b) a warrant pursuant to which Crom has the right to purchase up to 700,000 shares of the Company’s common stock (the “2023 Warrant”) at an exercise price of $ 1.38 which expires 60 months from the date of issuance.

The proceeds of the 2023 Note Payable were used primarily to fund the GTMR Acquisition, as well as fund the aforementioned debt repayment.

On January 25, 2024, the Company paid the outstanding principal and accrued interest owed on the 2023 Note Payable to Crom.

During December 2024, Crom exercised the 700,000 warrants to purchase 700,000 shares at an exercise price of $ 1.38 .

See Note 11, “Stockholders’ Equity” for further information on warrants.

(f) On February 22, 2024, the Company and the BCRT entered into a new note payable in the principal amount of $ 2,400,000 (the "Buckhout February 2024 Note") which matures on August 31, 2026, and accrues interest at a per annum rate of 5 % through January 1, 2025, 8 % per annum through January 1, 2026, and 12 % per annum thereafter.

The principal amount will be amortized at the rate of $ 100,000 per month, commencing in September 2024 until the final payment is made in August 2026.

The terms of the Buckhout February 2024 Note do not permit the principal amount to be converted into common stock.

(a) On February 22, 2024, as a result of amending two note payables with Robert Eisiminger, the Company entered into the 2024 Eisiminger Note, with a principal balance of $ 6,000,000 , maturing on August 31, 2026, and bearing interest at 7.5 % per annum until February 1, 2025, and at 8 % per annum thereafter.

As of December 31, 2025, the Company fully repaid this note.

(b) On February 22, 2024, the Company and the BCRT entered into a new note payable in the principal amount of $ 2,400,000 (the "Buckhout February 2024 Note") maturing on August 31, 2026, and bearing interest at 5 % per annum through January 1, 2025, 8 % per annum through January 1, 2026, and 12 % per annum thereafter.

The principal amount was to be amortized at the rate of $ 100,000 per month, commencing in September 2024 until the final payment was made in August 2026.

The terms of the Buckhout February 2024 Note did not permit the principal amount to be converted into common stock.

Refer to Note 6 , "Convertible Promissory Notes - Related Party" for relevant information regarding the previous note with the BCRT.

(g) On July 8, 2024, the Company repaid the balance owed on the Term Loan Promissory Note Payable of $ 252,678 , that was due to mature on August 11, 2024.

This payment retired the Term Loan Promissory Note Payable.

As of December 31, 2025, the Company fully repaid this note.

Interest expense, which includes amortization of discount, for the years ended December 31, 2025, 2024, and 2023 was $ 385,912 , $ 706,054 , and $ 1,732,265 , respectively.

The total principal payments on our notes payable for the next two years are as follows:

2025 $ 1,200,000

2026 6,800,000

Total $ 8,000,000

Note Payable – Related Party

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On February 16, 2024, the Company entered into a letter agreement to (i) extend the maturity date from December 31, 2024 to August 1, 2025 and (ii) require subsequent monthly principal payments of $ 50,000 for eight months commencing on the maturity date, with the final payment by March 31, 2026.

On August 1, 2025, the Company further extended the maturity date to March 1, 2026, maintaining the $ 50,000 monthly amortization for eight months beginning in March 2026.

All other terms of the note payable remain unchanged.

As a result, $ 250,000 is reflected in current liabilities and the remaining balance is reflected in non-current liabilities.

As a result, $ 400,000 is reflected in current liabilities.

On February 11, 2026, the Company fully repaid the note payable.

See Note 17 , “Subsequent Events” for further information.

Revolving Credit Facility

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On February 22, 2024 the Company entered into a $ 4,000,000 revolving credit facility with Live Oak Bank that bears interest at prime plus 2 % interest and matures on February 22, 2025 (the “New Live Oak Revolver").

The New Live Oak

Revolver replaces the Revolving Credit Facility.

The New Live Oak Revolver replaces the Revolving Credit Facility.

The Company rolled over the principal balance outstanding of approximately $ 625,000 on the Revolving Credit Facility and was advanced an additional amount of $ 904,793 , the majority of which was used to make the partial payment on the convertible promissory note with the BCRT.

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As of December 31, 2024, the total amount outstanding on the New Live Oak Revolver was $ 1,999,944 .

The Company incurred $ 187,384 in interest in the twelve months ended December 31, 2024, none of which is accrued as of December 31, 2024.

On February 13, 2025, the Company fully repaid its outstanding line of credit with Live Oak Bank in the amount of $ 1,989,986 Following this payment, the line of credit was closed and the restricted cash was released to the Company’s checking account.

On February 13, 2025, the Company fully repaid its outstanding line of credit with Live Oak Bank in the amount of $ 1,989,986 .

Following this payment, the line of credit was closed and the restricted cash was released to the Company’s checking account.

The Company has no remaining obligations under this facility.

Refer to subsequent events in Note 1 7 for more detail.

Due To Seller and Contingent Earnout

As part the GTMR Acquisition, the Company was obligated to pay $ 1,250,000 which included $ 350,000 held back to satisfy any net working capital deficiencies.

This balance was originally scheduled to be paid six months following the closing date, however, payment was postponed, and the unpaid balance of $ 350,000 accrued interest at an annual rate equal to the rate of interest announced publicly by Citibank N.A.

in New York, plus 2 % until it was paid in full in July of 2024.

Also as part of the GTMR Acquisition, the Company issued an Accounts Receivable Note to the sellers of GTMR whereby the Company was obligated to pay the sellers a principal amount of $ 206,587 , adjusted for deficiencies in net working capital, for four months following the closing date of the acquisition.

The Company determined a net working capital deficiency of $ 49,740 , resulting in an amount due to the sellers of $ 156,847 .

This amount was paid in full in September of 2023.

Due To Seller

As part of the acquisition of SSI (the "SSI Acquisition"), the Company was obligated to pay an earnout contingent on the results of operations of SSI through August 2023.

On February 15, 2024, the Company entered into an agreement with the former shareholders of SSI concerning the amount and timing of the contingent earnout included in total consideration for the SSI Acquisition in August 12, 2021.

The parties agreed to settle the amount for a total of $ 720,000 , with an initial payment of $ 180,000 that was made by the Company at signing of the agreement, plus starting in March 2024, monthly payments of $ 20,000 plus interest payable at 5 % per annum for 27 months.

As a result, $ 240,000 is recorded as Due to Seller in current liabilities and $ 100,000 is reflected in non-current liabilities as of December 31, 2024.

Prior to the February 15, 2024 agreement, this earnout was recorded as Contingent Earno ut on the Consolidated Balance Sheets.

The parties agreed to settle the amount for a total of $ 720,000 , consisting of an initial payment of $ 180,000 made by the Company upon execution of the agreement, followed by monthly payments of $ 20,000 plus interest at 5 % per annum for 27 months beginning in March 2024.

In November 2025, the balance was fully paid off.

Stockholders’ Equity (Deficit)

On October 13, 2022, the Company effected a 1-for-20 reverse split of our authorized and outstanding shares of common stock.

As a result of the Reverse Stock Split, all authorized and outstanding common stock and per share amounts in this Form 10-K, including but not limited to, the consolidated financial statements and footnotes included herein, have been adjusted to reflect the Reverse Stock Split for all periods presented.

Preferred Stock

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As of December 31, 2025 and December 31, 2024, the Company had 5,875,000 shares of Series A preferred stock issued and outstanding, respectively, convertible into 587,500 shares of common stock.

The 5,875,000 shares were issued to the Former Officers of the Company in settlement of debt.

For the year ended December 31, 2024, the Company has total preferred stock dividends recognized of $ 119,277 , of which $ 73,077 is related to Series A preferred stock dividends.

The 5,875,000 shares were issued to former officers of the Company in settlement of debt.

For the year ended December 31, 2023, the Company had preferred stock dividends recognized of $ 118,152 , of which $ 72,624 was related to Series A Preferred Stock dividends.

For the years ended December 31, 2025 and 2024, the Company recognized total preferred stock dividends of $ 107,442 and $ 119,277 , respectively, of which $ 73,077 in each year related to Series A preferred stock dividends.

Series B Preferred Stock

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In the year ended December 31, 2024, the Company raised $ 150,000 for 150,000 shares of Series C preferred stock along with 300,000 common shares.

In the year ended December 31, 2021, the Company raised $ 620,000 for 620,000 shares of Series C preferred stock along with 1,240,000 common shares.

Each share of the Series C preferred stock is convertible into 0.625 common shares, and the Series C preferred stock pays a $ 0.06 dividend per Series C preferred share per year.

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As a result, as of December 31, 2024, 770,000 shares of Series C preferred stock have been issued.

See Note 17 , “Subsequent Events”, for conversions of Series C preferred stock.

On January 3 and January 8, 2025, two holders of the Company’s Series C preferred stock, converted an aggregate of 200,000 shares of Series C preferred stock to 125,000 shares of common stock at a conversion rate of 0.625 shares of common stock per share of Series C preferred stock.

As of December 31, 2025, 570,000 shares of Series C preferred stock is outstanding.

The Company has 3,000,000,000 shares of common stock, par value $ 0.0001 authorized.

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The holders of the Company’s Common Stock are entitled to one vote for each share of common stock held.

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 (the “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.

On September 17, 2025, the Company filed a registration statement on Form S-8 (File No.

333-290332) to register an aggregate of 9,000,000 shares of the Company's common stock to be issued pursuant to the Castellum, Inc.

Second Amended 2021 Stock Incentive Plan.

On January 25, 2024 the Company entered into a securities purchase agreement with an institutional investor, pursuant to which the Company agreed to sell and issue, in a registered direct offering, an aggregate of (i) 5,243,967 shares of the Company’s common stock, at a purchase price of $ 0.32 per share and (ii) 3,193,534 pre-funded warrants (the “Pre-funded Warrant(s)”) to purchase up to an aggregate of 3,193,534 shares of common stock for aggregate gross proceeds to the Company of approximately $ 2.7 million, before deducting the placement agent fees and estimated offering expenses payable by the Company (the “Registered Offering”).

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In a concurrent private placement, the Company agreed to issue to the same institutional investor, for each ordinary share and Pre-funded Warrant purchased in the offering, an additional ordinary share purchase warrant (“Regular Warrants”).

The Regular Warrants have an exercise price of $ 0.35 and are exercisable to purchase an aggregate of 8,437,501 shares of common stock.

The Regular Warrants are exercisable for five years .

The shares, the Pre-Funded Warrants, and the Pre-Funded Warrant Shares are being offered pursuant to a shelf registration statement on Form S-3 (File No.

The Regular Warrants had an exercise price of $ 0.35 and were exercisable to purchase an aggregate of 8,437,501 shares of common stock.

The Regular Warrants were exercisable for five years .

The shares, the Pre-Funded Warrants, and the Pre-Funded Warrant Shares were being offered pursuant to a shelf registration statement on Form S-3 (File No.

333-275840), which was declared effective by the U.S.

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The Registered Offering closed on January 29, 2024.

Pursuant to a placement agency agreement dated as of January 25, 2024 (the “Placement Agency Agreement”), the Company engaged Maxim Group LLC (“Maxim”) to act as the lead placement agent in connection with the Registered Offering.

At closing, the Company paid Maxim (i) a cash fee equal to 7.0 % of the aggregate gross proceeds of the Registered Offering and (ii) reimbursed Maxim for all reasonable and documented out-of-pocket expenses of $ 60,000 , which included the reasonable fees, costs, and disbursements of its legal counsel.

On December 22, 2024, the Company entered into a securities purchase agreement with several institutional investors, pursuant to which the Company agreed to sell and issue, in a registered direct offering, 9,473,700 shares of the Company’s common stock, at a purchase price of $ 0.38 per share (the “Second Registered Offering”).

This resulted in aggregate gross proceeds to the Company of approximately $ 3.6 million, The Second Registered Offering closed on December 24, 2024.

The shares are being offered pursuant to a shelf registration statement on Form S-3 (File No.

333-275840), which was declared effective by the SEC on December 12, 2023, and a related prospectus supplement, dated December 22, 2024, related to the Second Registered Offering.

On December 27, 2024, the Company entered into a securities purchase agreement with several institutional investors, pursuant to which the Company agreed to sell and issue, in a public offering that included certain additional other purchasers an aggregate of 4,355,000 shares of the Company’s common stock, at a purchase price of $ 0.85 per share (the “Public Offering”).

This resulted in aggregate gross proceeds to the Company of approximately $ 3.7 million.

The Public Offering closed on December 30, 2024.

The shares are being offered pursuant to a shelf registration statement on Form S-3 (File No.

333-275840), which was declared effective by the SEC on December 12, 2023, and a related prospectus supplement, dated December 27, 2024, related to the Public Offering.

Pursuant to placement agency agreements dated as of December 22, 2024 and December 27, 2024, respectively the Company engaged Maxim to act as the lead placement agent in connection with the Second Registered Offering and the Public Offering.

In connection therewith, the Company has agreed to (i) pay Maxim a cash fee equal to 7.0 % of the aggregate gross proceeds of the Second Registered Offering and the Public Offering, and (ii) reimburse Maxim for all reasonable and documented out-of-pocket expenses, including the reasonable fees, costs, and disbursements of its legal counsel in the aggregate of $ 120,000 .

D uring the twelve months ended December 31, 2024, the Company recorded an obligation to issue 515,464 restricted shares of common stock, that vest ratably over a period of one year , to its Board of Directors (“Board”) for their service on the Board from January 1, 2024, through June 30, 2024.

All Pre-funded and Regular Warrants have been exercised as of December 31, 2025.

On January 3, 2025, a member of the Company’s Board of Directors (“Board”), exercised 110,028 stock options at $ 0.21 per share for 110,028 shares of common stock.

On August 21, 2025, a member of the Company's Board exercised 125,000 stock options at $ 0.21 per share for 125,000 shares of common stock.

In January 2025, two holders of the Company’s Series C preferred stock, converted 200,000 shares of Series C preferred stock into 125,000 shares of common stock at a conversion rate of 0.625 shares of common stock per share of Series C preferred stock.

On February 12, 2025, an investor exercised an aggregate of 1,080,717 warrants to purchase 1,080,717 shares of the Company’s common stock which resulted in proceeds to the Company of $ 1 .

Prior to this exercise, the treatment of these warrants was evaluated under ASC 260-10, Earnings Per Share — Overall.

Under this guidance, shares issuable for little or no cash consideration are considered outstanding common shares and are included in the computation of basic earnings per share from the date they are granted.

Accordingly, the exercise of these warrants does not impact the Company's earnings per share calculation.

On January 10, 2025, the Company filed a universal shelf registration on Form S-3 (File No.

333-284205), which was declared effective by the SEC on January 24, 2025, pursuant to which the Company may offer and sell up to $ 100,000,000 of equity and debt securities.

On March 19, 2025, the Company closed on the March 2025 Public Offering of 4,500,000 Units at a public offering price of $ 1.00 per Unit.

Each Unit consisted of one share of common stock and one warrant to purchase one share of common stock.

The March 2025 Warrants were immediately exercisable at $ 1.08 per share and expired 60 days from the date of

The shares of common stock and March 2025 Warrants were immediately separable and issued separately.

Gross proceeds from the March 2025 Public Offering were approximately $ 4.5 million before deducting placement agent fees and offering expenses.

Castellum used the net proceeds of the March 2025 Offering for working capital and general corporate purposes.

On June 13, 2025, the Company closed on the June 2025 Public Offering of 4,166,667 Units at a public offering price of $ 1.20 per Unit.

Each Unit consists of one share of common stock and one warrant to purchase one share of common stock.

The June 2025 Warrants were immediately exercisable at $ 1.22 per share and expired 60 days from the date of issuance.

The shares of common stock and June 2025 Warrants were immediately separable and issued separately.

Gross proceeds from the June 2025 Public Offering were approximately $ 5.0 million before deducting placement agent fees and offering expenses.

Castellum used the net proceeds of the June 2025 Public Offering for working capital and general corporate purposes.

As of December 31, 2025, 1,755,543 of the March 2025 Warrants issued were exercised at $ 1.08 per share, for gross proceeds of $ 1.90 million before deducting placement agent fees.

The remaining 2,744,457 March 2025 Warrants have expired as of December 31, 2025.

As of December 31, 2025, 3,673,666 of the June 2025 Warrants issued were exercised at $ 1.22 per share, for gross proceeds of $ 4.48 million before deducting placement agent fees.

The remaining 493,001 June 2025 Warrants have expired as of December 31, 2025.

D uring the year ended December 31, 2025, the Company recorded an obligation to issue 515,464 restricted shares of common stock, that vest ratably over a period of one year , to its Board for their service on the Board from January 1, 2024, through June 30, 2024.

The total expense booked to record this obligation was $ 146,768 .

Any unvested restricted shares of common stock are forfeited upon termination of the members position on the Board prior to the end of 2024.

As of December 31, 2024.

these shares have not been issued.

During the twelve months ended December 31, 2024, 29,403,701 shares of common stock were issued related to the Registered Offering, Second Registered Offering, and the Public Offering, for common stock, along with the warrant exercises noted below.

On June 11, 2025, the Board agreed to a cash payment totaling $ 146,700 , which was paid out on June 17, 2025, and the obligation to issue shares was reduced to zero .

During the twelve months ended December 31, 2025, 17,536,622 shares of common stock were issued related to the stock option exercises, March 2025 Public Offering and June 2025 Public Offering, for common stock, along with the warrant exercises noted below.

The Pre-funded Warrants were immediately exercisable and do not have an expiration date.

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The Regular Warrants expire on March 20, 2029, and have an exercise price of $ 0.35 per share.

As of December 31, 2024, 6,437,501 of the Regular Warrants have been exercised, with a remaining 2,000,000 , exercised in February of 2025.

Refer to subsequent events in Note 1 7 for more detail.

During the month of February, an institutional investor exercised an aggregate of 2,000,000 warrants to purchase 2,000,000 shares of the Company’s common stock which resulted in aggregate proceeds to the Company of $ 700,000 .

All warrants held by this investor have now been fully exercised .

On February 12, 2025, an investor exercised an aggregate of 1,080,717 warrants to purchase 1,080,717 shares of the Company’s common stock which resulted in proceeds to the Company of $ 1 .

The treatment of these warrants was accessed under ASC 260-10, Earnings Per Share—Overall, where shares issuable for little or no cash consideration shall be considered outstanding common shares and are included in the computation of basic earnings per share since they were originally granted.

Of the 4,500,000 March 2025 Warrants issued during the March Public Offering, 1,755,543 warrants were exercised at $ 1.08 per share prior to December 31, 2025.

The remaining 2,744,457 warrants expired on May 19, 2025.

Of the 4,166,667 June 2025 Warrants issued during the June 2025 Public Offering, 3,673,666 warrants were exercised at $ 1.22 per share prior to December 31, 2025.

The remaining 493,001 warrants expired on August 12, 2025.

The Regular Warrants and the Pre-funded Warrants do not require a cash settlement.

Based on the terms of the agreements, both the Regular Warrants and the Pre-funded Warrants were freestanding, equity-linked instruments that represented separate units of account.

The Company allocated the value of the net proceeds from the Registered Offering to the common stock, Regular Warrants and Pre-funded Warrants based on relative fair value.

The Company allocated the value of the net proceeds from the Registered Offering to the

common stock, Regular Warrants and Pre-funded Warrants based on relative fair value.

The value allocated to the Regular Warrants and Pre-funded Warrants was recorded in Additional Paid-In Capital in the Consolidated Balance Sheets.

In December, Crom exercised 700,000 warrants, at an exercise price of $ 1.38 , which were issued February 13, 2023, acquiring an equal number of shares of the Company’s common stock.

The following table represents a summary of warrants for the year ended December 31, 2025 and December 31, 2024:

2025 2024 2023

Number Weighted

Price Number Weighted

Beginning balance 8,744,698 $ 1.40 7,444,698 $ 1.68 5,678,836 $ 1.84

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Exercised ( 8,509,926 ) 0.41 ( 10,331,035 ) 0.41 — —

( 3,247,458 ) 1.08 — — — —

Ending balance 5,653,981 $ 1.40 8,744,698 $ 1.40 7,444,698 $ 1.68

Warrants exercisable 5,653,981 8,744,698

Intrinsic value of warrants $ — $ 6,661,661 $ 327,214

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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.

As of December 31, 2024, the Company has granted 4,032,500 shares of common stock under the Stock Incentive Plan.

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.

As of December 31, 2025, 8,807,500 stock options have been granted under the Amended Plan.

The following represents a summary of options for the Amended Plan and additional options granted outside of the Amended Plan for the years ended December 31, 2025 and 2024:

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Stock based compensation expense related to options for the years ended December 31, 2025 and 2024 was $ 2,475,687 and $ 5,280,217 , respectively, which is comprised of $ 2,202,451 and $ 4,940,735 in service-based grants and $ 273,236 and $ 339,482 in performance-based grants, for the years ended December 31, 2025 and 2024, respectively.

Forfeitures are recognized as incurred.

In accordance with ASC 718-10-50, the Company measures the fair value of its share-based payment arrangements using the Black-Scholes model.

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3.89 % - 4.45 %

3.48 % - 3.89 %

The Company measures the share-based compensation for all options and warrants that are not considered derivative liabilities using the Black-Scholes method with these assumptions, and any changes to these inputs can produce significantly higher or lower fair value measurements.

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The Derivative Liabilities had and have been accounted for utilizing ASC 815 “Derivatives and Hedging.” The warrants issued in connection with the 2023 SPA were exercised in December 2024.

Refer to Note 11 , “Stockholders’ Equity” for more detail.

On February 13, 2024, the Company paid the outstanding principal and accrued interest owed on the 2023 Note Payable to Crom, thereby extinguishing the conversion feature associated with this note;

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The estimated fair values of these liabilities were 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).

As of December 31, 2025, the Company recorded the fair value of the 656,250 warrants issued on April 4, 2022 (“Derivative Liability”) at $ 262,000 , all other derivative liabilities were extinguished or exercised.

In connection with the MFSI Divestiture, as discussed in Note 3 , "Acquisition and Disposition", 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.

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Anticipated Receivable $ — $ — $ 135,466 $ 135,466

Derivative Liabilities $ — $ — $ 883,000 $ 883,000

Derivative Liability $ — $ — $ 262,000 $ 262,000

Fair Value Measurements at December 31, 2024

Level 1 Level 2 Level 3 Total

Derivative Liabilities $ — $ — $ 157,600 $ 157,600

The Company’s Derivative Liabilities as of December 31 are as follows:

2024 2023 Inception

Fair value of 656,250 warrants issued on April 04, 2022

$ 883,000 $ 66,000 $ 378,000

Fair value of conversion option of Crom convertible note $ — $ 200 $ 162,000

Fair value of 700,000 warrants issued on February 13, 2023

$ — $ 91,400 $ 259,000

$ 883,000 $ 157,600

Anticipated Receivable $ — $ — $ 265,739 $ 265,739

Derivative Liability $ — $ — $ 883,000 $ 883,000

The value at inception of the remaining Derivative Liability was $ 378,000 .

During the year ended December 31, 2025, 2024, and 2023 the Company recognized changes in the fair value of the Derivative Liabilities of $ 621,000 , $( 725,400 ), and $ 666,400 respectively.

Activity related to the Derivative Liabilities for the year ended December 31, 2024 is as follows:

Activity related to the Derivative Liability for the year ended December 31, 2025 is as follows:

Beginning balance as of December 31, 2024 $ ( 883,000 )

Issuance of Derivative Liabilities —

Change in fair value of Derivative Liabilities ( 725,400 )

Change in fair value of Derivative Liability 621,000

Ending balance as of December 31, 2025 $ ( 262,000 )

4 unchanged sentences

Stock Price $ 0.90 $ 2.00

Conversion option - convertible note n/a 1.20

Conversion option - convertible note n/a n/a

Strike price - warrants 1.84 1.38 - 1.84

2 unchanged sentences

Volatility 145.20 % 98.00 % - 148.30 %

Market yield - conversion option n/a 17.40 %

Market yield - conversion option n/a n/a

Risk-free rate 3.48 % 3.90 % - 5.60 %

1 unchanged sentence

On August 12, 2021, the Company issued a note to an employee in the principal amount of $ 400,000 that has a maturity date of December 31, 2024 and bears interest at a rate of five percent ( 5 %).

The maturity date and other terms of this note were subsequently amended on February 16, 2024, as noted in Note 8 , “Note Payable - Related Party”.

The maturity date and other terms of this note were subsequently amended on February 16, 2024 and August 1, 2025 as noted in Note 8 , “Note Payable - Related Party”.

On February 11, 2026, the Company fully repaid the note payable with the related party.

See Note 17 , “Subsequent Events” for further information.

As part of the SSI Acquisition Agreement, the Company was obligated to pay an earnout contingent on the results of operations of SSI through August 2023.

1 unchanged sentence

The former shareholders were both employed by the Company during 2025.

Refer to Note 10 , “Due to Seller and Contingent Earnout”, for additional details.

During 2023, the Company granted warrants to two of its officers pursuant to the employment agreements with these officers as a bonus for closing the GTMR Acquisition.

As part of the GTMR Acquisition, the Company was obligated to pay $ 1,250,000 which included $ 350,000 held back to satisfy any net working capital deficiencies.

This balance was originally scheduled to be paid six months following the closing date, however, payment was postponed and the unpaid balance of $ 350,000 accrued interest at an annual rate equal to the rate of interest announced publicly by Citibank N.A.

in New York, plus 2 % until it was paid in full in July of 2024.

One of the sellers of GTMR remains an employee of the Company.

On November 7, 2025 , the Company fully settled the Due to Seller obligation, paying $ 140,000 plus accrued interest.

Defined Contribution Plan

The Company and its subsidiaries maintain 401(k) plans as a defined contribution retirement plan for all eligible employees.

Each 401(k) plan provides for tax-deferred contributions of employees’ salaries, limited to a maximum annual amount as established by the IRS.

The plans enroll employees immediately with no age or service requirement.

The Company sponsors a qualified 401(k) plan that allows eligible employees to make contributions, subject to certain limitations.

The Company provides a matching contribution of up to 4 % of an employee's compensation.

The aggregate 401(k) Plan employer match was $ 814,511 , $ 907,989 and $ 882,707 in the years ended December 31, 2025, 2024 and 2023, respectively.

As of March 11, 2025, the Company has no material contractual obligations, purchase commitments, or other significant commitments that require disclosure in this note.

Should the Company enter into any such commitments in the future, it will update its disclosures accordingly in its periodic filings.

The Company determines whether an arrangement contains a lease at inception.

Operating lease right-of-use (“ROU”) assets and operating lease liabilities are recognized for leases with terms greater than twelve months.

Lease liabilities are measured at the present value of future lease payments, and ROU assets are measured based on the corresponding lease liability adjusted for any prepaid or accrued lease payments.

The Company has elected the practical expedient not to recognize short-term leases, defined as leases with an initial term of twelve months or less, on the consolidated balance

Lease expense for operating leases is recognized on a straight-line basis over the lease term.

The Company’s leases do not contain material residual value guarantees or restrictive covenants.

The Company’s operating leases primarily consist of office facilities and a warehouse.

These leases are recognized on the consolidated balance sheets as operating lease right-of-use assets and corresponding operating lease liabilities.

In addition, the Company maintains certain month-to-month and short-term office arrangements, including leases supporting individual employees, which are not material individually or in the aggregate and are accounted for as short-term leases.

Lease cost consisted of the following for the years ended December 31, 2025 and 2024:

December 31, 2025 December 31, 2024

Operating lease cost 530,345 427,933

Short-term lease cost 47,021 110,115

Total lease cost $ 577,366 $ 538,048

Supplemental balance sheet and other lease information are as follows:

December 31, 2025 December 31, 2024

Weighted-average remaining lease term (years) 3 4

Weighted-average discount rate 8.1 % 8.4 %

Future minimum lease payments under operating leases as of December 31, 2025 were as follows:

Total lease payments $ 909,807

imputed interest $ 88,720

Operating lease liabilities $ 821,087

Other than the leases described above, the Company had no material commitments as of December 31, 2025.

The components of the provision for income taxes for the years ended December 31, are as follows:

2025 2024 2023

Federal 49,510 ( 17,148 ) 84,279

State 158,470 85,180 138,770

Current tax expense 207,980 68,032 223,049

Federal — — ( 1,165,655 )

State — — ( 314,511 )

Deferred tax expenses — — ( 1,480,166 )

Total $ 207,980 $ 68,032 $ ( 1,257,117 )

The following table summarizes the significant differences between the U.S.

federal statutory tax rate and the Company’s effective tax rate for financial statement purposes for the years ended December 31:

Year Ended December 31,

2025 2024 2023

Federal income taxes at statutory rate 21.00 % 21.00 % 21.00 %

State income taxes at statutory rate ( 0.40 ) % 2.20 % 3.50 %

Change in tax rate ( 0.50 ) % ( 0.80 ) % ( 2.90 ) %

Permanent differences ( 8.40 ) % ( 3.60 ) % ( 7.70 ) %

Other ( 2.10 ) % 0.50 % ( 1.70 ) %

Goodwill impairment — % ( 6.30 ) % — %

Amount % Amount % Amount %

Pre-tax book income $ ( 2,190,312 ) $ ( 9,912,275 ) $ ( 19,057,295 )

federal statutory tax rate ( 459,965 ) 21.0 % ( 2,081,578 ) 21.0 % ( 4,002,032 ) 21.0 %

State and local income taxes, net of federal income tax effects (1) 220,780 ( 10.1 ) % 64,818 ( 0.7 ) % ( 185,003 ) 1.0 %

Research and development tax credits ( 149,376 ) 6.8 % — — % — — %

Change in valuation allowance 187,612 ( 8.6 ) % 986,455 ( 10.0 ) % 1,225,611 ( 6.4 ) %

Nontaxable or nondeductible items 15,314 ( 0.7 ) % 105,363 ( 1.1 ) % 64,732 ( 0.3 ) %

Goodwill impairment — — % — — % 1,209,001 ( 6.3 ) %

Warrant fair value adjustments ( 130,410 ) 6.0 % 190,806 ( 1.9 ) % ( 221,345 ) 1.2 %

Compensation 438,403 ( 20.0 ) % 878,050 ( 8.9 ) % 728,210 ( 3.8 ) %

Other 85,622 ( 3.9 ) % ( 75,882 ) 0.8 % ( 76,291 ) 0.4 %

Totals $ 207,980 ( 9.5 ) % $ 68,032 ( 0.7 ) % $ ( 1,257,117 ) 6.6 %

The following is a summary of the net deferred tax asset (liability) as of December 31:

2024 2023 2022

(1) State taxes in Florida, New Jersey, Maryland and Virginia comprise the majority of this category.

Our effective tax rates were ( 9.5 )% and ( 0.7 )% for the years ended December 31, 2025 and 2024, respectively.

Our effective tax rates were below the 21% statutory rate primarily due to state taxes, nondeductible compensation and increase in valuation allowance, partially offset by tax credits and changes in fair value adjustments.

The tax effects of temporary differences that gave rise to significant portions of deferred tax assets and liabilities consist of the following at December 31:

Deferred tax assets:

Net operating losses $ 414,597 $ —

Deferred interest 746,725 864,967

R&D credit carryforward 223,212 —

Lease liabilities 233,011 297,596

8 unchanged sentences

Property and equipment ( 38,778 ) ( 17,890 )

Debt discount ( 113,542 ) ( 256,788 ) ( 741,579 )

Cash to accrual method change ( 58,816 ) ( 113,542 )

6 unchanged sentences

The Company believes that, based on a number of factors, the available objective evidence creates sufficient uncertainty regarding the realizability of the deferred tax assets such that a valuation allowance has been recorded.

These factors include the Company’s history of net losses since its inception.

These factors include the Company’s history of book losses since its inception.

As of December 31, 2025, our federal and state net operating loss (“NOLs”) carryforwards for income tax purposes were approximately $ 1,471,502 and $ 1,060,113 , respectively.

If not utilized, certain state net operating loss carryforwards will begin to expire in 2042.

The Company also has Federal and New Jersey research and development credit carryforwards for income tax purposes of $ 75,539 and $ 147,673 , respectively.

It is more likely than not that the majority of these net operation losses and credit carryforwards will not be realized.

Cash paid for income taxes, net of refunds, for the year ended December 31:

US state and local

Virginia 22,300

Maryland 150,000

All Other States 16,200

Total cash paid for income taxes, net of refunds 188,500

The Company’s policy is to recognize interest and penalties associated with uncertain tax benefits as part of the income tax provision and include accrued interest and penalties with the related income tax liability on the Company’s consolidated balance sheets.

To date, the Company has not recognized any interest and penalties in its consolidated statements of

operations, nor has it accrued for or made payments for interest and penalties.

To date, the Company has not recognized any interest and penalties in its consolidated statements of operations, nor has it accrued for or made payments for interest and penalties.

The Company has no material unrecognized tax benefits as of December 31, 2025 and 2024.

The provision (benefit) for income taxes for the years ended December 31 are as follows:

2024 2023 2022

Current $ 68,032 $ 223,049 $ 209,563

Deferred — ( 1,480,166 ) 610,033

Total $ 68,032 $ ( 1,257,117 ) $ 819,596

Fiscal years ending December 31, 2022 and later remain subject to examination by U.S.

federal and state taxing authorities.

There are currently no audits in progress.

As of December 31, 2025, our federal and state net operating loss (“NOLs”) carryforwards for income tax purposes were approximately $ 1,471,502 and $ 1,060,113 , respectively.

If not utilized, certain state net operating loss carryforwards will begin to expire in 2042.

The Company also has Federal and New Jersey research and development credit carryforwards for income tax purposes of $ 75,539 and $ 147,673 , respectively.

It is more likely than not that the majority of these net operation losses and credit carryforwards will not be realized.

Subsequent Events

On January 3, 2025, a member of the Company’s Board of Directors, exercised stock options at $ 0.212 per share for 110,028 shares of Common Stock.

On January 3 and January 8, 2025, two holders of the Company’s Series C Preferred Stock, converted 200,000 shares of Series C Preferred Stock to 125,000 shares of common stock at a conversion rate of 0.625 shares of Common Stock per share of Series C Preferred Stock.

The Company filed a universal shelf registration on Form S-3 (File No.

333-284205) on January 10, 2025, which was declared effective by the SEC on January 24, 2025, pursuant to which the Company may offer and sell up to $ 100,000,000 of equity and debt securities.

The shelf registration provides the Company with the flexibility to issue securities from time to time in one or more offerings, subject to market conditions and corporate needs.

All warrants held by this investor have now been fully exercised.

On February 12, 2025, an investor exercised an aggregate of 1,080,717 warrants to purchase 1,080,717 shares of the Company’s common stock which resulted in proceeds to the Company of $ 1 .

The treatment of these warrants was accessed under ASC 260-10, Earnings Per Share—Overall , where shares issuable for little or no cash consideration shall be considered outstanding common shares and are included in the computation of basic earnings per share since they were originally granted.

On February 13, 2025, the Company fully repaid the New Live Oak Revolver in the amount of $ 1,989,986 .

Following this payment, the New Live Oak Revolver was closed and the restricted cash was released to the Company’s checking account.

The Company has no remaining obligations under the New Live Oak Revolver.

On February 27, 2025, the GTMR subsidiary was awarded a $ 103.3 million, five and one-half year contract for Special Missions Management of On-Site Services (“MOSS”) in support of the Naval Air Systems Command (“NAVAIR”) Program Office 290 (“PMA-290”) Special Missions.

On February 11, 2026, the Company fully repaid the $ 400,000 note payable with the related party and currently has no outstanding debt.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosures

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data