Castellum Stock

Castellum, Inc. (Castellum) focuses on acquiring and growing technology companies in the areas of cybersecurity, IT, electronic warfare, information warfare, and information operations with businesses in the defense, federal, civilian, and commercial markets. Services include intelligence analysis, software development, software engineering, program management, strategic and mission planning, information assurance, cybersecurity and policy support, and data analytics. These services are applicable to customers in the United States government (USG), financial services, healthcare, and other users of large data applications. They can be delivered to on-premises enclaves or customers who rely upon cloud-based infrastructures. The company has worked with multiple business brokers and contacts within their business network to identify potential acquisitions.

The company has developed a qualified business opportunity (the Opportunity Pipeline). The company’s primary customers are agencies and departments of the USG. The company’s expertise and technology support national security missions and government modernization for intelligence, defense, and federal civilian customers. The demand for the company’s expertise and technology, in large measure, is created by the increasingly complex network, systems, and information environments in which governments and businesses operate, and by the need to stay current with emerging technology while increasing productivity, enhancing security, and ultimately, improving performance.

The company provides expertise and technology to enterprise and mission customers in support of national security missions and government modernization/transformation.

Markets

The company provides its expertise and technology to its domestic and international customers in the following market areas:

Digital Solutions –The company modernizes enterprise and agency-unique applications, enterprise infrastructure, and business processes to enhance productivity and increase user satisfaction. The company uses data analytics and visualization to provide insights and outcomes that optimize its customer’s operations.

C4ISR, Cyber & Space – Castellum teams ensure information superiority by delivering multi-domain C4 technology and networks. The company’s software-defined, full-spectrum cyber, electronic warfare, and C-UAS solutions provide electromagnetic spectrum advantage and deliver precision effects against national security threats. The company is developing technologies that meet the challenges of 5G wireless communications both on and off the battlefield, millimeter wave, and the use of lasers for free space optical communications and long-range sensing.

Engineering Services – Castellum provides platform integration, modernization, and sustainment; system engineering; naval architecture; training and simulation services; and logistics engineering to help the company’s customers achieve a decisive tactical edge. The company enhances platforms to improve situational awareness, mobility, interoperability, lethality, and survivability. The company conducts software vulnerability analysis and harden technology to protect against malicious actors. The company’s platform-agnostic, mission-first approach ensures optimal performance, so its nation’s forces can overmatch its adversaries.

Enterprise IT – Castellum amplifies efficiency with unmatched expertise and next-generation technology. The company designs, implements, protects, and manages secure enterprise IT solutions for the United States (U.S.) federal, state, and local agencies to optimize efficiency, enhance performance, and ensure end-user satisfaction.

Mission support –Castellum specializes in planning and intelligence support for information warfare and information operations (IW/IO). The company develops IW/IO plans, exercises, doctrine, and training for the Military Services and the Combatant Commands in domestic and deployed overseas locations. The company’s intelligence support ensures continuous advances in collection, analysis, and dissemination to optimize decision-making. Castellum also has linguists and cultural advisors who provide clients with insights into the history, media consumption, and cultural nuances of target audiences to maximize the effectiveness of communications plans and ensure mission success.

Strengths and Strategy

The company primarily offers its expertise and technology to defense, intelligence, and civilian agencies of the U.S. federal, state, and local governments. The company’s work for USG agencies may combine a wide range of skills drawn from its expertise and technology. For example, Castellum performs software development and virtualization of infrastructure services for the U.S. Navy. The company maintains and monitors government owned data centers. The company is subject matter experts in electronic and electromagnetic warfare. The company performs advanced data analytics on litigation data in support of the Department of Justice. Lastly, through the company’s IW/IO operations, Castellum provides key services to governments of other nations.

To effectively perform on its existing customer contracts and secure new customer contracts with the U.S. federal, state, and local governments, the company must maintain expert knowledge of agency policies, operations, and challenges. The company combines this comprehensive knowledge with expertise and technology for its enterprise and mission customers.

Castellum seeks acquisitions which fit one or more of the following criteria: expands Castellum's capability in existing areas of expertise such as cybersecurity and electronic warfare; broadens the scope of clients which Castellum serves such as adding a new service branch or new government agency; increases the scale of Castellum's business in existing areas in order to generate better operating profit margins and reduce the Company's wrap rate; increases the geographic footprint of Castellum in order to offer more capability to existing or new clients; adds management talent to Castellum; adds technological capability in new areas which Castellum believes are high growth potential; and fills a need within Castellum to be able to serve customers, such as adding a prime contract vehicle or the capability to win new prime contract vehicles.

Customers

The company provides expertise and technology to defense, intelligence, and civilian agencies of the U.S. federal, state, and local governments. The company’s clients call it to work on their hardest problems by providing innovative, intelligent, and agile cloud-ready capabilities across the DoD Information Network Operations, Electromagnetic Warfare, Cyberspace Operations, Intelligence, and Information Dominance community. The company specializes in intelligence analysis, software development, software engineering, turnkey system development, program management, strategic and mission planning, information assurance and cybersecurity and policy along with analysis support.

The company’s government clients include cabinet-level departments of the USG, the U.S. Army, the U.S. Navy, the U.S. Marine Corp, Special Operations, as well as other federal and civilian agencies. The company also serves state and local agencies and commercial clients, working to solve their hardest and most sophisticated cyber challenges, and has one international client.

Regulation

Some significant law and regulations that affect the company include the following:

the Federal Acquisition Regulation (FAR) and agency regulations supplemental to FAR, which regulate the formation, administration, and performance of USG contract;

the False Claims Act, which imposes civil and criminal liability for violations, including substantial monetary penalties for, among other things, presenting false or fraudulent claims for payments or approval;

the False Statements Act, which imposes civil and criminal liability for making false statements to the USG;

the Truthful Cost or Pricing Data Statute, which requires certification and disclosure of cost and pricing data in connection with the negotiation of certain contracts, modifications, or task orders;

the Procurement Integrity Act, which regulates access to competitor bid and proposal information and certain internal government procurement sensitive information, and its ability to provide compensation to certain former government procurement officials;

laws and regulations restricting the ability of a contractor to provide gifts or gratuities to employees of the USG;

post-government employment laws and regulations, which restrict the ability of a contractor to recruit and hire current employees of the USG and deploy former employees of the USG;

laws, regulations, and executive orders restricting the handling, use, and dissemination of information classified for national security purposes or determined to be controlled unclassified information or for official use only, and the export of certain products, services, and technical data, including requirements regarding any applicable licensing of the company’s employees involved in such work;

laws, regulations, and executive orders regulating the handling, use, and dissemination of personally identifiable information in the course of performing a USG contract;

international trade compliance laws, regulations, and executive orders that prohibit business with certain sanctioned entities and require authorization for certain exports or imports in order to protect national security and global stability;

laws, regulations, and executive orders governing organizational conflicts of interest that may restrict the company’s ability to compete for certain USG contracts because of the work that it performs for the USG or may require that the company takes measures, such as firewalling off certain employees or restricting their future work activities due to the work that they perform under a USG contract;

laws, regulations, and executive orders that impose requirements on the company to ensure compliance with requirements and protect the government from risks related to its supply chain most notably is compliance with Cybersecurity Maturity Model Certification (CMMC);

laws, regulations, and mandatory contract provisions providing protections to employees or subcontractors seeking to report alleged fraud, waste, and abuse related to a government contract;

the National Industrial Security Operating Manual and other laws and regulations concerning the maintenance of a facility security clearance and the safeguarding of classified materials;

the Contractor Business Systems rule, with authorizes Department of Defense agencies to withhold a portion of the company’s payments; and

the Cost Accounting Standards and Cost Principles, which impose accounting and allowability requirement that govern the company’s right to reimbursement under certain cost-based USG contracts and require consistency of accounting practices over time.

Given the magnitude of the company’s revenue derived from contracts with the DoD, the Defense Contract Audit Agency (DCAA) is its relevant government audit agency. The DCAA audits the adequacy of the company’s internal control systems and policies including, among other areas, compensation. In addition, the DCMA directly reviews the adequacy of certain other business systems, such as the company’s purchasing system. The company is also subject to audit by Inspectors General of other USG agencies.

Internationally, the company is subject to special USG laws and regulations (such as The Foreign Corrupt Practices Act of 1977 (the FCPA), local government regulations and procurement policies and practices, including regulations relating to import-export control, investments, exchange controls, and repatriation of earnings, as well as varying currency, political and economic risks.

Competition

Castellum competes with (and sometimes also teams with) Northrup Grumman, CACI, Inc., Peraton, and Booz-Allen Hamilton.