Castellum Announces Proposed Public Offering of Common Stock and Warrants

Rhea-AI Summary

Castellum (NYSE-American: CTM), a cybersecurity, electronic warfare, and software services company focused on the federal government, has announced plans for a public offering of common stock and warrants. The offering will include shares of common stock and warrants exercisable into company shares, with all shares being offered by Castellum.

The company plans to use the net proceeds for working capital and general corporate purposes. Maxim Group is serving as the sole placement agent on a reasonable best-efforts basis. The offering is subject to market conditions, with no guarantees regarding completion, size, or terms.

The offering is being made pursuant to a previously filed and effective shelf registration statement on Form S-3 (File No. 333-284205) dated January 24, 2025. A preliminary prospectus supplement and accompanying prospectus will be available on the SEC's website.

Positive

• Company has an effective shelf registration statement allowing quick access to capital markets
• Engagement of established placement agent Maxim Group

Negative

• Potential dilution for existing shareholders
• Uncertain offering terms and completion timeline
• No specific amount of capital to be raised disclosed
• Offering made on 'reasonable best-efforts' basis, indicating less certainty of completion

Insights

Financial Analyst

Castellum's announcement of a proposed public offering of common stock and warrants is a significant capital raising initiative that could substantially impact its capital structure. With a modest market cap of $89.3 million and current share price of $1.18, this offering will likely result in material dilution for existing shareholders.

The company's vague description of using proceeds for "working capital and general corporate purposes" raises concerns about immediate cash needs rather than specific growth initiatives. For a small-cap government contractor in the cybersecurity and electronic warfare space, this type of financing often indicates near-term liquidity requirements.

Particularly concerning is the combination offering of both shares and warrants, which suggests the company needed to sweeten the deal to attract investors. The "reasonable best-efforts" placement arrangement with Maxim Group (rather than a firm commitment underwriting) further indicates potential challenges in securing investor interest.

While the shelf registration filed in January provides flexibility, the timing of this capital raise warrants scrutiny. Investors should monitor the final terms closely, especially the pricing relative to current market value and the warrant exercise prices, as these will determine the true cost of this capital and potential future dilution.

Investment Banker

Castellum's public offering structure reveals strategic financial positioning that merits careful analysis. The company has opted for a combined equity and warrant offering, a financing mechanism typically employed when straight equity might prove insufficient to attract adequate capital at favorable terms.

The selection of Maxim Group as the sole placement agent on a reasonable best-efforts basis (rather than a firm commitment underwriting) signals potential market reception challenges. For context, firm commitment arrangements where underwriters purchase all securities are preferred by companies with strong investor demand, while best-efforts arrangements shift risk back to the issuer.

The shelf registration (effective January 24) provides Castellum flexibility in timing, but launching just seven weeks after effectiveness suggests urgency rather than opportunistic timing. With only $89.3 million market capitalization, the offering size will be critical – too large relative to current float could pressure share price considerably.

The warrant component introduces additional complexities: while allowing Castellum to potentially secure higher proceeds than a straight equity offering, it creates overhang concerns as future warrant exercises would trigger secondary dilution events. Investors should scrutinize the final pricing terms, warrant coverage ratio, and exercise provisions when disclosed to assess the true economic impact of this financing.

VIENNA, Va., March 14, 2025 (GLOBE NEWSWIRE) --  Castellum, Inc. (the “Company” or “Castellum”) (NYSE-American: CTM), a cybersecurity, electronic warfare, and software services company focused on the federal government, today announced that it intends to offer and sell shares of its common stock and warrants exercisable into shares of the Company’s common stock, in a public offering. All of the shares of common stock are being offered by Castellum. Castellum initially intends to use the net proceeds of the offering for working capital and general corporate purposes. Consummation of the offering is subject to market and other conditions, and there can be no assurance as to whether or when the offering may be completed, or as to the actual size or terms of the offering.

Maxim Group LLC is acting as the sole placement agent for the offering on a reasonable best-efforts basis.

A shelf registration statement on Form S-3 (File No. 333-284205) relating to the securities being offered was previously filed with the U.S. Securities and Exchange Commission (the “SEC”) and became effective on January 24, 2025. The shares may be offered only by means of a prospectus. A preliminary prospectus supplement and the accompanying prospectus relating to and describing the terms of the public offering are being filed with the SEC and will be available on the SEC’s website at www.sec.gov. When available, copies of the preliminary prospectus supplement and accompanying prospectus relating to the public offering may also be obtained by contacting Maxim Group LLC, at 300 Park Avenue, 16th Floor, New York, NY 10022, Attention: Prospectus Department, or by telephone at (212) 895-3745 or by email at syndicate@maximgrp.com. Before you invest, you should read the preliminary prospectus supplement and accompanying prospectus, together with the information incorporated by reference therein, for more complete information about the Company and the proposed offering. The final terms of the offering will be disclosed in a final prospectus supplement to be filed with the SEC.

This press release does not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or other jurisdiction.

About Castellum, Inc.

Castellum, Inc. (NYSE-American: CTM) is a defense-oriented technology company that is executing strategic acquisitions in the cybersecurity, MBSE, and information warfare areas - http://castellumus.com/.

Forward-Looking Statements:

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All forward-looking statements are inherently uncertain, based on current expectations and assumptions concerning future events or future performance of the company. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. Words such as “will,” “would,” “believe,” and “expects,” and similar language or phrasing are indicative of forward-looking statements. These forward-looking statements are subject to risks, uncertainties, and other factors, many of which are outside of the Company’s control, that could cause actual results to differ (sometimes materially) from the results expressed or implied in the forward-looking statements, including, among others: the Company’s ability to close the described equity offering ; its ability to effectively integrate and grow its acquired companies; its ability to identify additional acquisition targets and close additional acquisitions; the impact on the Company’s revenue due to a delay in the U.S. Congress approving a federal budget; and the Company’s ability to maintain the listing of its common stock on the NYSE American LLC. In evaluating such statements, prospective investors should review carefully various risks and uncertainties identified in Item 1A. “Risk Factors” section of the Company’s recently filed Form 10-Q, Item 1A. "Risk Factors” in the Company’s most recent Form 10-K, and other filings with the Securities and Exchange Commission which can be viewed at www.sec.gov. These risks and uncertainties, or not closing the described potential debt financing in this press release, could cause the Company's actual results to differ materially from those indicated in the forward-looking statements. Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.

Contact:

Glen Ives
President and Chief Executive Officer
Phone: (703) 752-6157
Contact: Info@castellumus.com

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/77c7240e-45a9-4c58-8e4f-2318bab1b4df

FAQ

What is the purpose of Castellum's (CTM) new stock and warrant offering?

The offering aims to raise capital for working capital and general corporate purposes.

When did Castellum's (CTM) shelf registration statement become effective?

The shelf registration statement (Form S-3) became effective on January 24, 2025.

Who is the placement agent for Castellum's (CTM) public offering?

Maxim Group is acting as the sole placement agent on a reasonable best-efforts basis.

What securities are included in Castellum's (CTM) proposed public offering?

The offering includes shares of common stock and warrants exercisable into company shares.