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Item 2. Management’s Discussion and Analysis

2023-08-10 compared with 2023-05-12 · 251 added, 84 removed, 406 unchanged (45% of the section changed)

1 unchanged sentence

The following discussion and analysis is intended to help you understand our business, financial condition, results of operations, liquidity and capital resources.

This discussion and analysis should be read together with our unaudited condensed consolidated financial statements as of March 31, 2023 and December 31, 2022, for the three months ended March 31, 2023 and 2022, and the related notes thereto, that are included elsewhere in this Quarterly Report on Form 10-Q (this “Quarterly Report”).

This discussion and analysis should be read together with our unaudited condensed consolidated financial statements as of June 30, 2023 and December 31, 2022, for the three and six months ended June 30, 2023 and 2022, and the related notes thereto, that are included elsewhere in this Quarterly Report on Form 10-Q (this “Quarterly Report”).

This discussion and analysis should also be read together with the historical audited annual consolidated financial statements as of and for the years ended December 31, 2022 and 2021, included in the Annual Report on Form 10-K (the “Annual Report”).

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Upon consummation of the Reverse Recapitalization, the most significant change in Legacy Bridger’s future reported financial position and results of operations was a gross decrease in cash and cash equivalents (as compared to Legacy Bridger’s balance sheet at December 31, 2022), of approximately $17.0 million.

Total direct and incremental transaction costs of Bridger, JCIC and Legacy Bridger paid at the closing of the Reverse Recapitalization on January 24, 2023 (the “Closing”) were approximately $16.6 million and will be treated as a reduction of the cash proceeds and deducted from our additional paid-in capital.

Total direct and incremental transaction costs of Bridger, JCIC and Legacy Bridger paid at the closing of the Reverse Recapitalization on January 24, 2023 (the “Closing”) were approximately $16.6 million and have been treated as a reduction of the cash proceeds and deducted from our additional paid-in capital.

Public Company Costs

73 unchanged sentences

Results of Operations

Comparison of the Three Months Ended March 31, 2023 to the Three Months Ended March 31, 2022

The following table sets forth our unaudited condensed consolidated statement of operations information for the three months ended March 31, 2023 and 2022 and should be reviewed in conjunction with the financial statements and notes included elsewhere in this Quarterly Report.

Comparison of the Three Months Ended June 30, 2023 to the Three Months Ended June 30, 2022

The following table sets forth our unaudited condensed consolidated statements of operations information for the three months ended June 30, 2023 and 2022 and should be reviewed in conjunction with the financial statements and notes included elsewhere in this Quarterly Report.

(All amounts in U.S.

March 31, 2023

March 31, 2022

dollars) Three Months Ended

June 30, 2023 Three Months Ended

June 30, 2022 Period Over Period Change ($) Period Over Period Change (%)

Revenues $ 11,615,280 $ 12,753,671 $ (1,138,391) (9 %)

Cost of revenues:

Flight operations 6,299,122 5,849,562 449,560 8 %

Maintenance 4,210,976 3,571,986 638,990 18 %

Total cost of revenues 10,510,098 9,421,548 1,088,550 12 %

Gross income 1,105,182 3,332,123 (2,226,941) (67 %)

Selling, general and administrative expense 15,187,808 5,735,627 9,452,181 165 %

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Interest expense (5,540,867) (2,293,682) (3,247,185) 142 %

Other income 601,891 134,311 467,580 348 %

Net loss $ (19,021,602) $ (4,562,875) $ (14,458,727) 317 %

(All amounts in U.S.

March 31, 2023

March 31, 2022

dollars) Three Months Ended

June 30, 2023 Three Months Ended

June 30, 2022

Series A Preferred Stock – adjustment to maximum redemption value $ (5,805,582) $ —

Legacy Bridger Series C Preferred Shares - adjustment to maximum redemption value $ — $ (191,240,782)

Legacy Bridger Series A Preferred Shares – adjustment for redemption, extinguishment, accrued interest, and change in fair value $ — $ (81,323,569)

Net loss attributable to Common stockholders - basic and diluted $ (24,827,184) $ (277,127,226)

Net loss per Common Stock - basic and diluted $ (0.55) $ (7.15)

Revenues decreased by $1.1 million, or 9%, to $11.6 million for the three months ended June 30, 2023, from $12.8 million for the three months ended June 30, 2022.

The following table shows revenues by service offering for each period.

(All amounts in U.S.

dollars) Three Months Ended

June 30, 2023 Three Months Ended

June 30, 2022 Period Over Period Change ($) Period Over Period Change (%)

Fire suppression $ 10,449,427 $ 11,682,263 $ (1,232,836) (11) %

Aerial surveillance 1,123,753 1,002,025 121,728 12 %

Other services 42,100 69,383 (27,283) (39) %

Total revenues $ 11,615,280 $ 12,753,671 $ (1,138,391) (9) %

Fire suppression revenue decreased by $1.2 million, or 11%, to $10.4 million for the three months ended June 30, 2023, from $11.7 million for the three months ended June 30, 2022.

The decrease in fire suppression revenue accounted for 108% of the total decrease in revenues for the three months ended June 30, 2023.

The decrease was primarily driven by a later start to the 2023 U.S.

wildfire season.

The Company actively worked to partially offset the impact of wet spring weather and slower start to the U.S wildfire season by expanding its aerial firefighting operations into Canada where wildfire activity began earlier.

Aerial surveillance revenue increased by $0.1 million, or 12%, to $1.1 million for the three months ended June 30, 2023, from $1.0 million for the three months ended June 30, 2022.

The increase was primarily driven by the number of aircraft operating for the three months ended June 30, 2023 compared to the three months ended June 30, 2022.

Other services revenue decreased by $27 thousand, or 39%, to $42 thousand for the three months ended June 30, 2023, from $69 thousand for the three months ended June 30, 2022.

The decrease was primarily driven by decreased maintenance services.

The following table shows revenues by revenue type for each period.

(All amounts in U.S.

dollars) Three Months Ended

June 30, 2023 Three Months Ended

June 30, 2022 Period Over Period Change ($) Period Over Period Change (%)

Flight revenue $ 5,794,315 $ 6,417,520 $ (623,205) (10) %

Standby revenue 5,135,937 6,210,976 (1,075,039) (17) %

Other revenue 685,028 125,175 559,853 447 %

Total revenues $ 11,615,280 $ 12,753,671 $ (1,138,391) (9) %

Flight revenue decreased by $0.6 million, or 10%, to $5.8 million for the three months ended June 30, 2023, from $6.4 million for the three months ended June 30, 2022.

The decrease was primarily driven by a later start to the 2023 U.S.

wildfire season.

Standby revenue decreased by $1.1 million, or 17%, to $5.1 million for the three months ended June 30, 2023, from $6.2 million for the three months ended June 30, 2022.

The decrease was primarily driven by a later start to the 2023 U.S.

wildfire season.

Other revenue increased by $0.6 million, or 447%, to $0.7 million for the three months ended June 30, 2023, from $0.1 million for the three months ended June 30, 2022.

The increase was primarily due to labor, maintenance and improvements to an aircraft under the ownership of a related party.

Refer to “Note 16 – Related Party Transactions” of the Notes to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report for additional details.

Cost of Revenues

Cost of revenues increased by $1.1 million, or 12%, to $10.5 million for the three months ended June 30, 2023, from $9.4 million for the three months ended June 30, 2022 due to the following drivers:

Flight Operations

Flight operations expenses increased by 0.4 million, or 8%, to $6.3 million for the three months ended June 30, 2023, from $5.8 million for the three months ended June 30, 2022.

The increase was primarily attributable to higher depreciation expense due to increase in flight hours due to the two additional Super Scooper aircraft placed into service in September 2022 and February 2023, respectively.

Maintenance expenses increased by $0.6 million, or 18%, to $4.2 million for the three months ended June 30, 2023, from $3.6 million for the three months ended June 30, 2022.

The increase was primarily driven by higher aircraft maintenance costs of $0.5 million and depreciation expense of $0.1 million required for the two additional Super Scooper aircraft placed into service in September 2022 and February 2023, respectively.

Selling, General and Administrative Expense

Selling, general and administrative expense increased by $9.5 million, or 165%, to $15.2 million for the three months ended June 30, 2023, from $5.7 million for the three months ended June 30, 2022.

The increase was primarily driven by $7.9 million of non-cash stock-based compensation expense for the restricted stock units (“RSUs”) issued to employees of Bridger in connection.

Refer to “Note 15 – Stock-Based Compensation” of the Notes to Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report for additional details.

The increase was also partially driven by a loss on disposal and an asset impairment charge of $1.1 million related to aging surveillance aircraft.

The increase was also partially driven by higher insurance costs of $0.6 million and higher operating costs of $0.4 million primarily associated with the two additional Super Scooper aircraft placed into service in September 2022 and February 2023, respectively.

Interest Expense

Interest expense increased by $3.2 million, or 142%, to $5.5 million for the three months ended June 30, 2023, from $2.3 million for the three months ended June 30, 2022.

The increase was primarily driven by the additional interest expense for the Series 2022 Bonds of $4.9 million partially offset by a decrease in interest expense for the Series A-1 and Series A-2 preferred shares of Legacy Bridger (together, the “Legacy Bridger Series A Preferred Shares”) of $1.7 million.

Other income increased by $0.5 million, or 348%, to $0.6 million for the three months ended June 30, 2023, from $0.1 million for the three months ended June 30, 2022.

The increase was primarily driven by interest income for the embedded derivative of Legacy Bridger Series C Preferred Shares of $0.2 million.

Refer to “ Note 17 – Mezzanine Equity ” of the Notes to Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report for additional details.

The increase was partially driven by realized gains from available-for-sale securities of $0.3 million.

Refer to “Note 3 – Cash Equivalents and Investments in Marketable Securities” of the Notes to Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report for additional details.

Comparison of the Six Months Ended June 30, 2023 to the Six Months Ended June 30, 2022

The following table sets forth our unaudited condensed consolidated statements of operations information for the six months ended June 30, 2023 and 2022 and should be reviewed in conjunction with the financial statements and notes included elsewhere in this Quarterly Report.

(All amounts in U.S.

dollars) Six Months Ended

June 30, 2023 Six Months Ended

June 30, 2022 Period Over Period Change ($) Period Over Period Change (%)

Revenues $ 11,980,653 $ 12,822,963 $ (842,310) (7 %)

Cost of revenues:

Flight operations 10,032,383 9,514,914 517,469 5 %

Maintenance 7,726,427 6,433,973 1,292,454 20 %

Total cost of revenues 17,758,810 15,948,887 1,809,923 11 %

Gross loss (5,778,157) (3,125,924) (2,652,233) 85 %

Selling, general and administrative expense 48,416,299 10,576,886 37,839,413 358 %

Operating loss (54,194,456) (13,702,810) (40,491,646) 295 %

Interest expense (11,205,412) (6,008,228) (5,197,184) 87 %

Other income 1,693,328 275,154 1,418,174 515 %

Net loss $ (63,706,540) $ (19,435,884) $ (44,270,656) 228 %

(All amounts in U.S.

dollars) Six Months Ended

June 30, 2023 Six Months Ended

June 30, 2022

Series A Preferred Stock – adjustment for deemed dividend upon Closing $ (48,300,000) $ —

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Legacy Bridger Series A Preferred Shares – adjustment for redemption, extinguishment and accrued interest $ — $ (85,663,336)

Legacy Bridger Series C Preferred Shares - adjustment to maximum redemption value $ — $ (191,240,782)

Net income (loss) attributable to Common Stockholders – basic and diluted $ 34,276,036 $ (296,340,002)

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Net income (loss) per Common Stock—diluted $ 0.44 $ (7.64)

Revenues increased by $0.3 million, or 427%, to $0.4 million for the three months ended March 31, 2023, from $0.1 million for the three months ended March 31, 2022.

The increase was primarily due to labor, maintenance and improvements to an aircraft under the ownership of a related party.

Revenues decreased by $0.8 million, or 7%, to $12.0 million for the six months ended June 30, 2023, from $12.8 million for the six months ended June 30, 2022.

The following table shows revenues by service offering for each period.

(All amounts in U.S.

dollars) Six Months Ended

June 30, 2023 Six Months Ended

June 30, 2022 Period Over Period Change ($) Period Over Period Change (%)

Fire suppression $ 10,449,427 $ 11,682,263 $ (1,232,836) (11) %

Aerial surveillance 1,123,753 1,002,025 121,728 12 %

Other services 407,473 138,675 268,798 194 %

Total revenues $ 11,980,653 $ 12,822,963 $ (842,310) (7) %

Fire suppression revenue decreased by $1.2 million, or 11%, to $10.4 million for the six months ended June 30, 2023, from $11.7 million for the six months ended June 30, 2022.

The decrease in fire suppression revenue accounted for 146% of the total decrease in revenues for the six months ended June 30, 2023.

The decrease was primarily driven by a later start to the 2023 U.S.

wildfire season.

Aerial surveillance revenue increased by $0.1 million, or 12%, to $1.1 million for the six months ended June 30, 2023, from $1.0 million for the six months ended June 30, 2022.

The increase was primarily driven by the number of aircraft operating for the six months ended June 30, 2023 compared to the six months ended June 30, 2022.

Other services revenue increased by $0.3 million, or 194%, to $0.4 million for the six months ended June 30, 2023, from $0.1 million for the six months ended June 30, 2022.

The increase was primarily driven by maintenance services performed on an externally owned aircraft.

The following table shows revenues by revenue type for each period.

(All amounts in U.S.

dollars) Six Months Ended

June 30, 2023 Six Months Ended

June 30, 2022 Period Over Period Change ($) Period Over Period Change (%)

Flight revenue $ 5,794,315 $ 6,417,520 $ (623,205) (10) %

Standby revenue 5,135,937 6,210,976 (1,075,039) (17) %

Other revenue 1,050,401 194,467 855,934 440 %

Total revenues $ 11,980,653 $ 12,822,963 $ (842,310) (7) %

Flight revenue decreased by $0.6 million, or 10%, to $5.8 million for the six months ended June 30, 2023, from $6.4 million for the six months ended June 30, 2022.

The decrease was primarily driven by a later start to the 2023 U.S.

wildfire season.

Standby revenue decreased by $1.1 million, or 17%, to $5.1 million for the six months ended June 30, 2023, from 6.2 million for the six months ended June 30, 2022.

The decrease was primarily driven by a later start to the 2023 U.S.

wildfire season.

Other revenue increased by $0.9 million, or 440%, to $1.1 million for the six months ended June 30, 2023, from $0.2 million for the six months ended June 30, 2022.

The increase was primarily due to labor, maintenance and improvements to an aircraft under the ownership of a related party and additional contractually specified items.

Refer to “Note 16 – Related Party Transactions” of the Notes to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report for additional details.

Revenues for the three months ended March 31, 2023 and 2022 were impacted by the seasonality inherent in our business as the North American wildfire season historically occurs during the second and third quarters of the fiscal year.

Cost of Revenues

Cost of revenues increased by $0.7 million, or 11%, to $7.2 million for the three months ended March 31, 2023, from $6.5 million for the three months ended March 31, 2022 due to the following drivers:

Cost of revenues increased by $1.8 million, or 11%, to $17.8 million for the six months ended June 30, 2023, from $15.9 million for the six months ended June 30, 2022 due to the following drivers:

Flight Operations

Flight operations expenses increased by $0.1 million, or 2%, to $3.7 million for the three months ended March 31, 2023, from $3.7 million for the three months ended March 31, 2022.

The increase was primarily attributable to higher personnel expenses of $0.2 million required for the two additional Super Scooper aircraft placed into service in September 2022 and February 2023, respectively.

The increase was partially offset by a decrease in depreciation expense of $0.1 million due to a decrease in flight hours.

Maintenance expenses increased by $0.7 million, or 23%, to $3.5 million for the three months ended March 31, 2023, from $2.9 million for the three months ended March 31, 2022.

The increase was primarily driven by higher subscriptions, licenses, and fees of $0.3 million, depreciation expense of $0.2 million, personnel expenses of $0.1 million, and aircraft maintenance of $0.1 million required for the two additional Super Scooper aircraft placed into service in September 2022 and February 2023, respectively.

Flight operations expenses increased by $0.5 million, or 5%, to $10.0 million for the six months ended June 30, 2023, from $9.5 million for the six months ended June 30, 2022.

The increase was primarily attributable to higher expenses of $0.5 million for the RSUs granted to all employees in April 2023.

Refer to “Note 15 – Stock-Based Compensation” of the Notes to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report for additional details.

Maintenance expenses increased by $1.3 million, or 20%, to $7.7 million for the six months ended June 30, 2023, from $6.4 million for the six months ended June 30, 2022.

The increase was primarily driven by aircraft maintenance of $0.7 million and higher subscriptions, licenses, and fees of $0.4 million required for the two additional Super Scooper aircraft placed into service in September 2022 and February 2023, respectively.

The increase was partially driven by higher expenses of $0.2 million for the RSUs granted to all employees in April 2023.

Refer to “Note 15 – Stock-Based Compensation” of the Notes to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report for additional details.

Selling, General and Administrative Expense

Selling, general and administrative expense increased by $28.4 million, or 586%, to $33.2 million for the three months ended March 31, 2023, from $4.8 million for the three months ended March 31, 2022.

The increase included planned operating selling, general and administrative expenses of $6.0 million, $3.2 million of professional service fees primarily associated with becoming a public company and $24.0 million of non-cash stock-based compensation expense for the restricted stock units (“RSUs”) issued to executives and senior management of Bridger in connection with the Reverse Recapitalization, which closed in January 2023.

Selling, general and administrative expense increased by $37.8 million, or 358%, to $48.4 million for the six months ended June 30, 2023, from $10.6 million for the six months ended June 30, 2022.

The increase was primarily driven by $31.9 million of non-cash stock-based compensation expense for the RSUs issued to management and all employees of Bridger in connection.

Refer to “Note 15 – Stock-Based Compensation” of the Notes to Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report for additional details.

The operating selling, general and administrative expenses of $6.0 million increased $1.2 million from $4.8 million for the three months ended March 31, 2022.

This increase was driven by both higher insurance costs and higher operating costs primarily associated with the recent addition of the two latest Super Scoopers.

The increase was partially driven by a loss on disposal of assets related to the impairment of a Twin Commander surveillance platform of $0.6 million.

The increase was partially driven by higher operating costs of $4.1 million and higher insurance costs of $1.2 million primarily associated with the two additional Super Scooper aircraft placed into service in September 2022 and February 2023, respectively.

Interest Expense

Interest expense increased by $2.0 million, or 52%, to $5.7 million for the three months ended March 31, 2023, from $3.7 million for the three months ended March 31, 2022.

The increase was primarily driven by the additional interest expense for the Series 2022 Bonds of $4.5 million, decrease in interest expense for the Series A-1 and Series A-2 preferred shares of Legacy Bridger (together, the “Legacy Bridger Series A Preferred Shares”) of $2.9 million and increase in interest expense for the two loan agreements in connection with the two separate credit facilities brokered through Live Oak Bank and backed by the U.S.

Interest expense increased by $5.2 million, or 87%, to $11.2 million for the six months ended June 30, 2023, from $6.0 million for the six months ended June 30, 2022.

The increase was primarily driven by the additional interest expense for the Series 2022 Bonds of $9.4 million, decrease in interest expense for the Legacy Bridger Series A Preferred Shares of $4.6 million and an increase in interest expense for the two loan agreements in connection with the two separate credit facilities brokered through Live Oak Bank and backed by the U.S.

Department of Agriculture for the completed purchase of the Company’s first two Super Scooper aircraft of $0.4 million.

Refer to discussion of our loan commitments further below under the section of this Quarterly Report entitled “ Liquidity and Capital Resources—Indebtedness .”

Other income increased by $1.0 million, or 675%, to $1.1 million for the three months ended March 31, 2023, from $0.1 million for the three months ended March 31, 2022.

Other income increased by $1.4 million, or 515%, to $1.7 million for the six months ended June 30, 2023, from $0.3 million for the six months ended June 30, 2022.

The increase was primarily driven by interest income for the embedded derivative of Legacy Bridger Series C Preferred Shares of $0.9 million.

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Our management believes that the inclusion of supplementary adjustments to EBITDA applied in presenting Adjusted EBITDA are appropriate to provide additional information to investors about certain material non-cash items and about unusual items that we do not expect to continue at the same level in the future.

The following table reconciles net loss, the most directly comparable GAAP measure, to EBITDA and Adjusted EBITDA for the three months ended March 31, 2023 and 2022.

Ended March 31,

The following table reconciles net loss, the most directly comparable GAAP measure, to EBITDA and Adjusted EBITDA for the three months ended June 30, 2023 and 2022.

Three Months Ended

June 30, 2023 Three Months Ended

June 30, 2022 Period Over Period Change ($) Period Over Period Change (%)

Net loss $ (19,021,602) $ (4,562,875) $ (14,458,727) 317 %

Depreciation and amortization 3,235,147 2,827,932 407,215 14 %

Interest expense 5,540,867 2,293,682 3,247,185 142 %

(Gain) loss on disposals (i)

Legal fees (ii)

Offering costs (iii)

Stock-based compensation (iv)

Business development & integration expenses (v)

EBITDA (10,245,588) 558,739 (10,804,327) (1934 %)

Loss on disposals and non-cash impairment charges (i)

1,053,866 — 1,053,866 NM

Offering costs (ii)

1,184,487 1,213,198 (28,711) (2 %)

Stock-based compensation (iii)

8,612,514 2,222 8,610,292 NM

Business development & integration expenses (iv)

354,455 236,603 117,852 50 %

Adjusted EBITDA $ 959,734 $ 2,010,762 $ (1,051,028) (52 %)

Net loss margin (vi)

Adjusted EBITDA margin (vi)

Net loss margin (v)

(164) % (36) %

Adjusted EBITDA margin (v)

NM - Not Meaningful

Represents loss on the disposal of aging aircraft.

Represents one-time costs associated with legal fees for infrequent or unusual transactions that were not capitalizable per GAAP.

Represents one-time professional service fees related to the preparation for potential offerings that have been expensed during the period.

Represents stock-based compensation expense recognized of RSUs granted to certain executives and senior management and the fair value adjustment for warrants issued in connection with the Reverse Recapitalization.

Represents expenses related to potential acquisition targets and additional business lines.

Net loss margin represents Net loss divided by Total revenue and Adjusted EBITDA margin represents Adjusted EBITDA divided by Total revenue.

i) Represents loss on the disposal of an aging aircraft and the non-cash impairment charges on a retired aircraft.

ii) Represents one-time professional service fees related to the preparation for potential offerings that have been expensed during the period.

iii) Represents stock-based compensation expense recognized of RSUs granted to all employees and the fair value adjustment for warrants issued in connection with the Reverse Recapitalization.

iv) Represents expenses related to potential acquisition targets and additional business lines.

v) Net loss margin represents Net loss divided by Total revenue and Adjusted EBITDA margin represents Adjusted EBITDA divided by Total revenue.

The following table reconciles net loss, the most directly comparable GAAP measure, to EBITDA and Adjusted EBITDA for the six months ended June 30, 2023 and 2022.

Six Months Ended

June 30, 2023 Six Months Ended

June 30, 2022 Period Over Period Change ($) Period Over Period Change (%)

Net loss $ (63,706,540) $ (19,435,884) $ (44,270,656) 228 %

Depreciation and amortization 4,986,192 4,094,854 891,338 22 %

Interest expense 11,205,412 6,008,228 5,197,184 87 %

EBITDA (47,514,936) (9,332,802) (38,182,134) 409 %

Loss on disposals and non-cash impairment charges (i)

1,052,407 781,492 270,915 35 %

Offering costs (ii)

3,267,607 1,213,198 2,054,409 169 %

Stock-based compensation (iii)

32,610,530 4,780 32,605,750 NM

Business development & integration expenses (iv)

873,277 391,976 481,301 123 %

Adjusted EBITDA $ (9,711,115) $ (6,941,356) $ (2,769,759) 40 %

Net loss margin (v)

(532) % (152) %

Adjusted EBITDA margin (v)

(81) % (54) %

NM - Not Meaningful

i) Represents loss on the disposal of an aging aircraft and the non-cash impairment charges on a retired aircraft.

ii) Represents one-time professional service fees related to the preparation for potential offerings that have been expensed during the period.

iii) Represents stock-based compensation expense recognized of RSUs granted to all employees and the fair value adjustment for warrants issued in connection with the Reverse Recapitalization.

iv) Represents expenses related to potential acquisition targets and additional business lines.

v) Net loss margin represents Net loss divided by Total revenue and Adjusted EBITDA margin represents Adjusted EBITDA divided by Total revenue.

Liquidity and Capital Resources

Cash and Marketable Securities

As of March 31, 2023, our principal sources of liquidity were cash and cash equivalents of $2.3 million which were held for working capital purposes and restricted cash of $12.4 million.

As of June 30, 2023, our principal sources of liquidity were cash and cash equivalents of $0.8 million which were held for working capital purposes and restricted cash of $12.2 million.

The restricted cash was procured through a county bond and is accessed for financing capital projects.

As of March 31, 2023, the Company had $30.3 million of investments in debt securities classified as available-for-sale with short-term maturities of less than one year and carried at fair value.

As of June 30, 2023, the Company had $12.6 million of investments in debt securities classified as available-for-sale with short-term maturities of less than one year and carried at fair value.

The Company’s available-for-sale securities investment portfolio is primarily invested in highly rated securities, with the primary objective of minimizing the potential risk of principal loss.

3 unchanged sentences

Total direct and incremental transaction costs of Bridger, JCIC and Legacy Bridger paid at Closing were approximately $16.6 million.

We may receive up to $306.5 million from the exercise of the 9,400,000 private placement warrants and 17,250,000 public warrants of the Company outstanding (collectively, the “Warrants”) after the Closing, assuming the exercise in full of all the Warrants for cash, but not from the sale of the shares of Common Stock issuable upon such exercise.

On March 31, 2023, the closing price of our Common Stock was $4.55 per share.

We may receive up to $306.5 million from the exercise of the 9,400,000 private placement warrants and 17,250,000 public warrants of the Company outstanding (collectively, the “Warrants”), assuming the exercise in full of all the Warrants for cash, but not from the sale of the shares of Common Stock issuable upon such exercise.

On June 30, 2023, the closing price of our Common Stock was $5.60 per share.

For so long as the market price of our Common Stock is below the exercise price of our Warrants ($11.50 per share), our Warrants remain “out-of-the money,” and holders of our Warrants are unlikely to cash exercise their Warrants, resulting in little or no cash proceeds to us.

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In considering our capital requirements and sources of liquidity, we have not relied on the receipt of proceeds from the Reverse Recapitalization or from the exercise of our Warrants.

For so long as the exercise price of our Warrants exceeds the trading

prices for shares of our Common Stock, it is unlikely that we will receive significant proceeds, if any, from the exercise of our Warrants in the near future.

For so long as the exercise price of our Warrants exceeds the trading prices for shares of our Common Stock, it is unlikely that we will receive significant proceeds, if any, from the exercise of our Warrants in the near future.

Nonetheless, we believe we will be sufficiently funded, and will not require substantial additional funds for operations in order to meet our short-term liquidity needs and the execution of our business plan for at least twelve months from the date of this Quarterly Report.

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Our ability to generate proceeds from equity financings will significantly depend on the market price of our Common Stock.

As of March 31, 2023, we held $19.0 million of current liabilities, $13.1 million of which was accrued expenses and other current liabilities.

As of March 31, 2023, we held $211.8 million of long-term liabilities with $205.2 million of total long-term debt, net of debt issuance costs, which are comprised of the Series 2022 Bonds, eight (8) support vehicle loans, two (2) hangar loans and three (3) loans on six (6) aircraft.

As of June 30, 2023, we held $16.9 million of current liabilities, $7.8 million of which was accrued expenses and other current liabilities.

As of June 30, 2023, we held $213.4 million of long-term liabilities with $205.1 million of total long-term debt, net of debt issuance costs, which are comprised of the Series 2022 Bonds, eight (8) support vehicle loans, two (2) hangar loans and three (3) loans on six (6) aircraft.

Rocky Mountain Bank Loans

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In connection with such credit facilities, we also entered into various term loan and other long-term debt agreements which contain certain financial covenants, including, that we maintain (i) a debt service coverage ratio that exceeds 1.25x (generally calculated as the ratio of the net operating income over the debt service payments made or as the ratio of adjusted EBITDA over the aggregate amount of interest and principal payments, in each case, as determined in the applicable agreement) and (ii) certain senior leverage ratios that do not exceed 7.00x through the third quarter of 2024, 6.00x through the third quarter of 2025, or 5.00x thereafter (generally calculated as the ratio of the senior funded debt over EBITDA, as determined in the applicable agreement).

We were not considered in violation of the debt service coverage ratio and the senior leverage ratio requirements as of March 31, 2023.

We were not considered in violation of the debt service coverage ratio requirement as of June 30, 2023.

We were considered in violation of the senior leverage ratio requirement as of June 30, 2023.

The calculation for this RMB covenant based on quarterly financials is a violation for only June 30, 2023.

The acceleration of the obligation has been waived for the most recent quarter.

Series 2022 Bonds

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Pursuant to the Series 2022 Bond Offering, Gallatin County issued $135.0 million of bonds on July 21, 2022 and an additional $25.0 million of bonds on August 10, 2022.

The proceeds from the offering, together with cash on hand, were used to redeem the capital contributions plus accrued interest for all of the remaining Series A-1 preferred shares of Legacy Bridger (the “Legacy Bridger Series A-1 Preferred Shares”) and Series A-2 preferred shares of Legacy Bridger (the “Legacy Bridger Series A-2 Preferred Shares”) totaling $134.0 million, the principal plus accrued interest for the Series 2021 Bond, totaling $7.7 million, to finance the construction and equipping of the Company’s third and fourth aircraft hangars in Belgrade, Montana and to fund the purchase of additional Super Scooper aircraft.

The proceeds from the offering, together with cash on hand, were used to redeem the capital contributions plus accrued interest for all of the remaining Series A-1 preferred shares of Legacy Bridger and Series A-2 preferred shares of Legacy Bridger totaling $134.0 million, the principal plus accrued interest for the Series 2021 Bond, totaling $7.7 million, to finance the construction and equipping of the Company’s third and fourth aircraft hangars in Belgrade, Montana and to fund the purchase of additional Super Scooper aircraft.

The Series 2022 Bonds mature on September 1, 2027, with an annual interest rate of 11.5%.

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At our direction, the Series 2022 Bonds may be redeemed by Gallatin County at any time, at a redemption price equal to 100% of the principal amount plus accrued interest upon the occurrence of certain events set forth in that certain Amended and Restated Trust Indenture, dated as of June 1, 2022 (the “Indenture”), between Gallatin County and U.S.

Bank Trust Company, National Association, Salt Lake City, Utah (the “Trustee”).

Bank Trust Company, National Association, Salt Lake City, Utah.

Mandatory and Extraordinary Redemptions — Subject to the terms of the Indenture, the Series 2022 Bonds must be redeemed, including, among other things, (i) from all the proceeds of the sale of any Super Scooper, (ii) in an amount equal to (a) 50% of our operating revenues less the portion used to pay or establish reserves for all our expenses, debt payments, capital improvements, replacements, and contingencies (“Excess Cash Flow”) or (b) 100% of Excess Cash Flow, in each case, in the event we fall below certain debt service coverage ratio requirements set forth in the Indenture, and (iii) upon a change of control (each a “Mandatory Redemption”).

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Following the Closing, the Series A Preferred Stock will continue to accrue interest daily at 7% per annum for the first six years, 9% per annum for the seventh year, and 11% per annum thereafter.

Accrued interest for the Series A Preferred Stock was $4.3 million as of March 31, 2023.

As of March 31, 2023, it was probable that the Series A Preferred Stock may become redeemable at the holder’s option on or after March 29, 2027.

Accrued interest for the Series A Preferred Stock was $10.1 million as of June 30, 2023.

As of June 30, 2023, it was probable that the Series A Preferred Stock may become redeemable at the holder’s option on or after March 29, 2027.

We have elected to recognize changes in redemption value immediately, adjusting the preferred shares to the maximum redemption value at each reporting date.

Upon the Closing and exchange of Legacy Bridger Series C Preferred Shares for shares of Series A Preferred Stock, the 50% multiplier applicable to redemptions of Legacy Bridger Series C Preferred Shares, valued at $157.9 million as of December 31, 2022, was removed and treated as a deemed dividend.

As of March 31, 2023, Series A Preferred Stock had a carrying value and redemption value of $336.9 million.

As of June 30, 2023, Series A Preferred Stock had a carrying value and redemption value of $342.7 million.

Common Stock — Legacy Bridger had 30,000,000 Legacy Bridger Class A Common Shares issued and outstanding as of December 31, 2022.

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This remained in place until the Closing.

Upon the Closing on January 24, 2023 and at March 31, 2023, we had 43,769,290 shares of Common Stock issued and outstanding.

Upon the Closing on January 24, 2023 and at June 30, 2023, we had 43,769,290 and 44,505,944 shares of Common Stock issued and outstanding.

Historical Cash Flows

The following table presents a summary of our consolidated cash flows from operating, investing and financing activities for the periods indicated.

Three Months Ended

March 31, 2023

Three Months Ended

March 31, 2022

Six Months Ended

June 30, 2023 Six Months Ended

June 30, 2022

Net cash used in operating activities $ (53,444,612) $ (10,029,205)

Net cash provided by (used in) investing activities 28,565,247 (8,998,304)

Net cash used in financing activities

Effect of exchange rate changes

Net cash (used in) provided by financing activities (4,496,266) 122,921,765

Effects of exchange rate changes 406 (263)

Net change in cash and cash equivalents $ (29,375,225) $ 103,893,993

Operating Activities

Net cash used in operating activities was $36.7 million for the three months ended March 31, 2023, compared to Net cash used in operating activities of $7.4 million for the three months ended March 31, 2022.

Net cash used in operating activities reflects net loss of $44.7 million for the three months ended March 31, 2023 compared to $14.9 million for the three months ended March 31, 2022.

Net cash used in operating activities for the three months ended March 31, 2023 reflects add-backs to Net loss for non-cash charges totaling $25.4 million, primarily driven by stock-based compensation expense associated with the RSUs granted to certain executives and senior management.

Net cash used in operating activities for the three months ended March 31, 2022 reflects add-backs to Net loss for non-cash charges totaling $5.0 million, primarily driven by interest accrued on Legacy Bridger Series B Preferred Shares and depreciation and amortization.

Net cash used in operating activities was $53.4 million for the six months ended June 30, 2023, compared to Net cash used in operating activities of $10.0 million for the six months ended June 30, 2022.

Net cash used in operating activities reflects net loss of $63.7 million for the six months ended June 30, 2023 compared to $19.4 million for the six months ended June 30, 2022.

Net cash used in operating activities for the six months ended June 30, 2023 reflects add-backs to Net loss for non-cash charges totaling $37.4 million, primarily driven by stock-based compensation expense associated with the RSUs granted to certain executives and senior management.

Net cash used in operating activities for the six months ended June 30, 2022 reflects add-backs to Net loss for non-cash charges totaling $9.5 million, primarily driven by interest accrued on Legacy Bridger Series B Preferred Shares and depreciation and amortization.

Investing Activities

Net cash provided by investing activities was $13.0 million for the three months ended March 31, 2023, compared to Net cash used in investing activities of $2.4 million for the three months ended March 31, 2022.

Net cash provided by investing activities for the three months ended March 31, 2023 reflects proceeds from maturities of marketable securities of $25.1 million, purchases of property, plant and equipment of $11.2 million, which primarily comprised of purchases of aircraft and aircraft improvements, and the construction in progress of the third hangar of $1.0 million.

Net cash used in investing activities for the three months ended March 31, 2022 reflects purchases of property, plant and equipment of $2.5 million, which primarily comprised of aircraft improvements.

Net cash provided by investing activities was $28.6 million for the six months ended June 30, 2023, compared to Net cash used in investing activities of $9.0 million for the six months ended June 30, 2022.

Net cash provided by investing activities for the six months ended June 30, 2023 reflects proceeds from maturities of marketable securities of $42.7 million, purchases of property, plant and equipment of $12.5 million, which primarily comprised of purchases of aircraft and aircraft improvements, and the construction in progress of the third hangar of $2.4 million.

Net cash used in investing activities for the six months ended June 30, 2022 reflects purchases of property, plant and equipment of $5.3 million, which primarily comprised of aircraft improvements.

Financing Activities

Net cash used in financing activities was $4.1 million for the three months ended March 31, 2023, compared to Net cash used in financing activities of $0.4 million for the three months ended March 31, 2022.

Net cash used in financing activities for the three months ended March 31, 2023 reflects costs incurred related to the Closing of $6.8 million, proceeds from the Closing of $3.2 million, and repayments on debt of $0.5 million.

Net cash used in financing activities for the three months ended March 31, 2022 reflects repayments on debt of $0.5 million.

Net cash used in financing activities was $4.5 million for the six months ended June 30, 2023, compared to Net cash provided by financing activities of $122.9 million for the six months ended June 30, 2022.

Net cash used in financing activities for the six months ended June 30, 2023 reflects costs incurred related to the Closing of $6.8 million, proceeds from the Closing of $3.2 million, and repayments on debt of $0.9 million.

Net cash provided by financing activities for the six months ended June 30, 2022 reflects borrowings from Legacy Bridger Series C Preferred Shares members of $293.7 million, payments to Legacy Bridger Series A Preferred Shares of $100.0 million, and payments to Legacy Bridger Series B Preferred Shares of $70.0 million.

Off-Balance Sheet Arrangements

As of March 31, 2023 and 2022, we did not have any relationships with special purpose or variable interest entities or other which would have been established for the purpose of facilitating off-balance sheet arrangements or other off-balance sheet arrangements.

As of June 30, 2023 and 2022, we did not have any relationships with special purpose or variable interest entities or other which would have been established for the purpose of facilitating off-balance sheet arrangements or other off-balance sheet arrangements.

Contractual Obligations

Our principal commitments consist of obligations for outstanding debt, hangar construction obligations, and leases.

The following table summarizes our contractual obligations as of March 31, 2023.

The following table summarizes our contractual obligations as of June 30, 2023.

Payments Due by Period

Total Current Noncurrent

Hangar construction obligations $ 758,960 $ 758,960 $ —

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Debt obligations 211,855,887 3,491,493 208,364,394

Total $ 214,470,026 $ 4,589,150 $ 209,880,876

On February 14, 2023, we made a payment of $9.1 million for the purchase of aircraft under our purchase agreement with Longview Aviation Services Inc.

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Upon termination of the board member or executive, the Company has the right, but not the obligation, to repurchase all or any portion of the vested Incentive Units at fair market value.

We did not grant any Legacy Bridger Incentive Units for the three months ended March 31, 2023.

We did not grant any Legacy Bridger Incentive Units for the three and six months ended June 30, 2023.

For the Time-Vesting Incentive Units, compensation cost is recognized over the requisite service period on a straight-line basis.

Upon a qualifying change of control event, the unrecognized compensation expense related to the Time-Vesting Incentive Units will be recognized when the change of control event is considered probable.

For the Exit-Vesting Incentive Units, expense is recognized when a qualifying change of control event is considered probable, which has not occurred as of March 31, 2023.

For the Exit-Vesting Incentive Units, expense is recognized when a qualifying change of control event is considered probable, which has not occurred as of June 30, 2023.

Forfeitures are accounted for as they occur.

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Restricted Stock Units

In January 2023, in connection with the Closing, the Company and its board of directors established and approved the 2023 Omnibus Incentive Plan (the “Plan”) which allowed the Company to grant RSUs to certain executives and senior management (the “Participants”) of the Company.

RSUs are settled in shares of the Company’s Common Stock as the RSUs become vested.

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Upon vesting of the award, the Company will issue shares of Common Stock to the award holder.

On April 13, 2023, the Company granted 2,234,750 RSUs to all employees of the Company.

These RSUs vest over a period of one to six years, subject to the participant’s continued employment.

The fair value of the RSUs that vest over time is the closing stock price on the date of grant.

Upon vesting of the award, the Company will issue shares of Common Stock to the award holder.

Impairment of Goodwill, Other Intangibles Assets and Long-Lived Assets

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As of the December 31, 2022 annual goodwill impairment test, the Company’s qualitative analysis indicated the fair value of the Company’s reporting unit exceeded its carrying value.

No impairment charge for goodwill was recorded for the three months ended March 31, 2023 and 2022.

No impairment charge for goodwill was recorded for the three and six months ended June 30, 2023 and 2022, respectively.

Long-Lived Assets

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Estimated useful life

Aircraft, engines and rotable parts

1,500 –6,000 flight hours

Unmanned aerial vehicles

Vehicles and equipment

Aircraft, engines and rotable parts 1,500 –6,000 flight hours

Unmanned aerial vehicles 5 – 10 years

Vehicles and equipment 3 – 5 years

Buildings 40 years

Property, plant and equipment are reviewed for impairment as discussed above under “ Long-Lived Assets ”.

Cost Method Investments

We hold equity securities without a readily determinable fair value, which are only adjusted for observable price changes in orderly transactions for the same or similar equity securities or any impairment, totaling $1,000 thousand as of March 31, 2023 and December 31, 2022, respectively.

Variable Interest Entities

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The VIE model requires an ongoing reconsideration of whether a reporting entity is the primary beneficiary of a VIE due to changes in the facts and circumstances.

For the three months ended March 31, 2023 and 2022, the VIE, NFMS, LLC, is consolidated into our financial statements.

For the three and six months ended June 30, 2023 and 2022, the VIE, NFMS, LLC, is consolidated into our financial statements.

See “ Note 2—Summary of Significant Accounting Policies ” of the Notes to Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report for additional information.

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The extended transition period exemptions afforded by our emerging growth company status may make it difficult or impossible to compare our financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of this exemption because of the potential differences in accounting standards used.

Refer to “Note 2—Summary of Significant Accounting Policies” of the Notes to Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report for the recent accounting pronouncements adopted and the recent accounting pronouncements not yet adopted for the three months ended March 31, 2023 and the year ended December 31, 2022.

Refer to “Note 2—Summary of Significant Accounting Policies” of the Notes to Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report for the recent accounting pronouncements adopted and the recent accounting pronouncements not yet adopted for the three and six months ended June 30, 2023 and the year ended December 31, 2022.

We will remain an “emerging growth company” under the JOBS Act until the earliest of (a) December 31, 2028, (b) the last date of our fiscal year in which we have total annual gross revenue of at least $1.235 billion, (c) the last date of our fiscal year in which we are deemed to be a “large accelerated filer” under the rules of the Securities and Exchange Commission (the “SEC”) with at least $700.0 million of outstanding securities held by non-affiliates or (d) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the previous three years.

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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-Q

Item 2. Management’s Discussion and Analysis