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Item 2. Management’s Discussion and Analysis

2024-05-14 compared with 2023-11-13 · 232 added, 458 removed, 274 unchanged (72% of the section changed)

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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 September 30, 2023 and December 31, 2022, for the three and nine months ended September 30, 2023 and 2022, and the related notes thereto, that are included elsewhere in this Quarterly Report on Form 10-Q (this “Quarterly Report”).

The discussion and analysis should be read together with the condensed consolidated financial statements as of March 31, 2024 and December 31, 2023, for the three months ended March 31, 2024 and 2023, 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, 2023 and 2022, included in the Annual Report on Form 10-K (the “Annual Report”).

This discussion and analysis contains forward-looking statements based upon our current expectations, estimates and projections that involve risks and uncertainties.

Actual results could differ materially from those anticipated in these forward-looking statements due to, among other considerations, the matters discussed in the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements.” Unless the context otherwise requires, all references in this section to “Bridger,” the “Company,” “we,” “us,” “our,” and other similar terms refer to the business of the Company’s predecessor, Bridger Aerospace Group Holdings, LLC and its subsidiaries (collectively, “Legacy Bridger”) prior to the consummation of the Reverse Recapitalization, and the Company and its subsidiaries following the consummation of the business combination with Jack Creek Investment Corp.

(“JCIC”) that occurred on January 24, 2023 (the “Reverse Recapitalization”).

BUSINESS OVERVIEW

Bridger provides aerial wildfire surveillance, relief, suppression and aerial firefighting services using next-generation technology and environmentally friendly and sustainable firefighting methods primarily throughout the United States.

Bridger provides aerial wildfire surveillance, relief and suppression and aerial firefighting services using next-generation technology and environmentally friendly and sustainable firefighting methods primarily throughout the United States.

Our mission is to save lives, property and habitats threatened by wildfires, leveraging our high-quality team, specialized aircraft and innovative use of technology and data.

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• Fire Suppression:

Consists of deploying specialized aircraft to drop large amounts of water quickly and directly on wildfires.

Consists of deploying specialized Viking CL-415EAF (“Super Scooper”) aircraft to drop large amounts of water quickly and directly on wildfires.

• Aerial Surveillance:

Consists of providing aerial surveillance for fire suppression aircraft over an incident and providing tactical coordination with the incident commander.

Aerial surveillance uses both manned aircraft and unmanned aircraft.

Consists of providing aerial surveillance via manned (“Air Attack”) aircraft for fire suppression aircraft over an incident and providing tactical coordination with the incident commander.

We manage our operations as a single segment for purposes of assessing performance, making operating decisions and allocating resources.

We have made and will continue to make significant investments in capital expenditures to build and expand our aerial forest fire management technologies.

We expect that our existing cash and cash equivalents provided by equity and debt financing will be sufficient to meet our current working capital and capital expenditure requirements for a period of at least twelve months from the date of this Quarterly Report.

We expect that our existing cash and cash equivalents as well as cash generated from our operations and additional sales of our common stock through our at-the-market offering will be sufficient to meet our current working capital and capital expenditure requirements for a period of at least 12 months from the date of this Quarterly Report, depending on the cash generated from our seasonal firefighting operations in 2024.

Refer to the Liquidity and Capital Resources section below and “Note 1 – Organization and Basis of Presentation” of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report for additional details on management’s assessment of the Company’s ability to continue as a going concern.

The Reverse Recapitalization

On January 24, 2023, we consummated the Reverse Recapitalization.

On January 24, 2023 (the “Closing Date”), Jack Creek Investment Corp (“JCIC”) completed the reverse recapitalization (the “Closing” and the “Reverse Recapitalization”) with the Company’s predecessor, Bridger Aerospace Group Holdings, LLC and its subsidiaries (collectively, “Legacy Bridger”).

As a result of the Reverse Recapitalization, Legacy Bridger and JCIC each became wholly-owned subsidiaries of the Company, and the JCIC shareholders and the equity holders of Legacy Bridger converted their equity ownership in JCIC and Legacy Bridger, respectively, into equity ownership in the Company.

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Public Company Costs

We have become the successor to a company registered with the Securities and Exchange Commission (“SEC”) and listed on the Nasdaq Global Market, which has required, and in the future may require, us to hire additional staff and implement procedures and processes to address public company regulatory requirements and customary practices.

We have become the successor to an SEC-registered and Nasdaq Global Market-listed company, which has required, and in the future may require, us to hire additional staff and implement procedures and processes to address public company regulatory requirements and customary practices.

We have incurred and expect to incur additional annual expenses for, among other things, directors’ and officers’ liability insurance, director fees and additional internal and external accounting, legal and administrative resources and fees.

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We believe that rising global temperatures have been, and in the future are expected to be, one factor contributing to increasing rates and severity of wildfires.

Historically, sales of our services have been higher in the summer season of each fiscal year due to weather patterns which are generally correlated to a higher prevalence of wildfires in North America.

Historically, our revenue has been higher in the summer season of each fiscal year due to weather patterns which are generally correlated to a higher prevalence of wildfires in North America.

Larger wildfires and longer seasons are expected to continue as droughts increase in frequency and duration, according to a 2022 article by the EPA.

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Our reliance on limited suppliers exposes us to volatility in the prices and availability of these materials which may lead to increased costs and delays in operations.

In March 2020, the World Health Organization declared a global pandemic related to the outbreak of a respiratory illness caused by COVID-19.

Due to the COVID-19 pandemic, in 2020, 2021 and 2022 we experienced delays on the delivery of aircraft.

Should such conditions become protracted or worsen or should longer-term budgets or priorities of our clients be impacted, the COVID-19 pandemic could negatively affect our financial condition and results of operations.

Given the dynamic nature of the COVID-19 pandemic and its global consequences, the ultimate impact on our operations, cash flows and financial condition cannot be reasonably estimated at this time.

The outbreak of COVID-19 may also have the effect of heightening many of the other risks described in the section entitled “Risk Factors” included in our Annual Report, such as those related to the market for our securities and cross-border transactions.

Economic and Market Factors

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We expect to continue to remain vulnerable to a number of industry-specific and global macroeconomic factors that may cause our actual results of operations to differ from our historical results of operations or current expectations.

The factors and trends that we currently believe are or will be most impactful to our financial condition and results of operations include the following:

the impact on us of significant operational challenges by third parties on which we rely;

inflationary pressures;

short- and long-term weather patterns;

potential labor and supply chain shortages affecting us and our partners;

volatile fuel prices;

aircraft delivery delays;

and changes in general economic conditions in the markets in which we operate.

Historically, our results of operations have not been materially impacted by other factors, other than the COVID-19 global pandemic.

The factors and trends that we currently believe are or will be most impactful to our results of operations and financial condition include, but are not limited to, the impact on us of significant operational challenges by third parties on which we rely, inflationary pressures, short-term and long-term weather patterns, potential labor and supply chain shortages affecting us and our partners, volatile fuel prices, aircraft delivery delays and changes in general economic conditions in the markets in which we operate.

Historically, our results of operations have not been materially impacted by other factors.

We continue to monitor the potential favorable or unfavorable impacts of these and other factors on our business, operations, financial condition and future results of operations, which are dependent on future developments.

Our future results of operations may be subject to volatility and our growth plans may be delayed, particularly in the short-term, due to the impact of the above factors and trends.

For instance, the impact of the COVID-19 pandemic directly affected the delivery of our aircraft and the support related to their deployment while on contract.

Deployment of two Viking CL415EAF (“Super Scooper”) aircraft was delayed in 2020 as a result of the Federal Aviation Administration’s transition to a work-from-home environment and a reduction in its ability to process carding and registration matters;

two other Super Scoopers were delayed in 2021 as a result of modified manufacturing procedures at the OEM in response to COVID-19 that increased production time, which we understood was compounded by the OEM’s delays in receiving certain parts and components;

and prior production delays pushed completion and delivery of another two Super Scoopers later in 2022 and early 2023 than we had previously anticipated receiving them.

However, we believe that our long-term outlook remains positive due to the increasing demand for our services and our ability to meet those demands consistently, despite adverse market factors.

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Standby revenue is primarily earned as a daily rate when aircraft are available for use at a fire base, awaiting request from the customer for flight deployment.

Other revenue consists of additional contractual items that can be charged to the customer, such as leasing revenues for facilities, as well as maintenance and repair on externally owned aircraft.

Other revenue consists of additional contractual items that can be charged to the customer, such as leasing revenues for facilities, as well as maintenance, repair and return-to-service work performed on customer aircraft.

Cost of Revenues

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These include labor, depreciation, subscriptions and fees, travel and fuel.

Cost of revenues also includes maintenance expenses for our aircraft including costs of routine maintenance expenses and repairs.

This consists of labor, parts, consumables, travel and subscriptions unique to each airframe.

Cost of revenues also includes routine aircraft maintenance expenses and repairs, consisting primarily of labor, parts, consumables, travel and subscriptions unique to each airframe.

Selling, General and Administrative Expense

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These functions include costs for items such as salaries, benefits, stock-based compensation and other personnel-related costs, maintenance and supplies, professional fees for external legal, accounting, and other consulting services, insurance, intangible asset amortization and depreciation expense.

Selling, general and administrative expenses also contain any gain or loss on the disposal of fixed assets.

Selling, general and administrative expenses also include gains or losses on the disposal of fixed assets.

Interest Expense

Interest expense consists of interest expense related to our loan agreements, the Series B preferred shares of Legacy Bridger (the “Legacy Bridger Series B Preferred Shares”), which were fully redeemed prior to Closing, the Gallatin municipal bond issuances by Legacy Bridger totaling $160,000,000 of gross proceeds that closed in July and August 2022 (the “Series 2022 Bonds”), the Series C preferred shares of Legacy Bridger (the “Legacy Bridger Series C Preferred Shares”) for the changes in fair values of the embedded derivative and the freestanding derivative, and interest rate swaps agreements.

Interest expense consists of interest costs related to our Gallatin municipal bond issuances by Legacy Bridger that closed in July and August 2022 (the “Series 2022 Bonds”), our permanent and term loan agreements, and the net effect of our interest rate swap.

Interest expense also includes amortization of debt issuance costs associated with our loan agreements.

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

Other Income (Expense)

Other income consists of interest income and realized gains on available-for-sale debt securities.

This also includes the reimbursement from an insurance claim against a damaged asset.

Other expense consists of the loss on extinguishment of Series 2021 bonds.

Income Tax Benefit

Income tax benefit consists of the tax benefit recognized as a result of a discrete benefit generated from the Ignis acquisition.

Refer to “ Liquidity and Capital Resources—Indebtedness ” included in this Quarterly Report for a discussion of our loan commitments.

RESULTS OF OPERATIONS

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

The following table sets forth our unaudited condensed consolidated statements of operations information for the three months ended September 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) Three Months Ended

September 30, 2023 Three Months Ended

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

Revenues $ 53,619,117 $ 32,452,593 $ 21,166,524 65 %

Cost of revenues:

Flight operations 9,673,769 7,120,107 2,553,662 36 %

Maintenance 5,534,423 5,498,105 36,318 1 %

Total cost of revenues 15,208,192 12,618,212 2,589,980 21 %

Gross income 38,410,925 19,834,381 18,576,544 94 %

Selling, general and administrative expense 15,826,474 18,058,418 (2,231,944) (12 %)

Operating income 22,584,451 1,775,963 20,808,488 1172 %

Interest expense (5,970,547) (6,984,901) 1,014,354 (15 %)

Other income (expense) 559,992 (441,788) 1,001,780 (227 %)

Income (loss) before income taxes 17,173,896 (5,650,726) 22,824,622 (404 %)

Income tax benefit 314,080 — 314,080 100 %

Net income (loss) $ 17,487,976 $ (5,650,726) $ 23,138,702 (409 %)

(All amounts in U.S.

dollars) Three Months Ended

September 30, 2023 Three Months Ended

September 30, 2022

Series A Preferred Stock – adjustment to maximum redemption value $ (6,048,025) $ —

Legacy Bridger Series C Preferred Shares - adjustment to maximum redemption value $ — $ (5,643,337)

Net income (loss) attributable to Common stockholders - basic and diluted $ 11,439,951 $ (11,294,063)

Net income (loss) per Common Stock - basic $ 0.25 $ (0.29)

Net income (loss) per Common Stock - diluted $ 0.15 $ (0.29)

Revenues increased by $21.2 million, or 65%, to $53.6 million for the three months ended September 30, 2023, from $32.5 million for the three months ended September 30, 2022.

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

(All amounts in U.S.

dollars) Three Months Ended

September 30, 2023 Three Months Ended

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

Fire suppression $ 46,153,645 $ 26,550,505 $ 19,603,140 74 %

Aerial surveillance 7,355,172 5,831,625 1,523,547 26 %

Other services 110,300 70,463 39,837 57 %

Total revenues $ 53,619,117 $ 32,452,593 $ 21,166,524 65 %

Fire suppression revenue increased by $19.6 million, or 74%, to $46.2 million for the three months ended September 30, 2023, from $26.6 million for the three months ended September 30, 2022.

The increase in fire suppression revenue accounted for 93% of the total increase in revenues for the three months ended September 30, 2023.

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

Aerial surveillance revenue increased by $1.5 million, or 26%, to $7.4 million for the three months ended September 30, 2023, from $5.8 million for the three months ended September 30, 2022.

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

Other services revenue increased by $40 thousand, or 57%, to $0.1 million for the three months ended September 30, 2023, from $0.1 million for the three months ended September 30, 2022.

The increase was primarily driven by a higher number of charter flights for the three months ended September 30, 2023 compared to the three months ended September 30, 2022.

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

(All amounts in U.S.

dollars) Three Months Ended

September 30, 2023 Three Months Ended

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

Flight revenue $ 28,322,994 $ 18,167,660 $ 10,155,334 56 %

Standby revenue 25,006,298 14,094,682 10,911,616 77 %

Other revenue 289,825 190,251 99,574 52 %

Total revenues $ 53,619,117 $ 32,452,593 $ 21,166,524 65 %

Flight revenue increased by $10.2 million, or 56%, to $28.3 million for the three months ended September 30, 2023, from $18.2 million for the three months ended September 30, 2022.

The increase was primarily driven by a higher number of Super Scooper aircraft flying on deployment.

Standby revenue increased by $10.9 million, or 77%, to $25.0 million for the three months ended September 30, 2023, from $14.1 million for the three months ended September 30, 2022.

The increase was primarily driven by a higher number of Super Scooper aircraft available for deployment.

Other revenue increased by $0.1 million, or 52%, to $0.3 million for the three months ended September 30, 2023, from $0.2 million for the three months ended September 30, 2022.

The increase was primarily driven by a higher number of charter flights for the three months ended September 30, 2023 compared to the three months ended September 30, 2022.

Cost of Revenues

Total cost of revenues increased by $2.6 million, or 21%, to $15.2 million for the three months ended September 30, 2023, from $12.6 million for the three months ended September 30, 2022.

Flight Operations

Flight operations expenses increased by $2.6 million, or 36%, to $9.7 million for the three months ended September 30, 2023, from $7.1 million for the three months ended September 30, 2022.

The increase was primarily attributable to higher personnel costs of $1.3 million and higher depreciation expense of $0.9 million due to an increase in flight hours associated with the two additional Super Scooper aircraft placed into service in September 2022 and February 2023, respectively.

The increase was partially driven by an increase in aircraft lease expense of $0.5 million due to the two additional Pilatus PC-12 operating leases and the additional Twin Otter operating lease placed into service August 2023 and June 2023, respectively.

Refer to “Note 18 – Related Party Transactions” of the Notes to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report for additional details.

Maintenance expenses increased by $36 thousand, or 1%, to $5.5 million for the three months ended September 30, 2023, from $5.5 million for the three months ended September 30, 2022.

The increase was primarily driven by higher contractor wages of $50 thousand for the three months ended September 30, 2023 compared to the three months ended September 30, 2022.

Selling, General and Administrative Expense

Selling, general and administrative expense decreased by $2.2 million, or 12%, to $15.8 million for the three months ended September 30, 2023, from $18.1 million for the three months ended September 30, 2022.

The decrease was primarily driven by $10.3 million of transaction related bonuses for employees recorded in the third quarter of 2022 in connection with the issuance of the Bridger Series C Preferred Shares, issuance of the Series 2022 Bonds, execution of the Transaction Agreements and initial filing of the proxy statement/prospectus.

The decrease was also partially driven by lower audit fees of $0.4 million and lower personnel expenses of $0.5 million for the three months ended September 30, 2023 compared to the three months ended September 30, 2022.

The decrease was partially offset by $9.0 million of non-cash stock-based compensation expense for the restricted stock units (“RSUs”) issued to employees of Bridger in connection with the Reverse Recapitalization.

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

Interest Expense

Interest expense decreased by $1.0 million, or 15%, to $6.0 million for the three months ended September 30, 2023, from $7.0 million for the three months ended September 30, 2022.

The decrease was primarily driven by lower 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 $3.0 million for the three months ended September 30, 2023 compared to the three months ended September 30, 2022.

The decrease was partially offset by additional interest expense for (i) the Series 2022 Bonds ($1.4 million);

(ii) the two loan agreements in connection with the two separate credit facilities brokered through Live Oak Bank ($0.4 million);

and (iii) the Legacy Bridger Series C Preferred Shares ($0.2 million), in each case for the three months ended September 30, 2023 compared to the three months ended September 30, 2022.

Other Income (Expense)

Other income increased by $1.0 million, or 227%, to $0.6 million for the three months ended September 30, 2023, from Other expense of $0.4 million for the three months ended September 30, 2022.

The increase was primarily driven by the loss on the extinguishment of Series 2021 bonds of $0.7 million for the three months ended September 30, 2022.

The increase was partially driven by interest income for the embedded derivative of Legacy Bridger Series C Preferred Shares of $0.3 million.

Refer to “ Note 19 – Mezzanine Equity ” of the Notes to Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report for additional details.

Income Tax Benefit

Income tax benefit increased by $0.3 million, or 100%, to $0.3 million for the three months ended September 30, 2023, from zero for the three months ended September 30, 2022.

The increase was primarily driven by a discrete benefit generated from the Ignis acquisition for the three months ended September 30, 2023.

Comparison of the Nine Months Ended September 30, 2023 to the Nine Months Ended September 30, 2022

The following table sets forth our unaudited condensed consolidated statements of operations information for the nine months ended September 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) Nine Months Ended

September 30, 2023 Nine Months Ended

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

Comparison of the Three Months Ended March 31, 2024 to the Three Months Ended March 31, 2023

The following table sets forth our Condensed Consolidated Statements of Operations information for the three months ended March 31, 2024 and 2023 and should be reviewed in conjunction with the financial statements and notes included elsewhere in this Quarterly Report.

$s in thousands Three Months Ended

March 31, 2024 Three Months Ended

March 31, 2023 Period Over Period Change ($) Period Over Period Change (%)

Revenues $ 5,507 $ 365 $ 5,142 1,409%

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Total cost of revenues 9,206 7,248 1,958 27%

Gross income 32,632,768 16,708,457 15,924,311 95 %

Gross loss (3,699) (6,883) 3,184 (46%)

Selling, general and administrative expense 11,610 33,229 (21,619) (65%)

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Interest expense (5,923) (5,665) (258) 5%

Other income (expense) 2,253,320 (166,634) 2,419,954 (1452 %)

Other income 1,159 1,092 67 6%

Loss before income taxes (20,073) (44,685) 24,612 (55%)

Income tax benefit 314,080 — 314,080 100 %

Income tax expense (14) — (14) n/a

Net loss $ (20,087) $ (44,685) $ 24,598 (55%)

(All amounts in U.S.

dollars) Nine Months Ended

September 30, 2023 Nine Months Ended

September 30, 2022

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

Series A Preferred Stock – adjustment to eliminate 50% multiplier $ 156,362,598 $ —

Series A Preferred Stock – adjustment to maximum redemption value $ (16,128,047) $ —

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 $ — $ (196,884,119)

Net income (loss) attributable to Common Stockholders – basic and diluted $ 45,715,987 $ (307,634,065)

Net income (loss) per Common Stock—basic $ 1.02 $ (7.93)

Net income (loss) per Common Stock—diluted $ 0.59 $ (7.93)

Revenues increased by $20.3 million, or 45%, to $65.6 million for the nine months ended September 30, 2023, from $45.3 million for the nine months ended September 30, 2022.

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

(All amounts in U.S.

dollars) Nine Months Ended

September 30, 2023 Nine Months Ended

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

Fire suppression $ 56,603,073 $ 38,232,768 $ 18,370,305 48 %

Aerial surveillance 8,478,925 6,833,650 1,645,275 24 %

Revenues increased by $5.1 million, or 1,409%, to $5.5 million for the three months ended March 31, 2024, from $0.4 million for the three months ended March 31, 2023.

Revenues by service offering for the three months ended March 31, 2024 and 2023 were as follows:

$s in thousands Three Months Ended

March 31, 2024 Three Months Ended

March 31, 2023 Period Over Period Change ($) Period Over Period Change (%)

Fire suppression $ 3,881 $ — $ 3,881 n/a

Aerial surveillance 583 — 583 n/a

Other services 1,043 365 678 186%

Total revenues $ 5,507 $ 365 $ 5,142 1,409%

Fire suppression revenue increased by $18.4 million, or 48%, to $56.6 million for the nine months ended September 30, 2023, from $38.2 million for the nine months ended September 30, 2022.

The increase in fire suppression revenue accounted for 90% of the total increase in revenues for the nine months ended September 30, 2023.

The increase was primarily driven by a higher number of aircraft operating for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.

Aerial surveillance revenue increased by $1.6 million, or 24%, to $8.5 million for the nine months ended September 30, 2023, from $6.8 million for the nine months ended September 30, 2022.

The increase was primarily driven by the type of aircraft operating for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.

Other services revenue increased by $0.3 million, or 148%, to $0.5 million for the nine months ended September 30, 2023, from $0.2 million for the nine months ended September 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 18 – Related Party Transactions” of the Notes to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report for additional details.

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

(All amounts in U.S.

dollars) Nine Months Ended

September 30, 2023 Nine Months Ended

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

Flight revenue $ 34,117,309 $ 24,585,180 $ 9,532,129 39 %

Standby revenue 30,142,235 20,305,658 9,836,577 48 %

Fire suppression revenue increased to $3.9 million and aerial surveillance revenue increased to $0.6 million for the three months ended March 31, 2024, in each case, from zero for the three months ended March 31, 2023.

The increase in fire suppression revenue and aerial surveillance revenue was primarily due to an earlier start to the 2024 wildfire season, compared to the three months ended March 31, 2023, which led to more aircraft operating for the three months ended March 31, 2024.

Other services revenue increased by $0.7 million, or 186%, to $1.0 million for the three months ended March 31, 2024, from $0.4 million for the three months ended March 31, 2023.

The increase was primarily due to return-to-service work performed on the Spanish Scoopers in connection with the MAB services agreement.

Refer to “Note 2 – Summary of Significant Accounting Policies” of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report for additional details.

Revenues by type for the three months ended March 31, 2024 and 2023 were as follows:

$s in thousands Three Months Ended

March 31, 2024 Three Months Ended

March 31, 2023 Period Over Period Change ($) Period Over Period Change (%)

Flight revenue $ 913 $ — $ 913 n/a

Standby revenue 3,468 — 3,468 n/a

Other revenue 1,126 365 761 208%

Total revenues $ 5,507 $ 365 $ 5,142 1,409%

Flight revenue increased by $9.5 million, or 39%, to $34.1 million for the nine months ended September 30, 2023, from $24.6 million for the nine months ended September 30, 2022.

The increase was primarily driven by a higher number of Super Scooper aircraft flying on deployment.

Standby revenue increased by $9.8 million, or 48%, to $30.1 million for the nine months ended September 30, 2023, from 20.3 million for the nine months ended September 30, 2022.

The increase was primarily driven by a higher number of Super Scooper aircraft available for deployment.

Other revenue increased by $1.0 million, or 248%, to $1.3 million for the nine months ended September 30, 2023, from $0.4 million for the nine months ended September 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 18 – Related Party Transactions” of the Notes to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report for additional details.

Flight revenue increased to $0.9 million and standby revenue increased to $3.5 million for the three months ended March 31, 2024, in each case, from zero for the three months ended March 31, 2023.

The increase in flight revenue and standby revenue was primarily due to an earlier start to the 2024 wildfire season, compared to the three months ended March 31, 2023, which led to more aircraft operating for the three months ended March 31, 2024.

Other revenue increased by $0.8 million, or 208%, to $1.1 million for the three months ended March 31, 2024, from $0.4 million for the three months ended March 31, 2023.

The increase was primarily due to return-to-service work performed on the Spanish Scoopers in connection with the MAB services agreement.

Refer to “Note 2 – Summary of Significant Accounting Policies” of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report for additional details.

Cost of Revenues

Total cost of revenues increased by $4.4 million, or 15%, to $33.0 million for the nine months ended September 30, 2023, from $28.6 million for the nine months ended September 30, 2022.

Total cost of revenues increased by $2.0 million, or 27%, to $9.2 million for the three months ended March 31, 2024, from $7.2 million for the three months ended March 31, 2023.

Flight Operations

Flight operations expenses increased by $3.1 million, or 18%, to $19.7 million for the nine months ended September 30, 2023, from $16.6 million for the nine months ended September 30, 2022.

The increase was primarily attributable to higher personnel expenses of $2.1 million due to an increase in flight hours associated with the two additional Super Scooper aircraft placed into service in September 2022 and February 2023, respectively.

The increase was partially driven by $0.5 million for the RSUs granted to all employees in April 2023.

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

Refer to “Note 18 – Related Party Transactions” 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 11%, to $13.3 million for the nine months ended September 30, 2023, from $11.9 million for the nine months ended September 30, 2022.

The increase was primarily driven by personnel costs of $0.8 million and higher depreciation expense of $0.3 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 17 – Stock-Based Compensation” of the Notes to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report for additional details.

Flight operations expenses increased by $1.3 million, or 34%, to $5.0 million for the three months ended March 31, 2024, from $3.7 million for the three months ended March 31, 2023.

The increase was primarily attributable to an increase in aircraft lease expense of $0.4 million due to two Pilatus PC-12 operating leases commencing in July 2023 and a Twin Otter operating lease commencing in April 2023, an increase in training costs of $0.5 million and an increase in stock-based compensation expense of $0.3 million.

Maintenance expenses increased by $0.7 million, or 19%, to $4.2 million for the three months ended March 31, 2024, from $3.5 million for the three months ended March 31, 2023.

The increase was primarily driven by an increase in contractor wages of $0.4 million and an increase of employee labor expenses of $0.3 million.

Selling, General and Administrative Expense

Selling, general and administrative expense increased by $35.6 million, or 124%, to $64.2 million for the nine months ended September 30, 2023, from $28.6 million for the nine months ended September 30, 2022.

The increase was primarily driven by $40.9 million of non-cash stock-based compensation expense for the RSUs issued to management and all employees of Bridger in connection with the Reverse Recapitalization.

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

The increase was partially driven by higher operating costs of $4.4 million and higher insurance costs of $1.4 million primarily associated with the two additional Super Scooper aircraft placed into service in September 2022 and February 2023, respectively.

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 offset by $11.3 million of transaction related bonuses for employees recorded in the third quarter of 2022 in connection with the issuance of the Bridger Series C Preferred Shares, issuance of the Series 2022 Bonds, execution of the Transaction Agreements and initial filing of the proxy statement/prospectus.

Selling, general and administrative expense decreased by $21.6 million, or 65%, to $11.6 million for the three months ended March 31, 2024, from $33.2 million for the three months ended March 31, 2023.

The decrease was primarily attributable to a decrease in stock-based compensation of $20.1 million associated with the immediate vesting of restricted stock units (“RSUs”) issued to executives and senior management of Bridger in connection with the Reverse Recapitalization in January 2023.

The remaining decrease is primarily attributable to a decrease in professional service fees of $1.5 million due to higher costs associated with becoming a public company in January 2023.

Interest Expense

Interest expense increased by $4.2 million, or 32%, to $17.2 million for the nine months ended September 30, 2023, from $13.0 million for the nine months ended September 30, 2022.

The increase was primarily driven by additional interest expense for the Series 2022 Bonds of $10.8 million for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.

The increase was partially driven by additional interest expense for the two loan agreements in connection with the two separate credit facilities brokered through Live Oak Bank of $1.2 million for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.

The increase was partially offset by lower interest expense for the Series A-1 and Series A-2 preferred shares of Legacy Bridger (together, the “Legacy Bridger Series A Preferred Shares”) and Legacy Bridger Series B Preferred Shares of $3.9 million and $3.6 million for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, respectfully.

Other Income (Expense)

Other income increased by $2.4 million, or 1,452%, to $2.3 million for the nine months ended September 30, 2023, from Other expense of $0.2 million for the nine months ended September 30, 2022.

The increase was primarily driven by interest income for the embedded derivative of Legacy Bridger Series C Preferred Shares of $1.3 million.

Refer to “ Note 19 – 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 the loss on the extinguishment of Series 2021 bonds of $0.7 million for the nine months ended September 30, 2022.

The increase was partially driven by an unrealized gain of $0.4 million related to short-term investments for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.

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.

Income Tax Benefit

Income tax benefit increased by $0.3 million, or 100%, to $0.3 million for the nine months ended September 30, 2023, from zero for the nine months ended September 30, 2022.

The increase was primarily driven by a discrete benefit generated from the Ignis acquisition for the nine months ended September 30, 2023.

Interest expense increased by $0.3 million, or 5%, to $5.9 million for the three months ended March 31, 2024, from $5.7 million for the three months ended March 31, 2023.

The increase was primarily driven by lower capitalized interest associated with the financing of the construction of fixed assets.

Other income increased by $0.1 million, or 6%, to $1.2 million for the three months ended March 31, 2024, from $1.1 million for the three months ended March 31, 2023.

NON-GAAP FINANCIAL MEASURES

Although we believe that net income or loss, as determined in accordance with GAAP, is the most appropriate earnings measure, we use EBITDA and Adjusted EBITDA as key profitability measures to assess the performance of our business.

We believe these measures help illustrate underlying trends in our business and use the measures to establish budgets and operational goals, and communicate internally and externally, for managing our business and evaluating its performance.

We believe these measures help illustrate underlying trends in our business and use the measures to establish budgets and operational goals, and communicate internally and externally, in managing our business and evaluating its performance.

We also believe these measures help investors compare our operating performance with its results in prior periods in a way that is consistent with how management evaluates such performance.

Each of the profitability measures described below are not recognized under GAAP and do not purport to be an alternative to net income or loss determined in accordance with GAAP as a measure of our performance.

Such measures have

limitations as analytical tools, and should not be considered in isolation or as substitutes for our results as reported under GAAP.

Such measures have limitations as analytical tools, and should not be considered in isolation or as substitutes for our results as reported under GAAP.

EBITDA and Adjusted EBITDA exclude items that can have a significant effect on our profit or loss and should, therefore, be used only in conjunction with our GAAP profit or loss for the period.

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Adjusted EBITDA is a non-GAAP profitability measure that represents EBITDA before certain items that are considered to hinder comparison of the performance of our businesses on a period-over-period basis or with other businesses.

During the periods presented, we exclude from Adjusted EBITDA gains and losses on disposals of assets, offering costs related to financing and other transactions, which include costs that are required to be expensed in accordance with GAAP.

In addition, we exclude from Adjusted EBITDA non-cash stock-based compensation, business development and integration expenses, loss on extinguishment of debt, and discretionary bonuses to employees and executives.

During the periods presented, we exclude from Adjusted EBITDA certain costs that are required to be expensed in accordance with GAAP, including non-cash stock-based compensation, business development and integration expenses, offering costs, gain on disposal of fixed assets, non-cash adjustments to the fair value of earnout consideration, and non-cash adjustments to the fair value of Warrants issued in connection with the Reverse Recapitalization.

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 income (loss), the most directly comparable GAAP measure, to EBITDA and Adjusted EBITDA for the three months ended September 30, 2023 and 2022.

Three Months Ended

September 30, 2023 Three Months Ended

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

Net income (loss) $ 17,487,976 $ (5,650,726) $ 23,138,702 (409 %)

Income tax benefit (314,080) — (314,080) (100 %)

Depreciation and amortization 5,247,755 4,467,072 780,683 17 %

Interest expense 5,970,547 6,984,901 (1,014,354) (15 %)

EBITDA 28,392,198 5,801,247 22,590,951 389 %

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

— 806,869 (806,869) (100) %

Offering costs (ii)

662,149 1,336,102 (673,953) (50 %)

Stock-based compensation (iii)

9,003,786 2,222 9,001,564 NM

Business development & integration expenses (iv)

680,021 193,039 486,982 252 %

Loss on extinguishment of debt (v)

— 844,925 (844,925) (100 %)

Discretionary bonuses to employees and executives (vi)

— 10,136,530 (10,136,530) (100 %)

Adjusted EBITDA $ 38,738,154 $ 19,120,934 $ 19,617,220 103 %

Net income (loss) margin (vii)

Adjusted EBITDA margin (vii)

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) Represents loss on extinguishment of debt related to the Series 2021 Bond and forgiveness of the Paycheck Protection Program (“PPP”) loan.

vi) Represents one-time discretionary bonuses to certain employees and executives of Bridger in connection with the issuance of the Legacy Bridger Series C Preferred Shares, the issuance of the Series 2022 Bonds, execution of the Transaction Agreements and the initial filing of the proxy/statement/prospectus prepared in connection with the Business Combination.

vii) Net income (loss) margin represents Net income (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 nine months ended September 30, 2023 and 2022.

Nine Months Ended

September 30, 2023 Nine Months Ended

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

The reconciliation of Net loss, the most directly comparable GAAP measure, to EBITDA and Adjusted EBITDA for the three months ended March 31, 2024 and 2023 is as follows:

$s in thousands Three Months Ended

March 31, 2024 Three Months Ended

March 31, 2023 Period Over Period Change ($) Period Over Period Change (%)

Net loss $ (20,087) $ (44,685) $ 24,598 (55%)

Income tax benefit (314,080) — (314,080) (100 %)

Income tax expense 14 — 14 n/a

Depreciation and amortization 1,290 1,751 (461) (26%)

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EBITDA (12,860) (37,269) 24,409 (65%)

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

Stock-based compensation 1

5,871 25,597 (19,726) (77)%

Offering costs (ii)

Business development & integration expenses 2

312 519 (207) (40)%

Stock-based compensation (iii)

41,614,316 7,002 41,607,314 NM

Business development & integration expenses (iv)

Change in fair value of earnout consideration 3

Change in fair value of Warrants 4

(266) (1,599) 1,333 (83%)

Loss on extinguishment of debt (v)

Offering costs 5

— 2,083 (2,083) (100%)

Discretionary bonuses to employees and executives (vi)

Gain on disposal 6

— (2) 2 (100)%

Adjusted EBITDA $ (6,928) $ (10,671) $ 3,743 (35%)

Net loss margin (vii)

Net loss margin 7

(365 %) (12,242 %)

Adjusted EBITDA margin (vii)

Adjusted EBITDA margin 7

(126 %) (2,924 %)

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) Represents loss on extinguishment of debt related to the Series 2021 Bond and forgiveness of the Paycheck Protection Program (“PPP”) loan.

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

1 Represents non-cash stock-based compensation expense associated with employee and non-employee equity awards.

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

3 Represents non-cash fair value adjustment for earnout consideration issued in connection with the acquisition of Ignis Technologies, Inc.

4 Represents the non-cash fair value adjustment for Warrants issued in connection with the Reverse Recapitalization.

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

6 Represents gain on the disposal of a fixed asset.

7 Net loss margin calculated as Net loss divided by Total revenue and Adjusted EBITDA margin calculated as Adjusted EBITDA divided by Total revenue.

LIQUIDITY AND CAPITAL RESOURCES

Going Concern

In accordance with Accounting Standards Codification (“ASC”) Topic 205-40, Going Concern , the Company has evaluated whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within 12 months after the date that these condensed consolidated financial statements are issued.

This evaluation includes considerations related to the covenants contained in the Company’s loan agreements as well as the Company’s liquidity position overall.

For the three months ended March 31, 2024, the Company had an operating loss of $15.3 million, net loss of $20.1 million and cash flow used in operating activities of $19.8 million.

In addition, as of March 31, 2024, the Company had unrestricted cash and investments of $6.8 million.

As disclosed in detail under the section entitled “Liquidity and Capital Resources—Indebtedness” below, the Company is not in compliance, and is projected to not be in compliance, with certain financial covenants associated with the Series 2022 Bonds during the next 12 months.

Beginning in November 2023, management has implemented steps to help improve the Company’s near-term cash position through a combination of cost reduction measures and the raising of funds through a number of potential avenues, including additional sales of our common stock through our at-the-market offering and registered direct equity offering.

Our ability to raise additional funds will depend on, among other factors, financial, economic and market conditions, many of which are outside of our control and there can be no assurance that we will be able to obtain additional funding on satisfactory terms or at all.

As of May 10, 2024, $5,869,526 is available for potential future sales under the 2024 ATM Agreement, which may be utilized for future financings under our effective shelf registration statement.

The amount registered for potential future sales under the 2024 ATM Agreement was reduced to $5,869,526 on April 15, 2024 in accordance with General Instruction I.B.6 of Form S-3 in connection with the Company’s registered direct offering of 2,183,366 shares of Common Stock described in “Note 22 – Subsequent Events” of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report.

Current and anticipated noncompliance with financial covenants and uncertainty regarding the Company’s ability to diligently prosecute the cost reduction plan and to raise additional cash funding raise substantial doubt about the Company’s ability to continue as a going concern within 12 months following the issuance date of the condensed consolidated financial statements as of and for the period ended March 31, 2024.

Cash and Marketable Securities

As of September 30, 2023, our principal sources of liquidity were cash and cash equivalents of $19.4 million which were held for working capital purposes and restricted cash of $12.3 million.

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

As of September 30, 2023, the Company had $2.2 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.

In connection with the Reverse Recapitalization, stockholders owning 34,245,643 shares of JCIC Class A Ordinary Shares exercised their rights to have those shares redeemed for cash at a redemption price of approximately $10.16 per share, or an aggregate of $347.8 million.

Following the payment of redemptions and expenses related to the Trust Account, there was approximately $2.4 million in remaining cash in the Trust Account, which was paid to UBS Securities LLC as a portion of its deferred underwriting fee from JCIC’s initial public offering.

As a result, we did not receive any cash proceeds from the Reverse Recapitalization.

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

As of March 31, 2024, our principal sources of liquidity were cash and cash equivalents of $6.8 million which were held for working capital purposes and restricted cash of $9.3 million.

Restricted cash consists primarily of cash reserved for debt servicing on the Series 2022 Bonds.

From time to time, the Company invests its excess cash in highly rated available-for-sale securities, with the primary objective of minimizing the potential risk of principal loss.

As of March 31, 2024, the Company had zero of investments in debt securities classified as available-for-sale.

We may receive up to $306.5 million from the exercise of the 9,400,000 private placement warrants and 17,249,874 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 September 29, 2023, the closing price of our Common Stock was $8.47 per share.

On March 28, 2024, the closing price of our Common Stock was $5.02 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.

There can be no assurance that our Warrants will be in the money prior to their January 24, 2028 expiration date, and therefore, we may not receive any cash proceeds from the exercise of our Warrants to fund our operations.

Even if the Warrants remain “out-of-the-money”, we believe that our cash on hand and debt securities will be sufficient to meet our working capital and capital expenditure requirements for a period of at least twelve months from the date of this Quarterly Report.

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.

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.

Refer to the discussion further below under the section entitled “ Liquidity and Capital Resources—Contractual Obligations .”

While we do not need to raise capital in order to fund our current operations for at least twelve months from the date of this Quarterly Report, we may in the future seek to raise additional funds through various potential sources, such as equity and debt financing for general corporate purposes or for specific purposes, including in order to pursue growth initiatives.

Due to the gross decrease in cash and cash equivalents (as compared to Legacy Bridger’s balance sheet at December 31, 2022), consisting of approximately $13.6 million as a result of the Reverse Recapitalization, we would anticipate the need to raise additional funds through equity or debt financing (or the issuance of stock as acquisition consideration) to pursue any significant acquisition opportunity, at the time of such acquisition opportunity.

Accordingly, we have not relied on the receipt of proceeds from the exercise of our Warrants in assessing our capital requirements and sources of liquidity.

We may in the future seek to raise additional funds through various potential sources, such as equity and debt financing for general corporate purposes or for specific purposes, including in order to pursue growth initiatives.

Based on our unrestricted cash and cash equivalents balance as of March 31, 2024, and our projected cash use, we would anticipate the need to raise additional funds through equity or debt financing (or the issuance of stock as acquisition consideration) to pursue any significant acquisition opportunity, at the time of such acquisition opportunity.

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

On July 21, 2023, we entered into a Purchase and Sale Agreement (the “Bighorn Purchase Agreement”), through our subsidiary Bridger Bighorn, LLC, with Robert Eisele and Christopher Eisele (the “Bighorn Sellers”), the owners of Big Horn Airways, Inc.

(“Bighorn”), pursuant to which we agreed to acquire 100% of the outstanding equity interests of Bighorn.

The aggregate consideration for the Bighorn acquisition is $39.25 million, with $14.75 million payable in unregistered shares of Common Stock, and the remainder of $24.50 million payable in cash, as may be adjusted pursuant to the terms of the Bighorn Purchase Agreement, including for Bighorn’s cash, indebtedness, and net working capital as of the closing of the Bighorn acquisition.

In November 2023, the Company and Bighorn sellers mutually agreed to terminate the Bighorn Purchase Agreement.

There are no termination fees payable by either party and the Company has agreed to reimburse Bighorn for all fees incurred in connection with the proposed transaction.

The amount of reimbursable transaction fees cannot be estimated at this time.

On September 20, 2023, we announced that our bid (via a public tender process) to purchase four Canadair CL-215T ("Spanish Super Scooper") amphibious aircraft from the Spanish Ministry for Ecological Transition and Demographic Challenge had been accepted by the Spanish government (the “Spanish Super Scooper Acquisition”).

Per the terms of the bid, we agreed to purchase the four Spanish Super Scoopers from the Spanish government for approximately €40.3 million (approximately $43.1 million as of November 10, 2023) in cash.

The closing of the Spanish Super Scooper Acquisition is subject to the terms and conditions of the Spanish public tender process and subject to our obtaining sufficient funding, and we continue to work toward the completion of the acquisition of the four Spanish Super Scoopers in the fourth quarter of 2023.

Assuming completion of the acquisition, which may occur through a variety of structures that have not yet been determined, we plan to move the Spanish Super Scoopers to a Maintenance, Repair and Overhaul (“MRO”) facility for overhaul work.

Our management team estimates that the cost to renovate and upgrade these Spanish Super Scoopers will be approximately $8 million to $12 million per aircraft.

Assuming timely completion of the acquisition, we expect these modified Spanish Super Scoopers to generate revenue and Adjusted EBITDA in-line with Bridger’s current fleet of Super Scoopers once contracting mechanics are negotiated with various foreign governments during their respective return-to-

service timeframes.

On November 17, 2023, the Company entered into a series of agreements designed to facilitate the purchase and return to service of the Spanish Scoopers originally awarded to the Company’s wholly-owned subsidiary, Bridger Aerospace Europe, S.L.U.

(“BAE”), in September 2023 via a public tender process from the Government of Spain for €40.3 million.

Under the terms of the agreements, the Company agreed to sell its entire outstanding equity interest in BAE to MAB and purchase $4.0 million of non-voting Class B units of MAB.

The Company also entered into a services agreement with MAB whereby the Company will manage the return to service upgrades of the Spanish Scoopers through the Company’s wholly-owned Spanish subsidiary, Albacete Aero, S.L., while they are owned and funded by MAB.

The service agreement also provides that the Company has the right, but not the obligation, to acquire each Spanish Scooper as it is ready to be contracted and returned to service.

Our management team estimates that the cost to renovate and upgrade these Spanish Scoopers will be approximately $8 million to $12 million per aircraft.

Assuming timely completion of such renovations and upgrades, we expect these modified Spanish Scoopers to generate revenue and Adjusted EBITDA in-line with Bridger’s current fleet of Super Scoopers once contracting mechanics are negotiated with various foreign governments during their respective return-to-service timeframes.

However, there can be no assurance that this acquisition will be completed upon the timeline discussed above or at all, nor that the Company will be able to successfully contract with various foreign governments to generate revenue.

As of September 30, 2023, we held $15.4 million of current liabilities, $10.5 million of which was accrued expenses and other current liabilities.

As of September 30, 2023, we held $224.8 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 support vehicle loans, two hangar loans and three loans on six aircraft.

Rocky Mountain Bank Loans

Through certain of our subsidiaries, we entered into two credit facilities with Rocky Mountain Bank to finance in part (i) the construction of airplane hangars on September 30, 2019 and (ii) the purchase of four Quest Kodiak aircraft on February 3, 2020.

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 requirement as of September 30, 2023.

We were not considered in violation of the senior leverage ratio requirement as of September 30, 2023.

As of March 31, 2024, we held $20.1 million of current liabilities, $12.0 million of which was accrued expenses and other current liabilities.

As of March 31, 2024, we held $220.0 million of long-term liabilities with $204.1 million of total long-term debt, net of debt issuance costs, which are comprised of the Series 2022 Bonds, two separate credit facilities brokered through Live Oak Bank, two separate credit facilities with Rocky Mountain Bank and various short term vehicle loans through First Interstate Bank.

Series 2022 Bonds

On July 21, 2022, we closed a bond offering for the Series 2022 Bonds in a taxable industrial development revenue bond transaction with Gallatin County, Montana for $160.0 million (the “Series 2022 Bond Offering”).

On July 21, 2022, we closed our Series 2022 Bond Offering in a taxable industrial development revenue bond transaction with Gallatin County, Montana for $160.0 million (the “Series 2022 Bond Offering”).

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 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 proceeds from the offering, together with cash on hand, were used to redeem the capital contributions plus accrued interest for all of the remaining Legacy Bridger Series A-1 preferred shares and Legacy Bridger Series A-2 preferred shares totaling $134.0 million, the principal plus accrued interest for the Series 2021 Gallatin County municipal bond, totaling $7.7 million, to finance the construction and equipping of the Company’s third aircraft hangar 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%.

Interest will be payable semiannually on March 1 and September 1 of each year until maturity and commenced on September 1, 2022.

Interest is payable semiannually on March 1 and September 1 of each year until maturity and commenced on September 1, 2022.

Debt issuance costs for the Series 2022 Bonds was $4.2 million.

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Subject to the terms of the loan agreements, in the event we are unable to comply with the terms of the financial covenants, we may be required (among other potential remedial actions) to engage an independent consultant to review, analyze and make recommendations with respect to our operations or in some instances, this could result in an event of default and/or the acceleration of our debt obligations under the loan agreements.

In addition, the acceleration of our debt obligations may in some instances (as set forth in the Amended and Restated Charter) result in an increase in the dividend rate of the Series A Preferred Stock by 2.00% per annum from the dividend rate otherwise in effect at such time.

The Company is in compliance with such financial covenants as of September 30, 2023.

However, management anticipates that the Company will be in violation of the DSCR and liquidity covenants during the twelve-month period subsequent to the date of this filing, primarily due to lower than expected revenues and cash generated.

The 2022 Bond agreement provides that, with regard to covenant violations, other than non-payment of principal or interest, no event of default shall be deemed to have occurred so long as a reasonable course of action to remedy a violation commences within 30 days of non-compliance and management diligently prosecutes the remediation plan to completion.

Management has consulted with bond counsel on the potential impact of future covenant violations and has proactively developed a cost reduction plan to remedy the anticipated covenant breaches in 2024.

Management began to implement portions of the plan in November 2023.

However, this plan is in progress and there is no assurance that management will be able diligently prosecute the remediation plan to completion, and the Company does not have sufficient liquidity to fund its outstanding obligations for the 2022 Bonds if they became immediately due and payable following subsequent compliance reporting dates.

The uncertainty regarding the company’s ability to diligently prosecute remediation plan to completion and the potential impact on the bonds maturity as a result of the anticipated debt covenant violations at subsequent compliance dates could result in the 2022 Bonds becoming immediately due and payable, which raises substantial doubt about our ability to continue as a going concern.

Mandatorily Redeemable Preferred Stock

Legacy Bridger Series B Preferred Shares

On April 25, 2022, we used a portion of the proceeds from the issuance of the Legacy Bridger Series C Preferred Shares, to redeem all 60,000,000 of our outstanding Legacy Bridger Series B Preferred Shares for $70.0 million, inclusive of $10.0 million in accrued interest.

Legacy Bridger Series A Preferred Shares

On April 25, 2022, we and our investors included a new mandatory redemption provision requiring Legacy Bridger Series A Preferred Shares to be redeemed on April 25, 2032.

Due to the mandatory redemption provision, Legacy Bridger Series A Preferred Shares were reclassified from mezzanine equity to liability.

We elected the fair value option to measure the modification of the Legacy Bridger Series A Preferred Shares.

On July 25, 2022, we used the proceeds from the Series 2022 Bonds plus cash on hand to redeem in full the remaining 6,055,556 shares of the Legacy Bridger Series A Preferred Shares for aggregate proceeds of $136.3 million.

The fair values of the Legacy Bridger Series A Preferred Shares increased by $3.9 million from interest accrued since the modification on April 25, 2022 and no gain or loss were recorded to net loss upon redemption.

In addition, the acceleration of our debt obligations may in some instances (as set forth in our Amended and Restated Charter) result in an increase in the dividend rate of the Series A Preferred Stock by 2.00% per annum from the dividend rate otherwise in effect at such time.

The Company is not in compliance with the DSCR covenant as of March 31, 2024 and management anticipates the Company will continue to not be in compliance with the DSCR covenant at future quarterly measurement periods in the next 12 months, primarily attributable to the seasonal nature of our business and a less intense 2023 wildfire season.

In addition, the Company is not in compliance with the $8.0 million minimum liquidity requirement as of March 31, 2024 and management anticipates that it may not be in compliance with the minimum liquidity requirement at future quarterly measurement periods in the next 12 months depending on the cash generated from its seasonal firefighting operations in 2024.

The Series 2022 Bonds agreements provide that, with regard to covenant violations, other than non-payment of principal or interest, no event of default shall be deemed to have occurred so long as a reasonable course of action to remedy a violation commences within 30 days of non-compliance and management diligently prosecutes the remediation plan to completion.

Management consulted with bond counsel on the impact of covenant violations and proactively developed a cost reduction plan, and began implementing the plan in November 2023, to help remedy the anticipated covenant breaches in 2024.

However, this plan is in progress and there is no assurance that management will be able to diligently prosecute the remediation plan to completion.

The uncertainty regarding the company’s ability to diligently prosecute the remediation plan to completion and the potential impact on the bonds maturity as a result of the anticipated debt covenant violations at subsequent compliance dates or failure to make required interest payments, could result in the Series 2022 Bonds becoming immediately due and payable, which raises substantial doubt about our ability to continue as a going concern.

Live Oak Bank Loans

Our loans with Live Oak Bank are subject to financial covenants requiring the Company to maintain a debt service coverage ratio, generally calculated as the ratio of the net cash flow (as defined in the applicable note agreements) to the amount of interest and servicing fees required to be paid over the succeeding 12 months on the principal amount of the note, as applicable, that will be outstanding on the payment date following such date of determination, that exceeds 1.25x at the aircraft or entity level and for the Company’s debt to worth ratio to not exceed 5.00x at the aircraft or entity level.

The Company is in compliance with such financial covenants as of March 31, 2024.

Rocky Mountain Bank Loans

The Company is in compliance with such financial covenants as of March 31, 2024.

Mezzanine and Permanent Equity

Series A Preferred Stock — On April 25, 2022, we authorized and issued 315,789.473684 Legacy Bridger Series C Preferred Shares for aggregate proceeds of $288.5 million, net of issuance costs of $11.5 million.

Preferred Shares

On April 25, 2022, we authorized and issued 315,789.473684 Legacy Bridger Series C Preferred Shares for aggregate proceeds of $288.5 million, net of issuance costs of $11.5 million.

Legacy Bridger Series C Preferred Shares rank senior to our Common Stock and ranked subordinate to Legacy Bridger Series A Preferred Shares with respect to the distribution of assets upon liquidation or certain triggering events.

Upon the Closing, Legacy Bridger Series C Preferred Shares were exchanged for shares of Series A Preferred Stock on a one-to-one basis as a portion of the merger consideration issued in connection with the Reverse Recapitalization.

The Series A Preferred Stock is classified as

mezzanine equity as it remains probable that they may become redeemable upon the mandatory redemption date of April 25, 2032.

The Series A Preferred Stock is classified as mezzanine equity as it remains probable that they may become redeemable upon the mandatory redemption date of April 25, 2032.

Series A Preferred Stock does not participate in earnings and is non-voting.

For additional information regarding the terms and conditions of the Series A Preferred Stock, see “Note 17 – Mezzanine Equity” of the Notes to Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report for additional details.

For additional information regarding the terms and conditions of the Series A Preferred Stock, see “Note 17 – Mezzanine Equity” for additional details.

Prior to the Closing, Legacy Bridger Series C Preferred Shares accrued interest daily at 7% per annum for the first year, 9% per annum for the second year and 11% per annum thereafter.

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 $16.1 million as of September 30, 2023.

As of September 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.

Accrued interest for the Series A Preferred Stock was $28.4 million as of March 31, 2024.

As of March 31, 2024, 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 September 30, 2023, Series A Preferred Stock had a carrying value and redemption value of $348.8 million.

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

The holders of these shares were entitled to one vote for each share held of record on all matters submitted to a vote of our shareholders.

These Legacy Bridger Class A Common Shares were issued to ElementCompany, LLC.

Legacy Bridger had 9,756,130 Legacy Bridger Class B Common Shares issued and outstanding as of December 31, 2022.

The holders of these Legacy Bridger Class B Common Shares were entitled to one vote for each share held of record on all matters submitted to a vote of our shareholders.

Legacy Bridger had 243,871 Legacy Bridger Class C Common Shares issued and outstanding as of December 31, 2022.

Legacy Bridger also had 606,061 shares of Legacy Bridger Class D Common Shares issued and outstanding as of December 31, 2022.

These Legacy Bridger Class C Common Shares and Legacy Bridger Class D Common Shares are non-voting shares.

Prior to the Closing, Legacy Bridger’s voting power followed the structure of the elected board members with three (3) designees from the holders of Legacy Bridger Class A Common Shares and two (2) designees from the holders of Legacy Bridger Class B Common Shares.

This remained in place until the Closing.

Upon the Closing on January 24, 2023 and at September 30, 2023, we had 43,769,290 and 44,776,926 shares of Common Stock issued and outstanding.

As of March 31, 2024, Series A Preferred Stock had a carrying value and redemption value of $361.0 million.

As of March 31, 2024 and December 31, 2023, we had 44,842,587 and 44,776,926 shares of Common Stock issued and outstanding, respectively.

Historical Cash Flows

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

Nine Months Ended

September 30, 2023 Nine Months Ended

September 30, 2022

Our consolidated cash flows from operating, investing and financing activities for the three months ended March 31, 2024 and 2023 were as follows:

$s in thousands Three Months Ended

March 31, 2024 Three Months Ended

March 31, 2023

Net cash used in operating activities $ (19,762) $ (36,653)

Net cash provided by (used in) investing activities 35,851,528 35,851,528 (69,780,302)

Net cash (used in) provided by financing activities (5,105,253) 128,309,992

Effects of exchange rate changes (43,281) (359)

Net cash (used in) provided by investing activities (214) 12,959

Net cash used in financing activities (896) (4,077)

Net change in cash and cash equivalents $ (20,872) $ (27,771)

Operating Activities

Net cash used in operating activities was $41.5 million for the nine months ended September 30, 2023, compared to Net cash used in operating activities of $8.0 million for the nine months ended September 30, 2022.

Net cash used in operating activities reflects net loss of $46.2 million for the nine months ended September 30, 2023 compared to $25.1 million for the nine months ended September 30, 2022.

Net cash used in operating activities for the nine months ended September 30, 2023 reflects add-backs to Net loss for non-cash charges totaling $52.0 million, primarily driven by stock-based compensation expense associated with the RSUs granted to Bridger employees of $38.7 million, depreciation and

amortization of $10.2 million, and change in fair value of derivative liability of $1.9 million.

Net cash used in operating activities for the nine months ended September 30, 2022 reflects add-backs to Net loss for non-cash charges totaling $18.7 million, primarily driven by depreciation and amortization of $8.6 million, change in fair value of Legacy Bridger Series A Preferred Shares of $3.9 million, and interest accrued on Legacy Bridger Series B Preferred Shares of $3.6 million.

Net cash used in operating activities was $19.8 million for the three months ended March 31, 2024, compared to Net cash used in operating activities of $36.7 million for the three months ended March 31, 2023.

Net cash used in operating activities reflects Net loss of $20.1 million for the three months ended March 31, 2024 compared to Net loss of $44.7 million for the three months ended March 31, 2023.

Net cash used in operating activities for the three months ended March 31, 2024 reflects add-backs to Net loss for non-cash charges totaling $6.5 million, primarily attributable to stock-based compensation expense of $5.9 million and depreciation and amortization of $1.3 million, partially offset by the change in fair value of embedded derivative of $0.9 million.

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 attributable to stock-based compensation expense of $25.6 million.

Investing Activities

Net cash provided by investing activities was $35.9 million for the nine months ended September 30, 2023, compared to Net cash used in investing activities of $69.8 million for the nine months ended September 30, 2022.

Net cash provided by investing activities for the nine months ended September 30, 2023 reflects proceeds from maturities of marketable securities of $53.1 million, purchases of property, plant and equipment of $18.1 million, which primarily comprised of purchases of aircraft and aircraft improvements, and the sale of property, plant and equipment of $0.8 million.

Net cash used in investing activities for the nine months ended September 30, 2022 reflects purchases of marketable securities of $38.5 million and purchases of property, plant and equipment of $23.8 million, which is primarily comprised of aircraft improvements, and the construction in progress of the third hangar of $7.7 million.

Net cash used in investing activities was $0.2 million for the three months ended March 31, 2024, compared to Net cash provided by investing activities of $13.0 million for the three months ended March 31, 2023.

Net cash used in investing activities for the three months ended March 31, 2024 reflects purchases of property, plant and equipment of $1.0 million, which primarily comprised of purchases aircraft improvements, and expenditures for capitalized software of $0.3 million, partially offset by proceeds from maturities of marketable securities of $1.1 million.

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

Financing Activities

Net cash used in financing activities was $5.1 million for the nine months ended September 30, 2023, compared to Net cash provided by financing activities of $128.3 million for the nine months ended September 30, 2022.

Net cash used in financing activities for the nine months ended September 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 $1.5 million.

Net cash provided by financing activities for the nine months ended September 30, 2022 reflects borrowings from Legacy Bridger Series C Preferred Shares members of $288.7 million, payments to Legacy Bridger Series A Preferred Shares of $236.3 million, borrowings from the 2022 taxable industrial revenue bond of $160.0 million, and payments to Legacy Bridger Series B Preferred Shares of $70.0 million.

Off-Balance Sheet Arrangements

As of September 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.

Net cash used in financing activities was $0.9 million for the three months ended March 31, 2024, compared to Net cash used in financing activities of $4.1 million for the three months ended March 31, 2023.

Net cash used in financing activities for the three months ended March 31, 2024 primarily reflects repayments on debt of $0.7 million and payment of issuance costs for Common Stock in the at-the-market offering of $0.3 million, partially offset by proceeds from issuance of Common Stock in the at-the-market offering of $0.2 million.

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

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 September 30, 2023.

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

The following table summarizes our contractual obligations as of March 31, 2024:

Payments Due by Period

Total Current Noncurrent

$s in thousands Total Current Noncurrent

Lease obligations $ 10,613 $ 2,194 $ 8,419

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Total $ 221,253 $ 5,224 $ 216,029

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.

and Viking Air Limited (the manufacturer of our Super Scooper aircraft and an affiliate of Longview Aviation Services Inc.), dated April 13, 2018.

On November 17, 2023, the Company entered into a series of agreements with MAB and its subsidiary designed to facilitate the purchase and return to service of four Spanish Scoopers originally awarded to the Company in September 2023 via a public tender process from the Government of Spain.

The terms of the agreements provide that the Company will manage the return to service upgrades of the Spanish Scoopers while they are owned and funded by MAB.

The Company has the right, but not the obligation, to acquire each plane as it is ready to be contracted and returned to service.

In the event that the Company does not purchase the aircraft within the time periods set forth in the agreements, then either party may initiate a sales process for the sale of all aircraft that have not been purchased by the Company, which sales process the Company will oversee and manage.

If the aircraft are sold to a third party through such process, then the Company must pay MAB’s subsidiary a cash fee equal to the amount, if any, by which the aggregate price of the Company’s purchase options for such aircraft exceeds the consideration paid by the third-party purchaser for the same aircraft, not to exceed $15.0 million in aggregate.

If the aircraft are not sold to a third party and MAB’s subsidiary has not otherwise entered into an operating lease with a third party for the aircraft, then the Company must pay MAB’s subsidiary $15.0 million.

Off-Balance Sheet Arrangements

On November 17, 2023, we entered into a series of agreements designed to facilitate the purchase and return to service of the Spanish Scoopers originally awarded to our wholly-owned subsidiary, BAE, in September 2023 via a public tender process from the Government of Spain for €40.3 million.

Under the terms of the agreements, we agreed to sell the entire outstanding equity interest in BAE to MAB and purchase $4.0 million of non-voting Class B units of MAB.

We also entered into a services agreement with MAB whereby we will manage the return to service upgrades of the Spanish Scoopers through our wholly-owned Spanish subsidiary, Albacete Aero, S.L., while they are owned and funded by MAB.

The service agreement also provides that we have the right, but not the obligation, to acquire each Spanish Scooper as it is ready to be contracted and returned to service.

The Company assessed both MAB and BAE for variable interest entity accounting under ASC 810-10-15 and determined that MAB is a voting interest entity and BAE is a variable interest entity.

However, neither entity is consolidated in the consolidated financial statements as the Company does not have a controlling financial interest in MAB and the Company is not the primary beneficiary of BAE.

As of March 31, 2024 and December 31, 2023, we did not have any other relationships with special purpose or variable interest entities which have been established for the purpose of facilitating off-balance sheet arrangement, which have not been consolidated in the consolidated financial statements of the Company.

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

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our unaudited condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report are prepared in accordance with GAAP.

The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, provision for income taxes and related disclosures.

Our Condensed Consolidated Financial Statements and the related notes included elsewhere in this Quarterly Report are prepared in accordance with GAAP.

The preparation of these Condensed Consolidated Financial Statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, provision for income taxes and related disclosures.

We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.

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We evaluate our estimates and assumptions on an ongoing basis.

To the extent that

there are material differences between these estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected.

To the extent that there are material differences between these estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected.

We believe that the following critical accounting policies involve a greater degree of judgment or complexity than our other accounting policies.

Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our unaudited condensed consolidated financial condition and results of operations.

Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our condensed consolidated financial condition and results of operations.

Investments in Marketable Securities

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Revenue Recognition

Revenues are recognized when control of the promised services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services.

We charge daily and hourly rates depending upon the type of firefighting services rendered and under which contract the services are performed.

These services are primarily split into flight revenue and standby revenue.

Flight revenue is primarily earned at an hourly rate when the engines of the aircraft are started and stopped upon request of the customer, tracked via a Hobbs meter.

Flight revenue is primarily earned at an hourly rate when the engines of the aircraft are started and stopped upon request of the customer, tracked via flight logs for Super Scoopers or a Hobbs meter for other aircraft.

Standby revenue is earned primarily as a daily rate when aircraft are available for use at a fire base, awaiting request from the customer for flight deployment.

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This occurs as the services are rendered and include the use of the aircraft, pilot and field maintenance personnel to support the contract.

Contracts are based on either a CWN or EU basis.

Contracts are based on either a Call-When-Needed (“CWN”) or Exclusive Use (“EU”) basis.

Rates established are generally more competitive based on the security of the revenue from the contract (i.e., an EU versus only on an as-needed basis in CWN).

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Acceptance by the customer is evidenced by the provision of their funded task order or accepted invoice.

Other revenue consists of leasing revenues from the rental of BSI, LLC facilities to another related party as well as external repair work performed on customer aircraft by Bridger Aviation Repair, LLC.

Other revenue consists of leasing revenues for facilities as well as external repair and return-to-service work performed on customer aircraft.

The Company commonly contracts with third-parties to perform certain repair and return-to-service work that we have promised in our customer agreements.

The Company considers itself the principal in these arrangements as we control the timing and nature of the services ultimately provided by the third-party to the customer.

Return-to-service revenue associated with the Spanish Scoopers is recognized over time using a cost-to-cost measure because it best depicts the transfer of value to the customer and also correlates with the amount of consideration to which the Company expects to be entitled in exchange for transferring the promised services to the customer.

Under the cost-to-cost measure of progress, progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation.

Revenues are recorded proportionally as costs are incurred.

Payment terms vary by customer and type of revenue contract.

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In such instances, we have elected the practical expedient to not evaluate whether a significant financing component exists.

As permitted under the practical expedient available under ASC 606, Revenue from Contracts with Customers , we do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount which we have the right to invoice for services performed.

As the Company has a right to consideration from customers in an amount that corresponds directly with the value to the customer of the Company’s performance completed to date, the Company has applied the practical expedient to recognize revenue in the amount to which we have the right to invoice.

As permitted under the practical expedient available under Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers , we do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount which we have the right to invoice for services performed.

Sales taxes and value added taxes in foreign jurisdictions that are collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from Revenues.

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Significant management judgments and assumptions are required in determining the fair value of assets acquired and liabilities assumed, particularly acquired intangible assets, including estimated useful lives.

The valuation of purchased intangible assets is based upon estimates of

the future performance and discounted cash flows of the acquired business.

The valuation of purchased intangible assets is based upon estimates of the future performance and discounted cash flows of the acquired business.

Each asset acquired or liability assumed is measured at estimated fair value from the perspective of a market participant.

Contingent consideration, represents an obligation of the acquirer to transfer additional assets or equity interests to the seller if future events occur or conditions are met, is recognized when probable and reasonably estimable.

Contingent consideration represents an obligation of the acquirer to transfer additional assets or equity interests to the seller if future events occur or conditions are met and is recognized when probable and reasonably estimable.

Contingent consideration recognized is included in the initial cost of the assets acquired.

Subsequent changes in the estimated fair value of contingent consideration are recognized as Selling, general and administrative expenses within the Unaudited Condensed Consolidated Statements of Operations.

Subsequent changes in the estimated fair value of contingent consideration are recognized as Selling, general and administrative expenses within the Condensed Consolidated Statements of Operations.

Stock-Based Compensation

Incentive Units

During the years ended December 31, 2022 and 2021, we granted incentive units (the “Legacy Bridger Incentive Units”) to selected board members and executives.

Within each grant, 80% of the Legacy Bridger Incentive Units vest annually over a four-year period subject to continued service by the grantee (the “Time-Vesting Incentive Units”) and the remaining 20% of the Legacy Bridger Incentive Units vest upon a qualifying change of control event (the “Exit-Vesting Incentive Units”).

Notwithstanding the above, any unvested Time-Vesting Incentive Units will become vested Time-Vesting Incentive Units if a qualifying change of control event occurs prior to the respective award’s four-year service-based vesting period.

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 and nine months ended September 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 September 30, 2023.

Forfeitures are accounted for as they occur.

Compensation cost for the Legacy Bridger Incentive Units is measured at their grant-date fair value.

The value of Legacy Bridger Common Shares is derived through an option pricing model, which incorporates various assumptions.

Use of a valuation model requires management to make certain assumptions with respect to selected model inputs.

Expected volatility was calculated based on the observed equity volatility for comparable companies.

The expected time to liquidity event is based on management’s estimate of time to an expected liquidity event.

The dividend yield was based on our expected dividend rate.

The risk-free interest rate is based on U.S.

Treasury zero-coupon issues.

The weighted-average assumptions we used in the option pricing model for its 2021 grants are as follows.

Dividend yield (%) 0

Expected volatility (%) 46.5

Risk-free interest rate (%) 1.26

Term (in years) 5.00

Discount for lack of marketability (%) 30

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 Bridger employees (the “Participants”).

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

The RSUs accrue dividend equivalents associated with the underlying shares of Common Stock as the Company declares dividends.

Dividends will be paid to holders of RSUs in cash upon the vesting date of the associated RSU and will be forfeited if the RSU does not vest.

On January 24, 2023, the Company granted 6,581,496 RSUs, of which 2,400,354 RSUs vested immediately upon Closing, subject to a one-year lock up period ending January 24, 2024.

The fair value of the RSUs that vested immediately upon Closing of the Transactions is the closing stock price on the date of grant, subject to a discount for lack of marketability due to the post-vesting restrictions.

The remaining 4,181,142 RSUs vest over a period ranging from three 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.

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.

On September 13, 2023, the Company granted 194,436 RSUs to one of the Company’s non-employee directors.

These RSUs vest over a period of one to five years, subject to the participant’s service with the Company.

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

In January 2023, the Company along with its board of directors established and approved and assumed the Bridger Aerospace Group Holdings, Inc.

2023 Omnibus Incentive Plan (the “Omnibus Plan”).

The Omnibus Plan was developed to motivate and reward employees and other individuals to perform at the highest level and contribute significantly to the success of the Company, thereby furthering the best interests of the Company and its shareholders.

The Omnibus Plan provides, among other things, the ability for the Company to grant options, stock appreciation rights, restricted stock, RSUs, performance awards and other stock-based and cash-based awards to employees, consultants and non-employee directors.

The Omnibus Plan expires on January 23, 2033 and authorizes 15,099,137 shares of common stock for grant life of the Omnibus Plan.

As of March 31, 2024, 4,513,130 shares of common stock remain available under the Omnibus Plan.

As of March 31, 2024, the Company has granted participants RSUs and bonuses paid in Common Stock under the Omnibus Plan.

The fair value of RSUs is determined based on the quoted market price of the Common Stock on the date of grant.

Compensation cost for the RSUs is recognized over the requisite service period based on a graded-vesting method.

The Company accounts for forfeitures as they occur.

Stock-based compensation is included in both Cost of revenues and Selling, general and administrative expense in the Condensed Consolidated Statements of Operations.

Upon vesting of each RSU, the Company will issue one share of Common Stock to the RSU holder.

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

Goodwill represents the excess of purchase price over fair value of the net assets acquired in an acquisition.

We assess goodwill for impairment as of December 31 annually or more frequently upon an indicator of impairment.

Goodwill is tested for impairment at the reporting unit level by first performing a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value.

Beginning in 2023, the Company assesses goodwill for impairment as of October 1 annually or more frequently upon an indicator of impairment.

Prior to 2023, the Company assessed goodwill for impairment as of December 31 annually or more frequently upon an indicator of impairment.

The change to an October 1 annual goodwill impairment assessment date was made to ensure the completion of the Company’s assessment prior to the end of its annual reporting period, thereby aligning impairment testing procedures with its year-end financial reporting.

When we elect to perform a qualitative assessment and conclude it is more likely that the fair value of the reporting unit is greater than its carrying value, no further assessment of that reporting unit’s goodwill is necessary.

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Conditions that would trigger an impairment assessment include, but are not limited to, a significant adverse change in legal factors or the business climate that could affect the value of an asset or an adverse reaction.

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 and nine months ended September 30, 2023 and 2022.

As of the October 1, 2023 annual goodwill impairment test, the Company’s qualitative analysis indicated the fair value of the Company’s reporting unit exceeded its carrying value.

No goodwill impairment charges were recorded for the three months ended March 31, 2024 or 2023.

Long-Lived Assets

A long-lived asset (including amortizable identifiable intangible assets) or asset group is tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.

Conditions that may indicate impairment include, but are not limited to, a significant adverse change in customer demand or business climate that could affect the value of an asset, a product recall or an adverse action or assessment by a regulator.

When indicators of impairment are present, we evaluate the carrying value of the long-lived assets in relation to the operating performance and future undiscounted cash flows of the underlying assets.

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Depreciation for aircraft, engines and rotable parts is recorded over the estimated useful life based on flight hours.

Depreciation for unmanned aerial vehicles, vehicles and equipment and buildings is computed using the straight-line method over the estimated useful lives of the property, plant and equipment.

The table below summarizes depreciable lives by asset category:

Depreciation for vehicles and equipment, buildings, and leasehold improvements is computed using the straight-line method over the estimated useful lives of the property, plant and equipment.

Airplane hangars located on leased airport property are considered leasehold improvements with useful lives determined based on the estimated life of the underlying ground lease.

Depreciable lives by asset category are as follows:

Estimated useful life

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

Unmanned aerial vehicles 5 – 10 years

Vehicles and equipment 3 – 5 years

Buildings 50 years

Leasehold improvements 27 – 29 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 September 30, 2023 and December 31, 2022, respectively.

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 $5.0 million as of March 31, 2024 and December 31, 2023.

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 and nine months ended September 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.

On November 7, 2022, we acquired all of the outstanding equity interests of MA, LLC, and it has not been accounted for as a VIE in subsequent reporting periods.

For the three months ended March 31, 2024 and 2023, Northern Fire Management Services, LLC, a VIE of which the Company was identified as the primary beneficiary, is consolidated into our financial statements.

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

Fair Value of Financial Instruments

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The warrant liabilities are subject to remeasurement at each balance sheet date until exercised.

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.

Refer to “Note 12 – Accrued Expenses and Other Liabilities” of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report for additional information.

RECENT ACCOUNTING PRONOUNCEMENTS

For additional information regarding recent accounting pronouncements adopted and under evaluation, refer to “ Note 2 – Summary of Significant Accounting Policies ” of the Notes to Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report.

For additional information regarding recent accounting pronouncements adopted and under evaluation, refer to “ Note 2 – Summary of Significant Accounting Policies ” of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report.

EMERGING GROWTH COMPANY AND SMALLER REPORTING COMPANY STATUS

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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 and nine months ended September 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.

Refer to “ Note 2 – Summary of Significant Accounting Policies ” of the Notes to 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, 2024 and the year ended December 31, 2023.

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 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.

We will be a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K.

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Forward-looking statements generally are accompanied by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “project,” “forecast,” “predict,” “poised,” “positioned,” “potential,” “seem,” “seek,” “future,” “outlook,” “target,” and similar expressions that predict or indicate future events or trends or that are not statements of historical matters, but the absence of these words does not mean that a statement is not forward-looking.

These forward-looking statements include, but are not limited to, (1) anticipated expansion of Bridger’s operations and increased deployment of Bridger’s aircraft fleet, including references to Bridger’s acquisition of and/or right to use the four Super Scoopers from the Spanish government, including the expected closing timings thereof, the anticipated benefits therefrom, and the ultimate structure of such acquisitions and/or right to use arrangements;

(2) Bridger’s business and growth plans and future financial performance, including anticipated revenue, cash flow, and Adjusted EBITDA for the fourth quarter and full year of 2023 and for 2024;

These forward-looking statements include, but are not limited to, (1) anticipated expansion of Bridger’s operations and increased deployment of Bridger’s aircraft fleet, including references to Bridger’s acquisition of and/or right to use the four Spanish Scoopers, including the expected closing timings thereof, the anticipated benefits therefrom, and the ultimate structure of such acquisitions and/or right to use arrangements;

(2) Bridger’s business and growth plans and future financial performance;

(3) current and future demand for aerial firefighting services, including the duration or severity of any domestic or international wildfire seasons;

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These forward-looking statements are subject to a number of risks and uncertainties, including:

the ultimate outcome of Bridger’s discussions with private investment funds to facilitate the potential acquisition and/or use of the Super Scoopers to be sold by the Spanish government;

Bridger’s ability to identify and effectively implement any current or future anticipated cost reductions, including any resulting impacts to Bridger’s business and operations therefrom;

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Bridger’s failure to realize the anticipated benefits of any acquisitions;

Bridger’s successful integration of the aircraft (including achievement of synergies and cost reductions);

Bridger’s successful integration of any aircraft (including achievement of synergies and cost reductions);

Bridger’s ability to successfully and timely develop, sell and expand its services, and otherwise implement its growth strategy;

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Bridger's ability to compete with existing or new companies that could cause downward pressure on prices, fewer customer orders, reduced margins, the inability to take advantage of new business opportunities, and the loss of market share;

the impact of the coronavirus pandemic;

the ability to successfully select, execute or integrate future acquisitions into Bridger's business, which could result in material adverse effects to operations and financial conditions;

and those factors discussed in the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” included in Bridger’s Annual Report on Form 10-K filed with the U.S.

Securities and Exchange Commission on March 20, 2023 and in the Quarterly Report.

and those factors discussed in the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” included in Bridger’s Annual Report filed with the U.S.

Securities and Exchange Commission on March 20, 2024 and in this Quarterly Report.

If any of these risks materialize or Bridger management's assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements.

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We have identified material weaknesses in our internal control over financial reporting, which we are in the process of, and are focused on, remediating.

The first material weakness is related to properly accounting for complex transactions within our financial statement closing and reporting process.

The first material weakness is related to reviewing third party accounting advice and properly accounting for complex transactions, especially related to merger and acquisition activity, within our financial statement closing and reporting process.

The second material weakness arises from our failure to design and maintain effective IT general controls over the IT systems used within the processing of key financial transactions.

Specifically, we did not design and maintain user access controls to ensure appropriate segregation of duties and that adequately restrict user and privileged access to financial applications, programs, and data to appropriate company personnel.

Additionally, we identified a material weakness in our internal control over financial reporting related to the period end account reconciliation review and entity level financial statement review controls which did not operate within a sufficient level of precision.

Within the same material weakness, we have also failed to maintain adequate documentation around the process of implementing new software solutions.

Lastly, we identified a third material weakness in our internal control over financial reporting related to the period-end account reconciliation and financial statement review controls which did not operate within a sufficient level of precision.

We have begun the process of, and are focused on, designing and implementing effective internal controls measures to improve our internal control over financial reporting and remediate the material weaknesses, including:

• actively recruiting additional personnel with knowledge of GAAP, in addition to engaging and utilizing third-party consultants and specialists to supplement our internal resources and implementing processes and controls to segregate key functions within our finance systems, as appropriate;

• designing and implementing a formalized control plan related to IT general controls, including controls related to managing access to financially significant systems within our IT environment;

• engaging a third-party consultant to assist with evaluating and documenting the design and operating effectiveness of internal controls and assisting with the remediation of deficiencies, as necessary.

• the recruitment of additional personnel with extensive knowledge of GAAP, implementation of software to facilitate the accumulation and review of our financial information, and utilization of third party consultants and specialists to supplement our internal resources, as well as implementing processes and controls to segregate key functions within our finance systems, as appropriate;

• designing and following a formalized control plan related to IT general controls, including controls related to developing, implementing and managing access to and implementing financially significant systems within our IT environment;

• engaging internal and external resources to assist with the design and evaluation of internal controls and the remediation of deficiencies, as necessary.

While these actions and planned actions are subject to ongoing management evaluation and will require validation and testing of the design and operating effectiveness of internal controls over a sustained period of financial reporting cycles, we are committed to the continuous improvement of our internal control over financial reporting and will continue to diligently review our internal control over financial reporting.

Although we plan to complete this remediation process as quickly as possible, we are unable, at this time, to estimate how long it will take and our efforts may not be successful in remediating the deficiencies or material weaknesses.

In addition, even if we are successful in strengthening our controls and procedures, we can give no assurances that in the future such controls and procedures will be adequate to prevent or identify errors or irregularities or to facilitate the fair preparation and presentation of our unaudited condensed consolidated financial statements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.

Pursuant to Item 305(e) of Regulation S-K, the Company is not required to provide the information required by this Item as it is a “smaller reporting company.”

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What changed 10-Q

Item 2. Management’s Discussion and Analysis