What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-13 compared with 2024-05-14 · 219 added, 93 removed, 413 unchanged (43% of the section changed)

1 unchanged sentence

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

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”).

The discussion and analysis should be read together with the condensed consolidated financial statements as of June 30, 2024 and December 31, 2023, for the three and six months ended June 30, 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 contains forward-looking statements based upon our current expectations, estimates and projections that involve risks and uncertainties.

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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 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.

We expect that our existing cash and cash equivalents as well as cash generated from our operations and potential additional sales of our common stock, par value $0.0001 per share (“Common Stock”), through our at-the-market offering and other offerings 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 and 2025.

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.

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RESULTS OF OPERATIONS

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.

Comparison of the Three Months Ended June 30, 2024 to the Three Months Ended June 30, 2023

The following table sets forth our Condensed Consolidated Statements of Operations information for the three months ended June 30, 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 (%)

June 30, 2024 Three Months Ended

June 30, 2023 Period Over Period Change ($) Period Over Period Change (%)

Revenues $ 13,014 $ 11,616 $ 1,398 12%

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Total cost of revenues 9,867 10,511 (644) (6%)

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

Gross income 3,147 1,105 2,042 185%

Selling, general and administrative expense 7,902 15,187 (7,285) (48%)

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Loss before income taxes (10,465) (19,022) 8,557 (45%)

Income tax expense (14) — (14) n/a

Income tax benefit 484 — 484 n/a

Net loss $ (9,981) $ (19,022) $ 9,041 (48%)

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:

Revenues increased by $1.4 million, or 12%, to $13.0 million for the three months ended June 30, 2024, from $11.6 million for the three months ended June 30, 2023.

Revenues by service offering for the three months ended June 30, 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

June 30, 2024 Three Months Ended

June 30, 2023 Period Over Period Change ($) Period Over Period Change (%)

Fire suppression $ 7,466 $ 10,449 $ (2,983) (29)%

Aerial surveillance 3,514 1,124 2,390 213%

Other services 2,034 43 1,991 4,630%

Total revenues $ 13,014 $ 11,616 $ 1,398 12%

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.

Fire suppression revenue decreased by $3.0 million, or 29%, to $7.5 million for the three months ended June 30, 2024, from $10.4 million for the three months ended June 30, 2023.

The decrease was primarily due to less Super Scoopers deployed for the three months ended June 30, 2024 compared to the three months ended June 30, 2023.

In 2023, the Company actively expanded our aerial firefighting operations in Canada.

Aerial surveillance increased by $2.4 million, or 213%, to $3.5 million for the three months ended June 30, 2024, from $1.1 million for the three months ended June 30, 2023.

The increase was primarily due to the higher rate of the Pilatus aircraft operating for the three months ended June 30, 2024 compared to the Twin Commander aircraft operating for three months ended June 30, 2023.

Other services revenue increased by $2.0 million, or 4,630%, to $2.0 million for the three months ended June 30, 2024, from $43,000 for the three months ended June 30, 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:

Revenues by type for the three months ended June 30, 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

June 30, 2024 Three Months Ended

June 30, 2023 Period Over Period Change ($) Period Over Period Change (%)

Flight revenue $ 4,483 $ 5,794 $ (1,311) (23)%

Standby revenue 6,511 5,136 1,375 27%

Other revenue 2,020 686 1,334 194%

Total revenues $ 13,014 $ 11,616 $ 1,398 12%

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.

Flight revenue decreased by $1.3 million, or 23%, to $4.5 million for the three months ended June 30, 2024, from $5.8 million for the three months ended June 30, 2023.

The decrease in flight revenue was primarily due to less Super Scoopers deployed for the three months ended June 30, 2024 compared to the three months ended June 30, 2023.

In 2023, the Company actively expanded our aerial firefighting operations in Canada.

The Company has had no aerial firefighting operations in Canada in 2024.

Standby revenue increased by $1.4 million, or 27% to $6.5 million for the three months ended June 30, 2024, from $5.1 million for the three months ended June 30, 2023.

Other revenue increased by $1.3 million, or 194%, to $2.0 million for the three months ended June 30, 2024, from $0.7 million for the three months ended June 30, 2023.

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

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Cost of Revenues

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.

Total cost of revenues decreased by $0.6 million, or 6%, to $9.9 million for the three months ended June 30, 2024, from $10.5 million for the three months ended June 30, 2023.

Flight Operations

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.

Flight operations expenses decreased by $1.2 million, or 19%, to $5.1 million for the three months ended June 30, 2024, from $6.3 million for the three months ended June 30, 2023.

The decrease was primarily due to a decrease in depreciation expense due to a decrease in flight hours for the Super Scoopers in the three months ended June 30, 2024.

Maintenance expenses increased by $0.5 million, or 13%, to $4.8 million for the three months ended June 30, 2024, from $4.2 million for the three months ended June 30, 2023.

The increase was primarily driven by an increase in employee labor expenses during the three months ended June 30, 2024.

Selling, General and Administrative Expense

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.

Selling, general and administrative expense decreased by $7.3 million, or 48%, to $7.9 million for the three months ended June 30, 2024, from $15.2 million for the three months ended June 30, 2023.

The decrease was primarily attributable to a decrease in the market value of the Warrants of $3.0 million.

The decrease was partially attributable to the decrease in stock-based compensation of $2.9 million associated with RSUs issued to senior management and employees of Bridger.

The decrease was also partially attributable to a decrease in professional service fees of approximately $0.8 million due to higher costs associated with becoming a public company in January 2023.

The remaining decrease is primarily attributable to a loss on disposal of $0.6 million related to an aging surveillance aircraft recorded in the three months ended June 30, 2023.

Interest Expense

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.

Interest expense increased by $0.3 million, or 6%, to $5.9 million for the three months ended June 30, 2024, from $5.5 million for the three months ended June 30, 2023.

The increase was primarily driven by lower capitalized interest associated with the financing of the construction of fixed assets for the three months ended June 30, 2024 compared to the three months ended June 30, 2023.

Other income decreased by $0.5 million, or 76%, to $0.1 million for the three months ended June 30, 2024, from $0.6 million for the three months ended June 30, 2023.

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

Refer to “ Note 4 – Cash Equivalents and Investment in Marketable Securities ” of the Notes to Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report for additional details.

The decrease was also partially attributable to interest income for the embedded derivative of Legacy Bridger Series C Preferred Shares of $0.2 million.

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

Income Tax Benefit

Income tax benefit increased to $0.5 million for the three months ended June 30, 2024, from zero for the three months ended June 30, 2023.

The increase was attributable to a discrete benefit generated from the FMS Acquisition during 2024.

Comparison of the Six Months Ended June 30, 2024 to the Six Months Ended June 30, 2023

The following table sets forth our unaudited condensed consolidated statements of operations information for the six months ended June 30, 2024 and 2023 and should be reviewed in conjunction with the financial statements and notes included elsewhere in this Quarterly Report.

$s in thousands Six Months Ended

June 30, 2024 Six Months Ended

June 30, 2023 Period Over Period Change ($) Period Over Period Change (%)

Revenues $ 18,521 $ 11,981 $ 6,540 55%

Cost of revenues:

Flight operations 10,115 10,032 83 1%

Maintenance 8,958 7,727 1,231 16%

Total cost of revenues 19,073 17,759 1,314 7%

Gross loss (552) (5,778) 5,226 (90%)

Selling, general and administrative expense 19,512 48,416 (28,904) (60%)

Operating loss (20,064) (54,194) 34,130 (63%)

Interest expense (11,777) (11,206) (571) 5%

Other income 1,303 1,693 (390) (23%)

Loss before income taxes (30,538) (63,707) 33,169 (52)%

Income tax benefit 470 — 470 n/a

Net loss $ (30,068) $ (63,707) $ 33,639 (53%)

Revenues increased by $6.5 million, or 55%, to $18.5 million for the six months ended June 30, 2024, from $12.0 million for the six months ended June 30, 2023.

Revenues by service offering for the six months ended June 30, 2024 and 2023 were as follows:

$s in thousands Six Months Ended

June 30, 2024 Six Months Ended

June 30, 2023 Period Over Period Change ($) Period Over Period Change (%)

Fire suppression $ 11,347 $ 10,449 $ 898 9%

Aerial surveillance 4,097 1,124 2,973 265%

Other services 3,077 408 2,669 654%

Total revenues $ 18,521 $ 11,981 $ 6,540 55%

Fire suppression revenue increased by $0.9 million, or 9%, to $11.3 million for the six months ended June 30, 2024, from $10.4 million for the six months ended June 30, 2023.

The increase was primarily due to an earlier start to the 2024 wildfire season in March and April of 2024, compared to the six months ended June 30, 2023, which led to more aircraft operating for the six months ended June 30, 2024.

Aerial surveillance revenue increased by $3.0 million, or 265%, to $4.1 million for the six months ended June 30, 2024, from $1.1 million for the six months ended June 30, 2023.

The increase was primarily due to the higher rate of the Pilatus aircraft operating for the six months ended June 30, 2024 compared to the Twin Commander aircraft operating for the six months ended June 30, 2023.

The increase was partially due to an earlier start to the 2024 wildfire season in March and April of 2024, compared to the six months ended June 30, 2023, which led to more aircraft operating for the six months ended June 30, 2024.

Other services revenue increased by $2.7 million, or 654%, to $3.1 million for the six months ended June 30, 2024, from $0.4 million for the six months ended June 30, 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 six months ended June 30, 2024 and 2023 were as follows:

$s in thousands Six Months Ended

June 30, 2024 Six Months Ended

June 30, 2023 Period Over Period Change ($) Period Over Period Change (%)

Flight revenue $ 5,396 $ 5,794 $ (398) (7)%

Standby revenue 9,979 5,136 4,843 94%

Other revenue 3,146 1,051 2,095 199%

Total revenues $ 18,521 $ 11,981 $ 6,540 55%

Flight revenue decreased by $0.4 million, or 7%, to $5.4 million for the six months ended June 30, 2024, from $5.8 million for the six months ended June 30, 2023.

The decrease in flight revenue was primarily due to less flight hours for our Super Scoopers in the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

In 2023, the Company actively expanded our aerial firefighting operations in Canada.

The Company has had no aerial firefighting operations in Canada in 2024.

Standby revenue increased by $4.8 million, or 94%, to $10.0 million for the six months ended June 30, 2024, from 5.1 million for the six months ended June 30, 2023.

The increase was also attributable to the early deployment of two Super Scoopers in March and April of 2024.

Other revenue increased by $2.1 million, or 199%, to $3.1 million for the six months ended June 30, 2024, from $1.1 million for the six months ended June 30, 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 $1.3 million, or 7%, to $19.1 million for the six months ended June 30, 2024, from $17.8 million for the six months ended June 30, 2023.

Flight Operations

Flight operations expenses increased by $0.1 million, or 1%, to $10.1 million for the six months ended June 30, 2024, from $10.0 million for the six months ended June 30, 2023.

The increase was primarily attributable to an increase of employee labor expenses of $0.9 million, an increase in aircraft lease expense of approximately $0.7 million due to two Pilatus operating leases commencing in July 2023 and a Twin Otter operating lease commencing in April 2023, and an increase in training costs of $0.3 million.

The increase was partially offset by a decrease of $1.8 million in depreciation expense due to a decrease in flight hours for the Super Scoopers in the six months ended June 30, 2024.

Maintenance expenses increased by $1.2 million, or 16%, to $9.0 million for the six months ended June 30, 2024, from $7.7 million for the six months ended June 30, 2023.

The increase was primarily driven by an increase in salaries and wages of $0.6 million, increase in depreciation expense of $0.4 million, and higher subscriptions, licenses, and fees of $0.2 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

Selling, General and Administrative Expense

Selling, general and administrative expense decreased by $28.9 million, or 60%, to $19.5 million for the six months ended June 30, 2024, from $48.4 million for the six months ended June 30, 2023.

The decrease was primarily attributable to the decrease in stock-based compensation of $22.8 million primarily associated with the immediate vesting of RSUs issued to executives and senior management of Bridger in connection with the Reverse Recapitalization in January 2023.

The remaining decrease is partially attributable to a decrease in professional service fees of $2.0 million due to higher costs associated with becoming a public company in the first six months of 2023 and a decrease in the market value of the Warrants of $1.7 million.

Interest Expense

Interest expense increased by $0.6 million, or 5%, to $11.8 million for the six months ended June 30, 2024, from $11.2 million for the six months ended June 30, 2023.

The increase was primarily driven by lower capitalized interest associated with the financing of the construction of fixed assets for the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

Other income decreased by $0.4 million, or 23%, to $1.3 million for the six months ended June 30, 2024, from Other income of $1.7 million for the six months ended June 30, 2023.

The decrease was primarily driven by realized gains on available-for-sale securities of $0.7 million.

The decrease was offset primarily by an increase in dividend income of $0.3 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

Income Tax Benefit

Income tax benefit increased to $0.5 million for the six months ended June 30, 2024, from zero for the six months ended June 30, 2023.

The increase was attributable to a discrete benefit generated from the FMS Acquisition during 2024.

NON-GAAP FINANCIAL MEASURES

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EBITDA and Adjusted EBITDA

EBITDA is a non-GAAP profitability measure that represents net income or loss for the period before the impact of the interest expense, income tax expense (benefit) and depreciation and amortization of property, plant and equipment and intangible assets.

EBITDA is a non-GAAP profitability measure that represents net income or loss for the period before the impact of the interest expense, income tax benefit and depreciation and amortization of property, plant and equipment and intangible assets.

EBITDA eliminates potential differences in performance caused by variations in capital structures (affecting financing expenses), the cost and age of tangible assets (affecting relative depreciation expense) and the extent to which intangible assets are identifiable (affecting relative amortization expense).

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

The 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:

The reconciliation of Net loss, the most directly comparable GAAP measure, to EBITDA and Adjusted EBITDA for the three months ended June 30, 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 (%)

June 30, 2024 Three Months Ended

June 30, 2023 Period Over Period Change ($) Period Over Period Change (%)

Net loss $ (9,981) $ (19,022) $ 9,041 (48%)

Income tax expense 14 — 14 n/a

Income tax benefit (484) — (484) n/a

Depreciation and amortization 1,998 3,235 (1,237) (38%)

6 unchanged sentences

Change in fair value of earnout consideration 3

192 — 192 n/a

Change in fair value of Warrants 4

2 unchanged sentences

(149) 1,184 (1,333) (113%)

Gain on disposal 6

Loss on disposal 6

— 1,054 (1,054) (100)%

3 unchanged sentences

Adjusted EBITDA margin 7

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

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

The reconciliation of Net loss, the most directly comparable GAAP measure, to EBITDA and Adjusted EBITDA for the six months ended June 30, 2024 and 2023 is as follows:

$s in thousands Six Months Ended

June 30, 2024 Six Months Ended

June 30, 2023 Period Over Period Change ($) Period Over Period Change (%)

Net loss $ (30,068) $ (63,707) $ 33,639 (53%)

Income tax benefit (470) — (470) (100%)

Depreciation and amortization 3,288 4,986 (1,698) (34%)

Interest expense 11,777 11,206 571 5%

EBITDA (15,473) (47,515) 32,042 (67%)

Stock-based compensation 1

10,350 33,144 (22,794) (69)%

NM - Not Meaningful

Business development & integration expenses 2

460 873 (413) (47)%

Change in fair value of earnout consideration 3

207 — 207 n/a

Change in fair value of Warrants 4

(2,132) (533) (1,599) 300%

Offering costs 5

(149) 3,268 (3,417) (105%)

Loss on disposal 6

— 1,052 (1,052) (100)%

Adjusted EBITDA $ (6,737) $ (9,711) $ 2,974 (31%)

Net loss margin 7

(162 %) (532 %)

Adjusted EBITDA margin 7

(36 %) (81 %)

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

3 unchanged sentences

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.

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

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

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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.

For the six months ended June 30, 2024, the Company had an operating loss of $20.1 million, net loss of $30.1 million and cash flow used in operating activities of $22.6 million.

In addition, as of June 30, 2024, the Company had unrestricted cash and investments of $8.5 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.

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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.

As of August 9, 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 18 – Stockholders’ Deficit” of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report.

Cash and Marketable Securities

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.

As of June 30, 2024, our principal sources of liquidity were cash and cash equivalents of $8.5 million which were held for working capital purposes and restricted cash of $14.0 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.

As of June 30, 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 March 28, 2024, the closing price of our Common Stock was $5.02 per share.

On June 28, 2024, the closing price of our Common Stock was $3.74 per share.

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

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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.

Based on our unrestricted cash and cash equivalents balance as of June 30, 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.

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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 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.

As of June 30, 2024, we held $24.9 million of current liabilities, $16.2 million of which was accrued expenses and other current liabilities.

As of June 30, 2024, we held $217.6 million of long-term liabilities with $203.6 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

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Financial Covenants — In connection with the Series 2022 Bonds, we are a party to certain loan agreements that contain customary representation and warranties, negative covenants, including, limitations on indebtedness, reduction of liquidity below certain levels, and asset sales, merger and other transactions, and remedies on and events of default.

Under the terms of such loan agreements, we are subject to certain financial covenants, that require, among other things, that we operate in a manner and to the extent permitted by applicable law, to produce sufficient gross revenues so as to be at all relevant times in compliance with the terms of such covenants, including that we maintain (i) beginning with the fiscal quarter ending December 31, 2023, a minimum debt service coverage ratio (generally calculated as the aggregate amount of our total gross revenues, minus operating expenses, plus interest, depreciation and amortization expense, for any period, over our maximum annual debt service requirements, as determined under such loan agreement) that exceeds 1.25x and (ii) beginning with the fiscal quarter ending September 30, 2022, a minimum liquidity of not less than $8 million in the form of unrestricted cash and cash equivalents, plus liquid investments and unrestricted marketable securities at all times.

Under the terms of such loan agreements, we are subject to certain financial covenants, that require, among other things, that we operate in a manner and to the extent permitted by applicable law, to produce sufficient gross revenues so as to be at all relevant times in compliance with the terms of such covenants, including that we maintain (i) beginning with the fiscal quarter ended December 31, 2023, a minimum debt service coverage ratio (generally calculated as the aggregate amount of our total gross revenues, minus operating expenses, plus interest, depreciation and amortization expense, for any period, over our maximum annual debt service requirements, as determined under such loan agreement) that exceeds 1.25x and (ii) beginning with the fiscal quarter ended September 30, 2022, a minimum liquidity of not less than $8 million in the form of unrestricted cash and cash equivalents, plus liquid investments and unrestricted marketable securities at all times.

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 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 Company is not in compliance with the DSCR covenant as of June 30, 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.

The Company is in compliance with the $8.0 million minimum liquidity requirement as of June 30, 2024.

However, management anticipates that the Company 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 and 2025.

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.

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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.

The Company is in compliance with such financial covenants as of June 30, 2024.

Rocky Mountain Bank Loans

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

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

The Company is in compliance with such financial covenants as of June 30, 2024.

Mezzanine and Permanent Equity

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

Accrued interest for the Series A Preferred Stock was $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.

Accrued interest for the Series A Preferred Stock was $34.6 million as of June 30, 2024.

As of June 30, 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.

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.

As of June 30, 2024, Series A Preferred Stock had a carrying value and redemption value of $367.2 million.

As of June 30, 2024 and December 31, 2023, we had 53,157,874 and 44,776,926 shares of Common Stock issued and outstanding, respectively.

Historical Cash Flows

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

Our consolidated cash flows from operating, investing and financing activities for the six months ended June 30, 2024 and 2023 were as follows:

$s in thousands Six Months Ended

June 30, 2024 Six Months Ended

June 30, 2023

Net cash used in operating activities $ (22,558) $ (53,445)

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

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

Net cash provided by investing activities 1,448 28,565

Net cash provided by (used in) financing activities 6,718 (4,496)

Net change in cash and cash equivalents $ (14,392) $ (29,375)

Operating Activities

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.

Net cash used in operating activities was $22.6 million for the six months ended June 30, 2024, compared to Net cash used in operating activities of $53.4 million for the six months ended June 30, 2023.

Net cash used in operating activities reflects Net loss of $30.1 million for the six months ended June 30, 2024 compared to Net loss of $63.7 million for the six months ended June 30, 2023.

Net cash used in operating activities for the six months ended June 30, 2024 reflects add-backs to Net loss for non-cash charges totaling $11.0 million, primarily attributable to stock-based compensation expense of $10.4 million and depreciation and amortization of $3.3 million, partially offset by the change in fair value of the Warrants of $2.1 million and the change in fair value of embedded derivative of $0.9 million.

Net cash used in operating activities for the six months ended June 30, 2023 reflects add-backs to Net loss for non-cash charges totaling $37.4 million, primarily attributable to stock-based compensation expense of $32.0 million and partially attributable to depreciation and amortization expense of $5.0 million.

Investing Activities

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.

Net cash used in investing activities was $1.4 million for the six months ended June 30, 2024, compared to Net cash provided by investing activities of $28.6 million for the six months ended June 30, 2023.

Net cash used in investing activities for the six months ended June 30, 2024 reflects purchases of property, plant and equipment of $1.9 million, which primarily comprised of purchases aircraft improvements, and expenditures for capitalized software of $0.8 million, partially offset by cash acquired through the FMS acquisition of $2.6 million and proceeds from maturities of marketable securities of $1.1 million.

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

Financing Activities

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.

Net cash provided by financing activities was $6.7 million for the six months ended June 30, 2024, compared to Net cash used in financing activities of $4.5 million for the six months ended June 30, 2023.

Net cash provided by financing activities for the six months ended June 30, 2024 primarily reflects proceeds from issuance of Common Stock in the Registered Direct Offering of $9.2 million, partially offset by repayments on debt of $1.5 million and payment of issuance costs for Common Stock in offerings of $0.7 million.

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

Contractual Obligations

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

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

The following table summarizes our contractual obligations as of June 30, 2024:

Payments Due by Period

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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.

As of June 30, 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.

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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.

As of June 30, 2024, 8,942,234 shares of Common Stock remain available under the Omnibus Plan.

As of June 30, 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.

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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.

No goodwill impairment charges were recorded for the three and six months ended June 30, 2024 or 2023.

Long-Lived Assets

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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 $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 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.

For the three and six months ended June 30, 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.

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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 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.

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 and six months ended June 30, 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.

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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.

Securities and Exchange Commission on March 20, 2024, as amended by Amendment No.

1 to Bridger’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2023, filed with the U.S.

Securities and Exchange Commission on July 12, 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 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 first material weakness is related to properly accounting for complex transactions within our financial statement closing and reporting process, including the calculation and related presentation and disclosure of diluted earnings per share amounts and merger and acquisition activity.

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.

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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:

• 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;

• 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 and assist with the accounting and review of complex transactions, accounting matters and related presentation and disclosure, 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;

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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 identified 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 condensed consolidated financial statements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis