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Item 2. Management’s Discussion and Analysis

2023-11-13 compared with 2023-08-10 · 245 added, 170 removed, 487 unchanged (46% 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 June 30, 2023 and December 31, 2022, for the three and six months ended June 30, 2023 and 2022, and the related notes thereto, that are included elsewhere in this Quarterly Report on Form 10-Q (this “Quarterly Report”).

This discussion and analysis should 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”).

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

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

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 equityholders of Legacy Bridger converted their equity ownership in JCIC and Legacy Bridger, respectively, into equity ownership in the Company.

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.

Legacy Bridger has been determined to be the accounting acquirer with respect to the Reverse Recapitalization, which will be accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with GAAP.

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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 Air CL-415EAF aircraft (“Super Scoopers”) 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;

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;

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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.

Results of Operations

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

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

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

June 30, 2023 Three Months Ended

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

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 %

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

Operating loss (14,082,626) (2,403,504) (11,679,122) 486 %

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 601,891 134,311 467,580 348 %

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

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

June 30, 2023 Three Months Ended

June 30, 2022

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)

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

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

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

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

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.

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dollars) Three Months Ended

June 30, 2023 Three Months Ended

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

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 %

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

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

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

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

wildfire season.

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

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

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

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

The decrease was primarily driven by decreased maintenance services.

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.

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dollars) Three Months Ended

June 30, 2023 Three Months Ended

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

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 %

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

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

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

wildfire season.

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

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

wildfire season.

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

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

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

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

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

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

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

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

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

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

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

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.

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

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

Interest Expense

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

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

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

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

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.

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

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

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

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

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) Six Months Ended

June 30, 2023 Six Months Ended

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

dollars) Nine Months Ended

September 30, 2023 Nine Months Ended

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

Revenues $ 65,599,770 $ 45,275,556 $ 20,324,214 45 %

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Total cost of revenues 32,967,002 28,567,099 4,399,903 15 %

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

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

Selling, general and administrative expense 64,242,773 28,635,304 35,607,469 124 %

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Interest expense (17,175,959) (12,993,129) (4,182,830) 32 %

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

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

Loss before income taxes (46,532,644) (25,086,610) (21,446,034) 85 %

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

Net loss $ (46,218,564) $ (25,086,610) $ (21,131,954) 84 %

(All amounts in U.S.

dollars) Six Months Ended

June 30, 2023 Six Months Ended

June 30, 2022

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) $ —

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

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

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) Six Months Ended

June 30, 2023 Six Months Ended

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

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 %

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Total revenues $ 65,599,770 $ 45,275,556 $ 20,324,214 45 %

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

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

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

wildfire season.

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

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

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

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

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) Six Months Ended

June 30, 2023 Six Months Ended

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

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 %

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Total revenues $ 65,599,770 $ 45,275,556 $ 20,324,214 45 %

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

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

wildfire season.

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

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

wildfire season.

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

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.

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Cost of Revenues

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

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.

Flight Operations

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

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

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.

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

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

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.

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Selling, General and Administrative Expense

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

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

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 a loss on disposal of assets related to the impairment of a Twin Commander surveillance platform of $0.6 million.

The increase was partially driven by higher operating costs of $4.4 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.

Interest Expense

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

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

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

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

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

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 realized gains from available-for-sale securities of $0.6 million.

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.

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.

Non-GAAP Financial Measures

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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, legal fees and 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 and business development expenses.

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.

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

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

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

June 30, 2023 Three Months Ended

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

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

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 %

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

1,053,866 — 1,053,866 NM

— 806,869 (806,869) (100) %

Offering costs (ii)

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680,021 193,039 486,982 252 %

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

Net loss margin (v)

Loss on extinguishment of debt (v)

— 844,925 (844,925) (100 %)

Adjusted EBITDA margin (v)

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

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

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

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

Six Months Ended

June 30, 2023 Six Months Ended

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

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 (%)

Net loss $ (46,218,564) $ (25,086,610) $ (21,131,954) 84 %

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

Depreciation and amortization 10,233,947 8,561,926 1,672,021 20 %

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1,553,298 585,015 968,283 166 %

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

Net loss margin (v)

Loss on extinguishment of debt (v)

— 844,925 (844,925) (100 %)

Adjusted EBITDA margin (v)

Discretionary bonuses to employees and executives (vi)

— 10,136,530 (10,136,530) (100 %)

Adjusted EBITDA $ 29,027,039 $ 12,179,578 $ 16,847,461 138 %

Net loss margin (vii)

(70) % (55) %

Adjusted EBITDA margin (vii)

NM - Not Meaningful

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

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

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.

Liquidity and Capital Resources

Cash and Marketable Securities

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

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

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.

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

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

On September 29, 2023, the closing price of our Common Stock was $8.47 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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Our ability to generate proceeds from equity financings will significantly depend on the market price of our Common Stock.

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

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

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.

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

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

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

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

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

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

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.

Series 2022 Bonds

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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

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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.

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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 $10.1 million as of June 30, 2023.

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

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.

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

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.

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This remained in place until the Closing.

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

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.

Historical Cash Flows

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

Six Months Ended

June 30, 2023 Six Months Ended

June 30, 2022

Nine Months Ended

September 30, 2023 Nine Months Ended

September 30, 2022

Net cash used in operating activities $ (41,491,364) $ (7,958,714)

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Operating Activities

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

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

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

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

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.

Investing Activities

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

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

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

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.

Financing Activities

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

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

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

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

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.

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 June 30, 2023.

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

Payments Due by Period

Total Current Noncurrent

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

Lease obligations 8,330,268 1,552,885 6,777,383

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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.

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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, 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 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.

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.

Business Combinations

The Company records tangible and intangible assets acquired and liabilities assumed in business combinations under the acquisition method of accounting in accordance with ASC 805, Business Combinations .

Under the acquisition method of accounting, amounts paid for the acquisition are allocated to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition inclusive of identifiable intangible assets.

Acquisition consideration includes contingent consideration with payment terms based on the achievement of certain targets of the acquired business.

The estimated fair value of identifiable assets and liabilities, including intangibles, are based on valuations that use information and assumptions available to management.

The Company allocates any excess purchase price over the fair value of the tangible and identifiable intangible assets acquired and liabilities assumed to goodwill.

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.

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 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.

Stock-Based Compensation

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

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

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 June 30, 2023.

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

Forfeitures are accounted for as they occur.

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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

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

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

No impairment charge for goodwill was recorded for the three and nine months ended September 30, 2023 and 2022.

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 $1,000 thousand as of June 30, 2023 and December 31, 2022, respectively.

Variable Interest Entities

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

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

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.

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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 six months ended June 30, 2023 and the year ended December 31, 2022.

Refer to “ Note 2 – Summary of Significant Accounting Policies ” of the Notes to Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report for the recent accounting pronouncements adopted and the recent accounting pronouncements not yet adopted for the three and 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.

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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;

(2) Bridger’s business plans and growth plans, including anticipated revenue, Adjusted EBITDA and Adjusted EBITDA margin for 2023;

(3) increases in the aerial firefighting market;

and (4) anticipated investments in additional aircraft, capital resource, and research and development and the effect of these investments.

These statements are based on various assumptions, whether or not identified in this Quarterly Report, and on the current expectations of Bridger’s management and are not predictions of actual performance.

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;

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

(4) the magnitude, timing, and benefits from any cost reduction actions;

(5) Bridger’s exploration of, need for, or completion of any future financings, and (6) anticipated investments in additional aircraft, capital resources, and research and development and the effect of these investments.

These statements are based on various assumptions and estimates, whether or not identified in this Quarterly Report, and on the current expectations of Bridger’s management and are not predictions of actual performance.

These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by any investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability.

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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;

the duration or severity of any domestic or international wildfire seasons;

changes in domestic and foreign business, market, financial, political and legal conditions;

failure to realize the anticipated benefits of the business combination with Jack Creek Investment Corp.;

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

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

risks relating to Bridger’s operations and business, including information technology and cybersecurity risks, loss of requisite licenses, flight safety risks, loss of key customers and deterioration in relationships between Bridger and its employees;

risks related to increased competition;

risks relating to potential disruption of current plans, operations and infrastructure of Bridger as a result of the consummation of the business combination with Jack Creek Investment Corp.;

risks relating to potential disruption of current plans, operations and infrastructure of Bridger, including as a result of the consummation of any acquisition;

risks that Bridger is unable to secure or protect its intellectual property;

risks that Bridger experiences difficulties managing its growth and expanding operations;

the 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;

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 the business, which could result in material adverse effects to operations and financial conditions;

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.

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

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

The risks and uncertainties above are not exhaustive, and there may be additional risks that Bridger presently does not know or that Bridger currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements.

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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