baer-20230630

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

___________________________

FORM 10-Q

___________________________


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from___________to___________

Commission file number: 001-41603

___________________________

BRIDGER AEROSPACE GROUP HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

___________________________


Delaware			88-3599336
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)

90 Aviation Lane Belgrade, MT			59714
(Address of Principal Executive Offices)			(Zip code)

(406) 813-0079

(Registrant’s telephone number, including area code)

___________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
symbol(s)

Name of each exchange
on which registered

Common Stock, $0.0001 par value per share

BAER

The Nasdaq Stock Market LLC

Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $11.50 per share

BAERW

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	o	Accelerated filer	o

Non-accelerated filer	x	Smaller reporting company	x

		Emerging growth company	x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of August 8, 2023, there were 44,505,944 shares of the registrant’s common stock, par value $0.0001 per share, issued and outstanding.

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TABLE OF CONTENTS


		Page
Part I	Financial Information	2

Item 1.	Financial Statements (Unaudited)	2

	Condensed Consolidated Balance Sheets	2

	Condensed Consolidated Statements of Operations	3

	Condensed Consolidated Statements of Comprehensive Loss	4

	Condensed Consolidated Statements of Stockholders’ Deficit	5

	Condensed Consolidated Statements of Cash Flows	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	43

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	64

Item 4.	Controls and Procedures	64

Part II	Other Information	66

Item 1.	Legal Proceedings	66

Item 1A.	Risk Factors	66

Item 6.	Exhibits	67

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

BRIDGER AEROSPACE GROUP HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(All amounts in U.S. dollars)


	As of June 30, 2023		As of December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	844,582	$	30,162,475
Restricted cash	12,239,819		12,297,151
Investments in marketable securities	12,572,950		54,980,156
Accounts receivable1	11,815,732		28,902
Aircraft support parts	434,894		1,761,270
Prepaid expenses and other current assets	2,892,240		1,835,032
Deferred offering costs	388,120		5,800,144
Total current assets	41,188,337		106,865,130
Property, plant and equipment, net	202,050,389		192,091,413
Intangible assets, net	155,369		208,196
Goodwill	2,457,937		2,457,937
Other noncurrent assets	7,583,603		4,356,225
Total assets	$	253,435,635	$	305,978,901
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	6,235,941	$	3,170,354
Accrued expenses and other current liabilities	7,823,154		18,669,572
Operating right-of-use current liability	355,119		21,484
Current portion of long-term debt, net of debt issuance costs	2,459,654		2,445,594
Total current liabilities	16,873,868		24,307,004
Long-term accrued expenses and other noncurrent liabilities	6,864,516		45,659
Operating right-of-use noncurrent liability	1,449,911		754,673
Long-term debt, net of debt issuance costs2	205,060,810		205,471,958
Total liabilities	$	230,249,105	$	230,579,294
COMMITMENTS AND CONTINGENCIES
MEZZANINE EQUITY
Series A Preferred Stock, $0.0001 par value; 315,789.473684 shares authorized, issued and outstanding at June 30, 2023	342,738,969		—
Legacy Bridger Series C Preferred Shares, $0.001 par value; 315,789.473684 shares authorized, issued and outstanding at December 31, 2022	—		489,021,545
STOCKHOLDERS’ DEFICIT
Common Stock, $0.0001 par value; 1,000,000,000 shares authorized; 44,505,944 shares issued and outstanding at June 30, 2023; 39,081,744 shares issued and outstanding at December 31, 2022	4,906		3,908
Additional paid-in capital	78,977,391		—
Accumulated deficit	(400,054,307)		(415,304,343)
Accumulated other comprehensive income	1,519,571		1,678,497
Total stockholders’ deficit	(319,552,439)		(413,621,938)
Total liabilities, mezzanine equity, and stockholders’ deficit	$	253,435,635	$	305,978,901

1Includes related party accounts receivable of $427,454 as of June 30, 2023.

2Includes related party debt of $10,000,000 for the 2022 taxable industrial revenue bond as of June 30, 2023 and December 31, 2022, respectively.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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BRIDGER AEROSPACE GROUP HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(All Amounts in U.S. dollars)


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Revenues1	$	11,615,280	$	12,753,671	$	11,980,653	$	12,822,963
Cost of revenues:
Flight operations	6,299,122		5,849,562		10,032,383		9,514,914
Maintenance	4,210,976		3,571,986		7,726,427		6,433,973
Total cost of revenues	10,510,098		9,421,548		17,758,810		15,948,887
Gross income (loss)	1,105,182		3,332,123		(5,778,157)		(3,125,924)
Selling, general and administrative expense	15,187,808		5,735,627		48,416,299		10,576,886
Operating loss	(14,082,626)		(2,403,504)		(54,194,456)		(13,702,810)
Interest expense2	(5,540,867)		(2,293,682)		(11,205,412)		(6,008,228)
Other income	601,891		134,311		1,693,328		275,154
Net loss	$	(19,021,602)	$	(4,562,875)	$	(63,706,540)	$	(19,435,884)
Series A Preferred Stock – adjustment for deemed dividend upon Closing	$	—	$	—	$	(48,300,000)	$	—
Series A Preferred Stock – adjustment to eliminate 50% multiplier	$	—	$	—	$	156,362,598	$	—
Series A Preferred Stock – adjustment to maximum redemption value	$	(5,805,582)	$	—	$	(10,080,022)	$	—
Legacy Bridger Series A Preferred Shares – adjustment for redemption, extinguishment, accrued interest, and change in fair value	$	—	$	(81,323,569)	$	—	$	(85,663,336)
Legacy Bridger Series C Preferred Shares - adjustment to maximum redemption value	$	—	$	(191,240,782)	$	—	$	(191,240,782)
Net (loss) income attributable to Common stockholders - basic and diluted	$	(24,827,184)	$	(277,127,226)	$	34,276,036	$	(296,340,002)
Net (loss) income per Common Stock - basic	$	(0.55)	$	(7.15)	$	0.77	$	(7.64)
Net (loss) income per Common Stock - diluted	$	(0.55)	$	(7.15)	$	0.44	$	(7.64)
Weighted average Common Stock outstanding – basic	45,388,892		38,770,646		44,443,930		38,770,646
Weighted average Common Stock outstanding – diluted	45,388,892		38,770,646		77,199,129		38,770,646

1Includes related party revenues of $112,210 and $433,454 for the three and six months ended June 30, 2023, respectively.

2Includes related party interest for the 2022 taxable industrial revenue bond of approximately $279,000 and $563,000 for the three and six months ended June 30, 2023, respectively.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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BRIDGER AEROSPACE GROUP HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(All Amounts in U.S. dollars)


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Net loss	$	(19,021,602)	$	(4,562,875)	$	(63,706,540)	$	(19,435,884)
Other comprehensive (loss) income, net of tax
Foreign currency translation adjustment	214		24		406		(263)
Unrealized gain (loss) on derivative instruments	203,467		309,654		(68,334)		984,035
Unrealized (loss) gain on investments in marketable securities	(28,301)		—		290,344		—
Reclassification of realized gains on investments in marketable securities to earnings	(208,190)		—		(381,342)		—
Total other comprehensive (loss) income, net of tax	(32,810)		309,678		(158,926)		983,772
Comprehensive loss	$	(19,054,412)	$	(4,253,197)	$	(63,865,466)	$	(18,452,112)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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BRIDGER AEROSPACE GROUP HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STOCKHOLDERS’ DEFICIT

For the Six Months Ended June 30, 2022

(All Amounts in U.S. dollars, except share amounts)


	Legacy Bridger Series A Preferred Shares			Legacy Bridger Series B Preferred Shares			Legacy Bridger Series C Preferred Shares / Series A Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income		Total Stockholders' Deficit
	Share	Value		Share	Value		Share	Value		Share	Value
Balance at December 31, 2021	10,500,000	$	1,050	60,000,000	$	6,000	—	$	—	39,081,744	$	3,908	$	—	$	(84,843,803)	$	24,706	$	(84,815,189)
Liquidation preference on Legacy Bridger Series A Preferred Shares	—	—		—	—		—	—		—	—		—		(4,339,767)		—		(4,339,767)
Unrealized gain on derivative instruments	—	—		—	—		—	—		—	—		—		—		674,381		674,381
Foreign currency translation adjustment	—	—		—	—		—	—		—	—		—		—		(287)		(287)
Stock based compensation attributable to Legacy Bridger holders prior to reverse recapitalization	—	—		—	—		—	—		—	—		—		2,558		—		2,558
Net loss	—	—		—	—		—	—		—	—		—		(14,873,009)		—		(14,873,009)
Balance at March 31, 2022	10,500,000	$	1,050	60,000,000	$	6,000	—	$	—	39,081,744	$	3,908	$	—	$	(104,054,021)	$	698,800	$	(103,351,313)
Legacy Bridger Series A Preferred Shares adjustment for redemption, extinguishment and revaluation	—	—		—	—		—	—		—	—		—		(81,323,569)		—		(81,323,569)
Legacy Bridger Series C Preferred Shares adjustment to maximum redemption value	—	—		—	—		—	—		—	—		—		(191,240,782)		—		(191,240,782)
Unrealized gain on derivative instruments	—	—		—	—		—	—		—	—		—		—		309,654		309,654
Foreign currency translation adjustment	—	—		—	—		—	—		—	—		—		—		24		24
Stock based compensation attributable to Legacy Bridger holders prior to reverse recapitalization	—	—		—	—		—	—		—	—		—		2,222		—		2,222
Net loss	—	—		—	—		—	—		—	—		—		(4,562,875)		—		(4,562,875)
Balance at June 30, 2022	10,500,000	$	1,050	60,000,000	$	6,000	—	$	—	39,081,744	$	3,908	$	—	$	(381,179,025)	$	1,008,478	$	(380,166,639)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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BRIDGER AEROSPACE GROUP HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STOCKHOLDERS’ DEFICIT

For the Six Months Ended June 30, 2023

(All Amounts in U.S. dollars, except share amounts)


	Legacy Bridger Series A Preferred Shares			Legacy Bridger Series B Preferred Shares			Legacy Bridger Series C Preferred Shares / Series A Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income		Total Stockholders' Deficit
	Share	Value		Share	Value		Share	Value		Share	Value
Balance at December 31, 2022	—	$	—	—	$	—	315,789	$	489,021,545	39,081,744	$	3,908	$	—	$	(415,304,343)	$	1,678,497	$	(413,621,938)
Unrealized loss on derivative instruments	—	—		—	—		—	—		—	—		—		—		(271,801)		(271,801)
Unrealized gain on investment in marketable securities	—	—		—	—		—	—		—	—		—		—		318,645		318,645
Reclassification of realized gains on investments in marketable securities to earnings	—	—		—	—		—	—		—	—		—		—		(173,152)		(173,152)
Foreign currency translation adjustment	—	—		—	—		—	—		—	—		—		—		192		192
Net loss	—	—		—	—		—	—		—	—		—		(44,684,938)		—		(44,684,938)
Effect of the Closing	—	—		—	—		—	(156,362,597)		4,687,546	684		52,084,522		78,956,576		—		131,041,782
Series A Preferred Stock adjustment to maximum redemption value	—	—		—	—		—	4,274,439		—	—		(4,274,439)		—		—		(4,274,439)
Stock based compensation after reverse recapitalization	—	—		—	—		—	—		2,400,354	240		25,596,776		—		—		25,597,016
Balance at March 31, 2023	—	$	—	—	$	—	315,789	$	336,933,387	46,169,644	$	4,832	$	73,406,859	$	(381,032,705)	$	1,552,381	$	(306,068,633)
Unrealized gain on derivative instruments	—	—		—	—		—	—		—	—		—		—		203,467		203,467
Unrealized loss on investment in marketable securities	—	—		—	—		—	—		—	—		—		—		(28,301)		(28,301)
Reclassification of realized gains on investments in marketable securities to earnings	—	—		—	—		—	—		—	—		—		—		(208,190)		(208,190)
Foreign currency translation adjustment	—	—		—	—		—	—		—	—		—		—		214		214
Net loss	—	—		—	—		—	—		—	—		—		(19,021,602)		—		(19,021,602)

Series A Preferred Stock adjustment to maximum redemption value	—	—		—	—		—	5,805,582		—	—		(5,805,582)		—		—		(5,805,582)
Bonuses paid in Class A Common Stock	—	—		—	—		—	—		736,554	74		4,927,546		—				4,927,620
Stock based compensation after reverse recapitalization	—	—		—	—		—	—		—	—		6,448,568		—		—		6,448,568
Balance at June 30, 2023	—	$	—	—	$	—	315,789	$	342,738,969	46,906,198	$	4,906	$	78,977,391	$	(400,054,307)	$	1,519,571	$	(319,552,439)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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BRIDGER AEROSPACE GROUP HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(All Amounts in U.S. dollars)


	For the Six Months Ended June 30,
	2023		2022
Cash Flows from Operating Activities:
Net loss	$	(63,706,540)	$	(19,435,884)
Adjustments to reconcile net loss to net cash used in operating activities
Loss on sale/disposal of fixed assets	392,472		781,492
Depreciation and amortization	4,986,192		4,094,854
Impairment of long-lived assets	626,848		—
Stock based compensation expense	32,045,584		4,780

Change in fair value of the Warrants	(533,000)		—
Change in fair value of freestanding derivative	50,559		—
Amortization of debt issuance costs	483,526		89,732
Interest accrued on Legacy Bridger Series B Preferred Shares	—		3,586,587
Change in fair value of Legacy Bridger Series C Preferred Shares	—		945,455
Change in fair value of Series A Preferred Stock	(224,080)		—
Realized gain on investments in marketable securities	(407,761)		—
Changes in operating assets and liabilities
Accounts receivable1	(11,786,830)		(4,611,847)
Aircraft support parts	1,326,376		170,475
Prepaid expense and other current and noncurrent assets	(3,339,409)		522,745
Accounts payable, accrued expenses and other liabilities	(13,358,549)		3,822,406
Net cash used in operating activities	(53,444,612)		(10,029,205)
Cash Flows from Investing Activities:
Investments in construction in progress – buildings	(2,444,633)		(3,983,754)
Proceeds from sales and maturities of marketable securities	42,723,969		—
Sale of property, plant and equipment	814,000		286,400
Purchases of property, plant and equipment	(12,528,089)		(5,300,950)
Net cash provided by (used in) investing activities	28,565,247		(8,998,304)
Cash Flows from Financing Activities:
Payment to Legacy Bridger Series A Preferred Shares members	—		(100,000,000)
Payment to Legacy Bridger Series B Preferred Shares members	—		(69,999,223)
Borrowing from Legacy Bridger Series C Preferred shares members, net of issuance costs	—		293,684,675
Payment of finance lease liability	(15,615)		—
Proceeds from the Closing	3,193,536		—
Costs incurred related to the Closing	(6,793,574)		—
Borrowings from various First Interstate Bank vehicle loans	—		202,217
Payment of debt issuance costs	—		(3,000)
Repayments on debt	(880,613)		(962,904)
Net cash (used in) provided by financing activities	(4,496,266)		122,921,765
Effects of exchange rate changes	406		(263)
Net change in cash, cash equivalents and restricted cash	(29,375,225)		103,893,993
Cash, cash equivalents and restricted cash – beginning of the period	42,459,626		17,261,132
Cash, cash equivalents and restricted cash – end of the period	$	13,084,401	$	121,155,125
Less: Restricted cash – end of the period	12,239,819		3,922,506
Cash and cash equivalents – end of the period	$	844,582	$	117,232,619
Supplemental disclosure of non-cash operating and financing activities
Assumption of Jack Creek liabilities	$	7,463,673	$	—
Recognition of warrant liabilities	$	5,863,000	$	—
Recognition of Deferred underwriting fee	$	1,500,000	$	—
Recognition of new right-of-use asset and corresponding operating lease liability	$	1,092,519	$	—
Bonuses paid in Class A Common Stock	$	4,927,620	$	—
Deferred offering costs included in accrued expenses and other current liabilities	$	388,120	$	1,455,840
Issuance costs on Legacy Bridger Series C Preferred Shares	$	—	$	5,000,000
Supplemental cash flow information
Interest paid2	$	11,489,494	$	3,715,257
Fixed assets in accounts payable	$	1,841,142	$	2,640,384
Conversion of Promissory Note to Common Stock	$	897,400	$	—
Series A Preferred Stock – adjustment for deemed dividend upon Closing	$	48,300,000	$	—
Series A Preferred Stock – adjustment to eliminate 50% multiplier	$	156,362,597	$	—
Series A Preferred Stock - adjustment to maximum redemption value	$	10,080,021	$	—
Legacy Bridger Series A Preferred Shares – adjustment for redemption, extinguishment and accrued interest	$	—	$	85,663,336
Legacy Bridger Series C Preferred Shares - adjustment for maximum redemption value	$	—	$	191,240,782

1Includes related party accounts receivable of $427,454 for the six months ended June 30, 2023.

2Includes related party interest paid of approximately $575,000 for the 2022 taxable industrial revenue bond for the six months ended June 30, 2023.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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BRIDGER AEROSPACE GROUP HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in U.S. dollars, except as stated)

Note 1 – Organization and Basis of Presentation

Nature of Business

Bridger Aerospace Group Holdings, Inc. and its subsidiaries (“Bridger”, “the Company,” “we,” “us” or “our”) provide aerial wildfire management, relief and suppression and delivery of firefighting services using next generation technology and sustainable and environmentally safe firefighting methods.

As of June 30, 2023, the Company owns 17 aircraft, including 4 Twin Commander surveillance platforms, 4 Quest Kodiaks, 6 Viking CL415EAFs, 2 Aurora eVOTL Skirons, and 1 Pilatus PC-12.

Basis of Presentation

The unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“US GAAP”). The unaudited condensed consolidated financial statements include the financial statements of the Company, all entities that are wholly-owned by the Company and all entities in which the Company has a controlling financial interest.

Reverse Recapitalization

On January 24, 2023, (the “Closing Date”), Jack Creek Investment Corp (“JCIC”) completed the reverse recapitalization (the “Closing” and the “Reverse Recapitalization”) with the Company’s predecessor, Bridger Aerospace Group Holdings, LLC and its subsidiaries (collectively, “Legacy Bridger”), which operated the majority of the historical business and was identified as the acquirer and predecessor upon the consummation of the transactions contemplated by the agreement and plan of merger (the “Transaction Agreements”) entered into on August 3, 2022. On the Closing Date, pursuant to the Transaction Agreements, JCIC and Legacy Bridger became wholly owned subsidiaries of a new public entity that was renamed Bridger Aerospace Group Holdings, Inc, and JCIC shareholders and Legacy Bridger equity holders converted their equity ownership in JCIC and Legacy Bridger, respectively, into equity ownership in Bridger.

Upon the consummation of the Reverse Recapitalization, Bridger issued Common Stock to the Legacy Bridger equity holders and Series A Preferred Stock (as defined below) as summarized below:

•the surrender and exchange of all 606,061 Legacy Bridger incentive units (“Incentive Units”) into 583,308 shares of Bridger’s common stock, par value $0.0001, (“Common Stock”) at a deemed value of $10.00 per share as adjusted by the per share Common Stock consideration of approximately 0.96246 (the “Exchange Ratio”), rounded down to the nearest share for each holder;

•the direct or indirect surrender and exchange of the remaining 40,000,000 issued and outstanding shares of Legacy Bridger common shares (excluding Incentive Units) into 38,498,436 shares of Common Stock at a deemed value of $10.00 per share as adjusted by the Exchange Ratio, rounded down to the nearest share for each holder; and

•the surrender and exchange of all 315,789.473684 issued and outstanding Series C preferred shares of Legacy Bridger (the “Legacy Bridger Series C Preferred Shares”), which were surrendered and exchanged on a one-to-one basis in connection with the Reverse Recapitalization into 315,789.473684 shares of preferred stock of Bridger that have the rights, powers, designations, preferences, and qualifications, limitations and restrictions set forth in Section 4.5 of the Amended and Restated Certificate of Incorporation (the “Series A Preferred Stock”). The Series A Preferred Stock are convertible at the election of the holders into shares of Common Stock, without the payment of additional consideration by the holders into such number of shares of Common Stock as determined by dividing the original issue price, plus accrued interest by a conversion price equal to $11 at the time of conversion.

Other related events occurred in connection with the Reverse Recapitalization, are summarized below:

•the filing and effectiveness of the Amended and Restated Certificate of Incorporation of Bridger and the effectiveness of the Amended and Restated Bylaws of Bridger, each of which occurred immediately prior to the Closing;

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BRIDGER AEROSPACE GROUP HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in U.S. dollars, except as stated)

•the adoption and assumption of the 2023 Omnibus Incentive Plan and any grants or awards issued thereunder and adoption of the 2023 Employee Stock Purchase Plan upon the Closing to grant equity awards to Bridger employees; and

•during the period from the Closing until five years following the Closing, JCIC subjected 20% of JCIC’s issued and outstanding common stock (“Sponsor Earnout Shares”), comprised of two separate tranches of 50% of the Sponsor Earnout Shares per tranche, to potential forfeiture to Bridger for no consideration until the occurrence (or deemed occurrence) of certain triggering events.

Immediately after giving effect to the Transaction Agreements, the following were outstanding:

•43,769,290 shares of Common Stock;

•315,789.473684 shares of Bridger Series A Preferred Stock;

•9,400,000 private placement warrants (“Private Placement Warrants”) to purchase shares of Common Stock at an exercise price of $11.50 per share;

•17,250,000 public warrants (“Public Warrants”) to purchase shares of Common Stock at an exercise price of $11.50 per share; and

•6,581,497 restricted stock units issued to the executives and senior management of the Company.

In connection with the Reverse Recapitalization, the Company paid transaction costs of $10,302 thousand as of the Closing.

The transactions contemplated by the Transaction Agreements were accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, JCIC was treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the financial statements of Bridger represent a continuation of the financial statements of Legacy Bridger with the Reverse Recapitalization treated as the equivalent of Legacy Bridger issuing stock for the net assets of JCIC, accompanied by a recapitalization. The net assets of JCIC will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Reverse Recapitalization will be those of Legacy Bridger in future reports of Bridger.

Legacy Bridger has been determined to be the accounting acquirer based on evaluation of the following facts and circumstances:

•Legacy Bridger equity holders have a relative majority of the voting power of Bridger;

•Bridger’s board of directors (the “Board”) has nine (9) members, and representatives or designees of the Legacy Bridger equity holders comprise the majority of the members of the Board;

•Legacy Bridger’s senior management comprise the senior management roles and are responsible for the day-to-day operations of Bridger;

•Bridger assumed Legacy Bridger’s name of business;

•The strategy and operations of Bridger continue Legacy Bridger’s former strategy and operations; and

•The Reverse Recapitalization created an operating public company, with management continuing to use Legacy Bridger operations to grow the business.

The Sponsor Earnout Shares are determined to be equity classified instruments of Bridger and the Public Warrants and Private Placement Warrants are determined to remain liability classified instruments upon the Closing.

In accordance with guidance applicable to these circumstances, the equity structure has been recast in all comparative periods up to the Closing to reflect the number of shares of Common Stock issued to Legacy Bridger’s stockholders in connection with the Reverse Recapitalization. As such, the shares and corresponding capital amounts and earnings per share related to Legacy Bridger’s common stock prior to the Reverse Recapitalization have been retroactively recasted as shares of Common Stock using the Exchange Ratio.

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BRIDGER AEROSPACE GROUP HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in U.S. dollars, except as stated)

On January 25, 2023, shares of the Company’s Common Stock began trading on the Nasdaq Global Market under the ticker symbol “BAER.”

Liquidity

The Company had $845 thousand and $30,162 thousand of cash and cash equivalents as of June 30, 2023 and December 31, 2022, respectively. The Company had $12,573 thousand and $54,980 thousand of investments in debt securities classified as available-for-sale with short-term maturities of less than one year and carried at fair value as of June 30, 2023 and December 31, 2022, respectively.

The Company has entered into various term loan agreements and other long-term debt to fund the purchase of aircraft, finance the construction of aircraft hangars and to supplement its cash balance. As of June 30, 2023, the Company has $2,460 thousand of current portion of long-term debt, net of debt issuance costs. As of June 30, 2023, future contractual payments related to the construction of the third hangar are $759 thousand for the next twelve months.

The Company believes it will be sufficiently funded for its short-term liquidity needs and the execution of its business plan for at least 12 months following the date at which the unaudited condensed consolidated financial statements were filed. As of July 31, 2023, the Company has cash and cash equivalents of $2,562 thousand, restricted cash of $12,281 thousand and investments in debt securities classified as available-for-sale of $10,189 thousand.

Note 2 - Summary of Significant Accounting Policies

Principles of Consolidation

The Company consolidates those entities in which it, through the existing owners, has control over significant operating, financial or investing decisions of the entity. All significant intercompany balances and transactions have been eliminated in consolidation.

Variable Interest Entities

The Company follows ASC 810-10-15 guidance with respect to accounting for variable interest entities (“VIE”). These entities do not have sufficient equity at risk to finance their activities without additional subordinated financial support from other parties or whose equity investors lack any of the characteristics of a controlling financial interest. A variable interest is an investment or other interest that will absorb portions of a VIE’s expected losses or receive portions of its expected returns and are contractual, ownership or pecuniary in nature and that change with changes in the fair value of the entity’s net assets. A reporting entity is the primary beneficiary of a VIE and must consolidate it when that party has a variable interest, or combination of variable interests, that provide it with a controlling financial interest. A party is deemed to have a controlling financial interest if it meets both of the power and loss/benefits criteria. The power criterion is the ability to direct the activities of the VIE that most significantly impact its economic performance. The losses/benefits criterion is the obligation to absorb losses from, or right to receive benefits from, the VIE that could potentially be significant to the VIE. 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.

Northern Fire Management Services, LLC (“NFMS, LLC”) is considered to be a VIE, as it lacks sufficient equity and is consolidated in the Company’s financial statements. For the three and six months ended June 30, 2022, Mountain Air, LLC (“MA, LLC”) was considered to be a VIE, as it lacked sufficient equity and is consolidated in the Company’s financial statements. For the three and six months ended June 30, 2023 and 2022 and the year ended December 31, 2022, NFMS, LLC held immaterial assets and liabilities in its financial statements. For the three and six months ended June 30, 2022, MA, LLC held immaterial assets and liabilities in its financial statements. For the three and six months ended June 30, 2023 and 2022 and the year ended December 31, 2022, the following entities were considered to be VIEs but were not consolidated in the unaudited condensed consolidated financial statements due to the lack of the power criterion or the losses/benefits criterion: AE Côte-Nord Canada (“Côte-Nord”) and Ensyn BioEnergy Canada, Inc.

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BRIDGER AEROSPACE GROUP HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in U.S. dollars, except as stated)

Northern Fire Management Services, LLC: The Company assisted in designing and organizing NFMS, LLC with a business purpose of employing Canadian aviation professionals for the Company. A master services agreement exists between NFMS, LLC, the Company, and Bridger Air Tanker, LLC, a wholly owned subsidiary of the Company, to transfer all annual expenses incurred to the Company in exchange for the Canadian employees to support the Company’s water scooper aircraft. NFMS, LLC is 50% owned by a Canadian citizen, and 50% owned by Bridger Aerospace Group, LLC. The Company is responsible for the decisions related to all of NFMS, LLC’s expenditures, which solely relates to payroll. Based on these facts, it was determined that the Company is the primary beneficiary of NFMS, LLC. Therefore, NFMS, LLC has been consolidated by the Company. All intercompany expenses associated with NFMS, LLC and its service agreement have been eliminated in consolidation.

Mountain Air, LLC: As of November 7, 2022, MA, LLC was a wholly-owned subsidiary of Bridger. Prior to MA, LLC becoming a wholly-owned subsidiary of the Company, MA, LLC was owned 50% by Timothy Sheehy, the Chief Executive Officer and a director of Bridger, and 50% by an entity affiliated with Matthew Sheehy, a director of Bridger. MA, LLC is a Federal Aviation Administration (“FAA”) part 135 certificate holder and is designed to hold aerial firefighting contracts. Bridger Aviation Services, LLC (“Bridger Aviation”), a wholly-owned subsidiary of Bridger, was a party to a certain Management Services Agreement (the “Aviation Agreement”), dated April 13, 2018, with MA, LLC. Pursuant to the Aviation Agreement, Bridger Aviation leased certain aircraft to MA, LLC. MA, LLC operated the aircraft and paid Bridger Aviation a fee equal to 99% of all revenue it received from the use and deployment of Bridger Aviation’s aircraft. MA, LLC was obligated to operate and maintain the aircraft in accordance with applicable FAA standards.

Timothy Sheehy originally conducted aerial operations through MA, LLC before Bridger’s current legal organizational structure was put into place, which created the need for the Aviation Agreement and resulting VIE treatment.

Seasonality

The Company’s business is generally seasonal, with a significant portion of total revenue occurring during the second and third quarters of the fiscal year due to the North American fire season. However, the weather dependency and seasonal fluctuation in the need to fight wildfires based upon location and the varying intensity of the fire season may lead our operating results to fluctuate significantly from quarter to quarter and year to year.

Use of Estimates

The preparation of financial statements in conformity with US GAAP, requires management to make assumptions and estimates that affect the reported amounts of assets and liabilities, disclosure of gain or loss contingencies as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from their estimates and such differences could be material to the unaudited condensed consolidated financial statements. Significant items subject to such estimates and assumptions include: (a) excess and aging aircraft support parts reserves, (b) allowance for doubtful accounts, (c) useful lives of property, plant and equipment, net (d) impairment of long-lived assets, goodwill and other intangible assets, (e) disclosure of fair value of financial instruments, (f) variable interest entities, (g) accounting for Series A Preferred Stock and Legacy Bridger Series C Preferred Shares, (h) revenue recognition, (i) estimates and assumptions made in determining the carrying values of goodwill and other intangible assets, (j) incentive units and (k) Public Warrants and Private Placement Warrants.

Reclassifications

Certain amounts from prior periods have been reclassified to conform to the current period presentation. The Company previously separately presented General and administrative and Business development operating expenses, which are now presented combined within “Selling, general and administrative expense” on the Unaudited Condensed Consolidated Statements of Operations. The reclassification had no impact on previously reported Net loss or Accumulated deficit.

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BRIDGER AEROSPACE GROUP HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in U.S. dollars, except as stated)

Deferred Offering Costs

Deferred offering costs primarily consist of capitalized legal, accounting and other third-party costs incurred that are directly related to the Reverse Recapitalization, which has been accounted for as a reverse recapitalization. These costs were charged to Stockholders’ deficit as a reduction of Additional paid-in capital generated upon the completion of the Reverse Recapitalization. As of June 30, 2023, the Company charged $17,961 thousand to Stockholders’ deficit. As of June 30, 2023 and December 31, 2022, the Company recorded $388 thousand and $5,800 thousand of deferred offering costs in the Unaudited Condensed Consolidated Balance Sheets, respectively.

Revenue Recognition

The Company charges daily and hourly rates depending upon the type of firefighting services rendered and under which contract the services are performed. These services are primarily split into flight revenue and standby revenue. Flight revenue is primarily earned at an hourly rate when the engines of the aircraft are started and stopped upon request of the customer, tracked via a Hobbs meter. Standby revenue is earned primarily as a daily rate when aircraft are available for use at a fire base, awaiting request from the customer for flight deployment.

The Company enters into short, medium and long-term contracts with customers, primarily with government agencies to deploy aerial fire management assets during the firefighting season. Revenue is recognized when performance obligations under the terms of a contract with our customers are satisfied and payment is typically due within 30 days of invoicing. This occurs as the services are rendered and include the use of the aircraft, pilot and field maintenance personnel to support the contract.

Contracts are based on either a Call-When-Needed (“CWN”) or Exclusive Use (“EU”) basis. Rates established are generally more competitive based on the security of the revenue from the contract (i.e., an EU versus only on an as-needed basis in CWN). These rates are delineated by the type of service, generally flight time or time available for deployment. Once an aircraft is deployed on a contract the fees are earned at these rates, the aircraft cannot be obligated to another customer. Contracts have no financing components and consideration is at pre-determined rates. No variable considerations are constrained within the contracts.

The transaction prices are allocated on the service performed and tracked real-time by each operator in a duty log. On at least a monthly basis, the services performed and rates are validated by each customer. Acceptance by the customer is evidenced by their funded task order or accepted invoice.

The Company has not incurred incremental costs for obtaining contracts with customers. In addition, the Company evaluates whether or not it should capitalize the costs of fulfilling a contract. Such costs would be capitalized when they are not within the scope of other standards and: (1) are directly related to a contract; (2) generate or enhance resources that will be used to satisfy performance obligations; and (3) are expected to be recovered. The Company has elected to use the practical expedient detailed in ASC 340-40-25-4 to expense any costs to fulfill a contract as they are incurred when the amortization period would be one year or less.

Contract assets are classified as a receivable when the reporting entity’s right to consideration is unconditional, which is when payment is due only upon the passage of time. As the Company invoices customers for performance obligations that have been satisfied, at which point payment is unconditional, contracts do not typically give rise to contract assets. Contract liabilities are recorded when cash payments are received or due in advance of performance.

Payment terms vary by customer and type of revenue contract. The Company generally expects that the period of time between payment and transfer of promised goods or services will be less than one year. In such instances, the Company has elected the practical expedient to not evaluate whether a significant financing component exists. As permitted under the practical expedient available under ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), the Company does 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 the Company recognizes revenue at the amount which it has the right to invoice for services performed.

Other revenue consists of leasing revenues for facilities as well as external repair work performed on customer aircraft.

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BRIDGER AEROSPACE GROUP HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in U.S. dollars, except as stated)

Revenue Disaggregation

The following shows the disaggregation of revenue by service for the three and six months ended June 30, 2023 and June 30, 2022.


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Fire suppression	$	10,449,427	$	11,682,263	$	10,449,427	$	11,682,263
Aerial surveillance	1,123,753		1,002,025		1,123,753		1,002,025
Other services	42,100		69,383		407,473		138,675
Total revenues	$	11,615,280	$	12,753,671	$	11,980,653	$	12,822,963

The following shows the disaggregation of revenue by type for the three and six months ended June 30, 2023 and June 30, 2022.


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Flight revenue	$	5,794,315	$	6,417,520	$	5,794,315	$	6,417,520
Standby revenue	5,135,937		6,210,976		5,135,937		6,210,976
Other revenue	685,028		125,175		1,050,401		194,467
Total revenues	$	11,615,280	$	12,753,671	$	11,980,653	$	12,822,963

Concentration Risk

For the three months ended June 30, 2023, the Company had three customers who individually accounted for 41%, 30%, and 27% of total revenues, respectively. For the three months ended June 30, 2022, the Company had one customer who individually accounted for 99% of total revenues. For the six months ended June 30, 2023, the Company had three customers who individually accounted for 39%, 30%, and 26% of total revenues, respectively. For the six months ended June 30, 2022, the Company had one customer who individually accounted for 98% of total revenues. As of June 30, 2023, three customers accounted for 37%, 29%, and 27% of accounts receivable, respectively. As of December 31, 2022, one customer accounted for 62% of accounts receivable.

Hedging Transactions and Derivative Financial Instruments

The Company is directly and indirectly affected by changes in certain market conditions. These changes in market conditions may adversely impact the Company’s financial performance and are referred to as “market risks.” The Company, when deemed appropriate, uses derivatives as a risk management tool to mitigate the potential impact of certain market risks. The Company manages interest rate risk through the use of derivative instruments, such as swap agreements. A swap agreement is a contract between two parties to exchange cash flows based on specified underlying notional amounts, assets and/or indices. The Company does not enter into derivative financial instruments for trading purposes.

The accounting for gains and losses that result from changes in the fair values of derivative instruments depends on whether the derivatives have been designated and qualify as hedging instruments and the type of hedging relationships. The changes in fair values of derivatives that have been designated and qualify as cash flow hedges are recorded in accumulated other comprehensive income and are reclassified into the line item on the Unaudited Condensed Consolidated Statements of Comprehensive Loss in which the hedged items are recorded in the same period the hedged items affect earnings. The changes in fair values of freestanding derivatives with no hedging designation are recorded in earnings through interest expense on the Unaudited Condensed Consolidated Statements of Operations.

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BRIDGER AEROSPACE GROUP HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in U.S. dollars, except as stated)

The Company formally assesses whether the financial instruments used in hedging transactions are effective at offsetting changes in either the fair values or cash flows of the related underlying exposures. Any ineffective portion of a financial instrument’s change in fair value is immediately recognized into earnings. The fair value is based on prevailing market data and using standard valuation models based on reasonable estimates about future relevant market conditions. Refer to “Note 12 – Long-Term Debt.” The notional amounts of the derivative financial instruments do not necessarily represent amounts exchanged by the parties and, therefore, are not a direct measure of the Company’s exposure to the financial risks described above.

Warrant Liabilities

The Company accounts for the Public Warrants and Private Placement Warrants (collectively, the “Warrants”) issued in connection with the Reverse Recapitalization in accordance with the guidance contained in accordance with ASC 480, Distinguishing Liabilities from Equity and ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, under which the Warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, the Company classifies the Warrants as liabilities at their fair value and adjusts the Warrants to fair value at each reporting period. The warrant liabilities are subject to remeasurement at each balance sheet date until exercised, and any change in fair value is recorded in earnings through Selling, general and administrative expense on the Unaudited Condensed Consolidated Statements of Operations.

Income Taxes

For periods prior to the Reverse Recapitalization, Legacy Bridger was a partnership for federal income tax purposes. Consequently, federal income taxes were not payable or provided for by Legacy Bridger. Members were taxed individually on their pro rata ownership share of Legacy Bridger’s earnings. Legacy Bridger’s net income or loss was allocated among the members in accordance with Legacy Bridger’s operating agreement.

Subsequent to the Reverse Recapitalization, the Company became the successor of Legacy Bridger as discussed in “Note 1 – Organization and Basis of Presentation.” Bridger is subject to U.S. federal income taxes, in addition to state and local income taxes, with respect to net taxable income or loss and any related tax credits of the Company. Bridger is also subject to taxes in foreign jurisdictions in which it operates.

The Company provides for income taxes and the related accounts under the asset and liability method. Income tax expense, deferred tax assets and liabilities and reserves for unrecognized tax benefits reflect management’s best assessment of estimated current and future taxes to be paid. The Company is subject to income taxes predominantly in the U.S., where tax laws are often complex and may be subject to different interpretations.

Deferred income taxes arise from temporary differences between the financial statement carrying amount and the tax basis of assets and liabilities and are measured using the enacted tax rates expected to be in effect during the year in which the basis difference reverses. In evaluating the ability to recover its deferred tax assets within the jurisdiction from which they arise, the Company considers all available positive and negative evidence. If based upon all available positive and negative evidence, it is more likely than not that the deferred tax assets will not be realized, a valuation allowance is established. The valuation allowance may be reversed in a subsequent reporting period if Bridger determines that it is more likely than not that all or part of the deferred tax asset will become realizable. At this time, a valuation allowance has been recorded against the deferred tax assets.

The Company’s interpretations of tax laws are subject to review and examination by various taxing authorities and jurisdictions where the Company operates, and disputes may occur regarding its view on a tax position. These disputes over interpretations with the various tax authorities may be settled by audit, administrative appeals or adjudication in the court systems of the tax jurisdictions in which the Company operates. The Company regularly reviews whether it may be assessed additional income taxes as a result of the resolution of these matters, and the Company records additional reserves as appropriate. In addition, the Company may revise its estimate of income taxes due to changes in income tax laws, legal interpretations and business strategies. The Company recognizes the financial statement effects of uncertain income tax positions when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. For additional information in income taxes, see “Note 19 – Income Taxes.”

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BRIDGER AEROSPACE GROUP HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in U.S. dollars, except as stated)

Net (Loss) Income Per Share

Basic net (loss) income per share is based on the weighted average number of shares of Common Stock outstanding during the period. Diluted net (loss) income per share is based on the weighted average number of shares of Common Stock used for the basic net (loss) income per share calculation, adjusted for the dilutive effect of restricted stock units (“RSUs”), Warrants, and Incentive Units, if any, using the “treasury stock” method, the Series A Preferred Stock that is convertible into shares of Common Stock, and the Sponsor Earnout Shares that will fully vest upon certain stock price metrics being achieved. In addition, net (loss) income for diluted net (loss) income per share is adjusted for the after-tax impact of changes to the fair value of the Warrants, to the extent they are dilutive.

As noted above, the Company accounted for the Closing as a reverse recapitalization. Net (loss) income per share calculations for all periods prior to the Closing have been retrospectively adjusted by the Exchange Ratio for the equivalent number of shares of Common Stock outstanding immediately after the Closing to effect the reverse recapitalization. Subsequent to the Closing, net (loss) income per share is calculated based on the weighted average number of shares of Common Stock outstanding.

Collaboration Agreements

The Company analyzes its collaboration arrangement to assess if it is within the scope of ASC Topic 808, Collaborative Agreements (“ASC 808”) by determining whether such an arrangement involves joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of such activities. This assessment is performed throughout the life of the arrangement based on changes in the responsibilities of all parties in the arrangement. If the Company concluded that it has a customer relationship with its collaborator, the collaboration arrangement would be accounted for under ASC 606.

Stock-Based Compensation

The Company accounts for its stock-based compensation in accordance with provisions of ASC 718, Compensation-Stock Compensation (“ASC 718”) at the grant date fair value.

Legacy Bridger granted Incentive Units which contain service and performance vesting conditions to select board members and an executive officer. Compensation cost for Incentive Units is measured at their grant-date fair value and is equal to the value of the Legacy Bridger’s Class D Common shares, which was estimated using an option pricing model. Compensation cost for service-based units is recognized over the requisite service period on a straight-line basis. For performance related units, expense is recognized when the performance related condition is considered probable.

In connection with the Closing, the Company along with the Board established and approved and assumed the Bridger Aerospace Group Holdings, Inc. 2023 Omnibus Incentive Plan (the “Plan”) which allowed the Company to grant RSUs to Bridger employees (the “Participants”). Upon satisfying the vesting conditions, each RSU provides the Participants the right to receive one share of Common Stock. The fair value of RSUs is determined based on the number of shares granted and the quoted market price of the Common Stock on the date of grant. Compensation cost for the RSUs is recognized as the performance condition of the Closing of the transaction was met and over the requisite service period based on the graded-vesting method. The Company accounts for forfeitures as they occur. Stock-based compensation is included in Selling, general and administrative expense on the Unaudited Condensed Consolidated Statements of Operations.

Advertising Expense

Advertising costs are expensed as incurred and are included in Selling, general and administrative expense on the Unaudited Condensed Consolidated Statements of Operations. Advertising expense for the three and six months ended June 30, 2023 was approximately $28 thousand and $52 thousand, respectively, and for the three and six months ended June 30, 2022 was approximately $316 thousand and $367 thousand, respectively.

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BRIDGER AEROSPACE GROUP HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in U.S. dollars, except as stated)

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments in this ASU replace the incurred loss model for recognition of credit losses with a methodology that reflects expected credit losses over the life of the loan and requires consideration of a broader range of reasonable and supportable information to calculate credit loss estimates. The Company adopted this standard on January 1, 2023. The adoption of this standard did not have a significant impact on the Company’s unaudited condensed consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment. This update modifies the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. In order to reduce complexity, an entity no longer will determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. The Company adopted this standard on January 1, 2023. The adoption of this standard did not have a significant impact on the Company’s unaudited condensed consolidated financial statements.

Recently Issued Accounting Pronouncements

In June 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, and in January 2021, issued ASU No. 2021-01, Reference Rate Reform: Scope. These updates provide optional expedients and exceptions for applying US GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The optional guidance is provided to ease the potential burden of accounting for reference rate reform. In December 2022, the FASB issued ASU No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, to extend the temporary accounting rules under Topic 848 from December 31, 2022 to December 31, 2024. The Company is currently evaluating the impact of adopting the new accounting guidance on the Company’s unaudited condensed consolidated financial statements.

Note 3 – Cash Equivalents and Investments in Marketable Securities

The investments in marketable securities are classified as available-for-sale debt securities with short-term maturities of less than one year. The fair values, gross unrealized gains and losses of the available-for-sale securities by type are as follows:


	As of June 30, 2023		As of December 31, 2022
	Carrying Value
Cash equivalents
Commercial paper	$	—	$	29,890,313
Money market fund	858,047		12,640
Total cash equivalents	$	858,047	$	29,902,953
Restricted cash
Money market fund	$	9,211,360	$	9,284,362

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BRIDGER AEROSPACE GROUP HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in U.S. dollars, except as stated)


	As of June 30, 2023
	Purchase Price		Unrealized Gains		Unrealized Losses		Fair Value
Investment in marketable securities
Commercial paper	$	4,746,204	$	157,419	$	—	$	4,903,623
Corporate bonds and notes	2,960,620		24,420		—		2,985,040
Government securities	4,684,574		—		(287)		4,684,287
Total marketable securities	$	12,391,398	$	181,839	$	(287)	$	12,572,950


	As of December 31, 2022
	Purchase Price		Unrealized Gains		Unrealized Losses		Fair Value
Investment in marketable securities
Commercial paper	$	32,635,849	$	277,674	$	—	$	32,913,523
Corporate bonds and notes	15,413,122		3,668		—		15,416,790
Government securities	6,658,634		—		(8,791)		6,649,843
Total marketable securities	$	54,707,605	$	281,342	$	(8,791)	$	54,980,156

The net unrealized (loss) gain included in total other comprehensive loss for the three and six months ended June 30, 2023 is $(28) thousand and $290 thousand, respectively. The Company did not have investments in marketable securities during the three and six months ended June 30, 2022.

The proceeds from sales of available-for-sale securities and gross realized gains included in earnings from sales of available-for-sale securities for the six months ended June 30, 2023 are $42,724 thousand and $408 thousand, respectively. The Company determines gains and losses using the first-in first-out method. For the three and six months ended June 30, 2023, $208 thousand and $381 thousand has been reclassified out of accumulated other comprehensive income, respectively. There have been no impairments measured for the three and six months ended June 30, 2023 and June 30, 2022, respectively.

Note 4 – Aircraft Support Parts

Aircraft support parts consist of the following:


	As of June 30, 2023		As of December 31, 2022
Repairables and expendables	$	434,894	$	1,734,292
Other support parts	—		26,978
Total aircraft support parts	$	434,894	$	1,761,270

Note 5 – Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following:


	As of June 30, 2023		As of December 31, 2022
Prepaid insurance	$	1,669,771	$	968,721
Prepaid subscriptions	1,173,256		770,724
Other current assets	49,213		95,587
Total prepaid expenses and other current assets	$	2,892,240	$	1,835,032

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BRIDGER AEROSPACE GROUP HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in U.S. dollars, except as stated)

Note 6 –Property, Plant and Equipment, Net

Property, plant and equipment, net consist of the following:


	As of June 30, 2023		As of December 31, 2022
Aircraft	$	188,179,561	$	160,113,061
Less: Accumulated depreciation	(20,344,539)		(16,783,360)
Aircraft, net	167,835,022		143,329,701
Construction-in-progress—Aircraft	—		16,992,010
Buildings	16,536,319		16,519,231
Vehicles and equipment	2,895,113		2,810,560
Construction-in-progress - Buildings	17,047,327		13,780,316
Finance lease right-of-use asset	130,378		130,378
Licenses	234,682		234,682
Less: Accumulated depreciation	(2,628,452)		(1,705,465)
Buildings and equipment, net	34,215,367		31,769,702
Total property, plant and equipment, net	$	202,050,389	$	192,091,413

For the three and six months ended June 30, 2023, the Company recorded $2,980 thousand and $3,985 thousand of depreciation expense in Cost of revenues, respectively, and $229 thousand and $948 thousand of depreciation expense in Selling, general and administrative expense, respectively. For the three and six months ended June 30, 2022, the Company recorded $2,468 thousand and $3,472 thousand of depreciation expense in Cost of revenues, respectively, and $333 thousand and $588 thousand of depreciation expense in Selling, general and administrative expense, respectively.

Aircraft are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. In 2023, the Company identified indicators of impairment for one of the Twin Commander surveillance platforms. The Company determined this asset group is not a viable contract operating plane due to a significant adverse change in the physical state of the asset, preventing the asset from acting as a revenue generating asset and anticipating sure cash flow losses. The Company believes the lack of cash flow and continued maintenance expenditure render the carrying amount of the asset unrecoverable. For the three and six months ended June 30, 2023, the Company recorded total impairment charges of $627 thousand, respectively, in Selling, general and administrative expense on the Unaudited Condensed Consolidated Statements of Operations. For the three and six months ended June 30, 2022, the Company recorded no impairment charges, respectively.

For the three and six months ended June 30, 2023, the Company recorded a net loss on sale/disposal of assets of $300 thousand and $392 thousand, respectively, in Selling, general and administrative expense on the Unaudited Condensed Consolidated Statements of Operations. For the three and six months ended June 30, 2022, the Company recorded a loss on disposals of assets related to the obsolescence of an aging aircraft of zero and $781 thousand, respectively, in Selling, general and administrative expense on the Unaudited Condensed Consolidated Statements of Operations.

For the three and six months ended June 30, 2023, capitalized interest to equipment from debt financing was $429 thousand and $822 thousand, respectively. For the three and six months ended June 30, 2022, capitalized interest to equipment from debt financing was $89 thousand and $142 thousand, respectively. Aircraft that is currently being manufactured is considered construction in process and is not depreciated until the aircraft is placed into service. Aircraft that is temporarily not in service is not depreciated until placed into service.

Note 7 – Goodwill and Intangible Assets, Net

The Company’s goodwill originated from the acquisition of MA, LLC in April 2018. The carrying amount of goodwill was $2,458 thousand as of June 30, 2023 and December 31, 2022, respectively. There were no impairment charges recorded for goodwill for the three and six months ended June 30, 2023 and 2022, respectively.

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BRIDGER AEROSPACE GROUP HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in U.S. dollars, except as stated)

Intangible assets consisted of the following:


		As of June 30, 2023
	Estimated Life (Years)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Licenses	10	$	67,623	$	(50,558)	$	17,065
Internal-use software	3	296,675		(158,371)		138,304
Total intangible assets		$	364,298	$	(208,929)	$	155,369


		As of December 31, 2022
	Estimated Life (Years)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Licenses	10	$	67,623	$	(47,177)	$	20,446
Internal-use software	3	296,675		(108,925)		187,750
Total intangible assets		$	364,298	$	(156,102)	$	208,196

Amortization expense for intangible assets and other noncurrent assets was approximately $27 thousand and $53 thousand for the three and six months ended June 30, 2023, respectively, and $27 thousand and $35 thousand for the three and six months ended June 30, 2022, respectively. Amortization expense is included in Selling, general and administrative expense on the Unaudited Condensed Consolidated Statements of Operations.

Note 8 – Other Noncurrent Assets

Other noncurrent assets consisted of the following:


	As of June 30, 2023		As of December 31, 2022
Investment in Overwatch	$	1,000,000	$	1,000,000
Operating lease right-of-use asset	1,638,130		671,054
Interest rate swap	1,338,801		1,407,135
Prepaid subscriptions	3,574,764		1,246,128
Other assets	31,908		31,908
Total other noncurrent assets	$	7,583,603	$	4,356,225

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BRIDGER AEROSPACE GROUP HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in U.S. dollars, except as stated)

Note 9 – Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consisted of the following:


	As of June 30, 2023		As of December 31, 2022
Accrued salaries, wages, and bonuses	$	484,340	$	6,515,774
Finance right-of-use liability	56,012		68,310
Accrued professional fees	87,961		2,291,469
Embedded derivative of Legacy Bridger Series C Preferred Shares	—		1,039,330
Embedded derivative of Series A Preferred Stock	815,250		—
Warrant liabilities	5,329,975		—
Deferred underwriting fee payable	1,500,000		—
Freestanding derivative on Legacy Bridger Series C Preferred Shares	—		2,186,283

Accrued interest expense and other accrued liabilities	6,414,132		6,614,065
Total accrued expenses and other liabilities	14,687,670		18,715,231
Less: Current accrued expenses and other current liabilities	(7,823,154)		(18,669,572)
Total long-term accrued expenses and other noncurrent liabilities	$	6,864,516	$	45,659

On May 24, 2023, the Company issued $4.9 million in Class A Common Stock in lieu of bonuses paid for the bonus pool accrued as of December 31, 2022. The Company’s bonus pool was accrued throughout the year and was based upon 2022 performance milestones. On August 19, 2022, the Company also granted $10.1 million of discretionary cash bonuses to employees and executives in connection with the issuance of the Legacy Bridger Series C Preferred Shares, issuance of the taxable industrial development revenue bond transaction under the CUSIP of Gallatin County for $160,000 thousand (“2022 Bonds”) and execution of the Transaction Agreements.

Warrant liabilities

The warrant liabilities consist of the following Warrants issued by the Company in connection the Reverse Recapitalization:

Public Warrants

The Company issued Public Warrants to purchase 17,250,000 shares of Common Stock at an exercise price of $11.50 per share in exchange for the 17,250,000 JCIC warrants originally issued by JCIC in its initial public offering. The Warrants may only be exercised for a whole number of shares of Common Stock. The exercise price and number of shares of Common Stock issuable upon exercise of the Warrants may also be adjusted in certain circumstances including in the event of a share dividend, recapitalization, reorganization, merger or consolidation. In no event will the Company be required to net cash settle any Warrant.

The Warrants became exercisable 30 days following the Reverse Recapitalization and will expire January 24, 2028.

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BRIDGER AEROSPACE GROUP HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in U.S. dollars, except as stated)

Under certain circumstances, the Company may elect to redeem the Public Warrants at a redemption price of $0.01 per Public Warrant at any time during the term of the warrant in which the Common Stock trading price has been at least $18.00 per share for 20 trading days within the 30 trading-day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the Warrant holders. If the Company elects to redeem the Public Warrants, it must notify the Public Warrant holders in advance, who would then have at least 30 days from the date of notification to exercise their respective warrants. If the warrant is not exercised within that 30-day period, it will be redeemed pursuant to this provision. The Company may also elect to redeem the outstanding Warrants at a redemption price of $0.10 per Warrant at any time during the term of the Warrant in which the Common Stock trading price is between $10.00 per share and $18.00 per share (as adjusted for share splits, share dividends, rights issuances, subdivisions, reorganization, recapitalizations and the like) for any 20 trading days within the 30 trading-day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the Warrant holders. In such case, the Warrant holders will be able to exercise their Warrants on a cashless basis prior to the redemption for a number of shares of our Common Stock determined based on the redemption date and the fair market value of the Common Stock.

As of June 30, 2023, the Company had 17,250,000 outstanding Public Warrants to purchase 17,250,000 shares of Common Stock. The Public Warrants are liability-classified with a balance of $3,450 thousand and a fair value of $0.20 per warrant as of June 30, 2023.

Private Placement Warrants

The Company issued Private Placement Warrants to purchase 9,400,000 shares of Common Stock at an exercise price of $11.50 per share in exchange for the 9,400,000 JCIC warrants originally purchased in a private placement by JCIC Sponsor, LLC (“JCIC Sponsor”) contemporaneously with JCIC’s initial public offering. JCIC Sponsor, or its permitted transferees, has the option to exercise the Private Placement Warrants on a cashless basis. If the Private Placement Warrants are held by holders other than JCIC Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company in all redemption scenarios and exercisable by the holders on the same basis as the Public Warrants.

As of June 30, 2023, the Company had 9,400,000 outstanding Private Placement Warrants to purchase 9,400,000 shares of Common Stock. The Private Placement Warrants are liability-classified with a balance of $1,880 thousand and a fair value of $0.20 per warrant as of June 30, 2023.

Note 10 – Interest Rate Swap and Freestanding Derivative