baer-20230930

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

___________________________

FORM 10-Q

___________________________


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

For the quarterly period ended September 30, 2023


☐			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 ☒ No ☐

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	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

		Emerging growth company	☒

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. ☐

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

As of November 9, 2023, there were 44,776,926 shares of the registrant’s common stock, par value $0.0001 per share, issued and outstanding.

Table of Contents

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 Income (Loss)	4

	Condensed Consolidated Statements of Stockholders’ Deficit	5

	Condensed Consolidated Statements of Cash Flows	8

	Notes to Condensed Consolidated Financial Statements	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	45

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	66

Item 4.	Controls and Procedures	67

Part II	Other Information	68

Item 1.	Legal Proceedings	68

Item 1A.	Risk Factors	68

Item 5.	Other Information	70

Item 6.	Exhibits	71

Table of Contents

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 September 30, 2023		As of December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	19,378,525	$	30,162,475
Restricted cash	12,292,731		12,297,151
Investments in marketable securities	2,249,068		54,980,156
Accounts and note receivable	25,401,837		28,902
Aircraft support parts	488,145		1,761,270
Prepaid expenses and other current assets	3,968,810		1,835,032
Deferred offering costs	—		5,800,144
Total current assets	63,779,116		106,865,130
Property, plant and equipment, net	198,472,301		192,091,413
Intangible assets, net	1,428,956		208,196
Goodwill	13,134,371		2,457,937
Other noncurrent assets1	13,896,708		4,356,225
Total assets	$	290,711,452	$	305,978,901
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	1,351,970	$	3,170,354
Accrued expenses and other current liabilities	10,536,129		18,669,572
Operating right-of-use current liability2	1,531,567		21,484
Current portion of long-term debt, net of debt issuance costs	1,940,914		2,445,594
Total current liabilities	15,360,580		24,307,004
Long-term accrued expenses and other noncurrent liabilities	12,821,049		45,659
Operating right-of-use noncurrent liability3	6,764,776		754,673
Long-term debt, net of debt issuance costs4	205,219,737		205,471,958
Total liabilities	$	240,166,142	$	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 September 30, 2023	348,786,994		—
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; 44,776,926 shares issued and outstanding at September 30, 2023; 39,081,744 shares issued and outstanding at December 31, 2022	4,949		3,908
Additional paid-in capital	82,776,619		—
Accumulated deficit	(382,566,331)		(415,304,343)
Accumulated other comprehensive income	1,543,079		1,678,497
Total stockholders’ deficit	(298,241,684)		(413,621,938)
Total liabilities, mezzanine equity, and stockholders’ deficit	$	290,711,452	$	305,978,901

1Includes related party operating lease right-of-use assets of approximately $6,569,000 for the two Pilatus PC-12 leases as of September 30, 2023.

2Includes related party operating lease right-of-use current liabilities of approximately $1,173,000 for the two Pilatus PC-12 leases as of September 30, 2023.

3Includes related party operating lease right-of-use noncurrent liabilities of approximately $5,396,000 for the two Pilatus PC-12 leases as of September 30, 2023.

4Includes related party debt of $10,000,000 for the 2022 taxable industrial revenue bond as of September 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 September 30,				For the Nine Months Ended September 30,
	2023		2022		2023		2022
Revenues1	$	53,619,117	$	32,452,593	$	65,599,770	$	45,275,556
Cost of revenues:
Flight operations	9,673,769		7,120,107		19,706,152		16,635,021
Maintenance	5,534,423		5,498,105		13,260,850		11,932,078
Total cost of revenues	15,208,192		12,618,212		32,967,002		28,567,099
Gross income	38,410,925		19,834,381		32,632,768		16,708,457
Selling, general and administrative expense2	15,826,474		18,058,418		64,242,773		28,635,304
Operating income (loss)	22,584,451		1,775,963		(31,610,005)		(11,926,847)
Interest expense3	(5,970,547)		(6,984,901)		(17,175,959)		(12,993,129)
Other income (expense)	559,992		(441,788)		2,253,320		(166,634)
Income (loss) before income taxes	17,173,896		(5,650,726)		(46,532,644)		(25,086,610)
Income tax benefit	314,080		—		314,080		—
Net income (loss)	$	17,487,976	$	(5,650,726)	$	(46,218,564)	$	(25,086,610)
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	$	(6,048,025)	$	—	$	(16,128,047)	$	—
Legacy Bridger Series A Preferred Shares – adjustment for redemption, extinguishment, accrued interest, and change in fair value	$	—	$	—	$	—	$	(85,663,336)
Legacy Bridger Series C Preferred Shares - adjustment to maximum redemption value	$	—	$	(5,643,337)	$	—	$	(196,884,119)
Net income (loss) attributable to Common stockholders - basic and diluted	$	11,439,951	$	(11,294,063)	$	45,715,987	$	(307,634,065)
Net income (loss) per Common Stock - basic	$	0.25	$	(0.29)	$	1.02	$	(7.93)
Net income (loss) per Common Stock - diluted	$	0.15	$	(0.29)	$	0.59	$	(7.93)
Weighted average Common Stock outstanding – basic	45,905,962		38,770,646		44,936,629		38,770,646
Weighted average Common Stock outstanding – diluted	78,895,759		38,770,646		77,903,350		38,770,646

1Includes related party revenues of approximately $68,000 and $501,000 for the three and nine months ended September 30, 2023, respectively.

2Includes related party lease expense of approximately $139,000 for the three and nine months ended September 30, 2023, respectively.

3Includes related party interest for the 2022 taxable industrial revenue bond of approximately $293,000 and $856,000 for the three and nine months ended September 30, 2023, respectively, and $95,000 for three and nine months ended September 30, 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 COMPREHENSIVE INCOME (LOSS)

(All Amounts in U.S. dollars)


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2023		2022		2023		2022
Net income (loss)	$	17,487,976	$	(5,650,726)	$	(46,218,564)	$	(25,086,610)
Other comprehensive income (loss), net of tax
Foreign currency translation adjustment	(43,687)		(96)		(43,281)		(359)
Unrealized gain on derivative instruments	180,525		459,150		112,191		1,443,185
Unrealized (loss) gain on investments in marketable securities	(12,942)		28,212		277,402		28,212
Reclassification of realized gains on investments in marketable securities to earnings	(100,388)		—		(481,730)		—
Total other comprehensive income (loss), net of tax	23,508		487,266		(135,418)		1,471,038
Comprehensive income (loss)	$	17,511,484	$	(5,163,460)	$	(46,353,982)	$	(23,615,572)

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 Nine Months Ended September 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)
Legacy Bridger Series C Preferred Shares adjustment to maximum redemption value	—	—		—	—		—	—		—	—		—		(5,643,337)		—		(5,643,337)
Unrealized gain on derivative instruments	—	—		—	—		—	—		—	—		—		—		459,150		459,150
Unrealized gain on investments in marketable securities	—	—		—	—		—	—		—	—		—		—		28,212		28,212
Foreign currency translation adjustment	—	—		—	—		—	—		—	—		—		—		(96)		(96)
Stock based compensation attributable to Legacy Bridger holders prior to reverse recapitalization	—	—		—	—		—	—		—	—		—		2,223		—		2,223
Net loss	—	—		—	—		—	—		—	—		—		(5,650,726)		—		(5,650,726)
Balance at September 30, 2022	10,500,000	$	1,050	60,000,000	$	6,000	—	$	—	39,081,744	$	3,908	$	—	$	(392,470,865)	$	1,495,744	$	(390,971,213)

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 Nine Months Ended September 30, 2023

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

Table of Contents


	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)
Unrealized gain on derivative instruments	—	—		—	—		—	—		—	—		—		—		180,525		180,525
Unrealized loss on investment in marketable securities	—	—		—	—		—	—		—	—		—		—		(12,942)		(12,942)
Reclassification of realized gains on investments in marketable securities to earnings	—	—		—	—		—	—		—	—		—		—		(100,388)		(100,388)
Foreign currency translation adjustment	—	—		—	—		—	—		—	—		—		—		(43,687)		(43,687)
Net income	—	—		—	—		—	—		—	—		—		17,487,976		—		17,487,976

Series A Preferred Stock adjustment to maximum redemption value	—	—		—	—		—	6,048,025		—	—		(6,048,025)		—		—		(6,048,025)
Class A Common Stock issued in Acquisition	—	—		—	—		—	—		426,531	43		3,241,957		—		—		3,242,000
Stock based compensation after reverse recapitalization	—	—		—	—		—	—		—	—		6,605,296		—		—		6,605,296
Balance at September 30, 2023	—	$	—	—	$	—	315,789	$	348,786,994	47,332,729	$	4,949	$	82,776,619	$	(382,566,331)	$	1,543,079	$	(298,241,684)

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 Nine Months Ended September 30,
	2023		2022
Cash Flows from Operating Activities:
Net loss	$	(46,218,564)	$	(25,086,610)
Adjustments to reconcile net loss to net cash used in operating activities, net of acquisitions
Loss on sale/disposal of fixed assets	423,187		1,588,361
Depreciation and amortization	10,233,947		8,561,926
Impairment of long-lived assets	626,848		—
Stock based compensation expense	38,650,880		7,003
Loss on extinguishment of debt	—		844,925
Change in fair value of the Warrants	1,865,500		—
Change in fair value of freestanding derivative	50,559		(59,309)
Amortization of debt issuance costs	725,524		288,853
Interest accrued on Legacy Bridger Series B Preferred Shares	—		3,586,586
Change in fair value of Legacy Bridger Series C Preferred Shares	—		3,918,636
Change in fair value of Series A Preferred Stock	(45,378)		—
Realized gain on investments in marketable securities	(561,905)		—
Changes in operating assets and liabilities
Accounts and note receivable	(25,372,935)		(10,885,879)
Aircraft support parts	1,273,125		183,390
Prepaid expense and other current and noncurrent assets	(4,057,674)		(305,096)
Accounts payable, accrued expenses and other liabilities	(19,084,478)		9,398,500
Net cash used in operating activities	(41,491,364)		(7,958,714)
Cash Flows from Investing Activities:
Investments in construction in progress – buildings	—		(7,739,841)
Proceeds from sales and maturities of marketable securities	53,088,665		—
Sale of property, plant and equipment	817,000		286,400
Purchases of property, plant and equipment	(18,054,137)		(23,818,386)
Purchases of marketable securities	—		(38,508,475)
Net cash provided by (used in) investing activities	35,851,528		(69,780,302)
Cash Flows from Financing Activities:
Payment to Legacy Bridger Series A Preferred Shares members	—		(236,250,000)
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	—		288,684,675
Borrowings from 2022 Taxable Industrial Revenue bond	—		160,000,000
Extinguishment of 2021 Taxable Industrial Revenue bond	—		(7,549,900)
Payment of finance lease liability	(22,790)		—
Proceeds from the Closing	3,193,536		—
Costs incurred related to the Closing	(6,793,574)		—
Borrowings from various First Interstate Bank vehicle loans	—		202,216
Payment of debt issuance costs	—		(4,417,806)
Payment of offering costs	—		(896,108)
Repayments on debt	(1,482,425)		(1,463,862)
Net cash (used in) provided by financing activities	(5,105,253)		128,309,992
Effects of exchange rate changes	(43,281)		(359)
Net change in cash, cash equivalents and restricted cash	(10,788,370)		50,570,617
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	$	31,671,256	$	67,831,749
Less: Restricted cash – end of the period	12,292,731		12,224,970
Cash and cash equivalents – end of the period	$	19,378,525	$	55,606,779
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	$	7,940,044	$	—
Bonuses paid in Class A Common Stock	$	4,927,620	$	—
Purchase consideration of Ignis acquisition paid in Class A Common Stock	$	3,242,000	$	—
Deferred offering costs included in accrued expenses and other current liabilities	$	—	$	3,762,322
Issuance costs on Legacy Bridger Series C Preferred Shares	$	—	$	5,000,000
Supplemental cash flow information
Interest paid1	$	21,995,073	$	11,936,730
Fixed assets in accounts payable	$	16,847	$	448,850
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	$	16,128,046	$	—
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	$	—	$	196,884,119

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1Includes related party interest paid of approximately $1,150,000 for the 2022 taxable industrial revenue bond for the nine months ended September 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 September 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;

•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

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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)

•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.

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

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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 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 nine months ended September 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 nine months ended September 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 nine months ended September 30, 2022, MA, LLC held immaterial assets and liabilities in its financial statements. For the three and nine months ended September 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.

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

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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)

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) allocation of the purchase price to the fair value of assets acquired and liabilities assumed, (e) impairment of long-lived assets, goodwill and other intangible assets, (f) disclosure of fair value of financial instruments, (g) variable interest entities, (h) accounting for Series A Preferred Stock and Legacy Bridger Series C Preferred Shares, (i) revenue recognition, (j) estimates and assumptions made in determining the carrying values of goodwill, other intangible assets, and contingent consideration, (k) incentive units and (l) 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.

Accounts and Note Receivable

Accounts receivable consist of amounts due from our customers. The Company maintains an allowance for doubtful accounts equal to the estimated losses expected to be incurred based upon a review of the outstanding accounts receivable, historical collection information and existing economic conditions. For the three and nine months ended September 30, 2023 and 2022, the Company did not record any bad debt expense as accounts receivable have historically been collected in accordance with the policy and there is not history of write-offs.

Note receivable consists of a promissory note to pay a specific sum, with interest, within a defined period. Each reporting period, the Company evaluates the collectability of the outstanding note receivable balance. If the promissory note is deemed uncollectible, the Company will record the value of the note and the accrued interest as bad debt expense. For the three and nine months ended September 30, 2023 and 2022, the Company did not record any bad debt expense based on the assessment of the receivable.

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 September 30, 2023, the Company charged $17,961 thousand to Stockholders’ deficit. As of December 31, 2022, the Company recorded $5,800 thousand of deferred offering costs in the Unaudited Condensed Consolidated Balance Sheets.

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

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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)

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, Other Assets and Deferred Costs—Contracts with Customers, 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 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.

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.

Revenue Disaggregation

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


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2023		2022		2023		2022
Fire suppression	$	46,153,645	$	26,550,505	$	56,603,073	$	38,232,768
Aerial surveillance	7,355,172		5,831,625		8,478,925		6,833,650
Other services	110,300		70,463		517,772		209,138
Total revenues	$	53,619,117	$	32,452,593	$	65,599,770	$	45,275,556

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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 following shows the disaggregation of revenue by type for the three and nine months ended September 30, 2023 and September 30, 2022.


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2023		2022		2023		2022
Flight revenue	$	28,322,994	$	18,167,660	$	34,117,309	$	24,585,180
Standby revenue	25,006,298		14,094,682		30,142,235		20,305,658
Other revenue	289,825		190,251		1,340,226		384,718
Total revenues	$	53,619,117	$	32,452,593	$	65,599,770	$	45,275,556

Concentration Risk

For the three and nine months ended September 30, 2023, the Company had one customer who individually accounted for 75% and 67% of total revenues, respectively. For the three and nine months ended September 30, 2022, the Company had one customer who individually accounted for 96% and 97% of total revenues, respectively. As of September 30, 2023, two customers accounted for 45% and 32% of accounts receivable, respectively. As of December 31, 2022, one customer accounted for 62% of accounts receivable.

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 and recorded in Accrued expenses and other current liabilities and Long-term accrued expenses and other noncurrent liabilities within the Unaudited Condensed Consolidated Balance Sheets. 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.

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 Income (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 14 – 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, Bridger Aerospace Group Holdings, LLC is a partnership for federal income tax purposes. Consequently, federal income taxes are not payable or provided for by Legacy Bridger. Members are taxed individually on their pro rata ownership share of Legacy Bridger’s earnings. Legacy Bridger’s net income or loss is allocated among the members in accordance with the Company’s operating agreement.

Subsequent to the Reverse Recapitalization, Bridger Aerospace Group Holdings, Inc. 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. these 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.

Net Income (Loss) Per Share

Basic net income (loss) per share is based on the weighted average number of shares of Common Stock outstanding during the period. Diluted net income (loss) per share is based on the weighted average number of shares of Common Stock used for the basic net income (loss) 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 income (loss) for diluted net income (loss) 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 income (loss) 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 income (loss) per share is calculated based on the weighted average number of shares of Common Stock outstanding.

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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)

Collaboration Agreements

The Company analyzes its collaboration arrangement to assess if it is within the scope of ASC 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 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 nine months ended September 30, 2023 was approximately $52 thousand and $104 thousand, respectively, and for the three and nine months ended September 30, 2022 was approximately $153 thousand and $520 thousand, respectively.

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 September 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

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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)

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 September 30, 2023		As of December 31, 2022
	Carrying Value
Cash equivalents
Commercial paper	$	—	$	29,890,313
Money market fund	6,893,438		12,640
Total cash equivalents	$	6,893,438	$	29,902,953
Restricted cash
Money market fund	$	9,251,919	$	9,284,362


	As of September 30, 2023
	Purchase Price		Unrealized Gains		Unrealized Losses		Fair Value
Investment in marketable securities
Commercial paper	$	1,908,494	$	90,606	$	—	$	1,999,100
Corporate bonds and notes	246,465		3,503		—		249,968
Total marketable securities	$	2,154,959	$	94,109	$	—	$	2,249,068


	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