BigBearai Holdings Inc
For the period ended Jun 30, 2024. Filed Aug 9, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 9, 2024
BBAI$2.220.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-10.
0001628280-24-022622
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-09.
0001628280-24-036497
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 139 previous paragraphs and 143 current paragraphs.
90 unchanged; 27 reworded; 19 added; 21 removed; 1 previous and 7 current paragraphs rearranged.
Tables are not compared: 19 previous and 29 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (19)
Current report
On March 22, 2024, the President signed the second Fiscal Year (“FY”) 2024 Consolidated Appropriations package into law, which includes Department of Defense (“DoD”) funding. This legislation reflects the Fiscal Responsibility Act (“FRA”) spending limit of $886 billion for National Defense, of which $842 billion was for the DoD base budget.
Current report
The President’s FY 2025 budget request was submitted to Congress on March 11, 2024, initiating the FY 2025 defense authorization and appropriations legislative process. The request included $895 billion for National Defense, of which $850 billion is for the DoD base budget, in keeping with the limit established by the FRA. While compression on overall requirements driven by the FRA limit is evident, the Office of the Secretary of Defense has stated the FY 2025 budget proposal meets their objectives of keeping National Defense Strategy priorities on track.
Current report
The House and Senate continue the legislative process on the FY 2025 budget. On May 22, 2024, the House Armed Services Committee (HASC) approved its version of the FY25 National Defense Authorization Act. The bill authorizes $849.8 billion in funding for the DoD, which is consistent with the President’s FY25 budget request. On June 28, 2024, the FY 2025 DoD Appropriations bill H.R. 8774 passed the House. On July 8, 2024, the Senate Armed Service Committee (“SASC”) filed their version of the FY 25 National Defense Authorization Act at a level $25 billion above the cap set by the FRA.
Current report
In the coming months, Congress will need to approve or revise the President’s FY 2025 budget proposal through enactment of appropriations bills and other policy legislation, which would then require final approval from the President in order for the FY 2025 budget to become law and complete the budget process.
Current report
On April 24, 2024, the President signed a bill providing a total of $95 billion in additional supplemental funding for Ukraine, Israel and Taiwan including funding for the restock of U.S. munitions capacity. Supplemental funding legislation is not subject to the FRA limits.
Current report
Other income consists primarily of interest income earned on money market accounts.
Current report
Revenues increased by $1.3 million during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023 primarily as a result of increases due to the acquisition of Pangiam, offset by decreased volume from the Air Force EPASS program which wound down in the second quarter of 2023.
Current report
Cost of revenues as a percentage of total revenues decreased to 72% for the three months ended June 30, 2024 as compared to 77% for the three months ended June 30, 2023. The decrease in cost of revenue as a percentage of total revenue was partially driven by a higher mix of higher margin solutions work in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.
Current report
SG&A expenses as a percentage of total revenues for the three months ended June 30, 2024 increased to 59% as compared to 44% for the three months ended June 30, 2023, which was primarily driven by an increase in non-recurring strategic initiatives of $1.2 million, non-recurring integration costs of $0.9 million, and non-recurring litigation costs of $0.7 million incurred during the three months ended June 30, 2024.
Current report
Research and development expenses increased by $1.3 million during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. The increase was driven by increased headcount, the timing of certain research and development projects, as well as research and development expenses related to Pangiam.
Current report
The net decrease in fair value of derivatives of $7.9 million for the three months ended June 30, 2024 consists of fair value remeasurements of IPO warrants, PIPE warrants, and RDO warrants. The 2023 PIPE warrants and the 2023 RDO warrant were fully settled as of June 30, 2024.
Current report
Comparison of the Six Months Ended June 30, 2024 and 2023
Current report
Revenues decreased by $7.7 million during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. The change in revenues were primarily driven by increases due to the acquisition of Pangiam, offset by decreased volume from the Air Force EPASS program which wound down in the second quarter of 2023.
Current report
SG&A
Current report
SG&A expenses as a percentage of total revenues for the six months ended June 30, 2024 increased to 55% as compared to 46% for the six months ended June 30, 2023. The increase in SG&A expenses as a percentage of total revenues was primarily driven by an increase in non-recurring strategic initiatives of $1.1 million, non-recurring integration costs of $0.9 million, and non-recurring litigation costs of $0.5 million incurred during the the six months ended June 30, 2024.
Current report
Research and development expenses increased by $1.4 million during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. The increase in research and development expenses was driven by increased headcount, the timing of certain research and development projects, as well as the inclusion of Pangiam’s results.
Current report
Transaction expenses for the six months ended June 30, 2024 consist of diligence, legal and other related expenses associated with the Pangiam Acquisition.
Current report
(1)Represents the total amount available under the credit facility, which is subject to borrowing base adjustments that limit the total amount available under the credit facilities to 90% of Eligible Prime Government Receivables and Eligible Subcontractor Government Receivables, plus 85% of Eligible Commercial Receivables.
Current report
For the six months ended June 30, 2023, net cash used in investing activities consisted of the purchase of property and equipment.
Removed paragraphs (21)
Previous report
Revenues
Previous report
Cost of Revenues
Previous report
Research and Development
Previous report
Restructuring Charges
Previous report
Transaction Expenses
Previous report
Interest Expense
Previous report
Income Tax (Benefit) Expense
Previous report
Revenues
Previous report
Revenues decreased by $9.0 million during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. The decrease was primarily driven by the planned wind-down of the Air Force EPASS program in mid-2023 of $6.8 million, the elimination of revenue from Virgin Orbit due to their bankruptcy announcement in April 2023 of $1.5 million, as well as contract award delays due to the continuing resolutions. The decrease was partially offset by revenue of $3.4 million attributed to Pangiam for the period from February 29, 2024 to March 31, 2024.
Previous report
Cost of Revenues
Previous report
SG&A expenses as a percentage of total revenues for the three months ended March 31, 2024 increased to 51% as compared to 48% for the three months ended March 31, 2023. The increase in SG&A expenses as a percentage of total revenues was primarily driven by increased employer payroll taxes related to equity-based compensation. SG&A expenses attributed to Pangiam activity for the period from February 29, 2024 to March 31, 2024 was $1.5 million.
Previous report
Research and Development
Previous report
Research and development expenses increased by $16 thousand during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. Research and development expenses attributed to Pangiam activity for period from February 29, 2024 to March 31, 2024 were $0.6 million, which were partially offset by decreased research and development expenses driven by certain software development projects that have reached the technological feasibility stage and for which related costs were capitalized during the three months ended March 31, 2024.
Previous report
Restructuring Charges
Previous report
Restructuring charges consist of employee separation costs related to strategic cost saving initiatives to better align our organization and cost structure and improve the affordability of our products and services. Restructuring charges for the three months ended March 31, 2023 includes the impairment of lease right-of-use assets associated with these strategic cost saving initiatives.
Previous report
Transaction Expenses
Previous report
The net increase in fair value of derivatives of $24.0 million for the three months ended March 31, 2024 includes a $42.3 million loss related to the change in fair value of warrants that were issued in 2023 (the “2023 Warrants”) that were exercised in the first quarter of 2024, partially offset by gains of $10.6 million, net of cash proceeds received, related to the issuance of warrants in the first quarter of 2024 (the “2024 Warrants”), and a gain of $18.3 million related to the decrease in fair value of the 2024 Warrants from the date of issuance to March 31, 2024.
Previous report
Interest Expense
Previous report
Other Income
Previous report
Income Tax Expense (Benefit)
Previous report
The Company did not meet the Secured Net Leverage ratio covenant during the three months ended March 31, 2024, and is unable to draw on the Senior Revolver as of March 31, 2024.
Reworded paragraphs (27)
Previous wording
The following discussion and analysis provides information that BigBear.ai Holdings, Inc. (“BigBear.ai”,“BigBear.ai Holdings”, or the “Company”) management believes is relevant to an assessment and understanding of BigBear.ai’s audited consolidated results of operations and financial condition. The following discussion and analysis should be read in conjunction with BigBear.ai’s consolidated financial statements and notes to those statements included elsewhere in this Quarterly Report on Form 10-Q. Certain information contained in this management discussion and analysis includes forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors. Please see “Cautionary Note Regarding Forward-Looking Statements,” and “Risk Factors” in our Annual Report on Form 10-K and this Quarterly Report on Form 10-Q. Unless the context otherwise requires, all references in this section to the “Company,” “BigBear.ai,” “we,” “us,” or “our” refer to BigBear.ai Holdings, Inc.
Current wording
The following discussion and analysis provides information that BigBear.ai Holdings, Inc. (“BigBear.ai”, “BigBear”,“BigBear.ai Holdings”, or the “Company”) management believes is relevant to an assessment and understanding of BigBear.ai’s consolidated results of operations and financial condition. The following discussion and analysis should be read in conjunction with BigBear.ai’s consolidated financial statements and notes to those statements included elsewhere in this Quarterly Report on Form 10-Q. Certain information contained in this management discussion and analysis includes forward-looking statements within the meaning of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. All statements contained in this Quarterly Report other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans and our objectives for future operations, are forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding BigBear’s industry, future events, and other statements that are not historical facts. These forward-looking statements are based on current expectations and beliefs concerning future developments and their potential effects on us and should not be relied upon as representing BigBear’s assessments as of any date subsequent to the date of this Quarterly Report on Form 10-Q. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements are subject to a number of risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors. Please see “Cautionary Note Regarding Forward-Looking Statements,” and “Risk Factors” in our Annual Report on Form 10-K and this Quarterly Report on Form 10-Q. Unless the context otherwise requires, all references in this section to the “Company,” “BigBear,” “BigBear.ai,” “we,” “us,” or “our” refer to BigBear.ai Holdings, Inc.
Previous wording
•Results of Operations: This section provides a discussion of our results of operations for the three months ended March 31, 2024 and, March 31, 2023.
Current wording
•Results of Operations: This section provides a discussion of our results of operations for the three and the six months ended June 30, 2024 and, June 30, 2023.
Previous wording
On February 27, 2024, the Company entered into a warrant exercise agreement with an existing accredited investor (the “RDO Investor”) to exercise in full the outstanding Registered Direct Offering (the “RDO warrants”) to purchase up to an aggregate of 8,886,255 shares of the Company’s common stock for gross proceeds of approximately $20.6 million. In consideration for the immediate and full exercise of the RDO warrants, the RDO Investor received a new unregistered common stock purchase warrant to purchase up to an aggregate of 5,800,000 shares of the Company’s common stock (the “First New Warrant”) in a private placement. The First New Warrant will become exercisable commencing at any time on or after August 28, 2024, expiring after five years, with an exercise price per share equal to $3.78.
Current wording
On February 27, 2024, the Company entered into a warrant exercise agreement with an existing accredited investor (the “RDO Investor”) to exercise in full the outstanding Registered Direct Offering to purchase up to an aggregate of 8,886,255 shares of the Company’s common stock for gross proceeds of approximately $20.6 million(the “RDO warrants”). In consideration for the immediate and full exercise of the RDO warrants, the RDO Investor received a new unregistered common stock purchase warrant to purchase up to an aggregate of 5,800,000 shares of the Company’s common stock (the “2024 RDO warrant”) in a private placement. The 2024 RDO warrants will become exercisable commencing at any time on or after August 28, 2024, expiring after five years, with an exercise price per share equal to $3.78.
Previous wording
On March 4, 2024, the Company entered into a warrant exercise agreement with an existing accredited investor (the “PIPE Investor”) to exercise in full the outstanding Private Placement (the “PIPE warrants”) to purchase up to an aggregate of 13,888,889 shares of the Company’s common stock for gross proceeds of approximately $33.2 million. In consideration for the immediate and full exercise of the PIPE warrants, the PIPE Investor received a new unregistered common stock purchase warrant to purchase up to an aggregate of 5,800,000 shares of the Company’s common stock (the “Second New Warrant”) in a private placement. The Second New Warrant will become exercisable commencing at any time on or after September 5, 2024 (the “Exercise Date”), expiring after five years, with an exercise price per share equal to $4.75.
Current wording
On March 4, 2024, the Company entered into a warrant exercise agreement with an existing accredited investor (the “PIPE Investor”) to exercise in full the outstanding PIPE warrants to purchase up to an aggregate of 13,888,889 shares of the Company’s common stock for gross proceeds of approximately $33.2 million. In consideration for the immediate and full exercise of the PIPE warrants, the PIPE Investor received a new unregistered common stock purchase warrant to purchase up to an aggregate of 9,000,000 shares of the Company’s common stock (the “2024 PIPE warrant”) in a private placement. The 2024 PIPE warrant will become exercisable commencing at any time on or after September 5, 2024 (the “Exercise Date”), expiring after five years, with an exercise price per share equal to $4.75.
Previous wording
The majority of our revenue is derived from federal government contracts. U.S. government spending levels, particularly defense spending, and timely funding thereof can affect our financial performance over the short and long term. On January 19, 2024, the President signed a continuing resolution that extends funding of appropriations bills to March 2024. This will provide Congress additional time to enact FY 2024 appropriations bills based on the overarching U.S. Government spending agreement reached by House and Senate leaders on January 7, 2024 which capped National Defense in FY 2024 to $886 billion. Overall, congressional sentiment remains strong for supporting the National Defense Strategy and defense spending. However, the logistical and political challenges, especially in the U.S. House of Representatives, are complex and add funding risk. Under the continuing resolution, funding at amounts consistent with appropriated levels for FY 2023 are available, subject to certain restrictions, but new contract and program starts are not authorized. We expect our key contracts will continue to be supported and funded under the continuing resolution. However, during periods covered by continuing resolutions, we may experience delays in new contract awards, and those delays may adversely affect our results of operations.
Current wording
The majority of our revenue is derived from federal government contracts. U.S. government spending levels, particularly defense spending, and timely funding thereof can affect our financial performance over the short and long term.. We expect our key contracts will continue to be supported and funded under the continuing resolution. However, during periods covered by continuing resolutions, we may experience delays in new contract awards, and those delays may adversely affect our results of operations.
Previous wording
We anticipate the federal budget will continue to be subject to debate and compromise shaped by, among other things, heightened political tensions, the global security environment, inflationary pressures, and macroeconomic conditions. The result may be shifting funding priorities, which could have material impacts on defense spending broadly and our federal government contracts.
Current wording
We anticipate the federal budget will continue to be subject to debate and compromise shaped by, among other things, heightened political tensions and the 2024 elections, the global security environment, inflationary pressures, and macroeconomic conditions. The result may be shifting funding priorities, which could have material impacts on defense spending broadly and our federal government contracts.
Previous wording
We operate in a complex and evolving security environment and our business is affected by geopolitical issues. Conflicts in Ukraine, the Middle East and heightened tension in the Pacific region have elevated global geopolitical tensions and security concerns. For our government customers, their focus on addressing immediate needs in these regions has slowed the pipeline and pace of contract awards, pushing revenue into subsequent periods. We continue to expect the geopolitical climate to drive adoption of our offerings over the long term, as it has heightened the need for advanced AI tools that provide enhanced intelligence and full spectrum cyber operations – areas where we have unmatched capabilities. While these conflicts are still evolving and the eventual outcomes remains highly uncertain, we do not believe that these events will have a material impact on our business and results of operations. However, if these conflicts worsen, leading to greater disruptions and uncertainty within the technology industry or global economy, our business and results of operations could be negatively impacted.
Current wording
We operate in a complex and evolving security environment and our business is affected by geopolitical issues. Conflicts in Ukraine, the Middle East and heightened tension in the Pacific region have elevated global geopolitical tensions and security concerns. For our government customers, their focus on addressing immediate needs in these regions has slowed the pipeline and pace of contract awards, pushing revenue into subsequent periods. We continue to expect the geopolitical climate to drive adoption of our offerings over the long term, as it has heightened the need for advanced AI tools that provide enhanced intelligence and full spectrum cyber operations – areas where we have unmatched capabilities. While these conflicts are still evolving and the eventual outcome remains highly uncertain, we do not believe that these events will have a material impact on our business and results of operations. However, if these conflicts worsen, leading to greater disruptions and uncertainty within the technology industry or global economy, our business and results of operations could be negatively impacted.
Previous wording
Transaction expenses incurred in 2024 consist of diligence, legal and other related expenses incurred associated with the Pangiam Acquisition, which was completed on February 29, 2024.
Current wording
Transaction expenses incurred in 2024 consist of diligence, legal and other related expenses associated with the Pangiam Acquisition, which was completed on February 29, 2024.
Previous wording
Goodwill impairment consists of non-cash charges goodwill.
Current wording
Goodwill impairment consists of non-cash charges to goodwill.
Previous wording
Net increase in fair value of derivatives consists of fair value remeasurements of the Company’s warrants.
Current wording
Net (decrease) increase in fair value of derivatives consists of fair value remeasurements of the Company’s warrants.
Previous wording
Income tax (benefit) expense consists of income taxes related to federal and state jurisdictions in which we conduct business.
Current wording
Income tax expense (benefit)consists of income taxes related to federal and state jurisdictions in which we conduct business.
Previous wording
Transaction expenses for the three months ended March 31, 2024 consist of diligence, legal and other related expenses incurred associated with the Pangiam Acquisition.
Current wording
Transaction expenses for the three months ended June 30, 2023 consist of diligence, legal and other related expenses associated with the Pangiam Acquisition.
Previous wording
The effective tax rate for the three months ended March 31, 2024 and the three months ended March 31, 2023 are consistent. The effective tax rate for the three months ended March 31, 2024 differs from the U.S. federal income tax rate of 21.0% primarily due to state and local income taxes, permanent differences between book and taxable income, certain discrete items and the change in valuation allowance.
Current wording
The effective tax rate for the three months ended June 30, 2024 and the three months ended June 30, 2023 are consistent. The effective tax rate for the three months ended June 30, 2024 and June 30, 2023 differs from the U.S. federal income tax rate of 21.0% primarily due to state and local income taxes, permanent differences between book and taxable income, certain discrete items, and the change in valuation allowance.
Previous wording
Cost of revenues as a percentage of total revenues increased to 79% for the three months ended March 31, 2024 as compared to 76% for the three months ended March 31, 2023. The increase in cost of revenues as a percentage of total revenues was primarily driven by an increase in equity-based compensation expense of $1.4 million and the elimination of gross margin from Virgin Orbit. Cost of revenues attributed to Pangiam activity for the period from February 29, 2024 to March 31, 2024 was $2.1 million.
Current wording
Cost of revenues as a percentage of total revenues was 75% for the six months ended June 30, 2024 as compared to 76% for the six months ended June 30, 2023. The decrease in cost of revenues as a percentage of total revenues was driven by higher margins from the inclusion of Pangiam’s results.
Previous wording
During the quarter ended March 31, 2024, the Company recognized non-cash goodwill impairment charge of $85.0 million primarily driven by a decrease in share price during the quarter compared to the share price of the equity issued as consideration for the purchase of Pangiam.
Current wording
During the six months ended June 30, 2024, the Company recognized a non-cash goodwill impairment charge of $85.0 million primarily driven by a decrease in share price during the quarter compared to the share price of the equity issued as consideration for the acquisition of Pangiam.
Previous wording
Net Increase in Fair Value of Derivatives
Current wording
The net increase in fair value of derivatives of $16.1 million for the six months ended June 30, 2024 includes fair value remeasurements of the IPO warrants, PIPE warrants, and RDO warrants. The 2023 PIPE warrants and the 2023 RDO warrant were fully settled as of June 30, 2024.
Previous wording
Interest expense during the three months ended March 31, 2024 and the three months ended March 31, 2023 consists primarily of interest expense, commitment fees, and debt issuance cost amortization under our Convertible Notes and Bank of America Senior Revolver. See the Liquidity and Capital Resources section below for more information.
Current wording
Interest expense during the six months ended June 30, 2024 and the six months ended June 30, 2023 consists primarily of interest expense, commitment fees, and debt issuance cost amortization under our Convertible Notes and Bank of America Senior Revolver. See the Liquidity and Capital Resources section below for more information.
Previous wording
As of March 31, 2024, the Company has an outstanding balance of $200.0 million related to the Convertible Notes, which is recorded on the balance sheet net of approximately $5.2 million of unamortized debt issuance costs.
Current wording
As of June 30, 2024, the Company has an outstanding balance of $200.0 million related to the Convertible Notes, which is recorded on the balance sheet net of approximately $4.8 million of unamortized debt issuance costs.
Previous wording
The Company was not in compliance with the Fixed Charge Coverage ratio requirement as of September 30, 2022, and as a result was unable to draw on the facility. On November 8, 2022, the Company entered into a Second Amendment to the Bank of America Credit Agreement (the “Second Amendment”), which modifies key terms of the Senior Revolver. As a result of the Second Amendment, funds available under the Senior Revolver are reduced to $25.0 million from $50.0 million, limited to a borrowing base of 90% of Eligible Prime Government Receivables and Eligible Subcontractor Government Receivables, plus 85% of Eligible Commercial Receivables. Additionally, the Second Amendment increased the Base Rate Margin, BSBY Margin and unused commitment fees by 0.25%. Following entry into the Second Amendment, the Senior Revolver no longer is subject to a minimum Fixed Charge Coverage ratio covenant, but is still subject to the Secured Net Leverage ratio covenant. In order for the facility to become available for borrowings (the “initial availability quarter”), the Company must report Adjusted EBITDA of at least one dollar. Commencing on the first fiscal quarter after the initial availability quarter, the Company is required to have aggregated reported Adjusted EBITDA of at least $1 over the two preceding quarters to maintain its ability to borrow under the Senior Revolver (though the inability to satisfy such condition does not result in a default under the Senior Revolver). Failure to meet this Adjusted EBITDA requirement is not a default but limits the Company’s ability to make borrowings under the Senior Revolver until such time that the Company is able to meet the Adjusted EBITDA thresholds as defined in the Second Amendment.
Current wording
85% of Eligible Commercial Receivables. Additionally, the Second Amendment increased the Base Rate Margin, BSBY Margin and unused commitment fees by 0.25%. Following entry into the Second Amendment, the Senior Revolver no longer is subject to a minimum Fixed Charge Coverage ratio covenant, but is still subject to the Secured Net Leverage ratio covenant. In order for the facility to become available for borrowings (the “initial availability quarter”), the Company must report Adjusted EBITDA of at least one dollar. Commencing on the first fiscal quarter after the initial availability quarter, the Company is required to have aggregated reported Adjusted EBITDA of at least $1 over the two preceding quarters to maintain its ability to borrow under the Senior Revolver (though the inability to satisfy such condition does not result in a default under the Senior Revolver). Failure to meet this Adjusted EBITDA requirement is not a default but limits the Company’s ability to make borrowings under the Senior Revolver until such time that the Company is able to meet the Adjusted EBITDA thresholds as defined in the Second Amendment.
Previous wording
As of March 31, 2024, the Company had not drawn on the Senior Revolver. Unamortized debt issuance costs of $116 were recorded on the balance sheet and are presented in Other non-current assets.
Current wording
As of June 30, 2024, the Company had not drawn on the Senior Revolver. Unamortized debt issuance costs of $0.1 million were recorded on the balance sheet and are presented in Other non-current assets.
Previous wording
On December 20, 2023, the Company entered into a $1,229 loan (the“2024 D&O Financing Loan”) with US Premium Finance to finance the Company’s directors and officers insurance premium through September 2024. The D&O Financing Loan had an interest rate of 6.99% per annum and a maturity date of September 8, 2024.
Current wording
On December 20, 2023, the Company entered into a $1.2 million loan (the“2024 D&O Financing Loan”) with US Premium Finance to finance the Company’s directors and officers insurance premium through September 2024. The D&O Financing Loan had an interest rate of 6.99% per annum and a maturity date of September 8, 2024.
Previous wording
On December 8, 2022, the Company entered into a $2,059 loan (the “2023 D&O Financing Loan”) with AFCO Credit Corporation to finance the Company’s directors and officers insurance premium through December 2023. The 2023 D&O Financing Loan required an upfront payment of $1,109 and has an interest rate of 5.75% per annum and a maturity date of December 8, 2023. The 2023 D&O Financing Loan was fully repaid at maturity.
Current wording
On December 8, 2022, the Company entered into a $2.1 million loan (the “2023 D&O Financing Loan”) with AFCO Credit Corporation to finance the Company’s directors and officers insurance premium through December 2023. The 2023 D&O Financing Loan required an upfront payment of $1.1 million and has an interest rate of 5.75% per annum and a maturity date of December 8, 2023. The 2023 D&O Financing Loan was fully repaid at maturity.
Previous wording
For the three months ended March 31, 2024, net cash used in operating activities was $14,359. Net loss before deducting depreciation, amortization and other non-cash items was $7,811 and was further impacted by an unfavorable change in net working capital of $6,548 which contributed to operating cash flows during this period. The unfavorable change in net working capital was largely driven by a decrease in contract assets of $2,443, a decrease in prepaid expenses and other assets of $950, an increase in accrued liabilities of $2,599, an increase in contract liabilities of $1,826, and an increase in other liabilities of $551. These were partially offset by an increase in accounts receivable of $8,957 and a decrease in accounts payable of $5,960.
Current wording
For the six months ended June 30, 2024, net cash used in operating activities was $21.4 million. Net loss before deducting depreciation, amortization and other non-cash items was $18.0 million and was further impacted by an unfavorable change in net working capital of $3.4 million which contributed to operating cash flows during this period. The unfavorable change in net working capital was largely driven by an increase in accounts receivable of $6.2 million, a decrease in accounts payable of $5.0 million and a decrease in other liabilities of $0.3 million. These were partially offset by a decrease in contract assets of $3.8 million, a decrease in prepaid expenses and other assets of $1.2 million, an increase in accrued liabilities of $1.7 million, and an increase in contract liabilities of $1.5 million.
Previous wording
For the three months ended March 31, 2023, net cash used in operating activities was $12,017. Net loss before deducting depreciation, amortization and other non-cash items was $8,447 and was further impacted by an unfavorable change in net working capital of $3,570 which contributed to operating cash flows during this period. The unfavorable change in net working capital was largely driven by a decrease in accounts payable of $4,914 and increases in contract assets of $1,115 and accounts receivable of $3,469. These were partially offset by a decrease in prepaid expenses and other assets of $1,488 and an increase in accrued liabilities of $4,066.
Current wording
For the six months ended June 30, 2023, net cash used in operating activities was $24.8 million. Net loss before deducting depreciation, amortization and other non-cash items was $14.7 million and was further impacted by an unfavorable change in net working capital of $10.1 million, which contributed to operating cash flows during this period. The unfavorable change in net working capital was largely driven by a decrease in accounts payable of $8.1 million and increases in contract assets of $1.0 million and accounts receivable of $7.7 million. These were partially offset by a decrease in prepaid expenses and other assets of $5.2 million and an increase in accrued liabilities of $0.7 million.
Previous wording
For the three months ended March 31, 2024, net cash provided by investing activities was $12,254, primarily consisting of cash acquired from the Pangiam acquisition of $13,935, partially offset by capitalized software development costs of $1,643. There were no investing activities during the three months ended March 31, 2023.
Current wording
For the six months ended June 30, 2024, net cash provided by investing activities was $10.5 million, primarily consisting of cash acquired from the Pangiam acquisition of $13.9 million, partially offset by capitalized software development costs of $3.2 million.
Previous wording
For the three months ended March 31, 2024, net cash provided by financing activities was $50,960, primarily consisting of the net proceeds from the issuance of the Private Placement and Registered Direct Offering shares of $53,809, partially offset by the payment of taxes related to net share settlement of equity awards $2,532 and the net repayment of $403 related to the 2023 D&O Financing Loan.
Current wording
For the six months ended June 30, 2024, net cash provided by financing activities was $50.6 million, primarily consisting of the net proceeds from the issuance of shares pursuant to the exercise of the PIPE warrants and RDO warrants of $53.8 million, partially offset by the payment of taxes related to net share settlement of equity awards $3.1 million and the net repayment of $0.8 million related to the 2023 D&O Financing Loan.
Previous wording
For the three months ended March 31, 2023, net cash provided by financing activities was $21,212, primarily consisting of net proceeds from the issuance of the Private Placement shares of $25,000, partially offset by $3,025 of fees related to the issuance of the Private Placement shares and payments on short-term borrowings of $763 related to the 2023 D&O Financing Loan.
Current wording
For the six months ended June 30, 2023, net cash provided by financing activities was $42.1 million, primarily consisting of net proceeds from the issuance of the Private Placement and Registered Direct Offering shares of $50.0 million, offset by the payment of transaction costs associated with the Private Placement and Registered Direct Offering of $5.2 million, the payment of taxes related to net share settlement of equity awards of $1.1 million, and partial repayment of $1.5 million related to the 2023 D&O Financing Loan.
Rearranged current paragraphs (7)
Current report — wording carried from elsewhere
Restructuring charges consist of employee separation costs related to strategic cost saving initiatives to better align our organization and cost structure and improve the affordability of our products and services.
Current report — wording carried from elsewhere
Interest expense consists primarily of interest expense, commitment fees and debt issuance cost amortization under our Convertible Notes and Bank of America Senior Revolver. See the Liquidity and Capital Resources section below for more information.
Current report — wording carried from elsewhere
Restructuring charges consist of employee separation costs related to strategic cost saving initiatives to better align our organization and cost structure and improve the affordability of our products and services.
Current report — wording carried from elsewhere
The change in other income during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 is primarily driven by interest income earned on money market accounts.
Current report — wording carried from elsewhere
The effective tax rate for the six months ended June 30, 2024 and the six months ended June 30, 2023 are consistent. The effective tax rate for the six months ended June 30, 2024 differs from the U.S. federal income tax rate of 21.0% primarily due to state and local income taxes, permanent differences between book and taxable income, certain discrete items and the change in valuation allowance.
Current report — wording carried from elsewhere
As of June 30, 2024, the Company has determined that it is not more-likely-than-not that substantially all of its deferred tax assets will be realized in the future and continues to have a full valuation allowance established against its deferred tax assets.
Current report — wording carried from elsewhere
The Company was not in compliance with the Fixed Charge Coverage ratio requirement as of September 30, 2022, and as a result was unable to draw on the facility. On November 8, 2022, the Company entered into a Second Amendment to the Bank of America Credit Agreement (the “Second Amendment”), which modifies key terms of the Senior Revolver. As a result of the Second Amendment, funds available under the Senior Revolver are reduced to $25.0 million from $50.0 million, limited to a borrowing base of 90% of Eligible Prime Government Receivables and Eligible Subcontractor Government Receivables, plus
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Net Increase in Fair Value of Derivatives