BigBearai Holdings Inc

Previous 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.

Current wording

•Results of Operations: This section provides a discussion of our results of operations for the three and the nine months ended September 30, 2024 and September 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 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.

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 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(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

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 wording

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 process to conclude. A Continuing Resolution (CR) passed the House and Senate on September 25, 2024 and was signed by the President on September 26, 2024. The bill funds U.S. Government operations through December 20, 2024. After the November 2024 election, Congress will return to the task of funding the U.S. Government for the balance of the FY 2025. Significant differences that must be resolved include the different allocations as noted above and policy matters that arose during consideration of the CR and the underlying bills.

Previous 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.

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 on our federal government contracts, which may affect the Company’s projected revenue and results of operation.

Previous wording

Cost of revenues primarily includes salaries, stock-based compensation expense, and benefits for personnel involved in performing the services described above as well as allocated overhead and other direct costs.

Current wording

Cost of revenues primarily include salaries, stock-based compensation expense, and benefits for personnel involved in performing the services described above as well as allocated overhead and other direct costs.

Previous wording

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 wording

Revenues increased by $7.5 million during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 primarily as a result of increases due to the Pangiam Acquisition, offset by decreased volumes in certain Air

Previous wording

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 wording

Cost of revenues as a percentage of total revenues decreased to 74% for the three months ended September 30, 2024 as compared to 75% for the three months ended September 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 September 30, 2024 as compared to the three months ended September 30, 2023.

Previous wording

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 wording

SG&A expenses increased in total dollars for the three months ended September 30, 2024 as compared to September 30, 2023 due to an increase in headcount, non-recurring strategic initiatives of $1.4 million and non-recurring integration costs of $0.7 million

Previous wording

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 wording

Research and development expenses increased by $4.2 million during the three months ended September 30, 2024 as compared to the three months ended September 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.There were also certain software development projects that reached technological feasibility resulting in capitalization of R&D expenses incurred in the three months ending September 30, 2023 which did not recur during the three months ending September 30, 2024.

Previous wording

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 wording

The net decrease in fair value of derivatives of $1.3 million for the three months ended September 30, 2024 consists of fair value remeasurements of IPO warrants, PIPE warrants, and RDO warrants. The 2023 PIPE warrants and the 2023 RDO warrants were fully settled as of September 30, 2024.

Previous wording

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 wording

Revenues decreased by $0.2 million during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. The change in revenues were primarily driven by increases due to the Pangiam Acquisition, offset by decreased volume from the Air Force EPASS program which wound down in the second quarter of 2023.

Previous 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.

Current wording

Cost of revenues as a percentage of total revenues was 75% for the nine months ended September 30, 2024 as compared to 76% for the nine months ended September 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

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 wording

SG&A expenses as a percentage of total revenues for the nine months ended September 30, 2024 increased to 51% as compared to 46% for the nine months ended September 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 $2.5 million, non-recurring integration costs of $1.6 million, and non-recurring litigation costs of $1.1 million incurred during the the nine months ended September 30, 2024.

Previous wording

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 wording

Research and development expenses increased by $5.5 million during the nine months ended September 30, 2024 as compared to the nine months ended September 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.

Previous wording

Transaction expenses for the six months ended June 30, 2024 consist of diligence, legal and other related expenses associated with the Pangiam Acquisition.

Current wording

Transaction expenses for the nine months ended September 30, 2024 consist of diligence, legal and other related expenses associated with the Pangiam Acquisition.

Previous 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.

Current wording

During the nine months ended September 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 Pangiam Acquisition.

Previous 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.

Current wording

The net increase in fair value of derivatives of $14.8 million for the nine months ended September 30, 2024 includes fair value remeasurements of the IPO warrants, PIPE warrants, and RDO warrants. The 2023 PIPE warrants and the 2023 RDO warrants were fully settled as of September 30, 2024.

Previous 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.

Current wording

Interest expense during the nine months ended September 30, 2024 and the nine months ended September 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

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 wording

The change in other income during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 is primarily driven by interest income earned on money market accounts.

Previous wording

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 wording

The effective tax rate for the nine months ended September 30, 2024 and the nine months ended September 30, 2023 are consistent. The effective tax rate for the nine months ended September 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.

Previous wording

Refer to Note 12—Income Taxes of the Notes to consolidated financial statements included in this Quarterly Report on Form 10-Q for more information.

Current wording

Refer to Note 12—Income Taxes to consolidated financial statements included in this Quarterly Report on Form 10-Q for more information.

Previous wording

The Company uses Adjusted EBITDA to evaluate its operating performance, generate future operating plans, and make strategic decisions, including those relating to operating expenses and the allocation of internal resources. Adjusted EBITDA is a financial measure not calculated in accordance with GAAP. Adjusted EBITDA is defined as net income (loss) adjusted for interest expense (income), net, income tax (benefit) expense, depreciation and amortization, equity-based compensation and associated employer payroll taxes, net increase in fair value of derivatives, restructuring charges, non-recurring strategic initiatives, non-recurring litigation, transaction expenses, goodwill impairment, non-recurring integration costs, capital market advisory fees, commercial start-up costs, loss on extinguishment of debt, transaction bonuses, termination of legacy benefits and management fees. Non-GAAP financial performance measures are used to supplement the financial information presented on a GAAP basis. This non-GAAP financial measure should not be considered in isolation or as a substitute for the relevant GAAP measures and should be read in conjunction with information presented on a GAAP basis. Because not all companies use identical calculations, our presentation of non-GAAP measures may not be comparable to other similarly titled measures of other companies.

Current wording

The Company uses Adjusted EBITDA to evaluate its operating performance, generate future operating plans, and make strategic decisions, including those relating to operating expenses and the allocation of internal resources. Adjusted EBITDA is a financial measure not calculated in accordance with GAAP. Adjusted EBITDA is defined as net income (loss) adjusted for interest expense (income), income tax (benefit) expense, depreciation and amortization, equity-based compensation and associated employer payroll taxes, net increase in fair value of derivatives, restructuring charges, non-recurring strategic initiatives, non-recurring litigation, transaction expenses, goodwill impairment, non-recurring integration costs, capital market advisory fees, commercial start-up costs, loss on extinguishment of debt, transaction bonuses, termination of legacy benefits and management fees. Non-GAAP financial performance measures are used to supplement the financial information presented on a GAAP basis. This non-GAAP financial measure should not be considered in isolation or as a substitute for the relevant GAAP measures and should be read in conjunction with information presented on a GAAP basis. Because not all companies use identical calculations, our presentation of non-GAAP measures may not be comparable to other similarly titled measures of other companies.

Previous wording

Our primary sources of liquidity are cash flows provided by our operations and access to existing credit facilities, if available. Our primary short-term cash requirements are to fund payroll obligations, working capital, operating lease obligations, interest payments and short-term debt, including current maturities of long-term debt. Working capital requirements can vary significantly from period to period, particularly as a result of the timing of receipts and disbursements related to long-term contracts. As more fully disclosed below under “Bank of America Senior Revolver,” as of June 30, 2024, until such date as we are able to comply

Current wording

Our primary sources of liquidity are cash flows provided by our operations and access to existing credit facilities, if available. Our primary short-term cash requirements are to fund payroll obligations, working capital, operating lease obligations, interest payments and short-term debt, including current maturities of long-term debt. Working capital requirements can vary significantly from period to period, particularly as a result of the timing of receipts and disbursements related to long-term contracts. As more fully described below under “Bank of America Senior Revolver,” as of September 30, 2024, until such date as we are able to comply with the Adjusted EBITDA requirement under the Senior Revolver, we are unable to draw on the Senior Revolver. However, based on our projected cash flow and liquidity needs, we believe that our cash from operating activities generated from continuing operations during the year will be adequate for the next 12 months to meet our anticipated uses of cash flow.

Previous wording

On May 10, 2024, we entered into a Controlled Equity Offering sales agreement with Cantor Fitzgerald & Co., as sales agent (the “sales agent”), pursuant to which we may, from time to time, sell shares of our common stock, having an aggregate offering price of up to $150.0 million through the sales agent under an “at-the-market” equity offering program. Any offer and sale of shares of our common stock under the Sales Agreement will be made pursuant to our shelf registration statement on Form S-3 (No. 333-271230), which was declared effective by the SEC on April 21, 2023, and the related prospectus supplement dated May 10, 2024 and accompanying prospectus that form a part of the registration statement.

Current wording

On May 10, 2024, we entered into a Controlled Equity Offering sales agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co., as sales agent (the “sales agent”), pursuant to which we may, from time to time, sell shares of our common stock, having an aggregate offering price of up to $150.0 million through the sales agent under an “at-the-market” equity offering program. Any offer and sale of shares of our common stock under the Sales Agreement will be made pursuant to our shelf registration statement on Form S-3 (No. 333-271230), which was declared effective by the SEC on April 21, 2023, and the related prospectus supplement dated May 10, 2024 and accompanying prospectus that form a part of the registration statement.

Previous wording

As stated in Note 10—Debt of the Notes to consolidated financial statements included in this Quarterly Report on Form 10-Q, the Company was not in compliance with the covenants of the Senior Revolver as of June 30, 2024 and is currently unable to draw on the Senior Revolver.

Current wording

As described in Note 10—Debt to consolidated financial statements included in this Quarterly Report on Form 10-Q, the Company was in compliance with the covenants of the Senior Revolver as of September 30, 2024 but is currently unable to draw on the Senior Revolver based on the Adjusted EBITDA requirements pursuant to the credit agreement.

Previous wording

(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 wording

(1) Pursuant to the credit agreement, if the Company is compliance with the Secured Net Leverage Ratio covenant and the Adjusted EBITDA requirement as further described in Note 10—Debt, the Company is eligible to borrow up to $25 million, 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.

Previous 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.

Current wording

As of September 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 $4.3 million of unamortized debt issuance costs.

Previous 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.

Current 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.

Previous wording

Refer to Note 10—Debt of the Notes to consolidated financial statements included in this Quarterly Report on Form 10-Q for more information.

Current wording

Refer to Note 10—Debt to consolidated financial statements included in this Quarterly Report on Form 10-Q for more information.

Previous wording

On February 27, 2024, the Company entered into a warrant exercise agreement with an existing accredited investor to exercise in full the outstanding RDO warrants to purchase up to an aggregate of 8,886,255 shares of the Company’s common stock for total gross proceeds of approximately $20.6 million, prior to deducting estimated offering expenses.

Current wording

On February 27, 2024, the Company entered into a warrant exercise agreement with an existing accredited investor to exercise in full the outstanding RDO warrants to purchase up to an aggregate of 8,886,255 shares of the Company’s common stock for total gross proceeds of approximately $20.6 million, prior to deducting offering expenses.

Previous wording

On March 4, 2024, the Company entered into a warrant exercise agreement with an existing accredited 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 total gross proceeds of approximately $33.2 million, prior to deducting estimated offering expenses.

Current wording

On March 4, 2024, the Company entered into a warrant exercise agreement with an existing accredited 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 total gross proceeds of approximately $33.2 million, prior to deducting offering expenses.

Previous 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.

Current wording

For the nine months ended September 30, 2024, net cash used in operating activities was $23.3 million. Net loss before deducting depreciation, amortization and other non-cash items was $22.2 million and was further impacted by an unfavorable change in net working capital of $1.2 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 $5.4 million, a decrease in accounts payable of $8.2 million and a decrease in other liabilities of $0.2 million. These were partially offset by a decrease in contract assets of $3.1 million, a decrease in prepaid expenses and other assets of $1.5 million, an increase in accrued liabilities of $7.6 million, and an increase in contract liabilities of $0.5 million.

Previous 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.

Current wording

For the nine months ended September 30, 2023, net cash used in operating activities was $18.2 million. Net loss before deducting depreciation, amortization and other non-cash items was $18.9 million and was further impacted by an unfavorable change in net working capital of $0.7 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 $6.3 million and increases in other liabilities of $1.8 million and accounts receivable of $0.5 million. These were partially offset by a decrease in prepaid expenses and other assets of $6.2 million, a decrease in contract assets of $0.9 million, and an increase in accrued liabilities of $2.0 million.

Previous 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.

Current wording

For the nine months ended September 30, 2024, net cash provided by investing activities was $6.2 million, primarily consisting of cash acquired from the Pangiam Acquisition of $13.9 million, partially offset by capitalized software development costs of $7.4 million.

Previous wording

For the six months ended June 30, 2023, net cash used in investing activities consisted of the purchase of property and equipment.

Current wording

For the nine months ended September 30, 2023, net cash used in investing activities was $2.7 million, primarily due to capitalization of software development costs of $2.7 million and the purchase of property and equipment.

Previous 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.

Current wording

For the nine months ended September 30, 2024, net cash provided by financing activities was $50.2 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 $1.2 million related to the 2023 D&O Financing Loan.

Previous 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.

Current wording

For the nine months ended September 30, 2023, net cash provided by financing activities was $40.5 million, primarily consisting of the 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 $5.7 million, the payment of taxes related to net share settlement of equity awards $2.2 million, and partial repayment of $2.1 million related to the 2023 D&O Financing Loan.

Previous wording

Our critical accounting estimates are disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operation included in our Annual Report on Form 10-K, for the year ended December 31, 2023, as filed with the SEC on March 15, 2024.

Current wording

In addition to those outlined for goodwill below, our critical accounting estimates are disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operation included in our Annual Report on Form 10-K, for the year ended December 31, 2023, as filed with the SEC on March 15, 2024.