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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2024
OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______

Commission file number 001-40031
BigBear.ai Holdings, Inc.
(Exact name of registrant as specified in its charter)
Delaware85-4164597
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
6811 Benjamin Franklin Drive, Suite 200, Columbia, MD
21046
(Address of Principal Executive Offices)(Zip Code)
(410) 312-0885
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, $0.0001 par valueBBAINew York Stock Exchange
Redeemable warrants, each full warrant exercisable for one share of common stock at an exercise price of $11.50 per shareBBAI.WSNew York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer
o
Accelerated filer
x
Non-accelerated filer
o
Smaller reporting company
o
Emerging growth company
x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x
There were 250,073,489 shares of our common stock, $0.0001 par value per share, outstanding as of August 2, 2024.



Table of Contents

BIGBEAR.AI HOLDINGS, INC.
Quarterly Report on Form 10-Q
June 30, 2024

TABLE OF CONTENTS

ItemPage
Item 1. Financial Statements (Unaudited)
2

Table of Contents

PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
BIGBEAR.AI HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited; in thousands, except share and per share data)
June 30,
2024
December 31,
2023
Assets
Current assets:
Cash and cash equivalents
$72,266 $32,557 
Accounts receivable, less allowance for credit losses of $127 as of June 30, 2024 and $230 as of December 31, 2023
33,944 21,949 
Contract assets
1,041 4,822 
Prepaid expenses and other current assets
4,519 4,449 
Total current assets
111,770 63,777 
Non-current assets:
Property and equipment, net
1,586 997 
Goodwill
118,621 48,683 
Intangible assets, net
118,197 82,040 
Right-of-use assets9,620 4,041 
Other non-current assets
1,089 372 
Total assets
$360,883 $199,910 
Liabilities and stockholders’ deficit
Current liabilities:
Accounts payable
$7,128 $11,038 
Short-term debt, including current portion of long-term debt
417 1,229 
Accrued liabilities
20,375 16,233 
Contract liabilities
3,496 879 
Current portion of long-term lease liability1,077 779 
Derivative liabilities17,074 37,862 
Other current liabilities
3,748 602 
Total current liabilities
53,315 68,622 
Non-current liabilities:
Long-term debt, net
195,250 194,273 
Long-term lease liability9,562 4,313 
Deferred tax liabilities
 37 
Total liabilities
258,127 267,245 
Commitments and contingencies (Note 13)
Stockholders’ equity (deficit):
Common stock, par value $0.0001; 500,000,000 shares authorized and 246,774,184 shares issued and outstanding at June 30, 2024 and 157,287,522 shares issued and outstanding at December 31, 2023
25 17 
Additional paid-in capital610,395 303,428 
Treasury stock, at cost 9,952,803 shares at June 30, 2024 and December 31, 2023
(57,350)(57,350)
Accumulated deficit
(450,314)(313,430)
Total stockholders’ equity (deficit)
102,756 (67,335)
Total liabilities and stockholders’ equity (deficit)
$360,883 $199,910 

The accompanying notes to the consolidated financial statements are an integral part of these statements.
3


BIGBEAR.AI HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited; in thousands, except share and per share data)


Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Revenues
$39,783 $38,459 $72,904 $80,613 
Cost of revenues
28,720 29,496 54,855 61,437 
Gross margin
11,063 8,963 18,049 19,176 
Operating expenses:
Selling, general and administrative
23,364 16,930 40,312 37,292 
Research and development
3,565 2,225 4,709 3,353 
Restructuring charges457 25 1,317 780 
Transaction expenses
347  1,450  
Goodwill impairment  85,000  
Operating loss(16,670)(10,217)(114,739)(22,249)
Interest expense
3,551 3,560 7,106 7,116 
Net (decrease) increase in fair value of derivatives
(7,882)3,121 16,110 13,688 
Other income
(617) (1,072) 
Loss before taxes(11,722)(16,898)(136,883)(43,053)
Income tax expense (benefit)15 (3)1 56 
Net loss$(11,737)$(16,895)$(136,884)$(43,109)
Basic net loss per share
$(0.05)$(0.12)$(0.63)$(0.30)
Diluted net loss per share
$(0.05)$(0.12)$(0.63)$(0.30)
Weighted-average shares outstanding:
Basic
246,303,139 145,469,043 216,754,082 142,027,938 
Diluted
246,303,139 145,469,043 216,754,082 142,027,938 




The accompanying notes to the consolidated financial statements are an integral part of these statements.
4


BIGBEAR.AI HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(unaudited; in thousands, except share data)

Three Months Ended June 30, 2024
Common stockAdditionalTreasuryAccumulatedTotal stockholders’
SharesAmountpaid in capitalstockdeficitequity
As of March 31, 2024
246,061,379 $25 $604,384 $(57,350)$(438,577)$108,482 
Net loss
— — — — (11,737)(11,737)
Equity-based compensation expense
— — 5,749 — — 5,749 
Exercise of options22,780 — 33 — — 33 
Issuance of shares for equity-based compensation awards, net215,700 — (378)— — (378)
Issuance of shares purchased under ESPP474,325 — 607 — — 607 
As of June 30, 2024
246,774,184 $25 $610,395 $(57,350)$(450,314)$102,756 
Three Months Ended June 30, 2023
Common stockAdditionalTreasuryAccumulatedTotal stockholders’
SharesAmountpaid in capitalstockdeficitdeficit
As of March 31, 2023141,823,207 $16 $282,573 $(57,350)$(279,278)$(54,039)
Net loss— — — — (16,895)(16,895)
Equity-based compensation expense— — 3,994 — — 3,994 
Issuance of Registered Direct Offering shares11,848,341 1 6,764 — — 6,765 
Issuance of shares for equity-based compensation awards, net1,072,662 — (1,398)— — (1,398)
Issuance of shares for exercised convertible notes94 — — — — — 
Issuance of shares purchased under ESPP708,470 — — — — — 
As of June 30, 2023155,452,774 $17 $291,933 $(57,350)$(296,173)$(61,573)

The accompanying notes to the consolidated financial statements are an integral part of these statements.
5



BIGBEAR.AI HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(unaudited; in thousands, except share data)


Six Months Ended June 30, 2024
Common stockAdditionalTreasuryAccumulatedTotal stockholders’
SharesAmountpaid in capitalstockdeficit(deficit) equity
As of December 31, 2023157,287,522 $17 $303,428 $(57,350)$(313,430)$(67,335)
Net loss— — — — (136,884)(136,884)
Equity-based compensation expense— — 10,906 — — 10,906 
Exercise of options
87,324 — 119 — — 119 
Issuance of common shares as consideration for the acquisition of Pangiam61,838,072 6 207,770 — — 207,776 
Proceeds from exercise of 2023 warrants22,775,144 2 90,705 — — 90,707 
Issuance of shares for equity-based compensation awards, net4,311,703 — (3,140)— — (3,140)
Proceeds from exercise of 2023 warrants
22,775,144 2 90,705 — — 90,707 
Issuance of shares for exercised convertible notes94 — — — — — 
Issuance of shares purchased under ESPP474,325 — 607 — — 607 
As of June 30, 2024246,774,184 $25 $610,395 $(57,350)$(450,314)$102,756 
Six Months Ended June 30, 2023
Common stockAdditionalTreasuryAccumulatedTotal stockholders’
SharesAmountpaid in capitalstockdeficitdeficit
As of December 31, 2022
127,022,363 $14 $272,528 $(57,350)$(253,064)$(37,872)
Net loss— — — — (43,109)(43,109)
Equity-based compensation expense— — 7,799 — — 7,799 
Issuance of Private Placement shares13,888,889 2 7,079 — — 7,081 
Issuance of Registered Direct Offering shares11,848,341 1 6,764 — — 6,765 
Issuance of shares for equity-based compensation awards, net1,984,523 — (2,237)— — (2,237)
Issuance of shares for exercised convertible notes188 — — — — — 
Issuance of shares purchased under ESPP708,470 — — — — — 
As of June 30, 2023155,452,774 $17 $291,933 $(57,350)$(296,173)$(61,573)




The accompanying notes to the consolidated financial statements are an integral part of these statements.
6

BIGBEAR.AI HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited in thousands)

Six Months Ended June 30,
20242023
Cash flows from operating activities:
Net loss$(136,884)$(43,109)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense
5,346 3,965 
Amortization of debt issuance costs
1,012 1,006 
Equity-based compensation expense
10,906 7,799 
Goodwill impairment85,000  
Non-cash lease expense363 297 
Provision for doubtful accounts
176 1,557 
Deferred income tax (benefit) expense
(37)53 
Net increase in fair value of derivatives
16,110 13,688 
Loss on sale of property and equipment  8 
Changes in assets and liabilities:
Increase in accounts receivable
(6,232)(7,735)
Decrease in contract assets
3,781 966 
Decrease in prepaid expenses and other assets
1,243 5,244 
Decrease in accounts payable
(5,047)(8,124)
Increase in accrued liabilities
1,652 660 
Increase (decrease) in contract liabilities
1,469 (22)
Decrease in other liabilities
(275)(1,066)
Net cash used in operating activities
(21,417)(24,813)
Cash flows from investing activities:
Acquisition of business, net of cash acquired
13,935  
Purchases of property and equipment
(167)(2)
Capitalized software development costs
(3,225) 
Net cash provided by (used in) investing activities
10,543 (2)
Cash flows from financing activities:
Proceeds from issuance of shares for exercised RDO and PIPE warrants
53,809  
Proceeds from issuance of Private Placement and Registered Direct Offering shares
 50,000 
Payment of Private Placement and Registered Direct Offering transaction costs
 (5,225)
Repayment of short-term borrowings
(812)(1,537)
Issuance of common stock upon ESPP purchase
607  
Proceeds from exercise of options
119  
Payments of tax withholding from the issuance of common stock
(3,140)(1,132)
Net cash provided by financing activities
50,583 42,106 
Net increase in cash and cash equivalents
39,709 17,291 
Cash and cash equivalents at the beginning of period
32,557 12,632 
Cash and cash equivalents at the end of the period
$72,266 $29,923 
Supplemental schedule of non-cash investing and financing activities:
Issuance of common stock as consideration for Pangiam acquisition
$207,770 $ 


The accompanying notes to the consolidated financial statements are an integral part of these statements.
7

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BIGBEAR.AI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, in thousands of U.S. dollars unless stated otherwise)

Note 1Description of the Business

BigBear.ai Holdings, Inc.’s (“BigBear.ai”, “BigBear.ai Holdings”, “BigBear” or the “Company”) mission is to help deliver clarity for the world’s most complex decisions. BigBear.ai is a leading provider of Edge AI-powered decision intelligence solutions for national security, supply chain management and digital identity. Customers and partners rely on BigBear.ai’s predictive analytics capabilities in highly complex, distributed, mission-based operating environments. We are a technology-led solutions organization, providing both software and services to our customers. Unless otherwise indicated, references to “we”, “us” and “our” refer collectively to BigBear.ai Holdings, Inc. and its consolidated subsidiaries.

Note 2Summary of Significant Accounting Policies

Basis of Presentation

We prepared these accompanying unaudited consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of SEC Regulation S-X. Accordingly, they do not include all information and notes required by GAAP for complete financial statements. Amounts presented within the consolidated financial statements and accompanying notes are presented in thousands of U.S. dollars unless stated otherwise, except for percentages, units, shares, per unit and per share amounts.

In the opinion of management, these consolidated financial statements reflect all adjustments that are of a normal recurring nature necessary for a fair presentation of our results of operations, financial condition and cash flows for the interim periods presented. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We base these estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Our actual results may differ materially from these estimates. Significant estimates inherent in the preparation of our consolidated financial statements include, but are not limited to, accounting for revenue and cost recognition; evaluation of goodwill; intangible assets; and other assets for impairment; income taxes; equity-based compensation; fair value measurements; and contingencies. We eliminate intercompany balances and transactions in consolidation.

The results of operations for the interim periods presented are not necessarily indicative of results to be expected for the full year or future periods. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023.

Emerging Growth Company

Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

This may make comparison of the Company’s financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

Recent Accounting Pronouncements

Recent Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-09, Improvements to Income Tax
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BIGBEAR.AI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, in thousands of U.S. dollars unless stated otherwise)
Disclosures (“ASU 2023-09”). Under ASU 2023-09, public benefit entities must disclose specific categories and provide additional information in the tax rate reconciliation if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate. The amendments from ASU 2023-09 are effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The Company does not expect this guidance to have a material impact to its consolidated financial statements or related disclosures.

Recent Accounting Pronouncements Adopted

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments–Credit Losses: Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 broadens the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually. The amendments in ASU 2016-13 require an entity to record an allowance for credit losses for certain financial instruments and financial assets, including accounts receivable, based on expected losses rather than incurred losses. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount. An entity must use judgment in determining the relevant information and estimation methods that are appropriate in its circumstances. The new guidance is effective for the years beginning after December 15, 2022, including interim periods. The Company prospectively adopted ASU 2016-13 as of January 1, 2023. The adoption of ASU 2016-13 did not have a material impact to the Company’s consolidated financial statements or related disclosures.

Note 3Restructuring Charges

During the three months ended March 31, 2024, the Company refined its organizational structure resulting in employee separation costs of $1.3 million, net of tax benefits. The Company had completed this organizational restructuring as of March 31, 2024. There were no unpaid employee separation costs related to this organizational restructuring as of June 30, 2024.

During the three months ended March 31, 2023, the Company refined its organizational structure resulting in employee separation costs of $0.8 million, net of tax benefits. The Company had completed this organizational restructuring as of March 31, 2023. There were no unpaid employee separation costs related to this organizational restructuring as of December 31, 2023.

Note 4Business Combinations

Pangiam Acquisition

On February 29, 2024, pursuant to the Agreement and Plan of Merger (the “Merger Agreement”), dated November 4, 2023, by and among BigBear.ai, Pangiam Merger Sub, Inc., a Delaware corporation and a direct wholly-owned subsidiary of the Company (“Merger Sub”), Pangiam Purchaser, LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of the Company (“Pangiam Purchaser”), Pangiam Ultimate Holdings, LLC, a Delaware limited liability company (the “Seller”), and Pangiam Intermediate Holdings, LLC, a Delaware limited liability company (“Pangiam Intermediate”), (i) Merger Sub merged with and into Pangiam Intermediate, with Merger Sub ceasing to exist and Pangiam Intermediate surviving as a wholly-owned subsidiary of the Company (the “First Merger”), and (ii) immediately following the First Merger, Pangiam Intermediate merged with and into Pangiam Purchaser, with Pangiam Intermediate ceasing to exist and Pangiam Purchaser continuing as a wholly-owned subsidiary of the Company (the “Second Merger”, together with the First Merger, the “Mergers”).

As consideration for the Mergers and the related transactions contemplated by the Merger Agreement, BigBear.ai issued a total of 61,838,072 shares of the Company’s common stock to Seller based on the 20-day volume-weighted average price for common stock ending on the trading day immediately prior to the date of the Merger Agreement of $1.3439, representing an enterprise value of $70 million (which was subject to customary adjustments for indebtedness, cash, working capital and transaction expenses) (the “Purchase Price”), less $3.5 million that was held back from the Purchase Price at the time of the closing of the Mergers to cover any post-closing downward adjustments to the Purchase Price (the “Holdback Amount”). On July 2, 2024 (the “Finalization Date”), BigBear.ai issued 2,144,073 shares of common stock at $1.3905 per share (as determined according to the volume weighted average price over the 20 trading days ending immediately prior to the Finalization Date) as settlement of the final determination of the post-close adjusted Purchase Price.
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BIGBEAR.AI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, in thousands of U.S. dollars unless stated otherwise)
The following table summarizes the preliminary fair value of the consideration transferred and the estimated fair values of the major classes of assets acquired and liabilities assumed as of the acquisition date.
February 29, 2024, as reported at March 31, 2024Measurement period adjustmentsFebruary 29, 2024, as reported at June 30, 2024
Holdback amount
$3,500 $(513)$2,987 
Equity issued207,776 (6)207,770 
Purchase consideration$211,276 $(519)$210,757 
Assets:
Cash$13,935 $ $13,935 
Accounts receivable5,848 91 5,939 
Prepaid expenses and other current assets143 150 293 
Property and equipment635  635 
Right-of-use assets5,754 188 5,942 
Intangible assets39,100 (1,035)38,065 
Other non-current assets1,772  1,772 
Total assets acquired$67,187 $(606)$66,581 
Liabilities:
Accounts payable1,137  1,137 
Accrued expenses2,454 36 2,490 
Other current liabilities69 (24)45 
Deferred revenue1,148  1,148 
Current portion of long-term lease liability
1,080 (874)206 
Long-term lease liability
6,109 (373)5,736 
Total liabilities acquired$11,997 $(1,235)$10,762 
Fair value of net identifiable assets acquired55,190 629 55,819 
Goodwill$156,086 $(1,148)$154,938 

The Holdback Amount is calculated for any potential differences between the estimated and final amount of cash balance, working capital and Seller transaction costs and is presented as other current liabilities on BigBear.ai’s consolidated balance sheets. The Holdback Amount will be settled in Company shares and the number of shares will be calculated based on the volume weighted-average price for the BigBear.ai Holdings, Inc. shares over the 20 trading days ending on the Mergers closing date.

The following table summarizes the intangible assets acquired by class:
February 29, 2024
Technology$14,835 
Trade names
1,560 
Customer relationships21,670 
Total intangible assets$38,065 

The acquired technology, trade names, and customer relationship intangible assets have a weighted-average estimated useful lives of 7 years, 5 years, and 20 years, respectively.

The fair value of the acquired technology and trade name was determined using the relief from royalty (“RFR”) method. The fair value of the acquired customer relationships was determined using the excess earnings method.

The acquisition was accounted for as a business combination, whereby the excess of the purchase consideration over the fair value of identifiable net assets was allocated to goodwill. The goodwill reflects the potential synergies and expansion of the Company’s offerings across product lines and markets complementary to its existing products and markets. For tax purposes, the goodwill related to the acquisition is deductible.

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BIGBEAR.AI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, in thousands of U.S. dollars unless stated otherwise)
The results of operations of Pangiam for the period from February 29, 2024, as reported at June 30, 2024 to June 30, 2024 have been included in the results of operations for the six months ended June 30, 2024. The post-acquisition net revenues and net loss included in the results of operations for the six months ended June 30, 2024 were $14.0 million and $87.9 million, respectively.

Pro Forma Financial Data (Unaudited)

The following table presents the pro forma consolidated results of operations of BigBear.ai for the six months ended June 30, 2024 and the year ended December 31, 2023 as though the acquisition of Pangiam had been completed as of January 1, 2023.

Six Months Ended June 30, 2024
Year ended December 31, 2023
Net revenue
$79,215 $195,813 
Net loss(141,040)(84,789)

The amounts included in the pro forma information are based on the historical results and do not necessarily represent what would have occurred if the business combination had taken place as of January 1, 2023, nor do they represent the results that may occur in the future. Accordingly, the pro forma financial information should not be relied upon as being indicative of the results that would have been realized had the acquisition occurred as of the date indicated or that may be achieved in the future.

The Company incurred $1.5 million of transaction expenses attributable to the acquisition of Pangiam during the six months ended June 30, 2024, which have been recorded in the pro forma results for the twelve months ended December 31, 2023. The Company incurred $85.0 million of goodwill impairment as outlined in Note 6—Goodwill during the six months ended June 30, 2024, which has been recorded in the pro forma results for the six months ended June 30, 2024.

Note 5Fair Value of Financial Instruments

Cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable, short-term debt, including the current portion of long-term debt, accrued liabilities and other current liabilities are reflected on the consolidated balance sheets at amounts that approximate fair value because of the short-term nature of these financial assets and liabilities.

Warrants that were issued at BigBear.ai’s initial public offering (“IPO warrants”), warrants issued in BigBear.ai’s 2023 and 2024 private placement warrants (“PIPE warrants”), and warrants issued in BigBear.ai’s 2023 and 2024 registered direct offering warrants (“RDO warrants”) are valued using a modified Black-Scholes option pricing model (“OPM”), which is considered to be a Level 3 fair value measurement. See Note 15—Warrants for information on the Level 3 inputs used to value the IPO warrants, PIPE warrants and RDO warrants.

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BIGBEAR.AI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, in thousands of U.S. dollars unless stated otherwise)
The table below presents the financial assets and liabilities measured at fair value :
June 30, 2024
Balance Sheet Caption
Level 1
Level 2Level 3Total
Recurring fair value measurements:
2023 PIPE warrantsDerivative liabilities$ $ $ $ 
2023 RDO warrantsDerivative liabilities    
IPO warrantsDerivative liabilities  28 28 
2024 PIPE warrantsDerivative liabilities  10,260 10,260 
2024 RDO warrantsDerivative liabilities  6,786 6,786 
Total recurring fair value measurements:17,074 17,074 
Nonrecurring fair value measurement:
Goodwill(1)
Goodwill  118,621 118,621 
December 31, 2023
Balance Sheet CaptionLevel 1Level 2Level 3Total
2023 PIPE warrantsDerivative liabilities$ $ $22,778 $22,778 
2023 RDO warrantsDerivative liabilities  15,018 15,018 
IPO warrantsDerivative liabilities  66 66 
2024 PIPE warrantsDerivative liabilities    
2024 RDO warrantsDerivative liabilities    
Nonrecurring fair value measurement:
Goodwill
Goodwill  48,683 48,683 
(1) As of March 31, 2024, in accordance with Subtopic 350-20, goodwill with a carrying amount of $204.8 million was written down to its implied fair value of $119.8 million, resulting in an impairment charge of $85.0 million, which was included in earnings during the first quarter. Differences between the implied fair value of $119.8 million and the balance as of June 30, 2024 relate to subsequent measurement period adjustments.

The changes in the fair value of the Level 3 liabilities are as follows:

2023 PIPE warrants2023 RDO warrantsIPO warrants2024 PIPE warrants2024 RDO warrants
December 31, 2023$22,778 $15,018 $66 $ $ 
Additions   27,990 15,196 
Changes in fair value37,361 15,551 (35)(17,730)(8,410)
Settlements(60,139)(30,569)(3)  
June 30, 2024$ $ $28 $10,260 $6,786 

Note 6Goodwill

The Company assessed if the reorganization was potentially masking a goodwill impairment by performing a quantitative goodwill impairment test of the Company’s reporting units immediately before and after the reorganization. The Company utilized a combination of the discounted cash flow (“DCF”) method of the Income Approach and the Market Approach. Under the Income Approach, the future cash flows of the Company’s reporting units were projected based on estimates of future revenues, gross margins, operating income, excess net working capital, capital expenditures and other factors. The Company utilized estimated revenue growth rates and cash flow projections. The discount rates utilized in the DCF method were based on a weighted-average cost of capital (“WACC”) determined from relevant market comparisons and adjusted for specific reporting unit risks and capital structure. A terminal value estimated growth rate was applied to the final year of the projected period and reflected the Company’s estimate of perpetual growth. The Company then calculated the present value of the respective cash flows for each reporting unit to arrive at an estimate of fair value under the Income Approach. The Market Approach is comprised of the Guideline Public Company and the Guideline Transactions Methods. The Guideline Public Company Method focuses on comparing the Company to selected reasonably similar (or guideline) publicly traded companies. Under this method, valuation multiples were: (i) derived from the operating data of selected guideline companies; (ii) evaluated and adjusted based on the strengths and weaknesses of the Company relative to the selected guideline companies; and (iii) applied to the operating data of
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BIGBEAR.AI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, in thousands of U.S. dollars unless stated otherwise)
the Company to arrive at an indication of value. In the Guideline Transactions Method, consideration was given to prices paid in recent transactions that had occurred in the Company’s industry or in related industries. The Company then reconciled the estimated fair value of its reporting units to its total public market capitalization as of the valuation date. The fair value of the Company’s reporting units immediately before and after the reorganization exceeded its carrying values.

The table below presents the changes in the carrying amount of goodwill:
As of December 31, 2023$48,683 
Goodwill arising from the Pangiam acquisition154,938 
Goodwill impairment(85,000)
As of June 30, 2024$118,621 

Accumulated impairment losses to goodwill were $138.5 million as of June 30, 2024.

During the first quarter of fiscal 2024, we performed a quantitative impairment analysis as a result of a decrease in the Company’s share price during the quarter compared to the share price of the equity issued as consideration for the purchase of Pangiam as described in Note 4. As a result of this testing, we recorded an $85.0 million non-cash goodwill impairment charge during the three months ended March 31, 2024. Our goodwill impairment test reflected an allocation of 50% and 50% between the income and market-based approaches, respectively. Significant inputs into the valuation models included the discount rate, EBITDA Growth and estimated future cash flows. We used a discount rate of 30.7%, guideline peer group and their historical and forward-looking revenues in the goodwill impairment test. Subsequent to the impairment, there was no excess of reporting unit fair value over carrying value.

Note 7Intangible Assets, net

The intangible asset balances and accumulated amortization are as follows:
June 30, 2024
Gross
carrying
amount
Accumulated
amortization
Net
carrying
amount
Weighted
average
useful
life in years
Customer relationships$96,270 $(13,660)$82,610 20
Technology41,035 (13,733)27,302 7
Software for sale7,053 (224)6,829 3
Trade name1,560 (104)1,456 5
Total$145,918 $(27,721)$118,197 
December 31, 2023
Gross
carrying
amount
Accumulated
amortization
Net
carrying
amount
Weighted
average
useful
life in years
Customer relationships$74,600 $(11,432)$63,168 20
Technology26,200 (11,156)15,044 7
Software for sale3,828  3,828 3
Trade name   5
Total$104,628 $(22,588)$82,040 

Amortization expense of $0.2 million and zero was recognized for the capitalized software development costs during the three and the six months ended June 30, 2024 and June 30, 2023, respectively.

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BIGBEAR.AI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, in thousands of U.S. dollars unless stated otherwise)
The table below presents the amortization expense related to intangible assets for the following periods:
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Amortization expense related to intangible assets$2,794 $1,868 $5,133 $3,737 

The table below presents the estimated amortization expense on intangible assets for the next five years and thereafter as of June 30, 2024:
Remainder of 2024$6,396 
202513,484 
202613,484 
202712,022 
20287,745 
Thereafter65,066 
Total estimated amortization expense$118,197 

Note 8Prepaid expenses and other current assets

The table below presents details on prepaid expenses and other current assets:
June 30,
2024
December 31,
2023
Prepaid insurance$661 $1,419 
Prepaid expenses2,056 1,246 
Prepaid taxes1,754 1,784 
Pre-contract costs(1)
48  
Total prepaid expenses and other current assets$4,519 $4,449 
(1) Costs incurred to fulfill a contract in advance of the contract being awarded are included in prepaid expenses and other current assets if we determine that those costs relate directly to a contract or to an anticipated contract that we can specifically identify and contract award is probable, the costs generate or enhance resources that will be used in satisfying performance obligations, and the costs are recoverable (referred to as pre-contract costs).

Note 9Accrued Liabilities
The table below presents details on accrued liabilities:
June 30
2024
December 31
2023
Payroll accruals
$14,251 $10,118 
Accrued interest
589 560 
Legal accruals2,770 1,253 
Other accrued expenses2,765 4,302 
Total accrued liabilities
$20,375 $16,233 

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BIGBEAR.AI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, in thousands of U.S. dollars unless stated otherwise)
Note 10Debt

The table below presents the Company’s debt balances:
June 30
2024
December 31
2023
Convertible Notes$200,000 $200,000 
Bank of America Senior Revolver  
D&O Financing Loan417 1,229 
Total debt200,417 201,229 
Less: unamortized issuance costs4,750 5,727 
Total debt, net195,667 195,502 
Less: current portion417 1,229 
Long-term debt, net$195,250 $194,273 

Convertible Notes

On December 7, 2021, the Company issued $200.0 million of unsecured convertible notes (the “Convertible Notes”) to certain investors. The Convertible Notes bear interest at a rate of 6.0% per annum, payable semi-annually, and not including any interest payments that are settled with the issuance of shares, were initially convertible into 17,391,304 shares of the Company’s common stock at an initial conversion price of $11.50 (the “Conversion Price”). The Conversion Price is subject to adjustments. On May 29, 2022, pursuant to the Convertible Notes indenture, the conversion rate applicable to the Convertible Notes was adjusted to 94.2230 (previously 86.9565) shares of common stock per $1,000 principal amount of Convertible Notes because the average of the daily volume-weighted average price of the common stock during the preceding 30 trading days was less than $10.00 (the “Conversion Rate Reset”). After giving effect to the Conversion Rate Reset, the Conversion Price is $10.61 and the Convertible Notes are convertible into 18,844,600 shares, not including any interest payments that are settled with the issuance of shares. The Convertible Note financing matures on December 15, 2026.

The Company may, at its election, force conversion of the Convertible Notes after December 15, 2022 and prior to October 7, 2026 if the trading price of the Company’s common stock exceeds 130% of the conversion price for 20 out of the preceding 30 trading days and the 30-day average daily trading volume ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to $3.0 million for the first two years after the initial issuance of the Convertible Notes and $2.0 million thereafter. Upon such conversion, the Company will be obligated to pay all regularly scheduled interest payments, if any, due on the converted Convertible Notes on each interest payment date occurring after the conversion date for such conversion to, but excluding, the maturity date (such interest payments, an “Interest Make-Whole Payments”). In the event that a holder of the Convertible Notes elects to convert the Convertible Notes (a) prior to December 15, 2024, the Company will be obligated to pay an amount equal to twelve months of interest or (b) on or after December 15, 2024 but prior to December 15, 2025, any accrued and unpaid interest plus any remaining amounts that would be owed up to, but excluding, December 15, 2025. The Interest Make-Whole Payments will be payable in cash or shares of the common stock at the Company’s election, as set forth in the Indenture.

Following certain corporate events that occur prior to the maturity date or if the Company exercises its mandatory conversion right in connection with such corporate events, the conversion rate will be increased in certain circumstances for a holder who elects, or has been forced, to convert its Convertible Notes in connection with such corporate events.

If a Fundamental Change (as defined in the Convertible Notes indenture) occurs prior to the maturity date, holders of the Convertible Notes will have the right to require the Company to repurchase all or any portion of their Convertible Notes in principal amounts of one thousand dollars or an integral multiple thereof, at a repurchase price equal to the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date.

The Convertible Notes require the Company to meet certain financial and other covenants. As of June 30, 2024, the Company was in compliance with all covenants related to the Convertible Notes.

On May 29, 2022, pursuant to the conversion rate adjustment provisions in the Convertible Notes indenture, the Conversion Price was adjusted to $10.61 (or 94.2230 shares of common stock per one thousand dollars of principal amount of Convertible Notes).
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BIGBEAR.AI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, in thousands of U.S. dollars unless stated otherwise)
Subsequent to the adjustment, the Convertible Notes are convertible into 18,844,600 shares, not including any interest payments that are settled with the issuance of shares.

During the six months ended June 30, 2024, Convertible Notes with a principal of $1,000 were exercised for 94 shares of the Company’s common stock. 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. As of June 30, 2024, the fair value of the Convertible Notes is $145.5 million, which is considered to be a Level 3 fair value measurement.

Bank of America Senior Revolver

The Company is party to a senior credit agreement with Bank of America, N.A. (the “Bank of America Credit Agreement”), entered into on December 7, 2021 (the “Closing Date”), subsequently amended on November 8, 2022, providing the Company with a $25.0 million senior secured revolving credit facility (the “Senior Revolver”). Proceeds from the Senior Revolver will be used to fund working capital needs, capital expenditures and other general corporate purposes. The Senior Revolver matures on December 7, 2025 (the “Maturity Date”).

The Senior Revolver is secured by a pledge of 100% of the equity of certain of the Company’s wholly owned subsidiaries and a security interest in substantially all of the Company’s tangible and intangible assets. The Senior Revolver includes borrowing capacity available for letters of credit and for borrowings on same-day notice, referred to as the “swing loans.” Any issuance of letters of credit or making of a swing loan will reduce the amount available under the revolving credit facility. The Company may increase the commitments under the Senior Revolver in an aggregate amount of up to the greater of $25.0 million or 100% of consolidated adjusted EBITDA plus any additional amounts so long as certain conditions, including compliance with the applicable financial covenants for such period, in each case on a pro forma basis, are satisfied.

As of the Closing Date, borrowings under the Senior Revolver bear interest, at the Company’s option, at:
(i)A Base Rate plus a Base Rate Margin of 2.00%. Base Rate is a fluctuating rate per annum equal to the higher of (a) the Federal Funds Rate plus 0.50%, (b) the prime rate of Bank of America, N.A., and (c) Bloomberg Short-Term Yield Index (“BSBY”) Rate plus 1.00%; or
(ii)The BSBY Rate plus a BSBY Margin of 1.00%.

The Base Rate Margin and BSBY Margin became subject to adjustment based on the Company’s Secured Net Leverage Ratio after March 31, 2022. The Company is also required to pay unused commitment fees and letter of credit fees under the Bank of America Credit Agreement. The Second Amendment (defined below) increased the Base Rate Margin, BSBY Margin and unused commitment fees by 0.25%.

The Bank of America Credit Agreement requires the Company to meet certain financial and other covenants. The Company was not in compliance with the Fixed Charge Coverage ratio requirement as of June 30, 2022, and as a result was unable to draw on the facility. The Company notified Bank of America N.A. of the covenant violation, and on August 9, 2022, entered into the First Amendment (the “First Amendment”) to the Bank of America Credit Agreement, which, among other things, waived the requirement that the Company demonstrate compliance with the minimum Fixed Charge Coverage ratio provided for in the Bank of America Credit Agreement for the quarter ended June 30, 2022.

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 one dollar 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).
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BIGBEAR.AI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, in thousands of U.S. dollars unless stated otherwise)
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 meet the Adjusted EBITDA threshold as defined in the Second Amendment.

The Bank of America Credit Agreement requires the Company to meet certain financial and other covenants. As of June 30, 2024, the Company was compliant with the covenant requirements.

As of June 30, 2024, the Company had not drawn on the Senior Revolver. Unamortized debt issuance costs of $0.1 million as of June 30, 2024, are recorded on the consolidated balance sheets and are presented in other non-current assets. The Bank of America Credit Agreement requires the Company to deliver monthly borrowing base certificates. The Company did not deliver such monthly borrowing base certificates for the months ending December 31, 2022, January 31, 2023, February 28, 2023, and March 31, 2023. Bank of America N.A. notified the Company of the reporting violation, and on April 21, 2023, Bank of America N.A. and the Company entered into the Third Amendment (the “Third Amendment”) to the Bank of America Credit Agreement, which, among other things, waived the requirement that the Company deliver the monthly borrowing base certificate for the months ending December 31, 2022, January 31, 2023, February 28, 2023, and March 31, 2023, and removed the reporting requirement to deliver a monthly borrowing base certificate going forward until the Company meets the Adjusted EBITDA requirements set forth above and is permitted to draw on the Senior Revolver.

D&O Financing Loan

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 has an interest rate of 6.99% per annum and a maturity date of September 8, 2024.

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 had 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.
Note 11Leases

The Company is obligated under operating leases for certain real estate and office equipment assets. The Company’s finance leases are not material. Certain leases contained predetermined fixed escalation of minimum rents at rates ranging from 2.5% to 5.4% per annum and remaining lease terms of up to ten years, some of which include renewal options that could extend certain leases to up to an additional five years.

The following table presents supplemental information related to leases:
June 30,
2024
June 30,
2023
Weighted average remaining lease term5.095.07
Weighted average discount rate13.43 %10.55 %

The table below summarizes total lease costs for the following periods:

Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Operating lease expense$585 $291 $972 $583 
Variable lease expense43 49 69 71 
Short-term lease expense10 31 14 94 
Rent expense$638 $371 $1,055 $748 
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Sublease income recognized (1)
$19 $52 $42 $91 
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BIGBEAR.AI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, in thousands of U.S. dollars unless stated otherwise)
(1) As of June 30, 2024 and June 30, 2023, the Company has subleased two and four of its real estate leases.

The following table presents supplemental cash flow and non-cash information related to leases:
Six Months Ended June 30,
20242023
Cash paid for amounts included in the measurement of lease liabilities - operating cash flows from leases$1,003 $691 
Right-of-use assets obtained in exchange for lease obligations - non-cash activity$5,942 $ 

As of June 30, 2024, the future annual minimum lease payments for operating leases are as follows:
Remainder of 2024$1,200 
20252,357 
20262,275 
20271,695 
20281,688 
Thereafter9,065 
Total future minimum lease payments$18,280 
Less: amounts related to imputed interest
7,641 
Present value of future minimum lease payments10,639 
Less: current portion of long-term lease liability
1,077 
Long-term lease liability$9,562 

Note 12Income Taxes
The table below presents the effective income tax rate for the following periods:
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Effective tax rate(0.1)% % %(0.1)%

The Company was taxed as a corporation for federal, state and local income tax purposes for the three and six month periods ended June 30, 2024 and June 30, 2023. The effective tax rate for the three and six month periods ended June 30, 2024 and June 30, 2023 differ from the U.S. federal income tax rate of 21.0% primarily due to foreign, state, and local income taxes, permanent differences between book and taxable income, certain discrete items, and the change in valuation allowance.
Note 13—Commitments and Contingencies

Contingencies in the Normal Course of Business

Under certain contracts with the U.S. government and certain governmental entities, contract costs, including indirect costs, are subject to audit by and adjustment through negotiation with governmental representatives. Revenue is recorded in amounts expected to be realized on final settlement of any such audits.

Legal Proceedings

The Company is subject to litigation, claims, investigations and audits arising from time to time in the ordinary course of business. Although legal proceedings are inherently unpredictable, the Company intends to defend itself vigorously with respect to any matters currently pending against it. The outcome of these matters, individually and in the aggregate, is not expected to have a material impact on the Company’s consolidated balance sheets, consolidated statements of operations, or cash flows. As of June 30, 2024, the Company has accrued $2.8 million related to various ongoing legal disputes. The $2.8 million balance as of June 30, 2024, reflects management’s best estimate as of that date and is net of any anticipated amounts recoverable through insurance.
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BIGBEAR.AI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, in thousands of U.S. dollars unless stated otherwise)

Note 14Stockholders’ Equity

Common Stock

The table below presents the details of the Company’s authorized common stock as of the following periods:
June 30,
2024
December 31,
2023
Common stock:
Authorized shares of common stock500,000,000500,000,000
Common stock par value per share$0.0001 $0.0001 
Common stock outstanding at the period end246,774,184 157,287,522 

Treasury Stock

These shares are measured at cost and presented as treasury stock on the consolidated balance sheets and consolidated statements of stockholders’ equity (deficit).

Dividend Rights

Subject to applicable law and the rights, if any, of the holders of any outstanding series of the Company’s preferred stock or any class or series of stock having a preference over or the right to participate with the Company’s common stock with respect to the payment of dividends, dividends may be declared and paid ratably on the Company’s common stock out of the assets of the Company that are legally available for this purpose at such times and in such amounts as the Company’s Board of Directors (the “Board”) in its discretion shall determine.

Voting Rights

Each outstanding share of the Company’s common stock is entitled to one vote on all matters submitted to a vote of stockholders. Holders of shares of common stock do not have cumulative voting rights.

Conversion or Redemption Rights

The Company’s common stock is neither convertible nor redeemable.

Liquidation Rights

Upon the Company’s liquidation, the holders of the Company’s common stock are entitled to receive pro rata the Company’s assets that are legally available for distribution, after payment of all debts and other liabilities and subject to the prior rights of any holders of the Company’s preferred stock then outstanding.

Preferred Stock

The table below presents the details of the Company’s authorized preferred stock as of the following periods:
June 30,
2024
December 31,
2023
Preferred stock:
Authorized shares of preferred stock1,000,0001,000,000
Preferred stock par value per share$0.0001 $0.0001 
Preferred stock outstanding at the period end

The Company’s Board may, without further action by the Company’s stockholders, from time to time, direct the issuance of shares of preferred stock in series and may, at the time of issuance, determine the designations, powers, preferences, privileges and relative participating, optional or special rights as well as the qualifications, limitations or restrictions thereof, including
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BIGBEAR.AI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, in thousands of U.S. dollars unless stated otherwise)
dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights of the Company’s common stock. Satisfaction of any dividend preferences of outstanding shares of the Company’s preferred stock would reduce the amount of funds available for the payment of dividends on shares of the Company’s common stock. Upon the affirmative vote of a majority of the total number of directors then in office, the Company’s Board may issue shares of the Company’s preferred stock with voting and conversion rights which could adversely affect the holders of shares of the Company’s common stock.

Note 15Warrants

2023 Registered Direct Offering Warrants

On June 13, 2023, the Company consummated the closing of a registered direct offering pursuant to an Underwriting Agreement with Cowen and Company, LLC, as representative of the underwriters, for the sale and purchase of an aggregate of 11,848,341 shares of common stock at par value and accompanying common warrants (“RDO warrants”). Each share of common stock is accompanied by a common warrant to purchase three-quarters of a share of common stock at an exercise price of $2.32 per share. The RDO warrants were initially exercisable for up to 8,886,255 shares of common stock and became exercisable six months after issuance and had a five-year term.

The table below presents the value of the RDO warrants under the Black-Scholes OPM using the following assumptions as of the following dates:
December 31,
2023
Value of each RDO warrant$1.69
Exercise price$2.32