NEW YORK, March 30, 2025 (GLOBE NEWSWIRE) -- Pomerantz LLP is investigating claims on behalf of investors of BigBear.ai Holdings, Inc. ("BigBear" or the "Company") (NYSE: BBAI). Such investors are advised to contact Danielle Peyton at newaction@pomlaw.com or 646-581-9980, ext. 7980. The investigation concerns whether BigBear and certain of its officers and/or directors have engaged in securities fraud or other unlawful business practices. [Click here for information about joining the class action] On this n ...

Group 1 - BigBear.ai management had to restate financial figures, indicating potential issues for investors [1] - The stock price referenced was from the afternoon of March 21, 2025, with the video published on March 23, 2025 [1]

Financial Performance - Revenues for the year ended December 31, 2024, increased to $158,236 million, up from $155,164 million in 2023, representing a growth of 1.3%[548]. - Gross margin improved to $45,220 million in 2024, compared to $40,601 million in 2023, reflecting a significant increase of 11.5%[548]. - Research and development expenses rose to $10,863 million in 2024, a substantial increase from $5,035 million in 2023, indicating a growth of 116.5%[548]. - The net loss for 2024 was $295,547 million, compared to a net loss of $70,657 million in 2023, representing an increase in losses of 318.5%[548]. - Basic and diluted net loss per share for 2024 was $1.27, compared to $0.47 in 2023, indicating a deterioration in per-share performance[548]. - Total comprehensive loss for 2024 was $295,426 million, compared to $70,657 million in 2023, marking an increase of 318.3%[548]. - Net loss for the year ended December 31, 2024, was $295.5 million, compared to a net loss of $70.7 million in 2023[556]. - The accumulated deficit as of December 31, 2024, was $571.6 million, up from $276.1 million as of December 31, 2023[546]. Assets and Liabilities - As of December 31, 2024, the total assets of BigBear.ai Holdings, Inc. amounted to $343.8 million, a significant increase from $199.9 million as of December 31, 2023[546]. - Total current liabilities increased to $203.0 million as of December 31, 2024, compared to $69.1 million in the previous year[546]. - Long-term debt, net of unamortized discounts, was $135.4 million as of December 31, 2024, down from $156.2 million in the previous year[546]. - Total liabilities decreased to $229.9 million as of December 31, 2023, down from $267.2 million[566]. - The company reported cash and cash equivalents of $50.1 million as of December 31, 2024, up from $32.6 million in the previous year[546]. Employee and Organizational Structure - The company employs 630 individuals, with approximately 53% being software engineers, data scientists, and cyber subject-matter experts[38]. - The company had approximately 630 full-time employees as of December 31, 2024, with no employees affiliated with labor unions[47][48]. - The company incurred employee separation costs of $1.3 million during the three months ended March 31, 2024, compared to $0.8 million for the same period in 2023, indicating a 63% increase[636][637]. - The company completed its organizational restructuring by March 31, 2024, with no unpaid employee separation costs as of December 31, 2024[636]. Acquisitions and Investments - The company completed the acquisition of Pangiam Intermediate Holdings, LLC on February 29, 2024, enhancing its vision AI capabilities in global trade, travel, and digital identity industries[23]. - The company issued 63,982,145 common shares as consideration for the acquisition of Pangiam, contributing to the increase in total stockholders' equity[551]. - The acquisition of Pangiam resulted in post-acquisition net revenues of $38.7 million and a net loss of $82.6 million for the year ended December 31, 2024[649]. - BigBear.ai's acquisition of ProModel Corporation was completed for approximately $16.1 million, funded through cash and the issuance of 649,976 shares[653]. Financial Instruments and Derivatives - The estimated fair value of derivative liabilities related to warrants was $54.7 million as of December 31, 2024, with the 2024 RDO and PIPE Warrants fully exercised in Q1 2025[525]. - The estimated fair value of derivative liabilities related to the 2029 and 2026 Convertible Notes was $116.2 million as of December 31, 2024[526]. - The company recorded changes in fair value of Level 3 liabilities, with significant additions of $37.4 million in 2024[666]. Revenue Recognition and Accounting Policies - The Company recognizes revenue from fixed-price contracts based on the predetermined price, with profit varying according to actual costs incurred[580]. - For T&M contracts, revenue is recognized based on the right to invoice method, corresponding directly with the value of the Company's performance[581]. - Revenue is recognized over time for contracts with continuous transfer of control, using the percentage-of-completion method based on costs incurred[591]. - The Company allocates transaction prices to performance obligations based on estimated standalone selling prices, particularly for contracts with the U.S. government[589]. Goodwill and Intangible Assets - Goodwill impairment for 2024 was recorded at $85,000 million, while there was no impairment in 2023, indicating a significant adjustment in asset valuation[548]. - Goodwill related to the Pangiam acquisition was recorded at $156.1 million, reflecting potential synergies and market expansion opportunities[648]. - The weighted-average estimated useful lives of the acquired intangible assets from Pangiam are 7 years for technology, 5 years for trade names, and 20 years for customer relationships[646]. - Intangible assets net amount to $119.1 million as of December 31, 2024, with amortization expense of $11.3 million recognized in 2024[673][674]. Research and Development - Research and development expenses were $5,035 million in 2023, down from $8,393 million in 2022, reflecting a strategic reduction in R&D spending[568]. - Capitalized software development costs increased to $10.2 million for the year ended December 31, 2024, compared to $3.3 million for the year ended December 31, 2023, reflecting a 209% increase[626].

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Revenue and Gross Margin - Revenue increased by $7.5 million (22.1%) in Q3 2024 compared to Q3 2023, driven by the Pangiam Acquisition, partially offset by decreased volumes in certain Air Force programs[172] - Gross margin for Q3 2024 was $10.8 million, up from $8.4 million in Q3 2023[171] - Revenues decreased by $0.2 million (0.2%) for the nine months ended September 30, 2024, compared to the same period in 2023, driven by the Pangiam Acquisition offset by decreased volume from the Air Force EPASS program[185] Operating and Net Loss - Operating loss for Q3 2024 was $10.5 million, compared to $8.2 million in Q3 2023[171] - Net loss for Q3 2024 was $12.2 million, compared to a net income of $4.0 million in Q3 2023[171] - Adjusted EBITDA for the nine months ended September 30, 2024, was $(4.358) million, compared to $(6.870) million in the same period in 2023[199] Acquisition and Strategic Initiatives - The company completed the acquisition of Pangiam on February 29, 2024, enhancing its vision and edge AI portfolio[150] - Transaction expenses decreased by $1.4 million (100.0%) for the three months ended September 30, 2024, compared to the same period in 2023, due to the completion of the Pangiam Acquisition[178] - Research and development expenses increased by $5.5 million (183.9%) for the nine months ended September 30, 2024, compared to the same period in 2023, driven by increased headcount and the inclusion of Pangiam's results[188] Financial Performance and Expenses - Cost of revenues decreased to 74% of total revenues for the three months ended September 30, 2024, compared to 75% in the same period in 2023, driven by a higher mix of higher margin solutions[174] - SG&A expenses as a percentage of total revenues decreased to 42% for the three months ended September 30, 2024, compared to 46% in the same period in 2023, primarily due to higher revenue[175] - SG&A expenses as a percentage of total revenues increased to 51% for the nine months ended September 30, 2024, compared to 46% in the same period in 2023, driven by non-recurring strategic initiatives and integration costs[187] - Research and development expenses increased by $4.2 million (1194.6%) for the three months ended September 30, 2024, driven by increased headcount and timing of certain projects[176] Backlog and Contract Delays - Total backlog as of September 30, 2024, was $437.494 million, a significant increase from $167.810 million as of December 31, 2023[209] - Funded backlog as of September 30, 2024, was $77.422 million, compared to $30.112 million as of December 31, 2023[209] - The company anticipates potential delays in new contract awards due to the continuing resolution funding the U.S. government through December 20, 2024[156] - Geopolitical tensions in Ukraine, the Middle East, and the Pacific region have slowed the pace of contract awards, pushing revenue into subsequent periods[159] Liquidity and Financing - The company raised $20.6 million through the exercise of RDO warrants and $33.2 million through the exercise of PIPE warrants in early 2024[151][152] - The company entered into a Controlled Equity Offering sales agreement on May 10, 2024, allowing it to sell up to $150.0 million in common stock[213] - The company's primary sources of liquidity are cash flows from operations and access to credit facilities, with projected cash flow expected to meet needs for the next 12 months[210] - Available cash and cash equivalents increased to $65.584 million as of September 30, 2024, compared to $32.557 million as of December 31, 2023[217] - Net cash used in operating activities was $23.3 million for the nine months ended September 30, 2024, primarily due to a net loss of $22.2 million and unfavorable changes in net working capital[232] - Net cash provided by investing activities was $6.2 million for the nine months ended September 30, 2024, primarily from cash acquired in the Pangiam Acquisition[234] - Net cash provided by financing activities was $50.2 million for the nine months ended September 30, 2024, mainly from the exercise of PIPE and RDO warrants[235] - The Company entered into warrant exercise agreements, raising approximately $53.8 million from the exercise of PIPE and RDO warrants[229][230] Debt and Convertible Notes - Total debt remained at $200.0 million as of September 30, 2024, with unamortized issuance costs of $4.262 million[218][221] - The Company issued $200.0 million of unsecured convertible notes with a 6.0% annual interest rate, convertible into 18,844,600 shares of common stock[219][220] - The Company has a $25.0 million senior secured revolving credit facility with Bank of America, maturing on December 7, 2025[222][223] - The Company's long-term debt, net of unamortized issuance costs, was $195.738 million as of September 30, 2024[218] - The conversion rate for the Convertible Notes was adjusted to 94.2230 shares per $1,000 principal amount due to the average daily volume-weighted average price of the common stock being less than $10.00 during the preceding 30 trading days[245] - The adjusted conversion price is $10.61, and the Convertible Notes are convertible into 18,844,600 shares, excluding interest payments settled with shares[245] - The outstanding principal amount of the company's long-term debt as of September 30, 2024, was $200.0 million, excluding unamortized discounts and issuance costs of $4.3 million[245] Tax and Valuation - Income tax expense for the nine months ended September 30, 2024, was $22 million, a decrease of 56.9% compared to $51 million in the same period in 2023[196] - The effective tax rate for the nine months ended September 30, 2024, was consistent with the previous year, primarily influenced by state and local taxes, permanent differences, and discrete items[196] - The company maintains a full valuation allowance against its deferred tax assets as of September 30, 2024, due to uncertainty about their realization[197] - The Company performed a quantitative goodwill impairment test as of September 30, 2024, using a discount rate of 12.0%, and determined no impairment was necessary[241][242] - Goodwill impairment charge of $85.0 million was recognized for the nine months ended September 30, 2024, primarily due to a decrease in share price[192] Market Risk and Management - The company is exposed to market risk related to interest rates, primarily through fixed-rate long-term debt and revolving credit[245] - The company has policies and procedures in place to manage and mitigate market risks[247] National Defense Budget - The FY 2024 National Defense budget was set at $886 billion, with $842 billion allocated to the DoD base budget[154] - The FY 2025 National Defense budget request is $895 billion, with $850 billion proposed for the DoD base budget[155] Derivatives and Fair Value - Net decrease in fair value of derivatives was $1.3 million for the three months ended September 30, 2024, compared to a decrease of $15.7 million in the same period in 2023, primarily due to the settlement of warrants[180] - Net increase in fair value of derivatives was $14.8 million for the nine months ended September 30, 2024, compared to a decrease of $1.9 million in the same period in 2023, driven by fair value remeasurements of warrants[193] Free Cash Flow - Free cash flow for the nine months ended September 30, 2024, was $(31.013) million, compared to $(20.979) million in the same period in 2023[201] Senior Revolver Covenants - The company was in compliance with the Senior Revolver covenants as of September 30, 2024, but is currently unable to draw on it due to Adjusted EBITDA requirements[214]

Revenue and Financial Performance - Revenue increased 22.1% to $41.5 million in Q3 2024 compared to $34.0 million in Q3 2023[1][4] - Q3 2024 revenue increased to $41.505 million, up from $33.988 million in Q3 2023, representing a 22.1% growth[26] - Nine months ended September 30, 2024 revenue was $114.409 million, slightly down from $114.601 million in the same period of 2023[26] - Full-year 2024 revenue guidance affirmed between $165 million and $180 million[1][16] Gross Margin - Gross margin improved to 25.9% in Q3 2024 from 24.7% in Q3 2023[1][4] - Q3 2024 gross margin improved to 25.9%, up from 24.7% in Q3 2023[26] - Nine months ended September 30, 2024 gross margin improved to 25.2%, up from 24.1% in the same period of 2023[26] Net Loss and Income - Net loss of $12.2 million in Q3 2024 compared to net income of $4.0 million in Q3 2023[1][4] - Q3 2024 net loss was $12.176 million, compared to a net income of $3.999 million in Q3 2023[26] - Net loss for the nine months ended September 30, 2024, was $(149,060) thousand, compared to $(39,110) thousand for the same period in 2023[21] - Nine months ended September 30, 2024 net loss widened to $149.060 million, compared to $39.110 million in the same period of 2023[26] Adjusted EBITDA - Non-GAAP Adjusted EBITDA of $0.9 million in Q3 2024, up from $0.2 million in Q3 2023[1][6] - Q3 2024 Adjusted EBITDA improved to $948 thousand, up from $157 thousand in Q3 2023[26] - Nine months ended September 30, 2024 Adjusted EBITDA was $(4.358) million, an improvement from $(6.870) million in the same period of 2023[26] - Q3 2024 Adjusted EBITDA margin improved to 2.3%, up from 0.5% in Q3 2023[26] - Nine months ended September 30, 2024 Adjusted EBITDA margin improved to (3.8)%, up from (6.0)% in the same period of 2023[26] Contracts and Backlog - Ending backlog of $437 million as of September 30, 2024[6] - Awarded a 5-year $165 million contract for U.S. Army's GFIM-OE production services[7] - Received a shared IDIQ contract with FAA worth up to $2.4 billion over 10 years[8] Operational Highlights - Deployed biometric boarding solution veriScan at Denver International Airport, impacting 46,600 international passengers[9] - Demonstrated ConductorOS AI orchestration platform at DoD's RDER T-REX24-2 event[10] Balance Sheet and Liquidity - Total assets increased to $354,083 thousand as of September 30, 2024, compared to $199,910 thousand as of December 31, 2023, reflecting significant growth[20] - Cash and cash equivalents rose to $65,584 thousand as of September 30, 2024, up from $32,557 thousand as of December 31, 2023, indicating improved liquidity[20] - Goodwill increased to $118,621 thousand as of September 30, 2024, compared to $48,683 thousand as of December 31, 2023, due to business acquisitions[20] - Total stockholders' equity improved to $98,433 thousand as of September 30, 2024, from a deficit of $(67,335) thousand as of December 31, 2023[20] Cash Flow and Financing - Net cash used in operating activities for the nine months ended September 30, 2024, was $(23,313) thousand, compared to $(18,233) thousand for the same period in 2023[21] - Acquisition of business, net of cash acquired, amounted to $13,935 thousand in the nine months ended September 30, 2024[21] - Proceeds from issuance of shares for exercised RDO and PIPE warrants, Private Placement, and Registered Direct Offering shares totaled $53,809 thousand in the nine months ended September 30, 2024[21] - Net increase in cash and cash equivalents for the nine months ended September 30, 2024, was $33,027 thousand, compared to $19,552 thousand for the same period in 2023[21] Non-GAAP Financial Measures - BigBear.ai uses non-GAAP financial measures such as EBITDA, Adjusted EBITDA, and Recurring SG&A to provide supplemental information about financial performance[32][36] - Adjusted EBITDA is defined as EBITDA adjusted for equity-based compensation, restructuring charges, and other non-recurring items[36] - Adjusted EBITDA Margin is calculated as Adjusted EBITDA as a percentage of Revenue[37] - Recurring SG&A excludes equity-based compensation, non-recurring strategic initiatives, and litigation costs[37] - BigBear.ai does not reconcile forward-looking non-GAAP measures to GAAP due to unpredictability of certain GAAP elements[40] - The company believes non-GAAP measures offer useful insights for comparing financial results across periods and with other companies[34][38] - Non-GAAP measures exclude significant expenses and income required by GAAP, limiting their comparability[39] - BigBear.ai provides reconciliations of non-GAAP measures to the most directly comparable GAAP measures[41] Company Overview - The company operates in AI-powered decision intelligence solutions for national security, digital identity, and supply chain management[43] - BigBear.ai is publicly traded on the NYSE under the symbol BBAI[43] Impairment and Other Expenses - Goodwill impairment of $85,000 thousand was recorded in the nine months ended September 30, 2024[21]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2024 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Commission file number 001-40031 BigBear.ai Holdings, Inc. (Exact name of registrant as specified in its charter) Registrant ...

Exhibit 99.1 BigBear.ai Announces Second Quarter 2024 Results • Revenue up 3.4% to $39.8 million compared to $38.5 million in 2023, up 20% QoQ vs. 1Q24. • Cash balance of $72.3 million as of June 30, 2024. • Announced upcoming exercises for ConductorOS distributed platform. • Signed MSA with Heathrow Airport to deliver advanced technologies to Europe's largest airport. • Adjusting full-year 2024 revenue guidance to $165-$180 million. COLUMBIA, MD – August 1, 2024 – BigBear.ai Holdings, Inc. (NYSE: BBAI) ("B ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Commission file number 001-40031 BigBear.ai Holdings, Inc. (Exact name of registrant as specified in its charter) Registran ...

Part I [Item 1. Business](index=5&type=section&id=Item%201.%20Business) BigBear.ai provides Edge AI decision intelligence solutions for national security, supply chain, and digital identity, primarily serving the U.S. government - BigBear.ai provides Edge AI-powered decision intelligence solutions, serving the national security, supply chain management, and digital identity markets through both software and services[12](index=12&type=chunk)[15](index=15&type=chunk) - On February 29, 2024, the company completed the acquisition of Pangiam, a leader in vision AI, to create a comprehensive vision and edge AI portfolio[13](index=13&type=chunk) - The company's total addressable market (TAM) is estimated at approximately **$80 billion** in 2024, projected to grow to **$272 billion** by 2028[33](index=33&type=chunk) - A significant portion of revenue is derived from contracts with public sector agencies, including the U.S. Federal Government[30](index=30&type=chunk) - As of December 31, 2023, the company had approximately **480 employees**, with a majority holding active security clearances[37](index=37&type=chunk) [Item 1A. Risk Factors](index=13&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including dependence on government contracts, customer concentration, long sales cycles, cybersecurity threats, and substantial indebtedness - A significant portion of business depends on sales to the public/government sector, which are subject to changes in fiscal policies, budgetary constraints, and potential contract terminations[54](index=54&type=chunk)[250](index=250&type=chunk) - The company has a high customer concentration, with three customers comprising **49% of revenue** for the twelve months ended December 31, 2023 These contracts contain termination for convenience clauses[65](index=65&type=chunk)[66](index=66&type=chunk) - The sales cycle is often long (**6-12+ months**) and unpredictable, involving considerable time and expense, particularly with government customers[62](index=62&type=chunk) - The company faces risks related to its **$200 million** in **6.0% Convertible Notes due 2026**, including restrictive covenants, subordination to secured debt, and potential dilution upon conversion[283](index=283&type=chunk)[327](index=327&type=chunk) - Cybersecurity threats are a significant risk, as the company's software handles sensitive customer data, making it an attractive target for cyberattacks[176](index=176&type=chunk)[177](index=177&type=chunk) - The integration of the newly acquired Pangiam business presents challenges, and the company may not successfully realize the anticipated strategic and financial benefits[341](index=341&type=chunk)[343](index=343&type=chunk) [Item 1B. Unresolved Staff Comments](index=93&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[418](index=418&type=chunk) [Item 1C. Cybersecurity](index=93&type=section&id=Item%201C.%20Cybersecurity) The company's cybersecurity program, based on NIST, is overseen by a CISO and the Board, with no material incidents reported to date - The company's cybersecurity program is built upon the National Institute of Standards and Technology (NIST) Cybersecurity Framework[420](index=420&type=chunk) - The program is supervised by a dedicated Chief Information Security Officer (CISO) with over 15 years of experience, who reports to the Board of Directors on cyber risks[421](index=421&type=chunk) - The Board of Directors, along with the Audit Committee and Nominating and Governance Committee, have oversight of cybersecurity threats[425](index=425&type=chunk) - To date, the company has not experienced any material cybersecurity incidents[425](index=425&type=chunk) [Item 2. Properties](index=94&type=section&id=Item%202.%20Properties) The company leases approximately 54,000 square feet across five primary locations, including its Columbia, Maryland headquarters - The company leases approximately **54,000 square feet** of space across five main locations, with its corporate headquarters in Columbia, Maryland[427](index=427&type=chunk) [Item 3. Legal Proceedings/Legal Matters](index=94&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in ordinary course legal matters, not expecting a material impact on its financial condition - The company is subject to litigation and claims in the ordinary course of business but does not expect the outcomes to have a material impact on its financial statements[428](index=428&type=chunk) [Item 4. Mine Safety Disclosures](index=94&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[429](index=429&type=chunk) Part II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=94&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on NYSE under 'BBAI', with no history or current intent to pay cash dividends - The company's common stock is traded on the NYSE under the ticker symbol **"BBAI"**[429](index=429&type=chunk) - As of December 31, 2023, there were **86 common stockholders of record**[430](index=430&type=chunk) - The company has never declared or paid cash dividends and does not currently intend to, planning to retain future earnings for growth[431](index=431&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=98&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Fiscal year 2023 saw flat revenue at $155.2 million, a reduced net loss of $60.4 million, improved Adjusted EBITDA, and a decrease in total backlog [Recent Developments](index=98&type=section&id=Recent%20Developments) Recent developments include the Pangiam acquisition, significant capital raises through warrant exercises and offerings, and a shift to a single operating segment - Completed the acquisition of Pangiam on February 29, 2024, a leader in vision AI for global trade, travel, and digital identity[443](index=443&type=chunk) - Raised approximately **$53.8 million** in gross proceeds through two separate warrant exercise agreements in February and March 2024[445](index=445&type=chunk)[446](index=446&type=chunk) - Raised approximately **$50 million** in gross proceeds during 2023 through a registered direct offering and a private placement[447](index=447&type=chunk)[448](index=448&type=chunk) - Effective Q1 2023, the company reorganized its operations from two segments (Cyber & Engineering and Analytics) into a single operating and reportable segment[451](index=451&type=chunk)[452](index=452&type=chunk) [Results of Operations](index=105&type=section&id=Results%20of%20Operations) Revenue remained flat at $155.2 million in 2023, while operating and net losses significantly improved due to the absence of goodwill impairment Consolidated Statements of Operations (in thousands) | | Year Ended December 31, | | | | :--- | :--- | :--- | :--- | | | **2023** | **2022** | **2021** | | **Revenues** | **$155,164** | **$155,011** | **$145,578** | | Gross margin | $40,601 | $42,993 | $34,068 | | Operating loss | ($39,034) | ($110,527) | ($78,472) | | Goodwill impairment | $0 | $53,544 | $0 | | **Net loss** | **($60,366)** | **($121,674)** | **($123,552)** | - Revenue in 2023 was nearly flat year-over-year, with an increase of just **$0.15 million** Growth in Army programs was offset by the wind-down of certain Air Force programs and lower volume from Virgin Orbit following its bankruptcy[471](index=471&type=chunk) - SG&A expenses decreased by **$13.7 million (16.2%)** in 2023 compared to 2022, driven by restructuring actions and a reduction in non-recurring integration and advisory costs[475](index=475&type=chunk) - Research and development expenses decreased by **$3.4 million (40.0%)** in 2023 due to the capitalization of certain software development projects that reached technological feasibility[477](index=477&type=chunk) [Supplemental Non-GAAP Information](index=109&type=section&id=Supplemental%20Non-GAAP%20Information) Adjusted EBITDA improved to a $3.2 million loss in 2023, and Free Cash Flow improved to negative $22.1 million, reflecting better operational efficiency Adjusted EBITDA Reconciliation (in thousands) | | **2023** | **2022** | **2021** | | :--- | :--- | :--- | :--- | | **Net loss** | **($60,366)** | **($121,674)** | **($123,552)** | | Adjustments | $57,163 | $104,589 | $128,404 | | **Adjusted EBITDA** | **($3,203)** | **($17,085)** | **$4,852** | Free Cash Flow (in thousands) | | **2023** | **2022** | **2021** | | :--- | :--- | :--- | :--- | | Net cash used in operating activities | ($18,307) | ($48,918) | ($19,782) | | Capital expenditures, net | ($3,830) | ($769) | ($639) | | **Free cash flow** | **($22,137)** | **($49,687)** | **($20,421)** | [Key Performance Indicators](index=111&type=section&id=Key%20Performance%20Indicators) Total backlog decreased to $167.8 million as of December 31, 2023, primarily due to reductions in priced, unexercised options and funded backlog Backlog Summary (in thousands) | Backlog Category | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Funded | $30,112 | $57,234 | | Unfunded | $49,382 | $18,220 | | Priced, unexercised options | $63,878 | $112,119 | | Unpriced, unexercised options | $24,438 | $30,900 | | **Total backlog** | **$167,810** | **$218,473** | [Liquidity and Capital Resources](index=113&type=section&id=Liquidity%20and%20Capital%20Resources) As of December 31, 2023, liquidity was $32.6 million, total debt was $195.5 million, and net cash used in operating activities improved to $18.3 million Liquidity and Debt Summary (in thousands) | | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $32,557 | $12,632 | | Total available liquidity | $32,557 | $12,632 | | Total debt, net | $195,502 | $194,377 | Consolidated Cash Flows (in thousands) | | **2023** | **2022** | | :--- | :--- | :--- | | Net cash used in operating activities | ($18,307) | ($48,918) | | Net cash used in investing activities | ($3,830) | ($5,234) | | Net cash provided by (used in) financing activities | $42,062 | ($103,137) | - The company's **$200 million** in unsecured convertible notes bear **6.0% interest** and mature on December 15, 2026 The conversion price was adjusted to **$10.61** in May 2022[512](index=512&type=chunk)[513](index=513&type=chunk) [Critical Accounting Policies and Estimates](index=117&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Critical accounting policies involve significant estimates in revenue recognition, goodwill impairment, warrant valuation, and software development cost capitalization - Revenue from long-term contracts is generally recognized over time using a percentage-of-completion cost-to-cost measure of progress, which requires significant estimation of total contract costs[553](index=553&type=chunk)[561](index=561&type=chunk) - Goodwill is assessed for impairment annually as of October 1 In 2022, the company recorded a non-cash goodwill impairment charge of **$53.5 million** related to its former Cyber & Engineering and Analytics reporting units[540](index=540&type=chunk)[547](index=547&type=chunk) - Private, PIPE, and RDO warrants are classified as liabilities and remeasured at fair value each period, with changes recognized in earnings Public warrants are classified as equity[568](index=568&type=chunk) - The company capitalizes software development costs incurred after technological feasibility is established In 2023, **$3.3 million** in such costs were capitalized[653](index=653&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=126&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risks include common stock value fluctuations impacting derivative liabilities and convertible debt, interest rate risk on fixed-rate debt, and inflation - The main market risk is tied to the value of the company's common stock, which impacts derivative liabilities and convertible debt features[579](index=579&type=chunk) - The company is exposed to interest rate risk, with **$200 million** in fixed-rate long-term debt outstanding as of December 31, 2023[579](index=579&type=chunk) - Inflation is a factor, but the company believes it can mitigate its effects through price increases and contractual escalation clauses[580](index=580&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=128&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for 2021-2023, along with the independent auditor's report Consolidated Balance Sheet Data (in thousands) | | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | **$199,910** | **$195,308** | | Cash and cash equivalents | $32,557 | $12,632 | | Goodwill | $48,683 | $48,683 | | **Total Liabilities** | **$267,245** | **$233,180** | | Long-term debt, net | $194,273 | $192,318 | | **Total stockholders' deficit** | **($67,335)** | **($37,872)** | Consolidated Statement of Operations Data (in thousands) | | **2023** | **2022** | **2021** | | :--- | :--- | :--- | :--- | | **Revenues** | **$155,164** | **$155,011** | **$145,578** | | **Gross margin** | **$40,601** | **$42,993** | **$34,068** | | **Operating loss** | **($39,034)** | **($110,527)** | **($78,472)** | | **Net loss** | **($60,366)** | **($121,674)** | **($123,552)** | [Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosures](index=176&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosures) The company reports no changes or disagreements with its accountants on financial disclosures - None[795](index=795&type=chunk) [Item 9A. Controls and Procedures](index=176&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls and internal control over financial reporting were effective as of December 31, 2023, with prior material weaknesses remediated - Management concluded that disclosure controls and procedures were effective as of December 31, 2023[796](index=796&type=chunk) - Previously disclosed material weaknesses related to segregation of duties, revenue recognition, and IT General Controls were remediated as of December 31, 2023[800](index=800&type=chunk)[801](index=801&type=chunk) - Based on its assessment, management concluded that internal control over financial reporting was effective as of December 31, 2023[798](index=798&type=chunk) [Item 9B. Other Information](index=178&type=section&id=Item%209B.%20Other%20Information) Executive officers adopted Rule 10b5-1 trading plans for equity award tax obligations, and a NYSE-compliant Clawback Policy was adopted - On December 15, 2023, several executive officers adopted Rule 10b5-1 trading plans to facilitate the sale of shares to cover tax withholding obligations related to equity awards[804](index=804&type=chunk)[805](index=805&type=chunk)[808](index=808&type=chunk) - The Compensation Committee adopted a Clawback Policy compliant with NYSE rules, allowing the company to recover excess incentive-based compensation from executives in the event of a material financial restatement[810](index=810&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=180&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not Applicable[811](index=811&type=chunk) Part III [Items 10-14](index=180&type=section&id=Items%2010-14) Information for Items 10-14 will be incorporated by reference from the company's definitive 2024 Proxy Statement - Information for Items 10, 11, 12, 13, and 14 is incorporated by reference from the Registrant's 2024 Proxy Statement, which will be filed within 120 days of the fiscal year-end[812](index=812&type=chunk)[813](index=813&type=chunk)[814](index=814&type=chunk) Part IV [Item 15. Exhibits, Financial Statement Schedules](index=180&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all exhibits, financial statements, and schedules filed with the Form 10-K, including governance and material contracts - This item provides a list of all financial statements, schedules, and exhibits filed with the Form 10-K, including governance documents, material contracts, and certifications[815](index=815&type=chunk)[816](index=816&type=chunk)[817](index=817&type=chunk) [Item 16. Form 10-K Summary](index=184&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company indicates no Form 10-K summary - None[818](index=818&type=chunk)