Month: March 2024

The 2023 annual report for Bridger Aerospace has been released.  In the report, the Company reported that it had a net annual loss of $77 million during 2023 and a long term debt of $205 million at the end of 2023.  So, during the three years of its operation, the Company has lost 6 + 42 + 77 = $125 million, which to most Montanans (but maybe not to  Montana’s oligarchs) would be considered “real money.”

To me, it is ironic that some of Tim Sheehy’s recent political ads bemoan our Federal government’s “reckless spending” when his Company consistently spends a lot more money than it takes in.  Does that mean that he will fit right in as a senator?

Doubt about Company’s Ability to Continue as a Going Concern

In an excellent example of “burying the lede,” on page 69 of that report, the independent CPA who audited the Company’s financial statements for 2022 and 2023 noted the following (my emphasis):

“As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations, operating cash flow deficits, debt covenant violations, and insufficient liquidity to fund its operations that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1.”

In Note 1 on page 75, the Company (under Tim’s signature) described the situation in the following terms (my emphasis):

“The Company is not in compliance with the DSCR [debt service coverage ratio on the $160 million in municipal bonds it obtained with the help of Gallatin County] covenant as of December 31, 2023 and management anticipates the Company to continue to not be in compliance with the DSCR covenant at future quarterly measurement periods in the next 12 months. . . . management anticipates that without additional cash funding the Company will not have sufficient cash on hand to fund operations. . . or to comply with the minimum liquidity covenant within the next 12 months, or until the Company begins to collect cash from its seasonal firefighting operations in 2024.”

The Company also mentioned that undisclosed “cost reduction measures” have been implemented and that further dilution of the value of its stock are under consideration (my emphasis):

“In addition to the cost reduction measures implemented in November 2023, the Company plans to seek additional cash funding through a number of potential avenues, including additional sales of our common stock through our at-the-market offering. . . and issuing additional shares of common stock pursuant to our shelf registration statement. These additional sources of working capital are not currently assured, and consequently do not sufficiently mitigate the risks and uncertainties disclosed above.“

Agreeing with the independent CPA, the Company admitted (my emphasis):

“Current and anticipated noncompliance with financial covenants and uncertainty regarding the Company’s ability to diligently prosecute the cost reduction plan and to raise additional cash funding for operations, including required interest payments associated with the Series 2022 Bonds, raise substantial doubt about the Company’s ability to continue as a going concern within 12 months following the issuance date of the consolidated financial statements as of and for the period ended December 31, 2023.”

Inexperienced and Overpaid CEO

Reviewing the Company’s statement of operations, it is interesting to note that “selling, general, and administrative expense” more than doubled between 2022 and 2023, rising from $35 million to $83 million.  One can only wonder if the unstated “cost reduction measures” will include reducing directors’ and executives’ compensation.  For example Tim’s 2023 compensation has been criticized for being “above average for companies of similar size in the US market” with Tim being characterized as “inexperienced” as a CEO.

Number of Employees Decreases

It is unfortunate that the number of Bridger employees has decreased from 166 at the end of 2022 to 148 at the end of 2023. Whether that decrease is part of the Company’s “cost reduction measures” is also unstated. Montana needs all the wildfire-suppression capabilities and good-paying jobs it can get.

It was surprising and disappointing that the Company did not address the usual (and critical) topics of “corporate governance” and “executive compensation” in its 2023 annual report. On page 113 of the report, the Company stated that that information “will be filed with the SEC within 120 days after the end of the fiscal year. . . . in connection with the solicitation of proxies for our 2024 Annual Meeting of Stockholders. . . . .” So, we may have to wait until the final days of April to see if the compensation that has been raining down on the Company’s executives (like Tim) while the Company’s cash reserves burn away will be curtailed by the Board of Directors (that the executives essentially control).

Dilution of Shareholders’ Ownership Percentage

The annual report noted that the number of issued and outstanding shares of the Company’s common stock increased by 14.6 percent, from 39,081,744 at the end of 2022 to 44,776,926 at the end of 2023.  Thus, the existing public common shareholders’ ownership percentage of the Company decreased as a result of the Company’s issuing new equity during 2023, which is called dilution.

Revenue Received from Few Customers

The Company is still reliant on receiving most of its revenue from a few customers.  In 2023, the Company reported that “Sales to our three largest customers in the aggregate represented 88%, sales to our largest customer represented 65% of our total revenues . . . and two customers accounted for 73% of accounts receivable. ”

Tim Would Face Significant Conflicts of Interest If Elected

The Company noted that as of the end of 2023 “the executive officers of Bridger and Mr. Matthew Sheehy (a co-founder and director of Bridger and the brother of Mr. Timothy Sheehy, the Bridger CEO), collectively beneficially [directly or indirectly] owned 53.3% of the outstanding Common Stock. . . . As a result, Bridger has a small number of significant stockholders who could significantly influence its business and operations. In addition, the BTO [Blackstone Technical Opportunities] Stockholders collectively beneficially owned 19.7% . . . of the outstanding Common Stock. . . .”

Thus, if Tim were to become one of Montana’s US  senators, he would face significant conflicts of interest as a major stockholder in a Company that is reliant both on receiving most of its revenue from the Federal government and cooperation from Blackstone Inc., a firm that has $1 trillion of assets under management.

Warning:  Take the above numbers “with a grain of salt” because the Company also reported on pages 35 and 36 that “A material weakness is a deficiency or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. . . . We have identified material weaknesses in our internal control over financial reporting, which we are in the process of, and are focused on, remediating. . . . Although we plan to complete this remediation process as quickly as possible, we are unable, at this time, to estimate how long it will take, and our efforts may not be successful in remediating the identified material weaknesses.”

2024 Is an All-Hands-on-Deck Situation for the Company

Even if the numbers in the Company’s annual report are approximate, it is clear that the year 2024 is going to be an all-hands-on-deck situation for the survival of the Company. For Tim Sheehy, CEO of Bridger Aerospace, to be distracted at this critical time by his US Senate campaign is unfortunate.  Both Bridger’s management and  its outside, independent CPA auditor agree that the Company must be turned around, and soon. Relying on the wildfire situation to be worse this year than last is not a plan. Tim’s “vision to build a global enterprise to fight wildfires” is at risk. Why Tim wants to leave the battlefield so early in the battle is inexplicable and some would say inexcusable.  He owes his employees, and himself, more.

I’m having a hard time believing that US Senate candidate Tim Sheehy is a “highly successful businessman,” as he’s characterized in the press.  Any historical common stock price chart will show that on the day Tim’s business, Bridger Aerospace (Bridger), shares were first offered to the public (January 25, 2023), the worth of the business (share price times number of shares) in the stock market was $890 million, and today, the company is worth $221 million. If that sounds like success to you, I have a bridge in Brooklyn to sell you.

Burning through Cash

One problem is that the business Tim manages keeps losing money, burning (pun intended) through its cash.  Even before Bridger went public, it was losing lots of money annually.  In 2021, the business lost $6 million.  In 2022, it lost another $42 million.  In 2023 (a year that Tim pointed out had “the shortest North American wildfire season in the past 20 years,”), the business appears to have lost even more than the $46 million it lost in the first nine months of 2023 (because annual revenue did not increase much since then, but expenses, like salaries and interest, continued to be paid).  Bridger’s public stockholders (probably not a happy bunch) will find out the true extent of the 2023 loss in March.

Deeply in Debt

Another problem is that Bridger is deeply in debt.  At the end of 2023, the business owed about $207 million to its lenders, which includes the $160 million in municipal (industrial revenue) bonds the business obtained through Gallatin County.  During the first nine months of 2023, Bridger paid about $17 million in interest on its debt.

No wonder that, at the end of 2023, Bridger’s cash reserve of about $38 million was apparently not enough to address the business’s near-term cash demands. So, on February 6, 2024, Tim’s business informed the SEC in a prospectus that it planned to issue and offer to sell $22 million of the $200 million of new common shares it had earlier warned shareholders that it might sell.  These new shares will dilute (reduce) the value of each of Bridger’s common stock shares.  How much you ask?

Dilution of Stock Value

According to the prospectus, even before the new shares are sold, if the business failed and all its tangible assets (like aircraft and hangars) were sold at their book (depreciated) value, the sales proceeds would not be enough to pay off its business liabilities (like its debt) and redeem its Series A preferred stock shares, much less produce enough money to pay anything to its existing common stock holders. In the example in the prospectus, if the new shares were sold  at a recent price of $5.40 per share, investment in each new share would cause “an immediate dilution net deficit of $11.37 per share to new investors.” Thus, new stock holders would have paid $11.37 more per share than each of their shares would be worth on liquidation at book value of the business’s tangible assets.

Yet Another Prospectus

In another prospectus that Bridger recently filed with the SEC, Tim’s business warned potential investors of the proposed resale by “selling stockholders” of “up to an aggregate of 8,825,729 shares of [Bridger] common stock” associated with Bridger’s acquisition of the wildfire situation awareness software company Ignis Technologies, Inc.  Bridger will not receive any of the proceeds of the resale of its stock.  As of January 25, 2024, there were outstanding 48,634,591 shares of Bridger’s common stock, of which 18% are owned by the selling stockholders.  Hopefully, they will not all rush for the exit at once.

Mother Nature Always—Always—Bats Last

It’s amazing that while Tim’s business thoroughly discloses to potential new investors that climate change is going to generate new revenue, Bridger’s managers (including Tim) are not capable of preparing for the wild swings in weather that are a defining aspect of that same future. Has Tim forgotten the military adage “no plan survives contact with the enemy,” in this case, climate change? I like the way our current senior US Senator, Jon Tester, described the reality of climate change: “I am a farmer, and that means I’m beholden to science. I also know that Mother Nature always—always—bats last.”

Designed by Ultra-rich Republicans to Enrich Sheehy

At this point, it appears that the difficult-to-understand financial structure of Tim’s business was designed by ultra-rich MAGA Republicans to transfer money from the pockets of US taxpayers (via the Department of the Interior) into the pockets of Bridger’s inexperienced and overpaid directors and managers (like Tim) during the good years when the planet is burning and our Big Skies are choked with smoke.  In the bad years when our skies are clear, money is transferred from the pockets of unsophisticated Wall Street stock buyers (who do not appear to understand the complex structure laid out in SEC filings) into those same directors’ and managers’ pockets. It should be no surprise that over half of the wealthy members of Bridger’s board and management team come from the oil and gas and the real estate development industries that are driving climate change and benefit from the Trump tax cut.

Sheehy Surrenders

While I’m sure aerial firefighting can be exciting, a lot of work lies ahead for Tim in making the business profitable, to continue to attract new investors and grow Bridger’s stock price. Is Tim giving up on his duty to Bridger’s shareholders (and employees) as the business feverously burns cash? If Tim becomes Montana’s junior senator, would he similarly surrender when the going got tough?

Preparation for the jury trial of the purchaser of Ascent Vision Technologies LLC is proceeding on schedule. As we warned in an earlier post, the trial of the military contractor, CACI, (whose local office is located in Belgrade) is scheduled to begin on April 15, 2024, in the middle of Sheehy’s campaign to take the job of Montana’s senior Senator Jon Tester.  CACI supplied civilian interrogators at the now infamous Abu Ghraib prison during the invasion and occupation of Iraq by the US.

Relying on the same strategy the Trump uses, CACI lawyers have been trying to avoid or delay, delay, delay a jury trial since the original case was filed in 2008.  For your scrolling pleasure, here is a listing (available on Pacer.uscourts.gov for Case #: 1:08-cv-00827-LMB-JFA)  of those efforts since the District Judge Leonie M. Brinkema ordered (on October 2, 2023) that a trial occur.

Plaintiff’s lead attorneys:

Baher Azmy
Center for Constitutional Rights
666 Broadway
7th Floor
New York, NY 10012
212-614-6464
212-614-6499 (fax)
bazmy@ccrjustice.org

Mohammed M. Alomari
Azimuth Legal Services PLLC
24300 Southfield Road
Suite 210
Southfield, MI 48075
248-281-6299
248-864-8554 (fax)
malomari@azimuthlegal.com

Iraq: Torture Survivors Await US Redress, Accountability