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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: June 30, 2021

OR

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 001-39046

BLADE AIR MOBILITY, INC.

(Exact name of registrant as specified in its charter)

Delaware

    

84-1890381

(State or other jurisdiction

of incorporation or organization)

 

(I.R.S. Employer

Identification No.)

499 East 34th Street
New York, NY

    

10016

(Address of principal executive offices)

 

(Zip Code)

(212) 967-1009

(Registrant’s telephone number, including area code)

Securities registered under section 12(b) of the Act:

Title of each class

    

Trading Symbol(s)

    

Name of each exchange on
which registered

Class A Common Stock, $0.0001 par value per share

 

BLDE

 

The Nasdaq Stock Market

Warrants, each exercisable for one share of Class A common
stock at an exercise price of $11.50 per share

 

BLDEW

 

The Nasdaq Stock Market

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    No 

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     No 

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

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

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.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b–2 of the Exchange Act). Yes    No 

As of August 11, 2021, there were 69,427,682 shares of the registrant’s Common stock, $0.0001 par value per share, issued and outstanding.

Table of Contents

BLADE AIR MOBILITY, INC.

FORM 10-Q

TABLE OF CONTENTS

    

Page

PART I. FINANCIAL INFORMATION

3

Item 1.

Financial statements

3

Condensed Consolidated Statements of Operations for the three and nine months ended June 30, 2021 and 2020 (unaudited)

3

Condensed Consolidated Balance Sheets as of June 30, 2021 (Unaudited) and September 30, 2020

4

Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended June 30, 2021 and 2020 (unaudited)

5

Condensed Consolidated Statements of Cash Flows for the nine months ended June 30, 2021 and 2020 (unaudited)

6

Notes to the Condensed Consolidated Financial Statements (unaudited)

7

Item 2.

Management’s discussion and analysis of financial condition and results of operations

25

Item 3.

Quantitative and qualitative disclosures about market risk

35

Item 4.

Controls and procedures

35

PART II. OTHER INFORMATION

37

Item 1.

Legal proceedings

37

Item 1A.

Risk factors

37

Item 2.

Unregistered sales of equity securities and use of proceeds

63

Item 3.

Defaults upon senior securities

64

Item 4.

Mine safety disclosures

64

Item 5.

Other information

64

Item 6.

Exhibits

66

2

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

BLADE AIR MOBILITY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except share and per share data)

For the Three Months Ended June 30,

For the Nine Months Ended June 30,

    

2021

    

2020

    

2021

    

2020

Revenue

$

12,951

$

3,438

$

30,210

$

15,115

Operating expenses

Cost of revenue

 

9,910

2,804

23,905

 

14,392

Software development

 

213

220

555

 

691

General and administrative

 

9,809

1,561

18,023

 

7,376

Selling and marketing

790

329

2,091

2,284

Total operating expenses

20,722

4,914

44,574

24,743

Loss from operations

 

(7,771)

(1,476)

(14,364)

 

(9,628)

Other non-operating (expense) income

Change in fair value of warrant liabilities

(14,913)

(14,913)

Recapitalization costs attributable to warrant liabilities

(1,742)

(1,742)

Interest income, net

140

151

151

181

Total other non-operating (expense) income

 

(16,515)

151

(16,504)

 

181

Net loss

$

(24,286)

$

(1,325)

$

(30,868)

$

(9,447)

Weighted average shares outstanding, basic and diluted

 

51,569,634

25,210,933

34,078,573

 

25,209,794

Net loss per share, basic and diluted

$

(0.47)

$

(0.05)

$

(0.91)

$

(0.37)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

3

Table of Contents

BLADE AIR MOBILITY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

As of

    

June 30, 2021

    

September 30, 2020

(unaudited)

Assets

Current assets

Cash and cash equivalents

$

30,003

$

12,162

Restricted cash

630

114

Accounts receivable

1,712

1,092

Short term investments

303,163

Prepaid expenses and other current assets

7,221

1,011

Total current assets

342,729

14,379

Non-current assets

Property and equipment, net

1,725

1,759

Investment in joint venture

200

200

Intangible assets, net

895

533

Operating right-of-use asset

458

737

Other non-current assets

142

107

Total assets

$

346,149

$

17,715

Liabilities and Stockholders’ Equity

 

  

 

  

Current liabilities

 

  

 

  

Accounts payable and accrued expenses

$

4,958

$

776

Deferred revenue

5,266

3,973

Operating lease liability, current

333

430

Note payable

 

 

1,165

Total current liabilities

 

10,557

 

6,344

Non-current liabilities

Warrant liability

38,799

Operating lease liability, long-term

95

291

Total liabilities

 

49,451

 

6,635

Commitments and Contingencies (Note 10)

 

  

 

  

Stockholders’ Equity

 

  

 

  

Preferred stock, $0.0001 par value, 2,000,000 shares authorized at June 30, 2021 and September 30, 2020. No shares issued and outstanding at June 30, 2021 and September 30, 2020.

 

 

Class A common stock, $0.0001 par value; 400,000,000 authorized; 69,403,489 and 25,268,848 shares issued and outstanding at June 30, 2021 and September 30, 2020, respectively.

 

7

 

3

Additional paid in capital

 

364,697

 

48,215

Accumulated deficit

(68,006)

(37,138)

Total stockholders’ equity

 

296,698

 

11,080

Total Liabilities and Stockholders’ Equity

$

346,149

$

17,715

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

Table of Contents

BLADE AIR MOBILITY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2021 AND 2020

(unaudited)

(in thousands, except share and per share data)

Total

Preferred Stock

Class A Common Stock

Additional Paid-

Accumulated

Stockholders'

    

Shares

    

Amount

    

Shares

    

Amount

    

In Capital

    

Deficit

    

Equity

Balance at April 1, 2021

 

$

 

26,115,841

$

3

$

51,413

$

(43,720)

$

7,696

Stock option exercise

9,627

5

5

Stock-based compensation - restricted stock

1,862

1,862

Stock-based compensation - stock options

656

656

Shares withheld for employee tax liability

(52)

(52)

EIC shares recapitalized, net of issuance costs and the fair value of warrant liabilities

30,778,021

3

191,180

191,183

Shares issued in PIPE, net of issuance costs

 

 

 

12,500,000

 

1

 

119,633

 

 

119,634

Net loss

 

 

 

 

 

 

(24,286)

 

(24,286)

Balance at June 30, 2021

$

69,403,489

$

7

$

364,697

$

(68,006)

$

296,698

Balance at April 1, 2020

$

25,210,933

$

3

$

47,893

$

(35,100)

$

12,796

Stock-based compensation - stock options

90

90

Net loss

(1,325)

(1,325)

Balance at June 30, 2020

$

25,210,933

$

3

$

47,983

$

(36,425)

$

11,561

Balance at October 1, 2020

$

25,268,848

$

3

$

48,215

$

(37,138)

$

11,080

Issuance of restricted stock

790,497

Stock option exercise

66,123

24

24

Stock-based compensation - restricted stock

4,684

4,684

Stock-based compensation - stock options

1,013

1,013

Shares withheld for employee taxes

(52)

(52)

EIC shares recapitalized, net of issuance costs and the fair value of warrant liabilities

30,778,021

3

191,180

191,183

Shares issued in PIPE, net of issuance costs

12,500,000

1

119,633

119,634

Net loss

(30,868)

(30,868)

Balance at June 30, 2021

$

69,403,489

$

7

$

364,697

$

(68,006)

$

296,698

Balance at October 1, 2019

$

25,203,350

$

3

$

47,710

$

(26,978)

$

20,735

Stock option exercise

7,583

5

5

Stock-based compensation - stock options

268

268

Net loss

(9,447)

(9,447)

Balance at June 30, 2020

$

 

25,210,933

$

3

$

47,983

$

(36,425)

$

11,561

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5

Table of Contents

BLADE AIR MOBILITY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)

For the Nine Months Ended June 30,

    

2021

    

2020

Cash Flows From Operating Activities:

  

Net loss

$

(30,868)

$

(9,447)

Adjustments to reconcile net loss to net cash and restricted cash used in operating activities:

 

Depreciation and amortization

405

 

398

Stock-based compensation

5,697

 

268

Change in fair value of warrant liabilities

14,913

Recapitalization costs attributable to warrant liabilities

1,742

Changes in operating assets and liabilities:

Prepaid expenses and other current assets

(6,120)

(203)

Accounts receivable

(620)

 

(248)

Other non-current assets

(35)

20

Operating lease assets/liabilities

(14)

(19)

Accounts payable and accrued expenses

3,782

(1,591)

Deferred revenue

1,293

 

907

Net cash used in operating activities

(9,825)

 

(9,915)

Cash Flows From Investing Activities:

 

Purchase of domain name

(503)

 

Purchase of property and equipment

(230)

(381)

Purchase of short-term investments

(303,163)

Net cash used in investing activities

(303,896)

 

(381)

Cash Flows From Financing Activities:

 

Proceeds from the exercise of common stock options

24

 

5

Proceeds from note payable

 

1,165

Repayment of note payable

(1,165)

 

Proceeds from recapitalization of EIC, net of issuance costs

213,585

 

Proceeds from sale of common stock in PIPE, net of issuance costs

119,634

 

Net cash provided by financing activities

332,078

 

1,170

Net increase (decrease) in cash and cash equivalents and restricted cash

18,357

 

(9,126)

Cash and cash equivalents and restricted cash - beginning

12,276

22,291

Cash and cash equivalents and restricted cash - ending

$

30,633

$

13,165

Cash and cash equivalents

$

30,003

$

13,049

Restricted cash

630

 

116

Total

$

30,633

$

13,165

Supplemental cash flow information

Cash paid for:

Interest

$

12

$

Income Taxes

$

$

Non-cash investing and financing activities

 

Adoption of new leases under ASC 842 entered into during the period

$

13

$

788

Initial measurement of net assets assumed in the recapitalization of EIC:

Prepaid expenses and other current assets

$

90

$

Accounts payable and accrued expenses

$

(348)

$

Warrant liability

$

(23,886)

$

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6

Table of Contents

Blade Air Mobility, Inc. and Consolidated Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(amounts in thousands, except share and per share data)

Note 1 – Business, Liquidity and Capital Resources

Overview and Management’s Plans

Blade Air Mobility, Inc. (“Blade" or the "Company”) is committed to providing consumers with a cost effective and time efficient alternative to ground transportation for congested routes. Blade arranges charter and by-the-seat flights across helicopters, jets, turboprops, and amphibious seaplanes operating in various locations throughout the United States. Blade’s platform utilizes a technology-powered, asset-light business model. Blade provides transportation to its customers through a network of contracted aircraft operators. Blade does not own, lease or operate its own aircraft.

The Company’s asset-light business model was developed to be scalable and profitable using conventional helicopters today while enabling a seamless transition to Electric Vertical Aircraft (“EVA”), or as known within the aerospace community, Electric Vertical Take-Off and Landing aircraft (“eVTOL”), once they are certified for public use. The Company intends to leverage the lower operating costs of EVA versus helicopters to reduce the consumer’s price for its flights. Additionally, the Company expects the reduced noise footprint and zero carbon emission characteristics of EVA to allow for the development of new vertical landing infrastructure (“vertiports”) in its existing and new markets.

Merger and Organization

On May 7, 2021 (the “Closing Date”), privately held Blade Urban Air Mobility, Inc., a Delaware corporation, (“Old Blade”) consummated transactions contemplated by the Agreement and Plan of Merger (the “Merger Agreement”), dated December 14, 2020, by and among Experience Investment Corp. (“EIC”), Experience Merger Sub, Inc., a wholly owned subsidiary of EIC (“Merger Sub”), and Old Blade. The Merger Agreement provided for the acquisition of Blade by EIC pursuant to the merger of Merger Sub with and into Old Blade (the “Merger”), with Old Blade continuing as the surviving entity and a wholly owned subsidiary of EIC. On the Closing Date, and in connection with the closing of the Merger Agreement (the “Closing”), EIC changed its name to Blade Air Mobility, Inc. (See Note 3).

Liquidity

As of June 30, 2021, the Company had working capital of $332,160, including cash and cash equivalents of $30,003. The Company had net losses of $30,868 and $9,447 for the nine months ended June 30, 2021 and 2020, respectively.

The Company expects to continue to incur net losses in the short term, as it continues to execute on its strategic initiatives. Based on the Company’s current liquidity, the Company believes that no additional capital will be needed to execute its current business plan over the next 12 months from the date of issuance of these financial statements.

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Management’s opinion is that all adjustments (consisting of normal accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ending September 30, 2021. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended September 30, 2020 and related notes thereto in the Form S–1 filed on May 28, 2021 with the Securities and Exchange Commission (“SEC”).

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Table of Contents

Blade Air Mobility, Inc. and Consolidated Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(amounts in thousands, except share and per share data)

Note 2 – Summary of Significant Accounting Policies (Continued)

Principles of Consolidation

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All inter-company balances and transactions have been eliminated in the accompanying unaudited condensed consolidated financial statements.

Reclassification

Certain amounts in prior periods related to the classification of disaggregated revenue have been reclassified to conform to current period presentation. These reclassifications had no effect on the previously reported net loss.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company bases its estimates on historical experience, current business factors, and various other assumptions that the Company believes are necessary to consider to form a basis for making judgments about the carrying values of assets and liabilities, the recorded amounts of revenue and expenses, and the disclosure of contingent assets and liabilities. The Company is subject to uncertainties such as the impact of future events, economic and political factors, and changes in the Company’s business environment; therefore, actual results could differ from these estimates. Accordingly, the accounting estimates used in the preparation of the Company’s financial statements will change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment evolves.

Changes in estimates are made when circumstances warrant. Such changes in estimates and refinements in estimation methodologies are reflected in reported results of operations; if material, the effects of changes in estimates are disclosed in the notes to the financial statements. Significant estimates and assumptions by management include the allowance for doubtful accounts, the carrying value of long-lived assets, the carrying value of intangible assets, the fair value of warrant liabilities, revenue recognition, contingencies, the provision for income taxes and related deferred tax accounts and the fair value of stock options and other stock-based awards.

Emerging Growth Company

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of 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 a 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 election to opt out is irrevocable. The Company has elected to use 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 consolidated financial statements with another public company that is not an emerging growth company or is 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.

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Table of Contents

Blade Air Mobility, Inc. and Consolidated Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(amounts in thousands, except share and per share data)

Note 2 – Summary of Significant Accounting Policies (Continued)

Warrant Liability

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. The Company accounts for the warrants issued in connection with its Initial Public Offering in accordance with the guidance contained in ASC 815-40-15-7D, under which the warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, the Company classifies the warrants as liabilities at their fair value and adjusts the warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s condensed consolidated statement of operations.

Cash and Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments with a maturity of three months or less on their acquisition date as cash and cash equivalents. Restricted cash consists principally of Company funds on deposit with a financial institution, which supports a letter of credit by the financial institution in favor of the Company’s obligations to the United States Department of Transportation as well as deposits posted for collateral with certain of the Company’s vendors.

Short Term Investments

Short-term investments consist of highly liquid investments available for sale. As of June 30, 2021, short-term investments consisted of available-for-sale traded debt securities funds, which are recorded at fair value with unrealized gains and losses reported, net of tax, in accumulated Other Comprehensive Income(loss), unless unrealized losses are determined to be unrecoverable. Realized gains and losses on the sale of securities are determined by specific identification. The Company considers all available-for-sale securities, as available to support current operational liquidity needs and, therefore, classifies all securities as current assets within short-term investments on the Company’s condensed consolidated balance sheet. These short-term investments are excluded from disclosure under “fair value of financial instruments” due to the Net Asset Value practical expedient.

Concentrations

Financial instruments which potentially subject the Company to concentrations of credit risk consists principally of cash amounts on deposit with financial institutions. At times, the Company’s cash in banks is in excess of the Federal Deposit Insurance corporation (“FDIC”) insurance limit. The Company has not experienced any loss as a result of these deposits.

9

Table of Contents

Blade Air Mobility, Inc. and Consolidated Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(amounts in thousands, except share and per share data)

Note 2 – Summary of Significant Accounting Policies (Continued)

Concentrations (Continued)

Major Customers

For the three and nine months ended June 30, 2021 and 2020, there was no single customer that generated 10% or more of the Company’s revenue.

Most of the Company’s customers remit payment in advance of the date of the flight. Accounts receivable consists principally of amounts due from the Company’s MediMobility organ transport customers, which are large hospitals that receive terms for payment, along with receivables from our credit card processors. Three of these customers accounted for 29%, 25%, and 16%, respectively, of accounts receivable as of June 30, 2021 and three customers accounted for 36%, 29% and 10%, respectively, of accounts receivable as of September 30, 2020. These concentrations make the Company vulnerable to a near-term severe impact should these relationships be terminated. To limit such risks, the Company performs ongoing credit evaluations of its customers’ financial condition.

Major Vendors

Three vendors accounted for 16%, 12%, and 12% of the Company’s purchases from operating vendors for the three months ended June 30, 2021. For the three months ended June 30, 2020, one vendor accounted for 12% of the Company’s purchases from operating vendors.

No vendor accounted for 10% or more of the Company’s purchases from operating vendors for the nine months ended June 30, 2021 and 2020.

Three vendors accounted for 26%, 22%, and 11% of the Company’s outstanding accounts payable as of June 30, 2021. One vendor accounted for 26% of the Company’s outstanding accounts payable as of September 30, 2020.

Accounts Receivable

Accounts receivable consists principally of amounts due from the Company’s MediMobility organ transport customers, which are large hospitals that receive terms for payment. Receivables are reviewed on a regular basis for collectability. Based upon these reviews and historical collection experience, the Company determined that no allowance for uncollectible accounts was required at June 30, 2021 and September 30, 2020.

Joint Venture

Investments in joint arrangements are classified as joint ventures. Joint ventures are accounted for using the equity method. Under the equity method of accounting, interests in joint ventures are initially recognized at cost and adjusted thereafter to recognize the Company’s share of the profits and losses. When the Company’s share of losses in a joint venture equals or exceeds its interests in the joint venture, the Company does not recognize further losses, unless it has incurred obligations or made payments on behalf of the joint venture.

When the Company’s investment in the joint venture does not qualify for accounting under the equity method because the Company does not have sufficient control or influence, then, except as provided for below, the investment in the joint venture would be accounted for at fair value.

Specifically, ASC 321-10-35-2 states, in part, that an entity may measure an equity security without a readily determinable fair value that does not qualify for the practical expedient to estimate fair value in accordance with paragraph 820-10-35-59 at its cost minus impairment, if any. As such, the Company has recorded its investment in the joint venture at cost less impairment, if any (See Note 4).

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Table of Contents

Blade Air Mobility, Inc. and Consolidated Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(amounts in thousands, except share and per share data)

Note 2 – Summary of Significant Accounting Policies (Continued)

Net Loss per Common Share

Basic loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding, plus the impact of common shares, if dilutive, resulting from the exercise of outstanding stock options, restricted shares and the warrants.

At June 30, 2021 and 2020, the following outstanding Common Stock equivalents have been excluded from the calculation of net loss per share because their impact would be anti-dilutive.

    

For the Three and Nine Months Ended June 30,

    

2021

    

2020

Warrants to purchase shares of Class A Common Stock

14,166,667

Options to purchase shares of Class A Common Stock

 

9,689,826

 

8,486,974

Restricted shares of Class A Common Stock

 

703,137

 

Total potentially dilutive securities

 

24,559,630

 

8,486,974

Revenue Recognition

The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers. The core principle of the revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods and services transferred to the customer. The following five steps are applied to achieve that core principle:

Step 1: Identify the contract with the customer

Step 2: Identify the performance obligations in the contract

Step 3: Determine the transaction price

Step 4: Allocate the transaction price to the performance obligations in the contract

Step 5: Recognize revenue when the company satisfies a performance obligation

The Company does not have any significant contracts with customers requiring performance beyond delivery.

For passenger revenue, seats or monthly or annual flight passes are typically purchased using the Blade App, and paid for via credit card transactions, wire, check, customer credit and gift cards, with payments principally collected by the Company in advance of the performance of related services. The Company initially records flight sales in its unearned revenue, deferring revenue recognition until the travel occurs. Unearned revenue from gift card purchases is recognized as revenue when a flight is flown or upon the expiration of the gift card. Unearned revenue from the Company’s monthly commuter pass and annual pass is recognized ratably over the term of the pass. For travel that has more than one flight segment, the Company deems each segment as a separate performance obligation and recognizes revenue for each segment as travel occurs. Fees charged in association with add-on services or changes or extensions to non-refundable seats sold are considered part of the Company's passenger performance obligation. As such, those fees are deferred at the time of collection and recognized at the time the travel is provided.

As of June 30, 2021 and September 30, 2020, the Company's balance in its deferred revenue is $5,266 and $3,973, respectively. Deferred revenue consists of unearned revenue, prepaid monthly and annual flight passes, customer credits, and gift card obligations. Unearned revenue represents principally the flight revenues received in advance of the actual flight. Customer credits represents unearned revenue for flights reservations that typically were cancelled for good reason by the customer. The customer has one year to use the credit as payment for a future flight with the Company. Gift cards represent prepayment of flight costs. The Company recognizes revenue for expired customer credits upon expiration.

11

Table of Contents

Blade Air Mobility, Inc. and Consolidated Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(amounts in thousands, except share and per share data)

Note 2 – Summary of Significant Accounting Policies (Continued)

Revenue Recognition (Continued)

Certain governmental taxes are imposed on the Company's flight sales through a fee included in flight prices. The Company collects these fees and remits them to the appropriate government agency. These fees are excluded from revenue.

The Company’s quarterly financial data is subject to seasonal fluctuations. Historically, its third and fourth quarter (quarters ended on June 30 and September 30) financial results have reflected higher travel demand, and were better than the first and second quarter financial results.

Blade operates in three key lines of business:

Short Distance – Consisting primarily of flights: (i) between 60 and 100 miles in distance, largely servicing commuters with prices between $595 and $795 per seat and (ii) between New York area airports and dedicated Blade terminals in Manhattan’s heliports for $195 per seat (or $95 per seat with the purchase of an annual Airport Pass for $795). Prices per seat presented at full dollar value and not rounded.
MediMobility Organ Transport and Jet – Consisting of transportation of human organs for transplant, non-medical jet charter and, by-the-seat, jet flights between New York and both Miami and Aspen.
Other – Consists principally of revenues from brand partners for exposure to Blade fliers and certain ground transportation services.

Disaggregated revenue by product line was as follows:

 

For the Three Months Ended

June 30, 

Product Line

    

2021

    

2020

Short distance

$

5,721

$

629

MediMobility organ transport and jet

 

6,500

 

2,636

Other

 

730

 

173

Total Revenue

$

12,951

$

3,438

    

For the Nine Months Ended

June 30, 

Product Line

    

2021

    

2020

Short distance

$

8,900

$

5,767

MediMobility organ transport and jet

 

19,753

 

9,089

Other

 

1,557

 

259

Total Revenue

$

30,210

$

15,115

Advertising

Advertising costs, which are included in selling and marketing expenses, are expensed as incurred. Advertising costs were $383 and $138 for the three months ended June 30, 2021 and 2020, respectively. Advertising costs were $1,093 and $1,019 for the nine months ended June 30, 2021 and 2020, respectively.

Cost of Revenue

Cost of revenue consists principally of flight costs paid to operators of aircraft under contractual arrangements with Blade and landing fees.

12

Table of Contents

Blade Air Mobility, Inc. and Consolidated Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(amounts in thousands, except share and per share data)

Note 2 – Summary of Significant Accounting Policies (Continued)

Software Development Costs for Internal Use

Costs incurred for the development of the Company’s internal use software are expensed as incurred.

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC 718, “Compensation - Stock Compensation” (“ASC 718”). ASC 718 establishes accounting for stock-based awards exchanged for employee and consultant services. Under the provisions of ASC 718, stock-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as expense over the employee’s requisite service period (generally the vesting period of the equity grant). The fair value of the Company’s stock options are estimated using the Black Scholes option-pricing model with the following assumptions: fair value of the Company’s common stock, expected volatility, dividend rate, risk free interest rate and the expected life. The Company utilized a third party to determine the fair value of the Company’s common stock. The Company calculates the expected volatility using the historical volatility for a pool of peer companies over the most recent period equal to the expected term and evaluates the extent to which available information indicate that future volatility may differ from historical volatility. The expected dividend rate is zero as the Company does not expect to pay or declare any cash dividends on its common stock. The risk-free rates for the expected terms of the stock options are based on the U.S. Treasury yield curve in effect at the time of the grant. The Company has not experienced significant exercise activity on stock options. Due to the lack of historical information, the Company determined the expected term of its stock option awards issued using the simplified method. The simplified method assumes each vesting tranche of the award has a term equal to the midpoint between when the award vests and when the award expires. The Company recognizes forfeitures at the time the forfeiture occurs.

Restricted stock awards are granted at the discretion of the Company’s Board of Directors. These awards are restricted as to the transfer of ownership and generally vest over the requisite service period.

Recently Issued and Adopted Accounting Pronouncements

In December 2019, FASB issued ASU 2019-12 Simplification of Income Taxes (Topic 740) Income Taxes. ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify U.S. GAAP for other areas of Topic 740 by clarifying and amending existing guidance. ASU 2019-12 is effective for public companies for annual periods beginning after December 15, 2020, including interim periods within those fiscal years. The standard will apply as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. The Company is in the process of evaluating the impact of the adoption of ASU 2019-12 on the Company’s financial statements and disclosures.

13

Table of Contents

Blade Air Mobility, Inc. and Consolidated Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(amounts in thousands, except share and per share data)

Note 2 – Summary of Significant Accounting Policies (Continued)

Recently Issued and Adopted Accounting Pronouncements (Continued)

In August 2020, the FASB issued ASU No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40).” The objective of this update is to simplify the accounting for convertible preferred stock by removing the existing guidance in ASC 470-20, “Debt: Debt with Conversion and Other Options,” that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock. The guidance in ASC 470-20 applies to convertible instruments for which the embedded conversion features are not required to be bifurcated from the host contract and accounted for as derivatives. In addition, the amendments revise the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification. These amendments are expected to result in more freestanding financial instruments qualifying for equity classification (and, therefore, not accounted for as derivatives), as well as fewer embedded features requiring separate accounting from the host contract. This amendment also further revises the guidance in ASU 260, “Earnings per Share,” to require entities to calculate diluted earnings per share (EPS) for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares. The amendments in ASU 2020-06 are effective for fiscal years beginning after December 15, 2023, with early adoption permitted. The Company does not expect the adoption of ASU 2020-06 to have a significant impact on its consolidated financial statements.

Note 3 – Merger Agreement

On May 7, 2021, the Merger between Blade and Experience was consummated. Pursuant to the Merger Agreement, at the closing date of the Merger, the outstanding shares of Old Blade common stock and preferred stock were cancelled and converted into (a) 10,024,296 shares of Blade Class A Common Stock for each outstanding share of Old Blade common stock, including shares that were subject to vesting conditions outstanding as of the closing date, (b) 16,101,172 shares of Blade Class A Common Stock for each outstanding share of Old Blade Series Seed Preferred Stock, Old Blade Series A Preferred Stock and Old Blade Series B Preferred Stock, outstanding as of the closing date (collectively, the “Old Blade Preferred Stock” and together with the Old Blade Common Stock, the “Old Blade Stock”) and/or (c) 9,689,826 options to purchase a number of shares of Blade Class A Common Stock at an exercise price calculated pursuant to the Merger Agreement for each option to acquire Old Blade Common Stock outstanding as of the closing date (each, a “Blade Option”), as calculated pursuant to the Merger Agreement.

The Merger was accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with GAAP. Under this method of accounting, EIC is treated as the “acquired” company for financial reporting purposes. This determination was based primarily on Old Blade having the ability to appoint a majority of the initial Board of the combined entity, Old Blade's senior management comprising the majority of the senior management of the combined company, and the ongoing operations of Old Blade comprising the ongoing operations of the combined company. Accordingly, for accounting purposes, the Merger was treated as the equivalent of Blade issuing shares for the net assets of EIC, accompanied by a recapitalization. The net assets of EIC was stated at historical cost, with no goodwill or other intangible assets recorded. The historical statements of the combined entity prior to the Merger are presented as those of Old Blade.

14

Table of Contents

Blade Air Mobility, Inc. and Consolidated Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(amounts in thousands, except share and per share data)

Note 3 – Merger Agreement (Continued)

The Company’s net assets acquired through the consummation of the Merger consisted of:

Cash, net of recapitalization costs

    

$

213,585

Prepaid expenses and other current assets

 

90

Accounts payable and accrued expenses

 

(348)

Warrant liability

 

(23,886)

Net assets acquired

$

189,441

Of the total recapitalization costs incurred of $27,263, $25,521 were allocated to equity and $1,742 were allocated to the warrant liabilities, and charged to other expenses on the Company’s condensed consolidated statement of operations.

The warrants acquired in the Merger include (a) redeemable warrants issued by EIC and sold as part of the units in the EIC IPO (whether they were purchased in the EIC IPO or thereafter in the open market), which are exercisable for an aggregate of 9,166,666 shares of Class A common stock at a purchase price of $11.50 per share (the “Public Warrants”) and (b) warrants issued by EIC to the Sponsor in a private placement simultaneously with the closing of the EIC IPO, which are exercisable for an aggregate of 5,000,000 shares of EIC Class A common stock at a purchase price of $11.50 per share (the “Private Placement Warrants”).

Simultaneous with the closing of the Merger, on May 7, 2021, the Company completed a PIPE financing, whereby the Company received $125,000 gross proceeds ($119,634 net of transaction costs) in exchange for 12,500,000 shares of Class A Common Stock.

Note 4 – Investment in Joint Venture

On March 24, 2019, and as amended on February 25, 2020, the Company entered into a joint venture agreement and a license agreement (the “First Amended Joint Venture and License Agreements”) with Hunch Ventures and Investments Private Limited, a private limited company incorporated under the laws of India (“Hunch”) and FlyBlade India Private Limited, a company incorporated and validly existing under the provisions of the Companies Act, 2013 (“FlyBlade India”), whereby the Company and Hunch initially invested $200 for 10% interest and $1,800 for 90% interest, respectively, for undertaking the business of FlyBlade India. Subsequently, upon the issuance of additional shares to Hunch in exchange for additional investment by Hunch, the Company’s interest fell below 10%. Pursuant to the First Amended Joint Venture and License Agreements, the Company and Hunch agreed to establish FlyBlade India as a joint venture and support it in carrying on the business operations. The Company agreed to provide the licensed IP support related to the software developed for short distance aviation services along with its trademarks in exchange for quarterly royalty payments of four percent (4)% of Gross Revenue for the period where Gross Revenue was up to $10,000 in a calendar year, quarterly royalty payments of three percent (3)% on Gross Revenue in excess of $10,000 and up to $40,000 in a calendar year, and quarterly royalty payments of one and half percent (1.5)% on Gross Revenue exceeding $40,000 (collectively, the "Royalties") in a calendar year. In addition to the Royalties, the Company could receive three percent (3)% of FlyBlade India’s profits before tax in each year that FlyBlade India attained a minimum of $3,500 in annual profits before income tax. Hunch agreed to provide support in carrying out the day to day operations, including the implementation of the business plan and hiring of personnel, ensuring compliance with local requirements and assisting with legal arrangements as needed by the business. For the three months ended June 30, 2021 and 2020, the Company recorded royalty revenue of $2 and $0, respectively, under this arrangement. For the nine months ended June 30, 2021 and 2020, the Company recorded royalty revenue of $21 and $0, respectively, under this arrangement.

In accordance with the First Amended Joint Venture and License Agreements, FlyBlade India was permitted to have a total of five directors, three of which were permitted to be appointed by Hunch and provided that Blade held at least a 10% interest, a single director was permitted to be appointed by the Company. Based upon Blade having less than ten percent (10)% interest on June 30, 2021, Blade held no board seat and lacked the power to appoint members of the FlyBlade India executive management team. As such, the Company is viewed as having minimal influence and control over FlyBlade India. As of June 30, 2021, the Company’s investment in the joint venture is recorded at cost.

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Table of Contents

Blade Air Mobility, Inc. and Consolidated Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(amounts in thousands, except share and per share data)

Note 4 – Investment in Joint Venture (Continued)

The Company determined that it does not control the joint venture and therefore was not required to consolidate. In addition, Blade does not have sufficient control to influence and as such the equity method is not appropriate. The investment should be recorded at fair value. However, the Company elected the practicability exception to fair value measurement because the equity security does not have a readily determinable fair value. Accordingly, the Company has recorded the investment at cost less impairment if any. Based upon a qualitative assessment, the Company has determined that the investment should not be impaired. Qualitative considerations included an evaluation of the COVID-19 pandemic delays to the start-up of flight operations in India. Both Hunch and Blade remain committed to the venture and discussions are underway with third parties to raise the next round of equity capital for the joint venture. As such, no impairment was warranted as of June 30, 2021.

As of June 30, 2021 and September 30, 2020, other non-current assets included amounts due from Blade India of $105 and $73, respectively.

Note 5 – Intangible Assets

Purchase of Customer List – Underhill

On March 8, 2019, the Company purchased a customer list from Underhill Holdings, LLC, doing business as Fly the Whale, a seaplane operator that previously competed with Blade on one route between Manhattan and Long Island (“Underhill”). Underhill agreed to refrain from marketing its by-the-seat services to the customer names sold to Blade and refrain from offering by-the-seat services that are competitive with Blade. The Company paid Underhill $250 in cash for this customer list. Blade is amortizing the customer list using the straight-line method over its estimated useful life of five years. Blade has other pre-existing arrangements with Underhill, including capacity agreements for the utilization of certain amphibious seaplane and helicopter operator activities (See Note 9).

Purchase of Blade Domain

On December 16, 2020, the Company purchased the website domain “Blade.com” for $503 in cash. Blade has recorded the purchase of the domain as an indefinite lived intangible asset, subject to impairment testing at least annually. As of June 30, 2021, the Company did not deem impairment of its website domain necessary.

Intangible Assets

The following table presents information about the Company's intangible assets at:

    

June 30, 2021

September 30, 2020

    

    

Gross

    

    

    

Gross

    

    

Carrying

Accumulated

Carrying

Accumulated

Amount

Amortization

Net

Amount

Amortization

Net

Intangible assets

Estimated useful life

Customer list

5 years

$

942

$

(554)

$

388

$

942

$

(414)

$

528

Domain name

Indefinite

 

503

 

 

503

 

 

 

Trademarks

10 years

 

6

 

(2)

 

4

 

6

 

(1)

 

5

Total

$

1,451

$

(556)

$

895

$

948

$

(415)

$

533

For the three months ended June 30, 2021 and 2020 amortization of its finite-lived intangible assets were $48 and $48, respectively. For the nine months ended June 30, 2021 and 2020 amortization of its finite-lived intangible assets were $142 and $142, respectively.

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Blade Air Mobility, Inc. and Consolidated Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(amounts in thousands, except share and per share data)

Note 6 – Right-of-Use Asset and Operating Lease Liability

The Company has entered into operating leases consisting principally of its airport and heliport terminals.

At the inception of a contract, the Company will assess whether the contract is, or contains, a lease. The Company's assessment is based on: (i) whether the contract involves the use of a distinct identified asset, (ii) whether the Company obtained the right to substantially all the economic benefit from the use of the asset throughout the period, and (iii) whether the Company has the right to direct the use of the asset.

The Company generally uses its incremental borrowing rate as the discount rate for leases, unless an interest rate is implicitly stated in the lease. The Company’s incremental borrowing rate used for all leases under ASC 842 was 5.00%, the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. The lease term for the Company’s leases include the noncancellable period of the lease plus any additional periods covered by either a Company option to extend the lease that the Company is reasonably certain to exercise, or an option to extend the lease controlled by the lessor. ROU assets, once recorded, are reviewed for impairment.

Lease expense for operating leases consists of the lease payments plus any initial direct costs and is recognized on a straight-line basis over the lease term.

Balance sheet information related to the Company’s leases is presented below:

As of

Operating leases:

    

June 30, 2021

    

September 30, 2020

Operating right-of-use asset

 

$

458

 

$

737

Operating lease liability, current

 

 

333

 

 

430

Operating lease liability, long term

 

 

95

 

 

291

The following provides details of the Company’s lease expense:

For the Three Months Ended June 30,

    

For the Nine Months Ended June 30,

Lease cost

    

2021

    

2020

    

2021

    

2020

Short-term lease cost

$

66

$

18

$

118

$

48

Operating lease cost

 

116

 

147

 

343

 

329

Total

$

182

$

165

$

461

$

377

Other information related to leases is presented below:

    

As of June 30, 

    

As of September 30, 

 

2021

2020

Weighted-average discount rate – operating lease

 

5.00

%  

5.00

%

Weighted-average remaining lease term – operating lease (in months)

 

13

 

21

As of June 30, 2021, the expected annual minimum lease payments of the Company’s operating lease liabilities and other short-term leases were as follows:

For the Years Ended September 30,

    

  

2021 (three months)

 

$

133

2022

 

 

270

2023

 

 

36

Total future minimum lease payments, undiscounted

 

 

439

Less: Imputed interest for leases in excess of one year

 

 

(11)

Present value of future minimum lease payments

 

$

428

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Blade Air Mobility, Inc. and Consolidated Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(amounts in thousands, except share and per share data)

Note 7 – Note Payable

On April 8, 2020, the Company entered into a note evidencing an unsecured loan (“PPP Loan”) in the principal amount of $1,165 pursuant to the Paycheck Protection Program (“PPP”) under the Coronavirus Aid Relief and Economic Security Act (“CARES Act”). The PPP Loan is administered by the U.S. Small Business Administration and the Company’s loan was made through JP Morgan Chase Bank. The PPP Loan bore interest at a fixed interest rate of zero point ninety-eight (0.98)% percent per year and would have matured in two (2) years after the issuance date. Payment of interest was deferred through September 2021.

The proceeds of the PPP Loan were eligible to be used for payroll costs, costs related to certain group health care benefits, rent payments, utility payments, mortgage interest payments, interest payments on other debt obligation that were incurred before February 15, 2021. The PPP Loan was guaranteed by the United States Small Business Administration (“SBA”). On May 7, 2021, the Company repaid the PPP Loan in full.

For the three and nine months ended June 30, 2021, the Company recorded interest expense of $6 and $12, respectively, which is included in interest income (expense), net on the Company’s condensed consolidated statement of operations.

Note 8 – Stock-Based Compensation

Option Awards

On December 14, 2020, the Board of Directors granted an option for the purchase of 10,920 shares of the Company’s Class A common stock to an employee of the Company. The option, which was granted under the Company’s 2015 Equity Incentive Plan, had an exercise price of $10.01 per share and a term of 10 years