Blade Air Mobility, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Acquisitions

Acquisitions

12 Months Ended

Sep. 30, 2021

Business Combination and Asset Acquisition [Abstract]

Acquisition of Trinity Air Medical, Inc. ("Trinity")

On September 15, 2021, the Company acquired 100% of the equity interests in Trinity, a nationwide, multi-modal organ logistics and transportation company. Trinity is a wholly-owned subsidiary of the Company and the results of Trinity for the period from September 16, 2021 (“acquisition date”) to September 30, 2021 are included in the MediMobility Organ Transport and Jet line of business.

The total purchase consideration included $23,065 in cash paid at closing. Acquisition costs of $272 were expensed as incurred and are included in general and administrative expenses in the consolidated statement of operations for the year ended September 30, 2021. In addition, potential earn-out payments may be made contingent upon Trinity’s achievement of certain EBITDA targets over a three-year period. The earn-out is calculated and paid annually in arrears and is the product of a multiple (12, 6 and 3 for the years 2021, 2022 and 2023, respectively) and the difference between the calculated year actual EBITDA and the contractual target EBITDA. The sellers are eligible for the earn-out only while employed with the Company, therefore, the earn-out is considered a compensation and will be recognized as an expense when incurred. At least 70% of the payment have to be made in cash.

Trinity Net Assets Acquired

The assets acquired and liabilities assumed have been included in the consolidated financial statements as of the acquisition date. Total assets acquired included identified intangible assets of $11,850. At the time of acquisition, the Company recognized an asset for goodwill, determined as the excess of the purchase price over the net fair value of the assets acquired and liabilities assumed, that amounted to $13,271, which is not deductible for tax purposes. The value of the components within goodwill included expected revenue and cost synergies, the business model, technology capabilities, new customers, and key personnel.

The purchase price allocation is preliminary, and as additional information becomes available, the Company may further revise the preliminary purchase price allocation during the remainder of the measurement period, which will not exceed 12 months from the acquisition date. Measurement period adjustments will be recognized in the reporting period in which the adjustment amounts are determined. The purchase price of the Trinity acquisition was allocated on a preliminary basis as follows:


Accounts receivable	$	2,259
Prepaid expenses and other current assets	510
Property and equipment	256
Identifiable Intangible assets	11,850
Operating lease right-of-use assets	348
Total identifiable assets acquired	15,223
Accounts payable	1,230
Operating lease liability	361
Deferred tax liability	3,838
Total liabilities assumed	5,429
Net assets acquired	9,794
Goodwill	13,271
Total consideration	$	23,065

An assessment of the fair value of identified intangible assets and their respective lives as of the acquisition date are as follows:


	Estimated Useful Life	Fair Value
Customer list	10 years	$	10,600
Trademark	6 years	1,000
Developed technology	3 years	250
Total intangible assets		$	11,850

Identified intangible assets in the table above are amortized on a straight-line basis over the estimated useful lives. The Company believes that the straight-line method of amortization is the most appropriate methodology as it is supported by the pattern in which the economic benefits of the intangible assets are consumed.

The fair value of the customer list and trademark was determined using the income approach. In the income approach, the fair value of an asset is based on the expected receipt of future economic benefits such as earnings and cash inflows from current sales projections and estimated costs over the estimated contractual relationship period. Indications of value were developed by discounting these benefits to their present value.

The fair value of the developed technology was determined using the replacement cost approach. In the replacement cost approach, the fair value of an asset is based on the cost of a market participant to reconstruct a substitute asset of comparable utility, adjusted for any obsolescence. The fair value of the asset would include the seller’s expected profit margin in the market and any opportunity costs lost over the period to reconstruct the substitute asset.

Unaudited Pro Forma Information

The following unaudited pro forma financial information presents what our results would have been had Trinity been acquired on October 1, 2019. The unaudited pro forma information presented below is for informational purposes only and is not necessarily indicative of our consolidated results of operations of the consolidated business had the Trinity acquisition actually occurred at the beginning of fiscal year 2020 or of the results of our future operations of the consolidated business.


	For the Year Ended September 30,
	2021		2020
	(Unaudited)
Revenue	$	69,485	$	39,032
Net loss (excluding Trinity's nonrecurring items)	(44,344)		(7,354)

The pro forma financial information includes adjustments to net loss to reflect the additional amortization that would have been recorded assuming the fair value adjustments to intangible assets had been applied from October 1, 2019.