UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-K | | | | | |
| ☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended: December 31, 2023 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.) |
| | |
55 Hudson Yards, 14th Floor New York, NY, | | 10001 |
| (Address of principal executive offices) | | (Zip Code) |
| | | | | | | | |
| (212) 967-1009 | |
| (Registrant’s telephone number, including area code) | |
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: | | | | | | | | | | | | | | |
| Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
| 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 |
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ☐ No ☒
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 registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See 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 checkmark 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
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 June 30, 2023, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the voting and non-voting common stock held by non-affiliates, computed by reference to the closing sales price of $3.94 per share, was approximately $231.2 million.
Registrant had 75,433,154 shares of common stock outstanding as of March 6, 2024.
____________________________
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive proxy statement relating to its annual meeting of stockholders to be held in 2024 (the “2024 Annual Meeting”), to be filed with the Securities and Exchange Commission (the “SEC”) within 120 days after the end of the fiscal year to which this Annual Report on Form 10-K relates, are incorporated herein by reference where indicated. Except with respect to information specifically incorporated by reference in this Annual Report on Form 10-K, such proxy statement is not deemed to be filed as part hereof.
BLADE AIR MOBILITY, INC.
FORM 10-K
TABLE OF CONTENTS
NOTE REGARDING FORWARD–LOOKING STATEMENTS
This Annual Report on Form 10-K may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified using forward-looking terminology, including the terms “believes”, “estimates”, “anticipates, “expects”, “seeks”, “projects”, “intends”, plans,” “may”, “will” or “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in several places throughout this report and include statements regarding our intentions, beliefs or current expectations concerning, among other things, results of operations, financial condition, liquidity, prospects, growth, strategies, the markets in which we operate and the development of Electric Vertical Aircraft (“EVA”) technology. Such forward-looking statements are based on available current market material and management’s expectations, beliefs, and forecasts concerning future events impacting us and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and generally beyond our control. Actual results and the timing of events may differ materially from the results anticipated in these forward-looking statements.
Our operations and financial results are subject to various risks and uncertainties. The following are among those factors, but are not the only factors, that could adversely affect us and/or that may cause actual results to differ materially from such forward-looking statements:
•continued occurrence of significant losses, which we have experienced since inception;
•the markets in which we operate may fail to grow or may grow more slowly than expected;
•our ability to effectively market and sell air transportation as a substitute for conventional methods of transportation;
•changes in consumer preferences, discretionary spending and other economic conditions;
•reliance on certain customers which could impact our Passenger segment revenue;
•the inability or unavailability to use or take advantage of the shift, or lack thereof, to EVA technology;
•our ability to enter new markets and offer new routes and services;
•any adverse publicity stemming from accidents involving small aircraft, helicopters or charter flights and, in particular, any accidents involving our third-party operators;
•any change to the ownership of our aircraft and the operational and business challenges related thereto;
•effects of competition;
•our reliance on contractual relationships with certain transplant centers, hospitals and Organ Procurement Organizations;
•harm to our reputation and brand;
•our ability to provide high-quality customer support;
•our ability to maintain a high daily aircraft usage rate and to aggregate fliers on our by-the-seat flights;
•impact of natural disasters, outbreaks and pandemics, economic, social, weather, growth constraints, geopolitical, and regulatory conditions or other circumstances on metropolitan areas and airports where we have geographic concentration;
•the effects of climate change;
•the availability of aircraft fuel;
•our ability to address system failures, defects, errors or vulnerabilities in our website, applications, backend systems or other technology systems or those of third-party technology providers;
•interruptions or security breaches of our information technology systems;
•our placements within mobile operating systems and application marketplaces;
•our ability to protect our intellectual property rights;
•our use of open source software;
•our ability to expand and maintain our infrastructure network;
•our ability to access additional funding;
•the increase of costs and risks associated with international expansion;
•our ability to identify, complete and successfully integrate future acquisitions;
•our ability to manage our growth;
•increases in insurance costs or reductions in insurance coverage;
•the loss of key members of our management team;
•our ability to maintain our company culture;
•effects of fluctuating financial results;
•our reliance on third-party operators to provide and operate aircraft;
•the availability of third-party aircraft operators to match demand;
•disruptions to third-party operators and providers workforce;
•increases in insurance costs or reductions in insurance coverage for our third-party aircraft operators;
•the possibility that our third-party aircraft operators may illegally, improperly or otherwise inappropriately operate our branded aircraft;
•our reliance on third-party web service providers;
•changes in our regulatory environment;
•risk and impact of any litigation we may subject to;
•regulatory obstacles in local governments;
•the expansion of domestic and foreign privacy and security laws;
•the expansion of environmental regulation;
•our ability to remediate any material weaknesses or maintain effective internal controls over financial reporting;
•our ability to maintain effective internal controls and disclosure controls;
•changes in fair value of our warrants;
•changes to the price of our securities;
•the possibility that our warrants may expire worthless;
•our ability to redeem outstanding warrants;
•our intention to not declare any dividends in the foreseeable future;
•the possibility that we may issue additional equity securities;
•our use of “smaller reporting company” exemptions from disclosure requirements;
•impact of our loss of “emerging growth company” status;
•provisions in our charter that may discourage unsolicited takeover proposals;
•provisions in our charter that designate exclusive forum; and
•the other factors described elsewhere in this Annual Report, included under the headings “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition” or as described in the other documents and reports we file with the SEC.
Actual results, performance or achievements may differ materially, and potentially adversely, from any forward-looking statements and the assumptions on which those forward-looking statements are based. There can be no assurance that the data contained herein is reflective of future performance to any degree. You are cautioned not to place undue reliance on forward-looking statements as a predictor of future performance. All information set forth herein speaks only as of the date hereof and we disclaim any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this Annual Report on Form 10-K.
Unless the context indicates otherwise, references in this Annual Report on Form 10-K to the “Company,” “Blade,” “we,” “us,” “our,” and similar terms refer to Blade Air Mobility, Inc.
Part I.
Item 1. Business
Business Overview
Blade Air Mobility, Inc. (“Blade” or the “Company”) provides air transportation and logistics for hospitals across the United States, where it is one of the largest transporters of human organs for transplant, and for passengers, with helicopter and fixed wing services primarily in the Northeast United States, Southern Europe and Western Canada. Based in New York City, Blade's asset-light model, coupled with its exclusive passenger terminal infrastructure and proprietary technologies, is designed to facilitate a seamless transition from helicopters and fixed-wing aircraft to Electric Vertical Aircraft (“EVA” or “eVTOL”), enabling lower cost air mobility that is both quiet and emission-free.
Blade currently operates in three key product lines across our Passenger and Medical segments:
Passenger segment
•Short Distance – Consisting primarily of helicopter and amphibious seaplane flights in the United States, Canada and Europe between 10 and 100 miles in distance. Flights are available for purchase both by-the-seat and on a full aircraft charter basis.
•Jet and Other – Consists principally of revenues from non-medical jet charter and by-the-seat jet flights between New York and South Florida, revenue from brand partners for exposure to Blade fliers and certain ground transportation services.
Medical segment
•MediMobility Organ Transport – Consisting primarily of transportation of human organs for transplant and/or the medical teams supporting these services. Blade also offers additional services including donor logistics coordination and support evaluating potential donor organs .
Our Business Model
Blade leverages an asset-light business model: we primarily utilize aircraft that are owned and/or operated by third-parties on Blade’s behalf. In these arrangements, pilots, maintenance, hangar, insurance, and fuel are all costs borne by our network of operators, which provide aircraft flight time to Blade at fixed hourly rates. This enables our operator partners to focus on training pilots, maintaining aircraft and flying, while we maintain the relationship with our customer from booking through flight arrival. For flights offered for sale by-the-seat, Blade schedules flights based on demand analysis and takes the economic risk of aggregating fliers to optimize flight profitability, providing predictable margins for our operators.
When utilizing third-party aircraft and/or aircraft operators, we typically pre-negotiate fixed hourly rates and flight times, paying only for flights actually flown, creating a predictable and flexible cost structure. Blade provides guaranteed flight commitments to some of our third-party operators through capacity purchase agreements, which enable Blade to ensure dedicated access to such aircraft with enhanced crew availability, lower costs and, in many cases, the ability to unlock more favorable rates when flying more than the minimum number of hours we guarantee to the operator. Additionally, a significant portion of Blade trips are flown by safety-vetted operators to whom Blade makes no commitments, providing us with additional flexible capacity for high demand periods.
We prioritize the use of dedicated aircraft under capacity purchase agreements, which provide better economics, but size our commitments significantly below our expected demand to limit the risk of a guarantee shortfall and then fulfill incremental demand through our network of non-dedicated operators. In 2023, approximately 46% of Blade’s flight costs were pursuant to capacity purchase agreements that included flight volume guarantees from Blade.
Blade’s proprietary “customer-to-cockpit” technology stack enables us to manage fliers and organ transports across numerous simultaneous flights with multiple operators around the world. We believe that this technology, which provides (i) real-time tracking of organ transports and passenger flights; (ii) profit/loss information on a flight-by-flight basis; (iii)
customized portals for all relevant parties including pilots, accounting teams, operator dispatch, transplant coordinators and Blade’s logistics team; and (iv) a customer-facing app for passenger missions, will enable us to continue to scale our business. This technology stack was built with future growth in mind and is designed to allow our platform to be easily scaled to accommodate, among other things, rapid increases in volume, new routes, new operators, broader flight schedules, international expansion, next-generation verticraft and ancillary services (e.g., last/first-mile ground connections, trip cancellation insurance, baggage delivery) through our mobile apps, website and cloud-based tools.
Our asset-light business model was developed to be scalable and profitable using conventional aircraft today while enabling a seamless transition to EVA, once they are certified for public use. We intend to leverage the expected lower operating costs of EVA versus helicopters to reduce the consumer’s price for our flights. Additionally, we expect the reduced noise footprint and zero carbon emission characteristics of EVA to allow for the development of new, vertical landing infrastructure (“vertiports”) in our existing and new markets.
Competition
Passenger segment
In both our Short Distance and Jet and Other product lines, we compete primarily with Part 135 operators or brokers of helicopters, seaplanes and jets. In most cases, these operators offer only full aircraft charter and do not compete with our by-the-seat offerings. However, in certain instances other air carriers offer competing by-the-seat service. Additionally, we may compete with ground transportation, rail or ferry services that are typically lower cost, but generally involve longer journeys.
In some cases, aircraft operators are able to offer lower costs than Blade on a specific aircraft type. We compete primarily based on our technology-enabled service, dedicated infrastructure, and access to a wide variety of aircraft types, which can lower costs for our customers based on our ability to select the most appropriate aircraft for the requested distance and payload.
The urban air mobility industry is still developing and evolving, but we expect it to be highly competitive. Our potential future competitors may be able to devote greater resources to the development of their current and future technologies or the promotion and sale of their offerings, or offer lower prices. For example, some multimodal transportation providers and even commercial airlines have expressed interest in air mobility, and Uber Technologies, Inc. has a significant investment in a company that is developing EVA aircraft. Moreover, potential manufacturers of EVAs may choose to develop vertically integrated businesses, or they may contract with competing air mobility service providers rather than entering into operating contracts with us, which would be a threat to our Short Distance product line.
Our potential competitors also may establish cooperative or strategic relationships among themselves or with third parties, including regional or national helicopter or heliport operations that we rely on to offer our urban air mobility services, which may further enhance their resources and offerings. It is possible that domestic or foreign companies or governments, some with greater experience in the urban air mobility industry or greater financial resources than we possess, will seek to provide products or services that compete directly or indirectly with ours in the future. Any such foreign competitor could benefit from subsidies or other protective measures provided by its home country.
Medical segment
In our MediMobility Organ Transport product line, we compete primarily with Part 135 jet operators and a limited number of asset-light logistics businesses. We compete primarily based on our technology-enabled service and access to a wide variety of aircraft types, including helicopters, jets and turboprops, in many locations across the United States. This can lower costs for our customers based on our ability to select the most appropriate aircraft located in the most efficient area for the requested distance and payload.
The organ transportation industry is rapidly evolving as new technology for organ preservation is introduced. We believe new technology will benefit our business by increasing the overall supply of organs to be transplanted. However, some companies developing organ preservation technology now provide organ transportation services that compete with us, as well as additional services that we do not currently offer, such as surgical organ recovery, that our customers find valuable.
We believe our ability to compete successfully as a diversified air mobility company will depend on a number of factors, which may change in the future due to increased competition, including the price of our offerings, customer confidence in the safety of our offerings, customer satisfaction for the service we offer, and, for by-the-seat offerings, the routes, frequency of flights and availability of seats offered through our platform. If we are unable to compete successfully, our business, financial condition and results of operations could be adversely affected.
Human Capital Resources
As of December 31, 2023, we had a total of 281 employees, with 235 individuals working in our operations located in the United States and 46 employees in our operations based in Europe. Among these employees, we had 231 permanent employees and 50 temporary employees. None of our employees are represented by a labor union. We believe we have good relationships with our employees and have not experienced any interruptions of operations due to labor disagreements.
Government Regulation
Transportation and Aviation
United States. As an arranger of air travel and an indirect air carrier, we are subject to United States Department of Transportation (“DOT”) regulations governing our advertising and sale of by-the-seat air transportation as well as the advertising and sale of aircraft charter. We are also subject to DOT regulations relating to consumer protection matters such as unfair or deceptive practices, flier complaints and ticket refunding policies and practices. Our operators are subject to the laws and regulations relating to the operation and maintenance of aircraft promulgated by the Federal Aviation Administration (“FAA”). Further, as a transporter of organs for transplant, we are subject to DOT regulations relating to the transportation of organs for transplant. Because Blade does not currently operate aircraft, our business operations are not directly regulated by the FAA. Our ground transportation offerings are governed by applicable local, state and federal regulations and include (i) owned vehicles for our Medical segment, both with and without lights and sirens; and (ii) third-party owned and operated vehicles for use in both our Medical and Passenger segments.
Canada. Our Canadian operations are subject to strict regulations imposed by various Canadian government agencies, including Transport Canada and Nav Canada. These regulations impose restrictions on the way we conduct our business, as well as the activities of our third-party aircraft operators. Additionally, Transport Canada and Nav Canada regulations require specific disclosures to consumers and the filing of flight routes.
France and Monaco. Our French operations are subject to strict regulation by government agencies in the country, including the Direction Générale de l'Aviation Civile (“DGAC”) and the Autorité de la Concurrence. Our Monégasque operations are subject to a complex and constantly changing regulatory landscape governed by the Direction de l'Aviation Civile de Monaco.
India. The Indian Joint Venture’s operations are regulated by Indian government agencies, including the Airports Authority of India, Ministry of Civil Aviation and Directorate General of Civil Aviation.
Privacy and Data Protection
There are many requirements regarding the collection, use, transfer, security, storage, destruction, and other processing of personally identifiable information and other data relating to individuals. Because our technology platform is an integral aspect of our business, compliance with laws governing the use, collection, and processing of personal data is necessary for us to achieve our objective of continuously enhancing the user experience of our mobile application and marketing site.
We receive collect, store, process, transmit, share and use personal information, and other customer data, including health information, and we rely in part on third parties that are not directly under our control to manage certain of these operations and to receive, collect, store, process, transmit, share, and use such personal information, including payment information. A variety of federal, state, local, municipal, and foreign laws and regulations, as well as industry standards (such as the payment card industry standards) govern the collection, storage, processing, sharing, use, retention and security of this information, including the California Online Privacy Protection Act, the Personal Information Protection and Electronic Documents Act, the Controlling the Assault of Non-Solicited Pornography and Marketing Act, the Telephone Protection
and Electronic Protection Act of 1991 (“TCPA”), Section 5 of the Federal Trade Commission Act, and the California Consumer Privacy Act (“CCPA”). The failure to comply with such data protection and privacy regulations can result in fines, penalties, and the enforcement of any non-compliance, which could significantly impact our business operations.
In January 2020, CCPA took effect, which provides new data privacy rights for consumers in California and new operational requirements for companies doing business in California. Furthermore, on January 1, 2023, the California Privacy Rights Act (“CPRA”), which amended and expanded the CCPA, including by providing consumers with additional rights with respect to their personal information, took effect applying to information collected by businesses on or after January 1, 2022. However, enforcement of the CPRA will not begin until July 1, 2023 and enforcement will apply only to violations occurring on or after that date. We believe that the personal information we collect from California residents that use our app, the air transportation services we have offered in California in the past, and direct marketing to California residents for those services, as well as our plans to offer future services in California, have made and in the future will make Blade subject to compliance with CCPA and CPRA.
Moreover, as we offer and advertise our services in Europe, Canada, and Monaco and are subject to privacy regulations in these foreign jurisdictions. The European Union's General Data Protection Regulation (“GDPR”), the Canadian Personal Information Protection and Electronic Documents Act (“PIPEDA”), as well as the Monégasque Data Protection Act (“DPA”) are known for their stringent requirements and can pose significant challenges for companies to comply with. The GDPR sets strict standards for the handling of personal data of individuals in the European Economic Area, and noncompliance can result in significant monetary penalties. In Canada, PIPEDA sets similar standards for protecting personal data and regulating its collection, use, and disclosure. In Monaco, the DPA provides similar protection for personal data and sets standards for the collection, use, and storage of personal information.
The GDPR imposes obligations on data controllers and data processors that have an establishment in the EU or are offering goods or services to, or monitoring the behavior of, individuals within the EU. The GDPR is wide-ranging in scope and imposes numerous requirements on companies that collect and further process personal data, including requirements relating to processing health and other sensitive data. The GDPR also imposes strict rules on the transfer of personal data to countries outside the European Union, including the United States and the United Kingdom post-Brexit, and stipulates a regime of accountability for processors and controllers. Organizations may be required to appoint a data protection officer who reports to the highest level of management within the business. The GDPR permits data protection authorities to impose large penalties for violations of the GDPR, including potential fines of up to €20 million or 4% of annual global revenues of the undertaking, whichever is greater. The GDPR also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for material and immaterial damages resulting from violations of the GDPR.
The CCPA, GDPR, and other similar regulations require companies to give specific types of notice and, in some cases, permit users to opt out of or obtain informed consent for the placement of a cookie or similar technologies on a user’s device for online tracking for behavioral advertising and other purposes and for direct electronic marketing, and the GDPR also imposes additional conditions in order to satisfy such consent, such as a prohibition on pre-checked tick boxes and bundled consents, thereby requiring users to affirmatively consent for a given purpose through separate tick boxes or other affirmative action.
Environmental
Our operators are subject to various federal, state and local laws relating to the protection of the environment, including the discharge or disposal of materials and chemicals and the regulation of aircraft noise, which laws are administered by numerous state and federal agencies. We seek representations of compliance with environmental laws from our operators.
Available Information
Our Annual Report on Form 10-K (Annual Report), Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements and amendments to those reports filed or furnished pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the Exchange Act), are available on the Investor Relations section of our website (https://ir.blade.com/) as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. We also make available through our website other reports filed with or furnished to the SEC under the Exchange Act, including reports filed by our officers and directors under Section 16(a) of the Exchange Act. All of the information on our Investor Relations website is available to be viewed free of charge. The SEC maintains a website (https://www.sec.gov)
that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
We routinely use the Investor Relations section of our website (https://ir.blade.com/), our corporate website (www.blade.com) and our X feed (@flybladenow) as channels of distribution to publish important information about Blade, including financial or other information that may be deemed material to investors. Information contained on our websites or social media channels is not part of this Annual Report or our other filings with the SEC. Except as specifically incorporated by reference into this document, information on these websites or social media channels is not part of this document.
Item 1A. Risk Factors
Our operations and financial results are subject to various risks and uncertainties which could adversely affect our business, financial condition, results of operations, cash flows, and the trading price of our common and capital stock. You should carefully consider the risks described below as well as the other information contained in this Annual Report. The risks and uncertainties in this Annual Report are not the only risks and uncertainties that we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may become material and adversely affect our business, financial condition, results of operations, cash flows, and the trading price of our common stock and warrants.
Risks Related to Our Business and Growth Strategy
We have incurred significant losses since inception. We expect to incur losses in the future, and we may not be able to achieve or maintain profitability.
We have incurred significant losses since inception. While we currently generate revenue primarily from the sale of air transportation, it is difficult for us to predict our future operating results. As a result, our losses may be larger than anticipated, and we may not achieve profitability when expected, or at all. Even if we do, we may not be able to maintain or increase profitability. Further, some of our future growth plans are dependent upon the availability of EVA. There can be no assurance that regulatory approval and availability of EVA, or consumer acceptance of EVA, will occur in a timely manner, if at all. In addition, there may be additional costs associated with the initial build out of EVA infrastructure needed to service our routes and we cannot be sure that EVA will result in expected cost savings or efficiencies, which could in turn affect our profitability.
Further, our ability to generate revenue sufficient to achieve profitability will depend on the successful commercialization of our Passenger services, our ability to secure new transplant centers, organ procurement organizations and hospital customers (collectively, “Medical Customers”), and our ability to effectively integrate acquisitions.
We expect to continue to incur net losses for the foreseeable future as we focus on growing our services in both the United States and internationally. The timing and amount of our operating and capital expenditures will depend on many factors, including:
•the amount of net revenue generated by sales of our Passenger and Medical services;
•our decision to purchase aircraft and/or vehicles;
•our launch of new Medical services, passenger routes and/or products;
•the costs and expenses of expanding our U.S. and international operations;
•the extent to which our urban air mobility services are utilized by fliers in the regions we operate;
•the costs incurred in our efforts to develop our brand and improve awareness;
•the costs, timing and outcomes of any future litigation; and
•the level of our selling, general and administrative expenses.
Because of the numerous risks and uncertainties associated with our expansion and commercialization, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve or maintain profitability.
The markets for our Passenger offerings are still in relatively early stages of growth, and if such markets do not continue to grow, grow more slowly than we expect, or fail to grow as large as we expect, our business, financial condition, and results of operations could be adversely affected.
Blade’s Passenger urban air mobility services have grown rapidly since we launched our business in 2014, however, our service offerings are still relatively new, and it is uncertain to what extent market acceptance will continue to grow, if at all.
Further, we currently operate our Passenger business in a limited number of metropolitan areas. The success of these markets to date and the opportunity for future growth in these markets may not be representative of the potential market for urban air mobility in other metropolitan areas. Our success will depend to a substantial extent on regulatory approval and availability of EVA technology, as well as the willingness of commuters and travelers to widely adopt urban air mobility as an alternative for ground transportation. If the public does not perceive urban air mobility as beneficial, or chooses not to adopt urban air mobility as a result of concerns regarding safety, affordability, or for other reasons, then the market for our offerings may not further develop, may develop more slowly than we expect, or may not achieve the growth potential we expect, any of which could materially adversely affect our business, financial condition and results of operations.
Prior to our offerings, the New York urban air mobility airport transfer market had not been served on a by-the-seat air transportation basis since U.S. Helicopter offered helicopter service in the 2000s. Furthermore, some of the other urban air mobility markets where we plan to expand have never had by-the-seat helicopter services. As a result, the number of potential fliers using our urban air mobility services cannot be predicted with any degree of certainty, and we cannot provide assurance that we will be able to operate in a profitable manner in any of our current or targeted future markets.
Our most recent entry into European and Canadian markets presents the risk of limited brand recognition in these regions. As a result, the lack of brand recognition may result in difficulties in gaining and retaining fliers and building partnerships with local entities. In addition, competition in these new markets may be strong, with established players and new entrants offering similar services. The potential intense competition and limited brand recognition could make it difficult for us to establish a strong market position and generate profitable returns.
Growth of our business will require significant investments in our infrastructure, technology, and marketing and sales efforts. Historically, cash flow from operations has not been sufficient to support these needs. If our business does not generate the level of available cash flow required to support these investments, our results of operations will be negatively affected. Further, our ability to effectively manage growth and expansion of our operations will also require us to enhance our operational systems, internal controls and infrastructure, human resources policies, and reporting systems. These enhancements will require significant capital expenditures and allocation of valuable management and employee resources.
The success of our Passenger segment will be highly dependent on our ability to effectively market and sell air transportation as a substitute for conventional methods of transportation.
We generate a substantial portion of our revenue from the sale of air transportation. Our success depends, in part, on our ability to cost-effectively attract new fliers, retain existing fliers, and increase utilization of our platform by existing fliers. Historically, we have made, and expect that we will need to continue to make, significant investments and implement strategic initiatives in order to attract new fliers, such as flier acquisition campaigns and the launching of new scheduled routes. These investments and initiatives may not be effective in generating sales growth or profits. In addition, marketing campaigns can be expensive and may not result in the acquisition of additional fliers in a cost-effective manner, if at all. As our brand becomes more widely known, future marketing campaigns or brand content may not attract new fliers at the same rate as past campaigns or brand content. If we are unable to attract new fliers, our business, financial condition, and results of operations will be adversely affected.
Our fliers have a wide variety of options for transportation, including business aviation, commercial airlines, private aircraft operators, personal vehicles, rental cars, taxis, public transit, and ride-sharing offerings. To expand our flier base, we must appeal to new fliers who have historically used other forms of transportation. If fliers do not perceive our urban air mobility services to be reliable, safe, and cost-effective, or if we fail to offer new and relevant services and features on our platform, we may not be able to attract or retain fliers or increase their utilization of our platform. If we fail to continue to grow our flier base, retain existing fliers, or increase the overall utilization of our platform, our business, financial condition, and results of operations could be adversely affected.
Our prospects and operations may be adversely affected by changes in consumer preferences, discretionary spending, and other economic conditions that affect demand for our services.
Our Passenger business, comprised of our Short Distance and Jet and Other offerings, are vulnerable to changes in consumer preferences, discretionary spending, and other market changes impacting luxury goods and discretionary purchases. The global economy has in the past, and will in the future, experience recessionary periods and periods of economic instability. During such periods, our current and future users may choose not to make discretionary purchases or may reduce overall spending on discretionary purchases. Such changes could result in reduced consumer demand for air transportation, including our urban air mobility services, or could shift demand from our urban air mobility services to other methods of air or ground transportation for which we do not offer services. If we are unable to generate demand or there is a future shift in consumer spending away from urban air mobility, our business, financial condition, and results of operations could be adversely affected.
Our Jet and Other product line is reliant on certain customers which could impact our Passenger segment revenue.
A portion of our revenue in the Jet and Other product is concentrated in a small number of jet charter customers. The jet charter market is vulnerable to changes in consumer preferences, discretionary spending, and other economic factors that can affect these customers' decision to charter with us or to pursue other transportation methods, including purchasing personal aircraft to meet their air transportation needs.
The EVA industry may not continue to develop, EVA may not be adopted by the market or our third-party aircraft operators, EVA may not be certified by transportation authorities, or EVA may not deliver the expected reduction in operating costs, any of which could adversely affect our prospects, business, financial condition, and results of operations.
EVA involves a complex set of technologies, which we rely on original equipment manufacturers (“OEMs”) to develop and our third-party aircraft operators to adopt. However, before EVA can fly passengers or cargo, OEMs must receive requisite approvals from federal transportation authorities. No EVA aircraft are currently certified by the FAA for commercial operations in the United States, and there is no assurance that OEM research and development will result in government certified aircraft that are market-viable or commercially successful in a timely manner, or at all. In order to gain government certification, the performance, reliability, and safety of EVA must be proven, none of which can be assured. Even if EVA aircraft are certified, individual operators must conform EVA aircraft to their licenses, which requires FAA approval, and individual pilots also must be licensed and approved by the FAA to fly EVA aircraft, which could contribute to delays in any widespread use of EVA and potentially limit the number of EVA operators available to our business.
Additional challenges to the adoption of EVA, all of which are outside of our control, include:
•market acceptance of EVA;
•state, federal, or municipal licensing requirements and other regulatory measures;
•necessary changes to infrastructure to enable adoption, including installation of necessary charging equipment; and
•public perception regarding the safety of EVA.
There are a number of existing laws, regulations, and standards that may apply to EVA, including standards that were not originally intended to apply to electric aircraft. Regulatory changes that address EVA more specifically could delay the ability of OEMs to receive type certification by transportation authorities and thus delay our third-party aircraft operators’ ability to utilize EVA for our flights. In addition, there can be no assurance that the market will accept EVA, that we will be able to execute on our business strategy, or that our offerings utilizing EVA will be successful in the market. There may be heightened public skepticism of this nascent technology and its adopters. In particular, there could be negative public perception surrounding EVA, including the overall safety and the potential for injuries or death occurring as a result of accidents involving EVA, regardless of whether any such safety incidents occur involving Blade or our third-party operators. Any of the foregoing risks and challenges could adversely affect our prospects, business, financial condition, and results of operations, and financial condition. If one or more of our third-party aircraft operators were to suffer an accident or lose the ability to fly certain aircraft due to safety concerns or investigations, we may be required to cancel or delay certain flights until replacement aircraft and personnel are obtained.
If we are not able to successfully enter into new markets and offer new routes and services and enhance our existing offerings, our business, financial condition, and results of operations could be adversely affected.
Growth in our Passenger segment will depend in part on our ability to successfully enter into new markets, create and introduce new routes, and expand our existing routes by adding more frequent flights. Significant changes to our existing routes or the introduction of new and unproven routes may require us to obtain and maintain applicable permits, authorizations, or other regulatory approvals. If these new or expanded routes are unsuccessful or fail to attract a sufficient number of fliers to be profitable, or we are unable to bring new or expanded routes to market efficiently, our business, financial condition, and results of operations could be adversely affected. Furthermore, new third-party aircraft operator or flier demands regarding our services, including the availability of superior routes or a deterioration in the quality of our existing routes, could negatively affect the attractiveness of our platform and the economics of our business and require us to make substantial changes to and additional investments in our routes or our business model.
Developing and launching new routes or enhancements to our existing routes involves significant risks and uncertainties, including risks related to the reception of such routes by existing and potential future third-party aircraft operators and fliers, increases in competition from local players who may have a better understanding of the local culture, language and customer preferences, increases in operational complexity, unanticipated delays or challenges in implementing such routes or enhancements, increased strain on our operational and internal resources (including an impairment of our ability to accurately forecast flier demand and the number of third-party aircraft operators using our platform), and negative publicity in the event such new or enhanced routes are perceived to be unsuccessful. We have scaled our business rapidly, and significant new initiatives have in the past resulted in such operational challenges affecting our business. In addition, developing and launching new routes and enhancements to our existing routes may involve significant upfront investment, such as additional marketing and terminal build out, and such investments may not generate return on investment. Any of the foregoing risks and challenges could negatively impact our ability to attract and retain qualified third-party aircraft operators and fliers and our ability to increase utilization of our routes and could adversely affect our business, financial condition, and results of operations.
Operation of aircraft involves a degree of inherent risk. We could suffer losses and adverse publicity stemming from any accident involving small aircraft, helicopters, or charter flights and, in particular, from any accident involving our third-party aircraft operators.
The operation of aircraft is subject to various risks, and demand for air transportation has and may in the future be impacted by accidents or other safety issues regardless of whether such accidents or issues involve Blade flights, our third-party aircraft operators, aircraft flown by our third-party aircraft operators or Blade-owned aircraft. Air transportation hazards, such as adverse weather conditions and fire and mechanical failures, may result in death or injury to personnel and passengers which could impact client or passenger confidence in a particular aircraft type or the air transportation services industry as a whole and could lead to a reduction in volume, particularly if such accidents or disasters were due to a safety fault. Safety statistics for air travel are reported by multiple parties, including the Department of Transportation (“DOT”) and National Transportation Safety Board (“NTSB”), and are often separated into categories of transportation. Because our services include a variety of transportation methods, our customers may have a hard time determining how safe our services are, and their confidence in the safety of our services may be impacted by, among other things, the classification of accidents in ways that reflect poorly on urban air mobility services, organ transportation services, air medical transportation or the transportation methods they utilize.
We believe that safety and reliability are two of the primary attributes fliers consider when selecting air transportation services. Our failure, or that of our third-party operators, to maintain standards of safety and reliability that are satisfactory to our customers may adversely impact our ability to retain current customers and attract new customers. We are at risk of adverse publicity stemming from any public incident involving our company, our people, or our brand. Such an incident could involve the actual or alleged behavior of any of our employees or third-party aircraft operators. Further, if our personnel, one of our third-party operators’ aircraft, one of our third-party operators’ Blade-branded aircraft, a Blade-owned aircraft, or a type of aircraft in our third-party operators’ fleet that is used by us is involved in a public incident, accident, catastrophe, or regulatory enforcement action, we could be exposed to significant reputational harm and potential legal liability. Blade-branded aircraft have in the past been involved in accidents and despite our best efforts, there can be no guarantee that such events will not occur in the future. The insurance we carry may be inapplicable or inadequate to cover any such incident, accident, catastrophe, or action. In the event that our insurance is inapplicable or inadequate, we may be forced to bear substantial losses from an incident or accident. In addition, any such incident, accident, catastrophe, or action involving our employees, a Blade-owned aircraft, one of the Blade-branded aircraft used by us belonging to our third-party operators’ fleet (or personnel and aircraft of our third-party operators), or the same type of aircraft as used by our third-party operators could create an adverse public perception, which could harm our reputation, resulting in current or prospective customers being reluctant to use our services and adversely impacting our
business, results of operations, and financial condition. If one or more of our third-party aircraft operators were to suffer an accident or lose the ability to fly certain aircraft due to safety concerns or investigations, we may be required to cancel or delay certain flights until replacement aircraft and personnel are obtained.
We may purchase aircraft in the future.
Purchasing aircraft will change aspects of our business model and include a significant investment that could affect our financial condition, cost structures and cause operational disruptions. Though we would continue to service the vast majority of our demand utilizing aircraft that are owned and operated by third-parties, purchasing aircraft represents an evolution of our “asset-light” business model, as there are risks associated with owning or operating any number of aircraft. The value of our aircraft could be impacted in future periods by changes in supply and demand for these aircraft, including as a result of the grounding of aircraft, which could adversely impact our business, operating results, cash flows and financial condition. In addition, we may be required to recognize losses in the future due to a decline in the fair values of certain tangible assets, including these aircraft.
Additionally, we may incur substantial maintenance costs as part of our owning aircraft. Maintaining a fleet of aircraft will require regular maintenance work, which may cause operational disruption. Our inability to perform or to contract timely maintenance and repairs can result in our aircraft being underutilized which could have an adverse impact on our business, financial condition and results of operations. On occasion, airframe manufacturers and/or regulatory authorities require mandatory or recommended modifications to be made across a particular fleet which may mean having to ground a particular type of aircraft. This may cause operational disruption to, and impose significant costs on, us. Furthermore, our operations in remote locations, where delivery of components and parts or transportation of maintenance personnel could take a significant period of time, could result in delays in our ability to maintain and repair our aircraft.
Ownership of aircraft is subject to various legal, financial and reputational risks stemming from catastrophic disasters, crashes, mechanical failures and collisions, which may result in loss of life, personal injury and/or damage to property and equipment. If any of these events were to occur, we could experience loss of revenue, termination of customer contracts, higher insurance rates, litigation, regulatory investigations and enforcement actions (including potential grounding of our fleet and suspension or revocation of our operating authorities) and damage to our reputation and customer relationships. Moreover, any aircraft accident or incident, even if fully insured, and operated by a third-party operator, could create a public perception that we are less safe or reliable than other air transportation companies, which could cause our customers to lose confidence in us and switch to other air transportation companies or other means of transportation.
If we choose to operate some aircraft directly in the future, versus utilizing a third-party, we would be subject to additional risks.
Our management has limited experience with operating aircraft. We may not be successful in identifying all potential costs and regulatory requirements related to the operation and maintenance of aircraft, and we may incur considerable costs.
The operation of aircraft is subject to various risks, including catastrophic disasters, crashes, mechanical failures and collisions, which may result in loss of life, personal injury and/or damage to property and equipment. We may experience accidents in the future if we choose to operate some aircraft directly. These risks could endanger the safety of our customers, our employees, third-parties, equipment, organs and other medical cargo, and the environment. If any of these events were to occur, we could experience loss of revenue, termination of customer contracts, higher insurance rates, litigation, regulatory investigations and enforcement actions and damage to our reputation and customer relationships. In addition, to the extent an accident occurs with an aircraft we operate or charter, we could be held liable for resulting damages, which may involve claims from injured passengers, and survivors of deceased passengers, our Medical customers and property owners.
There can be no assurance that the amount of our insurance coverage available in the event of such losses would be adequate to cover such losses, or that we would not be forced to bear substantial losses from such events, regardless of our insurance coverage. Moreover, any aircraft accident or incident, even if fully insured, and whether involving us or other private aircraft operators, could create a public perception that we are less safe or reliable than other private aircraft operators, which could cause our customers to lose confidence in us and switch to other private aircraft operators or other means of transportation. In addition, any aircraft accident or incident, whether involving us or other private aircraft operators, could also affect the public’s view of industry safety, which may reduce the amount of trust by our customers.
We expect to face intense competition in the urban air mobility industry.
The urban air mobility industry is still developing and evolving, but we expect it to be highly competitive. Our potential competitors may be able to devote greater resources to the development of their current and future technologies or the promotion and sale of their offerings, or offer lower prices. For example, some multimodal transportation providers and even commercial airlines have expressed interest in air mobility, and Uber Technologies, Inc. has a significant investment in a company that is developing EVA aircraft. Moreover, potential manufacturers of EVAs may choose to develop vertically integrated businesses, or they may contract with competing air mobility service providers rather than entering
into operating contracts with us or our third-party operators, which would be a threat to our business. Our potential competitors also may establish cooperative or strategic relationships among themselves or with third parties, including regional or national helicopter or heliport operations that we rely on to offer our urban air mobility services, which may further enhance their resources and offerings. It is possible that domestic or foreign companies or governments, some with greater experience in the urban air mobility industry or greater financial resources than we possess, will seek to provide products or services that compete directly or indirectly with ours in the future. Any such foreign competitor could benefit from subsidies or other protective measures provided by its home country.
We believe our ability to compete successfully as an urban air mobility service will depend on a number of factors, which may change in the future due to increased competition, including the price of our offerings, consumer confidence in the safety of our offerings, consumer satisfaction for the experiences we offer, and the routes, frequency of flights, and availability of seats offered through our platform. If we are unable to compete successfully, our business, financial condition, and results of operations could be adversely affected.
Our reliance on contractual relationships with certain transplant centers, hospitals and Organ Procurement Organizations and other strategic alliances could adversely affect our business.
We rely significantly on contractual relationships with certain transplant centers, hospitals and Organ Procurement Organizations and other strategic partners and alliances to generate revenues, expand into new markets and further penetrate existing markets. In recent years, we have entered into strategic business relationships with, among others, Organ Procurement Organizations, hospitals and transplant centers to increase growth in our Medical product line. Our Medical product line growth is highly dependent on the procurement of human organs for transplant by our Medical Customers.
If our Medical Customers cannot procure human organs for transplant or the industry experiences a shortage of human organs, we may face challenges in fulfilling our contractual obligations with third- party aircraft and ground operators. This could negatively impact our reputation, ability to generate increased revenue and achieve profitability.
Additionally, if new organ preservation technology or the emergence of animal-derived, synthetic, or lab-grown organs makes rapid, dedicated air transportation of human organs unnecessary, our Medical Customers may no longer require our services to successfully complete organ transplants for their patients, which could have a material adverse effect on our business, results of operations, and financial condition.
The organ transportation market is highly competitive and some providers benefit from proprietary organ preservation technology or additional capabilities that could put us at a disadvantage.
We compete for organ transportation business primarily on our ability to provide reliable, end-to-end air and ground transportation at competitive pricing. Increasingly, we compete directly with manufacturers of organ preservation equipment that also offer transportation or with providers that offer additional services, such as surgical organ recovery, that our customers find valuable. We may face increased competition as our Medical Customers may prefer a streamlined logistics offering, including services or technology that we cannot provide, which could have a material adverse effect on our business, results of operations, and financial condition.
Furthermore, the organ transportation market is highly regulated and continually evolving. In order to continue to offer competitive organ transport solutions, we have pursued, and may continue to pursue, acquisitions related to our Medical segment. All future acquisitions are subject to various conditions, including regulatory approvals. Acquisitions may encounter intense scrutiny under federal and state antitrust laws. Any delays, injunctions, conditions or modifications by any government agencies could have a negative effect on us and result in the abandonment of all or part of attractive acquisition opportunities. Additionally, as we expand our Medical offerings, we have been in the past, and could be in the future, the subject of anticompetitive litigation by the Federal Trade Commission (FTC), the Department of Justice (DOJ) and the Department of Health and Human Services (HHS.)
If we experience harm to our reputation and brand, our business, financial condition, and results of operations could be adversely affected.
Continuing to increase the strength of our reputation and brand for reliable, experience-driven, and cost-effective urban air mobility and human organ transport is critical to our ability to attract and retain qualified, third-party aircraft operators and fliers. In addition, our growth strategy continues to include international expansion through route acquisition, joint ventures, minority investments, or other partnerships with local companies as well as event activations and cross-marketing with other established brands, all of which benefit from our reputation and brand recognition.
The successful development of our reputation and brand will depend on a number of factors, many of which are outside our control. Negative perception of our platform or company may harm our reputation and brand, including as a result of:
•complaints or negative publicity or reviews about us, our third-party aircraft operators, fliers, our air mobility services, other brands or events we associate with, or our flight operations policies (e.g., cancellation or baggage fee policies), even if factually incorrect or based on isolated incidents;
•changes to our flight operations, safety and security, privacy or other policies that users or others perceive as overly restrictive, unclear, or inconsistent with their values;
•a failure to enforce our flight operations policies in a manner that users perceive as effective, fair, and transparent;
•illegal, negligent, reckless, or otherwise inappropriate behavior by fliers, our third-party aircraft operators, or other third parties involved in the operation of our business or by our management team or other employees;
•a failure to provide routes and flight schedules sought by fliers;
•actual or perceived disruptions or defects in our platform, such as data security incidents, platform outages, payment processing disruptions, or other incidents that impact the availability, reliability, or security of our offerings;
•litigation over, or investigations by regulators into, our operations or those of our third-party aircraft operators;
•a failure to operate our business in a way that is consistent with our certain values;
•inadequate or unsatisfactory flier support service experiences;
•negative responses by third-party aircraft operators or fliers to new mobility offerings on our platform;
•perception of our treatment of employees, contractors, or third-party aircraft operators and our response to their sentiment related to political or social causes or actions of management;
•a failure to deliver human organs or medical teams to transplant centers on a timely basis;
•mistakes, delays or inconsistency in our evaluation of organ offers for customers of Trinity Organ Placement Services; or
•any of the foregoing with respect to our competitors, to the extent such resulting negative perception affects the public’s perception of us or our industry as a whole.
In addition, changes we may make to enhance and improve our offerings and balance the needs and interests of our third-party aircraft operators and fliers may be viewed positively from one group’s perspective (such as fliers) but negatively from another’s perspective (such as third-party aircraft operators), or may not be viewed positively by either third-party aircraft operators or fliers. If we fail to balance the interests of third-party aircraft operators and fliers or make changes that they view negatively, third-party aircraft operators and fliers may stop using our platform or take fewer flights, any of which could adversely affect our reputation, brand, business, financial condition, and results of operations.
Any failure to offer high-quality customer support may harm our relationships with fliers or Medical Customers and could adversely affect our reputation, brand, business, financial condition, and results of operations.
We strive to create high levels of flier satisfaction through the experience we provide in our terminal lounges and the support provided by our Flier Experience team, Medical Logistics Coordinators and Flier Relations representatives. The ease and reliability of our offerings, including our ability to provide high-quality customer support, helps us attract and retain fliers and commercial customers. Fliers depend on our Flier Relations team to resolve any issues relating to our services, such as flight operations policies, flight cancellations, or scheduling changes. Transplant centers depend on our logistics coordinators to monitor and coordinate between multiple operators of air and ground transportation, surgical teams procuring organs, organ procurement organizations providing support at the donor site, and the transplant centers that will ultimately perform the transplant on the recipient. Our ability to provide effective and timely support is largely dependent on our ability to attract and retain skilled employees who can support our fliers and Medical Customers and are sufficiently knowledgeable about our services. As we continue to grow our business and improve our platform, we will face challenges related to providing quality support at scale. Any failure to provide efficient customer support, or a market perception that we do not maintain high-quality support, could adversely affect our reputation, brand, business, financial condition, and results of operations.
We are especially vulnerable to delays, cancellations, or flight rescheduling, as we rely on maintaining a high daily aircraft usage rate, and need to aggregate fliers on our by-the-seat flights to lower direct costs to third-party operators.
Our success depends in part on maintaining a high daily aircraft usage rate (i.e., the number of revenue generating hours flown on average in a day), which can be achieved in part by reducing turnaround times at heliports and airports. Aircraft usage rate is reduced by delays caused by a variety of factors, many of which are beyond our control, including adverse weather conditions, security requirements, air traffic congestion, and unscheduled maintenance. Reduced aircraft usage rates may limit our ability to achieve and maintain profitability as well as lead to customer dissatisfaction.
In our Passenger segment, our success also depends on our ability to generate more revenue per flight by maintaining high flier utilization rates (i.e., the number of seats purchased on each flight). Flier utilization rates may be reduced by a variety of factors, including the introduction of new routes or schedules. In some cases, we may choose to offer flights with low flier utilization rates to increase or maintain flier satisfaction and brand recognition and for marketing or other purposes. We have utilized certain commuter passes and bulk purchasing options to increase our flier utilization rates in the past; however, these products may be less appealing due to changes in consumer preferences, discretionary spending, and other economic factors.
While historically we have maintained daily aircraft and flier utilization rates sufficient to offset the costs we pay to operators, we may be unable to maintain and increase utilization rates as our business grows and expands. The risk of delays, cancellations, and flight rescheduling, which could negatively impact our utilization rates, may increase as we expand our business to include new markets and destinations, more frequent flights on current routes, and expanded facilities.
Our Short Distance product line is concentrated in a small number of metropolitan areas and airports which makes our business particularly susceptible to natural disasters, outbreaks and pandemics, economic, social, weather, growth constraints, and regulatory conditions or other circumstances affecting these metropolitan areas.
We derive a significant portion of our Short Distance revenue from flights that either originate from or fly into heliports and airports located in or near New York, New York, Vancouver, British Columbia and the South of France. As a result of our geographic concentration, our business and financial results are particularly susceptible to natural disasters, outbreaks and pandemics, economic, social, weather, growth constraints, and regulatory conditions or other circumstances in each of these metropolitan areas. A significant interruption or disruption in service at one of the terminals where we have a significant volume of flights could result in the cancellation or delay of a significant portion of our flights and, as a result, could have a severe impact on our business, results of operations, and financial condition. In addition, any changes to local laws or regulations within these key metropolitan areas that affect our ability to operate or increase our operating expenses in these markets would have an adverse effect on our business, financial condition, and operating results.
Disruption of operations at the airports or heliports where our terminal facilities are located, whether caused by labor relations, utility or communications issues or fuel shortages, could harm our business. Certain airports or heliports may regulate flight operations, such as limiting the number of landings per year, which could reduce our operations. Bans on our airport operations or the introduction of any new permitting requirements would significantly disrupt our operations. In addition, demand for our urban air mobility services could be impacted if drop-offs or pick-ups of fliers become inconvenient because of airport rules or regulations, or more expensive for fliers because of airport-imposed fees, which would adversely affect our business, financial condition, and operating results.
Our concentration in large metropolitan areas and heavily trafficked airports also makes our business susceptible to an outbreak of a contagious disease, such as the Ebola virus, Middle East Respiratory Syndrome, Severe Acute Respiratory Syndrome, H1N1 influenza virus, avian flu, Zika virus, COVID-19, or any other similar illness, both due to the risk of a contagious disease being introduced into the metropolitan area through the high volume of travelers flying into and out of such airports and the ease at which contagious diseases can spread through densely populated areas, as seen with the spread of COVID-19 in Los Angeles, California and New York, New York.
Natural disasters, including tornados, hurricanes, floods and earthquakes, wildfires and severe weather conditions, such as heavy rains, strong winds, dense fog, blizzards, or snowstorms, may damage or impact our facilities, those of third-party aircraft operators, or otherwise disrupt flights into or out of the airports from which our flights arrive or depart. For example, our Northeast United States operations are subject to severe winter weather conditions, and our South Florida operations are subject to tropical storms and hurricanes. Less severe weather conditions, such as rainfall, snowfall, fog,
mist, freezing conditions, or extreme temperatures, may also impact the ability for flights to occur as planned, which could reduce our sales and profitability and may result in additional expenses related to rescheduling of flights.
The occurrence of one or more natural disasters, severe weather events, epidemic or pandemic outbreaks, terrorist attacks, or disruptive political events in regions where we operate and where our facilities are located, or where our third-party aircraft operators’ facilities are located, could adversely affect our business.
We are subject to risks associated with climate change, including the potential increased impacts of severe weather events on our operations and infrastructure.
All climate change-related regulatory activity and developments may adversely affect our business and financial results by requiring us to reduce our emissions, make capital investments to modernize certain aspects of our operations, or otherwise pay for our emissions. Such activity may also impact us indirectly by increasing our operating costs. In addition, passenger demand may be negatively impacted by climate change concerns. As we consider purchasing aircraft, there could be additional costs and disclosure requirements if we were to own and or operate.
The potential physical effects of climate change, such as increased frequency and severity of storms, floods, fires, fog, mist, freezing conditions, sea-level rise, and other climate-related events, could affect our operations, infrastructure, and financial results. Operational impacts, such as the delay or cancellation of flights, could result in loss of revenue. In addition, certain of our terminals are in locations susceptible to the impacts of storm-related flooding and sea-level rise, which could result in costs and loss of revenue. We could incur significant costs to improve the climate resiliency of our infrastructure and otherwise prepare for, respond to, and mitigate such physical effects of climate change. We are not able to accurately predict the materiality of any potential losses or costs associated with the physical effects of climate change.
Terrorist attacks, geopolitical conflict or security events may adversely affect our business, financial condition and results of operations.
Terrorist attacks, geopolitical conflict or security events, or the fear or threat of any of these events, could have a significant adverse effect on our business, reputation and brand. Despite significant security measures at airports and heliports, the aviation industry remains a high-profile target for terrorist groups. Security events, primarily from external sources but also from potential insider threats, also pose a significant risk to our passenger and organ transport operations. These events could include random acts of violence and could occur in public areas that we cannot control. Terrorist attacks, geopolitical conflict or security events, or the fear or threat of any of these events, even if not made directly on or involving the aviation industry, could have a significant negative impact on us by discouraging passengers from flying, leading to decreased revenue. In addition, potential costs from these types of events include increased security costs, impacts from avoiding flight paths over areas in which conflict is occurring or could occur, such as flight redirections or cancellations, reputational harm and other costs. If any or all of these types of events occur, they could have a material adverse effect on our business, financial condition and results of operations.
Our business is dependent on the availability of aircraft fuel. Continued periods of significant disruption in the supply of aircraft fuel could have a significant negative impact on consumer demand, our operating results, and liquidity.
Although aircraft operators are currently able to obtain adequate supplies of aircraft fuel, we cannot predict the future availability. Natural disasters (including hurricanes or similar events in the U.S. Southeast and on the Gulf Coast where a significant portion of domestic refining capacity is located), political disruptions or wars involving oil-producing countries, economic sanctions imposed against oil-producing countries (for example, the wars in Ukraine and the Middle East) or specific industry participants, changes in fuel-related governmental policy, the strength of the U.S. dollar against foreign currencies, changes in the cost to transport or store petroleum products, changes in access to petroleum product pipelines and terminals, speculation in the energy futures markets, changes in aircraft fuel production capacity, environmental concerns and other unpredictable events may result in fuel supply shortages or distribution challenges in the future. Any of these factors or events could cause a disruption in or increased demands on oil production, refinery operations, pipeline capacity, or terminal access and possibly result in diminished availability of aircraft fuel supply for our third-party aircraft operators or our potentially owned aircraft. The impact of such events may limit our ability to expand internationally, attract and retain fliers and commercial customers, and our third-party aircraft operators’ ability to perform our by-the-seat flights, which could result in loss of revenue and adversely affect our ability to provide our services.
Risks Related to Intellectual Property, Cybersecurity, Information Technology and Data Management Practices
System failures, defects, errors, or vulnerabilities in our website, applications, backend systems, or other technology systems or those of third-party technology providers could harm our reputation and brand and adversely impact our business, financial condition, and results of operations.
Our systems, or those of third parties upon which we rely, may experience service interruptions, outages, or degradation because of hardware and software defects or malfunctions, human error, or malfeasance by third parties or our employees, contractors, or service providers, earthquakes, hurricanes, floods, fires, natural disasters, power losses, disruptions in telecommunications services, fraud, military or political conflicts, terrorist attacks, cyberattacks, or other events. Our insurance may not be sufficient, and we may not have sufficient remedies available to us from our third-party service providers, to cover all of our losses that may result from such interruptions, outages, or degradation.
The software underlying our platform is highly complex and may contain undetected errors or vulnerabilities, some of which may only be discovered after the code has been released. We rely heavily on a software engineering practice known as “continuous deployment,” which refers to the frequent release of our software code, sometimes multiple times per day. This practice increases the risk that errors and vulnerabilities are present in the software code underlying our platform. The third-party software that we incorporate into our platform may also be subject to errors or vulnerabilities. Any errors or vulnerabilities discovered in our platform, whether in our proprietary code or that of third-party software on which our software relies, could result in negative publicity, a loss of users or loss of revenue, access or other performance issues, security incidents, or other liabilities. Such vulnerabilities could also prevent fliers from booking flights, which would adversely affect our flier utilization rates, or disrupt communications with our operators (e.g., flight schedules or passenger manifests), which could affect our on-time performance. For example, we have experienced an error in our app that temporarily allowed a small number of users to log into and view a different user’s profile. Although we quickly corrected the error after receiving user complaints, with no material adverse impact to our business, similar and more serious errors could occur in the future. We may need to expend significant financial and development resources to analyze, correct, eliminate, or work around errors or defects or to address and eliminate vulnerabilities. Any failure to timely and effectively resolve any such errors, defects, or vulnerabilities could adversely affect our business, financial condition, and results of operations as well as negatively impact our reputation or brand.
We have experienced and will likely continue to experience system failures and other events or conditions from time to time that interrupt the availability or reduce or affect the speed or functionality of our technology platform. These events have resulted in, and similar future events could result in, losses of revenue due to increased difficulty of booking services through our technology platform, impacts to on-time performance, and resultant errors in operating our business. A prolonged interruption in the availability or reduction in the availability or other functionality of our platform could adversely affect our business and reputation and could result in the loss of customers. Moreover, to the extent that any system failure or similar event results in harm or losses to customers, such as the inability to book flights or monitor organ transports because of a system failure, we may make voluntary payments to compensate for such harm, or the affected customers could seek monetary recourse or contractual remedies from us for their losses. Such claims, even if unsuccessful, would likely be time consuming and costly for us to address.
We rely on our information technology systems to manage numerous aspects of our business. A cyber-based attack of these systems could disrupt our ability to deliver services to our customers and could lead to increased overhead costs, decreased sales, and harm to our reputation.
We rely on information technology networks and systems to operate and manage our business. Our information technology networks and systems process, transmit and store personal and financial information, proprietary information of our business, and also allow us to coordinate our business across our operation bases, and allow us to communicate with our employees and externally with customers, suppliers, partners, and other third parties. While we believe we take reasonable steps to secure these information technology networks and systems, and the data processed, transmitted, and stored thereon, such networks, systems, and data may be susceptible to cyberattacks, viruses, malware, or other unauthorized access or damage (including by environmental, malicious, or negligent acts), which could result in unauthorized access to, or the release and public exposure of, our proprietary information or our users’ personal information. In addition, cyberattacks, viruses, malware, or other damage or unauthorized access to our information technology networks and systems, could result in damage, disruptions, or shutdowns to our platform. Any of the foregoing could cause substantial harm to our business, require us to make notifications to our customers, governmental authorities, or the media, and could result in litigation, investigations or inquiries by government authorities, or subject us to penalties, fines, and other losses relating to the investigation and remediation of such an attack or other unauthorized access or damage to our information technology systems and networks.
We rely on mobile operating systems and application marketplaces to make our apps available to users of our platform. If we do not effectively operate with or receive favorable placements within such application marketplaces and maintain high user reviews, our usage or brand recognition could decline and our business, financial results, and results of operations could be adversely affected.
We depend in part on mobile operating systems, such as Android and iOS, and their respective application marketplaces to make our platform available to customers. Such mobile operating systems or application marketplaces could limit or prohibit us from making our apps available, make changes that degrade the functionality of our apps, increase the difficulty of using our apps, impose terms of use unsatisfactory to us, or modify their search or ratings algorithms in ways that are detrimental to us. Additionally, if any future competitor’s placement in such mobile operating system’s application marketplace is more prominent than the placement of our apps, overall growth in our flier base could slow and the usage of our platform could be adversely affected. Our apps have experienced fluctuations in the number of downloads in the past, and we anticipate similar fluctuations in the future. Any of the foregoing risks could adversely affect our business, financial condition, and results of operations.
As new mobile devices and mobile platforms are released, there is no guarantee that certain mobile devices will continue to support our platform or effectively roll out updates to our apps. Additionally, in order to deliver high-quality apps, we need to ensure that our offerings are designed to work effectively with a range of mobile technologies, systems, networks, and standards. We may not be successful in developing or maintaining relationships with key participants in the mobile technology industry to make, or continue to make, such technologies, systems, networks, or standards available to our users. If fliers on our platform encounter any difficulty accessing or using our apps on their mobile devices or if we are unable to adapt to changes in popular mobile operating systems, our business, financial condition, and results of operations could be adversely affected.
If we fail to adequately protect our proprietary intellectual property rights, our competitive position could be impaired and we may lose market share, generate reduced revenue, and incur costly litigation to protect our rights.
Our success depends, in part, on our ability to protect our proprietary intellectual property rights, including certain technologies we utilize in arranging air transportation. To date, we have relied primarily on trade secrets and trademarks to protect our proprietary technology. Our software is also subject to certain protection under copyright law, though we have chosen not to register any of our copyrights. We routinely enter into non-disclosure agreements with our employees, consultants, third party aircraft operators, and other relevant persons and take other measures to protect our intellectual property rights, such as limiting access to our trade secrets and other confidential information. We intend to continue to rely on these and other means, including patent protection, in the future. However, the steps we take to protect our intellectual property may be inadequate, and unauthorized parties may attempt to copy aspects of our intellectual property or obtain and use information that we regard as proprietary and, if successful, may potentially cause us to lose market share, harm our ability to compete, and result in reduced revenue. Moreover, our non- disclosure agreements do not prevent our competitors from independently developing technologies that are substantially equivalent or superior to our products, and there can be no assurance that our competitors or third parties will comply with the terms of these agreements, or that we will be able to successfully enforce such agreements or obtain sufficient remedies if they are breached. There can be no assurance that the intellectual property rights we own or license will provide competitive advantages or will not be challenged or circumvented by our competitors.
Further, obtaining and maintaining patent, copyright, and trademark protection can be costly, and we may choose not to, or may fail to, pursue or maintain such forms of protection for our technology in the United States or foreign jurisdictions, which could harm our ability to maintain our competitive advantage in such jurisdictions. It is also possible that we will fail to identify patentable aspects of our technology before it is too late to obtain patent protection, that we will be unable to devote the resources to file and prosecute all patent applications for such technology, or that we will inadvertently lose protection for failing to comply with all procedural, documentary, payment, and similar obligations during the patent prosecution process. The laws of some countries do not protect proprietary rights to the same extent as the laws of the United States, and mechanisms for enforcement of intellectual property rights in some foreign countries may be inadequate to prevent other parties from infringing our proprietary technology. To the extent we expand our international activities, our exposure to unauthorized use of our technologies and proprietary information may increase. We may also fail to detect unauthorized use of our intellectual property, or be required to expend significant resources to monitor and protect our intellectual property rights, including engaging in litigation, which may be costly, time-consuming, and divert the attention of management and resources, and may not ultimately be successful. If we fail to meaningfully establish, maintain, protect, and enforce our intellectual property rights, our business, financial condition, and results of operations could be adversely affected.
We use open source software in connection with our platform, which may pose risks to our intellectual property.
We use open source software in connection with our platform and plan to continue using open-source software in the future. Some licenses governing the use of open-source software contain requirements that we make available source code for modifications or derivative works we create based upon the open-source software. If we combine or link our proprietary source code with open-source software in certain ways, we may be required, under the terms of the applicable
open-source licenses, to make our proprietary source code available to third parties. Although we monitor our use of open-source software, we cannot provide assurance that all open-source software is reviewed prior to use in our platform, that our developers have not incorporated open-source software into our platform that we are unaware of, or that they will not do so in the future. Additionally, the terms of open-source licenses have not been extensively interpreted by United States or international courts, and so there is a risk that open-source software licenses could be construed in a manner that imposes unanticipated conditions or restrictions on us or our proprietary software. If an author or other third party that distributes such open- source software were to allege that we had not complied with the conditions of an open-source license, we could incur significant legal costs defending ourselves against such allegations or remediating any alleged non-compliance with open-source licenses. Any such remediation efforts could require significant additional resources, and we may not be able to successfully complete any such remediation. Further, in addition to risks related to license requirements, use of certain open-source software can lead to greater risks than use of third-party commercial software, as open-source licensors generally do not provide warranties, and the open-source software may contain security vulnerabilities.
If we are unable to obtain and maintain adequate facilities and infrastructure, we may be unable to offer our existing Passenger flight schedule and to expand or change our Passenger route network in the future, which may have a material adverse impact on our operations.
In our Passenger segment, in order to operate our existing and proposed flight schedule and, where desirable, add service along new or existing routes, we must be able to maintain or obtain space for passenger terminals. As airports and heliports around the world become more congested, it may not be possible for us to ensure that our plans for new service can be implemented in a commercially viable manner, given operating constraints at airports and heliports throughout our network, including those imposed by inadequate facilities at desirable locations. Additionally, there is no assurance that we will be able to obtain necessary approvals and to make necessary infrastructure changes to enable adoption of EVA. Any limitation on our ability to acquire or maintain space for passenger terminal operations could have a material adverse effect on our business, results of operations, and financial condition.
Blade leases and licenses exclusive passenger terminal infrastructure from airport and heliport operators in key markets. These leases, licenses, and permits vary in term, ranging from month-to-month permits to multi-year use and occupancy agreements that are coterminous with the airport or heliport operator’s underlying lease with the municipality that owns the premises. While our experience with these multi-year use and occupancy agreements have led to long-term uninterrupted usage thus far, certain municipalities, including New York, retain the authority to terminate a heliport operator’s lease upon as short as 30 days’ notice. If a municipality exercised its termination rights, under certain conditions, our agreements with the airport or heliport operator would concurrently terminate. Termination of one or more of our leases could negatively impact our ability to provide services in our existing markets and have a material adverse effect on our business, results of operations, and financial condition.
We may require substantial additional funding to finance our operations, but adequate additional financing may not be available when we need it, on acceptable terms, or at all.
Prior to our recapitalization we financed our operations and capital expenditures primarily through private financing rounds. In the future, we could be required to raise capital through public or private financing or other arrangements. Such financing may not be available on acceptable terms, or at all, and our failure to raise capital when needed could harm our business. For example, unfavorable economic conditions, whether related to inflation, interest rates, economic instability or otherwise have, resulted in, and may continue to result in, significant disruption and volatility of global financial markets that could adversely impact our ability to access capital. We may sell equity securities or debt securities in one or more transactions at prices and in a manner we may determine from time to time. If we sell any such securities in subsequent transactions, our current investors may be materially diluted. Any debt financing, if available, may involve restrictive covenants and could reduce our operational flexibility or profitability. If we cannot raise funds on acceptable terms, we may not be able to grow our business or respond to competitive pressures.
Our international operations and any future international expansion strategy will subject us to additional costs and risks, and our plans may not be successful.
We have started expanding our Passenger segment internationally. In 2019, we entered into a joint venture in India (our “Indian Joint Venture”), in 2021, we expanded into Canada through the acquisition of the exclusive rights to Helijet International, Inc.’s passenger transportation services, in 2022, we expanded into Europe (France, Switzerland and Monaco) through the acquisition of the passenger transportation services of Héli Sécurité, Azur Hélicoptère and Monacair, and we may continue to expand our international operations into new countries. Operating outside of the United States may require significant management attention to oversee operations across a broad geographic area with
varying regulations, customs and cultural norms, in addition to placing strain on our finance, analytics, compliance, legal, engineering, and operations teams. We have, and may, incur significant operating expenses and may not be successful in our international expansion for a variety of reasons, including:
•recruiting and retaining talented and capable employees in foreign countries and maintaining our company culture across all of our offices;
•competition from local incumbents that better understand the local market, may market and operate more effectively, and may enjoy greater local affinity or awareness;
•differing demand dynamics, which may make our offerings less successful;
•complying with local laws and regulatory standards, including with respect to data privacy and tax;
•obtaining any required government approvals, licenses, or other authorizations;
•varying levels of Internet and mobile technology adoption and infrastructure;
•costs and exchange rate fluctuations;
•operating in jurisdictions that do not protect intellectual property rights to the same extent as the United States; and
•limitations on the repatriation and investment of funds as well as foreign currency exchange restrictions.
As of December 31, 2023, our European market expansion has incurred integration issues and losses, resulting in an impairment of the carrying values of the purchased intangible assets related to our acquisition of the passenger transportation services of Héli Sécurité, Azur Hélicoptère and Monacair. We made these acquisitions following careful analysis and due diligence to achieve our desired strategic objective to expand internationally in the largest helicopter market globally than are most likely, in our estimation, to be improved following the introduction of EVA; however, the acquisition involved estimates, assumptions, and judgments, which have varied, and may continue to vary, due to slower than expected business integration, lower than anticipated operating results of the European expansion and our expectation of delays in the commercialization of EVA for use in Europe.
We hold a minority ownership stake in our Indian Joint Venture and do not hold any control rights over the operations of the business. As such, we cannot directly prevent actions which may result in losses or negative publicity. While we have implemented various measures intended to anticipate, identify, and address the risk associated with our lack of control, these measures may not adequately address or prevent all potential risks and may adversely impact our reputation and brand, which could adversely affect our business, financial condition, and results of operations. In the future, we may enter into other joint ventures or licensing agreements that involve a similar lack of control, which could adversely impact our reputation and brand.
Our limited experience in operating our business internationally increases the risk that any potential future expansion efforts that we undertake may not be successful. If we invest substantial time and resources to expand our operations internationally and are unable to manage these risks effectively, our business, financial condition, and results of operations could be adversely affected. In addition, international expansion may increase our risks related to compliance with various laws and standards, including with respect to anti-corruption, anti-bribery, and trade and economic sanctions.
As part of our growth strategy, we may engage in future acquisitions that could disrupt our business and have an adverse impact on our financial condition.
We have and intend to continue to explore potential strategic acquisitions of assets and businesses, including partnerships, route acquisitions or joint ventures with third parties. Our management has limited experience with acquiring and integrating acquired strategic assets and companies into our business, and there is no assurance that any future acquisitions will be successful. We may not be successful in identifying appropriate targets for such transactions. In addition, we may not be able to continue the operational success of such businesses or successfully finance or integrate any assets or businesses that we acquire or with which we form a partnership or joint venture. We have and may continue to have impairment of intangible assets or goodwill related to our acquisitions. For example, during the year ended December 31, 2023, the Company recognized an impairment charge for the exclusive rights to air transportation services associated with the acquisition of Blade Europe in the amount of $20.8 million, which was included in intangible impairment expense within general and administrative expenses in the consolidated statements of operations and is part of the Passenger segment. The impairment was as a result of adjustments made to the near term projections for revenue, expenses and expected EVA introduction, to reflect our experience operating Blade Europe since September 2022 as well as expected delays in the commercialization of EVA.
Furthermore, the integration of any acquisition may divert management’s time and resources from our core business and disrupt our operations or may result in conflicts with our business. Any acquisition, partnership, or joint venture may reduce our cash reserves, may negatively affect our earnings and financial performance, and, to the extent financed with the proceeds of debt, may increase our indebtedness, and, to the extent acquired or financed through equity issuance, dilute our current investors. We cannot ensure that any acquisition, partnership, or joint venture we make will not have a material adverse effect on our business, financial condition, and results of operations.
We may be unable to manage our future growth effectively, which could make it difficult to execute our business strategy.
If our operations continue to grow as planned, of which there can be no assurance, we will need to expand our sales, marketing, operations, and the number of aircraft operators with whom we do business. Our continued growth could increase the strain on our resources, and we could experience operating difficulties, including difficulties in hiring, training, and managing an increasing number of employees. These difficulties may result in the erosion of our brand image, divert the attention of management and key employees, and impact financial and operational results. In addition, in order to continue to increase our presence, we expect to incur substantial expenses as we continue to attempt to increase our route offerings, flight frequency, passenger terminal footprint, and employee base. The continued expansion of our business may also require additional space for administrative support. If we are unable to drive commensurate growth, these costs, which include lease commitments, marketing costs and headcount, could result in decreased margins and reduced profitability, which could have a material adverse effect on our business, financial condition, and results of operations.
Our insurance may become too difficult or expensive for us to obtain. Increases in insurance costs or reductions in insurance coverage may materially and adversely impact our results of operations and financial position.
We maintain general liability aviation premise insurance and non-owned aircraft liability coverage We believe our level of coverage is customary in the industry and adequate to protect against claims. However, there can be no assurance that it will be sufficient to cover potential claims or that present levels of coverage will be available in the future at reasonable cost. There is also no assurance that the current coverage is adequate to cover potential claims and that current policies may include certain policy exclusions that could decrease or eliminate coverage. Further, we expect our insurance costs to increase as we add routes, increase flight and passenger volumes and expand into new markets. It is too early to determine what impact, if any, the adoption of EVAs will have on our insurance costs.
If we decide to purchase and or operate aircraft, there could be additional insurance costs related to aviation hull, aviation liability, aviation premises, hangar, product, and or war risk insurance coverages. There is no assurance that insurance carriers would be able to provide us with sufficient insurance coverage or affordable premiums. If insurance coverage is not available, our insurance costs may increase and may result in our being in breach of regulatory requirements or contractual arrangements requiring that specific insurance be maintained, which may have a material adverse effect on our business, financial condition and results of operations.
Regarding other non-aviation insurance policies, we maintain a number of insurance policies, including directors' and officers' liability insurance, general liability insurance, property insurance, employment practices insurance, cyber insurance, and workers' compensation insurance, among others. If the costs of maintaining adequate insurance coverage increase significantly in the future, our operating results could be materially adversely affected. Likewise, if any of our current insurance coverage should become unavailable to us or become economically impractical, we would be required to operate our business without indemnity from commercial insurance providers. If we operate our business without insurance, we could be responsible for paying claims or judgments against us that would have otherwise been covered by insurance, which could adversely affect our results of operations or financial condition.
We are highly dependent on our senior management team and other highly skilled personnel. If we are not successful in attracting or retaining highly qualified personnel, we may not be able to successfully implement our business strategy.
Our success depends, in significant part, on the continued services of our senior management team and on our ability to attract, motivate, develop, and retain a sufficient number of other highly skilled personnel, including finance, marketing, sales, technology, legal and support personnel. We believe that the breadth and depth of our senior management team’s experience across multiple industries will be instrumental to our success. The loss of any one or more members of our senior management team, for any reason, including resignation or retirement, could impair our ability to execute our business strategy and have a material adverse effect on our business, financial condition, and results of operations. Additionally, our financial condition and results of operations may be adversely affected if we are unable to attract and retain skilled employees to support our operations and growth.
Our company culture has contributed to our success, and if we cannot maintain this culture as we grow, our business could be harmed.
We believe that our company culture, which promotes accountability, attention to detail, communication, and support for others, has been critical to our success. We face a number of challenges that may affect our ability to sustain our corporate culture, including:
•failure to identify, attract, reward, and retain people in leadership positions in our organization who share and further our culture, values, and mission;
•the increasing size and geographic diversity of our workforce;
•competitive pressures to move in directions that may divert us from our mission, vision, and values;
•the continued challenges of a rapidly-evolving industry;
•the increasing need to develop expertise in new areas of business that affect us;
•negative perception of our treatment of employees or our response to employee sentiment related to political or social causes or actions of management; and
•the integration of new personnel and businesses from acquisitions.
If we are not able to maintain our culture, our business, financial condition, and results of operations could be adversely affected.
Our financial results may fluctuate from quarter to quarter, which makes our results difficult to predict and may cause our results to fall short of expectations.
Our financial results may fluctuate from quarter to quarter due to a number of factors, including but not limited to the seasonality of our fliers’ travel patterns and the demands of our Medical Customers, both of which are unpredictable and could impact the volume of air transportation missions we arrange in any given quarter. Our revenue from sales may fluctuate significantly from quarter to quarter, and our future quarterly and annual expenses as a percentage of our revenue may be significantly different from those we have recorded in the past. Our financial results in some quarters may fall below expectations. Comparing our financial results on a period-to-period basis may not be meaningful, and you should not rely on our past results as an indication of our future performance.
Risks Related to Our Dependence on Third-Party Providers
We rely on our third-party operators to provide and operate aircraft. If such third-party operators do not perform adequately or terminate their relationships with us, our costs may increase and our business, financial condition, and results of operations could be adversely affected.
We primarily rely on third-party contractors to own and operate aircraft. Should we experience complications with any of these third-party contractors or their aircraft, we may need to delay or cancel flights. We face the risk that any of our contractors may not fulfill their contracts and deliver their services on a timely basis, or at all. We have experienced, and may in the future experience, operational complications with our contractors. The ability of our contractors to effectively satisfy our requirements could also be impacted by any such contractor’s financial difficulty or damage to their operations caused by fire, terrorist attack, natural disaster and public health threats. The failure of any contractors to perform to our expectations could result in delayed or canceled flights and harm our business. Our reliance on contractors and our inability to fully control any operational difficulties with our third-party contractors could have a material adverse effect on our business, financial condition, and results of operations.
If our third-party aircraft operators are unable to match our growth in demand or we are unable to add additional third-party aircraft operators to our platform to meet demand, our costs may increase and our business, financial condition, and results of operations could be adversely affected.
We are dependent on a finite number of certificated third-party aircraft operators to primarily provide our services. In the event potential competitors establish cooperative or strategic relationships with third-party aircraft operators in the markets
we serve, offer to pay third-party aircraft operators more attractive rates or guarantee a higher volume of flights than we offer, we may not have access to the necessary number of aircraft to achieve our planned growth. Though we have successfully incentivized our operators to add aircraft to support our growth in the past, there is no guarantee we will be able to continue doing so without incurring costs. If our third-party aircraft operators are unable or unwilling to add aircraft, or are only able to do so at significantly increased expense, or otherwise do not have capacity or desire to support our growth, or we are unable to add new operators on reasonable terms, or at all, our business and results of operations could be adversely affected. As the urban air mobility market grows, we expect competition for third-party aircraft operators to increase. Further, we expect that as competition in the urban air mobility market grows, the use of exclusive contractual arrangements with third-party aircraft operators, sometimes requiring volume guarantees, may increase, as may the cost of securing their services.
Transportation for the hearts, lungs and livers that make up the vast majority of our Medical product line is typically requested only hours before the required departure time. Our ability to successfully fulfill these requests is the primary metric by which Medical Customers evaluate our performance. The short turnaround times required in our Medical product line necessitate dedicated aircraft and crews. Historically, the combination of our Passenger and Medical demand has been enough to incentivize operators to provide dedicated aircraft and crews for this purpose, but there is no guarantee that will continue, particularly if demand for private aircraft continues to increase. As a result, we may need to own and/or operate aircraft in the future in order to maintain access to the number of aircraft required to support or growing business; ownership and operation of aircraft would result in additional risks.
If we encounter problems with any of our third-party aircraft operators or third-party service providers, such as workforce disruptions, our operations could be adversely affected by a resulting decline in revenue or negative public perception about our services.
Due to our reliance on third parties aircraft operators, we are subject to the risk of disruptions to their operations, which has in the past and may in the future result from many of the same risk factors disclosed in this “Risk Factors” section, such as the impact of adverse economic conditions and the inability of third parties to hire or retain skilled personnel, including pilots and mechanics. Several of these third-party operators provide significant capacity that we would be unable to replace in a short period of time should that operator fail to perform its obligations to us. Disruptions to capital markets, shortages of skilled personnel and adverse economic conditions in general, such as conditions resulting from the COVID-19 pandemic, have subjected certain of these third-party regional operators to significant financial and operational pressures, which have in the past and could result in the temporary or permanent cessation of their operations. We may also experience disruption to our regional operations if we terminate agreements with one or more of our current aircraft operators and transition the services to another provider.
Although our third-party aircraft operators are not currently experiencing workforce disruptions, we cannot predict the future actions of their workforce. Union strikes among airport workers or certain pilots of third-party aircraft operators may result in disruptions of our services and thus could have a material adverse effect on our business, financial condition, and results of operations. Any significant disruption to our operations as a result of problems with any of our third-party aircraft operators would have a material adverse effect on our business, results of operations, and financial condition.
In addition, we have entered into agreements with contractors to provide various facilities and services required for our operations. Because we rely on others to provide such services, our ability to control the efficiency and timeliness of such services is limited. Similar agreements may be entered into in any new markets we decide to serve. We are also at risk should one of these service providers cease operations, and there is no guarantee that we could replace these providers on a timely basis with comparably priced providers, or at all. Any material problems with the efficiency and timeliness of contract services, resulting from financial hardships or otherwise, could have a material adverse effect on our business, results of operations, and financial condition.
Our third-party aircraft operators’ insurance may become too difficult or expensive for them to obtain. If our third-party aircraft operators are unable to maintain sufficient insurance coverage, it may materially and adversely impact our results of operations and financial position.
Hazards are inherent in the aviation industry and may result in loss of life and property, potentially exposing us to substantial liability claims arising from the operation of aircraft. Safe operation of aircraft is primarily the responsibility of our third-party operators and they are primarily held liable for accidents, thus incidents related to aircraft operation are covered by our third-party operators’ insurance. A limited number of hull and liability insurance underwriters provide coverage for our third-party aircraft operators. Insurance underwriters are required by various federal and state regulations to maintain minimum levels of reserves for known and expected claims. However, there can be no assurance that underwriters have established adequate reserves to fund existing and future claims. The number of aviation accidents and the impact of general economic conditions on underwriters may result in increases in premiums above the rate of inflation.
If our third-party aircraft operators’ insurance costs increase, such operators are likely to pass the increased costs to us, which could cause us to increase the prices paid by our fliers. Such cost increases could adversely affect demand for our services and harm our business. Additionally, under all aircraft operating agreements, our third-party aircraft operators have agreed to indemnify us against liability arising from the operation of aircraft and to maintain insurance covering such liability. However, there can be no assurance there will be no challenge to the indemnification rights or that the aircraft operator will have sufficient assets or insurance coverage to fulfill its indemnity obligations.
Illegal, improper, or otherwise inappropriate operation of branded aircraft by our third-party aircraft operators, regardless of whether they are operating aircraft on our behalf, could harm our reputation, business, brand, financial condition, and results of operations.
Some of our third-party aircraft operators operate Blade-branded aircraft on a non-exclusive basis, enabling them to utilize Blade-branded aircraft for flight operations unrelated to Blade. If our third-party aircraft operators were to operate Blade-branded aircraft, regardless of whether such aircraft is flying on our behalf, in an illegal, improper, or otherwise inappropriate manner, such as violating local noise-abatement regulations or ignoring suggested noise-abatement flight paths and procedures, we could be exposed to significant reputational harm. While we have implemented various measures intended to anticipate, identify, and address the risk of these types of activities, these measures may not adequately address or prevent all illegal, improper, or otherwise inappropriate activity by our third-party aircraft operators while flying Blade-branded aircraft. Further, any negative publicity related to the foregoing, whether or not such incident occurred while flying on our behalf, could adversely affect our reputation and brand or public perception of the urban air mobility industry as a whole, which could negatively affect demand for platforms like ours and potentially lead to increased regulatory or litigation exposure. Any of the foregoing risks could harm our business, financial condition, and results of operations.
We rely on third-party web service providers to deliver our offerings to users on our platform, and any disruption of or interference with our use of third-party web services could adversely affect our business, financial condition, and results of operations.
Our platform’s continuing and uninterrupted performance is critical to our success. We currently host our platform and support our operations using a third-party provider of cloud infrastructure services. While we have engaged reputable vendors to provide these services, we do not have control over the operations of the facilities used by our third- party provider, and their facilities may be vulnerable to damage or interruption from natural disasters, cybersecurity attacks, human error, terrorist attacks, power outages, and similar events or acts of misconduct. In addition, any changes in our third-party cloud infrastructure provider’s service levels may adversely affect our ability to meet the requirements of users. While we believe we have implemented reasonable backup and disaster recovery plans, we have experienced, and expect that in the future we will experience, interruptions, delays, and outages in service and availability from time to time due to a variety of factors, including infrastructure changes, human or software errors, website hosting disruptions, and capacity constraints. Sustained or repeated system failures would reduce the attractiveness of our offerings. It may become increasingly difficult to maintain and improve our performance, especially during peak usage times, as we expand our service offerings. Any negative publicity or user dissatisfaction arising from these disruptions could harm our reputation and brand and may adversely affect the usage of our offerings, and could harm our business, financial condition, and results of operation.
Legal and Regulatory Risks Related to Our Business
Our business is subject to a wide variety of extensive and evolving laws and regulations, which may result in increases in our costs, disruptions to our operations, limits on our operating flexibility, reductions in the demand for air travel, and competitive disadvantages.
We are subject to a wide variety of laws and regulations relating to various aspects of our business, employment and labor, health care, tax, privacy and data security, health and safety, and environmental issues. Laws and regulations at the foreign, federal, state, and local levels frequently change, especially in relation to new and emerging industries, and we cannot always reasonably predict the impact from, or the ultimate cost of compliance with, current or future legal or regulatory changes. We monitor these developments and devote a significant amount of management’s time and external resources towards compliance. Moreover, changes in law, the imposition of new or additional regulations or the enactment of any new or more stringent legislation that impacts our business could require us to change the way we operate or limit our ability to expand into certain jurisdictions, which could have a material adverse effect on our business, financial condition, and operating results.
Further, our business has been adversely impacted when government agencies have ceased to operate as expected including due to partial shut-downs or similar events. These events have resulted in, among other things, reduced demand for air
travel, an actual or perceived reduction in air traffic control and security screening resources, and related travel delays, as well as disruption in the ability of the FAA to grant required regulatory approvals, such as those that are involved when a new aircraft is first placed into service.
Our results of operations and the manner in which we conduct business may be affected by changes in law and future actions taken by governmental agencies, including:
•changes in law that affect the services that can be offered by us in particular markets and at particular airports, or the types of fares offered or fees that can be charged to fliers;
•restrictions on competitive practices (for example, court orders, or agency regulations or orders, that would curtail our ability to respond to a competitor);
•the adoption of new passenger security standards or regulations that impact customer service standards;
•restrictions on airport operations, such as restrictions on the use of airports or heliports; and
•the adoption of more restrictive locally-imposed noise restrictions.
Each additional regulation or other form of regulatory oversight increases costs and adds greater complexity to operations and, in some cases, may reduce the demand for air travel. There can be no assurance that the increased costs or greater complexity associated with our compliance with new rules, anticipated rules or other forms of regulatory oversight will not have a material adverse effect on us.
Any significant reduction in air traffic capacity at and in the airspace serving key airports in the United States or Internationally could have a material adverse effect on our business, results of operations and financial condition. Weaknesses in the National Airspace System and the Air Traffic Control (“ATC”) system, such as outdated procedures and technologies, have resulted in short-term capacity constraints during peak travel periods or adverse weather conditions in certain markets, resulting in delays and disruptions of air traffic. Outdated technologies may also cause the ATC system to be less resilient in the event of a failure. For example, an automation failure and an evacuation, in 2015 and 2017 respectively, at the Washington Air Route Control Center resulted in cancellations and delays of hundreds of flights traversing the greater Washington, D.C. airspace.
Failure to comply with legal and regulatory requirements, such as obtaining and maintaining licenses, certificates, authorizations, and permits critical for the operation of our business, may result in civil penalties or private lawsuits, or the suspension or revocation of licenses, certificates, authorizations, or permits, which would prevent us from operating our business. Even when we believe we are in complete compliance, a regulatory agency may determine that we are not.
We could be subject to litigation, which is expensive and could divert management attention.
We have in the past, and may in the future become, involved in legal actions and claims related in the ordinary course of business related to breaches of contracts, wrongful termination, injury, creation of a hostile workplace, discrimination, wage and hour, employee benefits, sexual harassment and other employment issues. Employees and former employees, from time to time, bring lawsuits against us regarding injury, creation of a hostile workplace, discrimination, wage and hour, employee benefits, sexual harassment and other employment issues. Companies that have faced employment or harassment-related lawsuits have had to terminate management or other key personnel and have suffered reputational harm that has negatively impacted their businesses. If we experience significant incidents involving employment or harassment-related claims in the future, we could face substantial out-of-pocket losses and fines if claims are not covered by our insurance coverages, as well as negative publicity. In addition, such claims may give rise to litigation, which may be time-consuming, costly and distracting to our management team.
In the past, following periods of volatility in the overall market and the market prices of particular companies' securities, securities class action or state stockholder lawsuits have often been instituted against publicly traded companies. We have been, and may in the future be, additional litigation and regulatory proceedings, including Section 220 Books and Records Demands, which could be used to file a derivative lawsuit against directors and officers. For additional information about litigation matters, see the section entitled “Business-Litigation”.
The existence of litigation, claims, investigations and proceedings may harm our reputation, limit our ability to conduct our business in the affected areas and adversely affect the trading prices of our stock and/or other securities. The outcome of any claims, investigations and proceedings is inherently uncertain, and in any event defending against these claims could result in substantial costs and divert our management's attention and resources from other business concerns, which could significantly impact our business. Any adverse determination in any such litigation or any amounts paid to settle any such actual or threatened litigation could require that we make significant payments, incur legal and other costs, limit our ability to conduct business or require us to change the manner in which we operate.
We may be blocked from or limited in providing or offering our services in certain jurisdictions, and may be required to modify our business model in those jurisdictions as a result.
We face regulatory obstacles, including those lobbied for in local government, which could prevent us from operating our urban air mobility or Medical services. We have incurred, and expect that we will continue to incur, significant costs in defending our right to operate in accordance with our business model in many jurisdictions. To the extent that efforts to block or limit our operations are successful, or we or third-party aircraft operators are required to comply with regulatory and other requirements applicable to air transportation services, our revenue and growth would be adversely affected.
We currently operate passenger terminals out of several airports and heliports throughout the Northeast United States. These facilities are strategically located in close proximity to heavily populated areas. If these airports or heliports were to restrict access for rotor wing operations, our passenger volume and utilization rates may be significantly adversely impacted and certain existing or planned future routes may cease to be profitable for us to operate. New York has a limited number of hangar and helipad sites, which may limit our ability to expand operations to other locations within the state. While we do not require hangar space to operate our business, the availability of nearby hangar space is advantageous to allow our third-party aircraft operators to effectively support our business. In addition, communities near certain key heliports and airports, and the elected officials representing them, are concerned about noise generated by helicopters. Some of these communities have proposed new rules and legislation to reduce or eliminate helicopter flights from key Blade service areas, including Manhattan, Cogolin, Gassin, Grimaud, Ramatuelle and St. Tropez. For example, across the United States, proposed legislation in 2021 at local, city and state levels sought to limit helicopter flights over cities with certain population and density restrictions, though its our view such bills will not pass. Between June 1, 2023 and September 15, 2023, the local governments of Cogolin, Gassin, Grimaud, Ramatuelle and St. Tropez, will impose daily and weekly limitations on the frequency of helicopter movements from landing zones within their respective geographical areas. Moreover, the Town Board of the Town of East Hampton, New York is considering the temporary closure, or additional restrictions on the use, of the East Hampton Airport, following the expiration of FAA grant assurances in September of 2021. On February 15, 2022, the Company filed and others filed a petition in the Supreme Court of the State of New York, County of Suffolk, alleging that the plan to close the East Hampton Airport violates New York’s Environmental Quality Review Act and Article 78 of New York’s Civil Practice Law and Rules. The court granted a temporary restraining order, which the respondents unsuccessfully tried to modify or partially stay. The court later consolidated this case with two other similar cases and on October 19, 2022 the court granted our and other petitioners’ petitions in their entirety, which led to the respondents filing of Notice of Appeal. Additionally, the Company and other plaintiffs filed a complaint in the United States District Court, the Southern District of New York, against the County of Westchester, April Gasparri, and Avports for preventing them from operating at Westchester County Airport. The County of Westchester responded with counterclaims against the plaintiffs for violating Westchester County Airport’s terminal use procedures and seeking a permanent injunction. The Company denies violating the terminal use procedures. If these or any similar efforts are successful, our business would be severely impacted and our growth opportunities in such areas may be reduced.
Failure to comply with federal, state, and foreign laws and regulations relating to privacy, data protection, and consumer protection, or the expansion of current laws and regulations or the enactment of new laws or regulations in these areas, could adversely affect our business and our financial condition.
We are subject to a wide variety of laws in the United States and other jurisdictions related to privacy, data protection, and consumer protection that are often complex and subject to varying interpretations. As a result, these privacy, data protection, and consumer protection laws may change or develop over time through judicial decisions or as new guidance or interpretations are provided by regulatory and governing bodies and such changes or developments may be contrary to our existing practices. This may cause us to expend resources on updating, changing, or eliminating some of our privacy and data protection practices.
Laws and regulations relating to privacy and data protection are continually evolving and subject to potentially differing interpretations. These requirements may not be harmonized, may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another, or may conflict with other rules or our practices. As a result, our practices may not have complied or may not comply in the future with all such laws, regulations, requirements, and obligations. The failure to comply with such data protection and privacy regulations can result in fines, penalties, and the enforcement of any non-compliance, which could significantly impact our business operations.
The CPPA provides new data privacy rights for consumers in California and new operational requirements for companies doing business in California. Compliance with the new obligations imposed by the CCPA depends in part on how particular regulators interpret and apply them, and because the CCPA is relatively new, there is still some uncertainty about
how the CCPA will be interpreted and enforced. If we fail to comply with the CCPA or if regulators assert that we have failed to comply with the CCPA, we may be subject to certain fines or other penalties and litigation, any of which may negatively impact our reputation, require us to expend significant resources, and harm our business. Furthermore, CPRA, which amended and expanded the CCPA, including by providing consumers with additional rights with respect to their personal information took effect applying to information collected by businesses on or after January 1, 2022. We believe that the personal information we collect from California residents that use our app, the air transportation services we have offered in California in the past, and direct marketing to California residents for those services, as well as our plans to offer future services in California, have made and in the future will make Blade subject to compliance with CCPA and CPRA.
Moreover, as we offer and advertise our services in Europe, Canada, and Monaco, it is important to acknowledge the impact of privacy regulations in these foreign jurisdictions which we are subject to. The GDPR, PIPEDA, and DPA are known for their stringent requirements and can pose significant challenges for companies to comply with. Complying with such privacy regulations requires increased expenditure in human and financial resources which may negatively impact the financial conditions of our foreign operations.
We have in the past, and could be in the future, subject to data breaches. A significant data breach or any failure, or perceived failure, by us to comply with any federal, state, or foreign privacy laws, regulations, or other principles or orders to which we may be subject could adversely affect our reputation, brand, and business, and may result in claims, investigations, proceedings, or actions against us by governmental entities, litigation, including class action litigation, from our fliers, fines, penalties, or other liabilities, or require us to change our operations or cease using certain data sets. Depending on the nature of the information compromised, we may also have obligations to notify users, law enforcement, government authorities, payment companies, consumer reporting agencies, or the media about the incident and may be required to expend additional resources in connection with investigating and remediating such an incident, and otherwise complying with applicable privacy and data security laws.
Failure to comply with applicable privacy and security laws and regulations could result in a material breach of contract with one or more of our Medical Customers, subject us to enforcement actions and adversely affect our business and our financial condition.
The cost of compliance with the laws and regulations is high and is likely to increase in the future as we continue to develop new verticals in the Medical segment, including our Trinity Organ Placement Services product or “TOPS.” Any failure or perceived failure by us to comply with applicable data privacy and security laws or regulations, our internal policies and procedures or our contracts governing our processing of personal information could result in negative publicity, government investigations and enforcement actions, claims by third parties and damage to our reputation, any of which could have an adverse effect on our operations, financial performance and business.
HIPAA privacy and security regulations extensively regulate the use and disclosure of PHI and require business associates to implement administrative, physical and technical safeguards to protect the security of such information. If we are unable to properly protect the privacy and security of PHI entrusted to us, we could be found to have breached our contracts with our customers and/or be subject to investigation by the HHS Office for Civil Rights (“OCR”). In the event OCR finds that we have failed to comply with applicable HIPAA privacy and security standards, we could face civil and criminal penalties. OCR has become an increasingly active regulator and has signaled its intention to continue this trend. OCR has the discretion to impose penalties without being required to attempt to resolve violations through informal means. Further, OCR may require companies to enter into resolution agreements and corrective action plans that impose ongoing compliance requirements. OCR enforcement activity can result in financial liability and reputational harm, and responses to such enforcement activity can consume significant internal resources. In addition to enforcement by OCR, state attorneys general are authorized to bring civil actions under either HIPAA or similar state laws, seeking either injunctions or damages in response to violations that threaten the privacy of state residents. Although we have developed and are implementing policies, processes and a compliance program infrastructure to assist us in complying with these laws and regulations and our contractual obligations, we cannot provide assurance regarding how these laws and regulations will be interpreted, enforced or applied to our Medical segment. Further, the FTC has prosecuted certain uses and disclosures of personal information and data breach cases as unfair and/or deceptive acts or practices under the Federal Trade Commission Act or under the FTC Health Breach Notification Act.
Environmental regulation and liabilities, including new or developing laws and regulations, may increase our costs of operations and adversely affect us.
In recent years, governments have increasingly focused on climate change, carbon emissions, and energy use. Laws and regulations that curb the use of conventional energy or require the use of renewable fuels or renewable sources of energy, such as wind or solar power, could result in a reduction in demand for hydrocarbon-based fuels such as oil and natural gas. In addition, governments could pass laws, regulations or taxes that increase the cost of such fuels, thereby decreasing demand for our services and increasing the costs of our operations by us or our third-party aircraft operators. More
stringent environmental laws, regulations, or enforcement policies could have a material adverse effect on our business, financial condition, and results of operations.
Risks Related to Ownership of Our Securities and Being a Public Company
We have identified material weaknesses in our internal control over financial reporting. If our remediation of these material weaknesses is not effective, or if we experience additional material weaknesses in the future or otherwise fail to maintain effective internal controls in the future, we may not be able to accurately report its financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our common stock.
Our management is responsible for establishing and maintaining adequate internal controls over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Our management is likewise required, on a quarterly basis, to evaluate the effectiveness of our internal controls over financial reporting and to disclose any changes and material weaknesses identified through such evaluation of those internal controls. A material weakness is a deficiency, or a 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.
In connection with the audit of our consolidated financial statements for the year ended December 31, 2023, management concluded that our internal controls over financial reporting were not effective as of December 31, 2023, due to the existence of two material weaknesses as follows:
•The lack of effective IT General Controls in relation to:
•user access controls that adequately restrict user access to financial applications, programs and data affecting underlying accounting records, and
◦the change management controls for certain operational applications that ensure IT program and data changes are identified, tested, authorized and implemented properly.
•a number of control deficiencies in relation to the revenue process that, although not individually material in nature, in aggregate constitute a material weakness
These material weaknesses could impact our 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. While we have implemented Sarbanes-Oxley Act (“SOX”) compliance software to assist in the overall evaluation and documentation of the design and operating effectiveness of our internal controls as described under “Item 9A. Controls and Procedures: Management’s Plans for Remediation” and expect to have the two identified material weaknesses remediated during 2024, the work is ongoing, may be time consuming and costly, and there can be no assurance as to when we will successfully remediate these material weaknesses.
As discussed above, we have taken, and plan to take, a number of measures to remediate these material weaknesses; however, if we are unable to remediate our continuing material weaknesses in a timely manner or we identify additional material weaknesses, we may be unable to provide required financial information in a timely and reliable manner and we may incorrectly report financial information. Likewise, if our financial statements are not filed on a timely basis, we could be subject to sanctions or investigations by the stock exchange on which our common stock is listed, the SEC or other regulatory authorities. Failure to timely file will cause us to be ineligible to utilize short form registration statements on Form S-3 or Form S-4, which may impair our ability to obtain capital in a timely fashion to execute our business strategies or issue shares to effect an acquisition. In either case, there could result a material adverse effect on our business. The existence of material weaknesses or significant deficiencies in internal control over financial reporting could adversely affect our reputation or investor perceptions of us, which could have a negative effect on the trading price of our stock. In addition, we have and will continue to incur additional costs to remediate material weaknesses in our internal control over financial reporting.
If our management is unable to conclude that our internal control over financial reporting is effective, or if Blade’s independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, when required, lenders and investors may lose confidence in the accuracy and completeness of our financial reports and we may face restricted access to various sources of financing in the future.
If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.
As a public company, we are subject to the reporting requirements of the Exchange Act, SOX, and the rules and regulations of the applicable listing standards of the Nasdaq. The requirements of these rules and regulations have increased and may continue to increase our legal, accounting, and financial compliance costs, have made some activities more difficult, time-consuming, and costly and have placed significant strain on our personnel, systems, and resources.
SOX requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. In particular, Section 404 of SOX(“Section 404”) requires us to perform system and process evaluation and testing of our internal control over financial reporting to allow management to report on, and our independent registered public accounting firm potentially to attest to, the effectiveness of our internal control over financial reporting. Any failure to maintain effective disclosure controls and internal control over financial reporting could have a material and adverse effect on our business, results of operations and financial condition and could cause a decline in the trading price of our common stock.
If we fail to develop and maintain effective internal control over financial reporting and disclosure controls and procedures, we may be unable to provide financial information and required SEC reports that a U.S. publicly traded company is required to provide in a timely and reliable fashion. Any such delays or deficiencies could penalize us, including by limiting our ability to obtain financing, either in the public capital markets or from private sources and hurt our reputation and could thereby impede our ability to implement our growth strategy. In addition, any such delays or deficiencies could result in our failure to meet the requirements for listing of our common stock on the Nasdaq.
We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the SEC is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers. We are also continuing to improve our internal control over financial reporting. In order to develop, maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we have expended, and anticipate that we will continue to expend, significant resources, including accounting-related and audit-related costs and significant management oversight.
Our Warrants are accounted for as derivative liabilities and are recorded at fair value with changes in fair value for each period reported in earnings, which may have an adverse effect on the market price of our common stock.
We are accounting for both the Public Warrants and the Private Placement Warrants as a warrant liability. At each reporting period, the accounting treatment of the Warrants will be re-evaluated for proper accounting treatment as a liability or equity, and the fair value of the liability of the public and private warrants will be remeasured. The change in the fair value of the liability will be recorded as other income (expense) in our consolidated statement of operations. The value of the liability related to the Warrants is determined by the warrants' market price, which is driven mainly by the share price of our common stock. Changes in the warrants' market price may have a material impact on the estimated fair value of the embedded derivative liability. As a result, our consolidated financial statements and results of operations will fluctuate quarterly, based on the share price of our common stock. If our stock price is volatile, we expect that we will recognize non-cash gains or losses on our Warrants or any other similar derivative instruments each reporting period and that the amount of such gains or losses could be material. The impact of changes in fair value on earnings may have an adverse effect on the market price of our common stock. See Note 2, 12 and 13 to the consolidated financial statements for additional information.
The price of our securities may change significantly, and you could lose all or part of your investment as a result.
The trading price of our common stock and Warrants has been and in the future may again be volatile. The stock market experienced extreme volatility during part of 2020, 2021, 2022 and 2023. This volatility often has been unrelated or disproportionate to the operating performance of particular companies. An investor might not be able to resell shares or Warrants at an attractive price due to a number of factors such as those listed in “Risks Related to Our Business and Growth Strategy”. Broad market and industry fluctuations may adversely affect the market price of our common stock, regardless of our actual operating performance. In addition, price volatility may be greater if the public float and trading volume of our common stock is low.
There is no guarantee that the Warrants will ever be in the money, and they may expire worthless.
The exercise price for our Warrants is $11.50 per share. There can be no assurance that the Warrants will be in the money prior to their expiration and, as such, they may expire worthless. The terms of our Warrants may be amended in a manner that may be adverse to the holders. The Warrant Agreement between American Stock Transfer and Trust
Company, LLC, as warrant agent, and us provides that the terms of the Warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 50% of the then outstanding Warrants to make any change that adversely affects the interests of the registered holders. Accordingly, we may amend the terms of the Warrants in a manner adverse to a holder if holders of at least 50% of the then outstanding Warrants approve of such amendment. Our ability to amend the terms of the Warrants with the consent of at least 50% of the then outstanding Warrants is unlimited. Examples of such amendments could be amendments to, among other things, increase the exercise price of the Warrants, shorten the exercise period or decrease the number of shares of our common stock purchasable upon exercise of a Warrant.
We may redeem unexpired Warrants held by former EIC stockholders prior to their exercise at a time that is disadvantageous to those stockholders, thereby making such Warrants worthless.
We have the ability to redeem outstanding Warrants at any time prior to their expiration, at a price of $0.01 per Warrant, provided that the last reported sales price of our common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations, and the like) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date we send the notice of redemption to the Warrant holders. If and when the Warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding Warrants could force you to: (1) exercise your Warrants and pay the related exercise price at a time when it may be disadvantageous for you to do so; (2) sell your Warrants at the then-current market price when you might otherwise wish to hold your Warrants; or (3) accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market value of your Warrants. None of the Private Placement Warrants will be redeemable by us for cash so long as they are held by the Sponsor (Experience Sponsor LLC) or its permitted transferees.
In addition, we may redeem Warrants (including Private Placement Warrants) for a number of shares of our common stock determined based on the redemption date and the fair market value of our common stock. Any such redemption may have similar consequences to a cash redemption described above. In addition, such redemption may occur at a time when the Warrants are “out-of-the-money”, in which case you would lose any potential embedded value from a subsequent increase in the value of our common stock had your Warrants remained outstanding.
We do not expect to declare any dividends in the foreseeable future.
We intend to retain future earnings, if any, for future operations and expansion and there are no current plans to pay any cash dividends for the foreseeable future. The declaration, amount, and payment of any future dividends on shares of our common stock will be at the sole discretion of our Board of Directors (or “Board”). Our Board of Directors may take into account general and economic conditions, our financial condition and results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax, and regulatory restrictions, implications on the payment of dividends by us to our stockholders or by our subsidiaries to us, and such other factors as our Board may deem relevant. As a result, you may not receive any return on an investment in our common stock unless you sell our common stock for a price greater than that which you paid for it.
We may issue additional shares of common stock or other equity securities without your approval, which would dilute your ownership interest in us and may depress the market price of our common stock.
We may issue additional shares of common stock or other equity securities in the future in connection with, among other things, future acquisitions, repayment of outstanding indebtedness or grants to our directors, officers, and employees without stockholder approval in a number of circumstances. In addition, exercise of the Warrants would be dilutive. Our issuance of additional common stock or other equity securities could have one or more of the following effects:
•our existing stockholders’ proportionate ownership interest in us will decrease;
•the amount of cash available per share, including for payment of dividends in the future, may decrease;
•the relative voting strength of each previously outstanding share of common stock may be diminished; and
•the market price of our common stock may decline.
We are a “smaller reporting company” within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to “smaller reporting companies,” this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.
We are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of our common stock held by non-affiliates is greater than or equal to $250 million as of the end of that fiscal year’s second fiscal quarter, OR (ii) our annual revenues are greater than or equal to $100 million during the last completed fiscal year and the market value of our common stock held by non- affiliates exceeds $700 million as of the end of that fiscal year’s second fiscal quarter. To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible.
We may incur significant costs associated with increased regulation as we transition from an “emerging growth company” to accelerated filer status.
We are currently an “emerging growth company” within the meaning of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies.” As of December 31, 2024, we will no longer be an emerging growth company, as defined under the JOBS Act, and will no longer be able to take advantage of certain exemptions from various reporting requirements that are applicable to emerging growth companies.
We will be faced with increased compliance regulation and disclosure requirements as we transition into accelerated filer status from “emerging growth company” status and these rules and regulations contribute to increased legal and financial compliance costs and make some activities time-consuming. In particular, we will be subject to new requirements, including, but not limited to, compliance with the auditor attestation requirements of Section 404, enhanced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, nonbinding advisory votes on executive compensation and stockholder approval of any golden parachute payments not previously approved. In addition, we will no longer be able to use the extended transition period for complying with new or revised accounting standards available to emerging growth companies and will be required to adopt new or revised accounting standards as of the effective dates for public companies. Such changes may require us to incur additional costs for compliance.
Provisions in our charter and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our common stock and could entrench management.
Our Certificate of Incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. These provisions include the ability of our Board to designate the terms of and issue new series of preferred shares, which may make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities. These anti-takeover defenses could discourage, delay, or prevent a transaction involving a change in control of the Company. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing and cause us to take corporate actions other than those you desire.
Our Certificate of Incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings and the federal district courts as the sole and exclusive forum for other types of actions and proceedings, in each case, that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain what such stockholders believe to be a favorable judicial forum for disputes with the Company or our directors, officers, or other employees.
Our Certificate of Incorporation provides that, unless we consent to the selection of an alternative forum, any (i) derivative action or proceeding brought on behalf of the Company; (ii) action asserting a claim of breach of a fiduciary duty owed by, or any other wrongdoing by, any current or former director, officer, or other employee or stockholder of the Company; (iii) action asserting a claim against the Company arising pursuant to any provision of the DGCL or our certificate of incorporation or our bylaws; or (iv) action to interpret, apply, enforce, or determine the validity of any provisions in the certificate of incorporation of bylaws; or (v) action asserting a claim against the company or any director or officer of the Company governed by the internal affairs doctrine, shall, to the fullest extent permitted by law, be exclusively brought in the Court of Chancery of the State of Delaware or, if such court does not have subject matter
jurisdiction thereof, the federal district court of the State of Delaware. Subject to the foregoing, the federal district courts of the United States are the exclusive forum for the resolution of any action, suit, or proceeding asserting a cause of action under the Securities Act. The exclusive forum provision does not apply to suits brought to enforce any liability or duty created by the Exchange Act. Any person or entity purchasing or otherwise acquiring an interest in any shares of our capital stock shall be deemed to have notice of and to have consented to the forum provisions in our certificate of incorporation. These choice-of- forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that he, she, or it believes to be favorable for disputes with the Company or our directors, officers, or other employees or stockholders, which may discourage such lawsuits. We note that there is uncertainty as to whether a court would enforce these provisions and that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Section 22 of the Securities Act creates concurrent jurisdiction for state and federal courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.
Alternatively, if a court were to find these provisions of our certificate of incorporation inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially adversely affect our business, financial condition, and results of operations and result in a diversion of the time and resources of our management and Board of Directors.
Future sales, or the perception of future sales, by us or our stockholders in the public market could cause the market price for the common stock to decline.
The sale of shares of our common stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of our common stock. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.
Pursuant to an Investor Rights Agreement, certain stockholders have the right, subject to certain conditions, to require us to register the sale of their shares of common stock under the Securities Act. By exercising their registration rights and selling a large number of shares, these stockholders could cause the prevailing market price of our common stock to decline.
If these stockholders exercise their registration rights, the trading price of shares of our common stock could drop significantly if the holders of these shares sell them or are perceived by the market as intending to sell them. These factors could also make it more difficult for us to raise additional funds through future offerings of shares of common stock or other securities.
In addition, the shares of common stock reserved for future issuance under our 2021 Omnibus Incentive Plan will become eligible for sale in the public market once those shares are issued, subject to any applicable vesting requirements, lockup agreements and other restrictions imposed by law. As of December 31, 2023, approximately 9,512,751 shares of our common stock were reserved for future issuance under our 2021 Omnibus Incentive Plan.
General Risks
If securities or industry analysts do not maintain coverage of us, if they change their recommendations regarding our common stock, or if our operating results do not meet their expectations, our common stock price and trading volume could decline.
The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our businesses. If securities or industry analysts do not maintain coverage of us, the trading price for our common stock could be negatively impacted. If one or more of the analysts who cover us downgrade our securities or publish unfavorable research about our businesses, or if our operating results do not meet analyst expectations, the trading price of our common stock would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our common stock could decrease, which might cause our common stock price and trading volume to decline.
We incur significant costs and obligations as a result of being a public company.
As a publicly traded company, we incur significant legal, accounting, and other expenses that we were not required to incur in the past. These expenses will increase once we are no longer an “emerging growth company” as defined under the JOBS ACT. In addition. new and changing laws, regulations, and standards relating to corporate governance and public disclosure for public companies, including Dodd Frank, the Sarbanes-Oxley Act, and regulations related thereto and the rules and regulations of the SEC and Nasdaq, have increased the costs and the time that must be devoted to
compliance matters. These rules and regulations have increased and may continue to increase our legal and financial costs and divert management time and attention from revenue-generating activities.
Item 1B. Unresolved Staff Comments
Not applicable.
Item 1C. Cybersecurity
Risk Management and Strategy
Blade’s cybersecurity is overseen by our senior management team including leaders from IT, Product Development, Finance, HR, and Legal. Our Chief Financial Officer, Vice President of Engineering and the Audit Committee of our Board of Directors review the organization's cybersecurity at regular meetings, which are quarterly, and when specific situations arise.
Discussions in these meetings cover issues important to Blade’s cybersecurity, which may include.
•Cybersecurity Threat Landscape: Emerging threats and trends;
•Incident Reports: Recent incidents and responses;
•Vulnerability Assessments and Penetration Testing: Identified vulnerabilities, remediation progress, and penetration testing results;
•Compliance: Adherence to laws, regulations, and standards;
•Security Policies and Procedures: Review and updates;
•Employee Training and Awareness: Training programs and awareness initiatives;
•Risk Management: Strategies to mitigate risks;
•Technology and Security Infrastructure: IT security and new technologies;
•Cybersecurity Insurance: Coverage and policy adequacy;
•Disaster Recovery and Business Continuity: Readiness and plan effectiveness’
•Performance Metrics: Effectiveness of security posture.
The company maintains safeguards including employee training, incident response reviews and exercises, cybersecurity insurance, and business continuity plans to protect its assets. Processes are regularly reviewed by internal and external experts. A third-party cybersecurity program is used to minimize disruption to business and operations.
To date, the Company has not experienced any material cybersecurity incidents and expenses incurred from cybersecurity incidents were immaterial (including penalties and settlements, of which there were none). For a discussion of whether and how any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect the Company, including its business strategy, results of operations or financial condition, see Item 1A. Risk Factors - "Risks Related to Intellectual Property, Cybersecurity, Information Technology and Data Management Practices", which are incorporated by reference into this Item 1C.
Item 2. Properties
Our corporate headquarters is located in New York, New York. We use this facility for finance and accounting, legal, talent management, technology, marketing, sales and other administrative functions. We also maintain, primarily for the Passenger segment, branded terminals for the use of Blade fliers and customer experience personnel pursuant to leases, licenses or permits with operators of various heliports and airports in New York, New York, Newark, New Jersey, Nantucket, Massachusetts, Cannes, France, Nice, France and Monte Carlo, Monaco. Our wholly-owned subsidiary Trinity, which is part of the Medical reporting segment, operates from Tempe, Arizona, Blade Europe, which is part of the Passenger reporting segment, operates from offices in Cannes, France and Monaco.
Item 3. Legal Proceedings
In the opinion of management, other than as described below, we are not involved in any claims, legal actions, or regulatory proceedings as of December 31, 2023, the ultimate disposition of which would have a material adverse effect on our consolidated financial position, results of operations, or cash flows.
In July 2022, Trinity Air Medical, LLC, a wholly owned subsidiary of Blade Urban Air Mobility, Inc., received a federal grand jury subpoena seeking records related to the provision of transplant transportation services. On August 2, 2023, the Company received notice that the grand jury investigation into the transplant transportation services industry has been closed and that the Company is no longer bound by the obligations placed on it by the subpoena.
On February 8, 2024, and February 21, 2024, two putative class action lawsuits relating to the acquisition of Blade Urban Air Mobility, Inc. (“Old Blade”) were filed. The lawsuits are captioned McFee v. Affeldt, et al.(“McFee”) and Drulias v. Affeldt, et al. (“Drulias”) (Del. Ch. 2024). McFee asserts breach of fiduciary duty claims against the former directors of Experience Investment Corp. (“EIC Directors”) and KSL Capital Partners Management V and alleges that the proxy statement related to the acquisition of Old Blade (“Merger Proxy”) insufficiently disclosed EIC’s cash position and the shareholder economics of the combined Company. Drulius asserts breach of fiduciary duty and unjust enrichment claims against the EIC Directors, the former officers of EIC, and KSL Capital Partners, LLC (“KSL”), and aiding and an abetting breach of fiduciary duty claim against KSL. The Drulias complaint alleges that the Merger Proxy insufficiently disclosed EIC’s cash position, Old Blade’s value prospects and risks, and information related to Old Blade’s chief executive officer, who is also our current chief executive officer. The complaints seek, among other things, damages and attorneys’ fees and costs.
Item 4. Mine Safety Disclosures
Not applicable.
Part II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities
Market Information
Our common stock is traded on The NASDAQ Capital Markets under the symbol “BLDE”.
Holders
On March 6, 2024, the Company had 31 holders of record of our common stock. In addition to holders of record of our common stock we believe there is a substantially greater number of “street name” holders or beneficial holders whose common stock is held of record by banks, brokers and other financial institutions.
Dividends
The Company has never declared or paid cash dividends on its common stock and has no intention to do so in the foreseeable future.
Securities Authorized for Issuance Under Equity Compensation Plans
See Part III, Item 12 of this Form 10-K and Note 6 to the consolidated financial statements included herein for additional information.
Item 6. [Reserved]
Not applicable.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with other sections of this Annual Report on Form 10-K, including our consolidated financial statements and the related notes and other financial information included elsewhere in this Annual Report on Form 10-K.
In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. For important information regarding these forward-looking statements, please see the discussion above under the caption “Note Regarding Forward-Looking Statements.”
Overview
Blade Air Mobility, Inc. (“Blade” or the “Company”) provides air transportation and logistics for hospitals across the United States, where it is one of the largest transporters of human organs for transplant, and for passengers, with helicopter and fixed wing services primarily in the Northeast United States, Southern Europe and Western Canada. Based in New York City, Blade's asset-light model, coupled with its exclusive passenger terminal infrastructure and proprietary technologies, is designed to facilitate a seamless transition from helicopters and fixed-wing aircraft to Electric Vertical Aircraft (“EVA” or “eVTOL”), enabling lower cost air mobility that is both quiet and emission-free.
Blade operates in three key product lines across two segments (see Note 7 to the consolidated financial statements included herein for further information on reportable segments):
Passenger segment
•Short Distance – Consisting primarily of helicopter and amphibious seaplane flights in the United States, Canada and Europe between 10 and 100 miles in distance. Flights are available for purchase both by-the-seat and on a full aircraft charter basis.
•Jet and Other – Consists principally of revenues from non-medical jet charter and by-the-seat jet flights between New York and South Florida, revenue from brand partners for exposure to Blade fliers and certain ground transportation services.
Medical segment
•MediMobility Organ Transport – Consisting primarily of transportation of human organs for transplant and/or the medical teams supporting these services. Blade also offers additional services including donor logistics coordination and support evaluating potential donor organs .
Blade Europe Acquisition
On September 1, 2022, Blade acquired, through Blade Europe SAS, a wholly-owned French société par actions simplifiée subsidiary (“Blade Europe”), 100% of the share capital and voting rights of Héli Tickets France SAS (“Héli Tickets France”), a French société par actions simplifiée, which was then renamed “Blade France SAS” (“Blade France”) and of Helicopter Monaco SARL (“Helicopter Monaco”), a Monegasque société à responsabilité limitée, which was then renamed “Blade Monaco SARL” (“Blade Monaco”). We refer to the three European legal entities (Blade Europe, Blade France and Blade Monaco) collectively as “Blade Europe”. These acquisitions are part of Blade’s growth strategy of leveraging its asset-light model, technology and recognized brand to aggregate the best use cases for urban air mobility. The routes in Southern France, Monaco, Italy and Switzerland, meet the criteria given the geography, short distances and large addressable markets. In addition these markets have connectivity to our existing service areas where the Blade brand enjoys recognition, creating the opportunity for cross pollination between our North American and European customer base. As a result of this acquisition and an Aircraft Operator Agreement Blade Europe entered into in connection with the acquisition, Blade gained the right to act as the exclusive air charter broker and/or reseller of air transportation services to be operated and provided by the operator partners at pre-negotiated fixed hourly rates and with a minimum number of annual flight hours guaranteed to the operators by Blade. The initial term of the Aircraft Operator Agreement ends on December 31, 2032 and it will automatically renew for successive three year periods.
Seats Flown
The following table reflects the key operating metric we use to evaluate the Passenger segment:
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| | | Year Ended December 31, |
| | | | 2023 | | 2022 |
| Seats flown – all passenger flights | | | | | 154,608 | | | 106,368 | |
We define “Seats flown — all passenger flights” (Seats Flown) as the total number of seats purchased by paying passengers on all flights, whether sold by-the-seat or within a charter arrangement. Our long-term consumer-facing strategy is
primarily focused on growth in by-the-seat products, and we believe that Seats Flown is an important indicator of our progress in executing on this growth strategy. This metric is not always directly correlated with revenue given the significant variability in the price we charge per seat flown across our various products and routes. For products and routes sold by-the-seat, we fly significantly more passengers at a low price per seat; which is captured by Seats Flown. Passenger revenue is heavily influenced by the Jet and Other product lines where we typically fly fewer passengers over long distances at a high price. We believe the Seats Flown metric is useful to investors in understanding the overall scale of our Passenger segment and trends in the number of passengers paying to use our service.
Our Business Model
Blade leverages an asset-light business model: we primarily utilize aircraft that are owned and/or operated by third-parties on Blade’s behalf. In these arrangements, pilots, maintenance, hangar, insurance, and fuel are all costs borne by our network of operators, which provide aircraft flight time to Blade at fixed hourly rates. This enables our operator partners to focus on training pilots, maintaining aircraft and flying, while we maintain the relationship with our customer from booking through flight arrival. For flights offered for sale by-the-seat, Blade schedules flights based on demand analysis and takes the economic risk of aggregating fliers to optimize flight profitability, providing predictable margins for our operators.
When utilizing third-party aircraft and/or aircraft operators, we typically pre-negotiate fixed hourly rates and flight times, paying only for flights actually flown, creating a predictable and flexible cost structure. Blade provides guaranteed flight commitments to some of our third-party operators through capacity purchase agreements, which enable Blade to ensure dedicated access to such aircraft with enhanced crew availability, lower costs and, in many cases, the ability to unlock more favorable rates when flying more than the minimum number of hours we guarantee to the operator. Additionally, a significant portion of Blade trips are flown by safety-vetted operators to whom Blade makes no commitments, providing us with additional flexible capacity for high demand periods.
We prioritize the use of dedicated aircraft under capacity purchase agreements, which provide better economics, but size our commitments significantly below our expected demand to limit the risk of a guarantee shortfall and then fulfill incremental demand through our network of non-dedicated operators. In 2023, approximately 46% of Blade’s flight costs were pursuant to capacity purchase agreements that included flight volume guarantees from Blade.
Blade’s proprietary “customer-to-cockpit” technology stack enables us to manage fliers and organ transports across numerous simultaneous flights with multiple operators around the world. We believe that this technology, which provides (i) real-time tracking of organ transports and passenger flights; (ii) profit/loss information on a flight-by-flight basis; (iii) customized portals for all relevant parties including pilots, accounting teams, operator dispatch, transplant coordinators and Blade’s logistics team; and (iv) a customer-facing app for passenger missions, will enable us to continue to scale our business. This technology stack was built with future growth in mind and is designed to allow our platform to be easily scaled to accommodate, among other things, rapid increases in volume, new routes, new operators, broader flight schedules, international expansion, next-generation verticraft and ancillary services (e.g., last/first-mile ground connections, trip cancellation insurance, baggage delivery) through our mobile apps, website and cloud-based tools.
Our asset-light business model was developed to be scalable and profitable using conventional aircraft today while enabling a seamless transition to EVA, once they are certified for public use. We intend to leverage the expected lower operating costs of EVA versus helicopters to reduce the consumer’s price for our flights. Additionally, we expect the reduced noise footprint and zero carbon emission characteristics of EVA to allow for the development of new, vertical landing infrastructure (“vertiports”) in our existing and new markets.
Factors Affecting our Performance
Ability to attract and retain fliers in our Short Distance product line
Our success depends, in part, on our ability to cost-effectively attract new fliers, retain existing fliers, and increase utilization of our platform by existing fliers. Historically, we have made, and expect that we will need to continue to make, significant investments and implement strategic initiatives in order to attract new fliers, such as flier acquisition campaigns and the launching of new scheduled routes. These investments and initiatives may not be effective in generating sales growth or profits. In addition, marketing campaigns can be expensive and may not result in the acquisition of additional fliers in a cost-effective manner, if at all. As our brand becomes more widely known, future
marketing campaigns or brand content may not attract new fliers at the same rate as past campaigns or brand content. If we are unable to attract new fliers, our business, financial condition, and results of operations will be adversely affected.
Our fliers have a wide variety of options for transportation, including business aviation, commercial airlines, private aircraft operators, personal vehicles, rental cars, taxis, public transit, and ride-sharing offerings. To expand our flier base, we must appeal to new fliers who have historically used other forms of transportation. If fliers do not perceive our urban air mobility services to be reliable, safe, and cost-effective, or if we fail to offer new and relevant services and features on our platform, we may not be able to attract or retain fliers or increase their utilization of our platform. If we fail to continue to grow our flier base, retain existing fliers, or increase the overall utilization of our platform, our business, financial condition, and results of operations could be adversely affected.
Ability to attract and retain customers in our MediMobility Organ Transport and Jet and Other product line
Our MediMobility Organ Transport product line primarily serves transplant centers, organ procurement organizations and hospitals. Transportation for the hearts, lungs and livers that make up the vast majority of this product line is typically requested only hours before the required departure time. Our ability to successfully fulfill these requests with consistent pricing on the requested aircraft type, be it jet, turboprop or helicopter, is the primary metric by which Medical Customers evaluate our performance.
The organ transportation market is highly competitive and we compete for organ transportation business primarily on our ability to provide reliable, end-to-end air and ground transportation at competitive pricing. Increasingly, we compete directly with manufacturers of organ preservation equipment that also offer transportation or with providers that offer additional services, such as surgical organ recovery, that our customers find valuable. We may face increased competition as our Medical Customers may prefer a streamlined logistics offering, including services or technology that we cannot provide, which could have a material adverse effect on our business, results of operations, and financial condition.
We utilize the same aircraft and aircraft operators in the Jet and Other business line of our Passenger segment. Historically, the combination of our Passenger and MediMobility Organ Transport demand, has been enough to incentivize operators to provide dedicated aircraft and crews for our use. However, there is no guarantee that we will continue to be able to secure dedicated aircraft at favorable rates, particularly given significant increases in demand for private jet aircraft in the United States in recent years. Periods of increased demand for private jets have historically led to increased charter costs and more limited availability in the spot jet charter market. Although this has not limited our ability to maintain or increase our access to dedicated jet aircraft at fixed prices in recent periods, jet charter, which makes up the majority of our Jet and Other business line, is highly competitive and volumes and pricing have historically been significantly influenced by overall market supply and demand.
Impact of inflation to our business
We generally pay a fixed hourly rate to our third-party operators, based on flight hours flown. These rates are susceptible to inflation and are typically renegotiated on a yearly basis, though some multi-year contracts have fixed rate increases. Some contracts with operators allow for pass-through of fuel price increases above a set threshold. To the extent we choose to own and/or operate aircraft in the future, we would be more directly exposed to inflation of aircraft operating expenses including pilot salaries, fuel, insurance, parts and maintenance.
We have historically passed through cost inflation to customers and most contracts with our MediMobility Organ Transport Customers automatically pass through any fuel surcharges, but there is no guarantee this will continue in the future.
Passenger Expansion into New Geographic Markets
Our Passenger segment growth plan is focused on dense urban areas, primarily those with existing air transportation infrastructure that are facing increasing ground congestion. Growth in our Passenger segment will depend in part on our ability to successfully enter into new markets, create and introduce new routes, and expand our existing routes by adding more frequent flights. In these areas, our urban air mobility services can provide the most time savings for our fliers, and given the short distances involved, costs for our services can be comparable to luxury, private car services. Significant changes to our existing routes or the introduction of new and unproven routes may require us to obtain and maintain applicable permits, authorizations, or other regulatory approvals. In addition, EVA may be commercially viable sooner in these markets given that battery technology constraints may limit the range of early models. Large urban markets with
existing heliport infrastructure should be able to accommodate EVA while other cities may need several years to permit and build such infrastructure.
If these new or expanded routes are unsuccessful or fail to attract a sufficient number of fliers to be profitable, or we are unable to bring new or expanded routes to market efficiently, our business, financial condition, and results of operations could be adversely affected. Furthermore, new third-party aircraft operator or flier demands regarding our services, including the availability of superior routes or a deterioration in the quality of our existing routes, could negatively affect the attractiveness of our platform and the economics of our business and require us to make substantial changes to and additional investments in our routes or our business model. The number of potential fliers using our urban air mobility services in any market cannot be predicted with any degree of certainty, and we cannot provide assurance that we will be able to operate in a profitable manner in any of our current or targeted future markets.
Development, approval and acceptance of EVA for commercial service
We intend to leverage the expected lower operating costs of EVA versus helicopters to reduce the price for our flights. Additionally, we expect the reduced noise footprint and zero carbon emission characteristics of EVA to allow for the development of new vertiports in our existing and new markets. However, EVA involves a complex set of technologies, which we rely on original equipment manufacturers (“OEMs”) to develop and our third-party aircraft operators to adopt. However, before EVA can fly passengers or cargo, OEMs must receive requisite approvals from federal transportation authorities. No EVA aircraft are currently certified by the FAA for commercial operations in the United States, and there is no assurance that OEM research and development will result in government certified aircraft that are market-viable or commercially successful in a timely manner, or at all. In order to gain government certification, the performance, reliability, and safety of EVA must be proven, none of which can be assured. Even if EVA aircraft are certified, individual operators must conform EVA aircraft to their licenses, which requires FAA approval, and individual pilots also must be licensed and approved by the FAA to fly EVA aircraft, which could contribute to delays in any widespread use of EVA and potentially limit the number of EVA operators available to our business. There is no assurance that research and development will result in government certified aircraft that are market-viable or commercially successful in a timely manner, or at all.
We believe that Blade is well positioned to introduce EVA into commercial service, once available, for a number of reasons. In our Passenger segment, we believe our existing Short Distance routes will be compatible with EVA, which are initially expected to have a limited range, and our existing terminal space will accommodate EVA. Additionally, we believe that the last-mile transports we perform using helicopters or ground vehicles in our Medical segment may be compatible with EVA, reducing organ transport time and cost for our customers. Blade’s unit economics are designed to be profitable using either conventional helicopters or EVA, even if early EVA do not deliver significant cost savings relative to helicopters. Moreover, Blade’s asset-light business model and technology platform are operator and aircraft agnostic, enabling a seamless transition to EVA.
Seasonality
Passenger segment
Historically, we have experienced significant seasonality in our Short Distance product line with flight volume peaking during the quarters ended June 30 (Q2) and September 30 (Q3) of each fiscal year due to the busy summer travel season, with lower volume during the quarters ended March 31 (Q1) and December 31 (Q4).
Jet and Other revenue has historically been stronger in the first and fourth quarter (Q1 and Q4) given that our by-the-seat jet service between New York and South Florida has historically operated only between November and April. We discontinued this service in Q4 2023 and do not expect the seasonality in our Jet and Other revenue to be significant in 2024.
Medical segment
Historically, seasonality in our MediMobility Organ Transport business has not been significant.
Key Components of the Company’s Results of Operations
Revenue
Short Distance products are typically purchased using the Blade App and paid for principally 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 revenue is recognized as the service is completed.
Jet products are typically purchased through our Flier Relations associates and our app and are paid for principally via checks, wires and credit card. Jet payments are typically collected at the time of booking before the performance of the related service. The revenue is recognized as the service is completed.
MediMobility Organ Transport products are typically purchased through our medical logistics coordinators and are paid for principally via checks and wires. Payments are generally collected after the performance of the related service in accordance with the client's payment terms. The revenue is recognized as the service is completed.
Cost of Revenue
Cost of revenue consists of flight costs paid to operators of aircraft and cars, landing fees, ROU asset amortization and internal costs incurred in generating organ ground transportation revenue using the Company's owned cars.
Software Development
Software development expenses consist primarily of staff costs and stock-based compensation costs. Software development costs are expensed as incurred.
General and Administrative
General and administrative expenses principally include staff costs including stock-based compensation, depreciation and amortization, impairment of intangible assets, directors and officers insurance costs, professional fees, credit card processing fees and establishment costs.
Selling and Marketing
Selling and marketing expenses consist primarily of advertising costs, staff costs including stock-based compensation, marketing expenses, sales commissions and promotion costs. The trend and timing of our brand marketing expenses will depend in part on the timing of our expansion into new markets and other marketing campaigns.
Results of Operations
The following table presents our consolidated statements of operations for the periods indicated (in thousands, except share and per share data):
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| | | Year Ended December 31, |
| | | | 2023 | | % of Revenue | | 2022 | | % of Revenue |
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| Revenue | | | | | $ | 225,180 | | | 100% | | $ | 146,120 | | | 100% |
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| Operating expenses | | | | | | | | | | | |
| Cost of revenue | | | | | 183,058 | | | 81% | | 123,845 | | | 85% |
| Software development | | | | | 4,627 | | | 2% | | 5,545 | | | 4% |
| General and administrative | | | | | 95,174 | | | 42% | | 62,510 | | | 43% |
| Selling and marketing | | | | | 10,438 | | | 5% | | 7,749 | | | 5% |
| Total operating expenses | | | | | 293,297 | | | 130% | | 199,649 | | | 137% |
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| Loss from operations | | | | | (68,117) | | | | | (53,529) | | | |
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| Other non-operating income (expense) | | | | | | | | | | | |
| Interest income, net | | | | | 8,442 | | | | | 3,434 | | | |
| Change in fair value of warrant liabilities | | | | | 2,125 | | | | | 24,225 | | | |
| Realized gain (loss) from sales of short-term investments | | | | | 8 | | | | | (2,162) | | | |
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| Total other non-operating income | | | | | 10,575 | | | | | 25,497 | | | |
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| Loss before income taxes | | | | | (57,542) | | | | | (28,032) | | | |
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| Income tax benefit | | | | | (1,466) | | | | | (772) | | | |
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| Net loss | | | | | $ | (56,076) | | | | | $ | (27,260) | | | |
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| Net loss per share, basic and diluted | | | | | $ | (0.76) | | | | | $ | (0.38) | | | |
| Weighted-average number of shares outstanding, basic and diluted | | | | | 73,524,476 | | | | | 71,238,103 | | | |
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Comparison of the Year Ended December 31, 2023 and 2022
Revenue
Disaggregated revenue by product line was as follows:
| | | | | | | | | | | | | | | | | | | | |
| | Year Ended December 31, | | |
| 2023 | | 2022 | | % Change |
| | (in thousands, except percentages) |
| Product Line: | | | | | | |
| Short Distance | | $ | 70,700 | | | $ | 44,986 | | | 57 | % |
| Jet and Other | | 27,876 | | | 29,355 | | | (5) | % |
| MediMobility Organ Transport | | 126,604 | | | 71,779 | | | 76 | % |
| Total Revenue | | $ | 225,180 | | | $ | 146,120 | | | 54 | % |
For the years ended December 31, 2023 and 2022, revenue increased by $79.1 million or 54%, from $146.1 million in 2022 to $225.2 million in 2023.
Short Distance revenue increased by $25.7 million or 57% from $45.0 million in 2022 to $70.7 million in 2023. Growth in Short Distance revenue was primarily driven by the acquisition of Blade Europe in September 2022, contributing growth of $19.8 million, increased volumes of Northeast helicopter charters for a $1.1 million increase, growth in our New York by-the-seat airport transfer products for $2.0 million, and growth in Canada for a $1.9 million increase.
Jet and Other revenue decreased by $(1.5) million or (5)% from $29.4 million in 2022 to $27.9 million in 2023. Decrease in Jet was driven primarily by the discontinuation of our seasonal by-the-seat jet service between New York and South Florida in the fourth quarter ended December 2023 for a $1.7 million decrease, partially offset by increased brand partnership revenues for a $0.4 million increase.
MediMobility Organ Transport revenue increased by $54.8 million or 76% from $71.8 million in 2022 to $126.6 million in 2023. Growth in MediMobility Organ Transport was driven primarily by higher activity from existing clients, resulting in a $29.4 million increase, as hospitals accepted more organs for transplant involving longer travel distances, increasing average flight hours per trip. The addition of new hospital clients resulted in a $23.2 million increase and increased revenue per flight hour resulted in a $2.7 million increase.
Cost of Revenue
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| Year Ended December 31, | | |
| 2023 | | 2022 | | % Change |
| (in thousands, except percentages) |
| Cost of revenue | $ | 183,058 | | | $ | 123,845 | | | 48 | % |
| Percentage of revenue | 81 | % | | 85 | % | | |
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For the year ended December 31, 2023 and 2022, cost of revenue increased by $59.2 million or 48%, from $123.8 million during 2022 to $183.1 million in 2023 driven by increased flight volume and an increase in the average price per trip.
Cost of revenue as a percentage of revenues decreased by 4 percentage points from 85% to 81%, attributable primarily to (i) increased use of dedicated aircraft (which are more cost efficient) and increased revenue per flight hour in our Medical business; (ii) the acquisition of Blade Europe, which operates at a lower cost of revenue as a percentage of revenue compared with our corporate average; (iii) increased passenger volumes, higher passenger load factor (i.e., percentage of available seats filled) and higher average seat pricing (attributable to fare class adoption) for our New York by-the-seat airport transfer products; and (iv) a reduction in spot market jet charter costs, which decreased more quickly than our jet charter pricing. These improvements were partially offset by a lower passenger load factor on our seasonal by-the-seat jet service between New York and South Florida and our subsequent discontinuation of the service in the fourth quarter ended December 31, 2023.
Software Development
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| Year Ended December 31, | | |
| 2023 | | 2022 | | % Change |
| (in thousands, except percentages) |
| Software development | $ | 4,627 | | | 5,545 | | | (17) | % |
| Percentage of revenue | 2 | % | | 4 | % | | |
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For the years ended December 31, 2023 and 2022, software development costs decreased $(0.9) million, or (17)%, from $5.5 million during 2022 to $4.6 million in 2023, attributable primarily to a decrease in staff costs due to reduction in headcount and stock-based compensation versus the prior year period.
General and Administrative
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| Year Ended December 31, | | |
| 2023 | | 2022 | | % Change |
| (in thousands, except percentages) |
| General and administrative | $ | 95,174 | | | $ | 62,510 | | | 52 | % |
| Percentage of revenue | 42 | % | | 43 | % | | |
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For the years ended December 31, 2023 and 2022, general and administrative expense increased by $32.7 million, or 52%, from $62.5 million in 2022 to $95.2 million in 2023.
The primary drivers for the increase were: (i) a $20.8 million impairment in Blade Europe’s intangible assets, specifically its exclusive rights to air transportation rights (see Note 4 to the consolidated financial statements included herein) (ii) a $11.5 million increase in staff costs, of which $4.1 million is attributable to stock-based compensation, $3.6 million is related to our acquisition of Blade Europe (September 2022) and $2.8 million is attributable to increased headcount to support growth in Medical; (iii) a $3.4 million increase attributable to a contingent consideration compensation (earn-out) in connection with the Trinity acquisition (see Note 11 - “Commitments and Contingencies” to the consolidated financial statements included herein); (iv) a $1.4 million increase in intangibles amortization costs (primarily as a result of our acquisition of Blade Europe, which was included for only four months of the prior year); (v) a $1.1 million increase across various general and administrative items in line with the company’s growth and geographical expansion (including a $0.9 million increase in rent and lease costs due to new leases); and (vi) a $0.9 million increase in credit card processing fees in line with the higher revenue. Those increases were partially offset by a $6.4 million decrease in corporate costs (M&A transaction fees, legal and professional fees and insurance costs).
Selling and Marketing
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| Year Ended December 31, | | |
| 2023 | | 2022 | | % Change |
| (in thousands, except percentages) |
| Selling and marketing | $ | 10,438 | | | $ | 7,749 | | | 35 | % |
| Percentage of revenue | 5 | % | | 5 | % | | |
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For the years ended December 31, 2023 and 2022, selling and marketing expense increased by $2.7 million, or 35%, from $7.7 million in 2022 to $10.4 million in 2023. The increase is attributable primarily to: (i) a $1.4 million in European marketing expenses (which were included for only four months of the prior year), primarily sales commission; (ii) a $1.4 million increase in sales commissions attributable to MediMobility Organ Transport revenue growth from new clients; and (iii) a $1.0 million increase in US marketing staff costs. Those increases were partially offset by a $1.1 million decrease in US marketing media and promotional expenses.
Other non-operating income (expense)
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, | | |
| 2023 | | 2022 | | % Change |
| (in thousands, except percentages) |
| Interest income, net | $ | 8,442 | | | $ | 3,434 | | | |
| Change in fair value of warrant liabilities | 2,125 | | | 24,225 | | | |
| Realized gain (loss) from sales of short-term investments | 8 | | | (2,162) | | | |
| Total other non-operating income | $ | 10,575 | | | $ | 25,497 | | | (59)% |
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For the year ended December 31, 2023, other non-operating income consists mainly of: (i) $8.4 million interest income, net of interest expense attributable to higher interest rates on our short-term investments and our money market funds in the current year period; and (ii) $2.1 million non-cash income due to fair value revaluation of warrant liabilities as the value of the warrant liabilities fluctuates with the warrants’ market price.
For the year ended December 31, 2022, other non-operating income consists of: (i) $24.2 million non-cash income due to fair value revaluation of warrant liabilities as the value of the warrant liabilities fluctuates with the warrants’ market price; (ii) a $2.2 million realized loss from sale of short-term investments; and (iii) $3.4 million interest income, net of interest expense. We earn interest income on our money market and short-term investments.
Segment Results of Operations
We operate our business as two reportable segments - Passenger and Medical. For additional information about our segments, see Note 7 - “Segment and Geographic Information” in the notes to the consolidated financial statements of this Annual Report on Form 10-K.
Segment Revenue, Segment Flight Profit and Segment Flight Margin
The following table presents our segment results for the periods indicated (in thousands, except percentages):
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| | | | | | |
| | Year Ended December 31, | | |
| | 2023 | | 2022 | | % Change |
| |
| Segment Revenue | | | | | | |
| Passenger | | $ | 98,576 | | | $ | 74,341 | | | 33 | % |
| Medical | | 126,604 | | | 71,779 | | | 76 | % |
| Total revenue | | $ | 225,180 | | | $ | 146,120 | | | 54 | % |
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| Segment Flight Profit(1) | | | | | | |
| Passenger | | $ | 19,444 | | | $ | 11,295 | | | 72 | % |
| Medical | | 22,678 | | | 11,592 | | | 96 | % |
| Total Flight Profit | | $ | 42,122 | | | $ | 22,887 | | | 84 | % |
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| Segment Flight Margin(1) | | | | | | |
| Passenger | | 19.7 | % | | 15.2 | % | | |
| Medical | | 17.9 | % | | 16.1 | % | | |
| Total Flight Margin | | 18.7 | % | | 15.7 | % | | |
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(1) See section titled “Reconciliations of Non-GAAP Financial Measures” for more information.
Passenger segment
For the years ended December 31, 2023 and 2022, Passenger revenue increased by $24.2 million or 33%, from $74.3 million in 2022 to $98.6 million in 2023. The increase was attributable to a $25.7 million increase in Short Distance and a decrease of $1.5
million in Jet and Other. Refer to the disaggregated revenue discussion above under “—Comparison of the Year Ended December 31, 2023 and 2022—Revenue” for more details.
Passenger Flight Profit increased by $8.1 million or 72% for the year ended December 31, 2023, from $11.3 million in the same period of 2022 to $19.4 million in 2023. Flight Profit is defined as revenue less cost of revenue, and in 2022 excluding non-cash right of use “ROU” asset amortization. The increase was attributable primarily to (i) the acquisition of Blade Europe in September 2022; (ii) a reduction in spot market jet charter costs, which decreased more quickly than our jet charter pricing; (iii) increased passenger volumes, higher passenger load factor and higher average seat pricing for our New York by-the-seat airport transfer products; and (iv) increased helicopter charter volumes in the Northeast. These improvements were partially offset by a lower passenger load factor on our seasonal by-the-seat jet service between New York and South Florida and our subsequent discontinuation of the service in the fourth quarter ended December 31, 2023.
Passenger Flight Margin increased from 15.2% in the year ended December 31, 2022 to 19.7% in the same period in 2023. The increase was attributable primarily to: (i) the acquisition of Blade Europe, which operates at a higher average Flight Profit Margin compared with our Passenger average; (ii) increased passenger volumes, higher passenger load factor and higher average seat pricing for our New York by-the-seat airport transfer products; and (iii) a reduction in spot market jet charter costs, which decreased more quickly than our jet charter pricing. These improvements were partially offset by a lower passenger load factor on our seasonal by-the-seat jet service between New York and South Florida and our subsequent discontinuation of the service in the fourth quarter ended December 31, 2023.
Medical segment
For the years ended December 31, 2023 and 2022, Medical revenue increased by $54.8 million or 76%, from $71.8 million in 2022 to $126.6 million in 2023. Refer to the disaggregated revenue discussion above under “—Comparison of the Year Ended December 31, 2023 and 2022—Revenue” for more details.
Medical Flight Profit increased by $11.1 million or 96% for the year ended December 31, 2023, from $11.6 million in the same period of 2022 to $22.7 million in 2023. The increase was attributable primarily to increased revenue from new and existing clients and an increase in average flight hours per trip.
Medical Flight Margin increased from 16.1% in the year ended December 31, 2022 to 17.9% in the same period in 2023. The increase was attributable primarily to an increase in average flight hours per trip, which reduces the margin impact of certain operator and facility fees we pass through to our customers at cost, increased revenue per flight hour, increased utilization of dedicated aircraft, which are more cost efficient, and higher volumes of ground transportation serviced by owned vehicles, which are more cost efficient than using third parties.
Segment Adjusted EBITDA
Segment Adjusted EBITDA is defined as segment income (loss) excluding non-cash items or certain transactions that are not indicative of ongoing Company operating performance and/or items that management does not believe are reflective of our ongoing core operations.
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| | | | | | |
| | Year Ended December 31, | | |
| | 2023 | | 2022 | | % Change |
| |
| Segment loss | | | | | | |
| Passenger | | $ | (33,503) | | | $ | (14,029) | | | 139 | % |
| Medical | | (1,388) | | | (2,930) | | | (53) | % |
| Total segment loss | | $ | (34,891) | | | $ | (16,959) | | | 106 | % |
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| Segment Adjusted EBITDA(1) | | | | | | |
| Passenger | | $ | (4,988) | | | $ | (6,367) | | | (22) | % |
| Medical | | 10,754 | | | 5,116 | | | 110 | % |
| Total segment Adjusted EBITDA | | $ | 5,766 | | | $ | (1,251) | | | NM(2) |
(1) See section titled “Reconciliations of Non-GAAP Financial Measures” for more information and reconciliations to the most directly
comparable GAAP financial measure.
(2) Percentage not meaningful.
Passenger segment
For the years ended December 31, 2023 and 2022, Passenger net loss increased by $19.5 million or (139)%, from $(14.0) million in 2022 to $(33.5) million in 2023. The increase in net loss is attributable primarily to a $20.8 million impairment in Blade Europe’s intangible assets, specifically its exclusive rights to air transportation rights (see Note 4 to the consolidated financial statements included herein), the acquisition of Blade Europe, which operated at a net loss during the period; and a $1.0 million increase in marketing staff costs ($0.3 million is attributable to stock-based compensation) due to increased headcount. The increase in net loss was partially offset by higher Flight Profit in the US and Canada of $4.3 million, a decrease of $1.2 million in legal fees and a decrease of $1.1 million in US marketing media and promotional expenses.
Passenger Adjusted EBITDA increased by $1.4 million or 22% for the year ended December 31, 2023 from $(6.4) million in the same period of 2022 to $(5.0) million in 2023. The increase is attributable primarily to higher Flight Profit in the US and Canada of $4.3 million and a decrease of $1.1 million in US marketing media and promotional expenses, this improvement was partially offset by the acquisition of Blade Europe, which operated at a negative Adjusted EBITDA during the period; and a $0.7 million increase in marketing staff costs due to increased headcount.
Medical segment
For the years ended December 31, 2023 and 2022, Medical net loss decreased by $1.5 million or 53%, from $(2.9) million in 2022 to $(1.4) million in 2023. The decrease in net loss is attributable to an $11.1 million increase in Flight Profit driven by (i) higher trip volumes and increased flight hours per trip, (ii) increased utilization of dedicated aircraft, which are more cost efficient, and (iii) higher volumes of ground transportation serviced with our internal car fleet, as we continue to add owned vehicles (which are more cost efficient) to provide integrated ground transfers in key markets. The decrease in net loss were partially offset by a $3.4 million increase in contingent consideration compensation (earn-out) expense in connection with the Trinity acquisition (2023 is the last year subject to an earn-out payment), a $4.7 million increase in fixed costs, primarily staff costs in order to support the higher activity, and a $1.4 million increase in sales commissions attributable to revenue growth from new clients.
Medical Adjusted EBITDA increased by $5.6 million or 110%, for the year ended December 31, 2023 from $5.1 million in same period of 2022 to $10.8 million in 2023. The increase is attributable to an $11.1 million increase in Flight Profit driven by (i) higher trip volumes and increased flight hours per trip (ii) increased utilization of dedicated aircraft, which are more cost efficient, and (iii) higher volumes of ground transportation serviced with our internal car fleet, as we continue to add owned vehicles (which are more cost efficient) to provide integrated ground transfers in key markets. Those increases were partially offset by a $4.1 million increase in fixed costs, primarily staff costs in order to support the higher activity, and a $1.4 million increase in sales commissions attributable to revenue growth from new clients.
Reconciliations of Non-GAAP Financial Measures
Certain non-GAAP measures included in this segment results of operations review have been derived from amounts calculated in accordance with GAAP but are not themselves GAAP measures. Blade believes that the non-GAAP measure discussed below, viewed in addition to and not in lieu of our reported U.S. GAAP results, provide useful information to investors by providing a more focused measure of operating results, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making. The non-GAAP measure presented herein may not be comparable to similarly titled measures presented by other companies. These include Flight Profit, Flight Margin and Segment Adjusted EBITDA, which we define, explain the use of and reconcile to the nearest GAAP financial measure below.
Segment Flight Profit and Flight Margin
Flight Profit is calculated as revenue less cost of revenue excluding non-cash timing of ROU asset amortization. Cost of revenue consists of flight costs paid to operators or aircraft and cars, landing fees and internal costs incurred in generating organ ground transportation revenue using the Company’s owned cars. Flight Margin is calculated as Flight Profit divided by revenue.
Flight Profit and Flight Margin are measures that management uses to assess the performance of the business. Blade believes that Flight Profit and Flight Margin provide a more accurate measure of the profitability of the Company's flight and ground operations, as they focus solely on the direct costs associated with those operations. Blade believes the exclusion of the ROU asset amortization from Flight Profit and Flight Margin is helpful as it better represents the Company's actual payable expenses in
exchange for the flights served by the operators in the fourth quarter. We also believe that excluding this non-cash ROU amortization expense will aid in comparing to prior and future periods as we do not expect it to re-occur after the fourth quarter of 2022.
The following table shows a reconciliation of segment revenue to segment Flight Profit and segment loss:
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| | | | | Year Ended December 31, 2023 | | Year Ended December 31, 2022 | | | | | | | | |
| | | | | Passenger | | Medical | | | | | | Passenger | | Medical | | | | | | | | | | | | |
| Revenue | | | | | $ | 98,576 | | | $ | 126,604 | | | | | | | $ | 74,341 | | | $ | 71,779 | | | | | | | | | | | | | |
| Cost of revenue | | | | | (79,132) | | | (103,926) | | | | | | | (63,658) | | | (60,187) | | | | | | | | | | | | | |
| Non-cash timing of ROU asset amortization | | | | | — | | | — | | | | | | | 612 | | | — | | | | | | | | | | | | | |
| Flight Profit | | | | | $ | 19,444 | | | $ | 22,678 | | | | | | | $ | 11,295 | | | $ | 11,592 | | | | | | | | | | | | | |
| Flight Margin | | | | | 19.7 | % | | 17.9 | % | | | | | | 15.2 | % | | 16.1 | % | | | | | | | | | | | | |
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| Flight Profit | | | | | $ | 19,444 | | | $ | 22,678 | | | | | | | $ | 11,295 | | | $ | 11,592 | | | | | | | | | | | | | |
| Reconciling items: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Non-cash timing of ROU asset amortization | | | | | — | | | — | | | | | | | (612) | | | — | | | | | | | | | | | | | |
| All other operating expenses(1) | | | | | (52,947) | | | (24,066) | | | | | | | (24,712) | | | (14,522) | | | | | | | | | | | | | |
| Segment loss | | | | | $ | (33,503) | | | $ | (1,388) | | | | | | | $ | (14,029) | | | $ | (2,930) | | | | | | | | | | | | | |
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(1) All other operating expenses refer to the total of software development, general and administrative and selling and marketing expense.
Segment Adjusted EBITDA
Segment Adjusted EBITDA is defined as segment income (loss) excluding non-cash items or certain transactions that are not indicative of ongoing Company operating performance and / or items that management does not believe are reflective of our ongoing core operations (as shown in the table below).
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| | Year Ended December 31, 2023 | Year Ended December 31, 2022 |
| | Passenger | | Medical | | Passenger | | Medical |
| | (in thousands) |
| Segment loss | | $ | (33,503) | | | $ | (1,388) | | | $ | (14,029) | | | $ | (2,930) | |
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| Reconciling items: | | | | | | | | |
| Depreciation and amortization | | 5,204 | | | 1,703 | | | 3,949 | | | 1,488 | |
| Stock-based compensation | | 1,497 | | | 705 | | | 1,227 | | | 269 | |
| Impairment of intangible assets | | 20,753 | | | — | | | — | | | — | |
| Legal and regulatory advocacy fees(1) | | 686 | | | — | | | 1,874 | | | — | |
| Executive severance costs | | 375 | | | — | | | — | | | — | |
| Contingent consideration compensation (earn-out)(2) | | — | | | 9,734 | | | — | | | 6,289 | |
| Non-cash timing of ROU asset amortization(3) | | — | | | — | | | 612 | | | — | |
| Segment Adjusted EBITDA | | $ | (4,988) | | | $ | 10,754 | | | $ | (6,367) | | | $ | 5,116 | |
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(1) Represents certain legal and regulatory advocacy fees for specific matters (primarily the proposed restrictions at East Hampton Airport and the potential operational restrictions on large jet aircraft at Westchester Airport) that we do not consider representative of legal and regulatory advocacy costs that we will incur from time to time in the ordinary course of our business. It is worth noting that we do not anticipate incurring any further legal fees related to the Westchester litigation.
(2) Represents contingent consideration compensation of $10,073 in connection with the Trinity acquisition in respect of 2023 results and a $339 credit recorded in connection with the settlement of the equity-based portion of Trinity's contingent consideration that was paid in the first quarter of 2023 in respect of 2022 results. 2023 is the last year subject to an earn-out payment.
(3) We believe that excluding this non-cash ROU asset amortization expense will aid in comparing to prior and future periods as we do not expect it to re-occur after the fourth quarter of 2022.
Liquidity and Capital Resources
Sources of Liquidity
As of December 31, 2023 and December 31, 2022, we had total liquidity of $166.1 million and $192.1 million, respectively, consisting of cash and cash equivalents of $27.9 million and $41.3 million, respectively, and short-term investments of $138.3 million and $150.7 million, respectively. In addition, as of December 31, 2023 and December 31, 2022, we had restricted cash of $1.1 million and $3.1 million, respectively. As of December 31, 2023, $138.3 million of short-term investments consisted of securities that are traded in highly liquid markets.
With $166.1 million of total liquid funds as of December 31, 2023, we anticipate that we have sufficient funds to meet our current operational needs for at least the next 12 months from the date of filing this Annual Report.
Liquidity Requirements
As of December 31, 2023, the Company had net working capital of $170.8 million, zero debt, cash and cash equivalents of $27.9 million and short-term investments of $138.3 million. The Company had net losses of $56.1 million and $27.3 million for the year ended December 31, 2023 and 2022, respectively.
In the course of our business, we have certain contractual relationships with third-party aircraft operators pursuant to which we may be contingently required to make payments in the future. As of December 31, 2023, we had commitments to purchase flights from various aircraft operators with aggregate minimum flight purchase guarantees of $14.0 million and $21.6 million for the years ending December 31, 2024 and 2025, respectively. $5.0 million and $13.3 million, respectively, of which may be cancelled by us immediately if a government authority enacts travel restrictions and $3.1 million and $0.0 million, respectively, of which could be terminated by Blade for convenience upon 30 or 60 days’ notice with the annual minimum guarantee being pro-rated as of the termination date. See “—Capacity Purchase Agreements” within Note 11 to the consolidated financial statements for additional information and for information about future periods. Additionally, the Company has operating lease obligations related to real estate and vehicles with expected annual minimum lease payments of $1.9 million and $0.9 million for the years ending December 31, 2024 and 2025, respectively. See Note 5 “Right-of-Use Asset and Operating Lease Liability” to the consolidated financial statements for additional information and for information about future periods.
We have non-cancellable commitments which primarily relate to cloud services and other items in the ordinary course of business. The amounts are determined based on the non-cancellable quantities to which we are contractually obligated. In December 2023, the Company entered into a technology service agreement with a vendor for cloud computing services where we are committed to spend $0.6 million and $1.1 million for the years ending December 31, 2024 and 2025, respectively.
In addition, as of December 31, 2023, the Company anticipates making an earn-out payment related to the Trinity acquisition of approximately $10.1 million, of which $7.1 million is in cash (2023 is the last year subject to an earn-out payment). This amount is expected to be paid in the first quarter of 2024, in respect of the year ended December 31, 2023.
We expect to incur net losses in the short term, as we continue to execute our strategic initiatives. Based on our current liquidity, we believe that no additional capital will be needed to execute our current business plan over the next 12 months. Our longer term liquidity requirement will depend on many factors including the pace of our expansion into new markets, our ability to attract and retain customers for our existing products, capital expenditures and acquisitions.
Cash Flows
The following table summarizes our cash flows for the periods indicated:
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| Year Ended December 31, | | |
| 2023 | | 2022 | | |
| (in thousands) |
| Net cash used in operating activities | $ | (32,349) | | | $ | (37,130) | | | |
| Net cash provided by investing activities | 17,089 | | | 79,340 | | | |
| Net cash used in financing activities | (76) | | | (1,084) | | | |
| Effect of foreign exchange rate changes on cash balances | (66) | | | 72 | | | |
| Net (decrease) increase in cash and cash equivalents and restricted cash | (15,402) | | | 41,198 | | | |
Cash Used In Operating Activities
For the year ended December 31, 2023, net cash used in operating activities was $32.3 million, driven by a net loss of $56.1 million and $6.7 million of cash used for working capital requirements, adjusted for non-cash items consisting of impairment of intangible assets of $20.8 million, stock-based compensation expense of $12.5 million, depreciation and amortization of $7.1 million, non-cash accretion of interest income on held-to-maturity securities of $6.5 million, income from change in fair value of warrant liabilities of $2.1 million, and a deferred tax benefit of $1.5 million. The $6.7 million of cash used for working capital requirements was primarily driven by an increase in accounts receivable of $10.3 million (attributable to the rapid revenue growth in MediMobility Organ Transport), an increase in prepaid expenses and other current assets of $6.0 million, driven by prepayments made to operators in connection with capacity purchase agreements; partially offset by an increase in accounts payable and accrued expenses of $9.0 million, driven by the accrual for the Trinity contingent consideration compensation payment and for the 2023 short term incentive plan, and an increase in lease liabilities of $0.4 million.
For the year ended December 31, 2022, net cash used in operating activities was $37.1 million, primarily driven by a net loss of $27.3 million and $17.0 thousand cash used for working capital requirements, adjusted for non-cash items consisting of income from change in fair value of warrant liabilities of $24.2 million, stock-based compensation expense of $8.3 million, depreciation and amortization of $5.7 million, realized loss of $2.2 million from the sale of short-term investments, accretion of interest income on held-to-maturity securities of $1.1 million, and a deferred tax benefit of $0.8 million. The $17.0 thousand cash used for working capital requirements was primarily driven by an increase in accounts receivable of $5.3 million, due to the rapid growth in MediMobility Organ Transport, an increase in prepaid expenses and other current assets of $5.3 million, driven by prepayments to operators in connection with new capacity purchase agreements, and an increase in other non-current assets of $0.7 million driven by an office lease deposit; fully offset by an increase in accounts payable and accrued expenses of $9.9 million, driven by timing of accruing for the Trinity contingent consideration compensation payment and for the 2022 short term incentive plan, an increase in deferred revenue of $0.7 million (driven by client prepayments), and a $0.6 million increase in lease liabilities (attributable to new leases entered into in 2022).
Cash Provided by Investing Activities
For the year ended December 31, 2023, net cash provided by investing activities was $17.1 million, driven by $264.5 million of proceeds from maturities of held-to-maturity investments, $20.5 million of proceeds from the sales of other short-term investments, offset by $265.8 million in purchases of held-to-maturity investments, $2.1 million in purchases of property and equipment, consisting of leasehold improvements, furniture and fixtures for lounges used by the Passenger segment, and vehicles used by the Medical segment.
For the year ended December 31, 2022, net cash provided by investing activities was $79.3 million, driven by $258.4 million of proceeds from the sales of other short-term investments, $98.0 million of proceeds from maturities of held-to-maturity investments, partially offset by $227.3 million in purchases of held-to-maturity investments, $48.1 million in consideration paid for the acquisition of Blade Europe, $0.7 million in purchases of other short-term investments, $0.7 million in purchases of property and equipment, consisting of leasehold improvements and vehicles, and $0.2 million additional investment in the joint venture in India.
Cash Used In Financing Activities
For the year ended December 31, 2023, net cash used in financing activities was $0.1 million, reflecting $0.1 million cash paid for payroll tax payments on behalf of employees in exchange for shares withheld by the Company (“net share settlement”), partially offset by $0.1 million of proceeds from the exercise of stock options.
For the year ended December 31, 2022, net cash used in financing activities was $1.1 million, reflecting $1.2 million cash paid for payroll tax payments on behalf of employees in exchange for shares withheld by the Company (“net share settlement”), partially offset by $0.1 million of proceeds from the exercise of stock options.
Critical Accounting Estimates
This discussion and analysis of the Company’s financial condition and results of operations is based on the Company’s consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported periods. In accordance with U.S. GAAP, the Company bases its estimates on historical experience and on various other assumptions the Company believes are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.
We consider an accounting estimate to be critical if: (1) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (2) changes in the estimate that are reasonably likely to occur from period to period, or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations.
We believe that of our significant accounting policies, which are described in the notes to the consolidated financial statements, the following accounting policies involve a greater degree of judgments, estimates and assumptions. Accordingly, these are the policies that we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of operations. For information on the Company’s significant accounting policies and estimates refer to Note 2 “Summary of Significant Accounting Policies” and to “Use of Estimates” section of Note 1 “Business and Basis of Presentation” in the consolidated financial statements.
Business Combinations
We allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired exclusive rights to air transportation services, customer list and trademark, based on expected future growth rates and margins, attrition rates, and royalty for similar brand licenses, useful lives, and discount rates.
Management's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Allocation of purchase consideration to identifiable assets and liabilities affects our amortization expense, as acquired finite-lived intangible assets are amortized over the useful life, whereas any indefinite lived intangible assets, including goodwill, are not amortized. During the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.
Goodwill Assessment
We review goodwill annually (in the fourth quarter) and whenever events or changes in circumstances indicate that goodwill might be impaired. We make certain judgments and assumptions to determine our reporting units and in allocating shared assets and liabilities to determine the carrying values for each of our reporting units. Determination of
reporting units is based on a judgmental evaluation of the level at which senior management reviews financial results, evaluates performance, and allocates resources.
We assess goodwill for impairment initially using a qualitative approach; however, should the qualitative assessment indicate potential impairment, a subsequent quantitative test must be performed.
Judgment in the assessment of qualitative factors of impairment include, among other factors: reviewing factors such as macroeconomic conditions, industry and market considerations, cost factors, entity-specific financial performance and other events, such as changes in the Company’s management, strategy and primary customer base, and factors affecting the reporting unit. To the extent we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company performs a quantitative goodwill and indefinite-lived intangible asset impairment analysis by comparing the carrying amount to the fair value of the reporting unit.
Performing a quantitative goodwill impairment test includes the determination of the fair value of a reporting unit by considering both public company multiples (a market approach) and projected discounted future cash flows (an income approach) and involves significant estimates and assumptions. These estimates and assumptions include, among others, revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, future economic and market conditions, and the determination of appropriate market comparables.
As of December 31, 2023, for the Blade Europe reporting unit, the first step of the goodwill impairment test (“Step 1 test”) was performed as it was determined that it is more likely than not that the fair value of the reporting unit was less than its carrying amount. Based on our Step 1 test, we determined that the fair value was greater than its respective carrying value and therefore, no further action was necessary.
The key assumptions with significant uncertainty and impact used on our evaluation of the Blade Europe reporting unit for the year ended December 31, 2023 were as follows:
a.EVA introduction timeline
b.Operating margins increase by 10%-15% in the initial years after the introduction of EVA
c.Weighted average cost of capital (“WACC”) of 12.5%
We assumed the introduction of EVA will drive higher profitability as operational costs are anticipated to be lower compared to conventional aircraft.
We performed a sensitivity analysis for the reporting unit. The sensitivity analyses are based on a change in one assumption while holding all other assumptions constant so that interdependencies between the assumptions are excluded. The results of this sensitivity analysis on our impairment test as of December 31, 2023 indicated that the WACC needed to be raised by approximately 300 basis points for Blade Europe’s goodwill to be impaired.
Additionally, if the expansion in operating margins, following the introduction of EVA, does not materialize by 2031 and long term projected operating margins fall short by more than 30%, it would trigger goodwill impairment.
Impairment of Finite-Lived Intangible Assets
As discussed in Note 4 “Goodwill and Intangible Assets”, fair value was determined using the discounted estimated cash flows. These estimates include revenue growth, operating margin, capital expenditures, weighted average cost of capital (“WACC”) and expected long-term cash flow growth rates. The assumptions that have the most significant effect on our discounted estimated cash flow calculation are: (i) EVA introduction timeline (ii) the expected increase in operating margins upon initial introduction of EVA and (iii) the WACC.
The key assumptions with significant uncertainty and impact used in our evaluations of Blade Europe’s finite-lived intangible assets as of December 31, 2023 were as follows:
•EVA introduction timeline
•Operating margins - 10%-15% increase in the initial introduction of EVA.
•WACC of 12.5%
Operating margins for the years prior to EVA commercialization represents our estimate of the operating margins similar to the overall Blade business. EVA manufacturers forecast potential decreases in operational costs of up to 75%, mainly due to lessened maintenance demands and the relative affordability of electricity versus jet fuel. The Company assumed moderate decrease in operational costs of 10% to 15% during the initial introduction of EVA.
Our determination of projected cash flows are sensitive to the risk of future variances due to industry and market conditions as well as business unit execution risks. Management assesses the projected cash flows by considering factors unique to its
assets, including recent operating results, business plans, economic projections, anticipated future cash flows, and other data. Projected cash flows can also be significantly impacted by the future growth opportunities for the cash generating assets as well as for the Company itself, general market and geographic sentiment.
Assumptions used in impairment testing are made at a point in time and require significant judgment; therefore, they are subject to change based on the facts and circumstances present at each annual and interim impairment test date. Additionally, these assumptions are generally interdependent and do not change in isolation. Consequently, if future results fall below our forward-looking projections for an extended period of time, the results of future impairment tests could indicate there is an impairment.
Income Tax
The Company periodically assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by considering, among other things, taxable income in carryback years, existing taxable temporary differences, prudent and feasible tax planning strategies and estimated future taxable profits. In evaluating the likelihood of utilizing our net deferred income tax assets, the significant factors that we consider include (1) strong earnings history exclusive of the loss that created the future deductible amount, coupled with evidence indicating loss is not an ongoing condition, (2) growth in the U.S. and global economies, (3) forecast of air transportation revenue trends, (4) impact of future taxable profits.
Leases
Blade’s operating leases consist of airport and heliport terminals, offices and aircraft leases that are embedded within certain capacity purchase agreements (“CPAs”). Judgements and assumptions that we apply in the accounting for leases:
•The determination of whether an arrangement is a lease at inception.
•Classifying leases as either operating or finance leases.
•Estimating the incremental borrowing rate - the Company calculates the present value of lease payments over the lease term, based on the incremental borrowing rate. Our incremental borrowing rate is an estimate based on an analysis of publicly traded debt securities of companies with credit and financial profiles similar to our own.
•Determining the lease term when a renewal option exists - some of the Company's leases include options to extend the lease, the Company uses judgement in determining whether a lease extension option would be exercised, this decision drives the ROU amortization period and the value of the ROU asset and the lease liability.
•In embedded leases under certain CPAs with third-party aircraft operators, we use estimates in determining what portion of the minimum guarantee represents a lease component.
Item 7A. Quantitative and Qualitative Disclosure About Market Risk
We are exposed to market risks in the ordinary course of business. These risks primarily include interest rate risk and foreign currency risk. Blade has not, to date, been exposed to material market risks.
Our earnings and cash flows are affected by changes in the interest rates due to the impact those changes have on our interest income from short-term, interest-bearing investments.
We are exposed to foreign currency risks related to our revenue and operating expenses denominated in currencies other than the U.S. dollar (predominantly the Canadian dollar and the Euro). Accordingly, changes in exchange rates may negatively affect our future revenue and other operating results as expressed in U.S. dollars. We might experience fluctuations in our net income (loss) as a result of transaction gains or (losses) related to remeasurement of our asset and liability balances that are denominated in currencies other than the functional currency of the entities in which they are recorded.
Item 8. Financial Statements and Supplementary Data
The financial statements required by this Item are included in Item 15 of this report and are presented beginning on page F-1.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with participation of the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on the evaluation of our disclosure controls and procedures, our CEO and CFO concluded that our disclosure controls and procedures were not effective as of December 31, 2023 due to the material weaknesses in internal controls over financial reporting described below.
Notwithstanding the material weaknesses, management has concluded that the consolidated financial statements included elsewhere in this Annual Report on Form 10-K present fairly, in all material respects, our financial position, results of operations, and cash flows in conformity with GAAP.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f) and 15d-15(f). Internal control over financial reporting is a process used to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with generally accepted accounting principles in the United States. Internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of our financial statements in accordance with generally accepted accounting principles in the United States, and that our receipts and expenditures are being made only in accordance with the authorization of our Board of Directors and management; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.
Our management, including our CEO and CFO, performed an assessment of the effectiveness of the Company’s internal controls over financial reporting based on the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework).
Based on this assessment, our CEO and CFO have concluded that during the period covered by this report, our internal control over financial reporting was not effective, due to the material weaknesses identified and described below. A material weakness is defined as a deficiency or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
We identified material weaknesses relating to:
•The lack of effective IT General Controls in relation to:
–user access controls that adequately restrict user access to financial applications, programs and data affecting underlying accounting records, and
–the change management controls for certain operational applications that ensure IT program and data changes are identified, tested, authorized and implemented properly.
•a number of control deficiencies in relation to the revenue process that, although not individually material in nature, in aggregate constitute a material weakness.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Due to the Company being an Emerging Growth Company as defined by the rules of the Securities and Exchange Commission, Management’s report was not subject to attestation by the Company’s
registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this Annual Report.
Management’s Plans for Remediation
We have identified and implemented, and continue to implement, certain remediation efforts to improve the effectiveness of our internal control over financial reporting. These remediation efforts are ongoing and include the following measures to address the material weaknesses identified:
•We have completed controls testing to enable management to assess the operating effectiveness of the change management controls for the Company’s main operational IT application and we are in the process of implementing those same change management controls for our other operational IT applications.
•We are re-enforcing procedures on proper user access administration and the need for timely documentation of associated requests and approvals.
•We have designed additional controls to supplement the existing business process controls in relation to revenues, with these controls being implemented by the end of Q1 2024.
We expect the above actions will be completed before the end of the fiscal year ending December 31, 2024. The material weaknesses will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. As we continue to evaluate and improve the applicable controls, management may take additional remedial measures or modify the remediation plan described above.
Changes in Internal Control over Financial Reporting
Except as disclosed above, there were no changes in our internal control over financial reporting as defined in Exchange Act Rule 13a-15(f) that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Internal Control over Financial Reporting
An internal control system over financial reporting has inherent limitations and may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.
Item 9B. Other Information
Entry into a Material Definitive Agreement
On March 11, 2024, Blade entered into definitive agreements to acquire eight fixed-wing aircraft (the “Acquired Aircraft”) from M&N Equipment, LLC (“M&N”), Atlas Jet Inc. and Aviation Bridge, LLC for a combined purchase price of approximately $21.0 million, funded by the application of $9.3 million in existing prepaid deposits under existing Capacity Purchase Agreements with M&N, and approximately $11.7 million in cash, subject to traditional closing conditions, inspections, holdbacks and adjustments. Blade intends to utilize the Acquired Aircraft, which were previously dedicated to Blade under existing Capacity Purchase Agreements, to support its Medical business line. The Acquired Aircraft will continue to be operated by M&N, subject to the execution of aircraft management and operation agreements.
Rule 10b5-1 Trading Plans
The adoption or termination of contracts, instructions or written plans for the purchase or sale of our securities by our Section 16 officers and directors for the three months ended December 31, 2023, each of which is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act (“Rule 10b5-1 Plan”), were as follows:
On December 14, 2023, Robert S. Wiesenthal, our Chief Executive Officer, adopted a Rule 10b5-1 trading arrangement providing for the sale from time to time of up to 250,000 shares of common stock. The duration of the trading arrangement is until February 28, 2025 or earlier if all transactions under the trading arrangement are completed.
On December 14, 2023, Melissa M. Tomkiel, our President and General Counsel, adopted a Rule 10b5-1 trading arrangement providing for the sale from time to time of up to 243,895 shares of common stock. The duration of the trading arrangement is until February 28, 2025 or earlier if all transactions under the trading arrangement are completed.
On December 14, 2023, William A. Heyburn, our Chief Financial Officer and Head of Corporate Development, adopted a Rule 10b5-1 trading arrangement providing for the sale from time to time of up to 300,000 shares of common stock. The duration of the trading arrangement is until February 28, 2025 or earlier if all transactions under the trading arrangement are completed.
Executive Compensation
On March 8, 2024, the Compensation Committee granted Performance-Based Restricted Stock Units (“PSUs”) to our named executive officers under the Company’s 2021 Omnibus Incentive Plan (the “Plan”) as described below.
| | | | | | | | |
| Name and Principal Position | | PSUs (#) |
| Robert S. Wiesenthal | | 1,971,428 |
| Chief Executive Officer | | |
| Melissa M. Tomkiel | | 1,285,714 |
| President and General Counsel | | |
| William A. Heyburn | | 1,114,285 |
| Chief Financial Officer and Head of Corporate Development | | |
The PSUs will vest subject to the achievement of certain financial performance metrics by the Company. Each PSU represents the right to receive one share of the Company’s common stock.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
Part III
Item 10. Directors, Executive Officers and Corporate Governance
| | | | | | | | | | | | | | |
| Name | | Age | | Title |
| Robert S. Wiesenthal | | 57 | | Chief Executive Officer and Director |
| Melissa M. Tomkiel | | 43 | | President and General Counsel |
| William A. Heyburn | | 35 | | Chief Financial Officer and Head of Corporate Development |
| Amir M. Cohen | | 47 | | Chief Accounting Officer |
| Seth J. Bacon | | 52 | | Chief Executive Officer, Trinity |
| Eric L. Affeldt | | 66 | | Chairman of the Board |
| John KL Borthwick | | 58 | | Director |
| Jane C. Garvey | | 80 | | Director |
| Andrew Lauck | | 38 | | Director |
| Kenneth B. Lerer | | 72 | | Director |
| Reginald L. Love | | 41 | | Director |
| Susan M. Lyne | | 73 | | Director |
| Edward M. Philip | | 58 | | Director |
Robert S. Wiesenthal has served as Blade’s Chief Executive Officer since the Closing Date and Old Blade’s Chief Executive Officer from July 2015 through the Closing Date. Mr. Wiesenthal has also served as one of our directors since May 2021, and as a member of Old Blade’s Board of Directors from June 2014 through the Closing Date. From January
2013 to July 2015, Mr. Wiesenthal served as Chief Operating Officer of Warner Music Group Corp., a global music conglomerate. From 2000 to 2012, Mr. Wiesenthal served in various senior executive capacities with Sony Corporation, most recently as Executive Vice President and Chief Financial Officer of Sony Corporation of America. Prior to joining Sony, from 1988 to 2000, Mr. Wiesenthal served in various capacities with Credit Suisse First Boston, most recently as Managing Director, Head of Digital Media and Entertainment. Mr. Wiesenthal currently serves on the Board of Directors of TripAdvisor Inc., a Nasdaq-listed company, and previously served on the Board of Directors of Starz, a global media and entertainment company. Mr. Wiesenthal has a B.A. from the University of Rochester.
Melissa M. Tomkiel has served as Blade’s President and General Counsel since the Closing Date and Old Blade’s President since January 2021 and Old Blade’s General Counsel since February 2015. Ms. Tomkiel was Old Blade’s President, Fixed Wing from 2015 to 2020. From 2010 to 2015, Ms. Tomkiel was President of LIMA NY Corp., a commuter air carrier operating amphibious seaplanes and rotorcraft. From 2006 to 2010, Ms. Tomkiel was an attorney at Pryor Cashman, a U.S. law firm. Ms. Tomkiel has a J.D. from St. John’s University School of Law and a B.A. from the University of Notre Dame.
William A. Heyburn has served as Blade’s Chief Financial Officer and Head of Corporate Development since the Closing Date, Old Blade’s Chief Financial Officer from December 2020 through the Closing Date and Old Blade’s Head of Corporate Development from May 2018 through the Closing Date. From 2015 to April 2018, Mr. Heyburn served in various capacities at Redbird Capital Partners, a private investment firm, most recently as Vice President. Prior to joining RedBird, Mr. Heyburn was a member of the U.S. Credit Investment Team at Oak Hill Advisors, L.P., a global alternative investment firm, from 2013 to 2015. Prior to joining Oak Hill, Mr. Heyburn was a member of the investment banking group at Moelis and Company, an independent investment bank, focused on restructuring transactions, from 2011 to 2013. Mr. Heyburn has an A.B. from Harvard University.
Amir M. Cohen has served as Blade’s Chief Accounting Officer since May 2021. From 2008 to April 2021, Mr. Cohen served in various capacities at WPP, a multinational communications holding company, most recently as Senior Vice President of Finance. Prior to joining WPP, Mr. Cohen was a Manager at PwC LLP in New York from 2006 to 2008. Mr. Cohen is a Certified Public Accountant and has an M.B.A from New York University and a B.A. in Economics and Accounting from the Hebrew University of Jerusalem.
Seth J. Bacon has served as Trinity’s Chief Executive Officer since he founded Trinity in 2013. Mr. Bacon has continued to serve as Trinity’s Chief Executive Officer since Blade’s acquisition of Trinity in September 2021. Prior to founding Trinity, Mr. Bacon served as the Battalion Chief of the Scottsdale Fire Department in Arizona, a captain of the Chandler Fire Department in Arizona and was a certified paramedic and rescue technician. Mr. Bacon has a B.B.A. from Arizona State University and an A.A.S. from Phoenix College.
Eric L. Affeldt has served as our Chairman since September 2019. From 2006 to 2017, Mr. Affeldt served as the President and Chief Executive Officer of ClubCorp, a privately held owner and operator of golf, dining and fitness clubs. In 2017, he assisted with the take private transaction of ClubCorp, which was previously listed on the NYSE, to an affiliate of Apollo Global Management. Prior to ClubCorp, he served as a principal of KSL Capital Partners, a private equity firm that specializes in travel and leisure, from 2005 to 2007. In addition, Mr. Affeldt was president of General Aviation Holdings, Inc., an aviation holding company, from 2000 to 2005. Prior to this, Mr. Affeldt also served as President and Chief Executive Officer of KSL Fairways, an owner and manager of golf courses; vice president and general manager of Doral Golf Resort and Spa in Miami and the PGA West and La Quinta Resort and Club in California. He has also served on the Board of Directors of the Vail Health System, a private healthcare system in Colorado, since 2017. Mr. Affeldt served as a director for Cedar Fair Entertainment Company, an owner and operator of amusement parks, from 2010 to 2018, and was chairman of the Board of Directors from 2012 to 2018. He has a B.A. in Political Science and Religion from Claremont McKenna College. We believe Mr. Affeldt is qualified to serve as one of our directors based on his extensive operational, board and investment experience.
John KL Borthwick has served as one of our directors since March 2023. Mr. Borthwick is the Chief Executive Officer and a member of the Board of Directors of Betaworks, a New York-based startup platform that builds, accelerates, and invests in early-stage consumer technology companies, which he founded in August 2008. From July 2006 to October 2007, Mr. Borthwick served as the Chief Executive Officer of Fotolog, a private photo-sharing social media network. From March 2003 to August 2006, Mr. Borthwick served as Senior Vice President of Alliances and Technology Strategy for Time Warner Inc., a NYSE-listed media and entertainment company. Mr. Borthwick currently serves on the Board of Trustees of WNYC, New York Public Radio. Mr. Borthwick has an M.B.A. from the Wharton School and a B.A. in Economics from Wesleyan University. We believe Mr. Borthwick is qualified to serve as one of our directors based on his
extensive experience in the startup, technology and investment sectors and his track record of building and accelerating successful companies.
Jane C. Garvey has served as one of our directors since May 2021. She was previously a member of the Board of Directors at United Airlines from 2009 to 2018, and served as its Chairman from May 2018 to May 2020. Ms. Garvey had numerous roles in public service, including serving as FAA Administrator from 1997 to 2002, Deputy Administrator of the Federal Highway Administration from 1993 to 1997, director of Boston’s Logan International Airport from 1991 to 1993, and as the Massachusetts Department of Public Works commissioner from 1988 to 1991. After leaving public service, Ms. Garvey became Executive Vice President and chairman of the transportation practice at APCO Worldwide, an independent global public affairs and strategic communications consultancy, from 2002 to 2006, and was an advisor to J.P. Morgan’s infrastructure practice from 2005 to 2008. She has served on several boards including Shanska, a multinational construction and development company, Bombardier, a multinational aerospace and transportation company, and MITRE Corporation, an American not-for-profit technology resource organization. Ms. Garvey currently serves as Chair of Meridiam Infrastructure, North America, a private global investor and asset manager, Chair of the Meridiam Infrastructure Global Advisory Board and Chairwoman of the Board of Directors of Allego Holding B.V., a NYSE-listed pan-European electric vehicle charging network. She has degrees from Mount Saint Mary College and Mount Holyoke College. We believe Ms. Garvey is qualified to serve as one of our directors based on her experience in a broad range of industries, including infrastructure development, financial services, transportation, construction, and consulting.
Andrew Lauck has served as one of our directors since March 2023. Mr. Lauck served as an observer on our Board from December 2022 to March 2023. Since December 2019, Mr. Lauck has been a Partner at RedBird Capital Partners LP (‘‘RedBird’’), a private investment firm, where he was a Principal from December 2016 to December 2019 and a Vice President from August 2014 to December 2016. At RedBird, Mr. Lauck leads the firm’s consumer investment business and is responsible for the firm’s investments in the Company, Jet Linx, BETA Technologies, Aero Centers, VeriJet, Equipment Share and RedBird QSR. Prior to joining RedBird, Mr. Lauck served as Vice President of BDT & Company LLC, a private merchant bank, from December 2013 to July 2014 and as an Associate from August 2011 to December 2013. Mr. Lauck was an Associate at Flexpoint Ford, LLC, a private equity investment firm, from July 2010 to August 2011 and an Analyst at Goldman Sachs, a NYSE-listed American multinational investment bank and financial services company, from July 2007 to June 2010. Mr. Lauck serves on the boards of Jet Linx Global, Inx., SAR Trilogy Management LLC (d/b/a AeroCenters); Gitbin & Associates, LLC (d/b/a Go Rentals); Ampler QSR LLC and Lambda Energy Resources LLC. Mr. Lauck also serves as Vice Chairman of the Board of Directors of Vogel Alcove, a non-profit organization on a mission to help young children overcome the lasting and traumatic effects of homelessness, and on the boards of the Cotton Bowl Athletic Association and the Frontiers of Flight Museum (both of which are privately held companies). Mr. Lauck previously served on the Boards of Ardent Leisure US Holdings Inc. (d/b/a Main Event Entertainment), Aethon United LP, FireBird Energy LLC, Four Corners Petroleum II, LLC, Vida Capital, CapturePoint LLC, and Avmont LLC. Mr. Lauck has a B.S. in Finance and International Business, with distinction and honors, from Indiana University, and is an FAA licensed, instrument-rated pilot. We believe Mr. Lauck is qualified to serve as one of our directors based on his extensive investment and management experience in the aviation, finance and consumer products industries.
Kenneth B. Lerer has served as one of our directors since May 2021 and was the chairman of Old Blade’s Board of Directors from July 2016 through the Closing Date. Mr. Lerer is a managing partner at Lerer Hippeau Ventures, an early stage venture capital fund, which he founded in January 2010. He was a co-founder of The Huffington Post (acquired by AOL), an American news aggregator and media company, from 2005 to 2011 and previously served as Executive Vice President of AOL Time Warner, a global media technology company, from 2000 to 2002. Mr. Lerer has sat on the Board of Group Nine Media, an American digital media holding company, since 2016. He was formerly the Chairman of BuzzFeed, an American internet media, news and entertainment company, from 2008 to 2019 and previously served on the Board of Viacom, a multinational media and entertainment corporation, from 2016 to 2018. We believe Mr. Lerer is qualified to serve as a one of our directors based on his extensive executive, board and investment experience.
Reginald L. Love has served as one of our directors since September 2021. Mr. Love has served as a Senior Advisor at Apollo Global Management, a private global alternative investment management firm, since February 2020. Mr. Love previously served as Partner at RON Transatlantic EG, an international financial holding company with interests in the financial services, logistics, energy, industrial and beer sectors in the United States, Latin America and Europe, from 2012 to February 2020. Prior to joining RON Transatlantic EG, Mr. Love served at the White House as personal aide to President Barack Obama from 2009 to 2011, where he was responsible for assisting with the coordination and completion of the President’s daily schedule as well as coordinating with other White House offices to set up long and medium range planning. Mr. Love is a graduate of Duke University and has an M.B.A. from the Wharton School at the University of Pennsylvania. Mr. Love also serves on the boards of Cox Media Group, a private American media conglomerate, and the
National Summer Learning Association, an American non-profit organization focused on education. We believe Mr. Love is qualified to serve as one of our directors based on his extensive leadership, investment, government affairs, legislative, public policy and international business experience.
Susan M. Lyne has served as one of our directors since May 2021. Since September 2014, Ms. Lyne has been President and Managing Partner of BBG Ventures, a private investment fund focused on women-led tech startups. From February 2013 to September 2014, Ms. Lyne was Chief Executive Officer of the AOL Brand Group where she oversaw the content brands of AOL, Inc., a global media technology company, including TechCrunch, Engadget, StyleList, Moviefone and MapQuest. From September 2008 to February 2013, she was Chief Executive Officer and then Chair of Gilt Groupe, Inc., the innovative ecommerce company that pioneered flash sales in the United States. From 2004 to 2008, Ms. Lyne served as President and Chief Executive Officer of Martha Stewart Living Omnimedia, Inc., a diversified media and merchandising company. From 1996 to 2004, Ms. Lyne held various positions at The Walt Disney Company, a diversified worldwide entertainment company, including President of ABC Entertainment. Ms. Lyne is currently a director of GoPro, Inc., a Nasdaq-listed company, where she is Chair of the Compensation Committee, and has previously served as a director of Gilt Groupe, Inc., AOL, Inc., Martha Stewart Living Omnimedia, Inc., Starz Entertainment Group, LLC, a global media and entertainment company, and CIT Group, Inc., an American bank and financial services company. We believe Ms. Lyne is qualified to serve as one of our directors based on her experience on the Boards of Directors of other companies, her extensive executive experience and her background in the media and consumer products industries.
Edward M. Philip has served as one of our directors since September 2019. Mr. Philip was the Chief Operating Officer of Partners in Health, a global non-profit healthcare organization, responsible for overseeing the operations of the Partners in Health projects globally including in countries such as Liberia, Sierra Leone, Rwanda and Haiti, from 2013 to 2017. Previously he served as Special Partner of Highland Consumer Fund, a consumer-oriented investment fund which he founded, from 2013 to 2017 and as Managing General Partner from 2006 to 2013. Mr. Philip was one of the founding members of the internet search company Lycos, Inc. During his time with Lycos, Mr. Philip held the positions of President, Chief Operating Officer and Chief Financial Officer at different times. Prior to joining Lycos, Mr. Philip spent time as the Vice President of Finance for The Walt Disney Company and also previously spent a number of years in investment banking. He currently serves on the Board of Directors of United Airlines Holdings Inc., a Nasdaq-listed airline, since 2016, Hasbro, Inc., a Nasdaq-listed toy and entertainment company, since 2002 and BRP Inc., a publicly traded Canadian recreational vehicle manufacturer, since 2005. Mr. Philip has a B.S. in Economics and Mathematics from Vanderbilt University and an M.B.A. from Harvard Business School. We believe Mr. Philip is qualified to serve as one of our directors based on his extensive public company Board service as well as his extensive experience in the travel, leisure and recreation industries.
All other the information required by this item will be included in an amendment to this Annual Report on Form 10-K or incorporated by reference from our Proxy Statement for our Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the year ended December 31, 2023.
Item 11. Executive Compensation
The information required by this item will be included in an amendment to this Annual Report on Form 10-K or incorporated by reference from our Proxy Statement for our Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the year ended December 31, 2023.
Item 12. Security Ownership of Certain Beneficial Owners and Management And Related Stockholder Matters
The information required by this item will be included in an amendment to this Annual Report on Form 10-K or incorporated by reference from our Proxy Statement for our Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the year ended December 31, 2023.
Item 13. Certain Relationships and Related Transactions and Director Independence
The information required by this item will be included in an amendment to this Annual Report on Form 10-K or incorporated by reference from our Proxy Statement for our Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the year ended December 31, 2023.
Item 14. Principal Accountant Fees and Services
The information required by this item will be included in an amendment to this Annual Report on Form 10-K or incorporated by reference from our Proxy Statement for our Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the year ended December 31, 2023.
Part IV
Item 15. Exhibits and Financial Statement Schedules.
Financial Statements
The consolidated financial statements of the Company for the fiscal years covered by this Annual Report are located beginning of page F-1 of this Annual Report.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
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| Report of Independent Registered Public Accounting Firm (PCAOB Firm ID # 688) | |
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of
Blade Air Mobility, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Blade Air Mobility, Inc. (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Marcum LLP
Marcum LLP
We have served as the Company’s auditor since 2020.
Melville, NY
March 12, 2024
BLADE AIR MOBILITY, INC.
Consolidated Balance Sheets
(in thousands, except share and per share data) | | | | | | | | | | | |
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| December 31, 2023 | | December 31, 2022 |
| Assets | | | |
| Current assets | | | |
| Cash and cash equivalents (1) | $ | 27,873 | | | $ | 41,338 | |
| Restricted cash (1) | 1,148 | | | 3,085 | |
| Accounts receivable, net of allowance of $98 and $0 at December 31, 2023 and December 31, 2022 | 21,005 | | | 10,877 | |
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| Short-term investments | 138,264 | | | 150,740 | |
| Prepaid expenses and other current assets | 17,971 | | | 12,086 | |
| Total current assets | 206,261 | | | 218,126 | |
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| Non-current assets: | | | |
| Property and equipment, net | 2,899 | | | 2,037 | |
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| Intangible assets, net | 20,519 | | | 46,365 | |
| Goodwill | 40,373 | | | 39,445 | |
| Operating right-of-use asset | 23,484 | | | 17,692 | |
| Other non-current assets (1) | 1,402 | | | 1,360 | |
| Total assets | $ | 294,938 | | | $ | 325,025 | |
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| Liabilities and Stockholders' Equity | | | |
| Current liabilities: | | | |
| Accounts payable and accrued expenses | $ | 23,859 | | | $ | 16,536 | |
| Deferred revenue | 6,845 | | | 6,709 | |
| Operating lease liability, current | 4,787 | | | 3,362 | |
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| Total current liabilities | 35,491 | | | 26,607 | |
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| Non-current liabilities: | | | |
| Warrant liability | 4,958 | | | 7,083 | |
| Operating lease liability, long-term | 19,738 | | | 14,970 | |
| Deferred tax liability | 451 | | | 1,876 | |
| Total liabilities | 60,638 | | | 50,536 | |
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| Commitments and Contingencies (Note 11) | | | |
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| Stockholders' Equity | | | |
| Preferred stock, $0.0001 par value, 2,000,000 shares authorized at December 31, 2023 and December 31, 2022. No shares issued and outstanding at December 31, 2023 and December 31, 2022. | — | | | — | |
| Common stock, $0.0001 par value; 400,000,000 authorized; 75,131,425 and 71,660,617 shares issued at December 31, 2023 and December 31, 2022, respectively. | 7 | | | 7 | |
| Additional paid in capital | 390,083 | | | 375,873 | |
| Accumulated other comprehensive income | 3,964 | | | 2,287 | |
| Accumulated deficit | (159,754) | | | (103,678) | |
| Total stockholders' equity | 234,300 | | | 274,489 | |
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| Total Liabilities and Stockholders' Equity | $ | 294,938 | | | $ | 325,025 | |
(1) Prior year amounts have been updated to conform to current period presentation.
The accompanying notes are an integral part of these consolidated financial statements.
BLADE AIR MOBILITY, INC.
Consolidated Statements of Operations
(in thousands, except share and per share data)
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| | | Year Ended December 31, | | | |
| | | | | 2023 | | | 2022 | | | |
| Revenue | | | | | $ | 225,180 | | | | $ | 146,120 | | | | |
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| Operating expenses | | | | | | | | | | | |
| Cost of revenue | | | | | 183,058 | | | | 123,845 | | | | |
| Software development | | | | | 4,627 | | | | 5,545 | | | | |
| General and administrative | | | | | 95,174 | | | | 62,510 | | | | |
| Selling and marketing | | | | | 10,438 | | | | 7,749 | | | | |
| Total operating expenses | | | | | 293,297 | | | | 199,649 | | | | |
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| Loss from operations | | | | | (68,117) | | | | (53,529) | | | | |
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| Other non-operating income (expense) | | | | | | | | | | | |
| Interest income, net | | | | | 8,442 | | | | 3,434 | | | | |
| Change in fair value of warrant liabilities | | | | | 2,125 | | | | 24,225 | | | | |
| Realized gain (loss) from sales of short-term investments | | | | | 8 | | | | (2,162) | | | | |
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| Total other non-operating income | | | | | 10,575 | | | | 25,497 | | | | |
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| Loss before income taxes | | | | | (57,542) | | | | (28,032) | | | | |
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| Income tax benefit | | | | | (1,466) | | | | (772) | | | | |
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| Net loss | | | | | $ | (56,076) | | | | $ | (27,260) | | | | |
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| Net loss per share (Note 9): | | | | | | | | | | | |
| Basic | | | | | $ | (0.76) | | | | $ | (0.38) | | | | |
| Diluted | | | | | $ | (0.76) | | | | $ | (0.38) | | | | |
| Weighted-average number of shares outstanding: | | | | | | | | | | | |
| Basic | | | | | 73,524,476 | | | | 71,238,103 | | | | |
| Diluted | | | | | 73,524,476 | | | | 71,238,103 | | | | |
The accompanying notes are an integral part of these consolidated financial statements.
BLADE AIR MOBILITY, INC.
Consolidated Statements of Comprehensive Loss
(in thousands)
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| | | Year Ended December 31, | | | |
| | | | | 2023 | | | 2022 | | | |
| Net loss | | | | | $ | (56,076) | | | | $ | (27,260) | | | | |
| Other comprehensive income: | | | | | | | | | | | |
| Net unrealized investment income (losses) | | | | | 39 | | | | (1,368) | | | | |
| Less: Reclassification adjustment for losses included currently in net income (loss) | | | | | (39) | | | | 2,162 | | | | |
| Foreign currency translation adjustments for the period | | | | | 1,677 | | | | 2,391 | | | | |
| Other comprehensive income | | | | | 1,677 | | | | 3,185 | | | | |
| Comprehensive loss | | | | | $ | (54,399) | | | | $ | (24,075) | | | | |
The accompanying notes are an integral part of these consolidated financial statements.
BLADE AIR MOBILITY, INC.
Consolidated Statements of Stockholders' Equity
(in thousands, except share data)
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| | | Common Stock | | Additional Paid-In Capital | | Accumulated Other Comprehensive Income (Loss) | | Accumulated
Deficit | | Total Stockholders’ Equity |
| | | Shares | | Amount | | | | |
| Balance as of Balance as of January 1, 2022 | | | | | 70,667,381 | | | $ | 7 | | | $ | 368,680 | | | $ | (898) | | | $ | (76,418) | | | $ | 291,371 | |
| Issuance of common stock upon exercise of stock options | | | | | 480,812 | | | — | | | 87 | | | — | | | — | | | 87 | |
| Issuance of common stock upon settlement of restricted stock units | | | | | 673,896 | | | — | | | — | | | — | | | — | | | — | |
| Stock-based compensation - restricted stock | | | | | — | | | — | | | 8,277 | | | — | | | — | | | 8,277 | |
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| Shares withheld related to net share settlement | | | | | (161,472) | | | — | | | (1,171) | | | — | | | — | | | (1,171) | |
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| Other comprehensive income | | | | | — | | | — | | | — | | | 3,185 | | | — | | | 3,185 | |
| Net loss | | | | | — | | | — | | | — | | | — | | | (27,260) | | | (27,260) | |
| Balance as of December 31, 2022 | | | | | 71,660,617 | | | $ | 7 | | | $ | 375,873 | | | $ | 2,287 | | | $ | (103,678) | | | $ | 274,489 | |
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| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| Issuance of common stock upon exercise of stock options | | | | | 386,790 | | | — | | | 70 | | | — | | | — | | | 70 | |
| Issuance of common stock upon settlement of restricted stock units | | | | | 2,724,920 | | | — | | | — | | | — | | | — | | | — | |
| Stock-based compensation - restricted stock | | | | | — | | | — | | | 12,501 | | | — | | | — | | | 12,501 | |
| | | | | | | | | | | | | | | |
| Shares withheld related to net share settlement | | | | | (25,658) | | | — | | | (146) | | | — | | | — | | | (146) | |
| Issuance of common stock for settlement of contingent consideration compensation (earn-out) | | | | | 384,756 | | | — | | | 1,785 | | | — | | | — | | | 1,785 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| Other comprehensive income | | | | | — | | | — | | | — | | | 1,677 | | | — | | | 1,677 | |
| Net loss | | | | | — | | | — | | | — | | | — | | | (56,076) | | | (56,076) | |
| Balance as of December 31, 2023 | | | | | 75,131,425 | | | $ | 7 | | | $ | 390,083 | | | $ | 3,964 | | | $ | (159,754) | | | $ | 234,300 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these consolidated financial statements.
BLADE AIR MOBILITY, INC.
Consolidated Statements of Cash Flows
(in thousands) | | | | | | | | | | | | | |
| |
| | | | | |
| Year Ended December 31, | |
| 2023 | | 2022 | | |
| Cash Flows From Operating Activities: | | | | | |
| Net loss | $ | (56,076) | | | $ | (27,260) | | | |
| Adjustments to reconcile net loss to net cash and restricted cash used in operating activities: | | | | | |
| Depreciation and amortization | 7,111 | | | 5,725 | | | |
| Stock-based compensation | 12,501 | | | 8,277 | | | |
| Change in fair value of warrant liabilities | (2,125) | | | (24,225) | | | |
| Impairment of intangible assets | 20,753 | | | — | | | |
| Realized (gain) loss from sales of short-term investments | (8) | | | 2,162 | | | |
| Realized foreign exchange loss | 6 | | | 6 | | | |
| Accretion of interest income on held-to-maturity securities | (6,519) | | | (1,094) | | | |
| Deferred tax benefit | (1,466) | | | (772) | | | |
| | | | | |
| Loss on disposal of property and equipment | 48 | | | 68 | | | |
| Bad debt expense | 163 | | | — | | | |
| Changes in operating assets and liabilities: | | | | | |
| Prepaid expenses and other current assets | (6,032) | | | (5,255) | | | |
| Accounts receivable | (10,254) | | | (5,347) | | | |
| Other non-current assets | 4 | | | (663) | | | |
| Operating right-of-use assets/lease liabilities | 379 | | | 611 | | | |
| Accounts payable and accrued expenses | 9,049 | | | 9,900 | | | |
| Deferred revenue | 117 | | | 737 | | | |
| | | | | |
| Net cash used in operating activities | (32,349) | | | (37,130) | | | |
| | | | | |
| Cash Flows From Investing Activities: | | | | | |
| Acquisitions, net of cash acquired | — | | | (48,101) | | | |
| | | | | |
| | | | | |
| Investment in joint venture | (39) | | | (190) | | | |
| Purchase of property and equipment | (2,109) | | | (730) | | | |
| Proceeds from disposal of property and equipment | 138 | | | — | | | |
| Purchase of short-term investments | (135) | | | (729) | | | |
| Proceeds from sales of short-term investments | 20,532 | | | 258,377 | | | |
| Purchase of held-to-maturity investments | (265,835) | | | (227,287) | | | |
| Proceeds from maturities of held-to-maturity investments | 264,537 | | | 98,000 | | | |
| Net cash provided by investing activities | 17,089 | | | 79,340 | | | |
| | | | | |
| Cash Flows From Financing Activities: | | | | | |
| Proceeds from the exercise of common stock options | 70 | | | 87 | | | |
| Taxes paid related to net share settlement of equity awards | (146) | | | (1,171) | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| Net cash used in financing activities | (76) | | | (1,084) | | | |
| | | | | |
| Effect of foreign exchange rate changes on cash balances | (66) | | | 72 | | | |
| Net (decrease) increase in cash and cash equivalents and restricted cash | (15,402) | | | 41,198 | | | |
| Cash and cash equivalents and restricted cash - beginning | 44,423 | | | 3,225 | | | |
| Cash and cash equivalents and restricted cash - ending | $ | 29,021 | | | $ | 44,423 | | | |
| | | | | |
| Reconciliation to consolidated balance sheets | | | | | |
| Cash and cash equivalents (1) | $ | 27,873 | | | $ | 41,338 | | | |
| Restricted cash (1) | 1,148 | | | 3,085 | | | |
| Total | $ | 29,021 | | | $ | 44,423 | | | |
| | | | | |
| Supplemental cash flow information | | | | | |
| Cash paid for: | | | | | |
| | | | | |
| Income taxes | 16 | | | — | | | |
| Non-cash investing and financing activities: | | | | | |
| New leases under ASC 842 entered into during the period | 9,760 | | | 6,364 | | | |
| Common stock issued for settlement of earn-out | 1,785 | | | — | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
(1) Prior year amounts have been updated to conform to current period presentation.
The accompanying notes are an integral part of these consolidated financial statements.
BLADE AIR MOBILITY, INC.
Notes to Consolidated Financial Statements
(amounts in thousands, except share, per share data and exchange rates)
Note 1 – Business and Basis of Presentation
Description of Business
Blade Air Mobility, Inc. (“Blade” or the “Company”) provides air transportation and logistics for hospitals across the United States, where it is one of the largest transporters of human organs for transplant, and for passengers, with helicopter and fixed wing services primarily in the Northeast United States, Southern Europe and Western Canada. Based in New York City, Blade's asset-light model, coupled with its exclusive passenger terminal infrastructure and proprietary technologies, is designed to facilitate a seamless transition from helicopters and fixed-wing aircraft to Electric Vertical Aircraft (“EVA” or “eVTOL”), enabling lower cost air mobility that is both quiet and emission-free.
Basis of Presentation and Principles of Consolidation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the United States Securities and Exchange Commission (“SEC”). The 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 consolidated financial statements.
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. These exemptions include, but are 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.
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.
BLADE AIR MOBILITY, INC.
Notes to Consolidated Financial Statements
(amounts in thousands, except share, per share data and exchange rates)
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, but are not limited to, the carrying value of long-lived assets, the fair value of intangible assets and goodwill, contingencies, the determination of whether a contract contains a lease, the allocation of consideration between lease and nonlease components, the determination of incremental borrowing rates for leases and the provision for income taxes and related deferred tax accounts.
Liquidity
As of December 31, 2023, the Company had net working capital of $170,770, cash and cash equivalents of $27,873 and short-term investments of $138,264. The Company had net losses of $56,076 and $27,260 for the years ended December 31, 2023 and December 31, 2022, respectively.
The Company expects 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
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.
Blade operates in three key product lines across two segments (see Note 7 for further information on reportable segments):
Passenger segment
•Short Distance – Consisting primarily of helicopter and amphibious seaplane flights in the United States, Canada and Europe between 10 and 100 miles in distance. Flights are available for purchase both by-the-seat and on a full aircraft charter basis. Short Distance products are typically purchased using the Blade App and paid for principally 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. Part of the revenue in Europe is driven by hotels and travel agencies who receive payment terms. The revenue is recognized as the service is completed.
•Jet and Other – Consists principally of revenues from non-medical jet charter and by-the-seat jet flights between New York and South Florida, revenue from brand partners for exposure to Blade fliers and certain ground transportation services. Jet products are typically purchased through our Flier Relations associates and our app and are paid for principally via checks, wires and credit card. Jet payments are typically collected at the time of booking before the performance of the related service. The revenue is recognized as the service is completed.
BLADE AIR MOBILITY, INC.
Notes to Consolidated Financial Statements
(amounts in thousands, except share, per share data and exchange rates)
Medical segment
•MediMobility Organ Transport – Consisting primarily of transportation of human organs for transplant and/or the medical teams supporting these services. Blade also offers additional services including donor logistics coordination and support evaluating potential donor organs. MediMobility Organ Transport products are typically purchased through our medical logistics coordinators and are paid for principally via checks and wires. Payments are generally collected after the performance of the related service in accordance with the client's payment terms. The revenue is recognized as the service is completed.
The Company initially records flight sales in deferred revenue, deferring revenue recognition until the travel occurs. Deferred revenue from advance payments, customer credit and gift card purchases is recognized as revenue when a flight is flown. Deferred revenue from the Company’s passes 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.
Contract Liabilities
Contract liability is defined as entity’s obligation to transfer goods or services to a customer for which the entity has received consideration (or the amount is due) from the customer. As of December 31, 2023 and 2022, the Company's contract liability balance is $6,845 and $6,709 respectively, and is recorded as deferred revenue on the consolidated balance sheets. This balance consists of payments from customers received in advance of the actual flight, prepaid monthly and annual flight passes, customer credits for flight reservations that were cancelled for good reason by the customer, and prepaid gift card obligations. The customer has one year to use the credit as payment for a future flight with the Company. Gift cards represent prepayment of flights. The table below presents a roll forward of the contract liability balance:
| | | | | | | | | | | | | | |
| For the Years Ended | | |
| | | | | | |
| December 31,
2023 | | | December 31,
2022 | | |
| Balance, beginning of period | $ | 6,709 | | | | $ | 5,976 | | | |
| Additions | 69,792 | | | | 72,742 | | | |
| Revenue recognized | (69,656) | | | | (72,009) | | | |
| Balance, end of period | $ | 6,845 | | | | $ | 6,709 | | | |
For the year ended December 31, 2023, the Company recognized $5,836 of revenue that was included in the contract liability balance as of January 1, 2023. For the year ended December 31, 2022, the Company recognized $4,406 of revenue that was included in the contract liability balance as of January 1, 2022.
Certain governmental taxes are imposed on the Company's flight sales through a tax included in flight prices. The Company collects these taxes and remits them to the appropriate government agency. These taxes are excluded from revenue.
The Company’s quarterly financial data is subject to seasonal fluctuations. Historically, its second and third quarter (ended on June 30 and September 30, respectively) financial results have reflected higher Passenger travel demand and were better than the first and fourth quarter financial results.
BLADE AIR MOBILITY, INC.
Notes to Consolidated Financial Statements
(amounts in thousands, except share, per share data and exchange rates)
Disaggregated Revenue
Disaggregated revenue by product line and segment was as follows:
| | | | | | | | | | | | | |
| |
| | | | | |
| For the Years Ended | | |
| December 31,
2023 | | December 31,
2022 | | |
| Passenger Segment | | | | | |
| | | | | |
| Short Distance | $ | 70,700 | | | $ | 44,986 | | | |
| Jet and Other | 27,876 | | | 29,355 | | | |
| Total | $ | 98,576 | | | $ | 74,341 | | | |
| | | | | |
| Medical Segment | | | | | |
| MediMobility Organ Transport | $ | 126,604 | | | $ | 71,779 | | | |
| Total | $ | 126,604 | | | $ | 71,779 | | | |
| | | | | |
| Total Revenue | $ | 225,180 | | | $ | 146,120 | | | |
Cost of Revenue
Cost of revenue consists of flight costs paid to operators of aircraft and cars, landing fees, ROU asset amortization and internal costs incurred in generating organ ground transportation revenue using the Company's owned cars.
Software Development Costs for Internal Use
Costs incurred for the development of the Company’s internal use software are expensed as incurred. Software development costs consist primarily of staff costs including stock-based compensation.
Selling and Marketing
Selling and marketing expenses consist primarily of advertising costs, staff costs including stock-based compensation, marketing expenses, sales commissions and promotion costs. Advertising costs, which are included in “Selling and marketing expenses”, are expensed as incurred. Advertising costs were $4,064 and $4,540 for the years ended December 31, 2023 and 2022, respectively.
General and Administrative
General and administrative expenses principally include staff costs including stock-based compensation, depreciation and amortization, impairment of intangible assets, directors and officers insurance costs, professional fees, credit card processing fees and establishment costs.
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 (the most recent stock options grants were in the year 2021) were 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 calculated the expected volatility using the historical volatility for a pool of peer companies over the most recent period equal to the expected term and evaluated the extent to which available information indicate that future volatility may differ from historical volatility. The expected dividend rate was zero as the Company did 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 were based on the U.S. Treasury yield curve in effect at the time of the grant. The Company had not experienced significant exercise activity on stock options. Due to the lack of historical
BLADE AIR MOBILITY, INC.
Notes to Consolidated Financial Statements
(amounts in thousands, except share, per share data and exchange rates)
information, the Company determined the expected term of its stock option awards issued using the simplified method. The simplified method assumed 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 recognized forfeitures at the time the forfeiture occurs.
Restricted stock units (“RSUs”) are granted at the discretion of the Company’s Board of Directors. These RSUs are restricted as to the transfer of ownership and generally vest over the requisite service period. The RSUs have various vesting dates, ranging from vesting on the grant date to as late as four years from the date of grant.
The Company's current default tax withholding method for the vesting of RSUs is the sell-to-cover method, under which shares with a market value equivalent to the estimated tax withholding obligation are withheld from the holder of the RSUs upon vesting and sold on behalf of such holder to cover their applicable tax withholding liability, and the cash proceeds from such sales are then remitted by the Company to the applicable tax authorities. This approach is used for the vesting of RSUs held by the majority of the Company’s employees, including all of the Company’s Section 16 “officers” as defined by Section 16 of the Securities and Exchange Act of 1934, as amended.
Income Taxes
The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the consolidated financial statements or in the Company’s tax returns. Deferred tax assets and liabilities are determined on the basis of the differences between U.S. GAAP treatment and tax treatment of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by considering taxable income in carryback years, existing taxable temporary differences, prudent and feasible tax planning strategies and estimated future taxable profits.
Each period, the Company analyzes whether it is more-likely-than-not that tax positions will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the positions. In evaluating whether a tax position has met the more-likely-than-not recognition threshold, the Company presumes that the position will be examined by the appropriate taxing authority that has full knowledge of all relevant information and considers that all years remain subject to examination in the US due to historical operational losses. When differences exist between tax positions taken in a tax return and amounts meeting the more-likely-than-not threshold, the company will record an uncertain tax position, resulting in one or more of the following: an increase in a liability for income taxes payable, a reduction of an income tax refund receivable, a reduction in a deferred tax asset, or an increase in a deferred tax liability. The Company records penalties and interest relating to uncertain tax positions as part of income tax expense. As of December 31, 2023, the Company has no uncertain tax positions. See Note 8 for additional information.
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
Held-to-Maturity Securities
The Company's investments in held-to-maturity securities consist of investment grade U.S. Treasury obligations with maturity dates of less than 365 days. The Company has the ability and intention to hold these securities until maturity. Accordingly, these securities are recorded in the Company's consolidated balance sheet at amortized cost and interest is recorded within interest income on the Company's consolidated statement of operations. The held-to-maturity securities balance and market value at December 31, 2023 and 2022 were $138,264 and $138,285, and $130,382 and $130,352, respectively.
BLADE AIR MOBILITY, INC.
Notes to Consolidated Financial Statements
(amounts in thousands, except share, per share data and exchange rates)
Other Short-Term Investments
Other short-term investments consist of highly-liquid investments available for sale. Other short-term investments consisted of an available-for-sale, traded, debt securities fund, which is 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 consolidated balance sheets. These other short-term investments are excluded from disclosure under “fair value of financial instruments” due to the net asset value practical expedient. The other short-term investments balance at December 31, 2023 and 2022 was $— and $20,358, respectively. The cost of other short-term investments at December 31, 2023 and 2022 was $— and $20,460, respectively.
Accounts Receivable and Allowances for Expected Credit Losses
Accounts receivable consists principally of amounts due from customers in the Company’s Medical segment, which are large hospitals that receive terms for payment. Additionally, a smaller balance is due from the Company’s European institutional clients (hotels and travel agencies), who do not pay prior to the flights. The allowance for expected credit losses on receivables is used to present accounts receivable, net at an amount that represents the Company’s estimate of the related transaction price recognized as revenue. The allowance represents an estimate of expected credit losses over the lifetime of the receivables, even if the loss is considered remote, and reflects expected recoveries of amounts previously written-off. We have determined our allowance for expected credit losses based on a specific evaluation of individual receivables and an analysis of past default experience for remaining receivables. We have historically not experienced significant losses on our receivables. We generally do not require customers to provide collateral for purchases. During the year ended December 31, 2023, the Company recorded an allowance for credit losses of $98 for potential uncollectible accounts.
Prepaid Expenses and Other Current Assets
Prepaid expenses includes prepaid insurance, the costs of which are amortized on a straight-line basis over the related coverage periods, prepaid marketing supplies and prepayments to aircraft operators, which are expensed based upon usage of flight time.
Property and Equipment, Net
Property and equipment are carried at cost, net of accumulated depreciation. Depreciation is computed utilizing the straight-line method over the estimated useful life of the asset. Leasehold improvements depreciation is computed over the shorter of the lease term or estimated useful life of the asset. Additions and improvements are capitalized, while repairs and maintenance are expensed as incurred.
| | | | | | | | | | | | | | | | | | | |
| Useful Life (in years) | | As of December 31, |
| | 2023 |
| 2022 | | |
| Furniture and fixtures | 5 | | $ | 886 | | | $ | 407 | | | |
| Technology equipment | 3 | | 402 | | | 330 | | | |
| Leasehold improvements | Shorter of useful life or life of lease | | 3,016 | | | 2,799 | | | |
| Vehicles | 5 | | 1,750 | | | 735 | | | |
| Total property and equipment, gross | | | 6,054 | | | 4,271 | | | |
| Less: Accumulated depreciation and amortization | | | (3,155) | | | (2,234) | | | |
| Total property and equipment, net | | | $ | 2,899 | | | $ | 2,037 | | | |
For the years ended December 31, 2023 and 2022, the Company recorded depreciation and amortization expense for property and equipment of $1,075 and $830, respectively.
BLADE AIR MOBILITY, INC.
Notes to Consolidated Financial Statements
(amounts in thousands, except share, per share data and exchange rates)
Acquisitions
The Company accounts for acquisitions of entities or asset groups that qualify as businesses in accordance with ASC 805, Business Combinations (“ASC 805”). The purchase price of the acquisition is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The excess of the purchase price over those fair values is recorded as goodwill. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded in the consolidated statements of operations. See Note 3 for additional information.
Intangibles Assets, Net
The Company has finite-lived and indefinite-lived intangible assets, including goodwill. Finite-lived intangible assets are amortized over their estimated useful lives. Goodwill and indefinite-lived intangible assets are not amortized but are reviewed for impairment on an annual basis, or more frequently if events or circumstances indicate that the asset may be impaired. Research and development costs are expensed as incurred. Following initial recognition of the finite-lived intangible asset, the asset is carried at cost less any accumulated amortization. Amortization of the asset begins when the asset is available for use. Amortization is recorded in “General and administrative expenses” on the Company’s consolidated statement of operations. See Note 4 for additional information.
Impairment of Long-Lived Assets
The Company assess long-lived assets for impairment in accordance with the provisions of ASC 360, Property, Plant and Equipment (“ASC 360”). Long-lived assets, except for goodwill and indefinite-lived intangible assets, consist of property and equipment and finite-lived acquired intangible assets, such as exclusive rights to air transportation services, customer lists and trademarks. Long-lived assets, except for goodwill and indefinite intangible assets, are tested for recoverability whenever events or changes in business circumstances indicate that the carrying amount of the asset may not be fully recoverable. If such events or changes in circumstances arise, the Company compares the carrying amount of the long-lived assets to the estimated future undiscounted cash flows expected to be generated by the long-lived assets. If the estimated aggregate undiscounted cash flows are less than the carrying amount of the long-lived assets, an impairment charge, calculated as the amount by which the carrying amount of the assets exceeds the fair value of the assets, is recorded. The fair value of the long-lived assets is determined through various valuation techniques, including estimated discounted cash flows expected to be generated from the long-lived asset and pricing information on comparable market transactions, unless another method provides a more reliable estimate. If an impairment loss is recognized, the adjusted carrying amount of a long-lived asset is recognized as a new cost basis of the impaired asset. Impairment loss is not reversed even if fair value exceeds carrying amount in subsequent periods. See Note 4 for additional information.
Goodwill
In testing goodwill for impairment, the Company has the option to begin with a qualitative assessment, commonly referred to as “Step 0,” to determine whether it is more likely than not that the fair value of a reporting unit containing goodwill is less than its carrying value. This qualitative assessment may include, but is not limited to, reviewing factors such as macroeconomic conditions, industry and market considerations, cost factors, entity-specific financial performance and other events, such as changes in the Company’s management, strategy and primary customer base. If the Company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company performs a quantitative goodwill impairment analysis by comparing the carrying amount to the fair value of the reporting unit. If the carrying amount exceeds the fair value, goodwill will be written down to the fair value and recorded as impairment expense in the consolidated statements of operations. The Company performs its impairment testing annually at December 31 and when circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.
We performed an annual test for goodwill impairment in the fourth quarter ended December 31, 2023 and determined that goodwill was not impaired.
Leases
We determine if an arrangement is a lease at inception. Leases are recorded on the balance sheet as “right-of-use” (“ROU”) assets and lease liabilities. Leases are classified as either operating or finance leases and lease expense is recognized within “General and administrative expenses” (airport and heliport terminals and offices) and “Cost of revenues” (aircraft leases embedded within certain capacity purchase agreements). As a lessee, for operating leases, total
BLADE AIR MOBILITY, INC.
Notes to Consolidated Financial Statements
(amounts in thousands, except share, per share data and exchange rates)
lease expense is recognized using a straight-line method. Finance leases are treated as the purchase of an asset on a financing basis. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term.
When available, the Company uses the rate implicit in the lease in determining the present value of the future minimum lease payments. However, the Company's leases generally do not provide a readily determinable implicit rate. Therefore, the Company estimates the incremental borrowing rate to discount lease payments based on information available at the inception of the lease. The incremental borrowing rate represents an estimate of the interest rate we would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of the lease.
Our lease terms include options to extend the lease when it is reasonably certain that we will exercise that option. Leases with a term of 12 months or less are not recorded on our consolidated balance sheets. Our lease agreements do not contain any residual value guarantees. Under certain of our capacity purchase agreements with third-party aircraft operators, we do not own the underlying aircraft. However, since we control the specific aircraft used, the aircraft is deemed to be leased for accounting purposes. For these capacity purchase agreements, we account for the lease and non-lease components separately. The lease component consists of the aircraft and the non-lease components consist of flight operations. We allocated the consideration in the capacity purchase agreements to the lease and non-lease components based on the Company’s best estimate of standalone value.
See Note 5 for additional information.
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 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 consolidated statement of operations. See Notes 12 and 13 for additional information.
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.
Major Customers
For the years ended December 31, 2023 and 2022, there was no single customer that generated 10% or more of the Company’s revenue.
BLADE AIR MOBILITY, INC.
Notes to Consolidated Financial Statements
(amounts in thousands, except share, per share data and exchange rates)
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 that receive terms for payment, along with receivables from credit card processors. No customer accounted for 10% or more of the Company’s outstanding accounts receivable as of December 31, 2023. One customer accounted for 13% of the Company’s outstanding accounts receivable as of December 31, 2022.
Major Vendors
One vendor accounted for 12% of the Company’s purchases from operating vendors for the year ended December 31, 2023 and 2022.
Two vendors accounted for 17% and 10%, respectively, of the Company’s outstanding accounts payable as of December 31, 2023. One vendor accounted for 20% of the Company’s outstanding payable as of December 31, 2022.
Foreign Currency Translation
All of our foreign subsidiaries use their local currency as their functional currency. Assets and liabilities are translated from the local functional currency into U.S. Dollars at the exchange rate on the balance sheet date and revenue and expenses are translated at the average exchange rate for the period. Translation adjustments are recorded in accumulated other comprehensive income. Foreign currency gains and losses arising from transactions not in the subsidiaries local currency are recorded in results of operations.
Recently Issued Accounting Standards - Adopted
On January 1, 2023, we adopted ASU 2021-08, Accounting for Contract Assets and Contract Liabilities From Contracts With Customers, or ASU 2021-08, that requires acquiring companies to apply ASC 606 to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination consistent with those recorded by the acquiring company. The Company does not have significant contracts with customers requiring performance beyond delivery. To the extent we acquire additional companies in our existing lines of business, the adoption of this standard will not have a material impact on our results of operations or financial position.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. The ASU changes accounting for credit losses on loans receivable and debt securities from an incurred loss methodology to an expected credit loss methodology. Among other things, ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Accordingly, ASU 2016-13 requires the use of forward-looking information to form credit loss estimates. In addition, ASU 2016-13 amends the accounting for credit losses on debt securities and purchased financial assets with credit deterioration. The Company adopted ASU 2016-13 as of January 1, 2023. The company’s financial assets that are subject to the new standard are predominantly accounts receivable and short-term investments classified as held-to-maturities (e.g., U.S. Treasury obligations). The Company’s receivables consist principally of MediMobility Organ Transport customers, which are large hospitals that receive terms of 45 days or less. U.S. Treasury obligations are rated as investment grade with maturities of less than 365 days. Given our historical experience, the short duration lifetime of these financial assets and the short time horizon over which to consider expectations of future economic conditions, the company assessed that non-collection of the cost basis of these financial assets is remote. The adoption of ASU 2016-13 did not materially impact the Company’s consolidated financial statements.
Recently Issued Accounting Pronouncements - Not Adopted
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, (“ASC 470-20”), 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
BLADE AIR MOBILITY, INC.
Notes to Consolidated Financial Statements
(amounts in thousands, except share, per share data and exchange rates)
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.
In October 2023, the FASB issued ASU No. 2023-06, Disclosure Improvements. The new guidance clarifies or improves disclosure and presentation requirements on a variety of topics in the codification. The amendments in the update are intended to align the requirements in the FASB ASC with the SEC’s regulations. The amendments are effective prospectively on the date each individual amendment is effectively removed from Regulation S-X or Regulation S-K, or if the SEC has not removed the requirements by June 30, 2027, this amendment will be removed from the Codification and will not become effective for any entity. The Company is in the process of evaluating the impact the adoption of this ASU will have on the financial statements and related disclosures, which is not expected to be material.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands the segment disclosures of public entities. This expansion includes the requirement to disclose significant segment expenses that are regularly provided to the chief operating decision maker and are included within each reported measure of segment profit or loss. Additionally, the ASU mandates the disclosure of the amount and description of the composition of other segment items, as well as interim disclosures of a reportable segment's profit or loss and assets. These disclosure requirements apply to public entities with a single reportable segment as well. The ASU will be effective for the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024, and early adoption is allowed. Currently, the Company is assessing the potential impact of adopting this ASU on its consolidated financial statements and disclosures.
In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is effective for annual periods beginning after December 15, 2024 on a prospective basis. Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance. The Company is evaluating the impact of the standard on its income tax disclosures.
Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force) and the SEC have not had, or are not anticipated to have, a significant effect on the Company's consolidated financial statements, both present and future.
Note 3 – Acquisitions
Acquisition in 2022
Acquisition of Blade Europe
On September 1, 2022, Blade acquired, through Blade Europe SAS, a wholly-owned French société par actions simplifiée subsidiary (“Blade Europe”), 100% of the share capital and voting rights (the “Shares”) of Héli Tickets France SAS (“Héli Tickets France”), a French société par actions simplifiée, which was then renamed “Blade France SAS” (“Blade France”) and of Helicopter Monaco SARL (“Helicopter Monaco”), a Monegasque société à responsabilité limitée, which was then renamed “Blade Monaco SARL” (“Blade Monaco”). These acquisitions are part of Blade’s growth strategy of leveraging its asset-light model, technology and recognized brand to aggregate the use cases for urban air mobility. The routes in Southern France, Monaco, Italy and Switzerland, meet the criteria given the geography, short distances and large
BLADE AIR MOBILITY, INC.
Notes to Consolidated Financial Statements
(amounts in thousands, except share, per share data and exchange rates)
addressable markets. In addition these markets have connectivity to our existing service areas where the Blade brand enjoys recognition, creating the opportunity for cross pollination between our North American and European customer base.
We hereafter refer to the three European legal entities (Blade Europe, Blade France and Blade Monaco) collectively as “Blade Europe”.
Prior to the completion of the acquisition, the sellers completed a series of reorganization transactions in which all assets and liabilities relating to the distribution and commercial passenger transportation activities of Héli Sécurité SAS, a French société par actions simplifiée (“Héli Sécurité”) and Azur Hélicoptère SAS, a French société par action simplifiée (“Azur”) were transferred to Héli Tickets France and all assets and liabilities relating to the distribution and commercial passenger transportation activities of Monacair S.A.M., a Monegasque société anonyme (“Monacair” and collectively with Héli Sécurité and Azur, the “Operators”) were transferred to Helicopter Monaco.
Simultaneously with the acquisition, on September 1, 2022 Blade Europe entered into an Aircraft Operator Agreement (the “Europe AOA”) with the sellers and the Operators. The Europe AOA governs the terms of the operating relationship between the parties thereto, including among other things, the right of Blade to act as exclusive air charter broker and/or reseller of the air transportation services to be operated and provided by the Operators thereto for specific routes at pre-negotiated fixed hourly rates and with a minimum number of annual flight hours guaranteed to the Operators by Blade. The agreement’s initial term ends on December 31, 2032 and it will thereafter automatically renew for successive three year periods.
The Company determined that the Europe AOA is an embedded lease and accounted for the lease component of the minimum guarantee as an operating right-of-use (“ROU”) asset with a corresponding balance included in the lease liability reported in the Company’s consolidated balance sheets (see Note 5).
Blade paid an aggregate cash purchase price for the Shares of Héli Tickets France and Helicopter Monaco of €47,800 ($48,101). Acquisition costs of $3,032 were expensed as incurred and are included in general and administrative expenses in the consolidated statement of operations for the year ended December 31, 2022.
The results of Blade Europe for the period from the September 1, 2022 (“acquisition date”) to December 31, 2022 are included in the Short Distance product line which is part of the Passenger segment.
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 identifiable intangible assets of $25,862. 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 $24,652. The value of the components within goodwill included expected revenue, cost synergies, new customers and key personnel.
The purchase price was allocated as follows:
| | | | | |
| |
| |
| Property and equipment, net | 162 | |
| Identifiable intangible assets | 25,862 | |
| Operating right-of-use asset | 11,913 | |
| |
| Total identifiable assets acquired | 37,937 | |
| Accounts payable and accrued expenses | 221 | |
| Operating lease liability | 11,913 | |
| |
| Deferred tax liability | 2,354 | |
| Total liabilities assumed | 14,488 | |
| Net assets acquired | 23,449 | |
| Goodwill | 24,652 | |
| Total consideration | $ | 48,101 | |
BLADE AIR MOBILITY, INC.
Notes to Consolidated Financial Statements
(amounts in thousands, except share, per share data and exchange rates)
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 |
| Exclusive rights to air transportation services | 12 | | $ | 25,359 | |
| Customer list | 3 | | 503 | |
| Total identifiable intangible assets | | | $ | 25,862 | |
| | | |
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 exclusive rights to air transportation services 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 customer list 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 Blade Europe been acquired on January 1, 2022. 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 acquisition actually occurred at the beginning of the period presented or of the results of our future operations of the consolidated business.
| | | | | | | | | | | | | | | | |
| | | For the Year Ended | | | | | |
| | | | | December 31,
2022 | | | | | |
| Reported Revenue | | | | | $ | 146,120 | | | | | | |
| Impact of Blade Europe(1) | | | | | 23,369 | | | | | | |
| Pro forma Revenue | | | | | $ | 169,489 | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
(1) In the accompanying consolidated financial statements for the year ended December 31, 2022, reported revenue includes $4,211 million of revenue from this acquisition.
The Company did not include net profit (loss) pro forma information as it is deemed impractical. Historical information was not available as the acquired companies have never operated as stand-alone businesses with the distribution and commercial transportation activities being operated by a different party than the operational activities. The pro forma profit (loss) of the acquired companies is based primarily on the hourly flying rates set annually with the Operators through the Europe AOA. As this agreement did not exist prior to the acquisition, it is not possible to compute the pro forma profit (loss) for these entities.
BLADE AIR MOBILITY, INC.
Notes to Consolidated Financial Statements
(amounts in thousands, except share, per share data and exchange rates)
Note 4 – Goodwill and Intangible Assets
The changes in the carrying value of goodwill are as follows:
| | | | | |
| |
| |
| Goodwill balance, December 31, 2022 | $ | 39,445 | |
| |
| |
| Adjustment(1) | 100 | |
| Foreign currency translation | 828 | |
| Goodwill balance, December 31, 2023 | $ | 40,373 | |
(1) Represents a measurement period adjustment made during the year ended December 31, 2023. See Note 3 for additional information.
The goodwill pertains to the Blade Europe Acquisition on September 1, 2022 (see Note 3 for additional information) and Trinity Acquisition on September 15, 2021.
The following table presents information about the Company's intangible assets as of:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | December 31, 2023 | | December 31, 2022 | | |
| Estimated Useful Life | | Gross Carrying Amount | | Accumulated Amortization |
| Net | | Gross Carrying Amount |
| Accumulated Amortization |
| Net | | | | | | |
| Exclusive rights to air transportation services(1)(2) | 5-12 years | | $ | 18,946 | | | $ | (8,042) | | | $ | 10,904 | | | $ | 38,594 | | | $ | (3,473) | | | $ | 35,121 | | | | | | | |
| Customer list(1) | 3-10 years | | 12,094 | | | (3,653) | | | 8,441 | | | 12,077 | | | (2,346) | | | 9,731 | | | | | | | |
| Domain name | Indefinite | | 504 | | | — | | | 504 | | | 504 | | | — | | | 504 | | | | | | | |
| Trademarks | 6-10 years | | 1,006 | | | (392) | | | 614 | | | 1,006 | | | (136) | | | 870 | | | | | | | |
| Developed technology | 3 years | | 250 | | | (194) | | | 56 | | | 250 | | | (111) | | | 139 | | | | | | | |
| Total | | | $ | 32,800 | | | $ | (12,281) | | | $ | 20,519 | | | $ | 52,431 | | | $ | (6,066) | | | $ | 46,365 | | | | | | | |
(1) Includes intangible assets associated with the acquisition of Blade Europe. See Note 3 for additional information.
(2) Exclusive rights to air transportation services include exclusive rights to Helijet’s scheduled passenger routes in Canada acquired in 2021.
During the year ended December 31, 2023, the Company recognized an impairment charge for the exclusive rights to air transportation services associated with the acquisition of Blade Europe in the amount of $20,753, which was included in intangible impairment expense within general and administrative expenses in the consolidated statements of operations and is part of the Passenger segment. The impairment was as a result of adjustments made to the near term projections for revenue, expenses and expected EVA introduction, to reflect our experience operating Blade Europe since September 2022 as well as expected delays in the commercialization of EVA.
Fair value was determined using the discounted estimated cash flows to measure the impairment loss for the asset group for which undiscounted future net cash flows were not sufficient to recover the net book value.
The estimated cash flows used to assess the recoverability of our long-lived assets and measure fair value are derived from current business plans. These plans consider price and volume projections. Other important assumptions include flight-hour costs, timing of EVA becoming commercial, EVA cost of operation, and the use of an appropriate discount rate. We believe our estimates and models are similar to what a market participant would use.
The fair value measurement of our long-lived assets is considered a Level 3 measurement because it relies on significant inputs not observable in the market. These inputs include discount rates and determination of long-term estimates of profitability and cash flow values. We used a weighted average discount rate of 12.5% to calculate the fair value of the impaired asset groups in 2023. This rate, along with the long-term estimates of profitability and cash flow values, represents management's best estimate of what a market participant would use.
BLADE AIR MOBILITY, INC.
Notes to Consolidated Financial Statements
(amounts in thousands, except share, per share data and exchange rates)
For the years ended December 31, 2023 and 2022, amortization of its finite-lived intangible assets were $6,036 and $4,895, respectively.
As of December 31, 2023, the estimated amortization expense of its finite-lived intangible assets for each of the next five years are as follows:
| | | | | |
| For the Year Ended December 31, | |
| 2024 | $ | 4,440 | |
| 2025 | 4,315 | |
| 2026 | 3,994 | |
| 2027 | 1,761 | |
| 2028 | 1,649 | |
Note 5 – Right-of-Use Asset and Operating Lease Liability
Blade’s operating leases consist of airport and heliport terminals, offices, vehicles and aircraft leases that are embedded within certain Capacity Purchase Agreements (“CPAs”). Upon meeting certain criteria as stated in ASC 842 Leases, the lease component of a CPA would be accounted for as an embedded lease, with a corresponding balance included in the operating right-of-use (“ROU”) asset and lease liability.
During the year ended December 31, 2023, the Company added the following leases in accordance with ASC 842:
A CPA for two aircraft was executed in August 2023, with a term from May 23, 2023 through August 31, 2024. In case of early termination by Blade, a one-year flight hour guarantee will be pro-rated to the date of the termination. In addition, Blade has the right for immediate termination with no penalty if a government authority enacts travel restrictions.
Effective in February 2023, Blade entered into an agreement for a three-year term ending February 14, 2026 for three aircraft (previous term was less than one year). This CPA was restated and amended in September 2023 for modified revenue guarantees and additional five months (for a total three-year term ending July 31, 2026). This CPA was further restated and amended in December 2023 to encompass modified revenue guarantees and an additional nine months (for a revised term from August 1, 2023 through April 30, 2027). In case of early termination by Blade, a one-year revenue guarantee will be pro-rated to the date of the termination. In addition, Blade has the right for immediate termination with no penalty if a government authority enacts travel restrictions.
Effective in March 2022, Blade entered into an agreement for a three-year term ending March 31, 2025 for six aircraft. This CPA was restated and amended in March 2023 for seven aircraft and additional two years (for a total five-year term ending March 31, 2028). This CPA was further restated and amended in December 2023 for up to eight aircraft for a five-year term ending March 31, 2028. Blade has the right to terminate the agreement without cause upon 60 days’ written notice, upon such termination a one-year flight hour guarantee will be pro-rated to the date of the termination and the operator will be entitled to retain any unapplied deposit paid by Blade at the time of such termination, in addition, Blade has the right for immediate termination with no penalty if a government authority enacts travel restrictions.
The Company allocated the consideration in the capacity purchase agreements to the lease and non-lease components based on their relative standalone value. The non-lease components for these agreements primarily consist of the costs associated with flight operations. The Company determined its best estimate of the standalone value of the individual components by considering observable information from publicly available market rates.
In addition, during the year ended December 31, 2023, the Company recognized a right-of-use asset and a lease liability for a pre-existing terminal facility lease in New York City. Prior to recognizing it this year, this lease had been accounted for as short term lease, in accordance with its contractual terms. Following the completion of leasehold improvements to the facilities, the Company reassessed the likelihood of renewal and determined that the lease would be extended to a longer
BLADE AIR MOBILITY, INC.
Notes to Consolidated Financial Statements
(amounts in thousands, except share, per share data and exchange rates)
term. As a result, this lease is now accounted for as an operating lease with a corresponding balance included in the ROU asset and lease liability on the balance sheet.
See Note 11, “Commitments and Contingencies”, for additional information about our capacity purchase agreements.
Balance sheet information related to the Company’s leases is presented below:
| | | | | | | | | | | |
| |
| | | |
| December 31, 2023 | | December 31, 2022 |
| Operating leases: | | | |
| Operating right-of-use asset | $ | 23,484 | | | $ | 17,692 | |
| Operating lease liability, current | 4,787 | | | 3,362 | |
| Operating lease liability, long-term | 19,738 | | | 14,970 | |
As of December 31, 2023, included in the table above is $21,081, $3,215 and $18,871 of operating right-of-use asset, current operating lease liability, and long-term operating lease liability, respectively, under aircraft leases that are embedded within the capacity purchase agreements. As of December 31, 2022, included in the table above is $14,916, $1,748 and $13,705 of operating right-of-use asset, current operating lease liability, and long-term operating lease liability, respectively, under aircraft leases that are embedded within the capacity purchase agreements.
The following provides details of the Company’s lease expense: | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | | | 2023 | | | | 2022 |
| Lease cost: | | | | | | | | | |
| Short-term lease cost | | | | | $ | 434 | | | | | $ | 304 | |
| Operating lease cost | | | | | 2,072 | | | | | 1,196 | |
| Operating lease cost - Cost of revenue | | | | | 4,618 | | | | | 1,379 | |
| Total | | | | | $ | 7,124 | | | | | $ | 2,879 | |
Operating lease costs related to aircraft leases that are embedded within capacity purchase agreements are reported as part of Cost of revenue.
Other information related to leases is presented below:
| | | | | | | |
| December 31, 2023 | | |
| Weighted-average discount rate – operating lease | 9.00 | % | | |
| Weighted-average remaining lease term – operating lease (in years) | 6.3 | | |
BLADE AIR MOBILITY, INC.
Notes to Consolidated Financial Statements
(amounts in thousands, except share and per share data)
As of December 31, 2023, the expected annual minimum lease payments of the Company’s operating lease liabilities were as follows:
| | | | | | | | |
| For the Year Ended December 31 | | |
| 2024 | | $ | 6,770 | |
| 2025 | | 5,459 | |
| 2026 | | 5,205 | |
| 2027 | | 4,354 | |
| 2028 | | 2,707 | |
| Thereafter | | 8,252 | |
| Total future minimum lease payments, undiscounted | | 32,747 | |
| Less: Imputed interest for leases in excess of one year | | (8,222) | |
| Present value of future minimum lease payments | | $ | 24,525 | |
Note 6 – Stock-Based Compensation
Stock Option Awards
Following is a summary of stock option activities for the year ended December 31, 2023:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Options | | Weighted
Average
Exercise Price | | Weighted Average Grant Date Fair Value | | Weighted Average Remaining Life (years) | | Intrinsic Value |
| Outstanding – January 1, 2023 | 7,603,864 | | | 0.19 | | | $ | 0.21 | | | 4.6 | | |
| Granted | — | | | — | | | — | | | | | |
| Exercised | (386,790) | | | 0.18 | | | 0.22 | | | | | |
| Forfeited | — | | | — | | | — | | | | | |
| Outstanding – December 31, 2023 | 7,217,074 | | | $ | 0.19 | | | $ | 0.21 | | | 3.5 | | $ | 24,119 | |
| Exercisable as of December 31, 2023 | 7,217,074 | | | $ | 0.19 | | | $ | 0.21 | | | 3.5 | | $ | 24,119 | |
For the years ended December 31, 2023 and 2022 the Company recorded no stock option expense. The fair value of stock options is amortized on a straight-line basis over the requisite service periods of the respective awards. As of December 31, 2023, there is no unrecognized stock-based compensation costs to be recognized in future periods.
BLADE AIR MOBILITY, INC.
Notes to Consolidated Financial Statements
(amounts in thousands, except share, per share data and exchange rates)
Restricted Stock
During the year ended December 31, 2023, the Company granted an aggregate of 786,394 of the Company's restricted stock units to various employees, officers, directors, consultants, and service providers under the 2021 Equity Incentive Plan. The restricted stock units have various vesting dates, ranging from vesting on the grant date to as late as four years from the date of grant.
| | | | | | | | | | | | | | | | | | | | |
| | | | | | Restricted Stock Units | | Weighted Average Grant Date Fair Value |
| Non-vested – January 1, 2023 | | | | | | 7,466,636 | | | $ | 5.52 | |
| Granted | | | | | | 786,394 | | | 3.51 | |
| Vested | | | | | | (2,724,920) | | | 5.96 | |
| Forfeited | | | | | | (268,128) | | | 5.59 | |
| Non-vested – December 31, 2023 | | | | | | 5,259,982 | | | $ | 4.99 | |
For the years ended December 31, 2023 and 2022, the Company recorded $12,501 and $8,277, respectively, in employee and officers restricted stock compensation expense. As of December 31, 2023, unamortized stock-based compensation costs related to restricted share arrangements was $24,151 and will be recognized over a weighted average period of 2.6 years.
Stock-Based Compensation Expense
Stock-based compensation expense for stock options and restricted stock units in the consolidated statements of operations is summarized as follows:
| | | | | | | | | | | | | |
| |
| | | | | |
| For the Years Ended | | |
| December 31,
2023 | | December 31,
2022 | | |
| Software development | $ | 739 | | | $ | 941 | | | |
| General and administrative(1) | 13,849 | | | 9,142 | | | |
| Selling and marketing | 596 | | | 319 | | | |
| Total stock-based compensation expense | $ | 15,184 | | | $ | 10,402 | | | |
| | | | | |
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| | | | | |
(1) The year ended December 31, 2023, includes an expense of $3,022 in connection with the equity-based portion of Trinity’s contingent consideration with a corresponding amount within accounts payable and accrued expenses, expected to be granted in 2024 in respect of 2023 results, offset by a credit of $339 in connection with the settlement of the equity-based portion of contingent consideration that was granted in the first quarter of 2023 in respect of 2022 results. The year ended December 31, 2022, included an expense of $2,125 in connection with the equity-based portion of Trinity’s contingent consideration , granted in the first quarter of 2023 in respect of 2022 results.
Note 7 – Segment and Geographic Information
Segment Information
Operating segments are defined as components of an enterprise that engage in business activities for which discrete financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) and is used in resource allocation and performance assessments. In addition, per ASC 280, Segment Reporting, paragraph 280-10-50-11, two or more operating segments may be aggregated into a single reported segment if the segments have similar economic characteristics. The Company has identified two reporting segments - Passenger and Medical. Our CODM is our senior management team. Our senior management team regularly reviews discrete information for those two reporting segments. The Passenger segment consists of our two product lines Short Distance and Jet and Other. The Medical segment consists of the MediMobility Organ Transport product line. Our product lines are defined in Note 2 in the Revenue Recognition section.
The CODM evaluates the performance of the segments and allocates resources primarily based on their respective revenue and income (loss) before income tax expense (benefit). The CODM does not evaluate operating segments or allocate resources using asset information and, accordingly, asset information by segment is not presented herein.
BLADE AIR MOBILITY, INC.
Notes to Consolidated Financial Statements
(amounts in thousands, except share, per share data and exchange rates)
The following table reflects certain financial data of the Company’s reportable segments:
| | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, | | | |
| | | | | 2023 | | 2022 | | | |
| | | | | | | | |
| | | | | | | | | | |
| Segment revenue | | | | | | | | | | |
| Passenger | | | | | $ | 98,576 | | | $ | 74,341 | | | | |
| Medical | | | | | 126,604 | | | 71,779 | | | | |
| Total revenue | | | | | $ | 225,180 | | | $ | 146,120 | | | | |
| | | | | | | | | | |
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| | | | | | | | | | |
| | | | | | | | | | |
| Segment loss | | | | | | | | | | |
| Passenger | | | | | $ | (33,503) | | $ | (14,029) | | | |
| Medical | | | | | (1,388) | | (2,930) | | | |
| Loss from reportable segments | | | | | (34,891) | | (16,959) | | | |
| Unallocated corporate costs & software development(1) | | | | | (33,226) | | | (36,570) | | | | |
| Other non-operating income | | | | | 10,575 | | | 25,497 | | | | |
| Loss before income taxes | | | | | $ | (57,542) | | $ | (28,032) | | | |
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| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | December 31,
2023 | | December 31,
2022 | | | |
| Goodwill | | | | | | | | | | |
| Passenger | | | | | $ | 27,045 | | | $ | 26,117 | | | | |
| Medical | | | | | 13,328 | | | 13,328 | | | | |
| Total goodwill | | | | | $ | 40,373 | | | $ | 39,445 | | | | |
(1) Unallocated corporate costs & software development includes costs that are not directly attributable to our reportable segments.
Corporate costs also include shared costs such as finance, accounting, tax, human resources, information technology, legal costs and costs of the development of our application.
Geographic Information
Revenue by geography is based on where the flight’s operator is based. Long-lived assets, net includes property and equipment, net and operating right-of-use assets. Summary financial data attributable to various geographic regions for the periods indicated is as follows:
| | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | | | 2023 | | 2022 |
| | | |
| | | | | | | |
| Revenue | | | | | | | |
| United States | | | | | $ | 190,744 | | | $ | 133,298 | |
| | | | | | | |
| | | | | | | |
| Other | | | | | 34,436 | | | 12,822 | |
| Total revenue | | | | | $ | 225,180 | | | $ | 146,120 | |
| | | | | | | |
| | | | | December 31,
2023 | | December 31,
2022 |
| Long-lived assets | | | | | | | |
| United States | | | | | $ | 13,727 | | | $ | 7,195 | |
| Other | | | | | 12,656 | | | 12,534 | |
| Total long-lived assets | | | | | $ | 26,383 | | | $ | 19,729 | |
BLADE AIR MOBILITY, INC.
Notes to Consolidated Financial Statements
(amounts in thousands, except share, per share data and exchange rates)
Note 8 – Income Taxes
The components of loss before income taxes were:
| | | | | | | | | | | | | |
| |
| | | | | |
| For the Years Ended | | |
| December 31,
2023 | | December 31,
2022 | | |
| United States | $ | (26,676) | | | $ | (21,563) | | | |
| Foreign | (30,866) | | | (6,469) | | | |
| Total | (57,542) | | | (28,032) | | | |
The Company follows the provisions of the accounting guidance on accounting for income taxes which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. A valuation allowance is provided to reduce the deferred tax asset to a level which, more likely than not, will be realized.
The benefit for income taxes is comprised of the following components:
| | | | | | | | | | | | | |
| |
| | | | | |
| For the Years Ended | | |
| Current: | December 31,
2023 | | December 31,
2022 | | |
| Federal | $ | — | | | $ | — | | | |
| State | — | | | — | | | |
| Total current | — | | | — | | | |
| Deferred: | | | | | |
| Federal | — | | | (84) | | | |
| State | — | | | (60) | | | |
| Foreign | (1,466) | | | (628) | | | |
| Total deferred | (1,466) | | | (772) | | | |
| Total income tax benefit | $ | (1,466) | | | $ | (772) | | | |
The income taxes benefit differs from the amount computed by applying the statutory federal income tax rate to loss before income taxes. The sources and tax effects of the differences are as follows:
| | | | | | | | | | | | | |
| |
| | | | | |
| For the Years Ended | | |
| December 31,
2023 | | December 31,
2022 | | |
| Tax at federal statutory rate | 21.00 | % | | 21.00 | % | | |
| State and local tax | 1.88 | | | 8.43 | | | |
| Foreign rate differential(1) | 2.16 | | | 0.93 | | | |
| | | | | |
| Warrant liability | 0.78 | | | 18.17 | | | |
| Executive compensation | (2.74) | | | — | | | |
| Earn-out | (3.68) | | | (4.72) | | | |
| Prior year adjustments | — | | | (0.64) | | | |
| Change in deferred tax rate | (7.59) | | | — | | | |
| Change in valuation allowance(1) | (9.55) | | | (37.58) | | | |
| Other | 0.29 | | | (0.57) | | | |
| Transaction costs | — | | | (2.27) | | | |
| Effective tax rate | 2.55 | % | | 2.75 | % | | |
(1) Prior period percentage have been updated to conform to current period presentation
BLADE AIR MOBILITY, INC.
Notes to Consolidated Financial Statements
(amounts in thousands, except share, per share data and exchange rates)
The Company’s deferred tax assets/(liabilities) consist of the following:
| | | | | | | | | | | |
| As of December 31, |
| 2023 | | 2022 |
| Deferred tax assets: | | | |
| Net operating loss carryforwards | $ | 25,351 | | | $ | 22,522 | |
| Stock-based compensation | 2,523 | | | 2,225 | |
| Research and development credits | 708 | | | 424 | |
| Capitalized Research Expenses | 2,110 | | | 1,244 | |
| Operating lease liability | 6,416 | | | 4,690 | |
| Accrued expenses | 1,055 | | | 657 | |
| Other | 766 | | | 691 | |
| Total deferred tax assets | 38,929 | | | 32,453 | |
| | | |
| Deferred tax liabilities: | | | |
| Property and equipment | — | | | (155) | |
| 481(a) Adjustment | — | | | (97) | |
| Operating right-of-use asset | (6,145) | | | (4,492) | |
| Amortization of intangibles | (2,073) | | | (3,917) | |
| Total deferred tax liabilities | (8,218) | | | (8,661) | |
| Total net deferred tax assets, before valuation allowance | 30,711 | | | 23,792 | |
| | | |
| Less: Valuation allowance | (31,162) | | | (25,668) | |
| Deferred tax liabilities, net of valuation allowance | $ | (451) | | | $ | (1,876) | |
As of December 31, 2023, the Company has a valuation allowance of approximately $31,162 against the net deferred tax assets, for which realization cannot be considered more likely than not at this time. In assessing the need for a valuation allowance, the Company considers all positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, jurisdictional netting and past financial performance. As of December 31, 2023 and 2022, based upon the consideration of such evidence, management believes a full valuation allowance against net deferred tax assets is warranted, with the exception of Monaco net operating losses.
The valuation allowance recorded by the Company as of December 31, 2023 resulted from the uncertainties of the future utilization of deferred tax assets relating primarily to net operating loss (“NOL”) carryforwards for US federal, Canada, France and US state income tax purposes. Realization of the NOL carryforwards is contingent on future taxable earnings. The deferred tax asset was reviewed for expected utilization using a “more likely than not” approach by assessing the available positive and negative evidence surrounding its recoverability. Accordingly, a full valuation allowance continues to be recorded, with the exception of Monaco net operating losses, as it was determined based upon past and projected future losses that it was “more likely than not” that the Company’s deferred tax assets would not be realized. The Company’s net deferred tax liability of $451 relates solely to Blade Europe. The Company's valuation allowance increased by $5,494 in 2023.
As of December 31, 2023, the Company has approximately $79,737 of gross US federal and $94,644 of gross US state and local net operating loss carryforwards. The US federal, state and city net operating losses begin to expire in the year 2035. Federal net operating losses incurred in tax year 2018 and beyond do not expire. The Company has $65,770 of federal net operating losses with an indefinite life.
In addition, as of December 31, 2023, the Company has approximately $4,551 of gross Canadian, $4,414 of gross French and $931 of gross Monaco net operating losses. Canadian net operating losses can be carried forward 20 years and French
BLADE AIR MOBILITY, INC.
Notes to Consolidated Financial Statements
(amounts in thousands, except share, per share data and exchange rates)
& Monaco net operating losses can be carried forward indefinitely. Canadian net operating losses will begin to expire in 2041.
Sections 382 and 383 of the Internal Revenue Code of 1986 subject the future utilization of net operating losses and certain other tax attributes, such as research and experimental tax credits, to an annual limitation in the event of certain ownership changes, as defined. The Company has undergone an ownership change study and has determined multiple changes in ownership as defined by IRC Section 382 of the Internal Revenue Code of 1986, did occur in December 2017, February 2018, and May 2021.
Based on the Company having undergone multiple ownership changes throughout its history, limited NOLs are subject to limitation at varying rates each year. Of the Company's $79,737 of total gross federal NOLs, approximately $3,858 of the Company's NOL carryforwards are subject to limitation. In addition, approximately $1,459 of NOLs and $112 of R&D Credits are expected to expire unused. The deferred tax assets associated with these attributes that are expected to expire without utilization have not been included within the deferred tax asset table or discussion above. There are approximately $75,879 of NOLs available to offset taxable income as of December 31, 2023. NOLs will continue to become available through 2037.
The Tax Cuts and Jobs Act of 2017 (TCJA) has modified the IRC 174 expenses related to research and development for tax years beginning after December 31, 2021. Under the TCJA, the Company must now capitalize the expenditures related to research and development activities and amortize over five years for U.S. activities and 15 years for non-U.S. activities using a mid-year convention. Therefore, the capitalization of research and development costs in accordance with IRC 174 resulted in a gross deferred tax asset of $7,682.
The Company files tax returns in the U.S. federal, Canada, France, Monaco and various US state and local jurisdictions and is subject to examination by tax authorities. The Company has reported US net operating losses dating back to inception. The IRS may examine records from the year a loss occurred when a net operating loss is applied. Thus, the Company is subject to U.S. federal income tax examinations for all years. The statute in other jurisdictions is generally three to four years but could be extended in certain circumstances.
On August 16, 2022, President Biden signed the Inflation Reduction Act, which is effective for tax years beginning on or after January 1, 2023 and includes a corporate minimum tax on certain corporations and a one percent excise tax on stock repurchases. We do not anticipate this legislation will have a material impact on our consolidated financial statements.
Note 9 – 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 warrants.
A reconciliation of net loss and common stock share amounts used in the computation of basic and diluted loss per common share is presented below.
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| | | Year Ended December 31, |
| | | | | 2023 | | 2022 | | |
| | | | | | | |
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| | | | | | | | | |
| Basic and dilutive loss per common share: | | | | | | | | | |
| Net loss attributable to Blade Air Mobility, Inc. | | | | | $ | (56,076) | | | $ | (27,260) | | | |
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| | | | | | | | | |
| | | | | | | | | |
| Total weighted-average basic common shares outstanding | | | | | 73,524,476 | | | 71,238,103 | | | |
| | | | | | | | | |
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| | | | | | | | | |
| | | | | | | | | |
| Net loss per common share: | | | | | | | | | |
| Basic and diluted loss per common share | | | | | $ | (0.76) | | | $ | (0.38) | | | |
| | | | | | | | | |
The following table represents common stock equivalents that were excluded from the computation of diluted loss per common share for the years ended December 31, 2023 and 2022 because the effect of their inclusion would be anti-
BLADE AIR MOBILITY, INC.
Notes to Consolidated Financial Statements
(amounts in thousands, except share, per share data and exchange rates)
dilutive: | | | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | | | 2023 | | 2022 | | |
| | | | | | | |
| | | | | | | | | |
| Warrants to purchase shares of common stock | | | | | 14,166,644 | | | 14,166,644 | | | |
| Options to purchase shares of common stock | | | | | 7,217,074 | | | 7,603,864 | | | |
| Restricted shares of common stock | | | | | 5,259,982 | | | 7,466,636 | | | |
| Total potentially dilutive securities | | | | | 26,643,700 | | | 29,237,144 | | | |
Note 10 – Related Party Transactions
The Company occasionally engages in transactions for certain air charter services with jet operators who are part of the portfolio of RedBird Capital Partners Management LLC, which is an investor in our company. Additionally, one of the board of directors is a Partner of an affiliated company of RedBird Capital Partners Management LLC.
During the year ended December 31, 2023, the Company paid these jet operators approximately $369 for air charter services.
Note 11 – Commitments and Contingencies
Capacity Purchase Agreements
Blade has contractual relationships with various aircraft operators to provide aircraft service. Under these CPAs, the Company pays the operator contractually agreed fees (carrier costs) for operating these flights. The fees are generally based on fixed hourly rates for flight time multiplied by hours flown. Under these CPAs, the Company is also responsible for landing fees and other costs, which are either passed through by the operator to the Company without any markup or directly incurred by the Company.
As of December 31, 2023, the Company has remaining unfulfilled obligations under agreements with various aircraft operators to provide aircraft service. The remaining unfulfilled obligation includes amounts within operating lease liability related to aircraft leases embedded within our capacity purchase agreements as discussed in Note 5 – Right-of-Use Asset and Operating Lease Liability. These future unfulfilled obligations were as follows:
| | | | | | | | | | | | | | | | | | | | |
| For the Year Ended December 31 | | Total Unfulfilled Obligation | | Immediate Termination (1) | | Termination for Convenience (2) |
| 2024 | | $ | 13,982 | | | $ | 4,975 | | | $ | 3,132 | |
| 2025 | | 21,567 | | | 13,327 | | | — | |
| 2026 | | 21,260 | | | 13,021 | | | — | |
| 2027 | | 20,687 | | | 12,447 | | | — | |
| 2028 | | 18,740 | | | 10,500 | | | — | |
| 2029 - 2032 (each year) | | 8,240 | | | — | | | — | |
(1) Within total unfulfilled obligation, the following amounts are where Blade has the ability for immediate termination if a government authority enacts travel restrictions.
(2) Within total unfulfilled obligation, the following amounts are where Blade could terminate for convenience upon 30 or 60 days’ notice, with a one-year annual minimum guarantee being pro-rated as of the termination date.
Legal and Environmental
From time to time, we may be a party to litigation that arises in the ordinary course of business. Other than described below, we do not have any pending litigation that, separately or in the aggregate, would, in the opinion of management, have a material adverse effect on its results of operations, financial condition or cash flows. As of December 31, 2023, management believes, after considering a number of factors, including (but not limited to) the information currently available, the views of legal counsel, the nature of contingencies to which the Company is subject and prior experience, that the ultimate disposition of these other litigation and claims will not materially affect the Company's consolidated
BLADE AIR MOBILITY, INC.
Notes to Consolidated Financial Statements
(amounts in thousands, except share, per share data and exchange rates)
financial position or results of operations. The Company records liabilities for legal and environmental claims when a loss is probable and reasonably estimable. These amounts are recorded based on the Company's assessments of the likelihood of their eventual disposition.
In July 2022, Trinity Air Medical, LLC, a wholly owned subsidiary of Blade Urban Air Mobility, Inc., received a federal grand jury subpoena seeking records related to the provision of transplant transportation services. On August 2, 2023, the Company received notice that the grand jury investigation into the transplant transportation services industry has been closed and that the Company is no longer bound by the obligations placed on it by the subpoena.
On February 8, 2024, and February 21, 2024, two putative class action lawsuits relating to the acquisition of Blade Urban Air Mobility, Inc. (“Old Blade”) were filed. The lawsuits are captioned McFee v. Affeldt, et al.(“McFee”) and Drulias v. Affeldt, et al. (“Drulias”) (Del. Ch. 2024). McFee asserts breach of fiduciary duty claims against the former directors of Experience Investment Corp. (“EIC Directors”) and KSL Capital Partners Management V and alleges that the proxy statement related to the acquisition of Old Blade (“Merger Proxy”) insufficiently disclosed EIC’s cash position and the shareholder economics of the combined Company. Drulius asserts breach of fiduciary duty and unjust enrichment claims against the EIC Directors, the former officers of EIC, and KSL Capital Partners, LLC (“KSL”), and aiding and an abetting breach of fiduciary duty claim against KSL. The Drulias complaint alleges that the Merger Proxy insufficiently disclosed EIC’s cash position, Old Blade’s value prospects and risks, and information related to Old Blade’s chief executive officer, who is also our current chief executive officer. The complaints seek, among other things, damages and attorneys’ fees and costs.
Non-Cancellable Commitments with Vendors
In December 2023, the Company entered into a technology service agreement with a vendor for cloud computing services where we are committed to spend $0.6 million, $1.1 million and $1.6 million for the years ending December 31, 2024, 2025 and 2026, respectively.
Contingent Consideration Compensation (earn-out)
On September 15, 2021, the Company completed its acquisition of 100% of Trinity Air Medical, Inc. (“Trinity”) shares. In connection with the Trinity acquisition, potential earn-out payments may be made contingent upon Trinity’s achievement of an EBITDA target for the year 2023. The sellers are eligible for the earn-out only while employed with the Company, classifying it as compensation expense. The final earn-out payment was calculated and paid in the beginning of the calendar year 2024. 70% of the payment was made in cash. For the year ended December 31, 2023, the Company included $10,073 in accounts payable and accrued expenses in connection with the Trinity acquisition in respect of 2023 results. 2023 is the last year subject to an earn-out payment.
Note 12 – Warrant Liabilities
Warrants — Public Warrants may only be exercised for a whole number of shares. The Public Warrants became exercisable on June 7, 2021. The Public Warrants will expire on May 7, 2026 or earlier upon redemption or liquidation.
Redemptions of Warrants for Cash — The Company may redeem the Public Warrants:
•in whole and not in part;
•at a price of $0.01 per warrant;
•upon not less than 30 days’ prior written notice of redemption to each warrant holder; and
•if, and only if, the reported last sale price of the Company’s common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending three business days before the Company sends the notice of redemption to each warrant holder.
Redemption of Warrants for Shares of Common Stock — The Company may redeem the outstanding warrants:
•in whole and not in part;
•at a price equal to a number of shares of common stock to be determined, based on the redemption date and the fair market value of the Company’s common stock;
BLADE AIR MOBILITY, INC.
Notes to Consolidated Financial Statements
(amounts in thousands, except share, per share data and exchange rates)
•upon a minimum of 30 days’ prior written notice of redemption;
•if, and only if, the last reported sale price of the Company’s common stock equals or exceeds $10.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations, and the like) on the trading day prior to the date on which the Company sends the notice of redemption to the warrant holders; and
•if, and only if, there is an effective registration statement covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating thereto is available throughout the 30-day period after the written notice of redemption is given.
If the Company calls the Public Warrants for redemption for cash, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis”, as described in the warrant agreement. The exercise price and number of shares of common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, recapitalization, reorganization, merger, or consolidation. However, except as described below, the warrants will not be adjusted for issuance of common stock at a price below its exercise price. Additionally, in no event will the Company be required to net-cash settle the warrants.
The Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the initial public offering, except that the Private Placement Warrants will be exercisable on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees (unless the Class A common stock equals or exceed $10 per share and the Company redeem all the Public Warrants). If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
Note 13 – Fair Value Measurements
The Company follows the guidance in ASC 820, Fair Value Measurement (“ASC 820”), for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
Level 1: Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2: Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
Level 3: Unobservable inputs based on management’s assessment of the assumptions that market participants would use in pricing the asset or liability.
The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2023 and 2022, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value.
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| Level | | December 31, 2023 | | December 31, 2022 |
| Warrant liabilities - Public Warrants | 1 | | $ | 3,208 | | | $ | 4,583 | |
| Warrant liabilities - Private Warrants | 2 | | 1,750 | | | 2,500 | |
| Fair value of aggregate warrant liabilities | | | $ | 4,958 | | | $ | 7,083 | |
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The Warrants were accounted for as liabilities in accordance with ASC 815-40 and are presented within “Warrant liability” on the Company’s consolidated balance sheets. The warrant liabilities are measured at fair value upon assumption and on a
BLADE AIR MOBILITY, INC.
Notes to Consolidated Financial Statements
(amounts in thousands, except share, per share data and exchange rates)
recurring basis, with changes in fair value presented within “Change in fair value of warrant liabilities” in the consolidated statements of operations.
The Public Warrants are considered part of Level 1 of the fair value hierarchy, as those securities are traded on an active public market. At May 7, 2021 and thereafter, the Company valued the Private Warrants using Level 2 of the fair value hierarchy. The Company used the value of the Public Warrants as an approximation of the value of the Private Warrants as they are substantially similar to the Public Warrants, but not directly traded or quoted on an active market.
Subsequent measurement
The following table presents the changes in fair value of the warrant liabilities: | | | | | | | | | | | | | | | | | |
| Public Warrants | | Private Placement Warrants | | Total Warrant Liability |
| Fair value as of January 1, 2023 | $ | 4,583 | | | $ | 2,500 | | | $ | 7,083 | |
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Change in fair value of warrant liabilities | (1,375) | | | (750) | | | (2,125) | |
| Fair value as of December 31, 2023 | $ | 3,208 | | | $ | 1,750 | | | $ | 4,958 | |
Note 14 – Stockholders' Equity
Preferred Stock
The board of directors of the Company is authorized to provide, out of the unissued shares of Preferred Stock, for one or more series of Preferred Stock and, with respect to each such series, to fix, without further stockholder approval, the number of shares constituting such series and the designation of such series, the powers (including voting powers), preferences and relative, participating, optional and other special rights, and the qualifications, limitations or restrictions thereof, of such series of Preferred Stock. The powers (including voting powers), preferences and relative, participating, optional and other special rights of, and the qualifications, limitations or restrictions thereof, of each series of Preferred Stock, if any, may differ from those of any and all other series at any time outstanding. There was no preferred stock issued and outstanding as of December 31, 2023 or December 31, 2022.
Note 15 – Subsequent Events
On March 11, 2024, Blade entered into definitive agreements to acquire eight fixed-wing aircraft (the “Acquired Aircraft”) from M&N Equipment, LLC (“M&N”), Atlas Jet Inc. and Aviation Bridge, LLC for a combined purchase price of approximately $21.0 million, funded by the application of approximately $9.3 million in existing prepaid deposits under existing Capacity Purchase Agreements with M&N, and approximately $11.7 million in cash, subject to traditional closing conditions, inspections, holdbacks and adjustments. Blade intends to utilize the Acquired Aircraft, which were previously dedicated to Blade under existing Capacity Purchase Agreements, to support its Medical business line. The Acquired Aircraft will continue to be operated by M&N, subject to the execution of aircraft management and operation agreements.
On March 8, 2024, the Compensation Committee granted an aggregate of 5,057,140 Performance-Based Restricted Stock Units (“PSUs”) to our named executive officers and key employees under the Company’s 2021 Omnibus Incentive Plan (the “Plan”). The PSUs will vest subject to the achievement of certain financial performance metrics by the Company. Each PSU represents the right to receive one share of the Company’s common stock. The grant date fair value of these PSUs are $3.94 per share.
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| Exhibit No. | | Description |
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|
2.1(1) | | |
2.2(9) | | |
3.1(2) | | |
3.2(2) | | |
4.1(3) | | |
4.2(3) | | |
4.3(4) | | |
4.4(13) | | |
10.1(6) | | |
10.2(6) | | |
10.3(6) | | |
10.4(6) | | |
10.5(6) | | |
10.6(6) | | |
10.7(6) | | |
10.8(6) | | |
10.9(12) | | |
| 10.10* | | |
10.13(5) | | |
10.14(7) | | |
10.15(6) | | |
10.16(6) | | |
10.17(6) | | |
10.18(6) | | |
10.19(6) | | |
10.20(6) | | |
10.21(6) | | |
10.22(6) | | |
10.23(6) | | |
10.24(6) | | |
| | |
10.25(6) | | |
10.26(6) | | |
| | |
10.27(3) | | |
10.28(8) | | |
10.29(8) | | |
| | | | | | | | |
10.30(11) | | |
10.31(11) | | |
10.32(11) | | |
10.33(10) | | |
| | |
10.34(14) | | |
| 10.35* | | |
| 21.1* | | |
| 23.1* | | |
| 24.1* | | |
| 31.1* | | |
| 31.2* | | |
| 32.1* | | |
| 32.2* | | |
| | |
| 97.1* | | |
| 101.INS* | | Interactive Data Files pursuant to Rule 405 of Regulation S-T formatted in Inline Extensible Business Reporting Language (“Inline XBRL”) |
| 101.CAL* | | XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.SCH* | | XBRL Taxonomy Extension Schema Document |
| 101.DEF* | | XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB* | | XBRL Taxonomy Extension Labels Linkbase Document |
| 101.PRE* | | XBRL Taxonomy Extension Presentation Linkbase Document |
| 104 | | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) |
| |
|
| * | | Filed herewith |
| (1) | | Incorporated by reference to our Form 8-K (file number 001-39046) filed on December 15, 2020 |
| (2) | | Incorporated by reference to our Form 8-K (file number 001-39046) filed on May 13, 2021 |
| (3) | | Incorporated by reference to our Form S-4/A (file number 001-39046) filed on March 10, 2021 |
| (4) | | Incorporated by reference to our Form 8-K (file number 001-39046) filed on September 18, 2019 |
| (5) | | Incorporated by reference to our Form 10-Q (file number 001-39046) filed on August 16, 2021 |
| (6) | | Incorporated by reference to our Form S-4 (file number 001-39046) filed on January 29, 2021 |
| (7) | | Incorporated by reference to our Form 8-K (file number 001-39046) filed on September 2, 2021 |
| (8) | | Incorporated by reference to our Form 10-K (file number 001-39046) filed on December 20, 2021 |
| (9) | | Incorporated by reference to our Form 8-K (file number 001-39046) filed on May 19, 2022 |
| (10) | | Incorporated by reference to our Form 8-K (file number 001-39046) filed on December 2, 2021 |
| (11) | | Incorporated by reference to our Form 10-Q (file number 001-39046) filed on August 9, 2022 |
| (12) | | Incorporated by reference to our post-effective amendment to the Form S-1 (file number 001-39046) filed on January 20, 2022 |
| (13) | | Incorporated by reference to our Form 10-K (file number 001-39046) filed on March 16, 2023 |
| (14) | | Incorporated by reference to our Form 8-K (file number 001-39046) filed on March 30, 2023 |
| + | | Denotes a management contract or compensatory arrangement |
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Item 16. Form 10–K Summary.
Not applicable.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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| BLADE AIR MOBILITY, INC. |
| March 12, 2024 |
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| By: | /s/ Robert S. Wiesenthal |
| | Robert S. Wiesenthal |
| | Chief Executive Officer (Principal Executive Officer) |
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints each of Robert S. Wiesenthal and Melissa M. Tomkiel, acting alone or together with another attorney-in-fact, as his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for such person and in his or her name, place and stead, in any and all capacities, to sign any or all further amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
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| Signature | | Title | | Date |
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| /s/ Robert S. Wiesenthal | | Chief Executive Officer and Director | | March 12, 2024 |
| Robert Wiesenthal | | (Principal Executive Officer) | | |
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| /s/ William A. Heyburn | | Chief Financial Officer | | March 12, 2024 |
| William A. Heyburn | | (Principal Financial Officer) | | |
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| /s/ Amir M. Cohen | | Chief Accounting Officer | | March 12, 2024 |
| Amir M. Cohen | | (Principal Accounting Officer) | | |
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| /s/ Eric Affeldt | | Chairman of the Board | | March 12, 2024 |
| Eric Affeldt | |
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| /s/ John Borthwick | | Director | | March 12, 2024 |
| John Borthwick | |
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| /s/ Jane Garvey | | Director | | March 12, 2024 |
| Jane Garvey | |
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| /s/ Andrew Lauck | | Director | | March 12, 2024 |
| Andrew Lauck | |
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| /s/ Kenneth Lerer | | Director | | March 12, 2024 |
| Kenneth Lerer | |
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| /s/ Reginald Love | | Director | | March 12, 2024 |
| Reginald Love | |
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| /s/ Susan Lyne | | Director | | March 12, 2024 |
| Susan Lyne | |
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| /s/ Edward Philip | | Director | | March 12, 2024 |
| Edward Philip | |
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