~~Delaware~~

~~84-1890381~~

Delaware

84-1890381

(State or other jurisdiction

of incorporation or organization)

(~~I.R.S. Employer~~

I.R.S.Employer
Identification No.)

~~499 East 34~~^th ~~Street~~ ~~New York~~, NY	~~10016~~

55 Hudson Yards, 14th Floor New York, NY		10001
(Address of principal executive offices)		(Zip Code)

	(~~212~~) ~~967-1009~~
			(212) 967-1009
			(Registrant’s telephone number, including area code)

Name of each exchange on

which registered

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 ☒x No ☐o

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 ☒x No ☐o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non–accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “ smaller reporting company,” and “emerging growth company” in Rule 12b–2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐o

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

As of ~~August 11, 2021,~~November 2, 2022, there were ~~69,427,682~~71,653,281 shares of the registrant’s Common ~~stock,~~Stock, $0.0001 par value per share, issued and outstanding.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

BLADE AIR MOBILITY, INC.

~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS~~

~~(unaudited)~~

Unaudited Interim Condensed Consolidated Balance Sheets

September 30, 2022 and December 31, 2021

(in thousands, except share and per share data)

For the Three Months Ended June 30,

For the Nine Months Ended June 30,


2021

2020

2021

2020
Revenue

$
12,951

$
3,438

$
30,210

$
15,115
Operating expenses

Cost of revenue

9,910

2,804

23,905

14,392
Software development

213

220

555

691
General and administrative

9,809

1,561

18,023

7,376
Selling and marketing

790

329

2,091

2,284
Total operating expenses

20,722

4,914

44,574

24,743

Loss from operations

(7,771)

(1,476)

(14,364)

(9,628)

Other non-operating (expense) income

Change in fair value of warrant liabilities

(14,913)

—

(14,913)

—
Recapitalization costs attributable to warrant liabilities

(1,742)

(1,742)

Interest income, net

140

151

151

181
Total other non-operating (expense) income

(16,515)

151

(16,504)

181

Net loss

$
(24,286)

$
(1,325)

$
(30,868)

$
(9,447)

Weighted average shares outstanding, basic and diluted

51,569,634

25,210,933

34,078,573

25,209,794

Net loss per share, basic and diluted

$
(0.47)

$
(0.05)

$
(0.91)

$
(0.37)

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





	September 30, 2022		December 31, 2021
Assets
Current assets
Cash and cash equivalents	$	51,845	$	2,595
Restricted cash	1,139		630
Accounts receivable	11,271		5,548

Short-term investments	150,378		279,374
Prepaid expenses and other current assets	10,773		6,798
Total current assets	225,406		294,945

Non-current assets:
Property and equipment, net	2,220		2,045
Investment in joint venture	390		200
Intangible assets, net	48,533		24,421
Goodwill	31,852		13,328
Operating right-of-use asset	16,944		713
Other non-current assets	1,312		232
Total assets	$	326,657	$	335,884

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses	$	11,562	$	6,369
Deferred revenue	6,036		5,976
Operating lease liability, current	2,627		438

Total current liabilities	20,225		12,783

Non-current liabilities:
Warrant liability	9,067		31,308
Operating lease liability, long-term	14,516		278
Deferred tax liability	144		144
Total liabilities	43,952		44,513

Commitments and Contingencies (Note 9)

Stockholders' Equity
Preferred stock, $0.0001 par value, 2,000,000 shares authorized at September 30, 2022 and December 31, 2021. No shares issued and outstanding at September 30, 2022 and December 31, 2021.	—		—
Common stock, $0.0001 par value; 400,000,000 authorized; 71,506,665 and 70,667,381 shares issued at September 30, 2022 and December 31, 2021, respectively.	7		7
Additional paid in capital	373,223		368,680
Accumulated other comprehensive loss	(2,262)		(898)
Accumulated deficit	(88,263)		(76,418)
Total stockholders' equity	282,705		291,371

Total Liabilities and Stockholders' Equity	$	326,657	$	335,884

See Notes to Unaudited Interim Condensed Consolidated Financial Statements

BLADE AIR MOBILITY, INC.

~~CONDENSED CONSOLIDATED BALANCE SHEETS~~

Unaudited Interim Condensed Consolidated Statements of Operations

Three and Nine Months Ended September 30, 2022 and 2021

(in thousands, except share and per share data)

As of


June 30, 2021

September 30, 2020

(unaudited)

Assets

Current assets

Cash and cash equivalents

$
30,003

$
12,162
Restricted cash

630

114
Accounts receivable

1,712

1,092
Short term investments

303,163

—
Prepaid expenses and other current assets

7,221

1,011
Total current assets

342,729

14,379

Non-current assets

Property and equipment, net

1,725

1,759
Investment in joint venture

200

200
Intangible assets, net

895

533
Operating right-of-use asset

458

737
Other non-current assets

142

107
Total assets

$
346,149

$
17,715

Liabilities and Stockholders’ Equity




Current liabilities




Accounts payable and accrued expenses

$
4,958

$
776
Deferred revenue

5,266

3,973
Operating lease liability, current

333

430
Note payable

—

1,165
Total current liabilities

10,557

6,344

Non-current liabilities

Warrant liability

38,799

—
Operating lease liability, long-term

95

291
Total liabilities

49,451

6,635

Commitments and Contingencies (Note 10)





Stockholders’ Equity




Preferred stock, $0.0001 par value, 2,000,000 shares authorized at June 30, 2021 and September 30, 2020. NaN shares issued and outstanding at June 30, 2021 and September 30, 2020.

—

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

7

3
Additional paid in capital

364,697

48,215
Accumulated deficit

(68,006)

(37,138)
Total stockholders’ equity

296,698

11,080

Total Liabilities and Stockholders’ Equity

$
346,149

$
17,715

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

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Revenue $ 45,722 $ 20,316 $ 107,985 $ 42,540
Operating expenses
Cost of revenue (1) 36,456 15,855 90,685 33,628
Software development (1) 2,026 844 3,923 1,456
General and administrative (1) 15,812 12,115 41,934 26,748
Selling and marketing (1) 1,856 1,231 5,294 2,433
Total operating expenses 56,150 30,045 141,836 64,265
Loss from operations (10,428) (9,729) (33,851) (21,725)
Other non-operating income (expense)
Change in fair value of warrant liabilities 425 (3,418) 22,241 (18,331)
Realized loss from sales of short-term investments (359) — (2,071) —
Recapitalization costs attributable to warrant liabilities — 11 — (1,731)
Interest income, net 1,173 309 1,892 453
Total other non-operating income (expense) 1,239 (3,098) 22,062 (19,609)
Loss before income taxes (9,189) (12,827) (11,789) (41,334)
Income tax expense (benefit) 56 (3,643) 56 (3,643)
Net loss $ (9,245) $ (9,184) $ (11,845) $ (37,691)
Net loss per share (Note 8):
Basic $ (0.13) $ (0.13) $ (0.17) $ (0.77)
Diluted $ (0.13) $ (0.13) $ (0.17) $ (0.77)
Weighted-average shares used to compute net loss per share:
Basic 71,466,085 69,011,623 71,099,764 48,814,039
Diluted 71,466,085 69,011,623 71,099,764 48,814,039

(1) Prior period amounts have been updated to conform to current period presentation.

See Notes to Unaudited Interim Condensed Consolidated Financial Statements

BLADE AIR MOBILITY, INC.

~~CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY~~

~~FOR THE THREE AND NINE MONTHS ENDED JUNE~~

Unaudited Interim Condensed Consolidated Statements of Comprehensive Loss

Three and Nine Months Ended September 30, 2022 and 2021 ~~AND 2020~~

~~(unaudited)~~

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Net loss $ (9,245) $ (9,184) $ (11,845) $ (37,691)
Other comprehensive income (loss):
Unrealized investment income (loss) 101 (297) (1,419) (297)
Less: Reclassification adjustment for losses included currently in net loss 359 — 2,071 —
Foreign currency translation adjustments for the period (2,334) — (2,016) —
Other comprehensive loss (1,874) (297) (1,364) (297)
Comprehensive loss $ (11,119) $ (9,481) $ (13,209) $ (37,988)

See Notes to Unaudited Interim Condensed Consolidated Financial Statements

BLADE AIR MOBILITY, INC.

Unaudited Interim Condensed Consolidated Statements of Stockholders' Equity

Three and Nine Months Ended September 30, 2022 and 2021

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

Total

Preferred Stock

Class A Common Stock

Additional Paid-

Accumulated

Stockholders'


Shares

Amount

Shares

Amount

In Capital

Deficit

Equity

Balance at April 1, 2021

0

$
0

26,115,841

$
3

$
51,413

$
(43,720)

$
7,696

Stock option exercise

—

—

9,627

—

5

—

5
Stock-based compensation - restricted stock

—

—

—

—

1,862

—

1,862
Stock-based compensation - stock options

—

—

—

—

656

—

656
Shares withheld for employee tax liability

—

—

—

—

(52)

—

(52)
EIC shares recapitalized, net of issuance costs and the fair value of warrant liabilities

—

—

30,778,021

3

191,180

—

191,183
Shares issued in PIPE, net of issuance costs

—

—

12,500,000

1

119,633

—

119,634
Net loss

—

—

—

—

—

(24,286)

(24,286)

Balance at June 30, 2021

—

$
—

69,403,489

$
7

$
364,697

$
(68,006)

$
296,698

Balance at April 1, 2020

—

$
—

25,210,933

$
3

$
47,893

$
(35,100)

$
12,796

��

Stock-based compensation - stock options

—

—

—

—

90

—

90
Net loss

—

—

—

—

—

(1,325)

(1,325)

Balance at June 30, 2020

—

$
—

25,210,933

$
3

$
47,983

$
(36,425)

$
11,561

Balance at October 1, 2020

—

$
—

25,268,848

$
3

$
48,215

$
(37,138)

$
11,080

Issuance of restricted stock

—

—

790,497

—

—

—

—
Stock option exercise

—

—

66,123

—

24

—

24
Stock-based compensation - restricted stock

—

—

—

—

4,684

—

4,684
Stock-based compensation - stock options

—

—

—

—

1,013

—

1,013
Shares withheld for employee taxes

—

—

—

—

(52)

—

(52)
EIC shares recapitalized, net of issuance costs and the fair value of warrant liabilities

—

—

30,778,021

3

191,180

—

191,183
Shares issued in PIPE, net of issuance costs

—

—

12,500,000

1

119,633

—

119,634
Net loss

—

—

—

—

—

(30,868)

(30,868)

Balance at June 30, 2021

—

$
—

69,403,489

$
7

$
364,697

$
(68,006)

$
296,698

Balance at October 1, 2019

—

$
—

25,203,350

$
3

$
47,710

$
(26,978)

$
20,735

—

Stock option exercise

—

—

7,583

—

5

—

5
Stock-based compensation - stock options

—

—

—

—

268

—

268
Net loss

—

—

—

—

—

(9,447)

(9,447)

Balance at June 30, 2020

0

$
0

25,210,933

$
3

$
47,983
��
$
(36,425)

$
11,561

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


	Common Stock		Additional Paid-In Capital			Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders' Equity
		Shares			Amount
Balances as of July 1,2022		71,397,326	$	7		$	371,690	$	(388)	$	(79,018)	$	292,291
Issuance of common stock upon exercise of stock options		10,000	—			2		—		—		2
Issuance of common stock upon settlement of restricted stock units		124,527	—			—		—		—		—
Stock-based compensation - restricted stock		—	—			1,685		—		—		1,685

Shares withheld related to net share settlement		(25,188)	—			(154)		—		—		(154)




Other comprehensive loss		—	—			—		(1,874)		—		(1,874)
Net loss		—	—			—		—		(9,245)		(9,245)
Balances as of September 30, 2022		71,506,665	$	7		$	373,223	$	(2,262)	$	(88,263)	$	282,705

Balances as of July 1, 2021		69,403,488	$	7		$	364,697	$	—	$	(68,006)	$	296,698
Issuance of common stock upon exercise of stock options		698,924	—			120		—		—		120
Stock-based compensation- restricted stock		—	—			3,924		—		—		3,924

Shares withheld related to net share settlement		(6,011)	—			—		—		—		—

EIC shares recapitalized, net of issuance costs and the fair value of warrant liabilities		—	—			(32)		—		—		(32)
Other comprehensive loss		—	—			—		(297)		—		(297)
Net loss		—	—			—		—		(9,184)		(9,184)




Balance as of September 30, 2021		70,096,401	$	7		$	368,709	$	(297)	$	(77,190)	$	291,229


	Common Stock		Additional Paid-In Capital			Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders' Equity
		Shares			Amount

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		450,143	—			81		—		—		81
Issuance of common stock upon settlement of restricted stock units		546,868	—			—		—		—		—
Stock-based compensation - restricted stock		—	—			5,627		—		—		5,627

Shares withheld related to net share settlement		(157,727)	—			(1,165)		—		—		(1,165)




Other comprehensive loss		—	—			—		(1,364)		—		(1,364)
Net loss		—	—			—		—		(11,845)		(11,845)
Balances as of September 30, 2022		71,506,665	$	7		$	373,223	$	(2,262)	$	(88,263)	$	282,705

Balance as of January 1, 2021		26,069,962	$	3		$	49,492	$	—	$	(39,499)	$	9,996
Issuance of common stock upon exercise of stock options		754,429	—			142		—		—		142

Stock-based compensation - restricted stock		—	—			7,581		—		—		7,581
Stock-based compensation - stock options		—	—			765		—		—		765
Shares withheld related to net share settlement		(6,011)	—			(52)		—		—		(52)
EIC shares recapitalized, net of issuance costs and the fair value of warrant liabilities		30,778,021	3			191,148		—		—		191,151
Shares issued in PIPE, net of issuance costs		12,500,000	1			119,633		—		—		119,634


Other comprehensive loss		—	—			—		(297)		—		(297)

Net loss		—	—			—		—		(37,691)		(37,691)

Balances as of September 30, 2021		70,096,401	$	7		$	368,709	$	(297)	$	(77,190)	$	291,229

See Notes to Unaudited Interim Condensed Consolidated Financial Statements

BLADE AIR MOBILITY, INC.

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(unaudited)~~

Unaudited Interim Condensed Consolidated Statements of Cash Flows

Nine Months Ended September 30, 2022 and 2021

(in thousands)

Nine Months Ended September 30,
2022 2021
Cash Flows From Operating Activities:
Net loss $ (11,845) $ (37,691)
Adjustments to reconcile net loss to net cash and restricted cash used in operating activities:
Depreciation and amortization 3,741 457
Stock-based compensation 5,627 8,346
Change in fair value of warrant liabilities (22,241) 18,331
Recapitalization costs attributable to warrant liabilities — 1,731
Realized loss from sales of short-term investments 2,071 —
Realized foreign exchange loss 7 —
Accretion of interest income on held-to-maturity securities (311) —
Deferred tax benefit — (3,643)
Loss on disposal of property and equipment 197 —
Changes in operating assets and liabilities:
Prepaid expenses and other current assets (3,781) (3,940)
Accounts receivable (4,461) 39
Other non-current assets (1,059) (116)
Operating right-of-use assets/lease liabilities 196 35
Accounts payable and accrued expenses 4,255 600
Deferred revenue (417) 236
Other (5) 1
Net cash used in operating activities (28,026) (15,614)
Cash Flows From Investing Activities:
Acquisitions, net of cash acquired (48,101) (23,065)
Investment in joint venture (190) —
Purchase of property and equipment (719) (264)
Purchase of short-term investments (120,489) (308,772)
Proceeds from sales of short-term investments 248,377 11,300
Net cash provided by / (used in) investing activities 78,878 (320,801)
Cash Flows From Financing Activities:
Proceeds from the exercise of common stock options 81 142
Taxes paid related to net share settlement of equity awards (1,165) (52)
Repayment of note payable — (1,165)
Proceeds from recapitalization of EIC, net of issuance costs — 215,101
Proceeds from sale of common stock in PIPE, net of issuance costs — 119,634
Net cash (used in) / provided by financing activities (1,084) 333,660
Effect of foreign exchange rate changes on cash balances (9) —
Net (decrease) increase in cash and cash equivalents and restricted cash 49,759 (2,755)
Cash and cash equivalents and restricted cash - beginning 3,225 10,337
Cash and cash equivalents and restricted cash - ending $ 52,984 $ 7,582
Reconciliation to the unaudited interim condensed consolidated balance sheets
Cash and cash equivalents $ 51,845 $ 6,952
Restricted cash 1,139 630
Total $ 52,984 $ 7,582
Non-cash investing and financing activities
New leases under ASC 842 entered into during the period $ 5,871 $ 13

For the Nine Months Ended June 30,


2021

2020
Cash Flows From Operating Activities:


Net loss

$
(30,868)

$
(9,447)
Adjustments to reconcile net loss to net cash and restricted cash used in operating activities:

Depreciation and amortization

405

398
Stock-based compensation

5,697

268
Change in fair value of warrant liabilities

14,913

—
Recapitalization costs attributable to warrant liabilities

1,742

—
Changes in operating assets and liabilities:

Prepaid expenses and other current assets

(6,120)

(203)
Accounts receivable

(620)

(248)
Other non-current assets

(35)

20
Operating lease assets/liabilities

(14)

(19)
Accounts payable and accrued expenses

3,782

(1,591)
Deferred revenue

1,293

907
Net cash used in operating activities

(9,825)

(9,915)

Cash Flows From Investing Activities:

Purchase of domain name

(503)

—
Purchase of property and equipment

(230)

(381)
Purchase of short-term investments

(303,163)

—
Net cash used in investing activities

(303,896)

(381)

Cash Flows From Financing Activities:

Proceeds from the exercise of common stock options

24

5
Proceeds from note payable

—

1,165
Repayment of note payable

(1,165)

—
Proceeds from recapitalization of EIC, net of issuance costs

213,585

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

119,634

—
Net cash provided by financing activities

332,078

1,170

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

18,357

(9,126)
Cash and cash equivalents and restricted cash - beginning

12,276

22,291
Cash and cash equivalents and restricted cash - ending

$
30,633

$
13,165

Cash and cash equivalents

$
30,003

$
13,049
Restricted cash

630

116
Total

$
30,633

$
13,165

Supplemental cash flow information

Cash paid for:

Interest

$
12

$
—
Income Taxes

$
0

$
0

Non-cash investing and financing activities

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

$
13

$
788
Initial measurement of net assets assumed in the recapitalization of EIC:

Prepaid expenses and other current assets

$
90

$
—
Accounts payable and accrued expenses

$
(348)

$
—
Warrant liability

$
(23,886)

$
—

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

~~Table of Contents~~

~~Blade Air Mobility, Inc. and Consolidated Subsidiaries~~

See Notes to Unaudited Interim Condensed Consolidated Financial Statements

Table of Contents
BLADE AIR MOBILITY, INC.
Notes to Unaudited Interim Condensed Consolidated Financial Statements

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

data and exchange rates)

Note 1 – Description of Business ~~Liquidity~~ and ~~Capital Resources~~

~~Overview and Management’s Plans~~

Summary of Significant Accounting Policies

Description of Business

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

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

~~Merger and Organization~~

On May 7, 2021 (the “Closing Date”), privately held Blade Urban Air Mobility, Inc., a Delaware corporation formed on December 22, 2014 (“Old Blade”), consummated transactions contemplated by the Agreement and Plan of Merger (the “Merger Agreement”), dated December 14, 2020, by and among Experience Investment Corp. (“EIC”), Experience Merger Sub, Inc., a wholly owned subsidiary of EIC (“Merger Sub”), and Old Blade. The Merger Agreement provided for the acquisition of Old Blade by EIC pursuant to the merger of Merger Sub with and into Old Blade (the “Merger”), with Old Blade continuing as the surviving entity and a ~~wholly owned~~wholly-owned subsidiary of EIC. On the Closing Date, and in connection with the closing of the Merger Agreement (the “Closing”), EIC changed its name to Blade Air Mobility, Inc. ~~(See~~See Note ~~3).~~

~~Liquidity~~

~~As of June~~3 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2021 ~~the Company had working capital of $332,160, including cash and cash equivalents of $30,003. The Company had net losses of $30,868 and $9,447~~ for ~~the nine months ended June 30, 2021 and 2020, respectively.~~

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

~~Note 2 – Summary of Significant Accounting Policies~~

information.

Basis of Presentation

and Principles of Consolidation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Management’s opinion is that all adjustments (consisting of normal accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended ~~June~~September 30, ~~2021~~2022 are not necessarily indicative of the results that may be expected for the fiscal year ending ~~September 30, 2021.~~December 31, 2022. These ~~unaudited condensed consolidated~~ financial statements should be read in conjunction with the Company’s consolidated financial statements and accompanying Notes included in the Company’s Annual Report on Form 10-K for the year ended September 30, ~~2020~~2021.

On February 1, 2022, the Board of Directors approved a change of the Company’s fiscal year-end from September 30 to December 31. The Company’s 2022 fiscal year began on January 1, 2022 and ~~related notes thereto~~will end on December 31, 2022.

Currency Conversion

The presentation currency of the Company is U.S. dollars (US$) and the unaudited interim condensed consolidated financial statements have been prepared on this basis. The period ended September 30, 2022 unaudited interim condensed consolidated statement of operations is prepared using average exchange rates of Euro (€) €1.02 to the US$ and Canadian dollars (C$) C$1.29 to the US$. The unaudited interim condensed consolidated balance sheet as at September 30, 2022 has been prepared using the exchange rates on that day of €1.02 to the US$ and C$1.37 to the US$ (December 31, 2021: C$1.27).

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 ~~Form S–1 filed~~Company's balance sheet at amortized cost and interest is recorded within interest income on ~~May 28,~~the Company's unaudited interim condensed consolidated statement of operations. The held-to-maturity securities balance at September 30, 2022 and December 31, 2021 ~~with~~was $120,222 and nil, respectively. The market value of the ~~Securities~~held-to-maturity securities at September 30, 2022 and ~~Exchange Commission (“SEC”).~~

December 31, 2021 was $120,119 and nil, respectively.

Table of Contents

~~Blade Air Mobility, Inc. and Consolidated Subsidiaries~~

BLADE AIR MOBILITY, INC.

Notes to Unaudited Interim Condensed Consolidated Financial Statements

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

data and exchange rates)

~~Note 2 – Summary~~

Other Short-Term Investments

Other short-term investments consist of ~~Significant Accounting Policies (Continued)~~

~~Principles~~highly-liquid investments available for sale. As of ~~Consolidation~~

September 30, 2022, 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 unaudited interim condensed consolidated balance sheets. These other short-term investments are excluded from disclosure under “fair value of financial statements include the accounts of the Company and its wholly-owned subsidiaries. All inter-company balances and transactions have been eliminated in the accompanying unaudited condensed consolidated financial statements.

~~Reclassification~~

~~Certain amounts in prior periods related~~instruments” due to the ~~classification~~Net Asset Value practical expedient. The other short-term investments balance at September 30, 2022 and December 31, 2021 was $30,156 and $279,374, respectively. The cost of ~~disaggregated revenue have been reclassified to conform to current period presentation. These reclassifications had no effect on the previously reported net loss.~~

~~Use of Estimates~~

~~The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates~~other short-term investments at September 30, 2022 and ~~assumptions that affect the amounts reported in the financial statements~~December 31, 2021 was $30,399 and accompanying notes. The Company bases its estimates on historical experience, current business factors, and various other assumptions that the Company believes are necessary to consider to form a basis for making judgments about the carrying values of assets and liabilities, the recorded amounts of revenue and expenses, and the disclosure of contingent assets and liabilities. The Company is subject to uncertainties such as the impact of future events, economic and political factors, and changes in the Company’s business environment; therefore, actual results could differ from these estimates. Accordingly, the accounting estimates used in the preparation of the Company’s financial statements will change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment evolves.

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

$280,263, respectively.

Emerging Growth Company

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth ~~companies including,~~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.

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

Changes in estimates are made when circumstances warrant. Such changes in estimates and refinements in estimation methodologies are reflected in reported results of operations; if material, the effects of changes in estimates are disclosed in the notes to the financial statements. Significant estimates and assumptions by management include, but are not limited to, the allowance for doubtful accounts, the carrying value of long-lived assets, the carrying value of intangible assets and goodwill, revenue recognition, 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, the provision for income taxes and related deferred tax accounts, and the fair value of stock-based awards.

Table of Contents

~~Blade Air Mobility, Inc. and Consolidated Subsidiaries~~

BLADE AIR MOBILITY, INC.

Notes to Unaudited Interim Condensed Consolidated Financial Statements

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

data and exchange rates)

~~Note 2 – Summary of Significant Accounting Policies (Continued)~~

~~Warrant Liability~~

~~The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of~~

Certain amounts in prior periods have been reclassified to conform to the ~~warrant’s specific terms and applicable authoritative guidance in Financial~~current period presentation.

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

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

~~Cash and Cash Equivalents and Restricted Cash~~

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

~~Short Term Investments~~

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

~~Concentrations~~

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

- Adopted

~~Table of Contents~~

~~Blade Air Mobility, Inc. and Consolidated Subsidiaries~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

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

~~Note 2 – Summary of Significant Accounting Policies (Continued)~~

~~Concentrations (Continued)~~

~~Major Customers~~

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

Most of the Company’s customers remit payment in advance of the date of the flight. Accounts receivable consists principally of amounts due from the Company’s MediMobility organ transport customers, which are large hospitals that receive terms for payment, along with receivables from our credit card processors. NaN of these customers accounted for 29%, 25%, and 16%, respectively, of accounts receivable as of June 30, 2021 and 3 customers accounted for 36%, 29% and 10%, respectively, of accounts receivable as of September 30, 2020. These concentrations make the Company vulnerable to a near-term severe impact should these relationships be terminated. To limit such risks, the Company performs ongoing credit evaluations of its customers’ financial condition.

~~Major Vendors~~

~~NaN vendors accounted for 16%, 12%, and 12~~% of the Company’s purchases from operating vendors for the three months ended June 30, 2021. For the three months ended June 30, 2020, 1 vendor accounted for 12% of the Company’s purchases from operating vendors.

~~NaN vendor accounted for 10% or more of the Company’s purchases from operating vendors for the nine months ended June 30, 2021 and 2020.~~

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

~~Accounts Receivable~~

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

~~Joint Venture~~

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

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

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

~~Table of Contents~~

~~Blade Air Mobility, Inc. and Consolidated Subsidiaries~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

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

~~Note 2 – Summary of Significant Accounting Policies (Continued)~~

~~Net Loss per Common Share~~

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

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

For the Three and Nine Months Ended June 30,


2021

2020
Warrants to purchase shares of Class A Common Stock

14,166,667

—
Options to purchase shares of Class A Common Stock

9,689,826

8,486,974
Restricted shares of Class A Common Stock

703,137

—
Total potentially dilutive securities

24,559,630

8,486,974

~~Revenue Recognition~~

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

~~Step 1: Identify the contract with the customer~~

~~Step 2: Identify the performance obligations in the contract~~

~~Step 3: Determine the transaction price~~

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

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

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

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

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

~~Table of Contents~~

~~Blade Air Mobility, Inc. and Consolidated Subsidiaries~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

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

~~Note 2 – Summary of Significant Accounting Policies (Continued)~~

~~Revenue Recognition (Continued)~~

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

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

~~Blade operates in 3 key lines of business:~~

●

Short Distance – Consisting primarily of flights: (i) between 60 and 100 miles in distance, largely servicing commuters with prices between $595 and $795 per seat and (ii) between New York area airports and dedicated Blade terminals in Manhattan’s heliports for $195 per seat (or $95 per seat with the purchase of an annual Airport Pass for $795). Prices per seat presented at full dollar value and not rounded.

●	~~MediMobility Organ Transport and Jet – Consisting of transportation of human organs for transplant, non-medical jet charter and, by-the-seat, jet flights between New York and both Miami and Aspen.~~

●	~~Other – Consists principally of revenues from brand partners for exposure to Blade fliers and certain ground transportation services.~~

~~Disaggregated revenue by product line was as follows:~~

For the Three Months Ended

June 30,
Product Line

2021

2020
Short distance

$
5,721

$
629
MediMobility organ transport and jet

6,500

2,636
Other

730

173
Total Revenue

$
12,951

$
3,438

For the Nine Months Ended

June 30,
Product Line

2021

2020
Short distance

$
8,900

$
5,767
MediMobility organ transport and jet

19,753

9,089
Other

1,557

259
Total Revenue

$
30,210

$
15,115

~~Advertising~~

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

~~Cost of Revenue~~

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

~~Table of Contents~~

~~Blade Air Mobility, Inc. and Consolidated Subsidiaries~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

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

~~Note 2 – Summary of Significant Accounting Policies (Continued)~~

~~Software Development Costs for Internal Use~~

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

~~Stock-Based Compensation~~

The Company accounts for stock-based compensation in accordance with ASC 718, “Compensation - Stock Compensation” (“ASC 718”). ASC 718 establishes accounting for stock-based awards exchanged for employee and consultant services. Under the provisions of ASC 718, stock-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as expense over the employee’s requisite service period (generally the vesting period of the equity grant). The fair value of the Company’s stock options are estimated using the Black Scholes option-pricing model with the following assumptions: fair value of the Company’s common stock, expected volatility, dividend rate, risk free interest rate and the expected life. The Company utilized a third party to determine the fair value of the Company’s common stock. The Company calculates the expected volatility using the historical volatility for a pool of peer companies over the most recent period equal to the expected term and evaluates the extent to which available information indicate that future volatility may differ from historical volatility. The expected dividend rate is 0 as the Company does not expect to pay or declare any cash dividends on its common stock. The risk-free rates for the expected terms of the stock options are based on the U.S. Treasury yield curve in effect at the time of the grant. The Company has not experienced significant exercise activity on stock options. Due to the lack of historical information, the Company determined the expected term of its stock option awards issued using the simplified method. The simplified method assumes each vesting tranche of the award has a term equal to the midpoint between when the award vests and when the award expires. The Company recognizes forfeitures at the time the forfeiture occurs.

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

~~Recently Issued and Adopted Accounting Pronouncements~~

In December 2019, FASB issued ASU 2019-12, Simplification of Income Taxes (Topic 740) Income ~~Taxes.~~Taxes (“ASU 2019-12”). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify U.S. GAAP for other areas of Topic 740 by clarifying and amending existing guidance. ASU 2019-12 is effective for public companies for annual periods beginning after December 15, 2020, including interim periods within those fiscal years. The ~~standard will apply as a cumulative-effect adjustment to retained earnings as~~adoption of the ~~beginning of the first reporting period in which the guidance is adopted. The Company is in the process of evaluating the~~ASU did not have a significant impact ~~of the adoption of ASU 2019-12~~ on the Company’s consolidated financial ~~statements and disclosures.~~

statements.

~~Table of Contents~~

~~Blade Air Mobility, Inc. and Consolidated Subsidiaries~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

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

~~Note 2 – Summary of Significant Accounting Policies (Continued)~~

Recently Issued ~~and~~Accounting Standards - Not Adopted ~~Accounting Pronouncements (Continued)~~

In August 2020, the FASB issued ASU No. 2020-06, ~~“Debt—~~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~~Accounting Standards Codification (“ASC”) 470-20, ~~“Debt:~~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 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~~Earnings per Share”, to require entities to calculate diluted ~~earnings per share (EPS)~~EPS for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares. The amendments in ASU 2020-06 are effective for fiscal years beginning after December 15, 2023, with early adoption permitted. The Company does not expect the adoption of ASU 2020-06 to have a significant impact on its consolidated financial statements.

Note 32 – ~~Merger Agreement~~

~~On May 7, 2021,~~Revenue

Revenue Recognition

For Short Distance revenue, seats or monthly or annual flight passes are typically purchased using the ~~Merger between~~ Blade App and ~~Experience was consummated. Pursuant to~~paid for principally via credit card transactions, wire, check, customer credit, and gift cards, with payments principally collected by the ~~Merger Agreement, at the closing date~~Company in advance of the ~~Merger,~~performance of related services. The revenue is recognized as the ~~outstanding shares of Old Blade common stock~~service is completed.

MediMobility Organ Transport products are typically purchased through our medical logistics coordinators and ~~preferred stock were cancelled~~are paid for principally via checks and ~~converted into (a) 10,024,296 shares of Blade Class A Common Stock for each outstanding share of Old Blade common stock, including shares that were subject to vesting conditions outstanding as~~wires. Payments are generally collected after the performance of the closing date, (b) 16,101,172 shares of Blade Class A Common Stock for each outstanding share of Old Blade Series Seed Preferred Stock, Old Blade Series A Preferred Stock and Old Blade Series B Preferred Stock, outstanding as of the closing date (collectively, the “Old Blade Preferred Stock” and together with the Old Blade Common Stock, the “Old Blade Stock”) and/or (c) 9,689,826 options to purchase a number of shares of Blade Class A Common Stock at an exercise price calculated pursuant to the Merger Agreement for each option to acquire Old Blade Common Stock outstanding as of the closing date (each, a “Blade Option”), as calculated pursuant to the Merger Agreement.

~~The Merger was accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded,~~related service in accordance with ~~GAAP. Under this method of accounting, EIC~~the client's payment terms. The revenue is ~~treated~~recognized as the ~~“acquired” company~~service is completed.

Jet products are typically purchased through our Flier Relations associates and our app and are paid for ~~financial reporting purposes. This determination was based primarily on Old Blade having~~principally via checks, wires and credit card. Jet payments are typically collected at the ~~ability to appoint a majority~~time of booking before the performance of the ~~initial Board~~related service. The revenue is recognized as the service is completed.

The Company initially records flight sales in its unearned revenue, deferring revenue recognition until the travel occurs. Unearned revenue from customer credit and gift card purchases is recognized as revenue when a flight is flown or upon the expiration of the ~~combined entity, Old Blade's senior management comprising~~gift card. Unearned revenue from the ~~majority~~Company’s passes is recognized ratably over the term of the ~~senior management of~~pass. For travel that has more than one flight segment, the ~~combined company,~~Company deems each segment as a separate performance obligation and ~~the ongoing operations of Old Blade comprising the ongoing operations of the combined company. Accordingly,~~recognizes revenue for ~~accounting purposes, the Merger was treated~~each segment as ~~the equivalent of Blade issuing shares for the net assets of EIC, accompanied by a recapitalization. The net assets of EIC was stated at historical cost,~~travel occurs. Fees charged in association with ~~no goodwill~~add-on services or ~~other intangible assets recorded. The historical statements of the combined entity prior to the Merger are presented as those of Old Blade.~~

Table of Contents

~~Blade Air Mobility, Inc. and Consolidated Subsidiaries~~

BLADE AIR MOBILITY, INC.

Notes to Unaudited Interim Condensed Consolidated Financial Statements

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

data and exchange rates)

~~Note 3 – Merger Agreement (Continued)~~

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

Cash, net of recapitalization costs

$
213,585
Prepaid expenses and other current assets

90
Accounts payable and accrued expenses

(348)
Warrant liability

(23,886)
Net assets acquired

$
189,441

~~Of the total recapitalization costs incurred of $27,263, $25,521 were allocated~~

extensions to ~~equity and $1,742 were allocated to the warrant liabilities, and charged to other expenses on the Company’s condensed consolidated statement of operations.~~

~~The warrants acquired in the Merger include (a) redeemable warrants issued by EIC and~~non-refundable seats sold asare considered part of the ~~units~~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 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 September 30, 2022 and December 31, 2021, the Company's contract liability balance was $6,036 and $5,976, respectively. This balance consists of unearned revenue, prepaid monthly and annual flight passes, customer credits and gift card obligations. Unearned revenue represents principally the flight revenues received in advance of the ~~EIC IPO (whether they~~actual flight. Customer credits represents unearned revenue for flight reservations that typically were ~~purchased in~~cancelled for good reason by the ~~EIC IPO or thereafter in~~customer. The customer has one year to use the ~~open market), which are exercisable~~credit as payment for ~~an aggregate of 9,166,666 shares of Class A common stock at~~ a ~~purchase price of $11.50 per share (the “Public Warrants”) and (b) warrants issued by EIC to the Sponsor in a private placement simultaneously~~future flight with the ~~closing~~Company. Gift cards represent prepayment of flights. The Company recognizes revenue for expired customer credits and gift cards upon expiration.

The table below presents a roll forward of the ~~EIC IPO, which are exercisable for an aggregate of 5,000,000 shares of EIC Class A common stock at a purchase price of $11.50 per share (the “Private Placement Warrants”).~~

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

contract liability balance:

~~Note 4 – Investment in Joint Venture~~

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


	Nine Months Ended September 30,
		2022		2021
Balance, beginning of period		$	5,976	$	4,418
Additions		58,470		41,991
Revenue recognized		(58,410)		(41,755)
Balance, end of period		$	6,036	$	4,654

For the nine months ended ~~June~~September 30, 2022, the Company recognized $4,158 of revenue that was included in the contract liability balance as of January 1, 2022. For the nine months ended September 30, 2021, ~~and 2020,~~ the Company ~~recorded royalty~~recognized $2,990 of revenue that was included in the contract liability balance as of ~~$21~~January 1, 2021.

Certain governmental taxes are imposed on the Company's flight sales through a fee included in flight prices. The Company collects these fees and ~~$0, respectively, under this arrangement.~~

~~In accordance with~~remits them to the ~~First Amended Joint Venture~~appropriate government agency. These fees are excluded from revenue.

The Company’s quarterly financial data is subject to seasonal fluctuations. Historically, the second and License Agreements, FlyBlade India was permitted to have a total of 5 directors, 3 of which were permitted to be appointed by Hunch and provided that Blade held at least a 10% interest, a single director was permitted to be appointed by the Company. Based upon Blade having less than ten percent (10)% interestthird quarter (ended on June 30 ~~2021, Blade held 0 board seat~~ and ~~lacked~~September 30, respectively) financial results have reflected higher Short Distance travel demand and were better than the ~~power to appoint members of~~first and fourth quarter (ended March 31 and December 31) financial results. Historically, MediMobility Organ Transport demand has not been seasonal. Jet and Other revenue have historically been stronger in the ~~FlyBlade India executive management team. As such, the Company is viewed as having minimal influence~~first and ~~control over FlyBlade India. As of June 30, 2021,~~fourth quarter (ended on March 31 and December 31, respectively) given that the Company’s ~~investment~~by-the-seat jet service has operated only between November and April.

Blade operates in three key lines of business:

•Short Distance – Consisting primarily of helicopter and amphibious seaplane flights in the ~~joint venture is recorded at cost.~~

United States, Canada and France 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, 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.

Table of Contents

~~Blade Air Mobility, Inc. and Consolidated Subsidiaries~~

BLADE AIR MOBILITY, INC.

Notes to Unaudited Interim Condensed Consolidated Financial Statements

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

data and exchange rates)

Disaggregated revenue by product line was as follows:

Three Months Ended
September 30,
Nine Months Ended September 30,
2022 2021 2022 2021
Product Line(1):
Short Distance $ 20,402 $ 13,403 $ 35,568 $ 20,252
MediMobility Organ Transport 20,219 2,245 50,143 5,130
Jet and Other 5,101 4,668 22,274 17,158
Total Revenue $ 45,722 $ 20,316 $ 107,985 $ 42,540

(1) Prior period amounts have been updated to conform to current period presentation.

Cost of revenue consists of flight costs paid to operators of aircraft and cars, landing fees and internal costs incurred in generating ground transportation revenue using the Company's owned cars.

Note 3 – Acquisitions

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 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 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 ofHéli 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

Table of Contents

BLADE AIR MOBILITY, INC.

Notes to Unaudited Interim Condensed Consolidated Financial Statements

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

agreement’s initial term ends on December 31, 2032 and it will thereafter automatically renew for successive three year periods.

The Company accounted for the lease component of the minimum guarantee included in the Europe AOA as an embedded lease, with a corresponding balance included in the operating right-of-use (“ROU”) asset and lease liability reported in the Company’s unaudited interim condensed 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 $2,785 were expensed as incurred and are included in general and administrative expenses in the unaudited interim condensed consolidated statement of operations for the period ended September 30, 2022.

The results of Blade Europe for the period from the September 1, 2022 (“acquisition date”) to September 30, 2022 are included in the Short Distance line of business.

The assets acquired and liabilities assumed have been included in the unaudited interim condensed consolidated financial statements as of the acquisition date. Total assets acquired included a preliminary estimate of identifiable intangible asset of $28,861. At the time of acquisition, the Company recognized an asset for a preliminary estimate of goodwill, determined as the excess of the purchase price over the net fair value of the assets acquired and liabilities assumed that amounted to $19,026. The value of the components within goodwill included expected revenue and cost synergies, exclusivity rights for transportation services, new customers and key personnel.

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


Accounts receivable	$	1,307
Prepaid expenses and other current assets	190
Property and equipment, net	143
Identifiable intangible assets	28,861
Operating right-of-use asset	11,913
Other non-current assets	69
Total identifiable assets acquired	42,483
Accounts payable and accrued expenses	1,003
Operating lease liability	11,913
Deferred revenue	492
Total liabilities assumed	13,408
Net assets acquired	29,075
Goodwill	19,026
Total consideration	$	48,101

A preliminary 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	10	$	25,975
Customer list	3	2,886
Total identifiable intangible assets		$	28,861

Table of Contents

BLADE AIR MOBILITY, INC.

Notes to Unaudited Interim Condensed Consolidated Financial Statements

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

Preliminary 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.

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, 2021. 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 2021 or of the results of our future operations of the consolidated business.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Reported Revenue	$	45,722	$	20,316	$	107,985	$	42,540
Impact of Blade Europe	10,846		12,038		23,702		16,624
Pro forma Revenue	$	56,568	$	32,354	$	131,687	$	59,164

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.

Note 4 – ~~Investment~~Goodwill and Intangible Assets

The changes in ~~Joint Venture (Continued)~~

~~The Company determined that it does not control~~ the ~~joint venture and therefore was not required to consolidate. In addition, Blade does not have sufficient control to influence and~~carrying value of goodwill are as ~~such~~follows:


Goodwill balance, December 31, 2021	$	13,328
Additions(1)	19,026
Foreign currency translation	(502)
Goodwill balance, September 30, 2022	$	31,852

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

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

~~Note 5 – Intangible Assets~~

~~Purchase of Customer List – Underhill~~

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

~~Purchase~~acquisition of Blade ~~Domain~~

~~On December 16, 2020, the Company purchased the website domain “Blade.com”~~Europe. See Note 3 for ~~$503~~additional information.

Table of Contents

BLADE AIR MOBILITY, INC.

Notes to Unaudited Interim Condensed Consolidated Financial Statements

(amounts in cash. Blade has recorded the purchase of the domain as an indefinite lived intangible asset, subject to impairment testing at least annually. As of June 30, 2021, the Company did not deem impairment of its website domain necessary.

~~Intangible Assets~~

thousands, except share, per share data and exchange rates)

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

as of:

June 30, 2021

September 30, 2020




Gross





Gross




Carrying

Accumulated

Carrying

Accumulated

Amount

Amortization

Net

Amount

Amortization

Net
Intangible assets

Estimated useful life

Customer list

5 years

$
942

$
(554)

$
388

$
942

$
(414)

$
528
Domain name

Indefinite

503

—

503

—

—

—
Trademarks

10 years

6

(2)

4

6

(1)

5
Total

$
1,451

$
(556)

$
895

$
948

$
(415)

$
533





		September 30, 2022						December 31, 2021
	Estimated Useful Life	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Exclusive rights to air transportation services(1)(2)	5-10 years	$	36,788	$	(2,127)	$	34,661	$	12,357	$	(206)	$	12,151
Customer list(1)	3-10 years	14,352		(1,974)		12,378		11,542		(957)		10,585
Domain name	Indefinite	504		—		504		504		—		504
Trademarks	6-10 years	1,006		(179)		827		1,006		(51)		955
Developed technology	3 years	250		(87)		163		250		(24)		226
Total		$	52,900	$	(4,367)	$	48,533	$	25,659	$	(1,238)	$	24,421

__________

(1) Includes preliminary estimate for 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.

For the three months ended ~~June~~September 30, ~~2021~~2022 and ~~2020~~2021, amortization of its finite-lived intangible assets were ~~$48~~$1,247 and ~~$48,~~$102, respectively. For the nine months ended ~~June~~September 30, 2022 and 2021, amortization of its finite-lived intangibles assets were $3,246 and ~~2020~~$196, respectively.

As of September 30, 2022, the estimated amortization expense of its finite-lived intangible assets ~~were $142 and $142, respectively.~~

for each of the next five years are as follows:


For the Year Ended December 31,
2022 (balance of the year)	$	1,816
2023	7,179
2024	7,051
2025	6,680
2026	5,864

~~Table of Contents~~

~~Blade Air Mobility, Inc. and Consolidated Subsidiaries~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

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

Note 65 – Right-of-Use Asset and Operating Lease Liability

~~The Company has entered into~~

Blade’s operating leases ~~consisting principally~~consist of ~~its~~ airport and heliport ~~terminals.~~

Atterminals, offices and aircraft leases that are embedded within certain capacity purchase agreements (“CPAs”). Upon meeting certain criteria as stated in ASC 842 Leases, the ~~inception~~lease component of a ~~contract,~~capacity purchase agreement would be accounted for as an embedded lease, with a corresponding balance included in the operating right-of-use (“ROU”) asset and lease liability.

As of September 30, 2022, the Company ~~will assess whether~~has three significant leases: an operating lease for office space located at 55 Hudson Yards in New York, New York for an initial term of 2.5 years, signed in May 2022; and aircraft leases that are embedded within two of our capacity purchase agreements, one signed in April 2022 for a three-year term for up to 6 aircraft and the ~~contract~~other signed in September 2022 (the “Europe AOA”, see Note 3). The Europe AOA was signed simultaneously with the acquisition of Blade Europe and is ~~or contains, a lease.~~for an initial ten-year term for 14 aircraft. The ~~Company's assessment is~~Company allocated the consideration in the capacity purchase agreements to the lease and nonlease components based ~~on: (i) whether the contract involves the use of a distinct identified asset, (ii) whether the Company obtained the right to substantially all the economic benefit from the use~~on their relative standalone value. The nonlease components for these agreements primarily consist of the ~~asset throughout~~costs associated with

Table of Contents

BLADE AIR MOBILITY, INC.

Notes to Unaudited Interim Condensed Consolidated Financial Statements

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

flight operations. The Company determined its best estimate of the ~~period, and (iii) whether~~standalone value of the ~~Company~~individual components by considering observable information from publicly available market rates.

Under the April 2022 capacity purchase agreement, Blade has the right to ~~direct~~terminate the ~~use~~agreement without cause upon 60 days’ written notice, upon such termination the flight hour guarantee will be pro-rated to the date of the ~~asset.~~

~~The Company generally uses its incremental borrowing rate as~~termination and the ~~discount rate~~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 ~~leases, unless an interest rate is implicitly stated in~~immediate termination with no penalty if a government authority enacts travel restrictions.

Under the ~~lease. The Company’s incremental borrowing rate used for all leases under ASC 842 was 5.00%,~~Europe AOA, the ~~rate~~number of ~~interest that~~aircraft available to Blade and the ~~Company would have to pay to borrow an amount equal~~corresponding number of minimum flight hours guaranteed to the ~~lease payments on~~operators by Blade, could be adjusted at the beginning of each calendar year upon reaching a ~~collateralized basis over a similar term. The lease term~~mutual agreement.

See Note 9, “Commitments and Contingencies”, for ~~the Company’s leases include the noncancellable period of the lease plus any~~ additional periods covered by either a Company option to extend the lease that the Company is reasonably certain to exercise, or an option to extend the lease controlled by the lessor. ROU assets, once recorded, are reviewed for impairment.

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

information about our capacity purchase agreements.

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





Operating leases:	September 30, 2022		December 31, 2021
Operating right-of-use asset	$	16,944	$	713
Operating lease liability, current	2,627		438
Operating lease liability, long-term	14,516		278

As of
Operating leases:

June 30, 2021

September 30, 2020
Operating right-of-use asset

$
458

$
737
Operating lease liability, current

333

430
Operating lease liability, long term

95

291

As of September 30, 2022, included in the table above is $13,839, $1,080 and $12,855 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, 2021 there were no aircraft leases embedded within a capacity purchase agreement.

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


	Three Months Ended September 30,				Nine Months Ended September 30,
Lease cost:	2022		2021		2022		2021
Short-term lease cost	$	116	$	43	$	213	$	121
Operating lease cost	341		112		751		343
Operating lease cost - Cost of revenue	398		—		648		—
Total	$	855	$	155	$	1,612	$	464

Operating lease costs related to aircraft leases that are embedded within a capacity purchase agreements are reported as part of Cost of revenue.

For the Three Months Ended June 30,

For the Nine Months Ended June 30,
Lease cost

2021

2020

2021

2020
Short-term lease cost

$
66

$
18

$
118

$
48
Operating lease cost

116

147

343

329
Total

$
182

$
165

$
461

$
377

Other information related to leases is presented below:


	September 30, 2022
Weighted-average discount rate – operating lease	8.40	%
Weighted-average remaining lease term – operating lease (in years)	7.7

Table of Contents

As of June 30,

As of September 30,

2021

2020

Weighted-average discount rate – operating lease

5.00
%
5.00
%
Weighted-average remaining lease term – operating lease (in months)

13

21

BLADE AIR MOBILITY, INC.

Notes to Unaudited Interim Consolidated Financial Statements

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

As of ~~June~~September 30, ~~2021,~~2022, the expected annual minimum lease payments of the Company’s operating lease liabilities ~~and other short-term leases~~ were as follows:

For the Years Ended September 30,

2021 (three months)

$
133
2022

270
2023

36
Total future minimum lease payments, undiscounted

439
Less: Imputed interest for leases in excess of one year

(11)
Present value of future minimum lease payments

$
428


For the Year Ended December 31,
Remainder of 2022	$	593
2023	4,535
2024	4,117
2025	2,136
2026	1,847
Thereafter	11,017
Total future minimum lease payments, undiscounted	24,245
Less: Imputed interest for leases in excess of one year	(7,102)
Present value of future minimum lease payments	$	17,143

~~Table of Contents~~

~~Blade Air Mobility, Inc. and Consolidated Subsidiaries~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

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

~~Note 7 – Note Payable~~

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

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

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

Note 86 – Stock-Based Compensation

~~Option Awards~~

On December 14, 2020, the Board of Directors granted an option for the purchase of 10,920 shares of the Company’s Class A common stock to an employee of the Company. The option, which was granted under the Company’s 2015 Equity Incentive Plan, had an exercise price of $10.01 per share and a term of 10 years. The option had a grant date fair value of $60, where 25% of the shares vest one year from the grant date, with the remaining 75% vest in successive equal monthly installments thereafter over 36 months.

~~Option Award Valuation Assumptions~~

~~The Company determined the fair value of stock options granted during the nine months ended June 30, 2021 based upon the assumptions as provided below.~~

Stock price

$
10.00

Exercise price

$
10.01

Dividend yield

0
%
Expected volatility

60
%
Risk-Free interest rate

0.63
%
Expected life (in years)

6.08

~~Stock Option Modification~~

Stock options granted under the 2015 Equity Incentive Plan vest over a period of time as previously determined by the Board of Directors, subject to the option holder’s continuous service through each applicable vesting date. Under the options agreements, consummation of the Merger would not automatically cause the vesting of options under the 2015 Equity Incentive Plan, but on December 14, 2020 the Company’s Board of Directors provided that the vesting of all outstanding options that were granted before December 14, 2020 under the 2015 Equity Incentive Plan that are held by current employees or other service providers would be accelerated upon the consummation of the Merger Agreement. Accordingly, stock options to purchase an aggregate of 2,684,026 shares of Class A Common Stock became vested immediately under this modification. Under ASC 718, the Company treated this event as a modification of these stock option awards. The Company determined that the increase in fair value of the stock options was immaterial, and as such, 0 additional cost was recognized.

~~Table of Contents~~

~~Blade Air Mobility, Inc. and Consolidated Subsidiaries~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

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

~~Note 8 – Stock-Based Compensation (Continued)~~

Stock Option Awards

Following is a summary of stock option activities for the nine months ended ~~June~~September 30, ~~2021:~~

Weighted


Weighted

Average

Weighted

Average

Remaining

Average

Grant Date

Life

Intrinsic

Options

Exercise Price

Fair Value

(years)

Value
Outstanding – October 1, 2020

9,859,674

$
0.19

$
0.20

6.8

$
0
Granted

10,920

10.01

5.49




Exercised

(66,123)

0.36

0.25




Forfeited

(114,645)

0.25

0.12




Outstanding – June 30, 2021

9,689,826

$
0.20

$
0.20

6.1

$
99,824
Exercisable as of June 30, 2021

9,683,001

$
0.19

$
0.20

6.1

$
99,818

2022:


	Options	Weighted Average Exercise Price		Weighted Average Grant Date Fair Value		Weighted Average Remaining Life (years)	Intrinsic Value
Outstanding – January 1, 2022	8,084,676	$	0.19	$	0.21	5.6	$	69,875
Granted	—	—		—
Exercised	(450,143)	0.18		0.22
Forfeited	—	—		—
Outstanding – September 30, 2022	7,634,533	$	0.19	$	0.21	4.8	$	29,335
Exercisable as of September 30, 2022	7,634,533	$	0.19	$	0.21	4.8	$	29,335

For the three months ended ~~June~~September 30, ~~2021~~2022 and ~~2020,~~2021, the Company recorded ~~$656 and $90~~$0 in stock option expense. For the nine months ended ~~June~~September 30, ~~2021~~2022 and ~~2020,~~2021, the Company recorded ~~$1,013~~$0 and ~~$268~~$765, respectively, in stock option expense. The fair value of stock options is amortized on a ~~straight line~~straight-line basis over the requisite service periods of the respective awards. As of ~~June~~September 30, ~~2021, $48~~2022, $0 of ~~stock-based compensation costs related to~~ stock options ~~remains~~remain subject to ~~amortization, which will be amortized over~~ amortization.

~~2.4 years.~~Table of Contents

BLADE AIR MOBILITY, INC.

Notes to Unaudited Interim Condensed Consolidated Financial Statements

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

Restricted Stock

~~On December 14, 2020,~~

During the three months ended September 30, 2022, the Company granted an aggregate of ~~739,537 shares~~150,118 of the ~~Company’s~~Company's restricted stock units to various employees, officers, directors, consultants, and service providers under the ~~2015 Equity Incentive Plan and 50,960 shares of the Company’s restricted stock to a director outside the 2015~~2021 Equity Incentive Plan. The ~~shares~~restricted stock units have various vesting dates, ranging from vesting on the grant date to as late as ~~one year~~four years from the date of grant.

Weighted

Average

Shares of Restricted

Grant Date

Stock

Fair Value
Non-vested – October 1, 2020

—

$
—
Granted

790,497

10.00
Vested

(87,360)

10.00
Non-vested – June 30, 2021

703,137

$
10.00


	Restricted Stock Units	Weighted Average Grant Date Fair Value
Non-vested – January 1, 2022	2,373,523	$	8.22
Granted	571,031	6.89
Vested	(518,957)	8.05
Forfeited	(72,580)	8.44
Non-vested – September 30, 2022	2,353,017	$	8.19

For the three months ended ~~June~~September 30, ~~2021~~2022 and ~~2020,~~2021, the Company recorded ~~$1,862~~$1,685 and $0$3,924 in employee and officers restricted stock compensation expense. For the nine months ended ~~June~~September 30, ~~2021~~2022 and ~~2020,~~2021, the Company recorded ~~$4,684~~$5,627 and $0$7,581 in employee and officers restricted stock compensation expense. As of ~~June~~September 30, ~~2021,~~2022, unamortized stock-based compensation costs related to restricted share arrangements was ~~$3,221~~$13,943 and will be recognized over a weighted average period of ~~0.5~~2.4 years.

~~Table of Contents~~

~~Blade Air Mobility, Inc. and Consolidated Subsidiaries~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

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

~~Note 8 – Stock-Based Compensation (Continued)~~

Stock-Based Compensation Expense

Stock-based compensation expense for stock options and restricted stock units in the unaudited interim condensed consolidated statements of operations is summarized as follows:

For the Three Months Ended June 30,

2021

2020
Software development

$
86

$
7
General and administrative

2,425

77
Selling and marketing

7

6
Total stock-based compensation expense

$
2,518

$
90

For the Nine Months Ended June 30,

2021

2020
Software development

$
174

$
19
General and administrative

5,516

231
Selling and marketing

7

18
Total stock-based compensation expense

$
5,697

$
268


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Software development	$	189	$	325	$	718	$	481
General and administrative	1,439		3,371		4,657		7,630
Selling and marketing	57		228		252		235
Total stock-based compensation expense	$	1,685	$	3,924	$	5,627	$	8,346

Note 97 – ~~Related Party Transactions~~

Income Taxes

The Company ~~contracts for certain air charter services with Underhill,~~has not recorded tax benefits on the loss before income taxes due to a ~~related party.~~full valuation allowance that offsets potential deferred tax assets resulting from net operating loss (“NOL”) carry forwards, reflecting the inability to demonstrate the realizability of such loss carry forwards.

Tax expenses recorded in the quarter ended September 30, 2022 are attributable to Blade France net profits.

As of September 30, 2022, the Company has a net deferred tax liability, due to what is referred to as a “naked credit.” The naked credit exists when a deferred tax liability can only be offset up to 80% by NOLs generated in tax years beginning in 2018 and beyond, as well as NOLs available after consideration of IRC Section 382 limitation. The remaining portion that cannot be used remains as a liability. In future years, if the deferred tax assets are determined by management to be “more likely than not” to be realized, the recognized tax benefits relating to the reversal of the valuation allowance as of September 30, 2022 will be recorded. The Company ~~paid Underhill approximately $1,100~~will continue to assess and ~~$184~~evaluate strategies that will enable the deferred tax asset, or portion thereof, to be utilized, and will reduce the valuation allowance appropriately as such time when it is determined that the “more likely than not” criteria is satisfied.

The Company recorded an income tax benefit of $3,643 for ~~each of~~ the three ~~months ended June 30, 2021~~ and ~~2020, and $2,039 and $1,142 for each of the~~ nine months ended ~~June~~September 30, 2021. The Company follows the provisions of the accounting guidance on accounting for income taxes which requires recognition of

Table of Contents

BLADE AIR MOBILITY, INC.

Notes to Unaudited Interim Condensed Consolidated Financial Statements

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

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.

Note 8 – Earnings Per Share

A reconciliation of net loss and common stock share amounts used in the computation of basic and diluted earnings per share is presented below.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Basic and dilutive loss per common share:
Net loss	$	(9,245)	$	(9,184)	$	(11,845)	$	(37,691)






Total weighted-average basic common shares outstanding	71,466,085		69,011,623		71,099,764		48,814,039





Net loss per common share:
Basic and dilutive loss per common share	$	(0.13)	$	(0.13)	$	(0.17)	$	(0.77)

The following table represents common stock equivalents that were excluded from the computation of diluted earnings per share for the three and nine months ended September 30, 2022 and 2021, and 2020, respectively, for air charter services. The rates charged by Underhill for these air charter services are comparable to those that could be obtained in an arm’s-length transaction with an unrelated third party. Through January 20, 2021, Melissa Tomkiel,because the ~~Company’s President and General Counsel, had a 20% interest in Underhill. On January 23, 2021, Ms. Tomkiel and Underhill entered into an agreement under which one half~~effect of ~~Ms. Tomkiel’s interest was immediately transferred back to Underhill and under which pursuant to the satisfaction of certain conditions by Underhill, Ms. Tomkiel’s interest~~their inclusion would be ~~fully transferred to Underhill. On April 8, 2021, those conditions were satisfied and Ms. Tomkiel’s remaining interest was transferred to Underhill.~~

anti-dilutive:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2022	2021	2022	2021
Warrants to purchase shares of common stock	14,166,644	14,166,666	14,166,644	14,166,666
Options to purchase shares of common stock	7,634,533	8,978,185	7,634,533	8,978,185
Restricted shares of common stock	2,353,017	2,137,132	2,353,017	2,137,132
Total potentially dilutive securities	24,154,194	25,281,983	24,154,194	25,281,983

Note 109 – Commitments and Contingencies

Capacity Purchase Agreements

Blade has contractual relationships with various aircraft operators to provide aircraft service. Under these Capacity Purchase Agreements (“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 ~~June~~September 30, ~~2021,~~2022, the Company has a remaining unfulfilled obligation for the years ~~ended September 30, 2021~~ending December 31, 2022, 2023, 2024, 2025, and ~~2022~~for each of the years ending December 31, 2026 through 2032 under agreements with various aircraft operators to purchase flights with an aggregate value of approximately $0$1,811, $11,437, $15,876, $14,748 and ~~$4,424,~~$7,248, respectively.

The above remaining unfulfilled obligation includes amounts within operating lease liability related to aircraft leases embedded within two of the capacity purchase agreements as discussed in Note 5 – Right-of-Use Asset and

Table of Contents

~~Blade Air Mobility, Inc. and Consolidated Subsidiaries~~

BLADE AIR MOBILITY, INC.

Notes to Unaudited Interim Condensed Consolidated Financial Statements

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

data and exchange rates)

~~Note 10 – Commitments~~

Operating Lease Liability. Blade has the right for immediate termination of certain agreements if a government authority enacts travel restrictions, this right is applicable to unfulfilled obligation for the years ending December 31, 2022, 2023, 2024 and ~~Contingencies (Continued)~~

2025 with an aggregate value of approximately $0, $4,189, $8,628 and $7,500, respectively. In addition, obligations amounting to $0, $3,925, $7,500 and $7,500 for the years ending December 31, 2022, 2023, 2024 and 2025, respectively, 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.

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 ~~June~~September 30, ~~2021,~~2022, 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 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.

On February 9, 2021, an individual complaint captioned, Digennaro v. Experience Investment Corp.,et al. (No. 020921-104) was filed in New York state court. The complaint names Experience Investment Corp.; its Chief Executive officers, Mr. Eric Affeldt; and its directors Mr. Martin J. Newburger, Mr. Brian C. Witherow, Mr. Rafael Pastor, Mr. Edward Philip, Experience Merger Sub, Inc. and Blade Urban Air Mobility, Inc. The complaint asserts claims for breach of fiduciary duty against Experience's officer and directors and aiding and abetting breach of fiduciary against the entities in connection with alleged material misstatements and omissions made in the Company's Form S-4, filed January 29, 2021. The complaint seeks, inter alia, injunctive relief enjoining or rescinding the Transaction, injunctive relief directing the filing of an amended registration statement, and damages. On May 18, 2021
, ~~this complaint was voluntarily dismissed.~~

On April 1, 2021, Shoreline Aviation, Inc. (SAI) filed an Amended Complaint in the United States District Court for the Eastern District of New York naming Cynthia L. Herbst, Sound Aircraft Flight Enterprises, ~~Inc.~~Inc (SAFE)., Ryan A. Pilla, Blade Urban Air Mobility, Inc., Robert Wiesenthal and Melissa Tomkiel as defendants. The case is captioned Shoreline Aviation, Inc. v. Sound Aircraft Flight Enterprises, Inc. et al., No. 2:20-cv-02161-JMA-SIL (E.D.N.Y.). The complaint ~~alleges,~~alleged, among other things, claims of misappropriation, violation of the Defend Trade Secrets Act, unfair competition, tortious interference with business relations, constructive trust, tortious interference with contract, and aiding and abetting breach of fiduciary duty against Blade, Robert Wiesenthal and Melissa Tomkiel (together the “Blade Defendants”). ~~Claims against~~On March 16, 2022, SAI and the Blade Defendants ~~relate to~~filed a Joint Stipulation and Order of Dismissal with Prejudice in the ~~May 2018 Asset Purchase Agreement between~~Court, in which, SAI and the Blade Defendants stipulated and ~~Sound Aircraft Flight Enterprises, Inc. (“SAFE”) and Cindy Herbst,~~agreed that pursuant to ~~which Blade purchased SAFE’s complete customer list, including names, contact information and customer flight histories. The complaint demands compensatory and consequential damages in excess~~Federal Rule of ~~$13 million relating to the~~Civil Procedure 41(a)(1)(A)(ii), all of SAI’s claims against the Blade Defendants ~~as well as punitive damages, certain equitable remedies, interest~~were dismissed with prejudice. The Blade Defendants expressly denied any wrongdoing and ~~attorneys’ fees and costs. The Company believes the outcome would~~did not ~~result in~~admit any liability.

Trinity Air Medical, LLC (“Trinity”), a ~~material contingency.~~

Aswholly owned subsidiary of ~~June 30, 2021, the Company~~Blade Urban Air Mobility, Inc., has ~~not accrued~~received a ~~reserve for any contingencies~~federal grand jury subpoena seeking records related to the ~~above legal proceedings.~~

provision of transplant transportation services. Trinity is cooperating with the subpoena.

Note ~~11 -~~ 10 – 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, ~~2025~~2026 or earlier upon redemption or liquidation.

The Company will not be obligated to deliver any shares of ~~Class A~~ common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the shares of ~~Class A~~ common stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration. No warrant will be exercisable, and the Company will not be obligated to issue any shares of ~~Class A~~ common stock upon exercise of a warrant unless ~~Class A~~ common stock, issuable upon such warrant exercise, has been ~~registered,~~registered, qualified, or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants.

~~Table of Contents~~

~~Blade Air Mobility, Inc. and Consolidated Subsidiaries~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

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

~~Note 11 - Warrant Liabilities (Continued)~~

On June ~~7, 2021,~~10, 2022, the ~~Company's~~Company’s post-effective amendment on Form S-3 to its registration statement on Form S-1 registering the shares issuable upon exercise of the warrants was declared effective by the SEC.

Redemptions of Warrants for Cash— Once the warrants become exercisable, 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 Class A 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.~~

•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

Table of Contents

BLADE AIR MOBILITY, INC.

Notes to Unaudited Interim Condensed Consolidated Financial Statements

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

•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.

If and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.

Redemption of Warrants for Shares of ~~Class A~~ Common Stock-— Commencing ninety days after the warrants become exercisable, the Company may redeem the outstanding warrants:

●

~~in whole and not in part;~~

●

~~at a price equal to a number of shares of Class A common stock to be determined, based on the redemption date and the fair market value of the Company’s Class A common stock;~~

●

~~upon a minimum of 30 days’ prior written notice of redemption;~~

●

if, and only if, the last reported sale price of the Company’s Class A 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;

●

if, and only if, the Private Placement Warrants are also concurrently exchanged at the same price (equal to a number of shares of the Company’s Class A common stock) as the Company’s outstanding Public Warrants, as described above; and

●

if, and only if, there is an effective registration statement covering the shares of Class A 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.~~

•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;

•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,”~~basis”, as described in the warrant agreement. The exercise price and number of shares of ~~Class A~~ common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger, or consolidation. However, except as described below, the warrants will not be adjusted for issuance of ~~Class A~~ common stock at a price below its exercise price. Additionally, in no event will the Company be required to ~~net cash~~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. 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.

~~Table of Contents~~

~~Blade Air Mobility, Inc. and Consolidated Subsidiaries~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

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

Note ~~12 -~~11 – 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.~~

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.

Table of Contents

BLADE AIR MOBILITY, INC.

Notes to Unaudited Interim Condensed Consolidated Financial Statements

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

The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis ~~at June~~as of September 30, 2022 and December 31, 2021, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value. ~~The Company had no warrant liabilities outstanding as of September 30, 2020.~~





	Level	September 30, 2022		December 31, 2021
Warrant liabilities - Public Warrants	1	$	5,867	$	20,258
Warrant liabilities - Private Warrants	2	3,200		11,050
Fair value of aggregate warrant liabilities		$	9,067	$	31,308

Level

June 30, 2021
Warrant liabilities - Public Warrants

1

$
25,105
Warrant liabilities - Private Warrants

2

13,694
Fair value of aggregate warrant liabilities as of June 30, 2021

$
38,799

The Warrants were accounted for as liabilities in accordance with ASC 815-40 and are presented within ~~warrant liabilities~~“Warrant liability” on the Company’s unaudited interim condensed consolidated balance sheets. The warrant liabilities are measured at fair value upon assumption and on a recurring basis, with changes in fair value presented within ~~change~~“Change in fair value of warrant ~~liabilities~~liabilities” in the unaudited interim condensed 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. ~~Prior to the consummation of the Merger with EIC and recapitalization of Blade, EIC had previously valued the Private Warrants using Level 3 of the fair value hierarchy.~~ At the Closing Date and ~~at June 30, 2021,~~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.

~~Table of Contents~~

~~Blade Air Mobility, Inc. and Consolidated Subsidiaries~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

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

~~Note 12 - Fair Value Measurements (Continued)~~

Subsequent measurement

The following table presents the changes in fair value of the warrant liabilities:

Private


Public

Placement

Total Warrant

Warrants

Warrants

Liability
Fair value as of September 30, 2020

$
0

$
0

$
0

Assumption of warrants in recapitalization

15,456

8,430

23,886
Change in fair value of warrant liabilities

9,649

5,264

14,913

Fair value as of June 30, 2021

$
25,105

$
13,694

$
38,799


	Public Warrants		Private Placement Warrants		Total Warrant Liability
Fair value as of January 1, 2022	$	20,258	$	11,050	$	31,308

Change in fair value of warrant liabilities	(14,391)		(7,850)		(22,241)
Fair value as of September 30, 2022	$	5,867	$	3,200	$	9,067

Note 1312 – COVID-19 Risks and Uncertainties

COVID-19, which was declared a global health pandemic by the World Health Organization in March 2020, has driven the implementation and continuation of significant government-imposed measures to prevent or reduce its spread, including travel restrictions, “shelter in place” orders, and business closures. ~~Consequently,~~At the ~~Company has~~onset of the pandemic, we experienced a substantial decline in the demand for ~~its~~our Short Distance passenger services due to travel restrictions that significantly ~~reducing~~reduced the number of commercial airline passengers and office closures that required many people to work from ~~home.~~ home, lowering commuter demand. However, we continued to see increasing demand for our MediMobility Organ Transport and Jet and Other services throughout the pandemic.

As a result of ~~this~~the decline ~~the Company~~in Short Distance demand, we paused ~~its~~our New York airport service from March 2020 through June ~~2021~~2021. Additionally, we implemented new measures to focus on the personal safety of our air and ground passengers during the pandemic, which did not materially increase our costs, and significantly reduced the number of ~~its Northeast commuter flights. In addition,~~Short Distance flights we offered in the ~~Company did not renew certain agreements with its operators for some charter services that were~~typically high-demand summer season during 2020.

We began to see a recovery in ~~effect prior to COVID- 19. Despite the decline~~Short Distance demand in ~~its core business, the Company saw an increase in demand for its MediMobility organ transport and jet business during the pandemic.~~

While the ultimate impact of the current COVID-19 pandemic is highly uncertain and subject to change, the Company was able to resume its New York by-the-seat airport flights on June 1, 2021, beginning with service between Manhattan and JFK Airport. Additionally, the Company has seen recovering demand on its other short-distance routes.Summer 2021. However, adverse developments related to the pandemic, such as ~~delays in vaccine distribution and administration,~~ the emergence of new viral strains that are not responsive to the vaccine, a reduction in business travel in favor of virtual meetings, or a continued lack of demand for air travel from the public, could slow the recovery of ~~the Company’s short-distance~~our Short Distance products and postpone ~~the Company’s~~our ability to ~~resume paused services or~~ launch planned route expansions.

Note ~~14 -~~13 – Subsequent Events

~~The~~

In November 2022, the Company ~~has completed~~granted an ~~evaluation~~aggregate of ~~all subsequent events through~~4,627,161 of the ~~filing of this Quarterly Report on Form 10-Q~~Company's restricted stock units to ~~ensure that these condensed consolidated financial statements include appropriate disclosure of events both recognized in~~various employees and officers under the condensed consolidated financial statements and events which occurred but were not recognized in the condensed consolidated financial statements. The Company has concluded that no subsequent event has occurred that requires disclosure.

2021 Omnibus Incentive Plan. These restricted stock units will vest over a four year

Table of Contents

BLADE AIR MOBILITY, INC.

Notes to Unaudited Interim Condensed Consolidated Financial Statements

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

period with the latest vesting on January 1, 2027. The weighted average grant date fair value of these restricted stock units is $4.62 per share.

Table of Contents

Item 2. 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 our unaudited interim condensed consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements included in ~~our~~the Company’s Annual Report on Form ~~S-1 filed with~~10-K for the ~~SEC~~year ended September 30, 2021.

On February 1, 2022, the Board of Directors approved a change of the Company's fiscal year-end from September 30 to December 31. The Company's 2022 fiscal year began on ~~May 28, 2021.~~

January 1, 2022 and will end on December 31, 2022.

In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs.

~~Unless otherwise stated, all dollar amounts presented below are stated in thousands, except for per share amounts.~~

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes statements that express our opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements.” 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 and the markets in which we operate. Such forward-looking statements are based on available current market material and management’s expectations, beliefs and forecasts concerning future events impacting us. Factors that may impact such forward-looking statements include: ~~loss~~the duration and severity of ~~our customers; decreases in our existing market share; effects~~the COVID-19 pandemic, failure of ~~competition; effects of pricing pressure;~~ the ~~inability of our customers to pay~~markets for our services; the loss of our existing relationships with operators; the loss of key members of our management team; changes in our regulatory environment, including aviation law and FAA regulations; the inabilityofferings to ~~implement information systems~~grow as expected, or expand our workforce; changes in our industry; heightened enforcement activity by government agencies; interruptions or security breaches of our information technology systems; the expansion of privacy and security laws;at all; our ability to ~~expand our infrastructure network; our ability to identify, complete~~attract and successfully integrate future acquisitions; our ability to remediate any material weaknesses or maintain effective internal controls over financial reporting; the ability to continue to meet applicable listing standards; costs related to our business combination; the possibility that we may be adversely affected by other political, economic, business and/or competitive factors; the impact of COVID-19retain customers and ~~its related effects on our results of operations, financial performance or other financial metrics;~~increase existing customer utilization rates; the inability or unavailability to use or take advantage of the shift, or lack thereof, to EVA ~~technology; pending~~technology or the failure of such technology to deliver the expected results and cost savings; our ability to successfully enter new markets and launch new offerings; accidents or safety-related events involving small aircraft that create adverse publicity; the effects of competition; effects of pricing pressures; injuries to our reputation and brand; challenges to our ability to provide quality customer support at scale; events that cause decreases in our daily aircraft usage rates and flier utilization rates; shifts in customer preferences, discretionary spending and the ability of our customers to pay for our services; disruption of operations at the heliports and airports where our operations are concentrated; risks associated climate change, including potential ~~litigation;~~increased impacts of severe weather and regulatory activity; the availability of aircraft fuel; technology system failures, defects, errors, or vulnerabilities and cyber-based attacks; our ability to receive favorable placements in mobile application marketplaces and effectively operate our mobile operating systems and applications; our ability to protect our intellectual property rights; risks related to our use of open source software; our ability to maintain and expand our facility and infrastructure network; our ability to obtain additional funding on acceptable terms, or at all; our ability to successfully navigate international expansion; our ability to identify, complete and successfully integrate acquisitions; our ability to manage future growth effectively; our ability or that of our third-party operators to obtain sufficient insurance at reasonable cost, or at all; the loss of key members of our management team; disruptions in the operations of our third-party operators, their failure to perform adequately, or their misuse of Blade-branded aircraft; the loss of our existing relationships with third-party operators or our inability to attract and retain qualified new operators to meet demand; disruptions or interference in our use of third-party web services; changes in our regulatory environment, including aviation law and FAA regulations; regulatory obstacles that may block our ability to offer our services in certain jurisdictions on a profitable basis, or at all; our ability to comply with privacy, data protection, consumer protections and environmental laws and regulations and changes to such laws and their interpretations; our ability to remediate any material weaknesses or maintain effective a system of disclosure controls and internal control over financial reporting; changes in the fair value of our warrants; and other factors beyond our control. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, the risks set forth in ~~Part II, Item 1A,~~ “Risk Factors”, included in ~~this Quarterly~~the Annual Report on Form ~~10-Q~~10-K for the year ended September 30, 2021, and in our other filings with the Securities and Exchange Commission (the ~~"SEC")~~SEC). WeExcept as required by law, we do not assume any obligation to update any forward-looking ~~statements.~~

statements, whether as a result of new information, changes in expectations, future events or otherwise.

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Merger and Organization

On May 7, 2021 (the “Closing Date”), privately held Blade Urban Air Mobility, Inc., a Delaware corporationformed on December 22, 2014, (“Old Blade”) consummated the previously announced transactions contemplated by the Agreement and Plan of Merger (the “Merger Agreement”), dated December 14, 2020, by and among Experience Investment Corp. (“EIC”), Experience Merger Sub, Inc., a wholly owned subsidiary of EIC (“Merger Sub”), and Old Blade. The Merger Agreement provided for the acquisition of Old Blade by EIC pursuant to the merger of Merger Sub with and into EIC (the “Merger”), with Old Blade continuing as the surviving entity and a ~~wholly owned~~wholly-owned subsidiary of EIC. On the Closing Date, and in connection with the closing of the business combination (the “Closing”), EIC changed its name to Blade Air Mobility, Inc. Unless the context indicates otherwise, the discussion of the Company and its financial condition and results of operations is with respect to Blade following the Closing Date and with respect to Old Blade prior to the Closing Date.

See Note 3 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2021 for additional information.

Acquisitions

On September 15, 2021, the Company completed its acquisition of 100% of Trinity Air Medical, Inc. (“Trinity”) shares. Trinity is an asset-light, multi-modal organ transport business working with transplant centers and organ procurement organizations in 16 states.

On November 30, 2021, the Company through its wholly-owned subsidiaries Blade Urban Air Mobility, Inc. and Blade Urban Air Mobility (Canada) Inc. (“Blade Canada”) entered into an agreement with Helijet International, Inc. ("Helijet"), a British Columbia-based aviation solutions company and with Pacific Heliport Services Ltd. (“PHS”), a wholly-owned subsidiary of Helijet. Pursuant to this agreement, Blade Canada has acquired exclusive rights to offer scheduled helicopter flights operated by Helijet and to utilize passenger terminals at heliports controlled by PHS. The agreement has an initial term of five years and will be automatically renewed for successive two-year periods. This transaction gave Blade access into the Canadian market and it launched Blade Canada in December 2021.

Acquisition of Blade Europe

We hereafter refer to the three European legal entities (Blade Europe, Blade France and Blade Monaco) collectively as “Blade Europe”.

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agreement’s initial term ends on December 31, 2032 and it will thereafter automatically renew for successive three year periods.

Blade paid an aggregate cash purchase price for the Shares of Héli Tickets France and Helicopter Monaco of €47.8 million ($48.1 million). Acquisition costs of $2.8 million were expensed as incurred and are included in general and administrative expenses in the unaudited interim condensed consolidated statement of operations for the period ended September 30, 2022.

The results of Blade Europe for the period from the September 1, 2022 (“acquisition date”) to September 30, 2022 are included in the Short Distance line of business.

Business Overview

Blade is a technology-powered, global air mobility ~~platform. We provide consumers~~platform committed to reducing travel friction by providing cost-effective air transportation alternatives to some of the most congested ground routes in the U.S. and abroad. Today, we predominantly use helicopters and amphibious aircraft for our passenger routes and are also one of the largest air medical transporters of human organs for transplant in the world. Our asset-light model, coupled with ~~a cost-effective and time-efficient alternative~~our exclusive passenger terminal infrastructure, is designed to ground transportation for congested routes, predominantly within the Northeast United States, through our helicopter, amphibious seaplane and fixed-wing transportation services. Our platform utilizes a technology-powered, asset-light business model, which was developed to be scalable and profitable using conventional helicopters today while enablingfacilitate a seamless transition to Electric Vertical Aircraft (“EVA” or “eVTOL”), ~~once they are certified for~~enabling lower cost air mobility to the public ~~use.~~that is both quiet and emission-free. Blade currently operates in three key lines of business:

●

~~Short Distance~~ — Consisting primarily of flights: (i) between 60 and 100 miles in distance, largely servicing commuters for prices between $595 and $795 per seat and (ii) between all New York area airports and dedicated Blade terminals in Manhattan’s heliports for $195 per seat (or $95 per seat with the purchase of an annual Airport Pass for $795).

●

~~MediMobility Organ Transport and Jet~~ ~~— Consisting of transportation of human organs for transplant, non-medical jet charter and limited, by-the-seat, jet flights between New York and both Miami and Aspen.~~

●

~~Other~~ ~~— Consists principally of revenues from brand partners for exposure to Blade fliers and certain ground transportation services.~~

•Short Distance – Consisting primarily of helicopter and amphibious seaplane flights in the United States, Canada and France between 10 and 100 miles in distance. Flights are available for purchase both by-the-seat and on a full aircraft charter basis

•MediMobility Organ Transport – Consisting of transportation of human organs for transplant.

~~Blade’s first international joint venture launched helicopter services in late 2019 in India, flying between Mumbai, Pune and Shirdi.~~

Our Business Model

Blade leverages an asset-light business model: we neither own nor operate aircraft. 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 ~~schedule~~maintain the relationship with the client from booking through flight arrival. For flights offered for sale by-the-seat, Blade schedules flights based on demand analysis and ~~maintain the relationship with the flier from booking through flight arrival. Blade~~ takes the economic risk of aggregating fliers to optimize flight profitability, providing predictable margins for our operators.

We typically ~~pre-negotiate~~prenegotiate fixed hourly rates and flight times with our aircraft operators, paying only for flights actually flown, creating a predictable and flexible cost structure. Our costs are variable based on how many flights we offer, so if demand recedes, we are able to adjust our supply requirements accordingly by using fewer operators and reducing our by-the-seat flights. Depending on the maturity of the routes an operator is servicing, Blade will sometimes provide ~~an annual~~ guaranteed ~~number of~~ flight ~~hours~~commitments to ~~the~~our aircraft operators.

Blade’s proprietary “customer-to-cockpit” technology stack enables us to manage fliers and organ transports across numerous simultaneous flights, coordinating multiple operators flying between terminals across our route network. We believe that this technology, which provides us with enhanced logistics capabilities and information from our fliers signaling their interest in new routes, 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 flier volume, new routes, new operators, broader flight schedules, 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.

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Our asset-light business model was developed to be scalable and profitable using conventional ~~helicopters~~aircraft today while enabling a seamless transition to EVA, once they are certified for public use. We intend to leverage the 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~~”vertiports”) in our existing and new markets.

In the interim, we purchase offsets to contract the carbon emissions generated by our urban air mobility services.

Key Business Metric

We collect, measure, and evaluate operating and financial data of our business to evaluate our performance, measure our progress, and make strategic decisions. The following table reflects the key operating metric we use to evaluate our business:

Three Months Ended

Nine Months Ended

June 30,

June 30,


2021

2020

2021

2020
Seats flown – all flights

6,813

922

12,695

13,200


	Three Months Ended September 30,		Nine Months Ended September 30,
	2022	2021	2022	2021
Seats flown – all passenger flights(1)	28,440	13,897	75,175	22,123

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(1) Prior period amounts have been updated to conform to current period presentation. The 2022 figures do not include seats flown by Blade Europe from the acquisition date through September 30, 2022.

We define “Seats flown — all passenger flights” as the total number of seats ~~occupied~~purchased by paying passengers on all flights, whether sold by-the-seat or within a charter ~~arrangement.~~arrangement, and excluding organ transportation flights regardless of whether the organ is accompanied by a medical team. Our long-term consumer-facing strategy is primarily focused on growth in by-the-seat products, and we believe that “Seats flown — all passenger flights” 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; growth in these areas is captured by “Seats flown — all passenger flights,” but ~~not necessarily in~~has less impact on revenue, which is heavily influenced by our MediMobility ~~organ transport~~Organ Transport and Jet and Other product ~~line~~lines where we typically fly fewer or sometimes no passengers over long distances at a high price. We believe the “Seats flown — all passenger flights” metric is useful to investors in understanding the overall scale of our business and trends in the number of passengers paying to use our service.

Recent Developments — Impact of COVID-19

COVID-19, which was declared a global health pandemic by the World Health Organization in March 2020, has driven the implementation and continuation of significant government-imposed measures to prevent or reduce its spread, including travel restrictions, “shelter in place” orders, and business closures. WeAt the onset of the pandemic, we experienced a substantial decline in the demand for ~~some of~~ our Short Distance passenger services due to travel restrictions that significantly reduced the number of commercial airline passengers and office closures that required many people to work from home, lowering commuter demand.

However, we continued to see increasing demand for our MediMobility Organ Transport and Jet and Other services throughout the pandemic.

As a result of ~~this~~the decline in Short Distance demand, we paused our New York airport service from March 2020 through June 2021. Additionally, we significantly reduced the number of Northeast commuter flights we offered in the typically high-demand summer season during 2020, however, we have begun to see a recovery in Northeast commuter demand in summer 2021. Despite the reduction in volume, our cost of revenue on a per flight basis for both 2020 and 2021 remained generally consistent with 2019 for our by-the-seat routes. In addition, we did not renew agreements with certain of our operators for charter services, although we continue to do business with some of them. Despite the decline in our Short distance business, we saw an increase in demand for our MediMobility organ transport and jet services during the pandemic. We also launched BLADE Essential Ground Connect, our ground transportation service, during the pandemic and we implemented new measures to focus on the personal safety of our air and ground ~~passengers.~~

~~On April 8, 2020,~~passengers during the pandemic, which did not materially increase our costs, and significantly reduced the number of Short Distance flights we ~~received a loan~~offered in the ~~principal amount of approximately $1.2 million through the Paycheck Protection Program under the CARES Act, which we used~~typically high-demand summer season during 2020.

We began to ~~help sustain our employee payroll costs and rent. On May 7, 2021, we repaid the PPP Loan~~see a recovery in ~~full.~~

While the ultimate impact of the current COVID-19 pandemic is highly uncertain and subject to change, we were able to resume our New York by-the-seat airport flights on June 1, 2021, beginning with service between Manhattan and JFK Airport. Additionally, we have seen recoveringShort Distance demand ~~on our other short-distance routes.~~in Summer 2021. However, adverse developments related to the pandemic, such as ~~delays in vaccine distribution and administration,~~ the emergence of new viral strains that are not responsive to the vaccine, a reduction in business travel in favor of virtual meetings, or a continued lack of demand for air travel from the public, could slow the recovery of our ~~short-distance~~Short Distance products and postpone our ability to ~~resume paused services or~~ launch planned route expansions. For example, the emergence of the Omicron variant resulted in a negative impact to our Short Distances services during the quarter ending March 31, 2022, while our MediMobility Organ Transport and Jet and Other businesses remained unaffected. This impact of the Omnicron variant on Short Distance services began to dissipate in the quarter ending June 30, 2022. In the quarter ending September 30, 2022 our U.S. Short Distance revenue surpassed pre-pandemic revenue levels, however, Canadian Short Distance revenue still lags pre-pandemic levels, driven primarily by lower business travel activity in our core Vancouver market.

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Factors Affecting our Performance

Ability to attract and retain fliers

in our Short Distance business

Our success depends in part on our ability to cost-effectively attract new fliers, retain existing fliers and increase utilization of our services by current fliers. We plan to continue making significant investments and implementing 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. Moreover, 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.

Ability to attract and retain customers in our MediMobility Organ Transport and Jet and Other businesses

~~Table~~Our MediMobility Organ Transport business primarily serves transplant centers and Organ Procurement Organizations (OPOs and, together, MediMobility Customers). Transportation for the hearts, lungs and livers that make up the vast majority of ~~Contents~~

this business 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 MediMobility Customers evaluate our performance. We utilize the same fixed wing aircraft and aircraft operators for our retail jet charter customers, who are also primarily concerned with availability and pricing, but typically book with much more advance notice.

Historically, the combination of Blade's retail jet charter and MediMobility Organ Transport demand, has been enough to incentivize operators to provide dedicated jet aircraft and crews for our MediMobility Organ Transport and Jet and Other product lines. However, there is no guarantee that we will continue to be able to secure dedicated aircraft at favorable rates, particularly given recent significant increases in demand for private jet aircraft in the United States. Recent increased demand for private jets has led to increased charter costs and more limited availability in the spot jet charter market, but has not limited Blade's ability to maintain or increase our access to dedicated jet aircraft at fixed prices.

Impact of inflation to our business

Blade generally pays a fixed hourly rate to its third-party operators, based on flight hours flown. These rates are susceptible to inflation and are typically renegotiated on a yearly basis, with the exception of certain aircraft utilized primarily for organ transportation, which can be on two to three year contracts. Some contracts with operators allow for pass-through of fuel price increases above a set threshold. Blade has historically passed through cost inflation to customers and most contracts with organ transportation clients automatically pass through any fuel surcharges, but there is no guarantee this will continue in the future.

Expansion into New Geographic Markets

Our consumer-facing growth plan is focused on dense urban areas, primarily those with existing air transportation infrastructure ~~in the Northeast and on the West Coast,~~ that are facing increasing ground congestion. In these areas, Blade’s 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. 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. ~~In addition to these domestic target markets, we will continue to explore international markets through joint ventures, as in India.~~ The number of potential fliers using our urban air mobility services in any ~~of these markets~~market cannot be predicted with any degree of certainty, and we cannot ~~assure you~~provide assurance that we will be able to operate in a profitable manner in any of our current or targeted future markets.

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.

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Development, approval and acceptance of EVA for passenger travel

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. However, manufacturers, individual operators that will purchase EVA, and pilots must receive requisite approvals from federal transportation authorities before EVA can fly passengers. No EVA aircraft are currently certified by the FAA for commercial operations in the United States, and 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. We believe our existing ~~short-distance~~short distance routes are compatible with EVA, which are initially expected ~~initially~~ to have a limited range, and our existing terminal space will accommodate EVA. 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

Historically, we experienced significant seasonality in our Short Distance businesses 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 ~~first~~quarters ended March 31 (Q1) and ~~second fiscal quarters.~~December 31 (Q4). In calendar year 2020, we experienced less seasonality as a result of the COVID-19 pandemic and related restrictions, which altered typical travel patterns. In 2021, we ~~have seen~~saw a recovery in demand for summer travel, resulting in a return to more typical seasonality. Thus far in 2022, we have seen a continued recovery in demand trends more in line with typical seasonality, however we did experience a minimal impact from the COVID-19 Omicron variant during the first quarter. Blade’s Short Distance expansion strategy is focused on routes with significantly less seasonality, such as intercity transfers, airport, and year-round commuter routes. ~~Thus, we expect~~

Historically, MediMobility Organ Transport demand has not been seasonal.

Jet and Other revenue have historically been stronger in the first and fourth quarter (ended on March 31 and December 31, respectively) given that ~~seasonality in revenue will decrease as our business grows~~the Company’s by-the-seat jet service has operated only between November and ~~our revenue mix shifts to these new year-round routes.~~

April.

~~Table~~Key Components of ~~Contents~~

~~Components of~~the Company’s Results of Operations

Revenue

For Short Distance revenue, seats or monthly or annual flight passes are typically purchased using the Blade ~~generates revenue through the sale of air travel services. Our fliers primarily purchase~~App and ~~manage reservations using our self-service mobile and web applications, but some choose to call, email or text our dedicated team of Flier Relations professionals. Fliers pay~~paid for principally via credit card transactions, wire, check, customer ~~credits~~credit, and gift cards, ~~and generally we collect~~with payments principally collected by the Company in advance of ~~performing~~the performance of related services. 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 ~~services. We also collect fees from add-ons, such~~service in accordance with the client's payment terms. The revenue is recognized as ~~trip insurance~~the service is completed.

Jet products are typically purchased through our Flier Relations associates and ~~ground transportation services,~~our app and ~~changes to non-refundable seats sold. Our MediMobility organ transport customers receive terms~~are paid for principally via checks, wires and ~~make~~credit card. Jet payments ~~to us after we perform~~are typically collected at the time of booking before the performance of the related service. ~~Most of our accounts receivable consist of amounts due from MediMobility customers. Additionally, our joint venture agreement for operations in India entitles us to receive quarterly royalty payments.~~

The revenue is recognized as the service is completed.

Cost of Revenue

Cost of revenue consists ~~principally~~ of flight costs paid to operators of aircraft and cars, landing ~~fees.~~

fees and internal costs incurred in generating ground transportation revenue using the Company's owned cars.

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Software Development

~~Costs incurred for the~~

Software development expenses consist primarily of ~~the Company’s internal use software~~staff costs and stock-based compensation costs. Software development costs are expensed as incurred.

General and Administrative

General and administrative expenses principally include ~~principally~~ personnel costs, stock-based compensation, facility fees, credit card processing fees, and professional fees. We expect that general and administrative expenses will increase for the foreseeable future as we expand our service offerings to additional cities and increase flight volumes on existing routes. We expect to incur additional expenses as a result of operating as a public company, including expenses related to compliance with reporting obligations under the rules and regulations of the SEC, rules and regulations applicable to companies listed on a national securities exchange, and higher expenses for director and officer insurance, investor relations, and professional services.

Selling and Marketing

Selling and marketing expenses consist primarily of advertising costs, staff salaries and stock-based compensation, marketing expenses, and promotion costs. We expect that selling and marketing expenses will increase for the foreseeable future as ~~it represents~~they represent a key component of our initiatives to expand into new markets. 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.

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Results of Operations

~~Comparison of the Three Months Ended June 30, 2021 and 2020~~

The following table presents our unaudited interim condensed consolidated statements of operations for the periods indicated:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in thousands)
Revenue	$	45,722	$	20,316	$	107,985	$	42,540

Operating expenses
Cost of revenue(1)	36,456		15,855		90,685		33,628
Software development(1)	2,026		844		3,923		1,456
General and administrative(1)	15,812		12,115		41,934		26,748
Selling and marketing(1)	1,856		1,231		5,294		2,433
Total operating expenses	56,150		30,045		141,836		64,265

Loss from operations	(10,428)		(9,729)		(33,851)		(21,725)

Other non-operating income (expense)
Change in fair value of warrant liabilities	425		(3,418)		22,241		(18,331)
Realized loss from sale of short-term investments	(359)		—		(2,071)		—
Recapitalization costs attributable to warrant liabilities	—		11		—		(1,731)
Interest income, net	1,173		309		1,892		453
Total other non-operating income (expense)	1,239		(3,098)		22,062		(19,609)

Loss before income taxes	(9,189)		(12,827)		(11,789)		(41,334)

Income tax expense (benefit)	56		(3,643)		56		(3,643)

Net loss	$	(9,245)	$	(9,184)	$	(11,845)	$	(37,691)

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Three Months Ended June 30,

2021

2020


$

% of Revenue

$

% of Revenue
Revenue

12,951

100

3,438

100

Operating expenses








Cost of revenue

9,910

77

2,804

82
Software development

213

2

220

6
General and administrative

9,809

76

1,561

45
Selling and marketing

790

6

329

10
Total operating expenses

20,722

161

4,914

143

Loss from operations

(7,771)



(1,476)



Other non-operating (expense) income








Change in fair value of warrant liabilities

(14,913)



—


Recapitalization costs attributable to warrant liabilities

(1,742)

—

Interest income,net

140



151


Total other non-operating (expense) income

(16,515)



151



Net loss

(24,286)



(1,325)


Weighted average shares outstanding, basic and diluted

51,569,634



25,210,933


Net loss per share, basic and diluted

(0.47)



(0.05)

(1) Prior period amounts have been updated to conform to current period presentation.

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Comparison of the Three Months Ended September 30, 2022 and 2021

Revenue


	Three Months Ended September 30,
	2022		2021		% Change
	(in thousands, except percentages)
Revenue	$	45,722	$	20,316	125	%

Disaggregated revenue by product line was as follows:


	Three Months Ended September 30,
	2022		2021
	(in thousands)
Product Line(1):
Short Distance	$	20,402	$	13,403
MediMobility Organ Transport	20,219		2,245
Jet and Other	5,101		4,668
Total Revenue	$	45,722	$	20,316

(1) Prior period amounts have been updated to conform to current period presentation.

For the Three Months Ended

June 30,
Product Line

2021

2020
Short distance

$
5,721

$
629
MediMobility organ transport and jet

6,500

2,636
Other

730

173
Total Revenue

$
12,951

$
3,438

For the three months ended ~~June~~September 30, ~~2021~~2022 and ~~2020,~~2021, revenue increased by ~~$9.6~~$25.4 million or ~~277%~~125%, from ~~$3.4~~$20.3 million in ~~2020~~2021 to ~~$13.0~~$45.7 million in ~~2021. The~~2022.

Short Distance revenue increased by $7.0 million in 2022, an increase of 52%, from $13.4 million in ~~revenue~~2021 to $20.4 million in 2022. Growth in Short Distance was driven by price increases ~~across all product lines as consumer demand began to recover following~~implemented in the ~~relaxation~~United States during 2022, the acquisition of ~~Covid lockdowns.~~

~~Short distance aviation services~~Blade Europe (which contributed one month of activity), the launch of Blade Canada in December 2021, and volume growth in our by-the-seat airport transfer products.

MediMobility Organ Transport revenue increased by ~~$5.1~~$18.0 million in 2022, an increase of 801% from $2.2 million in 2021 ~~an increase of 809%.~~to $20.2 million in 2022. Growth in ~~Short distance was driven by a recovery in demand for the Company's commuter products following the relaxation of Covid lockdowns.~~

MediMobility organ transport and jet increased by $3.9 million in 2021, an increase of 147%. Our MediMobility and jet charter businesses were not adversely impacted by the pandemic and continued to show strong growth. In MediMobility, growth was driven by our successful effort to add additional hospital customers. In jet charter, growthOrgan Transport was driven by the ~~successful~~ acquisition of ~~additional fliers~~Trinity completed in mid-September 2021, the addition of new hospital clients and growth within existing clients, both in terms of trip volume and average price per trip as hospitals accepted more ~~frequent trips from fliers who preferred to avoid commercial airline~~organs for transplant involving longer travel ~~during the pandemic.~~

distances.

~~Table of Contents~~

Jet and Other revenue increased by $0.4 million in 2022, an increase of 9%, from ~~$0.2~~$4.7 million in 2021 to ~~$0.7 million~~$5.1 million. Growth was driven ~~primarily~~ by ~~revenue~~an increase in the average price per jet charter trip, partially offset by lower revenues from brand partners.

Cost of Revenue


	Three Months Ended September 30,
	2022			2021			% Change
	(in thousands, except percentages)
Cost of revenue(1)	$	36,456		$	15,855		130	%
Percentage of revenue	80		%	78		%

__________

(1) Prior period amounts have been updated to conform to current period presentation.

For the three months ended ~~June~~September 30, ~~2021~~2022 and ~~2020,~~2021, cost of revenue increased by ~~$7.1~~$20.6 million, or ~~253%~~130%, from ~~$2.8~~$15.9 million during ~~2020~~2021 to ~~$9.9~~$36.5 million in ~~2021~~2022 driven by increased flight ~~volume.~~ volume and an increase in the average price per trip.

Table of Contents

Cost of revenue ~~decreased~~ as a percentage of revenues increased by 2 percentage points from ~~82%~~78% to ~~77%~~80%, ~~driven by~~attributable primarily to (i) a shift in revenue mix towards MediMobility Organ Transport, which has higher ~~average utilization~~cost of revenue as a percentage of revenue compared with our Short Distance products; (ii) increased volumes in our by-the-seat ~~routes.~~

airport transfer products, which continued to operate below breakeven during the ramp period; and (iii) the Blade Canada business that launched in late December 2021, which operated at breakeven during the three months ended September 30, 2022, as business travel demand remained below pre-pandemic levels.

Software Development


	Three Months Ended September 30,
	2022			2021		% Change
	(in thousands, except percentages)
Software development(1)	$	2,026		844		140	%
Percentage of revenue	4		%	4	%

__________

(1) Prior period amounts have been updated to conform to current period presentation.

For the three months ended ~~June~~September 30, ~~2021~~2022 and ~~2020,~~2021, software development costs ~~decreased $7,~~increased $1.2 million, or ~~3%. No new large development projects have taken place since last year.~~

140%, from $0.8 million during 2021 to $2.0 million in 2022, attributable primarily to: (i) a $0.7 million increase in staff costs and consulting costs related to improvements to our software following our expansion to Europe and Canada; and (ii) $0.6 million professional fees in connection with a user experience re-design project, partially offset by a decrease of $0.1 million in stock based compensation.

General and Administrative


	Three Months Ended September 30,
	2022			2021			% Change
	(in thousands, except percentages)
General and administrative(1)	$	15,812		$	12,115		31	%
Percentage of revenue	35		%	60		%

__________

(1) Prior period amounts have been updated to conform to current period presentation.

For the three months ended ~~June~~September 30, ~~2021~~2022 and ~~2020,~~2021, general and administrative expense increased by ~~$8.2~~$3.7 million, or ~~528%~~31%, from ~~$1.6~~$12.1 million during ~~2020~~2021 to ~~$9.8~~$15.8 million in ~~2021,~~2022.

The primary drivers of the net increase iswere: (i) a $3.3 million increase in staff costs attributable ~~to: $2.4~~to new hires in order to support our significant growth, both organically and through our acquisitions of Trinity (September 2021) and Blade Europe (September 2022); (ii) a $1.6 million increase due to ~~stock-based compensation; $3.3~~accruals related to our short term incentive plan for the year 2022, to be paid in 2023, which includes $1.1 million related to the first two quarters of this calendar year; and (iii) a $1.2 million increase ~~due to~~in intangibles amortization costs ~~related with~~as a result of the ~~company's transition from private to public company, those costs include~~ accounting ~~& consulting professional fees; an increase~~for the acquisitions of Trinity, Blade Canada, and Blade Europe; (vi) partially offset by a $2.0 million decrease in D&O insurance expense of $1.2 million since going public; $1.3 million increase due to staff costs and office costs, in line with the higher level of activity as well as new roles created in connection with the Company becoming public. Additionally, the Company has eliminated cost controls introduced during the pandemic given continued revenue growth and the recovery in overall travel demand.

stock-based compensation costs.

Selling and Marketing


	Three Months Ended September 30,
	2022			2021			% Change
	(in thousands, except percentages)
Selling and marketing(1)	$	1,856		$	1,231		51	%
Percentage of revenue	4		%	6		%

For the three months ended ~~June~~September 30, ~~2021~~2022 and ~~2020,~~2021, selling and marketing expense increased by ~~$0.5~~$0.6 million, or ~~140%~~51%, from ~~$0.3~~$1.2 million during ~~2020~~2021 to ~~$0.8~~$1.9 million in ~~2021.~~2022. The increase is attributable primarily to higher marketing ~~activity to support the Company’s revenue growth.~~

spend associated with an increase in Short Distance flights in 2022 versus 2021.

Table of Contents

Other non-operating income (expense) ~~income~~


	Three Months Ended September 30,
	2022		2021		% Change
	(in thousands, except percentages)
Change in fair value of warrant liabilities	$	425	$	(3,418)	(112)%
Realized loss from sale of short-term investments	(359)		—		NM(1)
Recapitalization costs attributable to warrant liabilities	—		11		NM(1)
Interest income, net	1,173		309		280%
Total other non-operating income (expense)	$	1,239	$	(3,098)	(140)%

__________

(1) Percentage not meaningful

For the three months ended ~~June~~September 30, ~~2021 and 2020,~~2022, other non-operating ~~(expense)~~ income ~~consists of $14.9~~consisted of: (i) $0.4 million non-cash ~~expense~~income due to fair value revaluation of ~~warrants~~warrant liabilities ~~representing~~as the ~~change in fair~~ value ~~between the date~~ of the ~~merger to June 30, 2021,~~warrant liabilities fluctuates with the warrants’ market price; (ii) $0.4 million realized loss from the sale of short-term investments during the quarter; and (iii) $1.2 million interest income, net of interest expense. ~~We also expensed recapitalization costs attributable to warrant liabilities during the three months ended June 30, 2021 of $1.7 million due to our reverse recapitalization on May 7, 2021.~~ We earn interest income on our money market and ~~short term investments. Interest income remained stable at approximately $0.1 million~~short-term investments, the increase over the prior year period is attributable to higher interest rates in ~~2021.~~

the current year period.

~~Table of Contents~~

Comparison of the Nine Months Ended ~~June~~September 30, ~~2021~~2022 and ~~2020~~

~~The following table presents our consolidated statements of operations for the periods indicated:~~

2021

Nine Months Ended June 30,

2021

2020


$

% of Revenue

$

% of Revenue
Revenue

30,210

100

15,115

100

Operating expenses








Cost of revenue

23,905

79

14,392

95
Software development

555

2

691

5
General and administrative

18,023

60

7,376

49
Selling and marketing

2,091

7

2,284

15
Total operating expenses

44,574

148

24,743

164

Loss from operations

(14,364)



(9,628)



Other non-operating (expense) income








Change in fair value of warrant liabilities

(14,913)



—


Recapitalization costs attributable to warrant liabilities

(1,742)

Interest income, net

151



181


Total other non-operating (expense) income

(16,504)



181



Net loss

(30,868)



(9,447)


Weighted average shares outstanding, basic and diluted

34,078,573



25,209,794


Net loss per share, basic and diluted

(0.91)



(0.37)

Revenue


	Nine Months Ended September 30,
	2022		2021		% Change
	(in thousands, except percentages)
Revenue	$	107,985	$	42,540	154	%

~~Revenue~~

Disaggregated revenue by product ~~lines~~line was as follows:


	Nine Months Ended September 30,
	2022		2021
	(in thousands)
Product Line(1):
Short Distance	$	35,568	$	20,252
MediMobility Organ Transport	50,143		5,130
Jet and Other	22,274		17,158
Total Revenue	$	107,985	$	42,540

(1) Prior period amounts have been updated to conform to current period presentation.

For the Nine Months Ended

June 30,
Product Line

2021

2020
Short distance

$
8,900

$
5,767
MediMobility organ transport and jet

19,753

9,089
Other

1,557

259
Total Revenue

$
30,210

$
15,115

For the nine months ended ~~June~~September 30, ~~2021~~2022 and ~~2020,~~2021, revenue increased by ~~$15.1~~$65.5 million or ~~100%~~154%, from ~~$15.1~~$42.5 million in ~~2020~~2021 to ~~$30.2~~$108.0 million in ~~2021. The increase~~2022.

Short Distance revenue increased by $15.3 million or 76% from $20.3 million in 2021 to $35.6 million in 2022. Growth in Short Distance was driven by: the launch of Blade Canada in December 2021; growth in US short distance revenue due to higher demand and higher utilization along with price increases implemented in the 2022 period; the reintroduction of our by-the-seat airport transfer products in June 2021; and the acquisition of Blade Europe in September 2022.

MediMobility Organ Transport revenue increased by $45.0 million or 877% from $5.1 million in 2021 to $50.1 million in 2022. Growth in MediMobility Organ Transport was driven by ~~higher demand across all~~the acquisition of ~~our product lines as consumer demand began to recover following~~Trinity completed in mid-September 2021, the ~~relaxation~~addition of ~~Covid lockdowns.~~

~~Short distance aviation services~~new hospital clients and growth within existing clients.

Table of Contents

Jet and Other revenue increased by ~~$3.1~~$5.1 million, an increase of ~~54%~~30% from $17.2 million in 2021 to $22.3 million in 2022 . Growth in ~~Short distance was driven by a recovery in demand for the Company's commuter products following the relaxation of Covid lockdowns.~~

MediMobility organ transport and jet increased by $10.7 million in 2021, an increase of 117%. Our MediMobility organ transport and jet businesses were not adversely impacted by the pandemic and continued to show strong growth. In MediMobility organ transport, growth was driven by our successful effort to add additional hospital customers. In jet charter, growth was driven by the successful acquisition of additional fliers and more frequent trips from fliers who preferred to avoid commercial airline travel during the pandemic.

~~Table of Contents~~

Other revenue increased by $1.3 million or 504% from $0.3 million to $1.6 million driven primarily by the introduction of our Essential Ground Connect car service and increased revenue from brand partners.

~~Cost of Revenue~~

~~For the nine months ended June 30, 2021 and 2020, cost of revenue increased by $9.5 million or 66%, from $14.4 million during 2020 to $23.9 million in 2021. The increase in cost of revenue~~Jet was driven by an increase in ~~overall~~the average price per jet charter trip and increased flight volumes on our seasonal by-the-seat jet services between New York and South Florida, partially offset by lower revenues from brand partners and ground transportation services.

Cost of Revenue


	Nine Months Ended September 30,
	2022			2021			% Change
	(in thousands, except percentages)
Cost of revenue(1)	$	90,685		$	33,628		170	%
Percentage of revenue	84		%	79		%

__________

(1) Prior period amounts have been updated to conform to current period presentation.

For the nine months ended September 30, 2022 and 2021, cost of revenue increased by $57.1 million or 170%, from $33.6 million during 2021 to $90.7 million in 2022 driven by increased flight volume ~~of operating flights.~~ and an increase in the average price per trip.

Cost of revenue as a percentage of revenues increased by 5 percentage points from 79% to 84%, attributable primarily to (i) a shift in revenue ~~was 79% vs. 95%~~mix towards MediMobility Organ Transport, which has higher cost of revenue as a percentage of revenue compared with our Short Distance products; (ii) the impact of the Omicron variant on demand for travel in Vancouver, Canada, where significant public health restrictions were in effect during the ~~prior period, driven by higher average utilization in~~period.; and (iii) the reintroduction of our by-the-seat ~~routes.~~

airport transfer service in June 2021, which is currently operating below breakeven during the ramp period, as expected.

Software Development


	Nine Months Ended September 30,
	2022			2021		% Change
	(in thousands, except percentages)
Software development(1)	$	3,923		1,456		169	%
Percentage of revenue	4		%	3	%

For the nine months ended ~~June~~September 30, 2022 and 2021, ~~and 2020,~~software development costs ~~decreased by $0.1~~increased $2.5 million, or ~~20%~~169%, from ~~$0.7~~$1.5 million during 2021 to $3.9 million in ~~2020~~2022, attributable primarily to: (i) a $1.7 million increase in staff costs and consulting costs related to improvements to our software following our expansion to Europe and Canada; (ii) $0.6 million professional fees in ~~2021, principally due to management’s decision to reduce development costs~~connection with a user experience re-design project; and (iii) an increase of $0.2 million in ~~response to the COVID-19 pandemic’s impact on operations.~~

stock based compensation.

General and Administrative


	Nine Months Ended September 30,
	2022			2021			% Change
	(in thousands, except percentages)
General and administrative(1)	$	41,934		$	26,748		57	%
Percentage of revenue	39		%	63		%

__________

(1) Prior period amounts have been updated to conform to current period presentation.

For the nine months ended ~~June~~September 30, ~~2021~~2022 and ~~2020,~~2021, general and administrative expense increased by ~~$10.6~~$15.2 million, or ~~144%~~57%, from ~~$7.4 million during 2020 to $18.0~~$26.7 million in 2021 ~~principally based upon an~~to $41.9 million in 2022.

Table of Contents

The primary drivers of the increase were: (i) a $8.2 million increase in staff costs attributable to new hires in order to support our significant growth, both organically and through our acquisition of Trinity (September 2021) and Blade Europe (September 2022) as well as the requirement for additional roles following the Company becoming public in May 2021; (ii) a $3.1 million increase in intangibles amortization costs as a result of the accounting for the acquisitions of Trinity, Blade Canada and Blade Europe; (iii) a $4.3 million increase in legal and regulatory advocacy fees and M&A transaction fees, which we do not expect to reoccur at this level. The legal and regulatory advocacy fees were in connection with the proposed flight volume restrictions at East Hampton Airport, potential operational restrictions on large jet aircraft at Westchester Airport and our recent settlement of the Shoreline matter; (iv) a $1.6 million increase due to the accruals related to our short term incentive plan for the year 2022 to be paid in 2023 (v) a $5.3 million increase across various general and administrative items (e.g., $1.1 million in travel and offices expenses to support our growth, $0.7 million D&O insurance costs, $0.7 million in state franchise taxes); (vi) partially offset by a $4.4 million decrease in costs related to the initial public listing and $2.9 million decrease in stock-based compensation of $5.6 million, an increase in D&O insurance expense of $1.2 million since going public, and an increase in professional fees (legal, consulting, and accounting) of $3.8 million of which the majority was attributed to our transition in connection with becoming a public company.

costs.

Selling and Marketing


	Nine Months Ended September 30,
	2022			2021			% Change
	(in thousands, except percentages)
Selling and marketing(1)	$	5,294		$	2,433		118	%
Percentage of revenue	5		%	6		%

For the nine months ended ~~June~~September 30, ~~2021~~2022 and ~~2020,~~2021, selling and marketing expense ~~decreased~~increased by ~~$0.2~~$2.9 million, or 8%118%, from ~~$2.3~~$2.4 million ~~during 2020~~in 2021 to $5.3 million in 2022. The increase is attributable primarily to a $2.1 million higher marketing spend associated with an increase in ~~2021. The decrease~~Short Distance flights in ~~selling~~2022 versus 2021 as well as increased media spend in connection with the re-launched Blade Airport transfer service and ~~marketing expense was attributed primarily~~a $0.3 million increase in staff costs due to ~~reductions in marketing and advertising during last year related to scaling down our short distance flight services in response to COVID-19 restrictions on travel and workplace closures.~~

hiring.

Other non-operating income (expense) ~~income~~


	Nine Months Ended September 30,
	2022		2021		% Change
	(in thousands, except percentages)
Change in fair value of warrant liabilities	$	22,241	$	(18,331)	(221)%
Realized loss from sale of short-term investments	(2,071)		—		NM(1)
Recapitalization costs attributable to warrant liabilities	—		(1,731)		NM(1)
Interest income, net	1,892		453		318%
Total other non-operating income (expense)	$	22,062	$	(19,609)	(213)%

__________

(1) Percentage not meaningful

For the nine months ended ~~June~~September 30, ~~2021 and 2020,~~2022, other non-operating ~~(expense)~~ income ~~consisted of $14.9~~consists of: (i) $22.2 million ~~expense~~non-cash income due to fair value revaluation of ~~warrants~~warrant liabilities ~~from~~as the ~~date~~value of the ~~merger to June 30, 2021, as well as~~warrant liabilities fluctuates with the warrants’ market price; (ii) a $2.1 million realized loss from sale of short-term investments; and (iii) $1.9 million interest income, ~~and~~net of interest expense. ~~We also expensed recapitalization costs attributable to warrant liabilities during the nine months ended June 30, 2021 of $1.7 million due to our reverse recapitalization on May 7, 2021.~~ We earn interest income on our money market ~~funds~~ and ~~short term~~short-term investments, ~~held with JP Morgan Chase Bank. Interest income remained stable at less than $0.2 million~~the increase over the prior year period is attributable to higher interest rates in ~~2021.~~the current year period.

Quarterly Disaggregated Revenue

The following table sets forth our unaudited quarterly disaggregated revenue by product line for each of the eight quarters leading up to the period ended September 30, 2022. These unaudited quarterly disaggregated revenue by product line have been prepared on the same basis as our unaudited interim condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Table of Contents


	Three Months Ended
	September 30, 2022		June 30, 2022		March 31, 2022		December 31, 2021
	(in thousands)
Product Line:(1)
Short Distance	$	20,402	$	10,963	$	4,203	$	6,255
MediMobility Organ Transport	20,219		17,249		12,675		9,822
Jet and Other	5,101		7,421		9,752		8,541
Total Revenue	$	45,722	$	35,633	$	26,630	$	24,618


	Three Months Ended
	September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020
	(in thousands)
Product Line:(1)
Short Distance	$	13,403	$	5,798	$	1,051	$	2,210
MediMobility Organ Transport	2,245		1,550		1,335		1,271
Jet and Other	4,668		5,603		6,887		4,505
Total Revenue	$	20,316	$	12,951	$	9,273	$	7,986

__________

(1) Prior period amounts have been updated to conform to current period presentation.

Liquidity and Capital Resources

Sources of ~~liquidity~~

Liquidity

Since ~~our~~ inception and until May 2021, ~~we have~~Old Blade financed ~~our~~its operations primarily from sales of ~~our~~ convertible preferred stock. On May 7, 2021 the Company raised ~~$331.8~~$333.3 million in net proceeds upon the consummation of the merger with EIC and the sale of common ~~stocks~~stock through a ~~PIPE.~~ private investment in public equity (“PIPE”) financing. As of ~~June 30, 2021 and~~ September 30, ~~2020,~~2022 and December 31, 2021, we had cash and cash equivalents of ~~$30.0~~$51.8 million and ~~$12.2~~$2.6 million, respectively, and restricted cash of ~~$0.6~~$1.1 million and ~~$0.1~~$0.6 million, respectively. In addition, as of ~~June~~September 30, ~~2021~~2022 we had ~~$303.1~~$150.4 million of ~~short term~~short-term investments inconsisting of a traded mutual fund which could be liquidated ~~at any time within~~with a one day ~~notice.~~notice and held-to-maturity government securities with maturity terms of less than 365 days. We anticipate that our available cash and cash equivalents and short-term investments will be sufficient to meet our current operational needs for at least the next 12 ~~months.~~months from the date of filing this Quarterly Report. Our ~~future capital requirements~~long-term liquidity will depend on many factors including the pace of our expansion into new markets, our ability to attract and retain ~~fliers,~~customers for our existing products, capital expenditures ~~acquisitions, as well as the timing of regulatory approval~~ and ~~market adoption of EVAs for urban air mobility.~~acquisitions.

~~Table of Contents~~

On April 8, 2020, we entered into an unsecured note evidencing our PPP Loan in the principal amount of $1.2 million. Proceeds of our PPP Loan were used for payroll costs, costs related to certain group health care benefits, rent payments, utility payments, mortgage interest payments, interest payments on other debt obligations that were incurred in the 24 weeks following the disbursement of the loan. On May 7, 2021, we repaid the PPP Loan in full.

Liquidity Requirements

As of ~~June, 2021,~~September 30, 2022, we had net working capital of ~~$332.2 million, including cash and cash equivalents of $30.0~~$1.8 million. We had a net ~~losses~~loss of ~~$30.9~~$11.8 million and ~~$9.4~~$37.7 million for the nine months ended ~~June~~September 30, 2022 and 2021, 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 September 30, 2022, we had commitments with various aircraft operators to purchase flights with an aggregate value of $1.8 million and ~~2020,~~$11.4 million for the years ending December 31, 2022 and 2023, respectively.

$4.2 million of which may be cancelled by us immediately if a government authority enacts travel restrictions and $3.9 million 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 9 to the unaudited interim condensed consolidated financial statements for additional information and for information about future periods.

We expect ~~to continue~~ to incur net losses in the short term, as we continue to execute on 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.

Table of Contents

Our long-term liquidity 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

~~Comparison of the Nine Months Ended June 30, 2021 and 2020~~

The following table summarizes our cash flows for the periods indicated:

Nine Months Ended June 30,

Change

2021

2020

$

%
Net cash used in operating activities

$
(9,825)

$
(9,915)

$
(90)

(1)
Net cash used in investing activities

(303,896)

(381)

(303,515)

(79,663)
Net cash provided by financing activities

332,078

1,170

330,908

28,282
Net increase (decrease) in cash, cash equivalents and restricted cash

$
18,357

$
(9,126)

$
27,483

301

~~Cash Used in~~


	Nine Months Ended September 30,
	2022		2021		% Change
	(in thousands, except percentages)
Net cash used in operating activities	$	(28,026)	$	(15,614)	79	%
Net cash provided by / (used in) investing activities	78,878		(320,801)		(125)	%
Net cash (used in) / provided by financing activities	(1,084)		333,660		(100)	%

Operating Activities

For the nine months ended ~~June~~September 30, 2022, net cash used in operating activities was $28.0 million, primarily driven by a net loss of $11.8 million, $5.3 million cash used for working capital requirements and adjusted for non-cash items consisting of income from change in fair value of warrant liabilities of $22.2 million, stock-based compensation expense of $5.6 million, depreciation and amortization of $3.7 million, realized loss of $2.1 million from the sale of short-term investments and $0.3 million accretion of interest income on held-to-maturity securities. The $5.3 million cash used for working capital requirements was primarily driven by an increase in accounts receivable of $4.5 million due to rapid growth in MediMobility Organ Transport, an increase in prepaid expenses and other current assets of $3.8 million driven by prepayments to operators in connection with new capacity purchase agreements, an increase in deferred revenue of $0.4 million driven by client prepayments and an increase in other non-current assets of $1.1 million driven by an office lease deposit. Those increases were partially offset by an increase in accounts payable and accrued expenses of $4.3 million in line with the increase in our activity and a $0.2 million increase in lease liabilities.

For the nine months ended September 30, 2021, net cash used in operating activities was ~~$9.8~~$15.6 million, primarily driven by a net loss of ~~$30.9~~$37.7 million, ~~offset by~~$3.1 million cash used for working capital requirements and adjusted for non-cash ~~stock based compensation~~items consisting of ~~$5.7 million and non-cash~~loss from change in fair value of warrant liabilities of ~~$14.9~~$18.3 million, stock-based compensation expense of $8.3 million, $3.6 million deferred tax benefit, $1.7 million recapitalization costs attributable to warrant liabilities and depreciation and amortization of $0.5 million. The ~~changes in operating assets and liabilities are~~$3.1 million cash used for working capital requirements was primarily driven by ana $3.9 million increase ~~of $6.1 million~~ in prepaid expenses ~~(primarily prepaid insurance premiums)~~ and other current assets driven by prepayment of full year D&O insurance premiums, partially offset by ana $0.6 million increase ~~of $3.8 million~~ in accounts payable and accrued expenses and ana $0.2 million increase ~~of $1.3 million~~in deferred ~~revenue.~~

revenue driven by client prepayments.

Investing Activities

For the nine months ended ~~June~~September 30, ~~2020,~~2022, net cash ~~used in operating~~provided by investing activities was ~~$9.9~~$78.9 million, ~~primarily~~ driven by ~~a net loss~~$248.4 million of ~~$9.4 million~~proceeds from the sale of other short-term investments, partially offset by non-cash stock based compensation of $0.3 million and non-cash depreciation and amortization of $0.4 million. The changes in operating assets and liabilities included are primarily driven by a $1.6 million decrease in accounts payable and accrued expenses, and an increase of $0.9$120.5 million in ~~deferred revenue.~~

~~Cash Used In Investing Activities~~

purchases of held-to-maturity securities, $48.1 million in consideration paid for the acquisition of Blade Europe, $0.7 million in purchases of property and equipment and $0.2 million additional investment in our joint venture in India.

For the nine months ended ~~June~~September 30, 2021, net cash used in investing activities was ~~$303.9~~$320.8 million, driven by a ~~$0.5~~$308.8 million of purchase of ~~domain name, $0.2~~other short-term investments, $23.1 million ofin consideration paid for Trinity, and $0.3 million in purchases of property and equipment, ~~and a $303.2~~partially offset by $11.3 million ~~purchase~~ of proceeds from the sale of other short-term investments.

Financing Activities

For the nine months ended ~~June~~September 30, ~~2020,~~2022, net cash used in ~~investing~~financing activities was ~~$0.4~~$1.1 million, ~~driven~~primarily reflecting payroll tax payments made on behalf of employees in exchange for shares withheld by ~~$0.4 million of purchases of property and equipment.~~

~~Cash Provided by Financing Activities~~

the Company from their equity awards upon vesting (“net share settlement”).

For the nine months ended ~~June~~September 30, 2021, net cash provided by financing activities was ~~$332.1~~$333.7 million, primarily reflecting ~~primarily~~ cash received of ~~$213.6~~$215.1 million from the Merger with EIC, ~~and~~ cash received of $119.6 million from the issuance of common stock under our PIPE financing, partially offset by the $1.2 million repayment of the PPP Loan.

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~~For the nine months ended June 30, 2020, net cash provided by financing activities was $1.2 million, principally related to the Company obtaining the PPP Loan of $1.2 million.~~

~~Off-Balance Sheet Arrangements~~

As of June 30, 2021, we were not a party to any off-balance sheet arrangements, as defined in Regulation S-K, that have or are reasonably likely to have a current or future material effect on our financial condition, results of operations, or cash flows.

Critical Accounting Policies and Significant Judgments and Estimates

~~Our condensed~~

This discussion and analysis of the Company’s financial condition and results of operations is based on the Company’s consolidated financial statements, ~~are~~which have been prepared in accordance with generally accepted accounting principles ~~generally accepted~~ in the United ~~States.~~States of America, or U.S. GAAP. The preparation of these ~~consolidated~~ financial statements requires ~~our management~~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 ~~costs,~~ and expenses ~~and related disclosure in~~during the ~~notes to financial statements. We evaluate our accounting policies, estimates and judgments on an on-going basis. Management~~reported periods. In accordance with U.S. GAAP, the Company bases its estimates ~~and judgments~~ on historical experience and on various other ~~factors that~~assumptions the Company believes are ~~believed to be~~ reasonable under the circumstances. ~~Our actual~~Actual results may differ from these estimates under different assumptions or conditions.

For ~~further~~ information ~~about our critical~~on the Company’s significant accounting policies and ~~use of~~ estimates ~~see~~refer to Note 2 to the Company’s consolidated financial statements in our Annual Report on Form 10-K for the year ended September 30, 2021 and to “Use of Estimates” section of Note 1 “Description of Business and Summary of Significant Accounting Policies” in the ~~notes to our~~unaudited interim condensed consolidated financial statements.

Item 3. Quantitative and qualitative disclosures about market risk

~~Not required.~~

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 4. Controls and Procedures

~~Evaluation of Disclosure Controls and Procedures~~

As of the end of the period covered by this report, our principal executive officer and principal financial officer 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”)). Our evaluation of internal controls over financial reporting did not include the internal controls of Blade Europe, which was acquired on September 1, 2022 and is included in our consolidated financial statements and constituted approximately 0.5% of total assets as of September 30, 2022 and 2% of sales and net loss, respectively, for the period then ended. The Company is currently in the process of integrating Blade Europeinto its internal control over financial reporting process pursuant to the Sarbanes-Oxley Act of 2002. The Company is evaluating changes to processes, information technology systems and other components of internal controls over financial reporting as part of its ongoing integration activities, and as a result, controls may be periodically changed. The Company believes, however, that it will be able to maintain sufficient controls over its financial reporting throughout this integration process.

Based on their evaluation of our disclosure controls and procedures, with the exclusion of Blade Europe, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective as of ~~June~~September 30, ~~2021,~~2022, to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is (a) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (b) accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate to allow for timely decisions regarding required disclosure.

We determined that our internal control over financial reporting had the following material weakness - the Company has not developed a formal framework that enables management to assess the effectiveness of internal controls over financial reporting, specifically lacking evidential matter to support:

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•Management’s evaluation of whether the internal controls are designed to prevent or detect material misstatements or omissions;

•Management’s conclusion that controls tests were appropriately planned and performed to adequately assess the operating effectiveness of the controls; and

•That the results of the control tests were appropriately considered.

Management has concluded that these deficiencies may impact the Company’s 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 and represent a material weakness in the Company’s internal control over financial reporting.

Because disclosure controls and procedures include those components of internal control over financial reporting that provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, management also determined that its disclosure controls and procedures were not effective as a result of ~~June 30, 2021 due to~~ the ~~following material weaknesses:~~

~~The first~~above-mentioned material weakness ~~relates to the lack of segregation of duties~~ in our accounting procedures and approval of significant transactions, due in part to the lack of a sufficient number of personnel in the accounting and finance function. This weakness could lead to intentional or unintentional errors that might not be detected. Further, we do not have adequate documentation of the components of ourits internal control ~~processes, making it difficult to appropriately monitor~~over financial reporting.

Notwithstanding the ~~effectiveness of our internal controls.~~

~~The second~~ material weakness, arises from the need to augment our information technology and application controls, including, but not limited to, the addition of formally documented controls around logical system access and code change management. Deficiencies in logical access controls can result in unauthorized or inappropriate access to key applications and data.

~~Notwithstanding these material weaknesses,~~ management has concluded that the unaudited interim condensed consolidated financial statements included in this quarterly report on Form 10-Q ~~are~~present fairly, ~~stated~~ in all material respects, our financial position, results of operations, and cash flows in ~~accordance~~conformity with ~~U.S.~~ GAAP.

Management’s Plans for Remediation

~~Table~~The Company is remediating this material weakness as efficiently and effectively as possible, with the hiring of ~~Contents~~

a Director of Internal Controls to assist in the overall evaluation and documentation of the design and operating effectiveness of our internal controls over financial reporting.

These plans are subject to ongoing review by senior management with Audit Committee oversight. As we continue to evaluate and work to improve our internal control over financial reporting, management may implement additional measures to address the material weakness or modify the remediation plan described above and will continue to review and make necessary changes to the overall design of our internal controls over financial reporting. The Company expects to complete the required remedial action during 2022.

Changes in Internal Control over Financial Reporting

On May 7, 2021, the Company consummated its Merger by and among EIC, Merger Sub, and Old Blade. The historical consolidated financial statements of Old Blade became the historical consolidated financial statements of the registrant. We are engaged in the process of design and implementation of our internal control over financial reporting in a manner commensurate with the scale of our operations subsequent to the Merger, including the enhancement of our internal accounting resources through the hire of both a Chief Accounting Officer and Corporate Controller. Additionally, the Company implemented additional closing procedures to strengthen its process and shorten its close cycle for financial reporting.

Other than ~~such changes related to this integration,~~the specific remediation steps discussed above, there were no other changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15(d)-15(f) promulgated under the Securities Exchange Act of 1934, that have materially affected, or are reasonably likely to materially affect, our internal control over financial ~~reporting.~~

reporting in the fiscal quarter ending September 30, 2022.

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.

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PART II - OTHER INFORMATION

Item 1.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 ~~June~~September 30, ~~2021,~~2022, the ultimate disposition of which would have a material adverse effect on our consolidated financial position, results of operations, or cash flows.

On February 9, 2021, an individual complaint captioned, Digennaro v. Experience Investment Corp., et al. (No. 020921-104) was filed in New York state court. The complaint names Experience Investment Corp.; its Chief Executive Officers, Mr. Eric Affeldt; and its directors Mr. Martin J. Newburger, Mr. Brian C. Witherow, Mr. Rafael Pastor, Mr. Edward Philip, Experience Merger Sub, Inc. and Blade Urban Air Mobility, Inc. The complaint asserts claims for breach of fiduciary duty against Experience's officer and directors and aiding and abetting breach of fiduciary against the entities in connection with alleged material misstatements and omissions made in the Company's Form S-4, filed January 29, 2021. The complaint seeks, inter alia, injunctive relief enjoining or rescinding the Transaction, injunctive relief directing the filing of an amended registration statement, and damages. On May 18, 2021 this complaint was dismissed.

On April 1, 2021, Shoreline Aviation, Inc. (SAI) filed an Amended Complaint in the United States District Court for the Eastern District of New York naming Cynthia L. Herbst, Sound Aircraft Flight Enterprises, Inc. (SAFE), Ryan A. Pilla, Blade Urban Air Mobility, Inc.(Blade), Robert Wiesenthal and Melissa Tomkiel as defendants. The case is captioned Shoreline Aviation, Inc. v. Sound Aircraft Flight Enterprises, Inc. et al., No. 2:20-cv-02161-JMA-SIL (E.D.N.Y.). The complaint ~~alleges,~~alleged, among other things, claims of misappropriation, violation of the Defend Trade Secrets Act, unfair competition, tortious interference with business relations, constructive trust, tortious interference with contract, and aiding and abetting breach of fiduciary duty against Blade, Robert Wiesenthal and Melissa Tomkiel (together the “Blade Defendants”). ~~Claims against~~On March 16, 2022, SAI and the Blade Defendants ~~relate to~~filed a Joint Stipulation and Order of Dismissal with Prejudice in the ~~May 2018 Asset Purchase Agreement between~~Court, in which, SAI and the Blade Defendants stipulated and ~~Sound Aircraft Flight Enterprises, Inc. (“SAFE”) and Cindy Herbst,~~agreed that pursuant to ~~which Blade purchased SAFE’s complete customer list, including names, contact information and customer flight histories. The complaint demands compensatory and consequential damages in excess~~Federal Rule of ~~$13 million relating to the~~Civil Procedure 41(a)(1)(A)(ii), all of SAI’s claims against the Blade Defendants ~~as well as punitive damages, certain equitable remedies, interest~~were dismissed with prejudice. The Blade Defendants expressly denied any wrongdoing and ~~attorneys’ fees and costs. The Company believes~~did not admit any liability.

Trinity Air Medical, LLC (“Trinity”), a wholly owned subsidiary of Blade Urban Air Mobility, Inc., has received a federal grand jury subpoena seeking records related to the ~~outcome would not result~~provision of transplant transportation services. Trinity is cooperating with the subpoena.

Item 1A. Risk Factors

You should carefully consider the risks described under “Risk Factors” in ~~a material contingency.~~

~~Item 1A.~~~~Risk Factors~~

~~Our operations and financial results are subject to various~~our Annual Report on Form 10-K for the year ended September 30, 2021. These risks ~~and uncertainties, including those described below, which~~ could ~~adversely~~materially affect our business, ~~financial condition,~~ results of operations ~~cash flows, and~~or financial condition, cause the trading price of our common ~~and capital stock.~~

~~Risks Related~~stock to ~~Our Business and Growth Strategy~~

~~We have incurred significant losses since inception, we expect~~decline materially or cause our actual results 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~~differ materially 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~~those expected or ~~at all, and even if we do, we may not be able to maintain~~those expressed in any forward-looking statements made by, or increase profitability. Further, our future growth is heavily 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.

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~~The duration and severity~~on behalf of, the ~~COVID-19 pandemic, and similar public health threats that we may face in the future, could result in additional adverse effects on our business operations and our financial results.~~

The COVID-19 outbreak, along with the measures governments and private organizations worldwide have implemented in an attempt to contain the spread of this pandemic, have resulted in a severe decline in demand for air travel and have adversely affected our business, operations and financial condition to an unprecedented extent. Measures such as travel restrictions, “shelter in place” and quarantine orders, limitations on public gatherings, cancellation of public events and many other restrictions have resulted in a precipitous decline in demand for business and leisure travel generally, including demand for our air mobility services. For example, historically our business has been comprised of business travel and commuter traffic, which largely has been replaced by “virtual meeting” and teleconferencing products or become unnecessary as a result of the significant number of people now working from home.

The full extent of the ongoing impact of COVID-19 on our longer-term operational and financial performance will depend on future developments, many of which are outside our control, including the duration and spread of COVID-19, the availability and acceptance of vaccines, travel advisories, curfews or “shelter in place” health orders, the impact of COVID-19 on overall long-term demand for air travel, increasing acceptance of employees working from home, government mandates restricting air service, sickness or quarantine of our employees or third-party aircraft operators resulting from exposure to COVID-19, and the impact of COVID-19 on the financial health and operations of our business partners, all of which are highly uncertain and cannot be predicted. At this time, weCompany. These risks are not ~~able to predict whether the COVID-19 pandemic will result in permanent changes to our customers’ behavior or their demand for our urban air mobility services.~~

The recent spread of the Delta variant of COVID-19, which appears to be more transmissible than other variants to date, may extend the impact of COVID-19 on our business. The impact of the Delta variant cannot be predicted at this time and could depend on numerous factors, including vaccination rates among the population, the effectiveness of COVID-19 vaccines against the Delta variant, any new measures that may be introduced by governments or other parties in response to an increase in COVID-19 cases and what impact they may have on commuting patterns and the demand for air travel. Given the dynamic nature of the circumstances, it is difficult to predict the impact of the ongoing COVID-19 pandemic on our business.

The markets for our 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 urban air mobility service has grown rapidly since we launched our business in 2014, though it is still relatively new, and it is uncertain to what extent market acceptance will continue to grow, if at all.

Further, we currently operate 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.

The New York airport transfer market has 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 markets where we plan to expand have never been served by 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 assure you that we will be able to operate in a profitable manner in any of our current or targeted future markets.

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

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~~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 business will be highly dependent on our ability to effectively market and sell air transportation as a substitute for conventional methods of transportation.~~

We generate substantially all 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. For example, for the years ended September 30, 2020 and September 30, 2019, flier acquisition campaigns represented approximately 11% and 16% of our revenues, respectively. 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 ridesharing 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.

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, 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

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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. Any of the foregoing risks and challenges could adversely affect our prospects, business, financial condition and results of operations.

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.

Our growth 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 toexclusive, 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 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 buildout, 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, including our urban air mobility services, 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 or aircraft flown by our third-party aircraft operators. Air transportation hazards, such as adverse weather conditions and fire and mechanical failures, may result in death or injury to personnel and passengers and 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 passenger 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 urban air mobility services include a variety of transportation methods, fliers may have a hard time determining how safe urban air mobility services are and their confidence in urban air mobility may be impacted by, among other things, the classification of accidents in ways that reflect poorly on urban air mobility services or the transportation methods urban air mobility services utilize.

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While we do not own, operate or maintain aircraft, we believe that safety and reliability are two of the primary attributes fliers consider when selecting air transportation services. Our failure to maintain standards of safety and reliability that are satisfactory to our fliers 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, 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. 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, 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 could create an adverse public perception, which could harm our reputation, result in air travelers being reluctant to use our services, and adversely impact 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.

Our operations may also be negatively impacted by accidents or other safety-related events or investigations that occur in or near the airports and heliports we utilize for our urban air mobility services. For example, if an accident were to occur at a heliport we rely on for certain flights, we may be unable to fly into or out of that heliport until the accident has been cleared, any damages to the facilities have been repaired and any insurance, regulatory or other investigations have be completed.

~~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 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 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.

~~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 is critical to our ability to attract and retain qualified third-party aircraft operators and fliers. In addition, our growth strategy includes international expansion through 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.

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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;

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~~changes to our flight operations, safety and security, privacy or other policies that users or others perceive as overly restrictive, unclear or inconsistent with our values;~~

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~~a failure to enforce our flight operations policies in a manner that users perceive as effective, fair and transparent;~~

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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;

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~~a failure to provide routes and flight schedules sought by fliers;~~

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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;

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~~litigation over, or investigations by regulators into, our operations or those of our third-party aircraft operators;~~

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~~a failure to operate our business in a way that is consistent with our values;~~

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~~inadequate or unsatisfactory flier support service experiences;~~

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~~negative responses by third-party aircraft operators or fliers to new mobility offerings on our platform;~~

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~~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; or~~

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~~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.

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~~Any failure to offer high-quality customer support may harm our relationships with fliers and could adversely affect our reputation, brand, business, financial condition and results of operations.~~

Through our marketing, advertising, and communications with fliers, we set the tone for our brand as aspirational but also within reach. 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 and Flier Relations representatives. The ease and reliability of our offerings, including our ability to provide high-quality flier support, helps us attract and retain fliers. Fliers depend on our “Flier Relations” team to resolve any issues relating to our services, such as leaving something in a third-party aircraft operator’s vehicle, flight cancellations or scheduling changes. Our ability to provide effective and timely support is largely dependent on our ability to attract and retain skilled Flier Relations employees who can support fliers 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 flier 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.

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, brand recognition, for marketing or other purposes. We have utilized monthly and annual commuter passes and annual corporate bulk purchasing options to increase our flier utilization rates in the past, however, these products may be less appealing following the COVID-19 pandemic.

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 resume our pre-COVID utilization rates or 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 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 business is primarily concentrated on urban air mobility, which is 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, including the current business disruption and related financial impact resulting from the global COVID-19 health crisis. 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 a competing service. 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.

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Our operations are 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 the majority of our revenue from flights that either originate from or fly into heliports in New York, New York. The remainder of our domestic flights originate or fly into airports and heliports in Los Angeles, California, Miami, Florida, Nantucket, Massachusetts, and other locations in New York State. 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 where our terminal facilities are located, whether caused by labor relations, utility or communications issues or fuel shortages, could harm our business. Certain airports 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, and severe weather conditions, such as heavy rains, strong winds, dense fog, blizzards or snowstorms, may damage 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 New York and Massachusetts operations are subject to severe winter weather conditions, our Los Angeles operations are subject earthquakes, El Niño conditions and high winds, and our Miami 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.

~~Major metropolitan areas, including those in which we currently operate, are also at risk of terrorist attacks, actual or threatened acts of war, political disruptions and other disruptions.~~

The occurrence of one or more natural disasters, severe weather events, epidemic or pandemic outbreaks, terrorist attacks or disruptive political events in regions 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, purchase carbon offsets, or otherwise pay for our emissions. Such activity may also impact us indirectly by increasing our operating costs.

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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.

Since we do not yet utilize electric aircraft, 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 our third-party 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 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. The impact of such events may limit 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.

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 degradations.

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 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 disrupting 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.

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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 fliers. Moreover, to the extent that any system failure or similar event results in harm or losses to the fliers using our platform, such as the inability to book or change flights because of a system failure, we may make voluntary payments to compensate for such harm or the affected users could seek monetary recourse or contractual remedies from us for their losses and 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 fliers. In 2019, the majority of our seats were booked through the Blade Android and iOS apps. Such mobile operating systems or application marketplaces could limit or prohibit us from making our apps available to fliers, 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.

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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 assure you 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.

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~~If we are unable to obtain and maintain adequate facilities and infrastructure, we may be unable to offer our existing flight schedule and to expand or change our route network in the future,~~ which ~~may have a material adverse impact on our operations.~~

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, including installation of necessary charging equipment. 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 six month seasonal 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 the consummation of the Transactions, 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, the global COVID-19 health crisis and related financial impact has 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 as 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.

~~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 presence internationally. In 2019, we entered into a joint venture in India (our “Indian Joint Venture”) and we may continue to expand our international operations. 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 may incur significant operating expenses and may not be successful in our international expansion for a variety of reasons, including:

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~~recruiting and retaining talented and capable employees in foreign countries and maintaining our company culture across all of our offices;~~

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~~competition from local incumbents that better understand the local market, may market and operate more effectively and may enjoy greater local affinity or awareness;~~

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~~differing demand dynamics, which may make our offerings less successful;~~

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~~complying with local laws and regulatory standards, including with respect to data privacy and tax;~~

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~~obtaining any required government approvals, licenses or other authorizations;~~

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~~varying levels of Internet and mobile technology adoption and infrastructure;~~

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~~costs and exchange rate fluctuations;~~

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~~operating in jurisdictions that do not protect intellectual property rights to the same extent as the United States; and~~

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~~limitations on the repatriation and investment of funds as well as foreign currency exchange restrictions.~~

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 intend to explore potential strategic acquisitions of businesses, including partnerships or joint ventures with third parties. Our management has limited experience with acquiring and integrating acquired 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 businesses that we acquire or with which we form a partnership or joint venture. We may have potential write-offs of acquired assets and/or an impairment of any goodwill recorded as a result of acquisitions. 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. 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, which could have a material adverse effect on our business, financial condition and results of operations.

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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.

Though we do not own or operate aircraft, we maintain general liability aviation premise insurance, non- owned aircraft liability coverage, and directors and officers insurance, and 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. Further, we expect our insurance costs to increase as we add routes, increase flight and passenger volumes and expand into new markets, and it is too early to determine what impact, if any, the adoption of EVAs will have on our insurance costs.

We are highly dependent on our senior management team and other highly skilled personnel, and 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, and technology 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:

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~~failure to identify, attract, reward and retain people in leadership positions in our organization who share and further our culture, values and mission;~~

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~~the increasing size and geographic diversity of our workforce;~~

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~~competitive pressures to move in directions that may divert us from our mission, vision and values;~~

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~~the continued challenges of a rapidly-evolving industry;~~

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~~the increasing need to develop expertise in new areas of business that affect us;~~

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~~negative perception of our treatment of employees or our response to employee sentiment related to political or social causes or actions of management; and~~

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~~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.~~

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~~Risks Related to Our Dependence on Third-Party Providers~~

We rely on our third-party operators to provide and operate aircraft to move our fliers. 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.

Our asset-light business model means that we do not own or operate any aircraft. Instead, we rely on third-party contractors to own and operate aircraft. Pilots, maintenance, hangar, insurance and fuel are all costs borne by our network of operators. Should we experience complications with any of these third-party contractors or their aircraft, we may need to delay or cancel by-the-seat 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, pandemic, such as the current COVID-19 outbreak, or other events. The failure of any contractors to perform to our expectations could result in delayed or cancelled 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 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 otherwise do not have capacity or desire to support our growth, or we are unable to add new operators, 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.

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.

~~All of our flight operations are conducted by third-party aircraft operators on our behalf. Due to our reliance on third parties to provide these essential services,~~ 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. As a result of the COVID-19 pandemic, we did not renew agreements with some of the third-party aircraft operators who have provided flight services to us in the past. While we continue to do business with some of these operators despite the lack of an agreement, there is no assurance that we will continue to do so. Additionally, although we expect to enter into new agreements with such operators on acceptable terms in the future, there is no guarantee that we will be able to do so.

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~~Although our third-party aircraft operators~~include, but 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 urban air mobility service 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 air medical or tourism accidents, as well as the number of insured losses within other helicopter operations and the commercial airline industry, 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.

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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.

~~United States.~~ Our operations are highly regulated by several U.S. government regulatory agencies, including the DOT and the FAA. These requirements restrict the ways we may conduct our business, as well as the operations of our third-party aircraft operators. Failure to comply with such requirements in the future may result in fines and other enforcement actions by the regulators. In the future, any new regulatory requirements, particularly requirements that limit our third-party aircraft operators’ ability to operate, could have a material adverse effect on us and the industry. Further, DOT and FAA rules require certain disclosures to consumers and filing of routes, which could create a burden on our marketing and operations teams.

~~Our results of operations and the manner in which we conduct business each may be affected by changes in law and future actions taken by governmental agencies, including:~~

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~~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;~~

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~~restrictions on competitive practices (for example, court orders, or agency regulations or orders, that would curtail our ability to respond to a competitor);~~

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~~the adoption of new passenger security standards or regulations that impact customer service standards;~~

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~~restrictions on airport operations, such as restrictions on the use of airports or heliports; and~~

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~~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 overseas 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.

~~India.~~ The Indian Joint Venture’s operations are highly regulated by Indian government agencies, including the Airports Authority of India, Ministry of Civil Aviation and Directorate General of Civil Aviation. If the Indian Joint Venture’s operations fail to comply with these laws and regulations, or if these agencies develop concerns over our operations, the Indian Joint Venture could face administrative, civil and/or criminal penalties. In addition, we may become subject to regulatory actions that could suspend, curtail or significantly modify the Indian Joint Venture’s operations, which could adversely affect the business, financial condition and results of operations of the Indian Joint Venture.

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 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 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 urban air mobility services, our revenue and growth would be adversely affected.

We currently operate passenger terminals out of several airports and heliports throughout New York, Massachusetts, and Florida. 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 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. (For example, proposed federal legislation in 2019 sought to limit helicopter flights over any city with certain population and density restrictions, though the bill did not pass. Additionally, the Town Board of the Town of East Hampton, New York is considering the closure, or additional restrictions on the use, of the East Hampton Airport, following the expiration of FAA grant assurances in September of 2021. If any similar efforts are successful, our business would be severely impacted and our growth opportunities in such areas may be reduced.)

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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.

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”). 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.

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. 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 (up to $2,500 per violation, or up to $7,500 per violation if the violation is intentional) and litigation, any of which may negatively impact our reputation, require us to expend significant resources, and harm our business. Furthermore, California voters approved the California Privacy Rights Act (“CPRA”) on November 3, 2020, which will amend and expand the CCPA, including by providing consumers with additional rights with respect to their personal information. The CPRA will come into effect on January 1, 2023, 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 expand our international presence, we will also be subject to additional privacy rules of such foreign jurisdictions, many of which, such as the European Union’s General Data Protection Regulation (the “GDPR”) and national laws supplementing the GDPR or national laws of similar scope and nature, such as in the United Kingdom, may require significant resources to comply with. The GDPR, for example, requires companies to meet stringent requirements regarding the handling of personal data and highly sensitive personal data of individuals located in the European Economic Area and includes significant monetary penalties for noncompliance. We do not currently offer or advertise our services in the European Union, and all of our services are charged in U.S. dollars. In the past we have marketed air transportation service for a significant event held in the EU, and we have arranged charter services for clients. These activities, and similar activities we may engage in in the future, could require us to comply with the GDPR.

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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.

~~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 also increasing the costs of our operations by 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~~

Blade has identified material weaknesses in its internal control over financial reporting. If Blade’s remediation of these material weaknesses is not effective, or if Blade experiences additional material weaknesses in the future or otherwise fails to maintain effective internal controls in the future, Blade may not be able to accurately or timely report its financial condition or results of operations, which may adversely affect investor confidence in Blade and, as a result, the value of the Class A 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 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 audits of Legacy Blade’s consolidated financial statements for the years ended September 30, 2019 and 2020, we identified two material weaknesses in our internal control over financial reporting, which have not been remediated as of June 30, 2021. The first material weakness relates to the lack of segregation of duties in our accounting procedures and approval of significant transactions, due in part to the lack of a sufficient number of personnel in the accounting and finance function. This weakness could lead to intentional or unintentional errors that might not be detected. Further, we do not have adequate documentation of the components of our internal control processes, making it difficult to appropriately monitor the effectiveness of our internal controls. The second material weakness arises from the need to augment our information technology and application controls, including, but not limited to, the ~~addition~~factors mentioned under “Forward-Looking Statements” and the risks of ~~formally documented controls around logical system access and code change management. Deficiencies~~our businesses described elsewhere in ~~logical access controls can result in unauthorized or inappropriate access to key applications and data.~~

We have engaged a top four audit firm and a public company financial readiness consultant to assist us in the process of designing and implementing measures to improve our internal control over financial reporting to remediate the material weaknesses, primarily by implementing additional review procedures within our accounting and finance department, hiring additional staff, and designing and implementing information technology and application controls in our financially significant systems. In addition, we have engaged external accounting experts to supplement our internal resources in our accounting and review processes.

this Quarterly Report on Form 10-Q.

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In addition, prior to our business combination with EIC, EIC identified a material weakness in its internal control over financial reporting related to the accounting for a significant and unusual transaction related to the warrants EIC issued in connection with the EIC IPO in September 2019. After discussion with EIC’s independent registered public accounting firm following the issuance of the SEC Staff Statement on April 12, 2021, EIC’s management and audit committee concluded that, in light of the SEC Staff Statement, it was appropriate to restate our previously issued and audited financial statements as of and for the years ended December 31, 2020. As a result of this material weakness, EIC management concluded that its internal control over financial reporting was not effective as of December 31, 2020. This material weakness resulted in a material misstatement of EIC’s warrant liabilities, change in fair value of warrant liabilities, additional paid-in capital, accumulated deficit and related financial disclosures as of and for the year ended December 31, 2020.

We have taken a number of measures to remediate these material weaknesses; however, if we are unable to remediate our 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 will incur additional costs to remediate material weaknesses in our internal control over financial reporting.

If Blade is unable to assert that its 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 Blade’s internal control over financial reporting, when required, lenders and investors may lose confidence in the accuracy and completeness of Blade’s financial reports and Blade 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 will be subject to the reporting requirements of the Exchange Act, the Sarbanes- Oxley Act, and the rules and regulations of the applicable listing standards of the Nasdaq. We expect that the requirements of these rules and regulations will continue to increase our legal, accounting and financial compliance costs, make some activities more difficult, time-consuming and costly and place significant strain on our personnel, systems and resources.

The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. In particular, Section 404 of the Sarbanes- Oxley Act (“Section 404”) will require 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 Class A 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 Class A common stock on the Nasdaq.

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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 (1) the accounting treatment of the Warrants will be re-evaluated for proper accounting treatment as a liability or equity and (2) the fair value of the liability of the public and private warrants will be remeasured and the change in the fair value of the liability will be recorded as other income (expense) in our income statement. Changes in the inputs and assumptions for the valuation model we use to determine the fair value of such liability may have a material impact on the estimated fair value of the embedded derivative liability. The share price of our common stock represents the primary underlying variable that impacts the value of the liability related to the Warrants, which are accounted for as derivative instruments. Additional factors that impact the value of the Warrants as derivative instruments include the volatility of our stock price, discount rates and stated interest rates. As a result, our consolidated financial statements and results of operations will fluctuate quarterly, based on various factors, such as the share price of our common stock, many of which are outside of our control. In addition, we may change the underlying assumptions used in our valuation model, which could in result in significant fluctuations in our results of operations. 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.

~~The price of the Company’s securities may change significantly and you could lose all or part of your investment as a result.~~

The trading price of the Class A common stock and Warrants is likely to be volatile. The stock market recently has experienced extreme volatility. This volatility often has been unrelated or disproportionate to the operating performance of particular companies. You may not be able to resell your 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 the Class A common stock, regardless of the Company’s actual operating performance. In addition, price volatility may be greater if the public float and trading volume of Class A common stock is low.

In the past, following periods of market volatility, stockholders have instituted securities class action litigation. If the Company was involved in securities litigation, it could have a substantial cost and divert resources and the attention of executive management from the Company’s business regardless of the outcome of such litigation.

~~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 & 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 Class A common stock purchasable upon exercise of a Warrant.

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~~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 the Class A 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 or its permitted transferees.

In addition, we may redeem Warrants (including Private Placement Warrants) for a number of shares of Class A common stock determined based on the redemption date and the fair market value of the Class A 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 the Class A common stock had your Warrants remained outstanding.

~~We do not expect to declare any dividends in the foreseeable future.~~

The Company intends 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 the Class A common stock will be at the sole discretion of the Company’s board of directors. The Company’s board of directors may take into account general and economic conditions, the Company’s financial condition and results of operations, the Company’s available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax, and regulatory restrictions, implications on the payment of dividends by the Company to its stockholders or by its subsidiaries to it and such other factors as the Company’s board of directors may deem relevant. As a result, you may not receive any return on an investment in the Company’s Class A common stock unless you sell the Company’s Class A common stock for a price greater than that which you paid for it.

~~A market for our securities may not continue, which would adversely affect the liquidity and price of our securities.~~

~~The price of our securities may fluctuate significantly due to general market and economic conditions.~~

~~An active trading market for our securities may not be sustained.~~

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 Class A 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 under our 2021 Omnibus Incentive Plan without stockholder approval in a number of circumstances. Our issuance of additional common stock or other equity securities could have one or more of the following effects:

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~~our existing stockholders’ proportionate ownership interest in us will decrease;~~

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~~the amount of cash available per share, including for payment of dividends in the future, may decrease;~~

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~~the relative voting strength of each previously outstanding share of common stock may be diminished; and~~

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~~the market price of our Class A common stock may decline.~~

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~~We will incur significant costs and obligations as a result of being a public company.~~

As a privately held company, Legacy Blade was not required to comply with many corporate governance and financial reporting practices and policies required of a publicly traded company. As a publicly traded company, we will 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 Jumpstart Our Business Startups Act of 2012 (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, 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. We expect these rules and regulations will increase our legal and financial costs and lead to a diversion of management time and attention from revenue-generating activities.

For as long as we remain an “emerging growth company” as defined in the JOBS Act, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies.” We may remain an “emerging growth company until September 8, 2025 or such earlier time that we have more than $1.07 billion in annual revenues, have more than $700.0 million in market value of our Class A common stock held by non-affiliates, or issue more than $1.0 billion of non-convertible debt over a three-year period. To the extent we choose not to use exemptions from various reporting requirements under the JOBS Act, or if we no longer can be classified as an “emerging growth company,” we expect that we will incur additional compliance costs, which will reduce our ability to operate profitably.

We are an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to “emerging growth companies” or “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 an “emerging growth company” within the meaning of the Securities Act, as modified by 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” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes- Oxley Act, reduced disclosure obligations regarding executive compensation in our 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. As a result, our stockholders may not have access to certain information they may deem important. We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including if the market value of our common stock held by non-affiliates exceeds $700 million as of the end of any second quarter of a fiscal year, in which case we would no longer be an emerging growth company as of the last day of such fiscal year. We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.

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 registration statement under the Securities Act 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. We have elected not to opt out of 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, we, 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 our financial statements with another public company that is not an emerging growth company or is an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

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Additionally, 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, and (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.

If we do not develop and implement all required accounting practices and policies, we may be unable to provide the financial information required of a U.S. publicly traded company in a timely and reliable manner.

As Legacy Blade was a privately held company, it was not required to adopt all of the financial reporting and disclosure procedures and controls required of a U.S. publicly traded company. We expect that the implementation of all required accounting practices and policies and the hiring of additional financial staff will increase our operating costs of and require our management to devote significant time and resources to such implementation. If we fail to develop and maintain effective internal controls and procedures and disclosure procedures and controls, we may be unable to provide financial information and required SEC reports that are timely and reliable. Any such delays or deficiencies could harm us, including by limiting our ability to obtain financing, either in the public capital markets or from private sources and damaging our reputation, which in either cause could 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 continued listing of our Class A common stock on Nasdaq.

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 Class A 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 of directors to designate the terms of and issue new series of preferred shares, which may make more difficult the removal of management 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.

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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.

~~Stockholders may experience dilution in the future.~~

The percentage of shares of Class A common stock owned by current stockholders may be diluted in the future because of equity issuances for acquisitions, capital market transactions or otherwise, including, without limitation, equity awards that we may grant to our directors, officers and employees or exercise of the Warrants. Such issuances may have a dilutive effect on our earnings per share, which could adversely affect the market price of the Class A common stock.

If securities or industry analysts do not publish research or reports about our business, if they change their recommendations regarding the Class A common stock or if our operating results do not meet their expectations, the Class A common stock price and trading volume could decline.

The trading market for the Class A common stock will depend in part on the research and reports that securities or industry analysts publish about us or our businesses. If no securities or industry analysts commence coverage of us, the trading price for the Class A common stock could be negatively impacted. In the event securities or industry analysts initiate coverage, 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 the Class A 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 the Class A common stock could decrease, which might cause the Class A common stock price and trading volume to decline.

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~~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 Class A common stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of Class A 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.

In connection with the merger, certain Legacy Blade stockholders, including the Sponsor, agreed with us, subject to certain exceptions, not to dispose of or hedge any of their shares of Class A common stock or securities convertible into or exchangeable for shares of common stock during the period from the Closing Date continuing through the earliest of: (i) the date that is 180 days from the Closing Date or (ii) such date on which we complete a liquidation, merger, stock exchange, reorganization or other similar transaction that results in all of the stockholders having the right to exchange their shares of Class A common stock for cash, securities or other property. In addition, certain Legacy Blade stockholders have agreed with us, subject to certain exceptions, not to dispose of or hedge any of their shares of Class A common stock or securities convertible into or exchangeable for shares of common stock during the period from the Closing Date continuing through and including the date that is six months after Closing (the “Lockup Period”), directly or indirectly, offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of any shares of Class A common stock of the Company, or any options or warrants to purchase any shares of the Class A common stock of the Company, or any securities convertible into, exchangeable for or that represent the right to receive shares of Class A common stock of the Company, or any interest in any of the foregoing. See “~~Certain Relationships and Related Party Transactions — Lockup Agreements~~”.

Pursuant to an Investor Rights Agreement, certain stockholders will have the right, subject to certain conditions, to require us to register the sale of their shares of Class A 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 the Class A common stock to decline.

As restrictions on resale end or if these stockholders exercise their registration rights, the trading price of shares of the Class A 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 Class A common stock or other securities.

In addition, the shares of Class A 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. A total number of shares representing 10% of the fully diluted shares of common stock immediately following consummation of the merger have been reserved for future issuance under our 2021 Omnibus Incentive Plan. The compensation committee of our board of directors may determine the exact number of shares to be reserved for future issuance under our 2021 Omnibus Incentive Plan at its discretion. We expect to file one or more registration statements on Form S-8 under the Securities Act to register shares of Class A common stock or securities convertible into or exchangeable for shares of Class A common stock issued pursuant to our 2021 Omnibus Incentive Plan. Any such Form S-8 registration statements will automatically become effective upon filing. Accordingly, shares registered under such registration statements will be available for sale in the open market. The initial registration statement on Form S-8 is expected to cover 10% of the fully diluted shares of Class A common stock immediately following consummation of the merger.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

~~Other than with respect to the PIPE Investment, the Company sold no securities during the three months ended June 30, 2021 that were not registered under the Securities Act.~~

On September 17, 2019, EIC consummated its initial public offering of 27,500,000 Units, which includes a partial exercise by the underwriter of the over-allotment option to purchase an additional 2,500,000 Units. The Units sold in the Initial Public Offering were sold at an offering price of $10.00 per Unit, generating total gross proceeds of $275,000,000. Deutsche Bank Securities Inc., Citigroup Global Markets Inc. and J.P. Morgan Securities LLC acted as book-running managers of the Initial Public Offering. The securities in the offering were registered under the Securities Act on a registration statement on Form S-1 (No. 333-233430). The funds from the initial public offering were used as consideration in the Merger.

Not applicable.

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Item 3.Defaults Upon Senior Securities

Not applicable.

Item 4.Mine Safety Disclosures

Not applicable.

Item 5. Other information

Executive Compensation

~~Form of Restricted Stock Unit Award Agreement~~

On ~~May 10, 2021,~~November 8, 2022 and November 9, 2022, the Compensation Committee ~~(“Compensation Committee”) of the Company’s Board of Directors approved a form of award agreement for grants of~~granted our named executive officers certain restricted stock units (“RSUs”~~, and such award agreement, the “RSU Award Agreement”~~) under the Company’s 2021 Omnibus Incentive Plan (the ~~“2021 Plan”~~“Plan”)~~. Pursuant to the RSU Award Agreement,~~ as described below.

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Name and Principal Position

RSUs (#)

Robert S. Wiesenthal

2,365,028

Chief Executive Officer

Melissa M. Tomkiel

931,791

President and General Counsel

William A. Heyburn

916,323

Chief Financial Officer and Head of Corporate Development

Upon vesting, each RSU ~~will entitle~~represents the ~~recipient~~right to receive one share of the Company’s ~~Class A~~ common stock, subject to vesting conditions that will be set forth in individual agreements. Even after vesting, the RSU Award Agreement provides for cancellation, rescission and recoupment if the recipient engages in “detrimental activity” (as defined in the 2021 Plan). Pursuantstock. Subject to the ~~RSU Award Agreement, dividend equivalents are subject~~terms and conditions of the Plan and the applicable award agreement, the RSUs will vest according to the ~~same vesting and forfeiture conditions as the corresponding RSU award.~~

~~The foregoing description of the RSU Award Agreement does not purport to be complete and is qualified in its entirety by reference~~following schedule: 6.25% (rounded down to the ~~full text~~nearest whole number) on the first day of ~~the RSU Award Agreement, a copy of which is filed as Exhibit 10.1 to this Quarterly Report on Form 10-Q and is incorporated herein by reference.~~

~~Base Salary Adjustments~~

On August 12, 2021, the Compensation Committee approved merit-based increases to the base salaries of certain of the Company’s executive officers, including the Company’s named executive officers, effective as of July 1, 2021. Theevery calendar quarter following ~~table sets forth the new salary for our Chief Executive Officer, our President and General Counsel, and our Chief Financial Officer and Head of Corporate Development:~~

Officer

Annual Base Salary Effective July 1, 2021
Robert S. Wiesenthal

$
500,000
Melissa M. Tomkiel

$
425,000
William A. Heyburn

$
375,000

~~Restricted Stock Unit Awards~~

To promote retention and provide additional incentives to the Company’s named executive officers, on August 12, 2021, the Compensation Committee approved grants of RSU awards under the 2021 Plan to our Chief Executive Officer, our President and General Counsel, and our Chief Financial Officer and Head of Corporate Development (collectively, the “August RSU Awards”). The August RSU Awards are evidenced by award agreements that are materially consistent with the form of RSU Award Agreement described above and filed as Exhibit 10.1 to this Quarterly Report on Form 10-Q.

~~Two-thirds of the RSUs under the August RSU Awards will become vested on July~~January 1, 2023 ~~and one-third of~~(with the first tranche to vest on April 1, 2023), with any remaining unvested RSUs ~~subject~~ to ~~the August RSU Awards will become vested~~vest on ~~July~~January 1, ~~2024,~~2027, in each case subject to such award recipient remaining continuously employed in good standing by the ~~recipients continued employment~~Company through ~~such~~the applicable vesting date.

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Item 6. Exhibits

The following table sets forth the number of RSUs granted to our Chief Executive Officer, our President and General Counsel, and our Chief Financial Officer and Head of Corporate Development pursuant to the August RSU Awards:


Exhibit No.		~~Number of RSUs Covered by~~ Description
~~Officer~~		~~August RSU Awards~~
~~Robert S. Wiesenthal~~ 2.1(1)		~~295,871~~
~~Melissa M. Tomkiel~~	~~157,583~~
~~William A. Heyburn~~	~~122,851~~

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~~Item 6.~~~~Exhibits~~

~~Exhibit No.~~	~~Description~~

~~2.1~~⁽¹⁾	Share Purchase Agreement, ~~and Plan of Merger,~~ dated as of ~~December 14, 2020~~May 18, 2022, by and among Blade Urban Air Mobility, Inc. and the Sellers party thereto
3.1(2)		Second Amended and Restated Certificate of Incorporation of Blade Air Mobility, Inc.
3.2⁽²⁾ (3)		Amended and Restated Bylaws of Blade Air Mobility, Inc.
~~4.1~~31.1*⁽³⁾		~~Specimen Class A Common Stock Certificate of Blade Air Mobility, Inc.~~
~~4.2~~⁽³⁾	~~Specimen Warrant Certificate of Blade Air Mobility, Inc.~~
~~4.3~~⁽⁴⁾	~~Warrant Agreement, dated September 12, 2019, by and between Experience Investment Corp. and American Stock Transfer & Trust Company, LLC, as warrant agent~~
10.1*	~~Restricted Stock Unit Award Agreement Pursuant to the Blade Air Mobility, Inc. 2021 Omnibus Incentive Plan.~~
31.1*	Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the ~~Sarbanes-Oxley~~Sarbanes- Oxley Act of 2002
32.2*		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the ~~Sarbanes-Oxley~~Sarbanes- Oxley Act of 2002
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 Exhibit 2.1 of our Form 8-K (file number 001-39046) filed on ~~December 15, 2020~~

May 19, 2022.

(2)Incorporated by reference to Exhibit 3.1 of our Form 8-K (file number 001-39046) filed on May 13, ~~2021~~

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~~Exhibit 3.2 of our Form 8-K (file number 001-39046) filed on ~~September 18, 2019~~

May 13, 2021.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		BLADE AIR MOBILITY, INC.

Date: ~~August 16, 2021~~ November 10, 2022		By:	/s/ Robert S. Wiesenthal
		Name:	Robert S. Wiesenthal
		Title:	Chief Executive Officer
	(Principal Executive Officer)

Date: ~~August 16, 2021~~ November 10, 2022		By:	/s/ William A. Heyburn
		Name:	William A. Heyburn
		Title:	Chief Financial Officer
	(Principal Financial Officer)

Date: ~~August 16, 2021~~ November 10, 2022		By:	/s/ Amir M. Cohen
		Name:	Amir M. Cohen
		Title:	Chief Accounting Officer (Principal Accounting Officer)


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


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


Large accelerated filer	☐o	Accelerated filer	☐o
Non-accelerated filer	☒x	Smaller reporting company	☒x
Emerging growth company	☒x

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			Page
PART I. FINANCIAL INFORMATION			3			3
Item 1.			Financial statements	3			3
		Unaudited Interim Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021	3
		Unaudited Interim Condensed Consolidated Statements of Operations for the three and nine months ended ~~June~~September 30, ~~2021~~2022 and ~~2020 (unaudited)~~2021	4			3
			Unaudited Interim Condensed ~~Consolidated Balance Sheets as of June 30, 2021 (Unaudited) and September 30, 2020~~		4
	~~Condensed~~ Consolidated Statements of ~~Changes in~~Comprehensive Loss for the three and nine months ended September 30, 2022 and 2021	5
		Unaudited Interim Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended ~~June~~September 30, ~~2021~~2022 and ~~2020 (unaudited)~~2021	6			5
			Unaudited Interim Condensed Consolidated Statements of Cash Flows for the nine months ended ~~June~~September 30, ~~2021~~2022 and ~~2020 (unaudited)~~2021	8			6
			Notes to ~~the~~ Unaudited Interim Condensed Consolidated Financial Statements ~~(unaudited)~~	9			7
Item 2.			Management’s discussion and analysis of financial condition and results of operations	25			25
Item 3.			Quantitative and qualitative disclosures about market risk	39			35
Item 4.			Controls and procedures	39			35

PART II. OTHER INFORMATION			41			37
Item 1.			Legal proceedings	41			37
Item 1A.			Risk factors	41			37
Item 2.			Unregistered sales of equity securities and use of proceeds	41			63
Item 3.			Defaults upon senior securities	41			64
Item 4.			Mine safety disclosures	41			64
Item 5.			Other information	41			64
Item 6.		Exhibits	42
~~Exhibits~~SIGNATURES			43			66


	For the Three Months Ended June 30,				For the Nine Months Ended June 30,
	2021		2020		2021		2020
Revenue	$	12,951	$	3,438	$	30,210	$	15,115
Operating expenses
Cost of revenue		9,910		2,804		23,905		14,392
Software development		213		220		555		691
General and administrative		9,809		1,561		18,023		7,376
Selling and marketing		790		329		2,091		2,284
Total operating expenses		20,722		4,914		44,574		24,743

Loss from operations		(7,771)		(1,476)		(14,364)		(9,628)

Other non-operating (expense) income
Change in fair value of warrant liabilities		(14,913)		—		(14,913)		—
Recapitalization costs attributable to warrant liabilities		(1,742)				(1,742)
Interest income, net		140		151		151		181
Total other non-operating (expense) income		(16,515)		151		(16,504)		181

Net loss	$	(24,286)	$	(1,325)	$	(30,868)	$	(9,447)

Weighted average shares outstanding, basic and diluted		51,569,634		25,210,933		34,078,573		25,209,794

Net loss per share, basic and diluted	$	(0.47)	$	(0.05)	$	(0.91)	$	(0.37)


	As of
	June 30, 2021		September 30, 2020
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	30,003	$	12,162
Restricted cash		630		114
Accounts receivable		1,712		1,092
Short term investments		303,163		—
Prepaid expenses and other current assets		7,221		1,011
Total current assets		342,729		14,379

Non-current assets
Property and equipment, net		1,725		1,759
Investment in joint venture		200		200
Intangible assets, net		895		533
Operating right-of-use asset		458		737
Other non-current assets		142		107
Total assets	$	346,149	$	17,715

Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable and accrued expenses	$	4,958	$	776
Deferred revenue		5,266		3,973
Operating lease liability, current		333		430
Note payable		—		1,165
Total current liabilities		10,557		6,344

Non-current liabilities
Warrant liability		38,799		—
Operating lease liability, long-term		95		291
Total liabilities		49,451		6,635

Commitments and Contingencies (Note 10)

Stockholders’ Equity
Preferred stock, $0.0001 par value, 2,000,000 shares authorized at June 30, 2021 and September 30, 2020. NaN shares issued and outstanding at June 30, 2021 and September 30, 2020.		—		—
Class A common stock, $0.0001 par value; 400,000,000 authorized; 69,403,489 and 25,268,848 shares issued and outstanding at June 30, 2021 and September 30, 2020, respectively.		7		3
Additional paid in capital		364,697		48,215
Accumulated deficit		(68,006)		(37,138)
Total stockholders’ equity		296,698		11,080

Total Liabilities and Stockholders’ Equity	$	346,149	$	17,715


												Total
	Preferred Stock			Class A Common Stock			Additional Paid-			Accumulated		Stockholders'
	Shares	Amount		Shares	Amount		In Capital			Deficit		Equity

Balance at April 1, 2021	0	$	0	26,115,841	$	3	$	51,413		$	(43,720)	$	7,696

Stock option exercise	—		—	9,627		—		5			—		5
Stock-based compensation - restricted stock	—		—	—		—		1,862			—		1,862
Stock-based compensation - stock options	—		—	—		—		656			—		656
Shares withheld for employee tax liability	—		—	—		—		(52)			—		(52)
EIC shares recapitalized, net of issuance costs and the fair value of warrant liabilities	—		—	30,778,021		3		191,180			—		191,183
Shares issued in PIPE, net of issuance costs	—		—	12,500,000		1		119,633			—		119,634
Net loss	—		—	—		—		—			(24,286)		(24,286)

Balance at June 30, 2021	—	$	—	69,403,489	$	7	$	364,697		$	(68,006)	$	296,698

Balance at April 1, 2020	—	$	—	25,210,933	$	3	$	47,893		$	(35,100)	$	12,796
		��
Stock-based compensation - stock options	—		—	—		—		90			—		90
Net loss	—		—	—		—		—			(1,325)		(1,325)

Balance at June 30, 2020	—	$	—	25,210,933	$	3	$	47,983		$	(36,425)	$	11,561

Balance at October 1, 2020	—	$	—	25,268,848	$	3	$	48,215		$	(37,138)	$	11,080

Issuance of restricted stock	—		—	790,497		—		—			—		—
Stock option exercise	—		—	66,123		—		24			—		24
Stock-based compensation - restricted stock	—		—	—		—		4,684			—		4,684
Stock-based compensation - stock options	—		—	—		—		1,013			—		1,013
Shares withheld for employee taxes	—		—	—		—		(52)			—		(52)
EIC shares recapitalized, net of issuance costs and the fair value of warrant liabilities	—		—	30,778,021		3		191,180			—		191,183
Shares issued in PIPE, net of issuance costs	—		—	12,500,000		1		119,633			—		119,634
Net loss	—		—	—		—		—			(30,868)		(30,868)

Balance at June 30, 2021	—	$	—	69,403,489	$	7	$	364,697		$	(68,006)	$	296,698

Balance at October 1, 2019	—	$	—	25,203,350	$	3	$	47,710		$	(26,978)	$	20,735
	—
Stock option exercise	—		—	7,583		—		5			—		5
Stock-based compensation - stock options	—		—	—		—		268			—		268
Net loss	—		—	—		—		—			(9,447)		(9,447)

Balance at June 30, 2020	0	$	0	25,210,933	$	3	$	47,983	��	$	(36,425)	$	11,561


	For the Three Months Ended
	June 30,
Product Line	2021		2020
Short distance	$	5,721	$	629
MediMobility organ transport and jet		6,500		2,636
Other		730		173
Total Revenue	$	12,951	$	3,438


	For the Nine Months Ended
	June 30,
Product Line	2021		2020
Short distance	$	8,900	$	5,767
MediMobility organ transport and jet		19,753		9,089
Other		1,557		259
Total Revenue	$	30,210	$	15,115


Cash, net of recapitalization costs	$	213,585
Prepaid expenses and other current assets		90
Accounts payable and accrued expenses		(348)
Warrant liability		(23,886)
Net assets acquired	$	189,441


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Product Line(1):
Short Distance	$	20,402	$	13,403	$	35,568	$	20,252
MediMobility Organ Transport	20,219		2,245		50,143		5,130
Jet and Other	5,101		4,668		22,274		17,158
Total Revenue	$	45,722	$	20,316	$	107,985	$	42,540


		June 30, 2021						September 30, 2020
		Gross						Gross
		Carrying		Accumulated				Carrying		Accumulated
		Amount		Amortization		Net		Amount		Amortization		Net
Intangible assets	Estimated useful life
Customer list	5 years	$	942	$	(554)	$	388	$	942	$	(414)	$	528
Domain name	Indefinite		503		—		503		—		—		—
Trademarks	10 years		6		(2)		4		6		(1)		5
Total		$	1,451	$	(556)	$	895	$	948	$	(415)	$	533


	As of
Operating leases:	June 30, 2021		September 30, 2020
Operating right-of-use asset	$	458	$	737
Operating lease liability, current		333		430
Operating lease liability, long term		95		291


	For the Three Months Ended June 30,				For the Nine Months Ended June 30,
Lease cost	2021		2020		2021		2020
Short-term lease cost	$	66	$	18	$	118	$	48
Operating lease cost		116		147		343		329
Total	$	182	$	165	$	461	$	377


	As of June 30,		As of September 30,
	2021		2020
Weighted-average discount rate – operating lease	5.00	%	5.00	%
Weighted-average remaining lease term – operating lease (in months)	13		21


For the Years Ended September 30,
2021 (three months)	$	133
2022		270
2023		36
Total future minimum lease payments, undiscounted		439
Less: Imputed interest for leases in excess of one year		(11)
Present value of future minimum lease payments	$	428


Stock price	$	10.00
Exercise price	$	10.01
Dividend yield		0	%
Expected volatility		60	%
Risk-Free interest rate		0.63	%
Expected life (in years)		6.08


						Weighted
				Weighted		Average
		Weighted		Average		Remaining
		Average		Grant Date		Life	Intrinsic
	Options	Exercise Price		Fair Value		(years)	Value
Outstanding – October 1, 2020	9,859,674	$	0.19	$	0.20	6.8	$	0
Granted	10,920		10.01		5.49
Exercised	(66,123)		0.36		0.25
Forfeited	(114,645)		0.25		0.12
Outstanding – June 30, 2021	9,689,826	$	0.20	$	0.20	6.1	$	99,824
Exercisable as of June 30, 2021	9,683,001	$	0.19	$	0.20	6.1	$	99,818


		Weighted
		Average
	Shares of Restricted	Grant Date
	Stock	Fair Value
Non-vested – October 1, 2020	—	$	—
Granted	790,497		10.00
Vested	(87,360)		10.00
Non-vested – June 30, 2021	703,137	$	10.00


			Private
	Public		Placement		Total Warrant
	Warrants		Warrants		Liability
Fair value as of September 30, 2020	$	0	$	0	$	0

Assumption of warrants in recapitalization		15,456		8,430		23,886
Change in fair value of warrant liabilities		9,649		5,264		14,913

Fair value as of June 30, 2021	$	25,105	$	13,694	$	38,799


	Three Months Ended		Nine Months Ended
	June 30,		June 30,
	2021	2020	2021	2020
Seats flown – all flights	6,813	922	12,695	13,200


	Three Months Ended June 30,
	2021		2020
	$	% of Revenue	$	% of Revenue
Revenue	12,951	100	3,438	100

Operating expenses
Cost of revenue	9,910	77	2,804	82
Software development	213	2	220	6
General and administrative	9,809	76	1,561	45
Selling and marketing	790	6	329	10
Total operating expenses	20,722	161	4,914	143

Loss from operations	(7,771)		(1,476)

Other non-operating (expense) income
Change in fair value of warrant liabilities	(14,913)		—
Recapitalization costs attributable to warrant liabilities	(1,742)		—
Interest income,net	140		151
Total other non-operating (expense) income	(16,515)		151

Net loss	(24,286)		(1,325)
Weighted average shares outstanding, basic and diluted	51,569,634		25,210,933
Net loss per share, basic and diluted	(0.47)		(0.05)


	Nine Months Ended June 30,
	2021		2020
	$	% of Revenue	$	% of Revenue
Revenue	30,210	100	15,115	100

Operating expenses
Cost of revenue	23,905	79	14,392	95
Software development	555	2	691	5
General and administrative	18,023	60	7,376	49
Selling and marketing	2,091	7	2,284	15
Total operating expenses	44,574	148	24,743	164

Loss from operations	(14,364)		(9,628)

Other non-operating (expense) income
Change in fair value of warrant liabilities	(14,913)		—
Recapitalization costs attributable to warrant liabilities	(1,742)
Interest income, net	151		181
Total other non-operating (expense) income	(16,504)		181

Net loss	(30,868)		(9,447)
Weighted average shares outstanding, basic and diluted	34,078,573		25,209,794
Net loss per share, basic and diluted	(0.91)		(0.37)


	Nine Months Ended June 30,				Change
	2021		2020		$		%
Net cash used in operating activities	$	(9,825)	$	(9,915)	$	(90)	(1)
Net cash used in investing activities		(303,896)		(381)		(303,515)	(79,663)
Net cash provided by financing activities		332,078		1,170		330,908	28,282
Net increase (decrease) in cash, cash equivalents and restricted cash	$	18,357	$	(9,126)	$	27,483	301


Officer	Annual Base Salary Effective July 1, 2021
Robert S. Wiesenthal	$	500,000
Melissa M. Tomkiel	$	425,000
William A. Heyburn	$	375,000