# Strata Critical Medical, Inc.: Form 10-Q for the period ended Jun 30, 2023

- Company: [Strata Critical Medical, Inc.](/companies/srta.md) (CIK 1779128)
- Form: 10-Q
- Filed: 2023-08-09
- Accepted by EDGAR: Aug 9, 2023, 08:29 ET
- Period: 2023-06-30
- Accession: 0001779128-23-000077
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1779128/000177912823000077/blde-20230630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1779128/000177912823000077/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-04-01 to 2023-06-30 | $61.0m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2023-01-01 to 2023-06-30 | $106.3m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2023-04-01 to 2023-06-30 | $50.6m | us-gaap:CostOfRevenue |
| Cost of revenue | 6 months, 2023-01-01 to 2023-06-30 | $88.7m | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2023-04-01 to 2023-06-30 | $10.4m | us-gaap:GrossProfit |
| Gross profit | 6 months, 2023-01-01 to 2023-06-30 | $17.5m | us-gaap:GrossProfit |
| Operating income | 3 months, 2023-04-01 to 2023-06-30 | −$12.2m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2023-01-01 to 2023-06-30 | −$25.0m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2023-04-01 to 2023-06-30 | −$376.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2023-01-01 to 2023-06-30 | −$572.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-04-01 to 2023-06-30 | −$12.2m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2023-01-01 to 2023-06-30 | −$22.4m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-04-01 to 2023-06-30 | −$0.17 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2023-01-01 to 2023-06-30 | −$0.31 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-04-01 to 2023-06-30 | −$0.17 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2023-01-01 to 2023-06-30 | −$0.31 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-04-01 to 2023-06-30 | 73,169,003 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2023-01-01 to 2023-06-30 | 72,584,138 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2023-01-01 to 2023-06-30 | −$25.1m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2023-01-01 to 2023-06-30 | $1.4m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2023-06-30 | $37.3m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-06-30 | $209.0m | us-gaap:AssetsCurrent |
| Total assets | at 2023-06-30 | $320.2m | us-gaap:Assets |
| Current liabilities | at 2023-06-30 | $29.3m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-06-30 | $59.4m | us-gaap:Liabilities |
| Shareholders' equity | at 2023-06-30 | $260.8m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 62,752 characters.

*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 the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.*

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

### Forward-Looking Statements

This Quarterly Report on Form 10-Q may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified using forward-looking terminology, including the terms “believes”, “estimates”, “anticipates”, “expects”, “seeks”, “projects”, “intends”, “plans”, “may”, “will” or “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in several places throughout this report and include statements regarding our intentions, beliefs or current expectations concerning, among other things, results of operations, financial condition, liquidity, prospects, growth, strategies, the markets in which we operate and the development of Electric Vertical Aircraft (“EVA”) technology. Such forward-looking statements are based on available current market material and management’s expectations, beliefs, and forecasts concerning future events impacting us and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and generally beyond our control. Actual results and the timing of events may differ materially from the results anticipated in these forward-looking statements.

Our operations and financial results are subject to various risks and uncertainties. The following are among those factors, but are not the only factors, that could adversely affect us and/or that may cause actual results to differ materially from such forward-looking statements:

- continued occurrence of significant losses, which we have experienced since inception;
- the impact of COVID-19 and its related effects on our results of operations, financial performance or other financial metrics;
- the markets in which we operate may fail to grow or may grow more slowly than expected;
- our ability to effectively market and sell air transportation as a substitute for conventional methods of transportation;
- changes in consumer preferences, discretionary spending and other economic conditions;
- the inability or unavailability to use or take advantage of the shift, or lack thereof, to EVA technology;
- our ability to enter new markets and offer new routes and services;
- any adverse publicity stemming from accidents involving small aircraft, helicopters or charter flights and, in particular, any accidents involving our third-party operators;
- effects of competition;
- our reliance on contractual relationships with certain transplant centers, hospitals and organ procurement organizations;
- harm to our reputation and brand;
- our ability to provide high-quality customer support;
- our ability to maintain a high daily aircraft usage rate and to aggregate fliers on our by-the-seat flights;
- impact of natural disasters, outbreaks and pandemics, economic, social, weather, growth constraints, and regulatory conditions or other circumstances on metropolitan areas and airports where we have geographic concentration;
- the effects of climate change;
- the availability of aircraft fuel;
- our ability to address system failures, defects, errors or vulnerabilities in our website, applications, backend systems or other technology systems or those of third-party technology providers;
- interruptions or security breaches of our information technology systems;
- our placements within mobile operating systems and application marketplaces;
- our ability to protect our intellectual property rights;
- our use of open source software;
- our ability to expand and maintain our infrastructure network;
- our ability to access additional funding;
- the increase of costs and risks associated with international expansion;
- our ability to identify, complete and successfully integrate future acquisitions;
- our ability to manage our growth;
- increases in insurance costs or reductions in insurance coverage;
- the loss of key members of our management team;
- our ability to maintain our company culture;
- effects of fluctuating financial results;
- our reliance on third-party operators to provide and operate aircraft;
- the availability of third-party aircraft operators to match demand;
- disruptions to third-party operators and providers workforce;
- increases in insurance costs or reductions in insurance coverage for our third-party aircraft operators;
- the possibility that our third-party aircraft operators may illegally, improperly or otherwise inappropriately operate our branded aircraft;
- our reliance on third-party web service providers;
- changes in our regulatory environment;
- regulatory obstacles in local governments;
- the expansion of domestic and foreign privacy and security laws;
- the expansion of environmental regulation;
- our ability to remediate any material weaknesses or maintain effective internal controls over financial reporting;
- our ability to maintain effective internal controls and disclosure controls;
- changes in fair value of our warrants;
- changes to the price of our securities;
- the possibility that our warrants may expire worthless;
- our ability to redeem outstanding warrants;
- our intention to not declare any dividends in the foreseeable future;
- the possibility that we may issue additional equity securities;
- our use of “emerging growth company” and “smaller reporting company” exemptions from disclosure requirements;
- provisions in our charter that may discourage unsolicited takeover proposals;
- provisions in our charter that designate exclusive forum; and
- the other factors described elsewhere in the Annual Report on Form 10-K for the year ended December 31, 2022, included under the headings “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition” or as described in the other documents and reports we file with the SEC.

Actual results, performance or achievements may differ materially, and potentially adversely, from any forward-looking statements and the assumptions on which those forward-looking statements are based. There can be no assurance that the data contained herein is reflective of future performance to any degree. You are cautioned not to place undue reliance on forward-looking statements as a predictor of future performance. All information set forth herein speaks only as of the date hereof and we disclaim any intention or obligation to update any forward-looking statements, whether as a result of new information, changes in expectations, future events or otherwise.

### Overview

Blade is a technology-powered, global air mobility 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 our exclusive passenger terminal infrastructure, is designed to facilitate a seamless transition to Electric Vertical Aircraft (“EVA” or “eVTOL”), which is expected to enable lower cost air mobility to the public that is both quiet and emission-free. Blade operates in three key product lines across two segments (see Note 5 to the unaudited interim condensed consolidated financial statements included herein for further information on reportable segments):

#### Passenger segment

- *Short Distance –* Consisting primarily of helicopter and amphibious seaplane flights in the United States, Canada and Europe between 10 and 100 miles in distance. Flights are available for purchase both by-the-seat and on a full aircraft charter basis.
- *Jet and Other –* Consists principally of revenues from non-medical jet charter and by-the-seat jet flights between New York and South Florida, revenue from brand partners for exposure to Blade fliers and certain ground transportation services.

#### Medical segment

- *MediMobility Organ Transport –* Consisting of transportation of human organs for transplant and/or the medical teams supporting these services.

### Blade Europe Acquisition

On September 1, 2022, Blade acquired, through Blade Europe SAS, a wholly-owned French société par actions simplifiée subsidiary (“Blade Europe”), 100% of the share capital and voting rights of Héli Tickets France SAS (“Héli Tickets France”), a French société par actions simplifiée, which was then renamed “Blade France SAS” (“Blade France”) and of Helicopter Monaco SARL (“Helicopter Monaco”), a Monegasque société à responsabilité limitée, which was then renamed “Blade Monaco SARL” (“Blade Monaco”). We refer to the three European legal entities (Blade Europe, Blade France and Blade Monaco) collectively as “Blade Europe”. These acquisitions are part of Blade’s growth strategy of leveraging its asset-light model, technology and recognized brand to aggregate the best use cases for urban air mobility. The routes in Southern France, Monaco, Italy and Switzerland, meet the criteria given the geography, short distances and large addressable markets. In addition these markets have connectivity to our existing service areas where the Blade brand enjoys recognition, creating the opportunity for cross pollination between our North American and European customer base. As a result of this acquisition and an Aircraft Operator Agreement Blade Europe entered into in connection with the acquisition, Blade gained the right to act as the exclusive air charter broker and/or reseller of air transportation services to be operated and provided by the operator partners at pre-negotiated fixed hourly rates and with a minimum number of annual flight hours guaranteed to the operators by Blade. The initial term of the Aircraft Operator Agreement ends on December 31, 2032 and it will automatically renew for successive three year periods.

### Seats Flown

The following table reflects the key operating metric we use to evaluate the Passenger segment:

| 2023 | Three Months Ended June 30, 2022 | 2023 | Six Months Ended June 30, 2022 |  |
| --- | ---: | ---: | ---: | ---: |
| Seats flown – all passenger flights | 41,637 | 28,241 | 70,187 | 46,735 |

We define “Seats flown — all passenger flights” (Seats Flown) as the total number of seats purchased by paying passengers on all flights, whether sold by-the-seat or within a charter arrangement. Our long-term consumer-facing strategy is primarily focused on growth in by-the-seat products, and we believe that Seats Flown is an important indicator of our progress in executing on this growth strategy. This metric is not always directly correlated with revenue given the significant variability in the price we charge per seat flown across our various products and routes. For products and routes sold by-the-seat, we fly significantly more passengers at a low price per seat; growth in these areas is captured by Seats Flown, but has less impact on revenue, which is heavily influenced by the Jet and Other product lines where we typically fly fewer passengers over long distances at a high price. We believe the Seats Flown metric is useful to investors in understanding the overall scale of our Passenger segment and trends in the number of passengers paying to use our service.

### Our Business Model

Blade leverages an asset-light business model: we 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 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 takes the economic risk of aggregating fliers to optimize flight profitability, providing predictable margins for our operators.

We typically pre-negotiate fixed hourly rates and flight times with our aircraft operators, paying only for flights actually flown, creating a predictable and flexible cost structure. Blade will sometimes provide guaranteed flight commitments to 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, international expansion, next-generation verticraft and ancillary services (e.g., last/first-mile ground connections, trip cancellation insurance, baggage delivery) through our mobile apps, website and cloud-based tools.

Our asset-light business model was developed to be scalable and profitable using conventional aircraft today while enabling a seamless transition to EVA, once they are certified for public use. We intend to leverage the expected lower operating costs of EVA versus helicopters to reduce the consumer’s price for our flights. Additionally, we expect the reduced noise footprint and zero carbon emission characteristics of EVA to allow for the development of new, vertical landing infrastructure (“vertiports”) in our existing and new markets. In the interim, we purchase offsets to counteract the carbon emissions generated by our urban air mobility services.

### Factors Affecting our Performance

### Ability to attract and retain fliers in our Short Distance product line

Our success depends in part on our ability to cost-effectively attract new fliers, retain existing fliers and increase utilization of our 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 product line

Our MediMobility Organ Transport product line primarily serves transplant centers, organ procurement organizations and hospitals. Transportation for the hearts, lungs and livers that make up the vast majority of this product line is typically requested only hours before the required departure time. Our ability to successfully fulfill these requests with consistent pricing on the requested aircraft type, be it jet, turboprop or helicopter, is the primary metric by which MediMobility Organ Transport Customers evaluate our performance.

We utilize the same aircraft and aircraft operators in our Passenger segment. Historically, the combination of our Passenger and MediMobility Organ Transport demand, has been enough to incentivize operators to provide dedicated aircraft and crews for our use. However, there is no guarantee that we will continue to be able to secure dedicated aircraft at favorable rates, particularly given significant increases in demand for private jet aircraft in the United States in recent years. 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 our ability to maintain or increase our access to dedicated jet aircraft at fixed prices.

### Impact of inflation to our business

We generally pay a fixed hourly rate to our third-party operators, based on flight hours flown. These rates are susceptible to inflation and are typically renegotiated on a yearly basis, though some multi-year contracts have fixed rate increases. Some contracts with operators allow for pass-through of fuel price increases above a set threshold. We have historically passed through cost inflation to customers and most contracts with our MediMobility Organ Transport Customers automatically pass through any fuel surcharges, but there is no guarantee this will continue in the future.

### Passenger Expansion into New Geographic Markets

Our Passenger segment growth plan is focused on dense urban areas, primarily those with existing air transportation infrastructure that are facing increasing ground congestion. In these areas, our urban air mobility services can provide the most time savings for our fliers, and given the short distances involved, costs for our services can be comparable to luxury, private car services. 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. The number of potential fliers using our urban air mobility services in any market cannot be predicted with any degree of certainty, and we cannot provide assurance that we will be able to operate in a profitable manner in any of our current or targeted future markets.

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.

### Development, approval and acceptance of EVA for commercial service

We intend to leverage the expected lower operating costs of EVA versus helicopters to reduce the price for our flights. Additionally, we expect the reduced noise footprint and zero carbon emission characteristics of EVA to allow for the development of new vertiports in our existing and new markets. However, 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. In our Passenger segment, we believe our existing Short Distance routes will be compatible with EVA, which are initially expected to have a limited range, and our existing terminal space will accommodate EVA. Additionally, we believe that the last-mile transports we perform using helicopters or ground vehicles in our Medical segment may be compatible with EVA, reducing organ transport time and cost for our customers. Blade’s unit economics are designed to be profitable using either conventional helicopters or EVA, even if early EVA do not deliver significant cost savings relative to helicopters. Moreover, Blade’s asset-light business model and technology platform are operator and aircraft agnostic, enabling a seamless transition to EVA.

### Seasonality

#### Passenger segment

Historically, we have experienced significant seasonality in our Short Distance product line with flight volume peaking during the quarters ended June 30 (Q2) and September 30 (Q3) of each fiscal year due to the busy summer travel season, with lower volume during the quarters ended March 31 (Q1) and December 31 (Q4).

Jet and Other revenue has historically been stronger in the first and fourth quarter (Q1 and Q4) given that our by-the-seat jet service has historically operated only between November and April.

#### Medical segment

Historically, MediMobility Organ Transport demand has not been seasonal.

### Key Components of the Company’s Results of Operations

### Revenue

Short Distance products are typically purchased using the Blade App and paid for principally via credit card transactions, wire, check, customer credit, and gift cards, with payments principally collected by the Company in advance of the performance of related services. The revenue is recognized as the service is completed.

Jet products are typically purchased through our Flier Relations associates and our app and are paid for principally via checks, wires and credit card. Jet payments are typically collected at the time of booking before the performance of the related service. The revenue is recognized as the service is completed.

MediMobility Organ Transport products are typically purchased through our medical logistics coordinators and are paid for principally via checks and wires. Payments are generally collected after the performance of the related service in accordance with the client's payment terms. The revenue is recognized as the service is completed.

### Cost of Revenue

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

### Software Development

Software development expenses consist primarily of staff costs and stock-based compensation costs. Software development costs are expensed as incurred.

### General and Administrative

General and administrative expenses principally include staff costs including stock-based compensation, depreciation and amortization, directors and officers insurance costs, professional fees, credit card processing fees and establishment costs.

### Selling and Marketing

Selling and marketing expenses consist primarily of advertising costs, staff costs including stock-based compensation, marketing expenses, sales commissions and promotion costs. The trend and timing of our brand marketing expenses will depend in part on the timing of our expansion into new markets and other marketing campaigns.

### Results of Operations

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

*(in thousands)*

| 2023 | Three Months Ended June 30, 2022 | 2023 | Six Months Ended June 30, 2022 |  |
| --- | ---: | ---: | ---: | ---: |
| Revenue | $60,989 | $35,633 | $106,260 | $62,263 |
| Operating expenses |  |  |  |  |
| Cost of revenue | 50,620 | 30,522 | 88,727 | 54,229 |
| Software development | 1,440 | 1,062 | 2,563 | 1,897 |
| General and administrative | 18,410 | 12,144 | 34,667 | 26,122 |
| Selling and marketing | 2,728 | 1,638 | 5,339 | 3,438 |
| Total operating expenses | 73,198 | 45,366 | 131,296 | 85,686 |
| Loss from operations | (12,209) | (9,733) | (25,036) | (23,423) |
| Other non-operating (expense) income |  |  |  |  |
| Interest income, net | 2,077 | 455 | 4,031 | 719 |
| Change in fair value of warrant liabilities | (2,462) | 19,266 | (1,896) | 21,816 |
| Realized loss from sales of short-term investments | (14) | (1,576) | (95) | (1,712) |
| Total other non-operating (expense) income | (399) | 18,145 | 2,040 | 20,823 |
| (Loss) income before income taxes | (12,608) | 8,412 | (22,996) | (2,600) |
| Income tax benefit | (376) | — | (572) | — |
| Net (loss) income | $(12,232) | $8,412 | $(22,424) | $(2,600) |

29

### Revenue

Disaggregated revenue by product line was as follows:

*(in thousands, except percentages)*

| 2023 Product Line: | Three Months Ended June 30, 2022 | % Change | 2023 | Six Months Ended June 30, 2022 | % Change |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Short Distance | $19,184 | $10,963 | 75% | $29,609 | $15,166 | 95% |
| Jet and Other | 7,406 | 7,421 | —% | 15,485 | 17,173 | (10)% |
| MediMobility Organ Transport | 34,399 | 17,249 | 99% | 61,166 | 29,924 | 104% |
| Total Revenue | $60,989 | $35,633 | 71% | $106,260 | $62,263 | 71% |

### Comparison of the Three Months Ended June 30, 2023 and 2022

For the three months ended June 30, 2023 and 2022, revenue increased by $25.4 million or 71%, from $35.6 million in 2022 to $61.0 million in 2023.

Short Distance revenue increased by $8.2 million or 75%, from $11.0 million in 2022 to $19.2 million in 2023. Growth in Short Distance was primarily driven by the acquisition of Blade Europe in September 2022, increased passenger volumes and average seat pricing for our New York by-the-seat airport transfer products, increased volumes of Northeast helicopter charters and growth in our Northeast commuter products.

Jet and Other revenue was flat year over year at $7.4 million as an increase in jet charter volume was offset by lower average pricing per trip.

MediMobility Organ Transport revenue increased by $17.2 million or 99% from $17.2 million in 2022 to $34.4 million in 2023. Growth in MediMobility Organ Transport was driven by 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 organs for transplant involving longer travel distances.

### Comparison of the Six Months Ended June 30, 2023 and 2022

For the six months ended June 30, 2023 and 2022, revenue increased by $44.0 million or 71%, from $62.3 million in 2022 to $106.3 million in 2023.

Short Distance revenue increased by $14.4 million or 95% from $15.2 million in 2022 to $29.6 million in 2023. Growth in Short Distance revenue was primarily driven by the acquisition of Blade Europe in September 2022, increased passenger volumes and average seat pricing for our New York by-the-seat airport transfer products, increased volumes of Northeast helicopter charters and growth in our Northeast commuter products.

Jet and Other revenue decreased by $(1.7) million or (10)% from $17.2 million in 2022 to $15.5 million in 2023. The decline was driven by lower average jet charter trip pricing, which more than offset a slight increase in jet charter volumes.

MediMobility Organ Transport revenue increased by $31.2 million or 104% from $29.9 million in 2022 to $61.2 million in 2023. Growth in MediMobility Organ Transport was driven by 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 organs for transplant involving longer travel distances.

### Cost of Revenue

*(in thousands, except percentages)*

| 2023 | Three Months Ended June 30, 2022 | % Change | 2023 | Six Months Ended June 30, 2022 | % Change |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Cost of revenue | $50,620 | $30,522 | 66% | $88,727 | $54,229 | 64% |
| Percentage of revenue | 83% | 86% |  | 83% | 87% |  |

### Comparison of the Three Months Ended June 30, 2023 and 2022

For the three months ended June 30, 2023 and 2022, cost of revenue increased by $20.1 million, or 66%, from $30.5 million during 2022 to $50.6 million in 2023 driven by increased flight volume and an increase in the average price per trip.

Cost of revenue as a percentage of revenues decreased by 3 percentage points from 86% in 2022 to 83% in 2023. This change is attributable primarily to (i) increased use of dedicated aircraft in our MediMobility business line, which results in lower costs; (ii) the acquisition of Blade Europe, which operates at a lower cost of revenue as a percentage of revenue compared with our Short Distance and Medical products; (iii) improved pricing and utilization in our New York by-the-seat Airport Transfer product; and (iv) a reduction in spot market jet charter costs, which decreased more quickly than our jet charter pricing.

### Comparison of the Six Months Ended June 30, 2023 and 2022

For the six months ended June 30, 2023 and 2022, cost of revenue increased by $34.5 million or 64%, from $54.2 million during 2022 to $88.7 million during 2023 driven by increased flight volume and an increase in the average price per trip.

Cost of revenue as a percentage of revenues decreased by 4 percentage points from 87% in 2022 to 83% in 2023, attributable primarily to (i) increased use of dedicated aircraft in our MediMobility business line, which results in lower costs; (ii) the acquisition of Blade Europe, which operates at a lower cost of revenue as a percentage of revenue compared with our Short Distance and Medical products; (iii) higher passenger utilization at Blade Canada in the current year period, compared with the six months ended June 30, 2022 which was negatively impacted by the COVID-19 Omicron variant; and (iv) improved pricing and utilization in our New York by-the-seat Airport Transfer product.

### Software Development

*(in thousands, except percentages)*

| 2023 | Three Months Ended June 30, 2022 | % Change | 2023 | Six Months Ended June 30, 2022 | % Change |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Software development | $1,440 | 1,062 | 36% | $2,563 | 1,897 | 35% |
| Percentage of revenue | 2% | 3% |  | 2% | 3% |  |

### Comparison of the Three Months Ended June 30, 2023 and 2022

For the three months ended June 30, 2023 and 2022, software development costs increased by $0.4 million, or 36%, from $1.1 million during 2022 to $1.4 million in 2023, attributable primarily to (i) a $0.2 million increase in consulting costs related to improvements to our organ transportation software platform and internationalization work for our passenger software platform; and (ii) $0.2 million of severance and other staff costs.

### Comparison of the Six Months Ended June 30, 2023 and 2022

For the six months ended June 30, 2023 and 2022, software development costs increased by $0.7 million, or 35%, from $1.9 million during 2022 to $2.6 million during 2023, attributable primarily to (i) a $0.6 million increase in consulting costs related to improvements to our organ transportation software platform and internationalization work for our passenger software platform; (ii) a $0.2 million increase for accruals related to our short term incentive plan for the year 2023; and (iii) $0.1 million of severance expenses, partially offset by a $0.2 million decrease in staff costs and stock-based compensation.

### General and Administrative

*(in thousands, except percentages)*

| 2023 | Three Months Ended June 30, 2022 | % Change | 2023 | Six Months Ended June 30, 2022 | % Change |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| General and administrative | $18,410 | $12,144 | 52% | $34,667 | $26,122 | 33% |
| Percentage of revenue | 30% | 34% |  | 33% | 42% |  |

### Comparison of the Three Months Ended June 30, 2023 and 2022

For the three months ended June 30, 2023 and 2022, general and administrative expense increased by $6.3 million, or 52%, from $12.1 million during 2022 to $18.4 million in 2023.

The primary drivers of the net increase were: (i) a $3.6 million increase in staff costs attributable to new hires in order to support our significant growth, both organically and through our acquisition of Blade Europe (September 2022); (ii) a $3.0 million increase attributable to an estimate of contingent consideration compensation (earn-out) in connection with the Trinity acquisition calculated based on expected 2023 performance, which will be paid in 2024 (see Note 8 - “Commitments and Contingencies” to the consolidated financial statements included herein); (iii) a $0.8 million increase in intangibles amortization costs as a result of our acquisition of Blade Europe, which did not exist in the prior year period; (iv) a $0.3 million increase in credit card processing fees (correlated with higher revenue); and (v) a $0.2 million increase in rent and lease costs attributable to new leases; those increases were partially offset by $1.7 million decrease in corporate costs (professional fees and insurance costs).

### Comparison of the Six Months Ended June 30, 2023 and 2022

For the six months ended June 30, 2023 and 2022, general and administrative expense increased by $8.5 million or 33%, from $26.1 million during 2022 to $34.7 million in 2023.

The primary drivers of the net increase were: (i) a $6.9 million increase in staff costs attributable to new hires in order to support our significant growth, both organically and through our acquisition of Blade Europe (September 2022); (ii) a $3.0 million increase attributable to an estimate of contingent consideration compensation (earn-out) in connection with the Trinity acquisition calculated based on expected 2023 performance, which will be paid in 2024 (see Note 8 - “Commitments and Contingencies” to the consolidated financial statements included herein); (iii) a $1.2 million increase in intangibles amortization costs (primarily as a result of our acquisition of Blade Europe, which did not exist in the prior year period); (iv) a $0.7 million increase across various general and administrative items in line with the company’s growth and geographical expansion; and (v) a $0.6 million increase in rent and lease costs attributable to new leases; those increases were partially offset by a $3.8 million decrease in corporate costs (professional fees and insurance costs).

### Selling and Marketing

*(in thousands, except percentages)*

| 2023 | Three Months Ended June 30, 2022 | % Change | 2023 | Six Months Ended June 30, 2022 | % Change |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Selling and marketing | $2,728 | $1,638 | 67% | $5,339 | $3,438 | 55% |
| Percentage of revenue | 4% | 5% |  | 5% | 6% |  |

### Comparison of the Three Months Ended June 30, 2023 and 2022

For the three months ended June 30, 2023 and 2022, selling and marketing expense increased by $1.1 million, or 67%, from $1.6 million during 2022 to $2.7 million in 2023. The increase is attributable primarily to: (i) a $0.6 million increase in sales commissions attributable to MediMobility Organ Transport revenue growth from new clients, and to Blade Europe (which was acquired after prior year period) where certain hotels earn commissions for facilitating transactions; (ii) a $0.3 million increase in staff costs due to increased headcount; and (iii) a $0.2 million increase in events and other marketing expenses.

### Comparison of the Six Months Ended June 30, 2023 and 2022

For the six months ended June 30, 2023 and 2022, selling and marketing expense increased by $1.9 million, or 55%, from $3.4 million during 2022 to $5.3 million in 2023. The increase is attributable primarily to: (i) a $0.8 million increase in sales commissions attributable mainly to high MediMobility Organ Transport revenue growth from new clients; (ii) a $0.6 million increase in staff costs due to increased headcount; and (iii) $0.4 million increase in media, events and other marketing expenses.

### Other non-operating (expense) income

*(in thousands, except percentages)*

| 2023 | Three Months Ended June 30, 2022 | % Change | 2023 | Six Months Ended June 30, 2022 | % Change |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Interest income, net | $2,077 | $455 |  | $4,031 | $719 |  |
| Change in fair value of warrant liabilities | (2,462) | 19,266 |  | (1,896) | 21,816 |  |
| Realized loss from sales of short-term investments | (14) | (1,576) |  | (95) | (1,712) |  |
| Total other non-operating (expense) income | $(399) | $18,145 | (102)% | $2,040 | $20,823 | (90)% |

### Comparison of the Three Months Ended June 30, 2023 and 2022

For the three months ended June 30, 2023, total other non-operating expense consisted of: (i) $2.1 million interest income, net of interest expense attributable to higher interest rates on our short-term investments and our money market funds in the current year period; and (ii) $2.5 million non-cash expense due to fair value revaluation of warrant liabilities as the value of the warrant liabilities fluctuates with the warrants’ market price.

### Comparison of the Six Months Ended June 30, 2023 and 2022

For the six months ended June 30, 2023, total other non-operating income consists of: (i) $4.0 million interest income, net of interest expense attributable to higher interest rates on our short-term investments and our money market funds in the current year period; (ii) $1.9 million non-cash expense due to fair value revaluation of warrant liabilities as the value of the warrant liabilities fluctuates with the warrants’ market price; and (iii) a $0.1 million realized loss from sale of short-term investments.

### Segment Results of Operations

We operate our business as two reportable segments - Passenger and Medical. For additional information about our segments, see Note 5 - “Segment and Geographic Information” in the notes to the unaudited interim condensed consolidated financial statements of this Quarterly Report on Form 10-Q.

#### Segment Revenue, Segment Flight Profit and Segment Flight Margin

The following table presents our segment results for the periods indicated (in thousands, except percentages):

*(in thousands, except percentages)*

| Segment Revenue | Three Months Ended June 30, 2023 | 2022 | % Change | Six Months Ended June 30, 2023 | 2022 | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Passenger | $26,590 | $18,384 | 45% | $45,094 | $32,339 | 39% |
| Medical | 34,399 | 17,249 | 99% | 61,166 | 29,924 | 104% |
| Total revenue | $60,989 | $35,633 | 71% | $106,260 | $62,263 | 71% |
| **Segment Flight Profit** |  |  |  |  |  |  |
| Passenger | $4,642 | $2,478 | 87% | $7,454 | $3,167 | 135% |
| Medical | 5,727 | 2,633 | 118% | 10,079 | 4,867 | 107% |
| Total Flight Profit | $10,369 | $5,111 | 103% | $17,533 | $8,034 | 118% |
| **Segment Flight Margin** |  |  |  |  |  |  |
| Passenger | 17.5% | 13.5% |  | 16.5% | 9.8% |  |
| Medical | 16.6% | 15.3% |  | 16.5% | 16.3% |  |
| Total Flight Margin | 17.0% | 14.3% |  | 16.5% | 12.9% |  |

33

### Passenger segment

**For the three months ended June 30, 2023 and 2022, Passenger revenue increased by $8.2 million or 45%, from $18.4 million in 2022 to $26.6 million in 2023.** The increase was attributable to a $8.2 million increase in Short Distance . Refer to the disaggregated revenue discussion above under “—Comparison of the Three Months Ended June 30, 2023 and 2022—Revenue” for more details.

Passenger Flight Profit increased by $2.2 million or 87% for the three months ended June 30, 2023, from $2.5 million in the same period of 2022 to $4.6 million in 2023. The increase was attributable primarily to the acquisition of Blade Europe in September 2022, increased passenger volumes and average seat pricing for our New York by-the-seat airport transfer products, increased volumes of Northeast helicopter charters and growth in our Northeast commuter products.

Passenger Flight Margin increased from 13.5% in the three months ended June 30, 2022 to 17.5% in the same period in 2023. The increase was attributable primarily to: (i) the acquisition of Blade Europe, which operates at a higher average Flight Profit compared with the Passenger average; (ii) improved pricing and utilization in our New York by-the-seat Airport Transfer product; and (iii) a reduction in spot market jet charter costs, which decreased more quickly than our jet charter pricing.

**For the six months ended June 30, 2023 and 2022, Passenger revenue increased by $12.8 million or 39%, from $32.3 million in 2022 to $45.1 million in 2023.** The increase was attributable to a $14.4 million increase in Short Distance partially offset by a decrease of $1.7 million in Jet and Other. Refer to the disaggregated revenue discussion above under “—Comparison of the Six Months Ended June 30, 2023 and 2022—Revenue” for more details.

Passenger Flight Profit increased by $4.3 million or 135% for the six months ended June 30, 2023, from $3.2 million in the same period of 2022 to $7.5 million in 2023. The increase was attributable primarily to the acquisition of Blade Europe in September 2022, increased passenger volumes and average seat pricing for our New York by-the-seat airport transfer products, increased volumes of Northeast helicopter charters and growth in our Northeast commuter products.

Passenger Flight Margin increased from 9.8% in the six months ended June 30, 2022 to 16.5% in the same period in 2023. The increase was attributable primarily to: (i) the acquisition of Blade Europe, which operates at a higher Flight Profit compared with our Passenger average; (ii) higher passenger utilization at Blade Canada in the current year period, compared with the six months ended June 30, 2022 which was negatively impacted by the COVID-19 Omicron variant; (iii) improved pricing and utilization in our New York by-the-seat Airport Transfer product; and (iv) a reduction in spot market jet charter costs, which decreased more quickly than our jet charter pricing.

### Medical segment

**For the three months ended June 30, 2023 and 2022, Medical revenue increased by $17.2 million or 99%, from $17.2 million in 2022 to $34.4 million in 2023**. Refer to the disaggregated revenue discussion above under “—Comparison of the Three Months Ended June 30, 2023 and 2022—Revenue” for more details.

Medical Flight Profit increased by $3.1 million or 118% for the three months ended June 30, 2023, from $2.6 million in the same period of 2022 to $5.7 million in 2023. The increase was attributable primarily to increased revenue from new and existing clients.

Medical Flight Margin increased from 15.3% in the three months ended June 30, 2022 to 16.6% in the same period in 2023. The increase was attributable primarily to increased utilization of dedicated aircraft.

**For the six months ended June 30, 2023 and 2022, Medical revenue increased by $31.2 million or 104%, from $29.9 million in 2022 to $61.2 million in 2023.** Refer to the disaggregated revenue discussion above under “—Comparison of the Six Months Ended June 30, 2023 and 2022—Revenue” for more details.

Medical Flight Profit increased by $5.2 million or 107% for the six months ended June 30, 2023, from $4.9 million in the same period of 2022 to $10.1 million in 2023. The increase was attributable primarily to increased revenue from new and existing clients.

Medical Flight Margin increased from 16.3% in the six months ended June 30, 2022 to 16.5% in the same period in 2023. The increase was attributable primarily to increased utilization of dedicated aircraft.

#### Segment Adjusted EBITDA

Segment Adjusted EBITDA is defined as segment net income (loss) excluding non-cash items or certain transactions that are not indicative of ongoing Company operating performance and/or items that management does not believe are reflective of our ongoing core operations.

*(in thousands, except percentages)*

| Segment net income (loss) | Three Months Ended June 30, 2023 | 2022 | % Change | Six Months Ended June 30, 2023 | 2022 | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Passenger | $(3,837) | $(2,326) | (65)% | $(8,955) | $(7,842) | (14)% |
| Medical | (497) | 694 | (172)% | 1,140 | 1,216 | (6)% |
| Total segment net loss | $(4,334) | $(1,632) | (166)% | $(7,815) | $(6,626) | (18)% |
| **Segment Adjusted EBITDA(1)** |  |  |  |  |  |  |
| Passenger | $(2,075) | $(1,085) | (91)% | $(5,130) | $(3,694) | (39)% |
| Medical | 3,023 | 1,113 | 172% | 4,903 | 2,064 | 138% |
| Total segment Adjusted EBITDA | $948 | $28 | 3,286% | $(227) | $(1,630) | 86% |

(1) See section titled “Reconciliations of Non-GAAP Financial Measures” for more information and reconciliations to the most directly

comparable GAAP financial measure.

### Passenger segment

**For the three months ended June 30, 2023 and 2022, Passenger net loss increased by $(1.5) million or (65)%, from $(2.3) million in 2022 to $(3.8) million in 2023.** The increase is attributable primarily to increased fixed costs related to the acquisition of Blade Europe, which operated at a net loss during the quarter.

Passenger Adjusted EBITDA decreased by $(1.0) million or (91)% for the three months ended June 30, 2023 from $(1.1) million in the same period of 2022 to $(2.1) million in 2023. The decrease is attributable to increased fixed costs related to the acquisition of Blade Europe, which operated at a net loss during the quarter.

**For the six months ended June 30, 2023 and 2022, Passenger net loss increased by $1.1 million or (14)%, from $(7.8) million in 2022 to $(9.0) million in 2023.** The increase is attributable primarily to increased fixed costs related to the acquisition of Blade Europe, which operated at a net loss during the period due to seasonally low Flight Profit that did not cover fixed costs during this period, this was partially offset by a $1.5 million decrease in legal and regulatory advisory fees incurred in the prior year period.

Passenger Adjusted EBITDA decreased by $1.4 million or (39)% for the six months ended June 30, 2023 from $(3.7) million in the same period of 2022 to $(5.1) million in 2023. The decrease is attributable primarily to increased fixed costs related to the acquisition of Blade Europe, which operated at a net loss during the period due to seasonally low Flight Profit that did not cover fixed costs during this period.

### Medical segment

**For the three months ended June 30, 2023 and 2022, Medical net income decreased by $1.2 million or (172)%, from $0.7 million in 2022 to $(0.5) million in 2023.** The decrease is attributable to a $1.3 million increase in fixed costs, primarily staff costs in order to support the higher activity and a $3.0 million contingent consideration compensation (earn-out) expense in connection with the Trinity acquisition based on expected 2023 performance; partially offset by a $3.1 million increase in Flight Profit due to higher revenue driven by the addition of new clients, growth within existing clients and organ transplant market growth, along with higher flight margin (16.6% vs 15.3%) primarily due to utilizing more dedicated aircraft.

Medical Adjusted EBITDA increased by $1.9 million or 172%, for the three months ended June 30, 2023 from $1.1 million in the same period of 2022 to $3.0 million in 2023. The increase is attributable to a $3.1 million increase in Flight Profit due to higher revenue driven by the addition of new clients, growth within existing clients and organ transplant market growth, along with higher flight margin (16.6% vs 15.3%) due to utilizing more dedicated aircraft, partially offset by a $1.2 million increase in fixed costs, primarily staff costs in order to support the higher activity.

**For the six months ended June 30, 2023 and 2022, Medical net income decreased by $0.1 million or (6)%, from $1.2 million in 2022 to $1.1 million in 2023.** The decrease is attributable to a $3.0 million contingent consideration compensation (earn-out) expense in connection with the Trinity acquisition based on expected 2023 performance and a $2.3 million increase in fixed costs, primarily staff costs in order to support the higher activity, those increases offset by a $5.2 million increase in Flight Profit due to higher revenue driven by the addition of new clients, growth within existing clients and organ transplant market growth.

Medical Adjusted EBITDA increased by $2.8 million or 138%, for the six months ended June 30, 2023 from $2.1 million in same period of 2022 to $4.9 million in 2023. The increase is attributable to $5.2 million increase in Flight Profit due to higher revenue driven by the addition of new clients, growth within existing clients and organ transplant market growth, partially offset by a $2.4 million increase in fixed costs, primarily staff costs in order to support the higher activity.

### Reconciliation of Non-GAAP Financial Measures

Certain non-GAAP measures included in this segment results of operations review have been derived from amounts calculated in accordance with GAAP but are not themselves GAAP measures. Blade believes that the non-GAAP measure discussed below, viewed in addition to and not in lieu of our reported U.S. GAAP results, provide useful information to investors by providing a more focused measure of operating results, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making. The non-GAAP measure presented herein may not be comparable to similarly titled measures presented by other companies. This includes Segment Adjusted EBITDA, which we define, explain the use of and reconcile to the nearest GAAP financial measure below.

#### Segment Adjusted EBITDA

Segment Adjusted EBITDA is defined as segment net income (loss) excluding non-cash items or certain transactions that are not indicative of ongoing Company operating performance and / or items that management does not believe are reflective of our ongoing core operations (as shown in the table below).

*(in thousands)*

|  | Three Months Ended June 30, 2023 Passenger | Medical | Three Months Ended June 30, 2022 Passenger | Medical |
| --- | ---: | ---: | ---: | ---: |
| Segment net income (loss) | $(3,837) | $(497) | $(2,326) | $694 |
| Reconciling items: |  |  |  |  |
| Depreciation and amortization | 1,363 | 397 | 744 | 374 |
| Stock-based compensation | 352 | 123 | 333 | 45 |
| Legal and regulatory advocacy fees(1) | — | — | 164 | — |
| Executive severance costs | 47 | — | — | — |
| Contingent consideration compensation (earn-out)(2) | — | 3,000 | — | — |
| Segment Adjusted EBITDA | $(2,075) | $3,023 | $(1,085) | $1,113 |

(1) Represents certain legal and regulatory advocacy fees for specific matters (primarily the proposed restrictions at East Hampton Airport and the potential operational restrictions on large jet aircraft at Westchester Airport) that we do not consider representative of legal and regulatory advocacy costs that we will incur from time to time in the ordinary course of our business.

(2) Represents contingent consideration compensation of $3,000 in connection with the Trinity acquisition in respect of 2023 results, 2023 is the last year subject to earn out payment.

*(in thousands)*

|  | Six Months Ended June 30, 2023 Passenger | Medical | Six Months Ended June 30, 2022 Passenger | Medical |
| --- | ---: | ---: | ---: | ---: |
| Segment net (loss) income | $(8,955) | $1,140 | $(7,842) | $1,216 |
| Reconciling items: |  |  |  |  |
| Depreciation and amortization | 2,497 | 863 | 1,478 | 750 |
| Stock-based compensation | 712 | 239 | 759 | 98 |
| Legal and regulatory advocacy fees(1) | 423 | — | 1,911 | — |
| Executive severance costs | 193 | — | — | — |
| Contingent consideration compensation (earn-out)(2) | — | 2,661 | — | — |
| Segment Adjusted EBITDA | $(5,130) | $4,903 | $(3,694) | $2,064 |

(1) Represents certain legal and regulatory advocacy fees for specific matters (primarily the proposed restrictions at East Hampton Airport and the potential operational restrictions on large jet aircraft at Westchester Airport) that we do not consider representative of legal and regulatory advocacy costs that we will incur from time to time in the ordinary course of our business.

(2) Represents contingent consideration compensation of $3,000 in connection with the Trinity acquisition in respect of 2023 results and a $339 credit recorded in connection with the settlement of the equity-based portion of Trinity's contingent consideration that was paid in the first quarter of 2023 in respect of 2022 results. 2023 is the last year subject to earn out payment.

### Liquidity and Capital Resources

### Sources of Liquidity

On May 7, 2021 the Company raised $333.3 million in net proceeds upon the consummation of the merger with Experience Investment Corp. (“EIC”) and the sale of common stock through a private investment in public equity (“PIPE”) financing. As of June 30, 2023 and December 31, 2022, we had total liquidity of $169.6 million and $194.0 million, respectively, consisting of cash and cash equivalents of $37.3 million and $43.3 million, respectively, and short-term investments of $132.3 million and $150.7 million, respectively. In addition, as of June 30, 2023 and December 31, 2022, we had restricted cash of $2.0 million and $1.1 million, respectively. As of June 30, 2023, $132.3 million of short-term investments consisted of securities that are traded in highly liquid markets.

With $169.6 million of total liquid funds as of June 30, 2023, we anticipate that we have sufficient funds to meet our current operational needs for at least the next 12 months from the date of filing this Quarterly Report.

### Liquidity Requirements

As of June 30, 2023, the Company had net working capital of $179.7 million, zero debt, cash and cash equivalents of $37.3 million and short-term investments of $132.3 million. The Company had net losses of $22.4 million and $2.6 million for the six months ended June 30, 2023 and 2022, respectively.

In the course of our business, we have certain contractual relationships with third-party aircraft operators pursuant to which we may be contingently required to make payments in the future. As of June 30, 2023, we had commitments to purchase flights from various aircraft operators with aggregate minimum flight purchase guarantees of $8.9 million and $18.9 million for the years ending December 31, 2023 and 2024, respectively. $2.7 million and $10.8 million, respectively, of which may be cancelled by us immediately if a government authority enacts travel restrictions and $2.7 million and $3.7 million, respectively, of which could be terminated by Blade for convenience upon 30 or 60 days’ notice with the annual minimum guarantee being pro-rated as of the termination date. See “—Capacity Purchase Agreements” within Note 8 to the unaudited interim condensed consolidated financial statements for additional information and for information about future periods. Additionally, the Company has operating lease obligations related to real estate and vehicles with expected annual minimum lease payments of $1.0 million and $1.5 million for the years ending December 31, 2023 and 2024, respectively. See Note 3 “Right-of-Use Asset and Operating Lease Liability” to the unaudited interim condensed consolidated financial statements for additional information and for information about future periods.

In addition, as of June 30, 2023, the Company anticipates an earn-out of approximately $6.0 million for the year ending December 31, 2023 in connection with the Trinity acquisition to be paid in 2024 in respect of 2023 results. See “—Contingent Consideration Compensation (earn-out)” within Note 8 to the unaudited interim condensed consolidated financial statements for additional information.

We expect to incur net losses in the short term, as we continue to execute our strategic initiatives. Based on our current liquidity, we believe that no additional capital will be needed to execute our current business plan over the next 12 months. Our longer term liquidity requirement will depend on many factors including the pace of our expansion into new markets, our ability to attract and retain customers for our existing products, capital expenditures and acquisitions.

### Cash Flows

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

*(in thousands)*

| 2023 | Six Months Ended June 30, 2022 |  |
| --- | ---: | ---: |
| Net cash used in operating activities | $(25,052) | $(21,675) |
| Net cash provided by investing activities | 20,049 | 207,621 |
| Net cash used in financing activities | (47) | (932) |
| Effect of foreign exchange rate changes on cash balances | 20 | 7 |
| Net (decrease) increase in cash and cash equivalents and restricted cash | (5,030) | 185,021 |

38

#### Cash Used In Operating Activities

For the six months ended June 30, 2023, net cash used in operating activities was $25.1 million, primarily driven by $10.5 million of cash used for working capital requirements and a net loss of $22.4 million, adjusted for non-cash items consisting of loss from change in fair value of warrant liabilities of $1.9 million, stock-based compensation expense of $6.0 million, depreciation and amortization of $3.5 million, realized loss of $0.1 million from the sale of short-term investments, $3.0 million non-cash accretion of interest income on held-to-maturity securities and deferred tax benefit of $0.6 million. The $10.5 million of cash used for working capital requirements was primarily driven by an increase in accounts receivable of $11.6 million (attributable to the rapid revenue growth in MediMobility Organ Transport), an increase in prepaid expenses and other current assets of $2.6 million (driven by prepayments to operators in connection with capacity purchase agreements) and a decrease in accounts payable and accrued expenses of $0.1 million, partially offset by an increase in deferred revenue of $3.3 million (driven by client prepayments).

For the six months ended June 30, 2022, net cash used in operating activities was $21.7 million, primarily driven by a $5.3 million cash used for working capital requirements and a net loss of $2.6 million, adjusted for non-cash items consisting of income from change in fair value of warrant liabilities of $21.8 million, stock-based compensation expense of $3.9 million and depreciation and amortization of $2.3 million and realized loss of $1.7 million from the sale of short-term investments. The $5.3 million cash used for working capital requirements was primarily driven by increases in accounts receivable of $4.1 million due to the rapid growth in MediMobility Organ Transport, an increase in prepaid expenses and other current assets of $3.9 million driven by prepayments to operators in connection with new capacity purchase agreements 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 deferred revenue of $2.5 million driven by client prepayments and an increase in accounts payable and accrued expenses of $1.3 million.

#### Cash Provided by Investing Activities

For the six months ended June 30, 2023, net cash provided by investing activities was $20.0 million, driven by $20.5 million of proceeds from the sales of other short-term investments, $131.2 million of proceeds from maturities of held-to-maturity investments, partially offset by $130.1 million in purchases of held-to-maturity investments, $0.1 million in purchases of other short-term investments and $1.4 million in purchases of property and equipment (consisting of leasehold improvements, furniture and fixtures (for lounges used by the Passengers segment) and vehicles (used by the Medical segment).

For the six month ended June 30, 2022, net cash provided by investing activities was $207.6 million, driven by $208.7 million of proceeds from the sales of other short-term investments (the proceeds were reinvested in a government money market fund which is part of Cash and Cash Equivalents), partially offset by $0.6 million in purchases of property and equipment and $0.5 million in purchases of short term investments.

#### Cash Used In Financing Activities

For the six months ended June 30, 2023, net cash used in financing activities was $0.05 million, primarily reflecting $0.1 million cash paid for payroll tax payments on behalf of employees in exchange for shares withheld by the Company (“net share settlement”), partially offset by $0.05 million of proceeds from the exercise of stock options.

For the six months ended June 30, 2022, net cash used in financing activities was $0.9 million, primarily reflecting $1.0 million cash paid for payroll tax payments on behalf of employees in exchange for shares withheld by the Company (“net share settlement”), partially offset by $0.1 million of proceeds from the exercise of stock options.

### Critical Accounting Policies and Significant Judgments and Estimates

This discussion and analysis of the Company’s financial condition and results of operations is based on the Company’s consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported periods. In accordance with U.S. GAAP, the Company bases its estimates on historical experience and on various other assumptions the Company believes are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

For information on the Company’s significant accounting policies and estimates refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Significant Judgments and Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2022. There have been no material changes to these policies and estimates as of June 30, 2023.

## Market risk

As filed, 225 characters.

There have been no material changes in market risk from the information provided in "Item 7A. Quantitative and Qualitative Disclosures About Market Risk" in our Annual Report on Form 10-K for the year ended December 31, 2022.

## Controls and procedures

As filed, 5,862 characters.

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”)). Based on their evaluation of our disclosure controls and procedures, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective as of June 30, 2023, 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 weaknesses:

- Management’s evaluation of the design effectiveness of internal controls to prevent or detect material misstatements or omissions has identified a large number of control deficiencies across all business processes including information technology (“IT”) general controls related to financially relevant IT applications. Although these deficiencies are not individually material in nature, in aggregate they constitute a material weakness; and
- The Company has not developed a formal framework that enables management to assess the operating effectiveness of internal controls over financial reporting including IT general controls related to financially relevant IT applications, specifically lacking evidential matter to support:
- 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 controls 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 the above-mentioned material weaknesses in its internal control over financial reporting.

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

### Management’s Plans for Remediation

The Company is remediating these material weaknesses as efficiently and effectively as possible, with the implementation in Q4 2022 of SOX compliance software to assist in the overall evaluation and documentation of the design and operating effectiveness of our internal controls over financial reporting. This software is being used:

- To document specific remediation plans to address all identified key control design gaps and / or weaknesses and track implementation progress of these remediation plans; and
- To help ensure appropriate evidential matter is available to support 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 controls tests were appropriately considered.

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 weaknesses 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 2023.

### Changes in Internal Control over Financial Reporting

Other than 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 in the fiscal quarter ending June 30, 2023.

### 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.

## Risk factors

As filed, 722 characters.

You should carefully consider the risks described under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022. These risks could materially affect our business, results of operations or financial condition, cause the trading price of our common stock to decline materially or cause our actual results to differ materially from those expected or those expressed in any forward-looking statements made by, or on behalf of, the Company. These risks are not exclusive, and additional risks to which we are subject include, but are not limited to, the factors mentioned under “Forward-Looking Statements” and the risks of our businesses described elsewhere in this Quarterly Report on Form 10-Q.

Filed Aug 9, 2023.
Source: SEC EDGAR, the filing index for accession 0001779128-23-000077. Last ingested by Listed: Nov 3, 2026, 14:11 ET. No prices; not investment advice.