SEC Form 10-Q Summary
Filing identity and period: The provided filing is for Blade Air Mobility, Inc. (Nasdaq: BLDE), not Strata Critical Medical, Inc. It reports the three and nine months ended June 30, 2021, filed August 16, 2021. The financial statements are unaudited.
Business context
Blade operates a technology-enabled, asset-light urban air mobility platform. It arranges helicopter, fixed-wing, seaplane and jet transportation through contracted aircraft operators and does not own, lease or operate aircraft. Its principal businesses are Short Distance, MediMobility organ transport and Jet, and Other services. Blade expects its platform to support a future transition to electric vertical aircraft, subject to certification, infrastructure and market acceptance.
On May 7, 2021, Experience Investment Corp. completed its merger with Blade Urban Air Mobility, Inc. The transaction was accounted for as a reverse recapitalization. Blade also completed a $125.0 million gross PIPE financing, receiving $119.6 million net of transaction costs.
Financial results and metrics
| Metric | Three months ended June 30, 2021 | Three months ended June 30, 2020 | Nine months ended June 30, 2021 | Nine months ended June 30, 2020 |
|---|---|---|---|---|
| Revenue | $13.0 million | $3.4 million | $30.2 million | $15.1 million |
| Cost of revenue | $9.9 million | $2.8 million | $23.9 million | $14.4 million |
| Gross margin | 23% | 18% | 21% | 5% |
| Operating loss | $(7.8) million | $(1.5) million | $(14.4) million | $(9.6) million |
| Operating margin | (60%) | (43%) | (48%) | (64%) |
| Net loss | $(24.3) million | $(1.3) million | $(30.9) million | $(9.4) million |
| Net loss per share | $(0.47) | $(0.05) | $(0.91) | $(0.37) |
| Seats flown | 6,813 | 922 | 12,695 | 13,200 |
Third-quarter revenue increased 277%, primarily from Short Distance revenue of $5.7 million, up from $0.6 million, and MediMobility organ transport and Jet revenue of $6.5 million, up from $2.6 million. Nine-month revenue doubled, with MediMobility organ transport and Jet increasing 117% and Short Distance increasing 54%.
Cost of revenue improved as a percentage of revenue to 77% from 82% in the quarter and to 79% from 95% for the nine-month period, reflecting higher utilization. General and administrative expense increased to $9.8 million in the quarter and $18.0 million for the nine months, driven by stock-based compensation, public-company costs, directors’ and officers’ insurance, professional fees and higher staffing.
Net loss included a $14.9 million non-cash loss from the change in fair value of warrant liabilities and $1.7 million of recapitalization costs attributable to warrant liabilities. Excluding these unusual non-operating items, the filing does not provide a formal adjusted earnings measure.
Cash flow, liquidity and capitalization
- Cash and cash equivalents were $30.0 million at June 30, 2021, compared with $12.2 million at September 30, 2020.
- Restricted cash was $0.6 million, and short-term investments were $303.2 million. Total current assets were $342.7 million and working capital was $332.2 million.
- Operating cash flow was negative $9.8 million for the nine months, compared with negative $9.9 million in the prior period.
- Investing cash flow was negative $303.9 million, primarily because of the purchase of short-term investments.
- Financing cash flow was positive $332.1 million, primarily from $213.6 million of net merger proceeds and $119.6 million of net PIPE proceeds.
- The $1.2 million Paycheck Protection Program loan was repaid in full on May 7, 2021. No note payable remained outstanding at quarter-end.
- Operating lease liabilities totaled $0.4 million. Warrant liabilities were $38.8 million and are remeasured through earnings each reporting period.
- Class A shares outstanding increased to 69.4 million at June 30, 2021 from 25.3 million at September 30, 2020. Potentially dilutive securities included approximately 14.2 million warrants, 9.7 million options and 0.7 million restricted shares.
Management stated that available liquidity should support the current business plan for at least the next 12 months without additional capital, although the Company expects continued short-term net losses.
Material changes, outlook and risks
- New York by-the-seat airport service resumed June 1, 2021 after being paused from March 2020 through June 2021. Management reported recovering demand on other Short Distance routes.
- COVID-19 continues to create uncertainty, including risks from new variants, reduced commuting, travel restrictions and weaker air-travel demand. The Delta variant was specifically identified as a risk.
- Management expects general and administrative and selling and marketing expenses to increase as Blade expands routes, markets, personnel and public-company infrastructure.
- Blade remains dependent on third-party aircraft operators, terminal and heliport access, aviation regulations, fuel availability, weather and flight utilization.
- No EVA aircraft had been certified by the FAA for commercial passenger operations as of the filing date. Delays, certification failures, infrastructure requirements or weak consumer acceptance could impair the long-term strategy.
- The Company disclosed a pending Shoreline Aviation lawsuit seeking more than $13 million in compensatory and consequential damages, plus punitive damages and other relief. Management believes the matter will not result in a material contingency and has recorded no reserve.
- Disclosure controls were not effective as of June 30, 2021 because of two material weaknesses: insufficient segregation of duties and documentation in accounting processes, and inadequate information-technology and application controls, including access and code-change controls.
- The Company is subject to significant warrant-related earnings volatility because public and private warrants are classified as derivative liabilities and remeasured at fair value.
Important facts for investors to verify
- Confirm the issuer identity: the supplied filing is Blade Air Mobility, Inc., while the request identifies Strata Critical Medical, Inc.
- Assess whether revenue growth and gross-margin improvement are sustainable after COVID-19 recovery effects and the return of seasonal travel demand.
- Monitor operating cash burn, short-term investment liquidity and the timing of future expansion spending.
- Track remediation of the two disclosed material weaknesses and any subsequent changes in disclosure controls or internal control over financial reporting.
- Evaluate potential dilution from 14.2 million warrants, 9.7 million options, restricted shares and future equity awards.
- Review changes in the fair value of warrant liabilities, which may materially affect reported net income or loss without corresponding cash effects.
- Follow the Shoreline Aviation litigation, third-party operator commitments, terminal access and aviation regulatory developments.
- Verify progress toward FAA certification and commercial deployment of electric vertical aircraft before assigning value to that strategic opportunity.