Business Context and Reporting Period
The provided filing is a Form 10-Q for Blade Air Mobility, Inc., successor to Experience Investment Corp. (EIC), not Strata Critical Medical, Inc. It covers the three months ended March 31, 2021, although the request identifies the period as “2021 Q2.” The filing reports EIC’s activities as a special purpose acquisition company before its May 7, 2021 business combination with Blade Urban Air Mobility, Inc.; it does not present Blade’s operating results for the quarter.
Key Financial Metrics
| Metric | Three months ended March 31, 2021 | Three months ended March 31, 2020 |
|---|---|---|
| Revenue | $0 | $0 |
| Operating costs | $235,113 | $145,130 |
| Loss from operations | $(235,113) | $(145,130) |
| Interest income | $4,136 | $869,270 |
| Change in warrant fair value | $(850,001) | $5,125,000 |
| Net income (loss) | $(1,080,978) | $5,697,071 |
| Net income (loss) per common share | $(0.09) | $0.62 |
| Cash used in operating activities | $(360,848) | $(212,273) |
At March 31, 2021, cash outside the Trust Account was $485,220, while marketable securities held in the Trust Account totaled $276.9 million. Current liabilities were $1.5 million, including $1.3 million of accounts payable and accrued liabilities. Warrant liabilities were $37.6 million, and Class A common stock subject to possible redemption was recorded as temporary equity at $225.0 million.
The filing reports no long-term debt, capital leases, operating leases, or other long-term contractual obligations. A deferred underwriting fee of $9.625 million was payable from the Trust Account upon completion of a business combination. Profit margins are not meaningful because the entity had no operating revenue and was a pre-combination SPAC.
Material Changes Versus the Prior Comparable Period
- Net results changed from $5.7 million of income in the first quarter of 2020 to a $1.1 million loss in the first quarter of 2021.
- Operating costs increased approximately 62% to $235,113 from $145,130.
- Interest income declined substantially to $4,136 from $869,270.
- The warrant fair-value adjustment changed from $5.125 million of income to $850,001 of expense.
- Cash used in operating activities increased to $360,848 from $212,273.
- Accounts payable and accrued liabilities increased to $1.3 million from $158,947 at December 31, 2020, and deferred offering costs of $1.2 million were recorded.
Guidance, Outlook, Risks, and Unusual Items
Management provided no operating revenue or earnings guidance. It stated that the entity would not generate operating revenue until completion of a business combination and expected to use Trust Account funds for that transaction, subject to permitted deductions.
- On May 7, 2021, EIC completed its merger with Blade and a $125 million PIPE investment. The registrant changed its name to Blade Air Mobility, Inc., and its securities began trading under BLDE and BLDEW.
- The merger and PIPE occurred after the reporting date and are not reflected in the March 31, 2021 financial statements except as subsequent events.
- The company’s warrants were reclassified from equity to liabilities following an SEC Staff Statement issued April 12, 2021. The warrants must be remeasured at fair value through earnings, creating potentially significant period-to-period volatility.
- Disclosure controls were not effective because of a continuing material weakness related to warrant accounting. Management stated that the weakness did not result in material misstatements in the reported interim financial statements.
- COVID-19 was identified as a potential adverse risk, but its specific financial impact was not determinable.
- A merger consulting agreement included $990,000 of fees contingent on successful completion of the Blade business combination; that amount was not recorded as of March 31, 2021.
- If a business combination had not been completed within the permitted period, the company could have been required to liquidate and redeem public shares, with warrants potentially expiring worthless. The merger was subsequently completed.
Important Facts for Investors to Verify
- Confirm the issuer and period: the filing is for Blade Air Mobility/EIC, with a March 31, 2021 quarter-end, not Strata Critical Medical or a June 30, 2021 quarter-end.
- Separate the SPAC predecessor’s results from Blade’s post-merger operating performance; this filing contains no Blade operating revenue for the reported period.
- Review the May 7, 2021 merger, PIPE financing, share issuance, redemption activity, and resulting capitalization.
- Assess the continuing material weakness in internal controls and the accounting correction for warrant liabilities.
- Reconcile Trust Account funds, the deferred underwriting fee, redemption obligations, warrant liabilities, and post-merger liquidity.
- Review the contingent $990,000 consulting fee and other merger-related costs.