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What changed in Strata Critical Medical, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Strata Critical Medical, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+347 added−356 removedSource: 10-K (2024-03-12) vs 10-K (2023-03-16)

Top changes in Strata Critical Medical, Inc.'s 2023 10-K

347 paragraphs added · 356 removed · 214 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeFor 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.
Biggest changeThis enables our operator partners to focus on training pilots, maintaining aircraft and flying, while we maintain the relationship with our customer from booking through flight arrival. For flights offered for sale by-the-seat, Blade schedules flights based on demand analysis and takes the economic risk of aggregating fliers to optimize flight profitability, providing predictable margins for our operators.
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.
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.
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.
This technology stack was built with future growth in mind and is designed to allow our platform to be easily scaled to accommodate, among other things, rapid increases in volume, new routes, new operators, broader flight schedules, international expansion, next-generation verticraft and ancillary services (e.g., last/first-mile ground connections, trip cancellation insurance, baggage delivery) through our mobile apps, website and cloud-based tools.
Further, as a transporter of organs for transplant, we are subject to DOT regulations relating to the transportation of organs for transplant. Because Blade does not operate aircraft, our business operations are not directly regulated by the FAA.
Further, as a transporter of organs for transplant, we are subject to DOT regulations relating to the transportation of organs for transplant. Because Blade does not currently operate aircraft, our business operations are not directly regulated by the FAA.
We routinely use the Investor Relations section of our website (https://ir.blade.com/), our corporate website (www.blade.com) and our Twitter feed (@flybladenow) as channels of distribution to publish important information about Blade, including financial or other information that may be deemed material to investors.
We routinely use the Investor Relations section of our website (https://ir.blade.com/), our corporate website (www.blade.com) and our X feed (@flybladenow) as channels of distribution to publish important information about Blade, including financial or other information that may be deemed material to investors.
Blade currently operates in three key lines of business across our Passenger and Medical segments: Passenger segment • Short Distance – Consisting primarily of helicopter and amphibious seaplane flights in the United States, Canada and Europe between 10 and 100 miles in distance.
Blade currently operates in three key product lines across our Passenger and Medical segments: Passenger segment • Short Distance – Consisting primarily of helicopter and amphibious seaplane flights in the United States, Canada and Europe between 10 and 100 miles in distance.
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”).
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 8 T able of Contents and Electronic Protection Act of 1991 (“TCPA”), Section 5 of the Federal Trade Commission Act, and the California Consumer Privacy Act (“CCPA”).
Government Regulation Transportation and Aviation As an arranger of air travel and an indirect air carrier, we are subject to United States Department of Transportation (“DOT”) regulations governing our advertising and sale of by-the-seat air transportation as well as the advertising and sale of aircraft charter.
As an arranger of air travel and an indirect air carrier, we are subject to United States Department of Transportation (“DOT”) regulations governing our advertising and sale of by-the-seat air transportation as well as the advertising and sale of aircraft charter.
We seek representations of compliance with environmental laws from our operators. 8 Table of Contents Available Information Our Annual Report on Form 10-K (Annual Report), Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements and amendments to those reports filed or furnished pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the Exchange Act), are available on the Investor Relations section of our website (https://ir.blade.com/) as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
Available Information Our Annual Report on Form 10-K (Annual Report), Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements and amendments to those reports filed or furnished pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the Exchange Act), are available on the Investor Relations section of our website (https://ir.blade.com/) as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
Environmental Our operators are subject to various federal, state and local laws relating to the protection of the environment, including the discharge or disposal of materials and chemicals and the regulation of aircraft noise, which laws are administered by numerous state and federal agencies.
Environmental Our operators are subject to various federal, state and local laws relating to the protection of the environment, including the discharge or disposal of materials and chemicals and the regulation of aircraft noise, which laws are administered by numerous state and federal agencies. We seek representations of compliance with environmental laws from our operators.
If we are unable to compete successfully, our business, financial condition and results of operations could be adversely affected. Human Capital Resources As of December 31, 2022, we had a total of 246 employees, with 202 individuals working in our operations located in the United States and 44 employees in our operations based in Europe.
If we are unable to compete successfully, our business, financial condition and results of operations could be adversely affected. Human Capital Resources As of December 31, 2023, we had a total of 281 employees, with 235 individuals working in our operations located in the United States and 46 employees in our operations based in Europe.
The SEC maintains a website (https://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
The SEC maintains a website (https://www.sec.gov) 9 T able of Contents that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
Among these employees, we had 182 permanent employees and 65 temporary employees. None of our employees are represented by a labor union. We believe we have good relationships with our employees and have not experienced any interruptions of operations due to labor disagreements.
Among these employees, we had 231 permanent employees and 50 temporary employees. None of our employees are represented by a labor union. We believe we have good relationships with our employees and have not experienced any interruptions of operations due to labor disagreements. Government Regulation Transportation and Aviation United States.
The organ transportation industry is rapidly evolving as new technology for organ preservation is introduced. We believe new technology will benefit our business by increasing the overall supply of organs to be transplanted. However, some 6 Table of Contents companies developing organ preservation technology may also develop organ transportation services that could compete with us.
The organ transportation industry is rapidly evolving as new technology for organ preservation is introduced. We believe new technology will benefit our business by increasing the overall supply of organs to be transplanted.
We believe our ability to compete successfully as a diversified air mobility company will depend on a number of factors, which may change in the future due to increased competition, including the price of our offerings, customer confidence in the safety of our offerings, customer satisfaction for the service we offer, and, for by-the-seat offerings, the routes, frequency of flights and availability of seats offered through our platform.
However, some companies developing organ preservation technology now provide organ transportation services that compete with us, as well as additional services that we do not currently offer, such as surgical organ recovery, that our customers find valuable. 7 T able of Contents We believe our ability to compete successfully as a diversified air mobility company will depend on a number of factors, which may change in the future due to increased competition, including the price of our offerings, customer confidence in the safety of our offerings, customer satisfaction for the service we offer, and, for by-the-seat offerings, the routes, frequency of flights and availability of seats offered through our platform.
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.
Additionally, we expect the reduced noise footprint and zero carbon emission characteristics of EVA to allow for the development of new, vertical landing infrastructure (“vertiports”) in our existing and new markets. Competition Passenger segment In both our Short Distance and Jet and Other product lines, we compete primarily with Part 135 operators or brokers of helicopters, seaplanes and jets.
Because our technology platform is an integral aspect of our business, compliance with laws governing the use, collection, and processing of personal data is necessary for us to achieve our objective of continuously enhancing the user experience of our mobile application and marketing site. 7 Table of Contents 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.
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.
These laws and regulations are imposed by relevant government agencies in Monaco, such as the Direction de l'Aviation Civile de Monaco. Privacy and Data Protection There are many requirements regarding the collection, use, transfer, security, storage, destruction, and other processing of personally identifiable information and other data relating to individuals.
The Indian Joint Venture’s operations are regulated by Indian government agencies, including the Airports Authority of India, Ministry of Civil Aviation and Directorate General of Civil Aviation. Privacy and Data Protection There are many requirements regarding the collection, use, transfer, security, storage, destruction, and other processing of personally identifiable information and other data relating to individuals.
Our asset-light model, coupled with our exclusive passenger terminal infrastructure, is designed to facilitate a seamless transition to EVA, which is expected to enable lower cost air mobility to the public that is both quiet and emission-free.
Based in New York City, Blade's asset-light model, coupled with its exclusive passenger terminal infrastructure and proprietary technologies, is designed to facilitate a seamless transition from helicopters and fixed-wing aircraft to Electric Vertical Aircraft (“EVA” or “eVTOL”), enabling lower cost air mobility that is both quiet and emission-free.
These regulations impose restrictions on the way we conduct our business, as well as the activities of our third-party aircraft operators. Our French operations are subject to regulation by government agencies in the country, including the Direction Générale de l'Aviation Civile (“DGAC”) and the Autorité de la Concurrence.
Our Canadian operations are subject to strict regulations imposed by various Canadian government agencies, including Transport Canada and Nav Canada. These regulations impose restrictions on the way we conduct our business, as well as the activities of our third-party aircraft operators. Additionally, Transport Canada and Nav Canada regulations require specific disclosures to consumers and the filing of flight routes.
Medical segment • MediMobility Organ Transport – Consisting of transportation of human organs for transplant and/or the medical teams supporting these services. Our Business Model Blade leverages an asset-light business model: we neither own nor operate aircraft.
Medical segment • MediMobility Organ Transport – Consisting primarily of transportation of human organs for transplant and/or the medical teams supporting these services. Blade also offers additional services including donor logistics coordination and support evaluating potential donor organs .
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.
Our Business Model Blade leverages an asset-light business model: we primarily utilize aircraft that are owned and/or operated by third-parties on Blade’s behalf. In these arrangements, pilots, maintenance, hangar, insurance, and fuel are all costs borne by our network of operators, which provide aircraft flight time to Blade at fixed hourly rates.
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.
In 2023, approximately 46% of Blade’s flight costs were pursuant to capacity purchase agreements that included flight volume guarantees from Blade. Blade’s proprietary “customer-to-cockpit” technology stack enables us to manage fliers and organ transports across numerous simultaneous flights with multiple operators around the world.
Our Indian joint venture’s operations are regulated by Indian government agencies, including the Airports Authority of India, Ministry of Civil Aviation and Directorate General of Civil Aviation. Our Monégasque operations are subject to a complex and constantly changing regulatory landscape.
France and Monaco . Our French operations are subject to strict regulation by government agencies in the country, including the Direction Générale de l'Aviation Civile (“DGAC”) and the Autorité de la Concurrence. Our Monégasque operations are subject to a complex and constantly changing regulatory landscape governed by the Direction de l'Aviation Civile de Monaco. India.
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Item 1. Business Business 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.
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Item 1. Business Business Overview Blade Air Mobility, Inc. (“Blade” or the “Company”) provides air transportation and logistics for hospitals across the United States, where it is one of the largest transporters of human organs for transplant, and for passengers, with helicopter and fixed wing services primarily in the Northeast United States, Southern Europe and Western Canada.
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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.
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When utilizing third-party aircraft and/or aircraft operators, we typically pre-negotiate fixed hourly rates and flight times, paying only for flights actually flown, creating a predictable and flexible cost structure.
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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.
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Blade provides guaranteed flight commitments to some of our third-party operators through capacity purchase agreements, which enable Blade to ensure dedicated access to such aircraft with enhanced crew availability, lower costs and, in many cases, the ability to unlock more favorable rates when flying more than the minimum number of hours we guarantee to the operator.
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In the interim, we purchase offsets to counteract the carbon emissions generated by our urban air mobility services. 5 Table of Contents 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”).
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Additionally, a significant portion of Blade trips are flown by safety-vetted operators to whom Blade makes no commitments, providing us with additional flexible capacity for high demand periods.
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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.
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We prioritize the use of dedicated aircraft under capacity purchase agreements, which provide better economics, but size our commitments significantly below our expected demand to limit the risk of a guarantee shortfall and then fulfill incremental demand through our network of non-dedicated operators.
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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.
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We believe that this technology, which provides (i) real-time tracking of organ transports and passenger flights; (ii) profit/loss information on a flight-by-flight basis; (iii) 6 T able of Contents customized portals for all relevant parties including pilots, accounting teams, operator dispatch, transplant coordinators and Blade’s logistics team; and (iv) a customer-facing app for passenger missions, will enable us to continue to scale our business.
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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.
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Our ground transportation offerings are governed by applicable local, state and federal regulations and include (i) owned vehicles for our Medical segment, both with and without lights and sirens; and (ii) third-party owned and operated vehicles for use in both our Medical and Passenger segments. Canada.
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The initial term of the Aircraft Operator Agreement ends on December 31, 2032 and it will automatically renew for successive three year periods. Competition Passenger segment In both our Short Distance and Jet and Other product lines, we compete primarily with Part 135 operators or brokers of helicopters, seaplanes and jets.
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Because our technology platform is an integral aspect of our business, compliance with laws governing the use, collection, and processing of personal data is necessary for us to achieve our objective of continuously enhancing the user experience of our mobile application and marketing site.
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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 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.
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(“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, with Old Blade continuing as the surviving entity and a wholly owned subsidiary of EIC.
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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.
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Our subsidiary, Blade Urban Ground Mobility, LLC, holds a for hire vehicle dispatch base license issued by the New York City Taxi and Limousine Commission, which regulates our ground mobility missions. Our Canadian operations are subject to regulations imposed by various Canadian government agencies, including Transport Canada and Nav Canada.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn connection with the audit of our consolidated financial statements for the year ended December 31, 2022, management concluded that our internal controls over financial reporting were not effective as of December 31, 2022, due to the existence of two material weaknesses as follows: • Management’s evaluation of the design effectiveness of internal controls to prevent or detect material misstatements or omissions has identified a significant number of control deficiencies across all business processes and areas, including IT general controls related to financially relevant IT applications.
Biggest changeIn connection with the audit of our consolidated financial statements for the year ended December 31, 2023, management concluded that our internal controls over financial reporting were not effective as of December 31, 2023, due to the existence of two material weaknesses as follows: • The lack of effective IT General Controls in relation to: • user access controls that adequately restrict user access to financial applications, programs and data affecting underlying accounting records, and ◦ the change management controls for certain operational applications that ensure IT program and data changes are identified, tested, authorized and implemented properly. • a number of control deficiencies in relation to the revenue process that, although not individually material in nature, in aggregate constitute a material weakness These material weaknesses could impact our financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
In particular, there could be negative public perception surrounding EVA, including the overall safety and the potential for injuries or death occurring as a result of accidents involving EVA, regardless of whether any such safety incidents occur involving Blade or of our third-party operators.
In particular, there could be negative public perception surrounding EVA, including the overall safety and the potential for injuries or death occurring as a result of accidents involving EVA, regardless of whether any such safety incidents occur involving Blade or our third-party operators.
We may incur significant operating expenses and may not be successful in our international expansion for a variety of reasons, including: • recruiting and retaining talented and capable employees in foreign countries and maintaining our company culture across all of our offices; • competition from local incumbents that better understand the local market, may market and operate more effectively, and may enjoy greater local affinity or awareness; • differing demand dynamics, which may make our offerings less successful; • complying with local laws and regulatory standards, including with respect to data privacy and tax; • obtaining any required government approvals, licenses, or other authorizations; • varying levels of Internet and mobile technology adoption and infrastructure; • costs and exchange rate fluctuations; • operating in jurisdictions that do not protect intellectual property rights to the same extent as the United States; and • limitations on the repatriation and investment of funds as well as foreign currency exchange restrictions.
We have, and may, incur significant operating expenses and may not be successful in our international expansion for a variety of reasons, including: • recruiting and retaining talented and capable employees in foreign countries and maintaining our company culture across all of our offices; • competition from local incumbents that better understand the local market, may market and operate more effectively, and may enjoy greater local affinity or awareness; • differing demand dynamics, which may make our offerings less successful; • complying with local laws and regulatory standards, including with respect to data privacy and tax; • obtaining any required government approvals, licenses, or other authorizations; • varying levels of Internet and mobile technology adoption and infrastructure; • costs and exchange rate fluctuations; • operating in jurisdictions that do not protect intellectual property rights to the same extent as the United States; and • limitations on the repatriation and investment of funds as well as foreign currency exchange restrictions .
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.
Further, if our personnel, one of our third-party operators’ aircraft, one of our third-party operators’ Blade-branded aircraft, a Blade-owned aircraft, or a type of aircraft in our third-party operators’ fleet that is used by us is involved in a public incident, accident, catastrophe, or regulatory enforcement action, we could be exposed to significant reputational harm and potential legal liability.
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. Canada.
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.
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.
We may sell equity securities or debt securities in one or more transactions at prices and in a manner we may determine from time to time. If we sell any such securities in subsequent transactions, our current investors may be materially diluted. Any debt financing, if available, may involve restrictive covenants and could reduce our operational flexibility or profitability.
If we cannot raise funds on acceptable terms, we may not be able to grow our business or respond to competitive pressures. Any future international expansion strategy will subject us to additional costs and risks, and our plans may not be successful. We have started expanding our Passenger segment internationally.
If we cannot raise funds on acceptable terms, we may not be able to grow our business or respond to competitive pressures. Our international operations and any future international expansion strategy will subject us to additional costs and risks, and our plans may not be successful. We have started expanding our Passenger segment internationally.
The operation of aircraft is subject to various risks, and demand for air transportation has and may in the future be impacted by accidents or other safety issues regardless of whether such accidents or issues involve Blade flights, our third-party aircraft operators, or aircraft flown by our third-party aircraft operators.
The operation of aircraft is subject to various risks, and demand for air transportation has and may in the future be impacted by accidents or other safety issues regardless of whether such accidents or issues involve Blade flights, our third-party aircraft operators, aircraft flown by our third-party aircraft operators or Blade-owned aircraft.
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.
Our success depends, in significant part, on the continued services of our senior management team and on our ability to attract, motivate, develop, and retain a sufficient number of other highly skilled personnel, including finance, marketing, sales, technology, legal and support personnel.
Southeast and on the Gulf Coast where a significant portion of domestic refining capacity is located), political disruptions or wars involving oil-producing countries, economic sanctions imposed against oil- producing countries (for example, the war in Ukraine) 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.
Southeast and on the Gulf Coast where a significant portion of domestic refining capacity is located), political disruptions or wars involving oil-producing countries, economic sanctions imposed against oil-producing countries (for example, the wars in Ukraine and the Middle East) or specific industry participants, changes in fuel-related governmental policy, the strength of the U.S. dollar against foreign currencies, changes in the cost to transport or store petroleum products, changes in access to petroleum product pipelines and terminals, speculation in the energy futures markets, changes in aircraft fuel production capacity, environmental concerns and other unpredictable events may result in fuel supply shortages or distribution challenges in the future.
We face a number of challenges that may affect our ability to sustain our corporate culture, including: • failure to identify, attract, reward, and retain people in leadership positions in our organization who share and further our culture, values, and mission; 21 Table of Contents • the increasing size and geographic diversity of our workforce; • competitive pressures to move in directions that may divert us from our mission, vision, and values; • the continued challenges of a rapidly-evolving industry; • the increasing need to develop expertise in new areas of business that affect us; • negative perception of our treatment of employees or our response to employee sentiment related to political or social causes or actions of management; and • the integration of new personnel and businesses from acquisitions.
We face a number of challenges that may affect our ability to sustain our corporate culture, including: • failure to identify, attract, reward, and retain people in leadership positions in our organization who share and further our culture, values, and mission ; • the increasing size and geographic diversity of our workforce ; • competitive pressures to move in directions that may divert us from our mission, vision, and values ; • the continued challenges of a rapidly-evolving industry ; • the increasing need to develop expertise in new areas of business that affect us ; • negative perception of our treatment of employees or our response to employee sentiment related to political or social causes or actions of management; and • the integration of new personnel and businesses from acquisitions .
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.
Continued periods of significant disruption in the supply of aircraft fuel could have a significant negative impact on consumer demand, our operating results, and liquidity. Although aircraft operators are currently able to obtain adequate supplies of aircraft fuel, we cannot predict the future availability. Natural disasters (including hurricanes or similar events in the U.S.
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.
Natural disasters, including tornados, hurricanes, floods and earthquakes, wildfires and severe weather conditions, such as heavy rains, strong winds, dense fog, blizzards, or snowstorms, may damage or impact our facilities, those of third-party aircraft operators, or otherwise disrupt flights into or out of the airports from which our flights arrive or depart.
Additionally, if new organ preservation technology or the emergence of animal-derived, synthetic, or lab-grown organs makes rapid, dedicated air transportation of human organs unnecessary, our MediMobility Organ Transport Customers may no longer require our services to successfully complete organ transplants for their patients, which could have a material adverse effect on our business, results of operations, and financial condition.
Additionally, if new organ preservation technology or the emergence of animal-derived, synthetic, or lab-grown organs makes rapid, dedicated air transportation of human organs unnecessary, our Medical Customers may no longer require our services to successfully complete organ transplants for their patients, which could have a material adverse effect on our business, results of operations, and financial condition.
We are dependent on a finite number of certificated third-party aircraft operators to provide our services.
We are dependent on a finite number of certificated third-party aircraft operators to primarily provide our services.
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.
Any significant reduction in air traffic capacity at and in the airspace serving key airports in the United States or Internationally could have a material adverse effect on our business, results of operations and financial condition.
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.
In addition, governments could pass laws, regulations or taxes that increase the cost of such fuels, thereby decreasing demand for our services and increasing the costs of our operations by us or our third-party aircraft operators.
If our third-party aircraft operators are unable or unwilling to add aircraft, or are only able to do so at significantly increased expense, or otherwise do not have capacity or desire to support our growth, or we are unable to add 22 Table of Contents new operators on reasonable terms, or at all, our business and results of operations could be adversely affected.
If our third-party aircraft operators are unable or unwilling to add aircraft, or are only able to do so at significantly increased expense, or otherwise do not have capacity or desire to support our growth, or we are unable to add new operators on reasonable terms, or at all, our business and results of operations could be adversely affected.
Negative perception of our platform or company may harm our reputation and brand, including as a result of: • complaints or negative publicity or reviews about us, our third-party aircraft operators, fliers, our air mobility services, other brands or events we associate with, or our flight operations policies (e.g., cancellation or baggage fee policies), even if factually incorrect or based on isolated incidents; • changes to our flight operations, safety and security, privacy or other policies that users or others perceive as overly restrictive, unclear, or inconsistent with their values; • a failure to enforce our flight operations policies in a manner that users perceive as effective, fair, and transparent; • illegal, negligent, reckless, or otherwise inappropriate behavior by fliers, our third-party aircraft operators, or other third parties involved in the operation of our business or by our management team or other employees; • a failure to provide routes and flight schedules sought by fliers; • actual or perceived disruptions or defects in our platform, such as data security incidents, platform outages, payment processing disruptions, or other incidents that impact the availability, reliability, or security of our offerings; • litigation over, or investigations by regulators into, our operations or those of our third-party aircraft operators; • a failure to operate our business in a way that is consistent with our values; • inadequate or unsatisfactory flier support service experiences; • negative responses by third-party aircraft operators or fliers to new mobility offerings on our platform; • perception of our treatment of employees, contractors, or third-party aircraft operators and our response to their sentiment related to political or social causes or actions of management; • a failure to deliver human organs or medical teams to transplant centers on a timely basis; or • any of the foregoing with respect to our competitors, to the extent such resulting negative perception affects the public’s perception of us or our industry as a whole.
Negative perception of our platform or company may harm our reputation and brand, including as a result of: • complaints or negative publicity or reviews about us, our third-party aircraft operators, fliers, our air mobility services, other brands or events we associate with, or our flight operations policies (e.g., cancellation or baggage fee policies), even if factually incorrect or based on isolated incidents; • changes to our flight operations, safety and security, privacy or other policies that users or others perceive as overly restrictive, unclear, or inconsistent with their values; • a failure to enforce our flight operations policies in a manner that users perceive as effective, fair, and transparent; • illegal, negligent, reckless, or otherwise inappropriate behavior by fliers, our third-party aircraft operators, or other third parties involved in the operation of our business or by our management team or other employees; • a failure to provide routes and flight schedules sought by fliers; • actual or perceived disruptions or defects in our platform, such as data security incidents, platform outages, payment processing disruptions, or other incidents that impact the availability, reliability, or security of our offerings; • litigation over, or investigations by regulators into, our operations or those of our third-party aircraft operators; • a failure to operate our business in a way that is consistent with our certain values; • inadequate or unsatisfactory flier support service experiences; • negative responses by third-party aircraft operators or fliers to new mobility offerings on our platform; • perception of our treatment of employees, contractors, or third-party aircraft operators and our response to their sentiment related to political or social causes or actions of management; • a failure to deliver human organs or medical teams to transplant centers on a timely basis; • mistakes, delays or inconsistency in our evaluation of organ offers for customers of Trinity Organ Placement Services; or • any of the foregoing with respect to our competitors, to the extent such resulting negative perception affects the public’s perception of us or our industry as a whole.
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.
All climate change-related regulatory activity and developments may adversely affect our business and financial results by requiring us to reduce our emissions, make capital investments to modernize certain aspects of our operations, or otherwise pay for our emissions. Such activity may also impact us indirectly by increasing our operating costs.
In addition, 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 14 Table of Contents aircraft operators or fliers.
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 one or more of our third-party aircraft operators were to suffer an accident or lose the ability to fly certain aircraft due to safety concerns or investigations, we may be required to cancel or delay certain flights until replacement aircraft and personnel are obtained.
If one or more of our third-party aircraft operators were to suffer an accident or lose the ability to fly certain aircraft due to safety concerns or investigations, we may be required to cancel or delay certain flights until replacement aircraft and personnel are obtained. We may purchase aircraft in the future.
In recent years, we have entered into strategic business relationships with, among others, Organ Procurement Organizations, hospitals and transplant centers to increase growth in our MediMobility Organ Transport product line. Our MediMobility Organ Transport product line growth is highly dependent on the procurement of human organs for transplant by our MediMobility Organ Transport Customers.
In recent years, we have entered into strategic business relationships with, among others, Organ Procurement Organizations, hospitals and transplant centers to increase growth in our Medical product line. Our Medical product line growth is highly dependent on the procurement of human organs for transplant by our Medical Customers.
If we fail to continue to grow our flier base, retain existing fliers, or increase the overall utilization of our platform, our business, financial condition, and results of operations could be adversely affected. Our prospects and operations may be adversely affected by changes in consumer preferences, discretionary spending, and other economic conditions that affect demand for our services.
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. 11 T able of Contents 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.
Air transportation hazards, such as adverse weather conditions and fire and mechanical failures, may result in death or injury to personnel and passengers which could impact 12 Table of Contents client or passenger confidence in a particular aircraft type or the air transportation services industry as a whole and could lead to a reduction in volume, particularly if such accidents or disasters were due to a safety fault.
Air transportation hazards, such as adverse weather conditions and fire and mechanical failures, may result in death or injury to personnel and passengers which could impact client or passenger confidence in a particular aircraft type or the air transportation services industry as a whole and could lead to a reduction in volume, particularly if such accidents or disasters were due to a safety fault.
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.
Additionally, there is no assurance that we will be able to obtain necessary approvals and to make necessary infrastructure changes to enable adoption of EVA. Any limitation on our ability to acquire or maintain space for passenger terminal operations could have a material adverse effect on our business, results of operations, and financial condition.
Further, our ability to generate revenue sufficient to achieve profitability will depend on the successful commercialization of our Passenger services, our ability to secure new transplant centers, organ procurement organizations and hospital customers (collectively, “MediMobility Organ Transport Customers”), and our ability to effectively integrate acquisitions.
Further, our ability to generate revenue sufficient to achieve profitability will depend on the successful commercialization of our Passenger services, our ability to secure new transplant centers, organ procurement organizations and hospital customers (collectively, “Medical Customers”), and our ability to effectively integrate acquisitions.
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.
The occurrence of one or more natural disasters, severe weather events, epidemic or pandemic outbreaks, terrorist attacks, or disruptive political events in regions where we operate and where our facilities are located, or where our third-party aircraft operators’ facilities are located, could adversely affect our business.
These events have resulted in, among other things, reduced demand for air 24 Table of Contents 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.
These events have resulted in, among other things, reduced demand for air 26 T able of Contents 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.
The short turnaround times required in our MediMobility Organ Transport product line necessitate dedicated aircraft and crews. Historically, the combination of our Passenger and MediMobility Organ Transport demand has been enough to incentivize operators to provide dedicated aircraft and crews for this purpose, but there is no guarantee that will continue, particularly if demand for private aircraft continues to increase.
The short turnaround times required in our Medical product line necessitate dedicated aircraft and crews. Historically, the combination of our Passenger and Medical demand has been enough to incentivize operators to provide dedicated aircraft and crews for this purpose, but there is no guarantee that will continue, particularly if demand for private aircraft continues to increase.
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.
In the event potential competitors establish cooperative or strategic relationships with third-party aircraft operators in the markets 24 T able of Contents 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.
Our ability to provide effective and timely support is largely dependent on our ability to attract and retain skilled employees who can support our fliers and MediMobility Organ Transport Customers and are sufficiently knowledgeable about our services. As we continue to grow our business and improve our platform, we will face challenges related to providing quality support at scale.
Our ability to provide effective and timely support is largely dependent on our ability to attract and retain skilled employees who can support our fliers and Medical Customers and are sufficiently knowledgeable about our services. As we continue to grow our business and improve our platform, we will face challenges related to providing quality support at scale.
Our financial results may fluctuate from quarter to quarter due to a number of factors, including but not limited to the seasonality of our fliers’ travel patterns and the demands of our MediMobility Organ Transport Customers, both of which are unpredictable and could impact the volume of air transportation missions we arrange in any given quarter.
Our financial results may fluctuate from quarter to quarter due to a number of factors, including but not limited to the seasonality of our fliers’ travel patterns and the demands of our Medical Customers, both of which are unpredictable and could impact the volume of air transportation missions we arrange in any given quarter.
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.
Such changes could result in reduced consumer demand for air transportation, including our urban air mobility services, or could shift demand from our urban air mobility services to other methods of air or ground transportation for which we do not offer services.
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 as used by our third-party operators could create an adverse public perception, which could harm our reputation, resulting in current or prospective customers being reluctant to use our services and adversely impacting our business, results of operations, and financial condition.
In addition, any such incident, accident, catastrophe, or action involving our employees, a Blade-owned aircraft, one of the Blade-branded aircraft used by us belonging to our third-party operators’ fleet (or personnel and aircraft of our third-party operators), or the same type of aircraft as used by our third-party operators could create an adverse public perception, which could harm our reputation, resulting in current or prospective customers being reluctant to use our services and adversely impacting our 13 T able of Contents business, results of operations, and financial condition.
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.
Less severe weather conditions, such as rainfall, snowfall, fog, 17 T able of Contents 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 .
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.
Operating outside of the United States may require significant management attention to oversee operations across a broad geographic area with 21 T able of Contents varying regulations, customs and cultural norms, in addition to placing strain on our finance, analytics, compliance, legal, engineering, and operations teams.
Transportation for the hearts, lungs and livers that make up the vast majority of our MediMobility Organ Transport product line is typically requested only hours before the required departure time. Our ability to successfully fulfill these requests is the primary metric by which MediMobility Organ Transport Customers evaluate our performance.
Transportation for the hearts, lungs and livers that make up the vast majority of our Medical product line is typically requested only hours before the required departure time. Our ability to successfully fulfill these requests is the primary metric by which Medical Customers evaluate our performance.
Our management has limited experience with acquiring and 20 Table of Contents integrating acquired strategic assets and companies into our business, and there is no assurance that any future acquisitions will be successful. We may not be successful in identifying appropriate targets for such transactions.
Our management has limited experience with acquiring and integrating acquired strategic assets and companies into our business, and there is no assurance that any future acquisitions will be successful. We may not be successful in identifying appropriate targets for such transactions.
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.
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. 23 T able of Contents Our company culture has contributed to our success, and if we cannot maintain this culture as we grow, our business could be harmed .
Blade’s Passenger urban air mobility services have 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.
Blade’s Passenger urban air mobility services have grown rapidly since we launched our business in 2014, however, our service offerings are still relatively new, and it is uncertain to what extent market acceptance will continue to grow, if at all. Further, we currently operate our Passenger business in a limited number of metropolitan areas.
More stringent environmental laws, regulations, or enforcement policies could have a material adverse effect on our business, financial condition, and results of operations. 27 Table of Contents Risks Related to Ownership of Our Securities and Being a Public Company We have identified material weaknesses in our internal control over financial reporting.
More 29 T able of Contents stringent environmental laws, regulations, or enforcement policies could have a material adverse effect on our business, financial condition, and results of operations. Risks Related to Ownership of Our Securities and Being a Public Company We have identified material weaknesses in our internal control over financial reporting.
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.
Due to our reliance on third parties aircraft operators, we are subject to the risk of disruptions to their operations, which has in the past and may in the future result from many of the same risk factors disclosed in this “ Risk Factors ” section, such as the impact of adverse economic conditions and the inability of third parties to hire or retain skilled personnel, including pilots and mechanics.
We expect to continue to incur net losses for the foreseeable future as we focus on growing our urban air mobility services in both the United States and internationally.
We expect to continue to incur net losses for the foreseeable future as we focus on growing our services in both the United States and internationally.
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.
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 20 T able of Contents open-source licenses, to make our proprietary source code available to third parties.
Any of these 16 Table of Contents 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.
Any of these factors or events could cause a disruption in or increased demands on oil production, refinery operations, pipeline capacity, or terminal access and possibly result in diminished availability of aircraft fuel supply for our third-party aircraft operators or our potentially owned aircraft.
The 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 had by-the-seat helicopter services.
Prior to our offerings, the New York urban air mobility airport transfer market had not been served on a by-the-seat air transportation basis since U.S. Helicopter offered helicopter service in the 2000s. Furthermore, some of the other urban air mobility markets where we plan to expand have never had by-the-seat helicopter services.
To the extent that efforts to block or limit our operations are successful, or we or third-party aircraft operators are required to comply with regulatory and other requirements applicable to air transportation services, our revenue and growth would be adversely affected. We currently operate passenger terminals out of several airports and heliports throughout New York, Massachusetts, and Florida.
To the extent that efforts to block or limit our operations are successful, or we or third-party aircraft operators are required to comply with regulatory and other requirements applicable to air transportation services, our revenue and growth would be adversely affected. We currently operate passenger terminals out of several airports and heliports throughout the Northeast United States.
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.
Further, some of our future growth plans are dependent upon the availability of EVA. There can be no assurance that regulatory approval and availability of EVA, or consumer acceptance of EVA, will occur in a timely manner, if at all.
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.
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 28 T able of Contents how the CCPA will be interpreted and enforced.
If our MediMobility Organ Transport Customers 13 Table of Contents cannot procure human organs for transplant or the industry experiences a shortage of human organs, we may face challenges in fulfilling our contractual obligations with third-party aircraft and ground operators. This could negatively impact our reputation, ability to generate increased revenue and achieve profitability.
If our Medical Customers cannot procure human organs for transplant or the industry experiences a shortage of human organs, we may face challenges in fulfilling our contractual obligations with third- party aircraft and ground operators. This could negatively impact our reputation, ability to generate increased revenue and achieve profitability.
To the extent we expand our international activities, 18 Table of Contents our exposure to unauthorized use of our technologies and proprietary information may increase.
To the extent we expand our international activities, our exposure to unauthorized use of our technologies and proprietary information 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.
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.
In addition, cyberattacks, viruses, malware, or other damage or unauthorized access to our information technology networks and systems, could 17 Table of Contents result in damage, disruptions, or shutdowns to our platform.
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.
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.
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 14 T able of Contents into operating contracts with us or our third-party operators, which would be a threat to our business.
For example, unfavorable economic conditions, whether related to the COVID-19 pandemic, inflation, interest rates or otherwise have, resulted in, and may continue to result in, significant disruption and volatility of global financial 19 Table of Contents markets that could adversely impact our ability to access capital.
For example, unfavorable economic conditions, whether related to inflation, interest rates, economic instability or otherwise have, resulted in, and may continue to result in, significant disruption and volatility of global financial markets that could adversely impact our ability to access capital.
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.
If such third-party operators do not perform adequately or terminate their relationships with us, our costs may increase and our business, financial condition, and results of operations could be adversely affected. We primarily rely on third-party contractors to own and operate aircraft.
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.
If we fail to comply with the CCPA or if regulators assert that we have failed to comply with the CCPA, we may be subject to certain fines or other penalties and litigation, any of which may negatively impact our reputation, require us to expend significant resources, and harm our business.
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.
Historically, we have made, and expect that we will need to continue to make, significant investments and implement strategic initiatives in order to attract new fliers, such as flier acquisition campaigns and the launching of new scheduled routes. These investments and initiatives may not be effective in generating sales growth or profits.
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.
Should we experience complications with any of these third-party contractors or their aircraft, we may need to delay or cancel flights. We face the risk that any of our contractors may not fulfill their contracts and deliver their services on a timely basis, or at all. We have experienced, and may in the future experience, operational complications with our contractors.
In addition, we may not be able to continue the operational success of such businesses or successfully finance or integrate any assets or businesses that we acquire or with which we form a partnership or joint venture. We may have potential write-offs of acquired assets and/or an impairment of any goodwill recorded as a result of acquisitions.
In addition, we may not be able to continue the operational success of such businesses or successfully finance or integrate any assets or businesses that we acquire or with which we form a partnership or joint venture. We have and may continue to have impairment of intangible assets or goodwill related to our acquisitions.
The timing and amount of our operating and capital expenditures will depend on many factors, including: • the amount of net revenue generated by sales of our Passenger and MediMobility Organ Transport services; • the costs and expenses of expanding our U.S. and international operations; • the extent to which our urban air mobility services are utilized by fliers in the regions we operate; • the extent to which our MediMobility Organ Transport services are adopted by MediMobility Organ Transport Customers; 9 Table of Contents • the costs incurred in our efforts to develop our brand and improve awareness; • the costs, timing and outcomes of any future litigation; and • the level of our selling, general and administrative expenses.
The timing and amount of our operating and capital expenditures will depend on many factors, including: • the amount of net revenue generated by sales of our Passenger and Medical services; • our decision to purchase aircraft and/or vehicles; • our launch of new Medical services, passenger routes and/or products; • the costs and expenses of expanding our U.S. and international operations; • the extent to which our urban air mobility services are utilized by fliers in the regions we operate; • the costs incurred in our efforts to develop our brand and improve awareness; • the costs, timing and outcomes of any future litigation; and • the level of our selling, general and administrative expenses.
These enhancements will require significant capital expenditures and allocation of valuable management and employee resources. The success of our Passenger segment will be highly dependent on our ability to effectively market and sell air transportation as a substitute for conventional methods of transportation. We generate a substantial portion of our revenue from the sale of air transportation.
The success of our Passenger segment will be highly dependent on our ability to effectively market and sell air transportation as a substitute for conventional methods of transportation. We generate a substantial portion of our revenue from the sale of air transportation.
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 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.
If we experience harm to our reputation and brand, our business, financial condition, and results of operations could be adversely affected. Continuing to increase the strength of our reputation and brand for reliable, experience-driven, and cost-effective urban air mobility and human organ transport is critical to our ability to attract and retain qualified, third-party aircraft operators and fliers.
Continuing to increase the strength of our reputation and brand for reliable, experience-driven, and cost-effective urban air mobility and human organ transport is critical to our ability to attract and retain qualified, third-party aircraft operators and fliers.
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.
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.
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.
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. 19 T able of Contents We depend in part on mobile operating systems, such as Android and iOS, and their respective application marketplaces to make our platform available to customers.
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.
If we are unable to generate demand or there is a future shift in consumer spending away from urban air mobility, our business, financial condition, and results of operations could be adversely affected. Our Jet and Other product line is reliant on certain customers which could impact our Passenger segment revenue.
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.
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.
In addition, our growth strategy continues to include international expansion through route acquisition, joint ventures, minority investments, or other partnerships with local companies as well as event activations and cross-marketing with other established brands, all of which benefit from our reputation and brand recognition.
In addition, our growth strategy continues to include international expansion through route acquisition, joint ventures, minority investments, or other partnerships with local companies as well as event activations and cross-marketing with other established brands, all of which benefit from our reputation and brand recognition. 15 T able of Contents The successful development of our reputation and brand will depend on a number of factors, many of which are outside our control.
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, public health threats, such as the COVID-19 outbreak, or other events.
The ability of our contractors to effectively satisfy our requirements could also be impacted by any such contractor’s financial difficulty or damage to their operations caused by fire, terrorist attack, natural disaster and public health threats. The failure of any contractors to perform to our expectations could result in delayed or canceled flights and harm our business.
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.
Fliers depend on our Flier Relations team to resolve any issues relating to our services, such as flight operations policies, flight cancellations, or scheduling changes.
If these or any similar efforts are successful, our business would be severely impacted and our growth opportunities in such areas may be reduced. 26 Table of Contents 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.
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.
The markets for our Passenger offerings are still in relatively early stages of growth, and if such markets do not continue to grow, grow more slowly than we expect, or fail to grow as large as we expect, our business, financial condition, and results of operations could be adversely affected.
Because of the numerous risks and uncertainties associated with our expansion and commercialization, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve or maintain profitability. 10 T able of Contents The markets for our Passenger offerings are still in relatively early stages of growth, and if such markets do not continue to grow, grow more slowly than we expect, or fail to grow as large as we expect, our business, financial condition, and results of operations could be adversely affected.
For example, our New York and Massachusetts operations are subject to severe winter weather conditions, and our Miami operations are subject to tropical storms and hurricanes.
For example, our Northeast United States operations are subject to severe winter weather conditions, and our South Florida operations are subject to tropical storms and hurricanes.
Our Passenger 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 high-inflation environment.
Our Passenger business, comprised of our Short Distance and Jet and Other offerings, are vulnerable to changes in consumer preferences, discretionary spending, and other market changes impacting luxury goods and discretionary purchases. The global economy has in the past, and will in the future, experience recessionary periods and periods of economic instability.
MediMobility Organ Transport logistics coordinators and Flier Relations representatives. The ease and reliability of our offerings, including our ability to provide high-quality customer support, helps us attract and retain fliers and commercial customers.
We strive to create high levels of flier satisfaction through the experience we provide in our terminal lounges and the support provided by our Flier Experience team , Medical Logistics Coordinators and Flier Relations representatives. The ease and reliability of our offerings, including our ability to provide high-quality customer support, helps us attract and retain fliers and commercial customers.
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.
Risks Related to Intellectual Property, Cybersecurity, Information Technology and Data Management Practices System failures, defects, errors, or vulnerabilities in our website, applications, backend systems, or other technology systems or those of third-party technology providers could harm our reputation and brand and adversely impact our business, financial condition, and results of operations. 18 T able of Contents 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.
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.
Increases in insurance costs or reductions in insurance coverage may materially and adversely impact our results of operations and financial position. We maintain general liability aviation premise insurance and non-owned aircraft liability coverage We believe our level of coverage is customary in the industry and adequate to protect against claims.
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.
We have utilized certain commuter passes and bulk purchasing options to increase our flier utilization rates in the past; however, these products may be less appealing due to changes in consumer preferences, discretionary spending, and other economic factors.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe also maintain, primarily for the Passenger segment, branded terminals for the use of Blade fliers and customer experience personnel pursuant to leases, licenses or permits with operators of various heliports and airports in New York, New York, White Plains, New York, Newark, New Jersey, Opa-Locka, Florida, Nantucket Massachusetts, Cannes, France, Nice, France and Monaco.
Biggest changeWe also maintain, primarily for the Passenger segment, branded terminals for the use of Blade fliers and customer experience personnel pursuant to leases, licenses or permits with operators of various heliports and airports in New York, New York, Newark, New Jersey, Nantucket, Massachusetts, Cannes, France, Nice, France and Monte Carlo, Monaco.
Our wholly-owned subsidiary Trinity, which is part of the Medical reporting segment, operates from Tempe, Arizona, Blade Europe, which is part of the Passenger reporting segment, operates from offices in Cannes, France and Monaco 33 Table of Contents
Our wholly-owned subsidiary Trinity, which is part of the Medical reporting segment, operates from Tempe, Arizona, Blade Europe, which is part of the Passenger reporting segment, operates from offices in Cannes, France and Monaco.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe Blade Defendants expressly denied any wrongdoing and 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 provision of transplant transportation services. Trinity is cooperating with the subpoena. Item 4. Mine Safety Disclosures Not applicable. Part II
Biggest changeIn July 2022, Trinity Air Medical, LLC, a wholly owned subsidiary of Blade Urban Air Mobility, Inc., received a federal grand jury subpoena seeking records related to the provision of transplant transportation services.
Item 3. Legal Proceedings In the opinion of management, other than as described below, we are not involved in any claims, legal actions, or regulatory proceedings as of December 31, 2022, the ultimate disposition of which would have a material adverse effect on our consolidated financial position, results of operations, or cash flows. On April 1, 2021, Shoreline Aviation, Inc.
Item 3. Legal Proceedings In the opinion of management, other than as described below, we are not involved in any claims, legal actions, or regulatory proceedings as of December 31, 2023, the ultimate disposition of which would have a material adverse effect on our consolidated financial position, results of operations, or cash flows.
Removed
(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.
Added
On August 2, 2023, the Company received notice that the grand jury investigation into the transplant transportation services industry has been closed and that the Company is no longer bound by the obligations placed on it by the subpoena. 35 T able of Contents On February 8, 2024, and February 21, 2024, two putative class action lawsuits relating to the acquisition of Blade Urban Air Mobility, Inc.
Removed
Sound Aircraft Flight Enterprises, Inc. et al., No. 2:20-cv-02161-JMA-SIL (E.D.N.Y.) . The complaint 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”).
Added
(“Old Blade”) were filed. The lawsuits are captioned McFee v. Affeldt, et al. (“ McFee ”) and Drulias v. Affeldt, et al. (“ Drulias ”) (Del. Ch. 2024). McFee asserts breach of fiduciary duty claims against the former directors of Experience Investment Corp.
Removed
On March 16, 2022, SAI and the Blade Defendants filed a Joint Stipulation and Order of Dismissal with Prejudice in the Court, in which, SAI and the Blade Defendants stipulated and agreed that pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(ii), all of SAI’s claims against the Blade Defendants were dismissed with prejudice.
Added
(“EIC Directors”) and KSL Capital Partners Management V and alleges that the proxy statement related to the acquisition of Old Blade (“Merger Proxy”) insufficiently disclosed EIC’s cash position and the shareholder economics of the combined Company.
Added
Drulius asserts breach of fiduciary duty and unjust enrichment claims against the EIC Directors, the former officers of EIC, and KSL Capital Partners, LLC (“KSL”), and aiding and an abetting breach of fiduciary duty claim against KSL.
Added
The Drulias complaint alleges that the Merger Proxy insufficiently disclosed EIC’s cash position, Old Blade’s value prospects and risks, and information related to Old Blade’s chief executive officer, who is also our current chief executive officer. The complaints seek, among other things, damages and attorneys’ fees and costs. Item 4. Mine Safety Disclosures Not applicable. Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDividends The Company has never declared or paid cash dividends on its common stock and has no intention to do so in the foreseeable future. Securities Authorized for Issuance Under Equity Compensation Plans See Part III, Item 12 of this Form 10-K and Note 8 to the consolidated financial statements included herein for additional information.
Biggest changeDividends The Company has never declared or paid cash dividends on its common stock and has no intention to do so in the foreseeable future. Securities Authorized for Issuance Under Equity Compensation Plans See Part III, Item 12 of this Form 10-K and Note 6 to the consolidated financial statements included herein for additional information. Item 6. [Reserved] Not applicable.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities Market Information Our common stock is traded on The NASDAQ Capital Markets under the symbol “BLDE”. Holders On March 6, 2023, the Company had 31 holders of record of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities Market Information Our common stock is traded on The NASDAQ Capital Markets under the symbol “BLDE”. Holders On March 6, 2024 , the Company had 31 holders of record of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe recast income statement was derived as follows: (in 000s) Year ended September 30, 2021 Plus: Three months ended December 31, 2021 (Transition Period) Less: Three months ended December 31, 2020 Year ended December 31, 2021 Revenue $ 50,526 $ 24,618 $ 7,986 $ 67,158 Operating expenses 74,619 35,154 10,354 99,419 Loss from operations (24,093) (10,536) (2,368) (32,261) Net (loss) income (40,052) 772 (2,361) (36,919) 40 Table of Contents Results of Operations The following table presents our consolidated statements of operations for the periods indicated (in thousands, except percentages): Year Ended December 31, 2022 % of Revenue 2021 % of Revenue Revenue $ 146,120 100% $ 67,158 100% Operating expenses Cost of revenue(1) 123,845 85% 54,305 81% Software development(1) 5,545 4% 2,158 3% General and administrative(1) 62,510 43% 39,143 58% Selling and marketing(1) 7,749 5% 3,813 6% Total operating expenses 199,649 137% 99,419 148% Loss from operations (53,529) (32,261) Other non-operating income (expense) Change in fair value of warrant liabilities 24,225 (7,422) Realized loss from sale of short-term investments (2,162) — Recapitalization costs attributable to warrant liabilities — (1,731) Interest income, net 3,434 743 Total other non-operating income (expense) 25,497 (8,410) Loss before income taxes (28,032) (40,671) Income tax benefit (772) (3,752) Net loss $ (27,260) $ (36,919) Net loss per share, basic and diluted $ (0.38) $ (0.68) Weighted-average number of shares outstanding: 71,238,103 54,105,944 __________ (1) Prior period amounts have been updated to conform to current period presentation. 41 Table of Contents Comparison of the Year Ended December 31, 2022 and 2021 Revenue Disaggregated revenue by product line was as follows: Year Ended December 31, 2022 2021 % Change (in thousands, except percentages) Product Line(1): Short Distance $ 44,986 $ 26,507 70 % Jet and Other $ 29,355 $ 25,699 14 % MediMobility Organ Transport 71,779 14,952 380 % Total Revenue $ 146,120 $ 67,158 118 % __________ (1) Prior period amounts have been updated to conform to current period presentation.
Biggest changeThe 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. 41 T able of Contents Results of Operations The following table presents our consolidated statements of operations for the periods indicated (in thousands, except share and per share data): Year Ended December 31, 2023 % of Revenue 2022 % of Revenue Revenue $ 225,180 100% $ 146,120 100% Operating expenses Cost of revenue 183,058 81% 123,845 85% Software development 4,627 2% 5,545 4% General and administrative 95,174 42% 62,510 43% Selling and marketing 10,438 5% 7,749 5% Total operating expenses 293,297 130% 199,649 137% Loss from operations (68,117) (53,529) Other non-operating income (expense) Interest income, net 8,442 3,434 Change in fair value of warrant liabilities 2,125 24,225 Realized gain (loss) from sales of short-term investments 8 (2,162) Total other non-operating income 10,575 25,497 Loss before income taxes (57,542) (28,032) Income tax benefit (1,466) (772) Net loss $ (56,076) $ (27,260) Net loss per share, basic and diluted $ (0.76) $ (0.38) Weighted-average number of shares outstanding, basic and diluted 73,524,476 71,238,103 42 T able of Contents Comparison of the Year Ended December 31, 2023 and 2022 Revenue Disaggregated revenue by product line was as follows: Year Ended December 31, 2023 2022 % Change (in thousands, except percentages) Product Line: Short Distance $ 70,700 $ 44,986 57 % Jet and Other 27,876 29,355 (5) % MediMobility Organ Transport 126,604 71,779 76 % Total Revenue $ 225,180 $ 146,120 54 % For the years ended December 31, 2023 and 2022, revenue increased by $79.1 million or 54%, from $146.1 million in 2022 to $225.2 million in 2023.
Judgment in the assessment of qualitative factors of impairment include, among other factors: reviewing factors such as macroeconomic conditions, industry and market considerations, cost factors, entity-specific financial performance and other events, such as changes in the Company’s management, strategy and primary customer base, factors affecting the reporting unit.
Judgment in the assessment of qualitative factors of impairment include, among other factors: reviewing factors such as macroeconomic conditions, industry and market considerations, cost factors, entity-specific financial performance and other events, such as changes in the Company’s management, strategy and primary customer base, and factors affecting the reporting unit.
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.
This technology stack was built with future growth in mind and is designed to allow our platform to be easily scaled to accommodate, among other things, rapid increases in volume, new routes, new operators, broader flight schedules, international expansion, next-generation verticraft and ancillary services (e.g., last/first-mile ground connections, trip cancellation insurance, baggage delivery) through our mobile apps, website and cloud-based tools.
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.
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.
The non-GAAP measures presented herein may not be comparable to similarly titled measures presented by other companies. These include Flight Profit, Flight Margin, and Adjusted EBITDA, which we define, explain the use of and reconcile to the nearest GAAP financial measure below.
The non-GAAP measure presented herein may not be comparable to similarly titled measures presented by other companies. These include Flight Profit, Flight Margin and Segment Adjusted EBITDA, which we define, explain the use of and reconcile to the nearest GAAP financial measure below.
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.
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.
In evaluation the likelihood of utilizing our net deferred income tax assets, the significant factors that we consider include (1) strong earnings history exclusive of the loss that created the future deductible amount, coupled with evidence indicating loss is not an ongoing condition, (2) growth in the U.S. and global economies, (3) forecast of air transportation revenue trends, (4) impact of future taxable profits.
In evaluating the likelihood of utilizing our net deferred income tax assets, the significant factors that we consider include (1) strong earnings history exclusive of the loss that created the future deductible amount, coupled with evidence indicating loss is not an ongoing condition, (2) growth in the U.S. and global economies, (3) forecast of air transportation revenue trends, (4) impact of future taxable profits.
Our incremental borrowing rate is an estimate based on an analysis of publicly traded debt securities of companies with credit and financial profiles similar to our own. • Determining the lease term when a renewal option exists - some of the Company's leases include options to extend the lease, the Company uses judgement in determining whether a lease extension option would be exercised, this decision drives the ROU amortization period and the value of the ROU asset and the lease liability. • In embedded leases under certain CPAs with third-party aircraft operators, we use estimates in determining what portion of the minimum guarantee represents a lease component. 54 Table of Contents
Our incremental borrowing rate is an estimate based on an analysis of publicly traded debt securities of companies with credit and financial profiles similar to our own. • Determining the lease term when a renewal option exists - some of the Company's leases include options to extend the lease, the Company uses judgement in determining whether a lease extension option would be exercised, this decision drives the ROU amortization period and the value of the ROU asset and the lease liability. • In embedded leases under certain CPAs with third-party aircraft operators, we use estimates in determining what portion of the minimum guarantee represents a lease component.
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.
This enables our operator partners to focus on training pilots, maintaining aircraft and flying, while we maintain the relationship with our customer from booking through flight arrival. For flights offered for sale by-the-seat, Blade schedules flights based on demand analysis and takes the economic risk of aggregating fliers to optimize flight profitability, providing predictable margins for our operators.
Blade operates in three key product lines across two segments (see Note 9 to the consolidated financial statements included herein for further information on reportable segments): Passenger segment • Short Distance – Consisting primarily of helicopter and amphibious seaplane flights in the United States, Canada and Europe between 10 and 100 miles in distance.
Blade operates in three key product lines across two segments (see Note 7 to the consolidated financial statements included herein for further information on reportable segments): Passenger segment • Short Distance – Consisting primarily of helicopter and amphibious seaplane flights in the United States, Canada and Europe between 10 and 100 miles in distance.
Cash (Used In) Provided by Financing Activities For the year ended December 31, 2022, net cash used in financing activities was $1.1 million, primarily reflecting $1.2 million cash paid for payroll tax payments made on behalf of employees in exchange for shares withheld by the Company (“net share settlement”), partially offset by $0.1 million proceeds from the exercise of stock options.
For the year ended December 31, 2022, net cash used in financing activities was $1.1 million, reflecting $1.2 million cash paid for payroll tax payments on behalf of employees in exchange for shares withheld by the Company (“net share settlement”), partially offset by $0.1 million of proceeds from the exercise of stock options.
Developments for 2022 Acquisitions 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”).
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”).
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.
Critical Accounting Estimates This discussion and analysis of the Company’s financial condition and results of operations is based on the Company’s consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP.
We also believe that excluding this non-cash ROU amortization expense will aid comparable to prior and future periods as we do not expect it to re-occur after the fourth quarter of 2022.
We also believe that excluding this non-cash ROU amortization expense will aid in comparing to prior and future periods as we do not expect it to re-occur after the fourth quarter of 2022.
Blade believes the exclusion of the ROU asset amortization from Flight Profit and Flight Margin is helpful as it better represents the Company's actual payable expenses in exchange for the flights served by the operators in the fourth quarter.
Blade believes the exclusion of the ROU asset amortization from Flight Profit and Flight Margin is helpful as it better represents the Company's actual payable expenses in 47 T able of Contents exchange for the flights served by the operators in the fourth quarter.
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.
Large urban markets with 39 T able of Contents existing heliport infrastructure should be able to accommodate EVA while other cities may need several years to permit and build such infrastructure.
Cost of Revenue 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. 39 Table of Contents Software Development Software development expenses consist primarily of staff costs and stock-based compensation costs. Software development costs are expensed as incurred.
Cost of Revenue Cost of revenue consists of flight costs paid to operators of aircraft and cars, landing fees, ROU asset amortization and internal costs incurred in generating organ ground transportation revenue using the Company's owned cars. Software Development Software development expenses consist primarily of staff costs and stock-based compensation costs. Software development costs are expensed as incurred.
See “—Capacity Purchase Agreements” within Note 13 to the consolidated financial statements for additional information and for information about future periods. Additionally, the Company has operating lease obligations related to real estate leases with expected annual minimum lease payments of $1.8 million and $1.3 million for the years ending December 31, 2023 and 2024, respectively.
See “—Capacity Purchase Agreements” within Note 11 to the consolidated financial statements for additional information and for information about future periods. Additionally, the Company has operating lease obligations related to real estate and vehicles with expected annual minimum lease payments of $1.9 million and $0.9 million for the years ending December 31, 2024 and 2025, respectively.
As of December 31, 2022 , we had commitments with various aircraft operators to purchase flights with the annual minimum guarantee of an aggregate value of $12.3 million and $18.0 million for the years ending December 31, 2023 and 2024, respectively. $1.4 million and $10.1 million, respectively of which may be cancelled by us immediately if a government authority enacts travel restrictions and $1.1 million and $9.0 million, respectively of which could be terminated by Blade for convenience upon 30 or 60 days’ notice with the annual minimum guarantee being pro-rated as of the termination date.
As of December 31, 2023 , we had commitments to purchase flights from various aircraft operators with aggregate minimum flight purchase guarantees of $14.0 million and $21.6 million for the years ending December 31, 2024 and 2025, respectively. $5.0 million and $13.3 million, respectively, of which may be cancelled by us immediately if a government authority enacts travel restrictions and $3.1 million and $0.0 million, respectively, of which could be terminated by Blade for convenience upon 30 or 60 days’ notice with the annual minimum guarantee being pro-rated as of the termination date.
In addition, as of December 31, 2022 and December 31, 2021, we had restricted cash of $1.1 million and $0.6 million, respectively. As of December 31, 2022 $150.7 million of short-term investments consisted of securities that are traded in highly liquid markets.
In addition, as of December 31, 2023 and December 31, 2022, we had restricted cash of $1.1 million and $3.1 million, respectively. As of December 31, 2023, $138.3 million of short-term investments consisted of securities that are traded in highly liquid markets.
During the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill.
During the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.
With $194.0 million of total liquid funds as of December 31, 2022, we anticipate that those will be sufficient to meet our current operational needs for at least the next 12 months from the date of filing this Annual Report.
With $166.1 million of total liquid funds as of December 31, 2023, we anticipate that we have sufficient funds to meet our current operational needs for at least the next 12 months from the date of filing this Annual Report.
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.
Our long-term consumer-facing strategy is 37 T able of Contents 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.
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.
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.
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.
Historically, we have made, and expect that we will need to continue to make, significant investments and implement strategic initiatives in order to attract new fliers, such as flier acquisition campaigns and the launching of new scheduled routes. These investments and initiatives may not be effective in generating sales growth or profits.
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.
Our ability to successfully fulfill these requests with consistent pricing on the requested aircraft type, be it jet, turboprop or helicopter, is the primary metric by which Medical Customers evaluate our performance.
Performing a quantitative goodwill impairment test includes the determination of the fair value of a reporting unit and involves significant estimates and assumptions. These estimates and assumptions include, among others, revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, future economic and market conditions, and the determination of appropriate market comparables.
These estimates and assumptions include, among others, revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, future economic and market conditions, and the determination of appropriate market comparables.
Year Ended December 31, 2022 Year Ended December 31, 2021 Passenger Medical Passenger Medical Segment net income (loss) $ (14,029) $ (2,930) $ (1,318) $ 542 Reconciling items: Depreciation and amortization 3,949 1,488 622 430 Stock-based compensation 1,227 269 2,009 146 Legal and regulatory advocacy fees(1) 1,874 — — — Contingent consideration compensation (earn-out)(2) — 6,289 — — Non-cash timing of ROU asset amortization(3) 612 — — — Segment Adjusted EBITDA $ (6,367) $ 5,116 $ 1,313 $ 1,118 __________ (1) Represents certain legal and regulatory advocacy fees for specific matters (the proposed flight volume restrictions at East Hampton Airport, 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.
Year Ended December 31, 2023 Year Ended December 31, 2022 Passenger Medical Passenger Medical (in thousands) Segment loss $ (33,503) $ (1,388) $ (14,029) $ (2,930) Reconciling items: Depreciation and amortization 5,204 1,703 3,949 1,488 Stock-based compensation 1,497 705 1,227 269 Impairment of intangible assets 20,753 — — — Legal and regulatory advocacy fees(1) 686 — 1,874 — Executive severance costs 375 — — — Contingent consideration compensation (earn-out)(2) — 9,734 — 6,289 Non-cash timing of ROU asset amortization(3) — — 612 — Segment Adjusted EBITDA $ (4,988) $ 10,754 $ (6,367) $ 5,116 (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.
Cash Provided by (Used In) Investing Activities For the year ended December 31, 2022, net cash provided by investing activities was $79.3 million, driven by $258.4 million of proceeds from the sale of other short-term investments, $98.0 million of proceeds from maturities of held-to-maturity investments, partially offset by $227.3 million in purchases of held-to-maturity securities, $48.1 million in consideration paid for the acquisition of Blade Europe, $0.7 million in purchases of other short-term investments, $0.7 million in purchases of property and equipment (leasehold improvements and vehicles) and $0.2 million additional investment in the joint venture in India.
For the year ended December 31, 2022, net cash provided by investing activities was $79.3 million, driven by $258.4 million of proceeds from the sales of other short-term investments, $98.0 million of proceeds from maturities of held-to-maturity investments, partially offset by $227.3 million in purchases of held-to-maturity investments, $48.1 million in consideration paid for the acquisition of Blade Europe, $0.7 million in purchases of other short-term investments, $0.7 million in purchases of property and equipment, consisting of leasehold improvements and vehicles, and $0.2 million additional investment in the joint venture in India. 50 T able of Contents Cash Used In Financing Activities For the year ended December 31, 2023, net cash used in financing activities was $0.1 million, reflecting $0.1 million cash paid for payroll tax payments on behalf of employees in exchange for shares withheld by the Company (“net share settlement”), partially offset by $0.1 million of proceeds from the exercise of stock options.
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.
Jet and Other revenue has historically been stronger in the first and fourth quarter (Q1 and Q4) given that our by-the-seat jet service between New York and South Florida has historically operated only between November and April.
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.
However, there is no guarantee that we will continue to be able to secure dedicated aircraft at favorable rates, particularly given significant increases in demand for private jet aircraft in the United States in recent years. Periods of increased demand for private jets have historically led to increased charter costs and more limited availability in the spot jet charter market.
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.
This metric is not always directly correlated with revenue given the significant variability in the price we charge per seat flown across our various products and routes. For products and routes sold by-the-seat, we fly significantly more passengers at a low price per seat; which is captured by Seats Flown.
Year Ended December 31, 2022 2021 (in thousands, except percentages) Net cash used in operating activities $ (37,130) $ (21,630) Net cash provided by / (used in) investing activities 79,340 (316,173) Net cash (used in) / provided by financing activities (1,084) 330,700 Effect of foreign exchange rate changes on cash balances 72 (9) Net increase (decrease) in cash and cash equivalents and restricted cash 41,198 (7,112) 51 Table of Contents Cash Used In Operating Activities For the year ended December 31, 2022, net cash used in operating activities was $37.1 million, primarily driven by a net loss of $27.3 million, $17 thousand cash used for working capital requirements and adjusted for non-cash items consisting of income from change in fair value of warrant liabilities of $24.2 million, stock-based compensation expense of $8.3 million, depreciation and amortization of $5.7 million, realized loss of $2.2 million from the sale of short-term investments, $1.1 million accretion of interest income on held-to-maturity securities and deferred tax benefit of $0.8 million.
For the year ended December 31, 2022, net cash used in operating activities was $37.1 million, primarily driven by a net loss of $27.3 million and $17.0 thousand cash used for working capital requirements, adjusted for non-cash items consisting of income from change in fair value of warrant liabilities of $24.2 million, stock-based compensation expense of $8.3 million, depreciation and amortization of $5.7 million, realized loss of $2.2 million from the sale of short-term investments, accretion of interest income on held-to-maturity securities of $1.1 million, and a deferred tax benefit of $0.8 million.
Liquidity Requirements As of December 31, 2022, the Company had net working capital of $191.5 million, zero debt, cash and cash equivalents of $43.3 million and short-term investments of $150.7 million. The Company had net losses of $27.3 million and $36.9 million for the years ended December 31, 2022 and 2021, respectively.
Liquidity Requirements As of December 31, 2023 , the Company had net working capital of $170.8 million, zero debt, cash and cash equivalents of $27.9 million and short-term investments of $138.3 million. The Company had net losses of $56.1 million and $27.3 million for the year ended December 31, 2023 and 2022, respectively.
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.
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.
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.
Our Business Model Blade leverages an asset-light business model: we primarily utilize aircraft that are owned and/or operated by third-parties on Blade’s behalf. In these arrangements, pilots, maintenance, hangar, insurance, and fuel are all costs borne by our network of operators, which provide aircraft flight time to Blade at fixed hourly rates.
The $17 thousand cash used for working capital requirements was primarily driven by an increase in accounts receivable of $5.3 million (attributable to rapid growth in MediMobility Organ Transport), an increase in prepaid expenses and other current assets of $5.3 million (driven by prepayments to operators in connection with new capacity purchase agreements) and an increase in other non-current assets of $0.7 million (driven by an office lease deposit).
The $17.0 thousand cash used for working capital requirements was primarily driven by an increase in accounts receivable of $5.3 million, due to the rapid growth in MediMobility Organ Transport, an increase in prepaid expenses and other current assets of $5.3 million, driven by prepayments to operators in connection with new capacity purchase agreements, and an increase in other non-current assets of $0.7 million driven by an office lease deposit; fully offset by an increase in accounts payable and accrued expenses of $9.9 million, driven by timing of accruing for the Trinity contingent consideration compensation payment and for the 2022 short term incentive plan, an increase in deferred revenue of $0.7 million (driven by client prepayments), and a $0.6 million increase in lease liabilities (attributable to new leases entered into in 2022).
Other non-operating income (expense) Year Ended December 31, 2022 2021 % Change (in thousands, except percentages) Change in fair value of warrant liabilities $ 24,225 $ (7,422) Realized loss from sale of short-term investments (2,162) — Recapitalization costs attributable to warrant liabilities — (1,731) Interest income, net 3,434 743 Total other non-operating income (expense) $ 25,497 $ (8,410) NM(1) __________ (1) Percentage not meaningful For the year ended December 31, 2022, other non-operating income consists of: (i) $24.2 million non-cash income due to fair value revaluation of warrant liabilities as the value of the warrant liabilities fluctuates with the warrants’ market price; (ii) a $2.2 million realized loss from sale of short-term investments; and (iii) $3.4 million interest income, net of interest expense.
For the year ended December 31, 2022, other non-operating income consists of: (i) $24.2 million non-cash income due to fair value revaluation of warrant liabilities as the value of the warrant liabilities fluctuates with the warrants’ market price; (ii) a $2.2 million realized loss from sale of short-term investments; and (iii) $3.4 million interest income, net of interest expense.
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.
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.
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.
When utilizing third-party aircraft and/or aircraft operators, we typically pre-negotiate fixed hourly rates and flight times, paying only for flights actually flown, creating a predictable and flexible cost structure.
Year Ended December 31, 2022 2021 % Change Segment net loss(1) Passenger $ (14,029) $ (1,318) (964) % Medical (2,930) 542 NM(2) Total segment net loss $ (16,959) $ (776) (2,085) % Segment Adjusted EBITDA(1) Passenger $ (6,367) $ 1,313 NM(2) Medical 5,116 1,118 358 % Total segment Adjusted EBITDA $ (1,251) $ 2,431 NM(2) __________ (1) See section titled “Reconciliations of Non-GAAP Financial Measures” for more information and reconciliations to the most directly comparable GAAP financial measure.
Year Ended December 31, 2023 2022 % Change Segment loss Passenger $ (33,503) $ (14,029) 139 % Medical (1,388) (2,930) (53) % Total segment loss $ (34,891) $ (16,959) 106 % Segment Adjusted EBITDA(1) Passenger $ (4,988) $ (6,367) (22) % Medical 10,754 5,116 110 % Total segment Adjusted EBITDA $ 5,766 $ (1,251) NM(2) (1) See section titled “Reconciliations of Non-GAAP Financial Measures” for more information and reconciliations to the most directly comparable GAAP financial measure.
Key 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 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.
Medical segment Historically, seasonality in our MediMobility Organ Transport business has not been significant. 40 T able of Contents 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.
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.
Based in New York City, Blade's asset-light model, coupled with its exclusive passenger terminal infrastructure and proprietary technologies, is designed to facilitate a seamless transition from helicopters and fixed-wing aircraft to Electric Vertical Aircraft (“EVA” or “eVTOL”), enabling lower cost air mobility that is both quiet and emission-free.
Medical segment • MediMobility Organ Transport – Consisting of transportation of human organs for transplant and/or the medical teams supporting these services.
Medical segment • MediMobility Organ Transport – Consisting primarily of transportation of human organs for transplant and/or the medical teams supporting these services. Blade also offers additional services including donor logistics coordination and support evaluating potential donor organs .
In the interim, we purchase offsets to counteract the carbon emissions generated by our urban air mobility services. 37 Table of Contents 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.
Factors Affecting our Performance Ability to attract and retain fliers in our Short Distance product line Our success depends, in part, on our ability to cost-effectively attract new fliers, retain existing fliers, and increase utilization of our platform by existing fliers.
Medical segment For the year ended December 31, 2022 compared to the same period in 2021, Medical net income decreased by $3.5 million from $0.5 million in 2021 to $(2.9) million in 2022. Medical Adjusted EBITDA increased by $4.0 million or 358% from $1.1 in 2021 to $5.1 million in 2022.
Passenger Adjusted EBITDA increased by $1.4 million or 22% for the year ended December 31, 2023 from $(6.4) million in the same period of 2022 to $(5.0) million in 2023.
We define “Seats flown — all passenger flights” as the total number of seats purchased by paying passengers on all flights, whether sold by-the-seat or within a charter arrangement.
Seats Flown The following table reflects the key operating metric we use to evaluate the Passenger segment: Year Ended December 31, 2023 2022 Seats flown – all passenger flights 154,608 106,368 We define “Seats flown — all passenger flights” (Seats Flown) as the total number of seats purchased by paying passengers on all flights, whether sold by-the-seat or within a charter arrangement.
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, with the exception of certain aircraft utilized primarily for organ transportation, which can be on two to three year contracts.
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.
For the years ended December 31, 2022 and 2021, cost of revenue increased by $69.5 million or 128%, from $54.3 million during 2021 to $123.8 million in 2022 driven by increased flight volume and an increase in the average price per trip.
Cost of Revenue Year Ended December 31, 2023 2022 % Change (in thousands, except percentages) Cost of revenue $ 183,058 $ 123,845 48 % Percentage of revenue 81 % 85 % For the year ended December 31, 2023 and 2022, cost of revenue increased by $59.2 million or 48%, from $123.8 million during 2022 to $183.1 million in 2023 driven by increased flight volume and an increase in the average price per trip.
Refer to the disaggregated revenue discussion above under “—Comparison of the Year Ended December 31, 2022 and 2021—Revenue” for more details.
Medical segment For the years ended December 31, 2023 and 2022, Medical revenue increased by $54.8 million or 76%, from $71.8 million in 2022 to $126.6 million in 2023. Refer to the disaggregated revenue discussion above under “ — Comparison of the Year Ended December 31, 2023 and 2022—Revenue” for more details.
Passenger revenue increased by $22.1 million attributable to $18.5 million increase in Short Distance and $3.7 million increase in Jet and Other. Refer to the disaggregated revenue discussion above under “—Comparison of the Year Ended December 31, 2022 and 2021—Revenue” for more details.
Refer to the disaggregated revenue discussion above under “—Comparison of the Year Ended December 31, 2023 and 2022—Revenue” for more details. Passenger Flight Profit increased by $8.1 million or 72% for the year ended December 31, 2023, from $11.3 million in the same period of 2022 to $19.4 million in 2023.
(2) All other operating expenses refer to the total of software development, general and administrative and selling and marketing expense. 47 Table of Contents Segment Adjusted EBITDA Segment Adjusted EBITDA is defined as revenue less the following expenses: cost of revenue, software development, general and administrative and selling and marketing expenses associated with the segment, excluding non-cash items or certain transactions that management does not believe are reflective of our ongoing core operations (as shown in the table below).
Segment Adjusted EBITDA Segment Adjusted EBITDA is defined as segment income (loss) excluding non-cash items or certain transactions that are not indicative of ongoing Company operating performance and / or items that management does not believe are reflective of our ongoing core operations (as shown in the table below).
The following table shows a reconciliation of segment revenue to segment Flight Profit and segment net income (loss): Year Ended December 31, 2022 Year Ended December 31, 2021 Passenger Medical Passenger Medical Revenue $ 74,341 $ 71,779 $ 52,206 $ 14,952 Cost of revenue(1) (63,658) (60,187) (41,905) (12,400) Non-cash timing of ROU asset amortization 612 — — — Flight Profit 11,295 11,592 10,301 2,552 Flight Margin 15.2 % 16.1 % 19.7 % 17.1 % Flight Profit $ 11,295 $ 11,592 $ 10,301 $ 2,552 Reconciling items: Non-cash timing of ROU asset amortization (612) — — — All other operating expenses(2) (24,712) (14,522) (11,619) (2,010) Segment net income (loss) $ (14,029) $ (2,930) $ (1,318) $ 542 __________ (1) Prior period amounts have been updated to conform to current period presentation.
The following table shows a reconciliation of segment revenue to segment Flight Profit and segment loss: Year Ended December 31, 2023 Year Ended December 31, 2022 Passenger Medical Passenger Medical Revenue $ 98,576 $ 126,604 $ 74,341 $ 71,779 Cost of revenue (79,132) (103,926) (63,658) (60,187) Non-cash timing of ROU asset amortization — — 612 — Flight Profit $ 19,444 $ 22,678 $ 11,295 $ 11,592 Flight Margin 19.7 % 17.9 % 15.2 % 16.1 % Flight Profit $ 19,444 $ 22,678 $ 11,295 $ 11,592 Reconciling items: Non-cash timing of ROU asset amortization — — (612) — All other operating expenses(1) (52,947) (24,066) (24,712) (14,522) Segment loss $ (33,503) $ (1,388) $ (14,029) $ (2,930) (1) All other operating expenses refer to the total of software development, general and administrative and selling and marketing expense.
The initial term of the Aircraft Operator Agreement ends on December 31, 2032 and it will 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).
The initial term of the Aircraft Operator Agreement ends on December 31, 2032 and it will automatically renew for successive three year periods.
Jet and Other revenue increased by $3.7 million or 14% from $25.7 million in 2021 to $29.4 million in 2022.
Jet and Other revenue decreased by $(1.5) million or (5)% from $29.4 million in 2022 to $27.9 million in 2023.
In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs.
In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. For important information regarding these forward-looking statements, please see the discussion above under the caption “Note Regarding Forward-Looking Statements.” 36 T able of Contents Overview Blade Air Mobility, Inc.
Blade believes that the non-GAAP measures discussed below, viewed in addition to and not in lieu of our reported U.S.
Reconciliations of Non-GAAP Financial Measures Certain non-GAAP measures included in this segment results of operations review have been derived from amounts calculated in accordance with GAAP but are not themselves GAAP measures. Blade believes that the non-GAAP measure discussed below, viewed in addition to and not in lieu of our reported U.S.
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.
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.
For additional information about our segments, see Note 9 - “Segment and Geographic Information” in the notes to the consolidated financial statements of this Annual Report on Form 10-K. 44 Table of Contents Segment Revenue, Flight Profit and Flight Margin The following table presents our segment results for the years ended December 31, 2022 and December 31, 2021 (in thousands, except percentages): Year Ended December 31, 2022 2021 % Change Revenue Passenger $ 74,341 $ 52,206 42 % Medical 71,779 14,952 380 % Total revenue $ 146,120 $ 67,158 118 % Flight Profit(1) Passenger $ 11,295 $ 10,301 10 % Medical 11,592 2,552 354 % Total Flight Profit $ 22,887 $ 12,853 78 % Flight Margin(1) Passenger 15.2 % 19.7 % Medical 16.1 % 17.1 % Total Flight Margin 15.7 % 19.1 % __________ (1) See section titled “Reconciliation of Non-GAAP Financial Measures” for more information.
Segment Revenue, Segment Flight Profit and Segment Flight Margin The following table presents our segment results for the periods indicated (in thousands, except percentages): Year Ended December 31, 2023 2022 % Change Segment Revenue Passenger $ 98,576 $ 74,341 33 % Medical 126,604 71,779 76 % Total revenue $ 225,180 $ 146,120 54 % Segment Flight Profit(1) Passenger $ 19,444 $ 11,295 72 % Medical 22,678 11,592 96 % Total Flight Profit $ 42,122 $ 22,887 84 % Segment Flight Margin(1) Passenger 19.7 % 15.2 % Medical 17.9 % 16.1 % Total Flight Margin 18.7 % 15.7 % (1) See section titled “Reconciliations of Non-GAAP Financial Measures” for more information.
For the years ended December 31, 2022 and 2021, general and administrative expense increased by $23.4 million, or 60%, from $39.1 million in 2021 to $62.5 million in 2022.
Medical segment For the years ended December 31, 2023 and 2022, Medical net loss decreased by $1.5 million or 53%, from $(2.9) million in 2022 to $(1.4) million in 2023.
For the years ended December 31, 2022 and 2021, selling and marketing expense increased by $3.9 million, or 103%, from $3.8 million in 2021 to $7.7 million in 2022.
Selling and Marketing Year Ended December 31, 2023 2022 % Change (in thousands, except percentages) Selling and marketing $ 10,438 $ 7,749 35 % Percentage of revenue 5 % 5 % For the years ended December 31, 2023 and 2022, selling and marketing expense increased by $2.7 million, or 35%, from $7.7 million in 2022 to $10.4 million in 2023.
We earn interest income on our money market and short-term investments, the increase over the prior year period is attributable to higher interest rates in the current year period. Segment Results of Operations We operate our business as two reportable segments - Passenger and Medical.
We earn interest income on our money market and short-term investments. Segment Results of Operations We operate our business as two reportable segments - Passenger and Medical. For additional information about our segments, see Note 7 - “Segment and Geographic Information” in the notes to the consolidated financial statements of this Annual Report on Form 10-K.
For the year ended December 31, 2021, net cash used in investing activities was $316.2 million, driven by a $308.8 million purchase of other short-term investments, $23.1 million in consideration paid for the acquisition of Trinity, $12.4 million in consideration paid for the purchase of the exclusive rights to Helijet’s scheduled passenger routes in Canada and $0.5 million in purchases of property and equipment; partially offset by $28.5 million of proceeds from the sale of other short-term investments.
Cash Provided by Investing Activities For the year ended December 31, 2023, net cash provided by investing activities was $17.1 million, driven by $264.5 million of proceeds from maturities of held-to-maturity investments, $20.5 million of proceeds from the sales of other short-term investments, offset by $265.8 million in purchases of held-to-maturity investments, $2.1 million in purchases of property and equipment, consisting of leasehold improvements, furniture and fixtures for lounges used by the Passenger segment, and vehicles used by the Medical segment.
(2) Percentage not meaningful. Passenger segment For the year ended December 31, 2022 compared to the same period in 2021, Passenger net loss increased by $12.7 million from $(1.3) million in 2021 to $(14.0) million in 2022. Passenger Adjusted EBITDA decreased by $7.7 million from $1.3 million in 2021 to $(6.4) million in 2022.
(2) Percentage not meaningful. 46 T able of Contents Passenger segment For the years ended December 31, 2023 and 2022, Passenger net loss increased by $19.5 million or (139)%, from $(14.0) million in 2022 to $(33.5) million in 2023.
(3) We believe that excluding this non-cash ROU amortization expense will aid in comparing to prior and future periods as we do not expect it to re-occur after the fourth quarter of 2022. 48 Table of Contents 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 December 31, 2022.
(3) We believe that excluding this non-cash ROU asset amortization expense will aid in comparing to prior and future periods as we do not expect it to re-occur after the fourth quarter of 2022. 48 T able of Contents Liquidity and Capital Resources Sources of Liquidity As of December 31, 2023 and December 31, 2022 , we had total liquidity of $166.1 million and $192.1 million, respectively, consisting of cash and cash equivalents of $27.9 million and $41.3 million, respectively, and short-term investments of $138.3 million and $150.7 million, respectively.
Those increases were fully offset by: an increase in accounts payable and accrued expenses of $9.9 million driven by timing of accruing for the Trinity contingent consideration compensation payment and for the 2022 short term incentive plan; an increase in deferred revenue of $0.7 million (driven by client prepayments); and a $0.6 million increase in lease liabilities (attributable to new leases entered into in 2022).
The $6.7 million of cash used for working capital requirements was primarily driven by an increase in accounts receivable of $10.3 million (attributable to the rapid revenue growth in MediMobility Organ Transport), an increase in prepaid expenses and other current assets of $6.0 million, driven by prepayments made to operators in connection with capacity purchase agreements; partially offset by an increase in accounts payable and accrued expenses of $9.0 million, driven by the accrual for the Trinity contingent consideration compensation payment and for the 2023 short term incentive plan, and an increase in lease liabilities of $0.4 million.
The increase is attributable primarily to: (i) a $2.3 million increase in media spending, primarily attributable to the re-launched Blade Airport in June 2021; (ii) a $0.8 million increase in sales commissions attributable mainly to high MediMobility Organ Transport revenue growth from new clients; and (iii) a $0.5 million increase in staff costs due to increased headcount.
The increase is attributable primarily to: (i) a $1.4 million in European marketing expenses (which were included for only four months of the prior year), primarily sales commission; (ii) a $1.4 million increase in sales commissions attributable to MediMobility Organ Transport revenue growth from new clients; and (iii) a $1.0 million increase in US marketing staff costs.
Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings. 53 Table of Contents Goodwill Assessment We review goodwill annually (in the fourth quarter) and whenever events or changes in circumstances indicate that goodwill might be impaired.
Goodwill Assessment We review goodwill annually (in the fourth quarter) and whenever events or changes in circumstances indicate that goodwill might be impaired. We make certain judgments and assumptions to determine our reporting units and in allocating shared assets and liabilities to determine the carrying values for each of our reporting units.
Growth in Short Distance revenue was driven by: the acquisition of Helijet’s passenger business in December 2021 (“Blade Canada”); increased US passenger volumes driven primarily by the reintroduction of our by-the-seat airport transfer products in June 2021; higher seat and charter prices, implemented during the 2022 period; and the acquisition of Blade Europe in September 2022.
Growth in Short Distance revenue was primarily driven by the acquisition of Blade Europe in September 2022, contributing growth of $19.8 million, increased volumes of Northeast helicopter charters for a $1.1 million increase, growth in our New York by-the-seat airport transfer products for $2.0 million, and growth in Canada for a $1.9 million increase.
Growth in Jet was driven primarily by an increase in the average price per jet charter trip and increased flight volumes on our seasonal by-the-seat jet service between New York and South Florida, partially offset by lower revenues from brand partners and ground transportation services.
Decrease in Jet was driven primarily by the discontinuation of our seasonal by-the-seat jet service between New York and South Florida in the fourth quarter ended December 2023 for a $1.7 million decrease, partially offset by increased brand partnership revenues for a $0.4 million increase.
For the years ended December 31, 2022 and 2021, revenue increased by $79.0 million or 118%, from $67.2 million in 2021 to $146.1 million in 2022. Short Distance revenue increased by $18.5 million or 70% from $26.5 million in 2021 to $45.0 million in 2022.
Passenger segment For the years ended December 31, 2023 and 2022, Passenger revenue increased by $24.2 million or 33%, from $74.3 million in 2022 to $98.6 million in 2023. The increase was attributable to a $25.7 million increase in Short Distance and a decrease of $1.5 45 T able of Contents million in Jet and Other.
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.
Although this has not limited our ability to maintain or increase our access to dedicated jet aircraft at fixed prices in recent periods, jet charter, which makes up the majority of our Jet and Other business line, is highly competitive and volumes and pricing have historically been significantly influenced by overall market supply and demand.
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. 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.
General and Administrative General and administrative expenses principally include staff costs including stock-based compensation, depreciation and amortization, impairment of intangible assets, directors and officers insurance costs, professional fees, credit card processing fees and establishment costs. Selling and Marketing Selling and marketing expenses consist primarily of advertising costs, staff costs including stock-based compensation, marketing expenses, sales commissions and promotion costs.
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 has less impact on revenue, which is heavily influenced by the Jet and Other product 35 Table of Contents lines where we typically fly fewer passengers over long distances at a high price.
Passenger revenue is heavily influenced by the Jet and Other product lines where we typically fly fewer passengers over long distances at a high price. We believe the Seats Flown metric is useful to investors in understanding the overall scale of our Passenger segment and trends in the number of passengers paying to use our service.
Medical segment For the year ended December 31, 2022 compared to the same period in 2021, Medical revenue increased by $56.8 million or 380%, Medical Flight Profit increased by $9.0 million or 354%, with Flight Margins at 16.1% versus 17.1%. Medical revenue increased by $56.8 million, with the increase attributable to MediMobility Organ Transport.
Medical Flight Margin increased from 16.1% in the year ended December 31, 2022 to 17.9% in the same period in 2023.
See Note 7 “Right-of-Use Asset and Operating Lease Liability” to the consolidated financial statements for additional information and for information about future periods. We expect to incur net losses in the short term, as we continue to execute our strategic initiatives.
See Note 5 “Right-of-Use Asset and Operating Lease Liability” to the consolidated financial statements for additional information and for information about future periods. We have non-cancellable commitments which primarily relate to cloud services and other items in the ordinary course of business. The amounts are determined based on the non-cancellable quantities to which we are contractually obligated.
General and Administrative Year Ended December 31, 2022 2021 % Change (in thousands, except percentages) General and administrative(1) $ 62,510 $ 39,143 60 % Percentage of revenue 43 % 58 % __________ (1) Prior period amounts have been updated to conform to current period presentation.
General and Administrative Year Ended December 31, 2023 2022 % Change (in thousands, except percentages) General and administrative $ 95,174 $ 62,510 52 % Percentage of revenue 42 % 43 % For the years ended December 31, 2023 and 2022, general and administrative expense increased by $32.7 million, or 52%, from $62.5 million in 2022 to $95.2 million in 2023.
However, manufacturers, individual operators that will 38 Table of Contents purchase EVA, and pilots must receive requisite approvals from federal transportation authorities before EVA can fly passengers.
However, EVA involves a complex set of technologies, which we rely on original equipment manufacturers (“OEMs”) to develop and our third-party aircraft operators to adopt. However, before EVA can fly passengers or cargo, OEMs must receive requisite approvals from federal transportation authorities.
Passenger segment For the year ended December 31, 2022 compared to the same period in 2021, Passenger revenue increased by $22.1 million or 42%, Passenger Flight Profit increased by $1.0 million or 10%, with Flight Margin at 15.2% versus 19.7% in the prior year period.
Medical Flight Profit increased by $11.1 million or 96% for the year ended December 31, 2023, from $11.6 million in the same period of 2022 to $22.7 million in 2023. The increase was attributable primarily to increased revenue from new and existing clients and an increase in average flight hours per trip.
MediMobility Organ Transport revenue increased by $56.8 million or 380% from $15.0 million in 2021 to $71.8 million in 2022.
Short Distance revenue increased by $25.7 million or 57% from $45.0 million in 2022 to $70.7 million in 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe might experience fluctuations in our net income (loss) as a result of transaction gains or (losses) related to remeasurement of our asset and liability balances that are denominated in currencies other than the functional currency of the entities in which they are recorded. Item 8.
Biggest changeWe 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.
Removed
Financial Statements and Supplementary Data The financial statements required by this Item are included in Item 15 of this report and are presented beginning on page F-1. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. Item 9A.
Removed
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”)).
Removed
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 December 31, 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.
Removed
Management has concluded that the Company’s disclosure controls and procedures were not effective as of December 31, 2022 due to the material weaknesses in our internal control over financial reporting as described below.
Removed
Management’s Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f) and 15d-15(f).
Removed
Internal control over financial reporting is a process used to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with generally accepted accounting principles in the United States.
Removed
Internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of our financial statements in accordance with generally accepted accounting principles in the United States, and that our receipts and expenditures are being made only in accordance with the authorization of our Board of Directors and management; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.
Removed
Under the supervision and with the participation of our management, including our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer), we performed an assessment of the 55 Table of Contents Company’s significant processes and key controls based on the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework).
Removed
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 2022 consolidated financial statements and constituted approximately 2.7% of total assets as of December 31, 2022 and 2.9% and 4.0% of sales and net loss, respectively, for the year then ended.
Removed
A material weakness is defined within the Public Company Accounting Oversight Board’s Auditing Standard No. 5 as a deficiency or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
Removed
Management concluded that the Company’s internal controls over financial reporting were not effective as of December 31, 2022.
Removed
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 IT general controls related to financially relevant IT applications.
Removed
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 control tests were appropriately considered.
Removed
These deficiencies 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.
Removed
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.
Removed
Notwithstanding the material weaknesses, management has concluded that the consolidated financial statements included elsewhere in this Annual Report on Form 10-K present fairly, in all material respects, our financial position, results of operations, and cash flows in conformity with GAAP.
Removed
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this Annual Report.
Removed
Management’s Plans for Remediation The Company is remediating these material weaknesses as efficiently and effectively as possible, with the implementation 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.
Removed
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 control tests were appropriately considered.
Removed
T hese plans are subject to ongoing review by senior management and Audit Committee oversight.
Removed
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.
Removed
The Company expects to complete the required remedial action during 2023. 56 Table of Contents Remediation of Previously Identified Material Weakness The following material weakness previously disclosed as of September 30, 2022 is in the process of being remediated as of December 31, 2022: • 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: – 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.
Removed
We remedia ted the portion of this material weakness in relation to the devel op me n t of a formal framework that enables management to evaluate whether the internal controls over financial reporting are designed to prevent or detect material misstatements or omissions .
Removed
We accomplished this by the implementation of SOX c ompliance software in August 2022 to assist in the documentation and evaluation of the design effectiveness of our internal controls over financial reporting.
Removed
This has enabled management to: • Complete Control Assessments for all in-scope entities, resulting in documentation of Risk and Control Matrices for all in-scope business processes, IT General Controls and Entity Level Controls; and • Identify design deficiencies in key controls over financial reporting. As noted, this previously disclosed material weakness is in the process of being remediated.
Removed
As described above under “—Management’s Annual Report on Internal Control over Financial Reporting” and “Management’s Plans for Remediation”, t he Company has still not yet developed a formal framework that enables management to assess the operating effectiveness of internal controls over financial reporting through appropriately planned, documented and considered controls testing.
Removed
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 for the period covered by this Annual Report.
Removed
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.
Removed
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.
Removed
Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

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