# Strata Critical Medical, Inc. (SRTA) FY 2021 MD&A

Verbatim Item 7 Management's Discussion and Analysis from Strata Critical Medical, Inc.'s 10-K for fiscal year 2021.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1779128/000177912821000025/blde-20210930.htm
Accession: 0001779128-21-000025
Filing date: 2021-12-20
Report date: 2021-09-30
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Published MD&A gate trimmed front/tail over-capture.
Confidence: high

Company profile: /company/SRTA/
All MD&A years: /company/SRTA/mda/
Next year: /company/SRTA/mda/fy2022/ (FY 2022)

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with other sections of this Annual Report on Form 10-K, including our consolidated financial statements and the related notes and other financial information included elsewhere in this Annual Report on Form 10-K.

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.”

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

Merger and Organization

On May 7, 2021 (the “Closing Date”), privately held Blade Urban Air Mobility, Inc., a Delaware corporation, (“Old Blade”) consummated the previously announced transactions contemplated by the Agreement and Plan of Merger (the “Merger Agreement”), dated December 14, 2020, by and among Experience Investment Corp. (“EIC”), Experience Merger Sub, Inc., a wholly owned subsidiary of EIC (“Merger Sub”), and Old Blade. The Merger Agreement provided for the acquisition of Old Blade by EIC pursuant to the merger of Merger Sub with and into EIC (the “Merger”), with Old Blade continuing as the surviving entity and a wholly owned subsidiary of EIC. On the Closing Date, and in connection with the closing of the business combination (the “Closing”), EIC changed its name to Blade Air Mobility, Inc. Unless the context indicates otherwise, the discussion of the Company and its financial condition and results of operations is with respect to Blade following the Closing Date and with respect to Old Blade prior to the Closing Date. See Note 3 to the consolidated financial statements for additional information.

Acquisitions

On September 15, 2021, the Company completed its acquisition of 100% of Trinity Air Medical, Inc. (“Trinity”) shares. Trinity is an asset-light, multi-modal organ transport business working with transplant centers and organ procurement organizations in 16 states. The results of Trinity from the acquisition date to September 30, 2021 are included in the MediMobility Organ Transport and Jet line of business. See Note 4 to the consolidated financial statements for additional information.

Business Overview

Blade is a technology-powered, global air mobility platform. We provide consumers with a cost-effective and time-efficient alternative to ground transportation for congested routes, predominantly within the Northeastern United States, through our helicopter, amphibious seaplane, and fixed-wing transportation services. Our platform utilizes a technology-powered, asset-light business model, which was developed to be scalable and profitable using conventional helicopters today while enabling a seamless transition to Electric Vertical Aircraft (“EVA”), once they are certified for public use. Blade currently operates in three key lines of business:

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

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

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

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

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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 to Blade at fixed hourly rates. This enables our operator partners to focus on training pilots, maintaining aircraft and flying, while we schedule flights based on demand analysis and maintain the relationship with the flier from booking through flight arrival. Blade takes the economic risk of aggregating fliers to optimize flight profitability, providing predictable margins for our operators.

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

Blade’s proprietary “customer-to-cockpit” technology stack enables us to manage hundreds of fliers across numerous simultaneous flights, coordinating multiple operators flying between terminals across our route network. We believe that this technology, which provides us with enhanced logistics capabilities and information from our fliers signaling their interest in new routes, will enable us to continue to scale our business. This technology stack was built with future growth in mind and is designed to allow our platform to be easily scaled to accommodate, among other things, rapid increases in flier volume, new routes, new operators, broader flight schedules, next-generation verticraft and ancillary services (e.g., last/first-mile ground connections, trip cancellation insurance, baggage delivery) through our mobile apps, website and cloud-based tools.

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

Key Business Metric

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

[[GREPCENT_TABLE]]
[["","For the Years Ended September 30,"],["","2021","","2020","","2019"],["Seats flown \u2013 all flights","27,665","","","17,346","","","32,845"]]
[[/GREPCENT_TABLE]]

We define “Seats flown — all flights” as the total number of seats purchased by paying passengers on all flights, whether sold by-the-seat or within a charter arrangement. Our long-term strategy is primarily focused on growth in by-the-seat products, and we believe that “Seats flown — all flights” is an important indicator of our progress in executing on this growth strategy. This metric is not always directly correlated with revenue given the significant variability in the price we charge per seat flown across our various products and routes. For products and routes sold by-the-seat, we fly significantly more passengers at a low price per seat; growth in these areas is captured by “Seats flown — all flights,” but not necessarily in revenue, which is heavily influenced by our MediMobility Organ Transport and Jet product line where we typically fly fewer or sometimes no passengers over long distances at a high price. We believe the “Seats flown — all flights” metric is useful to investors in understanding the overall scale of our business and trends in the number of passengers paying to use our service.

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Factors Affecting our Performance

Ability to attract and retain fliers in our Short Distance business

Our success depends in part on our ability to cost-effectively attract new fliers, retain existing fliers and increase utilization of our services by current fliers. We plan to continue making significant investments and implementing strategic initiatives in order to attract new fliers, such as flier acquisition campaigns and the launching of new scheduled routes. These investments and initiatives may not be effective in generating sales growth or profits. Moreover, if fliers do not perceive our urban air mobility services to be reliable, safe, and cost-effective, or if we fail to offer new and relevant services and features on our platform, we may not be able to attract or retain fliers or increase their utilization of our platform.

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

Our MediMobility Organ Transport business primarily serves transplant centers and Organ Procurement Organizations ("OPOs" and, together, "MediMobility Customers"). Transportation for the hearts, lungs and livers that make up the vast majority of this business line is typically requested only hours before the required departure time. Our ability to successfully fulfill these requests with consistent pricing on the requested aircraft type, be it jet, turboprop or helicopter, is the primary metric by which MediMobility Customers evaluate our performance. We utilize the same fixed wing aircraft and aircraft operators for our retail jet charter customers, who are also primarily concerned with availability and pricing, but typically book with much more advance notice.

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

Expansion into New Geographic Markets

Our growth plan is focused on dense urban areas, primarily those with existing air transportation infrastructure in the Northeast and on the West Coast, that are facing increasing ground congestion. In these areas, Blade’s urban air mobility services can provide the most time savings for our fliers, and given the short distances involved, costs for our services can be comparable to luxury, private car services. In addition, EVA may be commercially viable sooner in these markets given that battery technology constraints may limit the range of early models. Large urban markets with existing heliport infrastructure should be able to accommodate EVA while other cities may need several years to permit and build such infrastructure. In addition to these domestic target markets, we will continue to explore international markets through joint ventures, as in India. The number of potential fliers using our urban air mobility services in any of these markets cannot be predicted with any degree of certainty, and we cannot provide assurance that we will be able to operate in a profitable manner in any of our current or targeted future markets.

Growth of our business will require significant investments in our infrastructure, technology, and marketing and sales efforts. Historically, cash flow from operations has not been sufficient to support these needs. If our business does not generate the level of available cash flow required to support these investments, our results of operations will be negatively affected. Further, our ability to effectively manage growth and expansion of our operations will also require us to enhance our operational systems, internal controls and infrastructure, human resources policies, and reporting systems. These enhancements will require significant capital expenditures and allocation of valuable management and employee resources.

Development, approval and acceptance of EVA for passenger travel

We intend to leverage the expected lower operating costs of EVA versus helicopters to reduce the consumer’s price for our flights. Additionally, we expect the reduced noise footprint and zero carbon emission characteristics of EVA to allow for the development of new, vertiports in our existing and new markets. However, manufacturers, individual operators that will purchase EVA, and pilots must receive requisite approvals from federal transportation authorities before EVA can fly passengers. No EVA aircraft are currently certified by the FAA for commercial operations in the United States, and there is no assurance that research and development will result in government certified aircraft that are market-viable or commercially successful in a timely manner, or at all.

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We believe that Blade is well positioned to introduce EVA into commercial service, once available, for a number of reasons. We believe our existing short-distance routes are compatible with EVA, which are expected initially to have a limited range, and our existing terminal space will accommodate EVA. Blade’s unit economics are designed to be profitable using either helicopters or EVA, even if early EVA do not deliver significant cost savings relative to helicopters. Moreover, Blade’s asset-light business model and technology platform are operator and aircraft agnostic, enabling a seamless transition to EVA.

Seasonality

Historically, we experienced seasonality with flight volume peaking during the quarters ended June 30 and September 30 of each fiscal year due to the busy summer travel season, with lower volume during the first and second fiscal quarters. In calendar year 2020, we experienced less seasonality as a result of the COVID-19 pandemic and related restrictions, which altered typical travel patterns. In 2021, we have seen a recovery in demand for summer travel, resulting in a return to more typical seasonality. Blade’s Short Distance expansion strategy is focused on routes with significantly less seasonality, such as intercity transfers, airport, and year-round commuter routes. We also continue to expand our MediMobility business, which sees consistent year-round demand, both organically and through acquisition. Thus, we expect that seasonality in revenue will decrease as our business grows and our revenue mix shifts to these new, year-round routes.

Key Components of the Company’s Results of Operations

Revenue

Blade generates revenue through the sale of air travel services. Our fliers primarily purchase and manage reservations using our self-service mobile and web applications, but some choose to call, email, or text our dedicated team of Flier Relations professionals. Fliers pay via credit card transactions, wire, check, customer credits, and gift cards, and generally, we collect payments in advance of performing the related services. We also collect fees from add-ons, such as trip insurance and ground transportation services, and changes to non-refundable seats sold. Our MediMobility Organ Transport customers receive terms and make payments to us after we perform the related service. Most of our accounts receivable consist of amounts due from MediMobility Organ Transport customers. Additionally, our joint venture agreement for operations in India entitles us to receive quarterly royalty payments.

Cost of Revenue

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

Software Development

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

General and Administrative

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

Selling and Marketing

Selling and marketing expenses consist primarily of advertising costs, staff salaries and stock-based compensation, marketing expenses, and promotion costs. We expect that selling and marketing expenses will increase for the foreseeable future as they represent a key component of our initiatives to expand into new markets. The trend and timing of our brand marketing expenses will depend in part on the timing of our expansion into new markets and other marketing campaigns.

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Results of Operations

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

[[GREPCENT_TABLE]]
[["","For the Years Ended September 30,"],["","2021","","2020","","2019"],["","","","% of Revenue","","","","% of Revenue","","","","% of Revenue"],["","($ in thousands, except for share and per share amounts)"],["Revenue","$","50,526","","","100","%","","$","23,434","","","100","%","","$","31,196","","","100","%"],["Operating expenses"],["Cost of revenue","39,721","","","79","%","","21,107","","","90","%","","26,497","","","85","%"],["Software development","1,514","","","3","%","","861","","","4","%","","751","","","2","%"],["General and administrative","29,922","","","59","%","","9,292","","","40","%","","10,476","","","34","%"],["Selling and marketing","3,462","","","7","%","","2,533","","","11","%","","5,013","","","16","%"],["Total operating expenses","74,619","","","148","%","","33,793","","","144","%","","42,737","","","137","%"],["Loss from operations","(24,093)","","","","","(10,359)","","","","","(11,541)"],["Other non-operating (expense) income"],["Change in fair value of warrant liabilities","(18,331)","","","","","\u2014","","","","","\u2014"],["Recapitalization costs attributable to warrant liabilities","(1,731)","","","","","\u2014","","","","","\u2014"],["Interest income, net","460","","","","","199","","","","","703"],["Total other non-operating (expense) income","(19,602)","","","","","199","","","","","703"],["Loss before income taxes","(43,695)","","","","","(10,160)","","","","","(10,838)"],["Income tax benefit","(3,643)","","","","","\u2014","","","","","\u2014"],["Net loss","$","(40,052)","","","","","$","(10,160)","","","","","$","(10,838)"],["Weighted average shares outstanding, basic and diluted","42,883,615","","","","","25,210,559","","","","","25,135,632"],["Net loss per share, basic and diluted","$","(0.93)","","","","","$","(0.40)","","","","","$","(0.43)"]]
[[/GREPCENT_TABLE]]

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Comparison of the Years Ended September 30, 2021, 2020 and 2019

Revenue

Disaggregated revenue by product line was as follows:

[[GREPCENT_TABLE]]
[["","","For the Years Ended September 30,"],["","","2021","","2020","","2019"],["","","(in thousands)"],["Product Line(1):"],["Short Distance","","$","22,253","","","$","9,466","","","$","26,040"],["MediMobility Organ Transport and Jet","","26,346","","","13,476","","","5,071"],["Other","","1,927","","","492","","","85"],["Total Revenue","","$","50,526","","","$","23,434","","","$","31,196"]]
[[/GREPCENT_TABLE]]
__________

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

2021 to 2020 Annual Comparison

Revenue increased by $27.1 million or 116%, from $23.4 million in 2020 to $50.5 million in 2021. The increase in revenue was driven by increases across all product lines as Short Distance demand began to recover following the relaxation of COVID-19 lockdowns while MediMobility Organ Transport and Jet revenues continued to exhibit strong growth.

Short Distance aviation services increased by $12.8 million in 2021, an increase of 135%. Growth in Short Distance was driven by a recovery in demand for the Company's commuter and airport transfer products following the relaxation of COVID-19 lockdowns.

MediMobility Organ Transport and Jet increased by $12.9 million in 2021, an increase of 96%. Our MediMobility Organ Transport and Jet charter businesses were not adversely impacted by the pandemic and continued to show strong growth. In MediMobility Organ Transport, growth was driven by our successful effort to add additional hospital customers and the inclusion of Trinity's revenue for the period from September 16, 2021 to September 30, 2021. The inclusion of Trinity contributed growth of 5% in 2021. In Jet charter, growth was driven by the successful acquisition of additional fliers and more frequent trips from fliers who preferred to avoid commercial airline travel during the pandemic.

Other revenue increased from $0.5 million to $1.9 million, an increase of 292%, driven primarily by the introduction of our Essential Ground Connect car service in the middle of prior year and higher revenue from brand partners.

2020 to 2019 Annual Comparison

Revenue decreased by $7.8 million, or 25%, from $31.2 million in 2019 to $23.4 million in 2020. The decline in revenue was driven principally by lower revenues from short distance aviation services, from $26.0 million in 2019 to $9.5 million in 2020, a reduction of $16.5 million or 64%. Short distance revenues were negatively impacted by a significant reduction in demand for commercial airline travel, driven by the COVID-19 pandemic, which resulted in our decision to pause our New York airport transfer services. In addition, the closure of offices in New York City led to a reduction in demand for our commuter services in the typically high-demand summer season.

The revenue decline in short distance was partially offset by significant increases in MediMobility Organ Transport and Jet revenues which were $13.5 million in 2020 as compared to $5.0 million in 2019, an increase of $8.5 million or 166%. Our MediMobility and jet charter businesses were not adversely impacted by the pandemic and continued to show strong growth. In MediMobility, growth was driven by our successful effort to add additional hospital customers, the continued need for organ transplants during the pandemic and the limited operating results for MediMobility in 2019, given our Q4

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2019 service launch. In jet charter, growth was driven by the successful acquisition of additional fliers and more frequent trips from fliers who preferred to avoid commercial airline travel during the pandemic.

Other revenue increased from $0.1 million to $0.5 million driven primarily by the introduction of our Essential Ground Connect ground transportation service and increased sales of commuter passes.

Cost of Revenue

2021 to 2020 Annual Comparison

Cost of revenue increased by $18.6 million or 88%, from $21.1 million during 2020 to $39.7 million in 2021, driven by increased flight volume. Cost of revenue decreased as a percentage of revenues from 90% to 79%, driven by higher average utilization in our by-the-seat routes as well as increased Short Distance revenues as a percentage of overall sales. Our direct operator costs for MediMobility Organ Transport and Jet are generally higher than the direct operator costs for our Short Distance flights. Thus, the shift in revenue mix led to an overall decrease in our cost of revenue as a percentage of total revenues.

2020 to 2019 Annual Comparison

Cost of revenue decreased by $5.4 million, or 20%, from $26.5 million during 2019 to $21.1 million in 2020. The decrease in cost of revenue was attributed primarily to the decline in short distance flight volume, which was driven by the COVID-19 pandemic. Generally, our direct costs payable to operators on a per flight per route basis remained consistent with 2019 for our by-the-seat routes. From 2019 to 2020, Short Distance revenue decreased as a percentage of our total sales. Our direct operator costs for MediMobility Organ Transport and Jet are generally higher than the direct operator costs for our Short Distance flights. Thus, the shift in revenue mix led to an overall increase in our cost of revenue as a percentage of total revenues.

Software Development

2021 to 2020 Annual Comparison

Software development costs increased by $0.7 million, or 76% due to an increase in stock-based compensation expense of $0.5 million and staff costs of $0.2 million.

2020 to 2019 Annual Comparison

Software development costs increased by $0.1 million, or 13%, from $0.8 million in 2019 to $0.9 million in 2020, principally due to hiring additional software development engineers and consultants in the period.

General and Administrative

2021 to 2020 Annual Comparison

General and administrative expense increased by $20.6 million, or 222%, from $9.3 million during 2020 to $29.9 million in 2021. The increase is attributable to: a $8.4 million increase in stock-based compensation expense; a $7.3 million increase in professional fees (primarily consulting, accounting and legal), of which $6.0 million are attributable to the Company's transition from a private to public company, while the remainder are attributable to ongoing business operations and fees in connection with M&A activity; an increase in insurance expense of $2.9 million ($2.7 million is due to D&O insurance since going public); a $2.0 million increase due to staff, office and credit card processing fees, in line with the higher level of activity as well as new roles created in connection with the Company becoming public. Additionally, the Company has eliminated cost controls introduced during the pandemic given continued revenue growth and the recovery in overall travel demand.

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2020 to 2019 Annual Comparison

General and administrative expense decreased by $1.2 million, or 11%, from $10.5 million during 2019 to $9.3 million in 2020, principally on account of headcount reductions implemented in the spring of 2020 to reduce fixed costs in response to the COVID-19 pandemic’s impact on operations.

Selling and Marketing

2021 to 2020 Annual Comparison

Selling and marketing expense increased by $1.0 million, or 37%, from $2.5 million during 2020 to $3.5 million in 2021. The increase is attributable to higher marketing activity to support the Company’s revenue growth.

2020 to 2019 Annual Comparison

Selling and marketing expense decreased by $2.5 million, or 49%, from $5.0 million during 2019 to $2.5 million in 2020. The decrease in selling and marketing expense was attributed primarily to significant reductions in marketing and advertising related to scaling down our short distance flight services in response to COVID-19 restrictions on travel and workplace closures.

Other non-operating (expense) income

2021 to 2020 Annual Comparison

Other non-operating (expense) income consisted of $18.3 million of non-cash expense due to fair value revaluation of warrant liabilities, representing the change in fair value between the date of the merger to September 30, 2021. We also expensed recapitalization costs of $1.7 million attributable to warrant liabilities due to our reverse recapitalization on May 7, 2021. We earn interest income on our money market and short-term investments. Net interest income increased by $0.3 million to $0.5 million in 2021 as a result of higher invested assets in the current year compared to the prior year.

2020 to 2019 Annual Comparison

Other non-operating (expense) income consists of interest income and interest expense. We earn interest income on our money market investments. Interest income decreased by $0.5 million, or 72%, from $0.7 million during 2019 to $0.2 million during 2020.

Quarterly Disaggregated Revenue

The following table sets forth our unaudited quarterly disaggregated revenue by product line for each of the twelve quarters in the period ended September 30, 2021. These unaudited quarterly disaggregated revenue by product line have been prepared on the same basis as our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

[[GREPCENT_TABLE]]
[["","","Three Months Ended"],["","","September 30, 2021","","June 30, 2021","","March 31, 2021","","December 31, 2020"],["","","(in thousands)"],["Product Line:"],["Short Distance","","$","13,353","","","$","5,721","","","$","1,049","","","$","2,130"],["MediMobility Organ Transport and Jet","","6,593","","","6,500","","","7,729","","","5,524"],["Other","","370","","","730","","","495","","","332"],["Total Revenue","","$","20,316","","","$","12,951","","","$","9,273","","","$","7,986"]]
[[/GREPCENT_TABLE]]

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[[GREPCENT_TABLE]]
[["","","Three Months Ended"],["","","September 30, 2020","","June 30, 2020","","March 31, 2020","","December 31, 2019"],["","","(in thousands)"],["Product Line:"],["Short Distance","","$","3,699","","","$","629","","","$","1,787","","","$","3,351"],["MediMobility Organ Transport and Jet","","4,387","","","2,636","","","4,588","","","1,865"],["Other","","233","","","173","","","79","","","7"],["Total Revenue","","$","8,319","","","$","3,438","","","$","6,454","","","$","5,223"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","","Three Months Ended"],["","","September 30, 2019","","June 30, 2019","","March 31, 2019","","December 31, 2018"],["","","(in thousands)"],["Product Line:"],["Short Distance","","$","14,916","","","$","6,610","","","$","1,785","","","$","2,729"],["MediMobility Organ Transport and Jet","","895","","","848","","","2,209","","","1,119"],["Other","","10","","","48","","","14","","","13"],["Total Revenue","","$","15,821","","","$","7,506","","","$","4,008","","","$","3,861"]]
[[/GREPCENT_TABLE]]

Liquidity and Capital Resources

Sources of liquidity

Since inception and until May 2021, Old Blade financed its operations primarily from sales of convertible preferred stock. On May 7, 2021 the Company raised $333.3 million in net proceeds upon the consummation of the merger with EIC and the sale of common stock through a PIPE. As of September 30, 2021 and 2020, we had cash and cash equivalents of $7.0 million and $12.2 million, respectively, and restricted cash of $0.6 million and $0.1 million, respectively. In addition, as of September 30, 2021 we had $297.2 million of short-term investments in a traded mutual fund which could be liquidated with a one day notice. We anticipate that our available cash and cash equivalents and short-term investments will be sufficient to meet our current operational needs for at least the next 12 months from the date of filing this Annual Report. Our future capital requirements will depend on many factors including the pace of our expansion into new markets, our ability to attract and retain fliers, capital expenditures, acquisitions, as well as the timing of regulatory approval and market adoption of EVAs for urban air mobility.

On April 8, 2020, we entered into an unsecured note evidencing our PPP Loan in the principal amount of $1.2 million. Proceeds from our PPP Loan were used for payroll costs, costs related to certain group health care benefits, rent payments, utility payments and interest payments on other debt obligations that were incurred before February 15, 2021. On May 7, 2021, we repaid the PPP Loan in full. See Note 7 to the consolidated financial statements for additional information.

Liquidity Requirements

As of September 30, 2021, we had net working capital of $304.9 million, including cash and cash equivalents of $7.0 million. We had net losses of $40.1 million (with $27.9 million non-cash costs related to warrants valuation and stock-based compensation), $10.2 million and $10.8 million for the years ended September 30, 2021, 2020 and 2019, respectively.

We expect to continue to incur net losses in the short term, as we continue to execute our strategic initiatives. Based on our current liquidity, we believe that no additional capital will be needed to execute our current business plan over the next 12 months.

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Cash Flows

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

[[GREPCENT_TABLE]]
[["","For the Years Ended September 30,"],["","2021","","2020","","2019"],["","(in thousands)"],["Net cash used in operating activities","$","(15,615)","","","$","(10,818)","","","$","(10,302)"],["Net cash used in investing activities","(321,338)","","","(377)","","","(1,054)"],["Net cash provided by financing activities","332,259","","","1,180","","","116"],["Net decrease in cash, cash equivalents and restricted cash","$","(4,694)","","","$","(10,015)","","","$","(11,240)"]]
[[/GREPCENT_TABLE]]

Cash Used in Operating Activities

For the year ended September 30, 2021, net cash used in operating activities was $15.6 million, primarily driven by a net loss of $40.1 million, offset by non-cash items consisting of change in fair value of warrant liabilities of $18.3 million, stock-based compensation of $9.6 million and depreciation and amortization of $0.5 million. The changes in operating assets and liabilities are primarily driven by an increase of $4.3 million in prepaid expenses (of which $3.8 million is attributable to prepaid insurance premiums), an increase of $0.4 million of accounts receivable and an increase of $0.1 million of non-current assets. Those increases were partially offset by an increase of $2.0 million in accounts payable and accrued expenses and an increase of $0.7 million of deferred revenue.

For the year ended September 30, 2020, net cash used in operating activities was $10.8 million, primarily driven by a net loss of $10.2 million, adjusted for non-cash items consisting of $0.5 million of depreciation and amortization and $0.5 million of stock-based compensation. The changes in operating assets and liabilities consist principally of increases of $0.3 million in prepaid expenses and other current assets, $0.6 million in accounts receivable, and a decrease of $1.4 million in accounts payable and accrued expenses, offset by an increase of $0.6 million in deferred revenue.

For the year ended September 30, 2019, net cash used in operating activities was $10.3 million, primarily driven by a net loss of $10.8 million, adjusted for non-cash items consisting of $0.5 million of depreciation and amortization and $0.3 million of stock-based compensation. The changes in operating assets and liabilities consist principally of an increase of $0.3 million in prepaid expenses and other current assets, an increase of $0.2 million in accounts receivable and a decrease of $0.4 million in accounts payable and accrued expenses, offset by an increase of $0.7 million in deferred revenue.

Cash Used In Investing Activities

For the year ended September 30, 2021, net cash used in investing activities was $321.3 million, driven by a $308.8 million purchase of short-term investments, $23.1 million in consideration paid for Trinity, $0.3 million in purchases of property and equipment, and a $0.5 million purchase of a domain name, partially offset by $11.3 million of proceeds from sale of short-term investments.

For the year ended September 30, 2020, net cash used in investing activities was $0.4 million, driven by purchases of property and equipment.

For the year ended September 30, 2019, net cash used in investing activities was $1.0 million, primarily driven by $0.6 million of purchases of property and equipment, a $0.2 million investment in our joint venture in India, and $0.3 million for the purchase of a customer list.

Cash Provided by Financing Activities

For the year ended September 30, 2021, net cash provided by financing activities was $332.3 million, reflecting primarily cash received of $213.7 million from the Merger with EIC and cash received of $119.6 million from the issuance of common stock under our PIPE financing, partially offset by the $1.2 million repayment of the PPP Loan.

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For the year ended September 30, 2020, net cash provided by financing activities was $1.2 million, reflecting proceeds of $1.2 million from the PPP Loan.

For the year ended September 30, 2019, net cash provided by financing activities was $0.1 million, reflecting proceeds from the exercise of common stock options.

Off-Balance Sheet Arrangements

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

Contractual Obligations and Commitments

Other than operating lease obligations and contractual obligations to aircraft operators as disclosed in Note 7 and Note 12, respectively, of the Company’s consolidated financial statements included in this Annual Report on Form 10-K, we had no material contractual obligations as of September 30, 2021.

Critical Accounting Policies and Significant Judgments and Estimates

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

For information on the Company’s significant accounting policies refer to Note 2 to the Company’s Consolidated Financial Statements.