SRFM Surf Air Mobility Inc

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): August 14, 2024

SURF AIR MOBILITY INC.

(Exact name of registrant as specified in its charter)

Delaware		001-41759		36-5025592
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

12111 S. Crenshaw Blvd.

Hawthorne, CA 90250

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code:

(424) 332-5480

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

	☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

	☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

	☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

	☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class:		Trading Symbol(s)		Name of Each Exchange on Which Registered:
Common stock, par value $0.0001 per share		SRFM		New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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Item 2.02 Results of Operations and Financial Condition

On August 14, 2024, Surf Air Mobility Inc. (the “Company”) issued a press release announcing the Company’s financial results for the second quarter ended June 30, 2024. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K, and is incorporated herein by reference.

The information in this Item 2.02, including Exhibit 99.1, are furnished herewith and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), or otherwise subject to the liabilities of that section, nor shall they be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

 

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

Exhibit Number		Exhibit Title or Description
99.1		Press Release dated August 14, 2024
104		Cover Page Interactive Data File (embedded within the Inline XBRL)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

	SURF AIR MOBILITY INC.
Date: August 14, 2024	By:	/s/ Oliver Reeves
	Name:	Oliver Reeves
	Title:	Chief Financial Officer

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Exhibit 99.1

Surf Air Mobility Reports Second Quarter Financial Results,

Exceeding Expectations

 

Revenue of $32.4 million, up 13.2% Year-Over-Year on a Pro Forma Basis,

Exceeding Expectations

 

Adjusted EBITDA Loss of $11.8 million as Compared with a Loss of $11.1 Million on a Pro Forma Basis in the Prior Year, Materially Outperforming Expectations

 

LOS ANGELES – August 14, 2024 - Surf Air Mobility Inc. (NYSE: SRFM), a leading regional air mobility platform, today reported financial results for the second quarter ended June 30, 2024.

“Our financial results for the second quarter demonstrate strong execution by the Surf Air Mobility team. Revenue exceeded our expectations and Adjusted EBITDA was materially higher than our initial plan. We remain focused on executing our strategy and on our unwavering commitment to expand our footprint and leadership position in the regional air mobility market,” said Deanna White, Chief Operating Officer and Interim CEO of Surf Air Mobility.

She continued, “In the last 90 days, we have moved rapidly to implement operational improvements and stringent management of operating expenses. These efforts resulted in second quarter positive adjusted EBITDA for our regional airline operations, formerly known as Southern Airways, reversing a longstanding trend. In addition to driving substantive improvement in those operations, we are simultaneously advancing our Technology operations, including the ‘SurfOS’ technology platform and our EP1 Caravan electrification initiative.

She concluded, “We are fundamentally improving our operating model and refining strategies to reduce our cost of operations. In addition, we plan to sub-capitalize key initiatives to drive efficiencies and more effectively manage capital. To that end, we recently announced a ground-breaking new venture with Palantir Technologies to form Surf Air Technologies. Together with Palantir, we will develop, market and sell AI-powered software tools to create a category-defining operating system for the advanced air mobility industry. This venture uniquely places Surf Air Mobility at the forefront of innovation in our industry.”

 

 

 

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Second Quarter Financial Highlights:

Surf Air Mobility is providing unaudited results for the period ended June 30, 2024, on a quarterly basis, as well as unaudited pro forma results for the period ended June 30, 2023, which assumes the Southern acquisition closed as of the beginning of fiscal year 2023.

Revenue

Net Loss

Adjusted EBITDA

As of June 30, 2024, Surf Air Mobility had $1.5 million in cash on hand, with the ability to draw $90 million in committed draws and up to $296 million in follow-on draws subject to the terms of the GEM share subscription facility.

Developments on Key Initiatives:

Mobility

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Software

 

Electrification

Capital Structure Update:

Financial Outlook

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The Company’s expectations for the third quarter reflect the impact of unplanned maintenance on aircraft over the last two months resulting in lower completion factors. Due to these factors, the Company currently expects that its regional airline operations will be marginally unprofitable in the third quarter. The Company is executing a series of actions to improve profitability and is targeting profitable regional airline operations for the full year.

Conference Call

Surf Air Mobility will host a conference call today at 5:00 pm ET. Interested parties can register in advance to listen to the webcast here, or can find a link on the Events & Presentations section of our investor relations website.

Alternatively, listeners may dial into the call as follows:
North America - Toll-Free (800) 715-9871
International (Toll) - (646) 307-1963
Conference ID: 4775356

Contacts

For Press:
press@surfair.com

For Investors:
investors@surfair.com

Source: Surf Air Mobility Inc.

About Surf Air Mobility

Surf Air Mobility, headquartered in Los Angeles, is a pioneering regional air mobility platform dedicated to transforming regional air travel through electrification. As the largest commuter airline operator in the US, Surf Air Mobility partners with commercial leaders to develop innovative powertrain technology for smaller aircraft, facilitating the electrification of existing fleets and the widespread adoption of electric aircraft. Surf Air Mobility’s mission is to drive substantial cost reductions and environmental benefits to make regional flying more accessible and affordable. Backed by a management team with extensive expertise spanning aviation, electrification, and consumer technology, Surf Air Mobility is poised to advance the future of sustainable air travel.

Forward-Looking Statements

This Press Release contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995, including statements regarding the anticipated benefits of the transaction; Surf Air Mobility’s ability to anticipate the future needs of the air mobility

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market; future trends in the aviation industry, generally; Surf Air Mobility’s future growth strategy and growth rate and its ability to access its financings and expand its business. Readers of this release should be aware of the speculative nature of forward-looking statements. These statements are based on the beliefs of Surf Air Mobility’s management as well as assumptions made by and information currently available to Surf Air Mobility and reflect Surf Air Mobility’s current views concerning future events. As such, they are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, among many others: Surf Air Mobility’s future ability to pay contractual obligations and liquidity will depend on operating performance, cash flow and ability to secure adequate financing; Surf Air Mobility’s limited operating history and that Surf Air Mobility has not yet manufactured any hybrid-electric or fully-electric aircraft; the powertrain technology Surf Air Mobility plans to develop does not yet exist; any accidents or incidents involving hybrid-electric or fully-electric aircraft; the inability to accurately forecast demand for products and manage product inventory in an effective and efficient manner; the dependence on third-party partners and suppliers for the components and collaboration in Surf Air Mobility’s development of hybrid-electric and fully-electric powertrains and its advanced air mobility software platform, and any interruptions, disagreements or delays with those partners and suppliers; the inability to execute business objectives and growth strategies successfully or sustain Surf Air Mobility’s growth; the inability of Surf Air Mobility’s customers to pay for Surf Air Mobility’s services; the inability of Surf Air Mobility to obtain additional financing or access the capital markets to fund its ongoing operations on acceptable terms and conditions; the outcome of any legal proceedings that might be instituted against Surf Air, Southern or Surf Air Mobility; the risks associated with Surf Air Mobility’s obligations to comply with applicable laws, government regulations and rules and standards of the New York Stock Exchange; and general economic conditions. These and other risks are discussed in detail in the periodic reports that Surf Air Mobility files with the SEC, and investors are urged to review those periodic reports and Surf Air Mobility’s other filings with the SEC, which are accessible on the SEC’s website at www.sec.gov, before making an investment decision. Surf Air Mobility assumes no obligation to update its forward-looking statements except as required by law.

Footnotes

Use of Non-GAAP Financial Measures: Surf Air Mobility uses Adjusted EBITDA to identify and target operational results which is beneficial to management and investors in evaluating operational effectiveness. Pro Forma Adjusted EBITDA is a supplemental measure of Surf Air Mobility’s performance that is not required by, or presented in accordance with, U.S. GAAP. Pro Forma Adjusted EBITDA is not a measurement of Surf Air Mobility’s financial performance under U.S. GAAP and should not be considered as an alternative to net income (loss) or any other performance measure derived in accordance with U.S. GAAP. Surf Air Mobility’s calculation of this non-GAAP financial measure may differ from similarly titled non-GAAP measures, if any, reported by other companies. This non-GAAP financial measure should not be

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considered in isolation from, or as a substitute for, financial information prepared in accordance with U.S. GAAP.

Non-GAAP financial measures have limitations in their usefulness to investors because they have no standardized meaning prescribed by GAAP and are not prepared under any comprehensive set of accounting rules or principles. In addition, non-GAAP financial measures may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by other companies.

Surf Air Mobility presents Pro Forma Adjusted EBITDA because it considers this measure to be an important supplemental measure of its performance and believes it is frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in its industry. Management believes that investors’ understanding of Surf Air Mobility’s performance is enhanced by including this non-GAAP financial measure as a reasonable basis for comparing its ongoing results of operations. Unaudited pro forma financial information for the second quarter and year to date period ended June 30, 2024, assumes the acquisition of Southern Airways closed as of the beginning of 2023.

 

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Unaudited Condensed Consolidated Balance Sheets as of June 30, 2024, and December 31, 2023:

		June 30, 2024		December 31, 2023
Assets:
Current assets:
Cash		$ 1,460		$ 1,720
Accounts receivable, net		4,487		4,965
Prepaid expenses and other current assets		9,928		11,051
Total current assets		15,875		17,736
Restricted cash		614		711
Property and equipment, net		47,041		45,991
Intangible assets, net		24,890		26,663
Operating lease right-of-use assets		10,523		12,818
Finance lease right-of-use assets		1,273		1,343
Other assets		5,331		5,727
Total assets		$ 105,547		$ 110,989
Liabilities and Shareholders’ Deficit:
Current liabilities:
Accounts payable		$ 25,983		$ 18,854
Accrued expenses and other current liabilities		78,897		59,582
Deferred revenue		17,072		19,011
Current maturities of long-term debt		4,922		5,177
Operating lease liabilities, current		4,322		4,104
Finance lease liabilities, current		256		215
SAFE notes at fair value, current		6		25
Convertible notes at fair value, current		8,014		7,715
Due to related parties, current		47,371		25,431
Total current liabilities		186,843		140,114
Long-term debt, net of current maturities		18,346		20,617
Operating lease liabilities, long term		3,894		5,507
Finance lease liabilities, long term		1,078		1,137
Due to related parties, long term		987		1,673
Other long-term liabilities		22,489		19,426
Total liabilities		$ 233,637		$ 188,474
Commitments and contingencies (Note 12)
Shareholders’ deficit:
Common shares, $0.0001 par value; 800,000,000 shares authorized as of both June 30, 2024 and December 31, 2023; 87,029,425 shares issued and outstanding as of June 30, 2024 and 76,150,437 shares issued and outstanding as of December 31, 2023		$ 8		$ 8
Additional paid-in capital		538,385		525,042
Accumulated deficit		(666,483)		(602,535)
Total shareholders’ deficit		$ (128,090)		$ (77,485)
Total liabilities and shareholders’ deficit		$ 105,547		$ 110,989

 

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Unaudited Condensed Consolidated Statements of Operations for the Three Months and Six Months Ended June 30, 2024 and 2023: (in thousands, except share and per share data):

		Three Months Ended June 30,				Six Months Ended June 30,
		2024		2023		2024		2023
Revenue		$ 32,366		$ 6,195		$ 62,990		$ 1,702
Operating expenses:
Cost of revenue, exclusive of depreciation and amortization		27,729		7,049		56,218		13,699
Technology and development		5,658		816		12,667		1,629
Sales and marketing		2,578		1,927		5,587		3,321
General and administrative		19,596		9,296		44,205		17,736
Depreciation and amortization		2,062		261		4,040		519
Total operating expenses		57,623		19,349		122,717		36,904
Operating loss		$ (25,257)		$ (13,154)		$ (59,727)		$ (25,202)
Other income (expense):
Changes in fair value of financial instruments carried at fair value, net		$ (154)		$ (30,404)		$ (669)		$ (38,500)
Interest expense		(1,911)		(525)		(3,582)		(697)
Loss on extinguishment of debt		—		(389)		—		(389)
Other income (expense)		304		(48)		(51)		(305)
Total other income (expense), net		$ (1,761)		$ (31,366)		$ (4,302)		$ (39,891)
Loss before income taxes		(27,018)		(44,520)		(64,029)		(65,093)
Income tax benefit		35		—		81		—
Net loss		$ (26,983)		$ (44,520)		$ (63,948)		$ (65,093)
Net loss per share applicable to common shareholders, basic and diluted		$ (0.33)		$ (3.14)		$ (0.80)		$ (4.60)
Weighted-average number of common shares used in net loss per share applicable to common shareholders, basic and diluted		81,890,955		14,168,091		79,599,848		14,138,856

 

 

 

 

 

 

 

 

 

 

 

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Unaudited Pro Forma Financial Measures; Reconciliation of Net Loss to Adjusted EBITDA for the Three Months and Six Months Ended June 30, 2024 and Pro forma Net Loss to Pro forma Adjusted EBITDA for the Three Months and Six Months Ended June 30, 2023 (in thousands):

 

	Three months ended June 30,					Six months ended June 30,
(in thousands)		2024		2023 (Proforma)		2024		2023 (Proforma)
Net loss		$ (26,983)		$ (16,673)		$ (63,948)		$ (32,184)
Addback:
Depreciation and amortization		2,062		2,332		4,040		4,133
Interest expense		1,911		1,483		3,582		2,538
Income tax expense (benefit)		(35)		151		(81)		(1)
Stock-based compensation expense(1)		7,353		1,653		19,996		2,798
Changes in fair value of financial instruments(2)		154		—		669		—
Transaction costs(3)		588		—		1,176		—
Data license fees(4)		3,125				6,250		—
Adjusted EBITDA		$ (11,825)		$ (11,054)		$ (28,316)		$ (22,716)
(1)Represents non-cash expenses related to equity-based compensation programs, which vary from period to period depending on various factors including the timing, number, and the valuation of awards.
(2)Represents fluctuations in the fair value of financial instruments carried at fair value. The fair values of the convertible notes, preferred stock warrant liabilities, and derivative liabilities were based on the values of the notes, warrants, and derivatives upon conversion due to the weighted probability associated with certain events.
(3)Represents costs related to a public company transaction, including accounting, legal, and listing costs.
(4) Represents accrued costs related to initial license fees under the Textron Licensing Agreement.

 

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v3.24.2.u1

Cover	Aug. 14, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Aug. 14, 2024
Entity File Number	001-41759
Entity Registrant Name	SURF AIR MOBILITY INC.
Entity Central Index Key	0001936224
Entity Tax Identification Number	36-5025592
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	12111 S. Crenshaw Blvd.
Entity Address, City or Town	Hawthorne
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	90250
City Area Code	424
Local Phone Number	332-5480
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common stock, par value $0.0001 per share
Trading Symbol	SRFM
Security Exchange Name	NYSE
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false

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