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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
FORM 10-Q
________________
[Mark One]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission File Number: 001-04321
WHEELS UP EXPERIENCE INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation or Organization)
98-1557048
(I.R.S. Employer Identification No.)


601 West 26th Street, Suite 900,
New York, New York
 (Address of Principal Executive Offices)
10001
(Zip Code)
Registrant’s Telephone Number, Including Area Code: (212) 257-5252

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Class A common stock, $0.0001 par value per shareUPNew York Stock Exchange
Redeemable warrants, each whole warrant exercisable for one share of Class A common stock at an exercise price of $11.50UP WSNew York Stock Exchange

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.   Yes     No  
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes      No  
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated FilerSmaller reporting company
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.  
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes     No  
As of November 8, 2021, 245,740,164 shares of Class A common stock, $0.0001 par value per share, were issued and outstanding.



WHEELS UP EXPERIENCE INC.
FORM 10-Q

TABLE OF CONTENTS
Page
Item 3.
Item 4.
PART II.
Other Information
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.



PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WHEELS UP EXPERIENCE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands except share data)
September 30, 2021December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents$535,253 $312,799 
Accounts receivable, net69,044 50,397 
Other receivables10,112 8,205 
Parts and supplies inventories, net8,742 5,320 
Prepaid expenses and other 34,106 18,801 
Total current assets 657,257 395,522 
Property and equipment, net 313,986 323,090 
Operating lease right-of-use assets112,372 64,479 
Goodwill437,181 400,160 
Intangible assets, net152,416 163,710 
Restricted cash2,177 12,077 
Employee loans receivable, net 102 
Other non-current assets 1,104 849 
Total assets $1,676,493 $1,359,989 
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt$131 $62,678 
Accounts payable 42,363 20,920 
Accrued expenses 83,231 71,381 
Deferred revenue, current585,319 651,096 
Operating lease liabilities, current32,315 15,858 
Intangible liabilities, current2,000 2,000 
Other current liabilities14,942 15,980 
Total current liabilities 760,301 839,913 
Long-term debt 22 148,411 
Deferred revenue, non-current1,948 1,982 
Operating lease liabilities, non-current87,087 56,358 
Warrant liability15,948  
Intangible liabilities, non-current14,583 16,083 
Other non-current liabilities3,548 3,415 
Total liabilities 883,437 1,066,162 
Commitments and contingencies (Note 11)
Equity:
Class A common stock, $0.0001 par value; 2,500,000,000 authorized; 245,583,108 and 169,717,416 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively
25 17 
Additional paid-in capital 1,460,053 831,226 
Accumulated deficit (677,491)(563,441)
Total Wheels Up Experience Inc. stockholders’ equity782,587 267,802 
Non-controlling interests10,469 26,025 
Total equity793,056 293,827 
Total liabilities and equity $1,676,493 $1,359,989 
The accompanying notes are an integral part of these condensed consolidated financial statements.
3


WHEELS UP EXPERIENCE INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands except share and per share data)
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Revenue$301,978 $194,781 $849,215 $485,208 
Costs and expenses:
Cost of revenue283,495 171,338 773,191 446,632 
Technology and development 8,769 6,044 23,818 15,345 
Sales and marketing 22,157 13,655 55,846 38,893 
General and administrative 42,490 14,542 76,444 38,740 
Depreciation and amortization13,639 14,722 40,952 44,189 
CARES Act grant (51,646) (64,923)
Total costs and expenses370,550 168,655 970,251 518,876 
Income (loss) from operations(68,572)26,126 (121,036)(33,668)
Other income (expense):
Change in fair value of warrant liability12,271  12,271  
Loss on extinguishment of debt(2,379) (2,379) 
Interest income7 36 25 503 
Interest expense(782)(5,614)(9,503)(18,127)
Total other income (expense)9,117 (5,578)414 (17,624)
Income (loss) before income taxes(59,455)20,548 (120,622)(51,292)
Income tax expense    
Net income (loss) (59,455)20,548 (120,622)(51,292)
Less: net income (loss) attributable to non-controlling interests(970)1,639 (6,572)(3,944)
Net income (loss) attributable to Wheels Up Experience Inc.$(58,485)$18,909 $(114,050)$(47,348)
Net income (loss) per share of Class A common stock:
Basic$(0.25)$0.11 $(0.60)$(0.29)
Diluted$(0.25)$0.11 $(0.60)$(0.29)
Weighted-average shares of Class A common stock outstanding:
Basic235,341,054 165,055,043 191,057,091 161,649,090 
Diluted235,341,054 165,055,043 191,057,091 161,649,090 
The accompanying notes are an integral part of these condensed consolidated financial statements.
4


WHEELS UP EXPERIENCE INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited, in thousands except share data)
Class A Common Stock
SharesAmountAdditional paid-in capitalAccumulated
deficit
Non-controlling interestsTotal
Balance as of December 31, 2020169,717,146 $17 $831,226 $(563,441)$26,025 $293,827 
Consideration issued for business combination3,968,900 1 30,171 — — 30,172 
Equity-based compensation — — 1,160 — 254 1,414 
Change in non-controlling interests allocation— — (2,620)— 2,620  
Net loss— — — (29,409)(2,804)(32,213)
Balance as of March 31, 2021173,686,046 18 859,937 (592,850)26,095 293,200 
Equity-based compensation— — 1,117 — 231 1,348 
Change in non-controlling interests allocation— — (3,106)— 3,106  
Net loss— — — (26,156)(2,798)(28,954)
Balance as of June 30, 2021173,686,046 18 857,948 (619,006)26,634 265,594 
Exercise of stock options229,889 — 1,332 — — 1,332 
Exchange of profits interests138,629 — 1,419 — (1,419) 
Equity-based compensation— — 19,777 — 8,129 27,906 
Issuance of common stock in connection with the Business Combination and PIPE Investment71,528,544 7 656,297 — — 656,304 
Transaction costs attributable to the issuance of common stock in connection with the Business Combination and PIPE Investment— — (70,406)— — (70,406)
Assumption of warrant liability— — (28,219)— — (28,219)
Change in non-controlling interests allocation— — 21,905 — (21,905) 
Net loss— — — (58,485)(970)(59,455)
Balance as of September 30, 2021245,583,108 $25 $1,460,053 $(677,491)$10,469 $793,056 
The accompanying notes are an integral part of these condensed consolidated financial statements.
5


WHEELS UP EXPERIENCE INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited, in thousands except share data)
Class A Common Stock
SharesAmountAdditional paid-in capitalAccumulated
deficit
Non-controlling interestsTotal
Balance as of December 31, 2019116,581,683 $12 $427,579 $(478,035)$(5,810)$(56,254)
Consideration issued for business combinations52,794,775 5 432,139 — — 432,144 
Equity-based compensation — — 435 — 149 584 
Change in non-controlling interests allocation— — (33,600)— 33,600  
Net loss— — — (41,018)(3,456)(44,474)
Balance as of March 31, 2020169,376,458 17 826,553 (519,053)24,483 332,000 
Equity-based compensation— — 434 — 338 772 
Change in non-controlling interests allocation— — (1,406)— 1,406  
Net loss— — — (25,238)(2,127)(27,365)
Balance as of June 30, 2020169,376,458 17 825,581 (544,291)24,100 305,407 
Equity-based compensation— — 863 — 305 1,168 
Change in non-controlling interests allocation— — (89)— 89  
Net income— — — 18,909 1,639 20,548 
Balance as of September 30, 2020169,376,458 $17 $826,355 $(525,382)$26,133 $327,123 
The accompanying notes are an integral part of these condensed consolidated financial statements.
6


WHEELS UP EXPERIENCE INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Nine Months Ended September 30,
20212020
OPERATING ACTIVITIES:
Net loss$(120,622)$(51,292)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization 40,952 44,190 
Amortization of deferred financing costs and debt discount618 1,265 
Equity-based compensation30,668 2,524 
Change in fair value of warrant liability(12,271) 
Provision for expected credit losses1,163 328 
Loss on extinguishment of debt2,379  
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable(9,074)28,196 
Other receivables(1,906)2,368 
Parts and supplies inventories(2,749)263 
Prepaid expenses and other (11,673)1,214 
Other non-current assets(256)1,019 
Operating lease liabilities, net(1,414)(297)
Accounts payable11,807 (16,786)
Accrued expenses(9,742)(9,021)
Other current liabilities(1,037)(613)
Other non-current liabilities131 2,069 
Deferred revenue(69,390)(26)
Net cash (used in) provided by operating activities(152,416)5,401 
INVESTING ACTIVITIES:
Purchases of property and equipment (6,683)(4,878)
Acquisition of businesses, net of cash acquired7,844 97,104 
Capitalized software development costs(9,589)(5,144)
Net cash (used in) provided by investing activities(8,428)87,082 
FINANCING ACTIVITIES:
Proceeds from stock option exercises1,332  
Proceeds from the Business Combination and PIPE Investment656,304  
Transaction costs in connection with the Business Combination and PIPE Investment(70,406) 
Proceeds from long-term debt 755 
Repayments of long-term debt(213,934)(54,772)
Repayment (issuance) of loans to employees102 (67)
Net cash provided by (used in) financing activities373,398 (54,084)
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH212,554 38,399 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH BEGINNING OF PERIOD324,876 96,440 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH END OF PERIOD$537,430 $134,839 
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Non-cash consideration issued for business acquisition of Delta Private Jets LLC $427,007 
Non-cash consideration issued for business acquisition of Gama Aviation LLC $32,638 
Non-cash consideration issued for business acquisition of Mountain Aviation, LLC$30,172  
Assumption of warrant liability in Business Combination$28,219  
The accompanying notes are an integral part of these condensed consolidated financial statements.

7



WHEELS UP EXPERIENCE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.ORGANIZATION AND OPERATIONS
Wheels Up Experience Inc. (together with its consolidated subsidiaries, “Wheels Up”, the “Company”, “our”, “we”, and “us”) is a leading brand in private aviation that strives to deliver a total private aviation solution.
On July 13, 2021 (the “Closing Date”), we consummated the transactions contemplated by the Agreement and Plan of Merger (the “Merger Agreement”), dated as of February 1, 2021, as amended on May 6, 2021, by and among Aspirational Consumer Lifestyle Corp., a blank check company incorporated as a Cayman Islands exempted company (“Aspirational”), Wheels Up Partners Holdings LLC, a Delaware limited liability company (“WUP”), Kittyhawk Merger Sub LLC., a Delaware limited liability company and a direct wholly owned subsidiary of Aspirational (“Merger Sub”), Wheels Up Blocker Sub LLC, a Delaware limited liability company and a direct wholly owned subsidiary of Aspirational (“Blocker Sub”), the Blocker Merger Subs (as defined in the Merger Agreement) and the Blockers (as defined in the Merger Agreement). In connection with the closing of the Merger Agreement, Aspirational filed a notice of deregistration with the Cayman Islands Registrar of Companies, together with the necessary accompanying documents, and filed a certificate of incorporation and a certificate of corporate domestication with the Secretary of State of the State of Delaware, under which Aspirational was domesticated and continues as a Delaware corporation, changing its name to “Wheels Up Experience Inc.” (the “Domestication”).
On the Closing Date, (i) the Blockers simultaneously merged with and into the respective Blocker Merger Subs, with the Blockers surviving each merger as wholly owned subsidiaries of Wheels Up (the “First Step Blocker Mergers”), (ii) thereafter, the surviving Blockers simultaneously merged with and into Blocker Sub, with Blocker Sub surviving each merger (the “Second Step Blocker Mergers”), and (iii) thereafter, Merger Sub merged with and into WUP, with WUP surviving the merger, with Wheels Up as its managing member (the “Company Merger” and collectively with the First Step Blocker Mergers and the Second Step Blocker Mergers, the “Mergers” and, together with the Domestication, the “Business Combination”) (See Note 3).

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Basis of Presentation
The unaudited interim condensed consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial reporting and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the condensed consolidated balance sheet at December 31, 2020 has been derived from the audited consolidated financial statements at that date, but certain notes or other information that are normally required by U.S. GAAP have been omitted if they substantially duplicate the disclosures contained in our annual audited consolidated financial statements. The condensed consolidated financial statements include the accounts of Wheels Up Experience Inc. and its wholly-owned subsidiaries. We consolidate Wheels Up Partners MIP LLC (“MIP LLC”) and record the profits interests held in MIP LLC that Wheels Up does not own as non-controlling interests (see Note 15). All intercompany transactions and balances have been eliminated in consolidation.
Certain information and footnote disclosure normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to instructions, rules and regulations prescribed by the U.S. Securities and Exchange Commission (“SEC”). In the opinion of management, the unaudited financial information for the interim periods presented reflects all adjustments, which are normal and recurring, necessary for a fair presentation of the consolidated statement of operations, financial position, and cash flows. Interim results should not be regarded as indicative of results that may be expected for any other period or the entire year. The unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes for the year ended December 31, 2020 included in the final prospectus filed on August 25, 2021.
8



Use of Estimates
Preparing the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates due to risks and uncertainties, including uncertainty in the current economic environment due to SARS-CoV-2 or COVID-19, and any evolutions thereof (“COVID-19”). The most significant estimates include, but are not limited to, the useful lives and residual values of purchased aircraft, the fair value of financial assets and liabilities, acquired intangible assets, goodwill, contingent consideration, and other assets and liabilities, sales and use tax, the estimated life of member relationships, the determination of the allowance for credit losses, impairment assessments, and the incremental borrowing rate for leases.
Warrant Liability
We determine if warrants are equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether warrants meet all of the requirements for equity classification under ASC 815, including whether warrants are indexed to our common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all of the criteria for equity classification, warrants are required to be recorded as a liability at their fair value on date of issuance and each balance sheet date thereafter. Changes in the estimated fair value of warrants are recognized as an unrealized gain or loss.
We recorded the Private Warrants and Public Warrants (each defined below and collectively the “Warrants”) assumed as part of the Business Combination (see Note 3 and Note 19) as liabilities.
Equity-Based Compensation
Restricted stock units (“RSUs”) are measured based upon the fair value of a share of Class A common stock on the date of grant. RSUs typically vest upon a service-based requirement, and we recognize compensation expense on a straight-line basis over the requisite service period.
Earnout Shares (as defined below) potentially issuable to holders of WUP profits interests and restricted interests as part of the Business Combination (see Note 3 and Note 14) are recorded as equity-based compensation. Earnout Shares contain market conditions and were valued using a Monte Carlo simulation model. Compensation expense related to an award with a market condition is recognized on an accelerated attribution basis over the requisite service period and is not reversed if the market condition is not satisfied.
Income Taxes
We account for income taxes using the asset and liability method. Deferred tax assets and liabilities reflect the expected future consequences of temporary differences between the financial reporting and tax bases of assets and liabilities as well as operating losses, capital losses, and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates that are expected to be in effect when these differences are anticipated to reverse. Management makes estimates, assumptions, and judgments to determine our provision for income taxes, deferred tax assets and liabilities, and any valuation allowance recorded against deferred tax assets. We assess the
10


likelihood that our deferred tax assets will be recovered from future taxable income and, to the extent we believe, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, we establish a valuation allowance.
We recognize the tax benefit from an uncertain tax position only if it is more likely than not the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. Interest and penalties related to unrecognized tax benefits are recognized within income tax expense.
Net Income (Loss) per Share
Basic net income (loss) per share is computed by dividing net income (loss) attributable to Wheels Up by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed based on the weighted average number of common shares outstanding plus the effect of dilutive potential common shares outstanding during the period. During the periods when there is a net loss, potentially dilutive common shares are excluded from the calculation of diluted net loss per share as their effect is anti-dilutive.
Deferred Offering Costs
We capitalized certain legal, accounting and other direct third-party costs related to the Business Combination. Deferred offering costs were included as an asset on the condensed consolidated balance sheets and were deferred until the Closing Date, at which time they were deducted from additional paid-in capital of the combined business.
Reclassifications
Certain reclassifications have been made to the prior years’ condensed consolidated financial statements to conform to the current year presentation.
Adopted Accounting Pronouncements
In December 2019, the FASB issued accounting standards update (“ASU”) 2019-12, Simplifying the Accounting for Income Taxes (ASC 740). This standard simplifies the accounting for income taxes by (i) eliminating certain exceptions within ASC 740 and (ii) clarifying and amending the existing guidance to enable consistent application of ASC 740. We adopted ASU 2019-12 on January 1, 2021. This adoption did not have a material impact on our consolidated financial statements.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting (ASC 848). The FASB issued a subsequent amendment to the initial guidance in January 2021 with ASU 2021-01. This standard provides temporary optional expedients and exceptions to accounting guidance on contract modifications and hedge accounting to ease financial reporting burdens as the market transitions from the London Interbank Offered Rate and other interbank offered rates to alternative reference rates. The guidance was effective upon issuance and generally can be applied through December 31, 2022. This adoption did not have a material impact on our consolidated financial statements.

3.BUSINESS COMBINATION
The Business Combination was accounted for as a reverse recapitalization, where Aspirational was treated as the acquired company for financial reporting purposes. This accounting treatment is the equivalent of Wheels Up issuing stock for the net assets of Aspirational, accompanied by a recapitalization whereby no goodwill or other intangible assets are recorded. Accordingly, WUP is deemed the accounting predecessor of the combined business, and Wheels Up, as the parent company of the combined business, is the successor SEC registrant, meaning that all historical financial information presented in the condensed consolidated financial statements represents the accounts of WUP.

11


Upon closing of the Business Combination, all outstanding WUP common interests and WUP preferred interests (including WUP restricted interests), as well as shares underlying WUP options, were converted into 190.0 million shares of Class A common stock and rolled over into the combined business. In addition, there were 29.0 million outstanding WUP profits interests recapitalized in connection with the Business Combination that can be exchanged on a value-for-value basis for Class A common stock subject to vesting.
All references to numbers of common shares and per common share data prior to the Business Combination in these condensed consolidated financial statements and related notes have been retroactively adjusted to account for the effect of the reverse recapitalization. The reported share and per share amounts, have been converted by applying the exchange ratio established in the Merger Agreement of 0.4604, which was based on the Wheels Up implied price per share prior to the Business Combination (the “Exchange Ratio”). On the Closing Date, we received approximately $656.3 million in gross proceeds. In connection with the Business Combination, we incurred $70.4 million of transaction costs, consisting of advisory, legal, share registration and other professional fees, which are recorded within additional paid-in capital as a reduction of proceeds.
PIPE Investment
In connection with the Business Combination, Aspirational entered into subscription agreements with certain investors (the “PIPE Investors”), whereby Aspirational issued 55,000,000 shares of common stock at a price of $10.00 per share (the “PIPE Shares”) for an aggregate purchase price of $550 million (the “PIPE Investment”), which closed simultaneously with the consummation of the Business Combination. On the Closing Date, the PIPE Shares were automatically converted into shares of Class A common stock on a one-for-one basis.
Earnout Shares
Further, as part of the Business Combination, existing holders of WUP equity, including holders of profits interests and restricted interests, but excluding holders of stock options, have the right to receive up to an aggregate of 9,000,000 additional shares of Class A common stock in three equal tranches, which are issuable upon the achievement of Class A common stock share price thresholds of $12.50, $15.00, and $17.50 for any 20 trading days within a period of 30 consecutive trading days within five years of the Closing Date, respectively (the “Earnout Shares”).
Public Warrants and Private Warrants
The Warrants assumed in the Business Combination include (i) 7,991,544 redeemable warrants sold by Aspirational as part of its initial public offering (the “Public Warrants”) of 23,974,362 units, consisting of one share of Class A common stock and one-third of one warrant exercisable for Class A common stock and (ii) 4,529,950 warrants privately sold by Aspirational at a price of $1.50 per warrant (the “Private Warrants”) to Aspirational Consumer Lifestyle Sponsor LLC (the “Sponsor”) simultaneously with the closing of the Aspirational initial public offering exercisable for Class A common stock. Each Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share. Each Private Warrant entitles the Sponsor to purchase one share of Class A common stock at a price of $11.50 per share.







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4.     PROPERTY AND EQUIPMENT
Property and equipment consist of the following (in thousands):
September 30,
2021
December 31, 2020
Aircraft $475,769 $473,509 
Software development costs32,129 22,414 
Leasehold improvements 11,703 9,560 
Computer equipment 2,147 1,846 
Buildings and improvements1,424 1,424 
Furniture and fixtures1,959 1,321 
Tooling 2,890 1,296 
Vehicles800 597 
528,821 511,967 
Less: Accumulated depreciation and amortization (214,835)(188,877)
Total $313,986 $323,090 
Depreciation and amortization expense of property and equipment was $8.4 million and $26.0 million for the three and nine months ended September 30, 2021, respectively, and $10.0 million and $31.0 million for the three and nine months ended September 30, 2020, respectively.
Capitalized costs related to the internal development of software was $3.9 million and $9.6 million for the three and nine months ended September 30, 2021, respectively, and $2.1 million and $5.1 million for the three and nine months ended September 30, 2020, respectively.
Amortization expense related to software development costs, included as part of depreciation and amortization expense of property and equipment, was $1.8 million and $4.8 million for the three and nine months ended September 30, 2021, respectively, and $1.2 million and $3.2 million for the three and nine months ended September 30, 2020, respectively.


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5.     REVENUE
Disaggregation of Revenue
The following table disaggregates revenue by service type and the timing of when these services are provided to the member or customer (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Services transferred at a point in time:
Flights, net of discounts and fees$218,360 $140,280 $621,494 $343,571 
Aircraft management55,388 36,107 151,405 87,737 
Other6,679 2,313 16,418 6,609 
Services transferred over time:
Memberships 17,982 13,345 49,144 39,787 
Aircraft management2,617 2,295 7,435 5,679 
Other952 441 3,319 1,825 
Total $301,978 $194,781 $849,215 $485,208 
Revenue in the condensed consolidated statements of operations is presented net of discounts and incentives of $5.0 million and $12.5 million, for the three and nine months ended September 30, 2021, respectively, and $2.8 million and $6.4 million for the three and nine months ended September 30, 2020, respectively.
Contract Balances
Receivables from member and customer contracts are included within accounts receivable, net. As of September 30, 2021 and December 31, 2020, gross receivables from members and customers were $60.5 million and $38.6 million, respectively. As of September 30, 2021 and December 31, 2020, undeposited funds were $14.0 million and $14.1 million, respectively. As of September 30, 2021 and December 31, 2020, the allowance for expected credit losses was $5.5 million and $2.3 million, respectively.
Deferred revenue consists of the following (in thousands):
 September 30, 2021December 31, 2020
Flights - Prepaid Blocks and jet cards$538,695 $609,490 
Memberships - annual dues36,771 32,016 
Memberships - initiation fees4,034 3,870 
Flights - credits6,780 7,291 
Other987 411 
Deferred revenue - total 587,267 653,078 
Less: Deferred revenue - current (585,319)(651,096)
Deferred revenue - non-current $1,948 $1,982 
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Changes in deferred revenue for the nine months ended September 30, 2021 were as follows (in thousands):
Deferred revenue - beginning balance$653,078 
Amounts deferred during the period611,985 
Revenue recognized from amounts included in the deferred revenue beginning balance(368,922)
Revenue from current period sales(308,874)
Deferred revenue - ending balance$587,267 
Revenue expected to be recognized in future periods for performance obligations that are unsatisfied, or partially unsatisfied, as of September 30, 2021 approximates $101.7 million, $393.2 million, $46.3 million and $46.0 million for 2021, 2022, 2023 and 2024, respectively.
Costs to Obtain a Contract
Capitalized costs related to sales commissions and referral fees were $3.4 million and $7.4 million for the three and nine months ended September 30, 2021, respectively, and $0.1 million and $2.2 million for the three and nine months ended September 30, 2020, respectively.
As of September 30, 2021 and December 31, 2020, capitalized sales commissions and referral fees of $6.2 million and $5.0 million, respectively, are in prepaid expenses and other current assets and $1.0 million and $0.8 million, respectively, are in other non-current assets on the condensed consolidated balance sheets. Amortization expense related to capitalized sales commissions and referral fees included in sales and marketing expense in the condensed consolidated statements of operations was $2.4 million and $5.9 million for the three and nine months ended September 30, 2021, respectively, and $0.2 million and $3.9 million for the three and nine months ended September 30, 2020, respectively.
6.    ACQUISITIONS
Mountain Aviation, LLC Acquisition
On January 5, 2021, we acquired all of the outstanding equity of Mountain Aviation, LLC (“Mountain Aviation”) for a total purchase price of $40.2 million, consisting of $30.2 million in WUP common interests and $10.0 million in cash. In addition, there is a potential incremental cash earn-out of up to $15.0 million based on achieving certain financial performance metrics related to certain special missions, which represents contingent consideration, and would be payable in the second quarter of 2023 to the extent achieved. The estimated fair value of the earn-out payment using a Monte Carlo simulation model as of the acquisition date was $0. As a result, we have not recorded a liability for the fair value of contingent consideration payable on the condensed consolidated balance sheet as of September 30, 2021. The valuation of the earn-out is based on significant inputs that are not observable in the market; therefore, it is a Level 3 financial instrument. Mountain Aviation adds to our Super-Midsize jet fleet and operations, provides full-service in-house maintenance capabilities, expands our presence in the Western United States and enhances our on-demand transcontinental charter flight capabilities. Acquisition-related costs for Mountain Aviation of $2.0 million were included in general and administrative expense in the condensed consolidated statements of operations for the nine months ended September 30, 2021. The acquisition of Mountain Aviation was determined to be a business combination.
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As of the date of acquisition, the total preliminary purchase price allocated to the Mountain Aviation assets acquired and liabilities assumed according to their estimated fair values were as follows (in thousands):
Current assets$32,884 
Property and equipment741 
Intangible assets5,040 
Goodwill37,021 
Other assets45,874 
Total assets acquired121,560 
Total liabilities assumed(81,388)
Net assets acquired$40,172 
Current assets of Mountain Aviation included $17.8 million of cash and $10.7 million of accounts receivable, including $1.5 million owed from Wheels Up that was eliminated in consolidation upon acquisition.
The above initial fair value estimates of the assets acquired and liabilities assumed were provisional based on the information that was available as of the acquisition date.
Goodwill represents the excess of the purchase price over the fair values of the acquired net tangible and intangible assets. The allocated value of goodwill primarily relates to anticipated synergies and economies of scale by combining the use of Mountain Aviation's aircraft, maintenance capabilities and existing business processes with our other acquisitions. The acquired goodwill is approximately 25.0% deductible for tax purposes.
The amounts allocated to acquired intangible assets and their associated weighted-average amortization periods, were determined based on the period the assets are expected to contribute directly or indirectly to our cash flows, consists of the following:
Amount
(In thousands)
Weighted-Average Amortization Period
(Years)
Customer relationships$4,600 6.0
Trade name330 1.0
Non-competition agreement110 1.0
Total acquired intangible assets$5,040 5.8
The results of Mountain Aviation were included in the condensed consolidated statement of operations from the date of acquisition. Revenue for Mountain Aviation was $87.2 million, net of intercompany eliminations, and income from operations was $11.5 million from the date of acquisition through September 30, 2021.
Unaudited Pro Forma Summary of Operations
The accompanying unaudited pro forma summary represents the consolidated results of operations as if the 2020 acquisitions of Wheels Up Private Jets LLC and Gama Aviation LLC (“Gama”) had been completed as of January 1, 2020, and the 2021 acquisition of Mountain Aviation had been completed as of January 1, 2020. The unaudited pro forma financial results for 2021 reflect the results for the three and nine months ended September 30, 2021, as well as the effects of pro forma adjustments for the transaction in 2021. The unaudited pro forma financial information includes the accounting effects of the acquisition, including adjustments to the amortization of intangible assets, and professional fees associated with the transaction. The pro forma results were based on estimates and assumptions, which we believe are reasonable. The unaudited pro forma summary does not
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necessarily reflect the actual results that would have been achieved had the companies been combined during the periods presented, nor is it necessarily indicative of future consolidated results (in thousands, except per share data).
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Net revenue$301,978 $226,266 $851,330 $616,894 
Net income (loss)$(59,455)$19,081 $(121,564)$(55,652)
Net income (loss) attributable to Wheels Up Experience Inc. $(58,617)$17,560 $(115,401)$(51,372)
Net income (loss) per share$(0.25)$0.11 $(0.60)$(0.32)

7.    GOODWILL AND INTANGIBLE ASSETS
Goodwill
The change in the carrying value of goodwill for the nine months ended September 30, 2021, was as follows (in thousands):
Balance as of December 31, 2020$400,160 
Acquisition of Mountain Aviation37,021 
Balance as of September 30, 2021$437,181 
Intangible Assets
The gross carrying value, accumulated amortization and net carrying value of intangible assets consisted of the following (in thousands):
September 30, 2021
Gross Carrying
Value
Accumulated AmortizationNet Carrying
Value
Status$80,000 $13,644 $66,356 
Customer relationships74,600 12,478 62,122 
Non-competition agreement210 181 29 
Trade name14,230 4,739 9,491 
Developed technology19,545 5,675 13,870 
Leasehold interest - favorable 600 52 548 
Total $189,185 $36,769 $152,416 
December 31, 2020
Gross Carrying
Value
Accumulated AmortizationNet Carrying
Value
Status$80,000 $7,645 $72,355 
Customer relationships70,000 6,609 63,391 
Non-competition agreement100 100  
Trade name13,900 2,487 11,413 
Developed technology19,545 3,559 15,986 
Leasehold interest - favorable 600 35 565 
Total $184,145 $20,435 $163,710 
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Amortization expense of intangible assets was $5.4 million and $16.0 million for the three and nine months ended September 30, 2021, respectively, and $5.2 million and $14.4 million for the three and nine months ended September 30, 2020, respectively.
Intangible Liabilities
The gross carrying value, accumulated amortization and net carrying value of intangible liabilities consisted of the following (in thousands):
September 30, 2021
Gross Carrying
Value
Accumulated AmortizationNet Carrying
Value
Intangible liabilities$20,000 $3,417 $16,583 
December 31, 2020
Gross Carrying
Value
Accumulated AmortizationNet Carrying
Value
Intangible liabilities$20,000 $1,917 $18,083 
Amortization of intangible liabilities, which reduces amortization expense was $0.5 million and $1.5 million for the three and nine months ended September 30, 2021, respectively, and $0.5 million and $1.4 million for the three and nine months ended September 30, 2020, respectively.
Future amortization expense of intangible assets and intangible liabilities held as of September 30, 2021 are as follows (in thousands):
Year ending December 31, Intangible AssetsIntangible Liabilities
2021$5,450 $500 
202220,124 2,000 
202319,864 2,000 
202419,701 2,000 
202519,288 2,000 
Thereafter67,989 8,083 
Total$152,416 $16,583 

8.    CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Cash Equivalents
As of September 30, 2021 and December 31, 2020, investments in money market funds recorded as cash equivalents on the condensed consolidated balance sheets were $408.1 million and $103.5 million, respectively.
Interest income from cash equivalents of $7 thousand and $25 thousand were recorded in interest income in the condensed consolidated statements of operations for the three and nine months ended September 30, 2021, respectively, and $36 thousand and $0.5 million for the three and nine months ended September 30, 2020, respectively.
Restricted Cash
As of September 30, 2021 restricted cash on the condensed consolidated balance sheet represents amounts held by financial institutions to establish a standby letter of credit required by the lessor of certain corporate office space. As of December 31, 2020, restricted cash also included $10.0 million related to amounts held by third-party lenders
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to collateralize our November 2013 secured credit facility (the “1st Facility”), as amended in August 2014 to increase the availability under the 1st Facility to a total of $175.4 million (collectively, the “Amended 1st Credit Facility”).
A reconciliation of cash and cash equivalents and restricted cash from the condensed consolidated balance sheets to the condensed consolidated statements of cash flows is shown below (in thousands):
September 30, 2021September 30, 2020
Cash and cash equivalents$535,253 $104,355 
Restricted cash2,177 30,484 
Total$537,430 $134,839 
Air Carrier Payroll Support Program
On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was signed into law. The CARES Act provides aid in the form of loans, grants, tax credits, and other forms of government assistance. Specifically, the CARES Act provided the airline industry with up to $25.0 billion in grants with assurances the support was to be used exclusively for employee salaries, wages, and benefits.
During 2020, Wheels Up applied for government assistance under the Payroll Support Program from the U.S. Department of the Treasury (the “Treasury”) as directed by the CARES Act. We were awarded a total grant of $76.4 million to support ongoing operations through payroll funding. For the nine months ended September 30, 2020 we received grant proceeds of $74.2 million. We utilized $51.6 million and $64.9 million of the grant proceeds to offset payroll expenses incurred for the three and nine months ended September 30, 2020, respectively, and the remaining balance was included as restricted cash to offset subsequent payroll expenses incurred during 2020.
The support payments were conditioned on our agreement to refrain from conducting involuntary employee layoffs or furloughs through September 30, 2020. Other conditions include continuing essential air service as directed by the Department of Transportation (“DOT”) and certain limitations on executive compensation. Based on the amount received, we were not required to provide financial protection to the Treasury in conjunction with the payroll support obtained.

9.    FAIR VALUE MEASUREMENTS
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability, an exit price, in an orderly transaction between unaffiliated willing market participants on the measurement date under current market conditions. Assets and liabilities recorded at fair value are measured and classified in accordance with a three-tier fair value hierarchy based on the observability of the inputs available and activity in the markets used to measure fair value. A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.
Level 1 -Quoted prices, unadjusted, in active markets for identical assets or liabilities that can be accessed at the measurement date.
Level 2 -Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, eit