SEC Form 10-Q Summary
Filing entity: Experience Investment Corp., despite the request metadata identifying Strata Critical Medical, Inc. The filing covers the quarter and six months ended June 30, 2020 and was filed August 13, 2020. The company is a blank-check company formed to pursue a business combination, with an intended focus on the travel and leisure industry. It had not commenced operating activities or generated operating revenue.
Financial Position and Results
| Metric | Three months ended June 30, 2020 | Six months ended June 30, 2020 |
|---|---|---|
| Operating revenue | None | None |
| Formation and operating costs | $115,556 | $260,686 |
| Interest income | $107,984 | $977,254 |
| Net income (loss) | $(5,982) | $566,089 |
| Basic and diluted earnings per share | $(0.01) | $(0.02) |
| Cash used in operating activities | Not separately presented | $(288,130) |
- At June 30, 2020, cash outside the Trust Account was $1.02 million, compared with $1.31 million at December 31, 2019.
- Marketable securities held in the Trust Account totaled $277.24 million, compared with $276.26 million at December 31, 2019.
- Total assets were $278.37 million; total liabilities were $10.11 million, including a $9.625 million deferred underwriting fee payable only upon completion of a business combination.
- Class A common stock subject to possible redemption was recorded at $263.26 million. Stockholders’ equity was approximately $5.0 million.
- The company had no long-term debt, capital leases, operating leases or other material long-term liabilities identified in the filing.
- Trust assets were invested primarily in money market funds holding U.S. Treasury bills. Management stated that the short-term investments did not create material interest-rate risk.
Material Changes Versus Comparable Period
- The filing provides only limited prior-period comparability because the company was formed on May 24, 2019 and had not yet completed its initial public offering during the comparable 2019 inception period.
- For the six months ended June 30, 2020, the company reported $566,089 of net income, compared with a $1,000 net loss from inception through June 30, 2019. The 2020 income was driven entirely by interest earned on Trust Account investments and was partly offset by operating costs and income taxes.
- Cash declined by $288,130 during the first six months of 2020, primarily because operating expenses exceeded cash inflows after excluding noncash interest income accrued in the Trust Account.
- Trust Account investments increased by approximately $977,000, consistent with accrued interest income.
Guidance, Outlook, Risks and Unusual Items
- Management does not expect operating revenue until after completion of an initial business combination.
- The company must complete a business combination by September 17, 2021. If it does not, it must cease operations, redeem the public shares using the Trust Account, and liquidate. Public warrants would expire worthless.
- The company intends to use substantially all Trust Account funds for a business combination. Public stockholders may redeem shares for their pro rata share of the Trust Account, subject to the transaction terms and applicable requirements.
- Management stated that existing cash outside the Trust Account was expected to fund current operating needs, but additional financing could be required if transaction costs exceed estimates, substantial redemptions occur, or the company cannot complete a transaction with available funds.
- The Sponsor may provide working-capital loans. Up to $1.5 million of such loans could be convertible into warrants, although no specific loan agreement was outstanding or disclosed as of June 30, 2020.
- Key risks include failure to identify or complete a suitable business combination, dilution from additional equity or equity-linked securities, redemption of public shares, dependence on Sponsor support, and possible negative interest rates reducing the per-share redemption amount below $10.
- The company reported no legal proceedings, no material changes to previously disclosed risk factors other than the negative-interest-rate risk, and no subsequent events requiring adjustment or disclosure.
- Management concluded that disclosure controls were effective and reported no material change in internal control over financial reporting.
Investor Verification Checklist
- Verify the issuer identity: the supplied filing is for Experience Investment Corp., not Strata Critical Medical, Inc.
- Confirm whether the company completed a business combination before the September 17, 2021 deadline and review the resulting redemption or liquidation outcome.
- Reconcile the $277.24 million Trust Account balance with public shares subject to redemption, accrued interest, taxes, and the $9.625 million deferred underwriting fee.
- Review the terms and potential dilution from the 27.5 million public units, 5 million private placement warrants, and 6.875 million Class B founder shares.
- Assess whether cash outside the Trust Account was sufficient to fund operations and transaction costs without additional Sponsor loans or other financing.
- Distinguish interest income from recurring operating performance, as the company had no operating revenue and remained a shell company during the reporting period.