Item 4.02 Non-Reliance on Previously Issued
Financial Statements or a Related Audit Report or Completed Interim Review.
On November 8, 2022, the
Audit Committee (the “Audit Committee”) of the Board of Directors of Inspirato Incorporated (the “Company”)
concluded, after discussion with the Company’s management, that the Company’s unaudited condensed consolidated financial
statements as of and for the quarterly periods ended March 31, 2022 and June 30, 2022 (collectively, the “Non-Reliance
Periods”) included in the Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission (the
“SEC”) for the Non-Reliance Periods, should no longer be relied upon. This is due to the incorrect application of
Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842) (“ASC 842”) with respect to the assessment of
right-of-use assets and liabilities, resulting in an understatement of both right-of-use assets and total lease liabilities of
approximately 9% for each of the Non-Reliance Periods resulting in an understatement of total assets and total liabilities by
approximately 5% for each of the Non-Reliance periods, and due to property-related and other expenses being under accrued in the
first quarter, and over accrued in the second quarter, resulting in cost of revenue being understated by approximately 1% and
overstated by approximately 5% in the first and second quarter, respectively. Similarly, any previously issued or filed reports,
press releases, earnings releases, and investor presentations or other communications describing the Company’s condensed
consolidated unaudited financial statements and other related financial information covering the Non-Reliance Periods should no
longer be relied upon.
The incorrect application and assessments pursuant to ASC 842 did not have a material impact on the Company's results of operations and
had no impact on the Company's revenues or operating cash flows for each of the Non-Reliance Periods.
The Company intends to restate
the unaudited condensed consolidated financial statements for the Non-Reliance Periods as soon as practicable by filing amended Quarterly
Reports on Form 10-Q for the Non-Reliance Periods. Accordingly, investors and others should rely only on financial information and other
disclosures regarding the Non-Reliance Periods once the Company restates its unaudited condensed consolidated financial statements for
the Non-Reliance Periods.
The above referenced misstatements
are preliminary, unaudited and subject to further change in connection with the completion of the amended Quarterly Reports on Form 10-Q/A
for the Non-Reliance Periods to be filed with the SEC.
The Audit Committee and management
have discussed the matters disclosed in this Current Report on Form 8-K with the Company’s independent registered public accounting
firm, BDO USA LLP.
In connection with the restatements
discussed above, the Company’s management has re-evaluated the effectiveness of the Company’s disclosure controls and procedures
as of March 31, 2022 and June 30, 2022 and based on that evaluation, the Company’s management has concluded its disclosure controls
and procedures remained ineffective due to the unremediated material weaknesses previously disclosed in Item 4 “Controls and Procedures”
in the Company’s Quarterly Reports on Form 10-Q filed with the SEC for the Non-Reliance Periods. Management is developing a remediation
plan for the material weaknesses.
Forward-Looking Statements
This Current Report on Form
8-K contains “forward-looking” statements. All statements other than statements of historical fact are statements that could
be deemed forward-looking statements. The Company advises caution in reliance on forward-looking statements. Forward-looking statements
include, without limitation, the Company’s plans and expectations related to the restatement of the condensed consolidated unaudited
financial statements as of and for the Non-Reliance Periods. These statements involve known and unknown risks, uncertainties and other
factors that may cause actual results to differ materially from those implied by forward-looking statements, including the outcome of
the Company’s evaluation of its accounting with respect to previously issued financial statements, including the possibility of
material adjustments thereto; the discovery of additional and unanticipated information during the procedures required to be completed
before the Company is able to file its required reports; the application of accounting or tax principles in an unanticipated manner; the
ability to identify and remediate material weaknesses and ineffective internal control over financial reporting and disclosure controls
and procedures; and the timing of the filing of the Quarterly Report on Form 10-Q for the period ended September 30, 2022. See also additional
risk factors set forth in the Company’s periodic filings with the SEC, including, but not limited to, those risks and uncertainties
listed in the section entitled “Risk Factors,” in the Company’s Quarterly Report on Form 10-Q filed with the SEC on
August 10, 2022. All forward-looking statements in this Current Report on Form 8-K are based on information available to the Company as
of the date of this filing. The Company expressly disclaims any obligation to update or alter its forward-looking statements, whether
as a result of new information, future events or otherwise.