Item 3.01. Notice of Delisting or Failure to
Satisfy a Continued Listing Rule or Standard; Transfer of Listing.
On November 18,
2022, Inspirato Incorporated (the “Company”) received a notice (the “Notice”) from the Listing Qualifications
Department of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that it is not in compliance with the periodic
filing requirements for continued listing set forth in Nasdaq Listing Rule 5250(c)(1) (the “Rule”) as a result of
its failure to file its Quarterly Report on Form 10-Q for the quarter ended September 30, 2022 (the “Third Quarter Report”)
with the Securities and Exchange Commission (the “SEC”) by the required due date. The Notice stated that, under Nasdaq rules,
the Company has 60 calendar days, or until January 17, 2023, to submit a plan to regain compliance with Nasdaq’s continued
listing requirements. If the plan is accepted, Nasdaq may grant an extension of up to 180 calendar days, or until May 15, 2023, to
regain compliance. The Company can also regain compliance with Nasdaq’s continued listing requirements at any time before January 17,
2023, by filing the Third Quarter Report with the SEC, and continuing to comply with Nasdaq’s other continued listing requirements.
The Company intends to file with the SEC the Third Quarter Report and regain compliance with Nasdaq’s continued listing requirements
as soon as practicable.
The
Notice has no immediate effect on the listing or trading of the Company’s shares of Class A common stock or warrants. However,
if the Company fails to timely regain compliance with the Rule, the Company’s shares of Class A common stock and warrants will
be subject to delisting from Nasdaq.
As previously disclosed
in the Current Report on Form 8-K filed on November 14, 2022 by the Company, on November 8,
2022, the Audit Committee (the “Audit Committee”) of the Board of Directors of 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 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/A 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.
Also on November 14,
2022 the Company filed a Notification of Late Filing on Form 12b-25 disclosing that it would not, without unreasonable effort and
expense, be able to file the Third Quarter Report with the SEC within the prescribed time period due to delays in completion of the financial
statements for the quarter ended September 30, 2022. The delay in the issuance of the Company’s financial statements for the
quarter ended September 30, 2022 is attributable to the pending restatement of the Company’s condensed consolidated unaudited
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.
As previously disclosed
in the Current Report on Form 8-K filed on November 14, 2022, the Audit Committee and management discussed the matters relating
to the Non-Reliance Periods 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.