Inspirato rporated(ISPO) - 2021 Q1 - Quarterly Report

PART I Financial Statements The unaudited condensed financial statements detail the company's financial position, operations, and cash flows as a blank check entity Condensed Balance Sheets Total assets were $177.3 million as of March 31, 2021, largely in the Trust Account, with liabilities decreasing to $16.7 million due to reduced warrant liabilities Condensed Balance Sheet Data (unaudited) | Account | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total Assets | $177,267,667 | $177,701,799 | | Investments held in Trust Account | $175,980,259 | $175,950,325 | | Total Liabilities | $16,708,174 | $23,222,304 | | Derivative warrant liabilities | $9,551,750 | $15,871,750 | | Class A common stock subject to possible redemption | $155,559,786 | $149,479,490 | | Total stockholders' equity | $5,000,007 | $5,000,005 | Unaudited Condensed Statement of Operations Net income for the three months ended March 31, 2021, was $6.1 million, primarily from a $6.3 million non-cash gain on derivative warrant liabilities Statement of Operations Highlights (For the Three Months Ended March 31, 2021) | Item | Amount | | :--- | :--- | | Loss from operations | $(269,936) | | Change in fair value of derivative warrant liabilities | $6,320,000 | | Net income | $6,079,998 | | Basic and diluted net income per common share, Class B | $1.41 | Unaudited Condensed Statement of Changes in Stockholders' Equity Stockholders' equity remained stable at approximately $5.0 million for the three months ended March 31, 2021, with net income offset by Class A common stock reclassification - Stockholders' equity remained stable at $5.0 million, with net income of $6.1 million balanced by a reclassification to Class A common stock subject to possible redemption[17] Unaudited Condensed Statement of Cash Flows The company used $0.43 million in cash for operating activities for the three months ended March 31, 2021, adjusted for a $6.3 million non-cash gain from warrant liabilities Cash Flow Summary (For the Three Months Ended March 31, 2021) | Item | Amount | | :--- | :--- | | Net income | $6,079,998 | | Change in fair value of derivative warrant liabilities | $(6,320,000) | | Net Cash Used in Operating Activities | $(428,910) | | Cash - beginning of the period | $1,242,226 | | Cash - end of the period | $813,316 | Notes to Unaudited Condensed Financial Statements The notes clarify the company's blank check status, detailing its IPO, business combination deadline, and accounting policies for warrants as derivative liabilities - The company operates as a blank check company, formed solely to effect a business combination, and has not commenced any operations as of March 31, 2021[23][24] - The December 2020 IPO raised $172.5 million gross proceeds from 17.25 million units at $10.00 per unit, with approximately $176.0 million placed in a trust account[25][27] - A business combination must be completed by June 15, 2022, within 18 months of the IPO, or the company will liquidate and redeem public shares[33] - Both Public Warrants (8.625 million) and Private Placement Warrants (7.175 million) are classified as derivative liabilities, measured at fair value with changes recognized in the statement of operations[54][88] - Derivative warrant liabilities decreased from $15.87 million at December 31, 2020, to $9.55 million at March 31, 2021, generating a non-cash gain of $6.3 million for the quarter[109][114] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's blank check status, reporting $6.1 million net income from warrant fair value changes, assessing liquidity, and highlighting critical accounting policies - The company operates as a blank check entity, with all activities focused on its formation, IPO, and the search for a business combination[119][120] - Net income for the three months ended March 31, 2021, was $6.1 million, primarily from a $6.3 million non-cash gain on derivative warrant liabilities[132] - As of March 31, 2021, the company held $0.813 million in cash outside the trust account, deemed sufficient for at least the next year's working capital needs[126][128] - Deferred underwriting commissions of $6.9 million and a deferred consulting fee of $50,000 are payable only upon completion of a business combination[135][136] - Critical accounting policies involve classifying warrants as derivative liabilities, re-measured at fair value each period, and redeemable Class A common stock as temporary equity[139][141] Quantitative and Qualitative Disclosures about Market Risk The company is not subject to material market or interest rate risk, as Trust Account proceeds are invested in short-term U.S. government treasury obligations - The company faces no material market or interest rate risk, as Trust Account funds are invested in short-term U.S. government securities with maturities of 185 days or less[151] Controls and Procedures Management concluded disclosure controls and procedures were ineffective as of March 31, 2021, due to a material weakness in accounting for complex equity instruments, with remediation planned - Disclosure controls and procedures were deemed not effective as of March 31, 2021[154] - The ineffectiveness stemmed from a material weakness in internal control over financial reporting regarding the accounting for complex equity instruments, specifically warrants[154] - Remediation plans include enhancing access to accounting literature and increasing communication with personnel and third-party professionals on complex accounting matters[158] PART II Legal Proceedings The company reports no legal proceedings - No legal proceedings are reported[161] Risk Factors No material changes to previously disclosed risk factors have occurred since the Amended Annual Report - No material changes to the risk factors disclosed in the company's Amended Annual Report have occurred as of the report date[162] Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities or use of proceeds during the period - None reported[163] Defaults Upon Senior Securities The company reports no defaults upon senior securities - None reported[164] Mine Safety Disclosures This item is not applicable to the company - Not applicable[165] Other Information The company reports no other information - None reported[166] Exhibits This section lists exhibits filed with the Quarterly Report, including CEO and CFO certifications and XBRL data files - Exhibits include certifications from Co-Chief Executive Officers and Chief Financial Officer, along with XBRL Instance Documents[168]