Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.
As previously disclosed by Isleworth Healthcare Acquisition Corporation (the “Company”) in its Current Report on Form 8-K filed on May 27, 2021 (the “Prior Form 8-K”), on April 12, 2021, the Staff of the U.S. Securities and Exchange Commission (the “SEC”) released the Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”) (the “Staff Statement”). Specifically, the Staff Statement focused on certain settlement terms and provisions related to certain tender offers following a business combination as well as provisions that provided for potential changes to the settlement amounts dependent upon the characteristics of the holder of the warrant, which terms are similar to those contained in the warrant agreement, dated as of February 24, 2021, by and between Isleworth Healthcare Acquisition Corp., a Delaware corporation (the “Company”), and Continental Stock Transfer & Trust Company, a New York corporation, as warrant agent. As a result of the Staff Statement, the Company reevaluated the accounting treatment of (i) the 10,350,000 redeemable warrants (the “Public Warrants”) that were included in the units issued by the Company in its initial public offering (the “IPO”), and (ii) the 6,140,000 warrants that were issued in a private placement of private placement warrants that closed concurrently with the closing of the IPO (the “Private Warrants” together with the Public Warrants, the “Warrants”), and determined to classify the Warrants as derivative liabilities on the balance sheet and measured at fair value at inception and at each reporting date, with changes in fair value recognized in the statement of operations in the period of change. The Company previously accounted for the Warrants as components of equity.
As disclosed in the Prior Form 8-K, the Company is in the process of preparing its Form 10-Q for the quarter ended March 31, 2021, and will include in the Notes to Unaudited Condensed Financial Statements in such Form 10-Q a restated balance sheet dated March 1, 2021 reflecting the impact of accounting for the Warrants as liabilities at fair value.
Given the scope of the process for evaluating the impact of the Staff Statement on the Company’s financial statements and the work required in connection with such amendment, the Company was unable to complete and file its Form 10-Q for the quarter ended March 31, 2021 by the required due date of May 17, 2021. On May 18, 2021, the Company filed a Form 12b-25 Notification of Late Filing with the SEC related to the Form 10-Q for the quarter ended March 31, 2021 that effectively extended the due date until May 24, 2021. For the same reasons noted above, the Company was unable to complete and file the Form 10-Q for the quarter ended March 31, 2021 by May 24, 2021.
On May 28, 2021, the Company received a notice from the Listing Qualifications Department of The Nasdaq Capital Market (the “Nasdaq”) indicating that the Company was not in compliance with Nasdaq Listing Rule 5250(c)(1) because the Company had not filed the Form 10-Q for the quarter ended March 31, 2021 with the SEC on or before May 24, 2021, the extended period provided for the filing under Rule 12b-25(b) of the Securities Exchange Act of 1934, as amended.
The Nasdaq informed the Company that, under the Nasdaq’s rules, the Company could regain compliance with the continued listing requirements by filing the Form 10-Q for the quarter ended March 31, 2021 at any time prior to November 22, 2021.
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