Restatement of Previously Issued Financial Statements (Tables)

3 Months Ended

Mar. 31, 2023

Accounting Changes and Error Corrections [Abstract]

Schedule of Effects of the Accounting Error

The effects of the accounting error on the Company's condensed consolidated balance sheet as of March 31, 2023 are as follows (in thousands):


	March 31, 2023		Adjustments			March 31, 2023
	(As Reported)					(As Restated)
Assets
Current assets:
Cash and cash equivalents	$	166,828	$	—		$	166,828
Marketable investments	100,823		—			100,823
Accounts receivable, net of allowance	52,138		(391)		(f), (h)	51,747
Inventories, net	71,819		(2,028)		(a), (c), (d)	69,791
Other current assets and prepaid expenses	26,156		—			26,156
Restricted cash	700		—			700
Total current assets	418,464		(2,419)			416,045
Property and equipment, net	53,016		(800)		(b), (e)	52,216
Deferred tax assets	577		—			577
Goodwill	1,339		—			1,339
Operating lease right-of-use assets	12,059		—			12,059
Other long-term assets	14,343		—			14,343
Total assets	$	499,798	$	(3,219)		$	496,579

Liabilities and stockholders' deficit
Current liabilities:
Accounts payable	$	35,169	$	—		$	35,169
Accrued liabilities	58,660		—			58,660
Operating lease liabilities	2,722		—			2,722
Deferred revenue	12,243		(187)		(g)	12,056
Total current liabilities	108,794		(187)			108,607
Deferred revenue, net of current portion	1,643		—			1,643
Operating lease liabilities, net of current portion	10,652		—			10,652
Convertible notes, net of unamortized debt issuance costs	417,011		—			417,011
Other long-term liabilities	711		—			711
Total liabilities	538,811		(187)			538,624

Stockholders’ deficit:
Common stock	20		—			20
Additional paid-in capital	126,504		—			126,504
Accumulated other comprehensive income (loss)	(8)		—			(8)
Accumulated deficit	(165,529)		(3,032)		(j)	(168,561)
Total stockholders’ deficit	(39,013)		(3,032)			(42,045)
Total liabilities and stockholders’ deficit	$	499,798	$	(3,219)		$	496,579

The effects of the accounting error on the Company's condensed consolidated income statement for the three-month period ended March 31, 2023 are as follows (in thousands, except per share data):


	Three Months Ended March 31, 2023		Adjustments			Three Months Ended March 31, 2023
	(As Reported)					(As Restated)
Net revenue:
Products	$	49,588	$	(467)	(f), (g)	$	49,121
Service	5,405		—			5,405
Total net revenue	54,993		(467)			54,526
Cost of revenue:
Products	27,231		2,828		(a), (b), (c), (d), (e)	30,059
Service	2,835		—			2,835
Total cost of revenue	30,066		2,828			32,894
Gross profit	24,927		(3,295)			21,632

Operating expenses:
Sales and marketing	29,512		—			29,512
Research and development	6,468		—			6,468
General and administrative	12,516		(263)		(h)	12,253
Total operating expenses	48,496		(263)			48,233
Loss from operations	(23,569)		(3,032)			(26,601)
Interest and other expense, net:
Amortization of debt issuance costs	(552)		—			(552)
Interest on convertible notes	(2,939)		—			(2,939)

Interest income	2,479		—			2,479
Other expense, net	(163)		—			(163)
Total interest and other expense, net	(1,175)		—			(1,175)
Loss before income taxes	(24,744)		(3,032)			(27,776)
Income tax expense	272		—			272
Net loss	$	(25,016)	$	(3,032)	(j)	$	(28,048)

Net loss per share:
Basic	$	(1.26)	$	(0.16)		$	(1.42)
Diluted	$	(1.26)	$	(0.16)		$	(1.42)
Weighted-average number of shares used in per share calculation:
Basic	19,776		19,776			19,776
Diluted	19,776		19,776			19,776

The effects of the accounting errors on the Company's condensed consolidated statement of cash flows for the three-month period ended March 31, 2023 are as follows (in thousands):


	Three Months Ended March 31,
	2023		Adjustments			2023
	(As Reported)					(As Restated)
Cash flows from operating activities:
Net loss	$	(25,016)	$	(3,032)	(j)	$	(28,048)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation	3,386		—			3,386
Depreciation and amortization	1,409		—			1,409
Amortization of contract acquisition costs	2,178		—			2,178
Amortization of debt issuance costs	552		—			552


Deferred tax assets	13		—			13

Provision for credit losses	488		(263)		(h)	225

Unrealized gain on foreign exchange forward	(623)		—			(623)
Accretion of discount on investment securities and investment income, net	(880)		846		(i)	(34)
Changes in assets and liabilities:
Accounts receivable	(7,064)		654		(f)	(6,410)
Inventories	(8,191)		2,028		(a), (c), (d)	(6,163)
Other current assets and prepaid expenses	(2,053)		—			(2,053)
Other long-term assets	(2,011)		—			(2,011)
Accounts payable	(1,330)		—			(1,330)
Accrued liabilities	1,706		—			1,706
Operating leases, net	(16)		—			(16)
Deferred revenue	388		(187)		(g)	201
Net cash used in operating activities	(37,064)		46			(37,018)
Cash flows from investing activities:
Acquisition of property and equipment	(11,153)		800		(b), (e)	(10,353)

Proceeds from maturities of marketable investments	95,000		(846)		(i)	94,154
Purchase of marketable investments	(23,467)		—			(23,467)
Net cash provided by (used in) investing activities	60,380		(46)			60,334
Cash flows from financing activities:
Proceeds from exercise of stock options and employee stock purchase plan	109		—			109
Taxes paid related to net share settlement of equity awards	(2,397)		—			(2,397)





Payments on finance lease obligations	(124)		—			(124)
Net cash used in financing activities	(2,412)		—			(2,412)
Net increase (decrease) in cash, cash equivalents and restricted cash	20,904		—			20,904
Cash, cash equivalents, and restricted cash at beginning of period	146,624		—			146,624
Cash, cash equivalents, and restricted cash at end of period	$	167,528	$	—		$	167,528
Supplemental non-cash investing and financing activities:
Assets acquired under finance lease	$	33	$	—		$	33
Assets acquired under operating lease	$	57	$	—		$	57

Acquisition of property and equipment	$	6,894	$	—		$	6,894
Supplemental disclosure of cash flow information:
Cash paid for interest	$	778	$	—		$	778
Income tax paid	$	483	$	—		$	483

Footnote to tables:

(a) Correction of the accounting error for the overstatement of inventory identified as a result of the physical inventory count ($1.2 million)

(b) Correction of the accounting error related to AviClear devices identified as a result of the physical inventory count ($1.0 million)

(d) Correction of the overstatement of demonstration and field inventory ($0.4 million)

(e) Correction of AviClear capitalized labor cost incorrectly expensed in previous period ($0.2 million)

(f) Correction of AviClear treatment revenue incorrectly recognized in the period ended June 30, 2023 ($0.7 million)

(g) Correction of AviClear sales and lease arrangements incorrectly allocated to deferred revenue in previous period ($0.2 million)

(h) Correction of the overstatement of the provision for credit losses associated with other receivables ($0.3 million)

(i) Correction of the classification error related to the cash interest received on investments in marketable securities purchased at a discount ($0.8 million)

(j) Net change in net loss for the three-month period ended March 31, 2023