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Restatement of Previously Issued Financial Statements
 6 Months Ended
Jun. 30, 2023
Accounting Changes and Error Corrections [Abstract]  
Restatement of Previously Issued Financial Statements Restatement of Previously Issued Financial Statements
Background of Restatement
The accompanying unaudited condensed consolidated financial statements have been restated to correct errors related to (1) an accounting error identified as a result of a physical inventory count performed by the Company and (2) other accounting adjustments identified that were deemed immaterial. The details of the errors are further described below:
1.The Company determined that, as a result of an accounting error identified by the physical inventory count, there was a shortfall of inventory relative to the Company's system of record. The effect of this error was an overstatement of $3.6 million of inventory on the condensed consolidated balance sheet as of June 30, 2023. This error resulted in an associated understatement of $2.4 million and $3.6 million of cost of revenue on the condensed consolidated statement of operations for the three and six months ended June 30, 2023, respectively.
2.The Company corrected certain other errors that were deemed immaterial to the related interim period and restated the financial statements for the quarter ended June 30, 2023. The details of these corrections are noted in the footnotes to the tables below.
The Company's basic and diluted losses per share increased by $0.08 and $0.24 per share for the three and six months ended June 30, 2023, respectively. The Company's income tax expenses for the three and six months ended June 30, 2023 did not change as a result of the restatement. The errors did not have an impact on the Company’s net cash or liquidity.
Effect of Restatement
The effects of the accounting error on the Company's condensed consolidated balance sheet as of June 30, 2023 are as follows (in thousands):

June 30,
2023		AdjustmentsJune 30,
2023
(As Reported)
(As Restated)
Assets
Current assets:
Cash and cash equivalents$180,654 $— $180,654 
Marketable investments41,949 — 41,949 
Accounts receivable, net of allowance
53,079 600 
(h)
53,679 
Inventories, net68,668 (4,504)
(a), (c), (d)
64,164 
Other current assets and prepaid expenses24,900 (102)
(j)
24,798 
Restricted cash700 — 700 
Total current assets369,950 (4,006)365,944 
Property and equipment, net65,511 (800)
(b), (e)
64,711 
Deferred tax assets547 — 547 
Goodwill1,339 — 1,339 
Operating lease right-of-use assets11,370 — 11,370 
Other long-term assets15,113 — 15,113 
Total assets$463,830 $(4,806)$459,024 
Liabilities and stockholders' deficit
Current liabilities:
Accounts payable$34,240 $— $34,240 
Accrued liabilities53,764 — 53,764 
Operating lease liabilities2,602 — 2,602 
Deferred revenue12,457 (140)
(g)
12,317 
Total current liabilities103,063 (140)102,923 
Deferred revenue, net of current portion1,690 — 1,690 
Operating lease liabilities, net of current portion10,069 — 10,069 
Convertible notes, net of unamortized debt issuance costs
417,568 — 417,568 
Other long-term liabilities575 — 575 
Total liabilities532,965 (140)532,825 
Stockholders’ deficit:
Common stock
20 — 20 
Additional paid-in capital128,014 — 128,014 
Accumulated other comprehensive income (loss)4 — 4 
Accumulated deficit(197,173)(4,666)
(k)
(201,839)
Total stockholders’ deficit(69,135)(4,666)(73,801)
Total liabilities and stockholders’ deficit$463,830 $(4,806)$459,024 
The effects of the accounting error on the Company's condensed consolidated income statement for the three-month period ended June 30, 2023 are as follows (in thousands, except per share data):

Three Months Ended June 30, 2023AdjustmentsThree Months Ended June 30, 2023
(As Reported)
(As Restated)
Net revenue:
Products$55,568 $607 
(f), (g)
$56,175 
Service5,650 — 5,650 
Total net revenue61,218 607 61,825 
Cost of revenue:
Products29,473 2,578 
(a), (c), (d), (j)
32,051 
Service3,691 — 3,691 
Total cost of revenue33,164 2,578 35,742 
Gross profit28,054 (1,971)26,083 
Operating expenses:
Sales and marketing33,271 — 33,271 
Research and development5,784 — 5,784 
General and administrative18,528 (337)
(h)
18,191 
Total operating expenses57,583 (337)57,246 
Loss from operations(29,529)(1,634)(31,163)
Interest and other expense, net:
Amortization of debt issuance costs(557)— (557)
Interest on convertible notes(2,958)— (2,958)
Interest income2,179 — 2,179 
Other expense, net(453)— (453)
Total interest and other expense, net(1,789)— (1,789)
Loss before income taxes(31,318)(1,634)(32,952)
Income tax expense
326 — 326 
Net loss$(31,644)$(1,634)
(k)
$(33,278)
Net loss per share:
Basic$(1.59)$(0.08)$(1.68)
Diluted$(1.59)$(0.08)$(1.68)
Weighted-average number of shares used in per share calculation:
Basic 19,858 19,858 19,858 
Diluted19,858 19,858 19,858 
The effects of the accounting error on the Company's condensed consolidated income statement for the six-month period ended June 30, 2023 are as follows (in thousands, except per share data):

Six Months Ended June 30, 2023AdjustmentsSix Months Ended June 30, 2023
(As Reported)
(As Restated)
Net revenue:
Products$105,156 $140 
(f), (g)
$105,296 
Service11,055 — 11,055 
Total net revenue116,211 140 116,351 
Cost of revenue:
Products56,704 5,406 
(a), (b), (c), (d), (e), (j)
62,110 
Service6,526 — 6,526 
Total cost of revenue63,230 5,406 68,636 
Gross profit52,981 (5,266)47,715 
Operating expenses:
Sales and marketing62,783 — 62,783 
Research and development12,252 — 12,252 
General and administrative31,044 (600)
(h)
30,444 
Total operating expenses106,079 (600)105,479 
Loss from operations(53,098)(4,666)(57,764)
Interest and other expense, net:
Amortization of debt issuance costs(1,109)— (1,109)
Interest on convertible notes(5,897)— (5,897)
Interest income4,658 — 4,658 
Other expense, net(616)— (616)
Total interest and other expense, net(2,964)— (2,964)
Loss before income taxes(56,062)(4,666)(60,728)
Income tax expense
598 — 598 
Net loss$(56,660)$(4,666)
(k)
$(61,326)
Net loss per share:
Basic$(2.86)$(0.24)$(3.09)
Diluted$(2.86)$(0.24)$(3.09)
Weighted-average number of shares used in per share calculation:
Basic 19,819 19,819 19,819 
Diluted19,819 19,819 19,819 
The effects of the accounting errors on the Company's condensed consolidated statement of cash flows for the six-month period ended June 30, 2023 are as follows (in thousands):
Six Months Ended June 30,
2023
Adjustments
2023
(As Reported)
(As Restated)
Cash flows from operating activities
Net loss$(56,660)$(4,666)
(k)
$(61,326)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation4,936 — 4,936 
Depreciation and amortization3,238 — 3,238 
Amortization of contract acquisition costs4,069 — 4,069 
Amortization of debt issuance costs1,109 — 1,109 
Deferred tax assets43 — 43 
Provision for credit losses2,514 (600)
(h)
1,914 
Accretion of discount on investment securities and investment income, net
(1,995)2,141 
(i)
146 
Changes in assets and liabilities:
Accounts receivable(10,031)— (10,031)
Inventories, net(5,040)4,504 
(a), (c), (d)
(536)
Other current assets and prepaid expenses(878)102 
(j)
(776)
Other long-term assets(4,782)— (4,782)
Accounts payable(1,666)— (1,666)
Accrued liabilities(3,806)— (3,806)
Operating leases, net(30)— (30)
Deferred revenue649 (140)
(g)
509 
Net cash used in operating activities(68,330)1,341 (66,989)
Cash flows from investing activities
Acquisition of property and equipment(25,908)800 
(b), (e)
(25,108)
Proceeds from maturities of marketable investments155,000 (2,141)
(i)
152,859 
Purchase of marketable investments(23,467)— (23,467)
Net cash provided by (used in) investing activities105,625 (1,341)104,284 
Cash flows from financing activities
Proceeds from exercise of stock options and employee stock purchase plan858 — 858 
Taxes paid related to net share settlement of equity awards(3,186)— (3,186)
Payments on finance lease obligations(237)— (237)
Net cash provided by (used in) financing activities(2,565)— (2,565)
Net increase (decrease) in cash, cash equivalents and restricted cash34,730 — 34,730 
Cash, cash equivalents, and restricted cash at beginning of period146,624 — 146,624 
Cash, cash equivalents, and restricted cash at end of period$181,354 $— $181,354 
Supplemental non-cash investing and financing activities:
Assets acquired under finance lease$68 $— $68 
Assets acquired under operating lease$57 $— $57 
Acquisition of property and equipment$6,301 $— $6,301 
Supplemental disclosure of cash flow information:
Cash paid for interest$5,731 $— $5,731 
Cash paid for income taxes$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 ($2.4 million and $3.6 million for three and six months ended June 30, 2023, respectively)
(b) Correction of the accounting error related to AviClear devices identified as a result of the physical inventory count ($1.0 million)
(c) Correction of the overstatement of demonstration and field inventory ($0.4 million), net of quarterly amortization ($0.1 million)
(d) Correction of the overstatement of demonstration and field inventory ($0.1 million and $0.5 million for three and six months ended June 30, 2023, respectively)
(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), net of quarterly amortization ($0.1 million)
(h) Correction of the overstatement of the provision for credit losses associated with other receivables ($0.3 million and $0.6 million for three and six months ended June 30, 2023, respectively)
(i) Correction of the classification error related to the cash interest received ($2.1 million)
(j) Correction of unapplied inventory prepayment upon receipt of inventory ($0.1 million)
(k) Net change in net loss for the three-month period or the six-month period ended June 30, 2023
The impact of the restatement and reclassification on the Company’s condensed consolidated statements of stockholders’ deficit and condensed consolidated statements of comprehensive loss for the three and six months ended June 30, 2023 are limited to the understatement of net loss, comprehensive loss, accumulated deficit, and total stockholders' deficit of $1.6 million and $4.7 million, respectively.
The related notes to the condensed consolidated financial statements have also been restated to reflect the error corrections described above.