UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the quarterly period ended ~~September 30, 2021~~March 31, 2022


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from to

Commission file number 001-40568

CLEAR SECURE, INC.

(Exact name of registrant as specified in its charter)


Delaware									86-2643981
(State or other jurisdiction of incorporation or organization)									(I.R.S. Employer Identification No.)

65 East 55th Street, 17th Floor, New York, NY 10022
(Address of Principal Executive Offices); (Zip Code)

(646) 723-1404

Registrant's telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, par value $0.00001 per share	YOU	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	x	Smaller reporting company	o
		Emerging growth company	x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

The registrant had the following outstanding shares of common stock as of ~~November 11, 2021:~~May 12, 2022:


Class A ~~common stock~~Common Stock par value $0.00001 per share	~~74,268,466~~78,579,207
Class B ~~common stock~~Common Stock par value $0.00001 per share		1,042,234
Class C ~~common stock~~Common Stock par value $0.00001 per share	~~44,598,167~~43,527,355
Class D ~~common stock~~Common Stock par value $0.00001 per share	~~26,709,821~~26,705,315

Table of Contents


		Page
	PART I - FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	31
	Condensed Consolidated Statements of Operations	42
	Condensed Consolidated Statements of Comprehensive ~~Income/(Loss)~~Loss	53
	Condensed Consolidated Statements of Changes in Redeemable Capital Units and Stockholders' Equity	64
	Condensed Consolidated Statements of Changes in Cash Flows	85
	Notes to Condensed Consolidated Financial Statements	96
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2928
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42
Item 4.	Controls and Procedures	4342
	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 3.	Defaults Upon Senior Securities	44
Item 4.	Mine Safety Disclosures	45
Item 5.	Other Information	45
Item 6.	Exhibits	46
Signatures		47

Table of Contents

CLEAR SECURE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(dollars in thousands, except per share data)


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	337,791	$	116,226	Cash and cash equivalents	$	299,134	$	280,107
Accounts receivable	Accounts receivable	3,921		912		Accounts receivable	7,525		5,331
Marketable debt securities		335,457		37,813
Marketable securities						Marketable securities	334,353		335,228
Prepaid revenue share fee	Prepaid revenue share fee	8,921		5,475		Prepaid revenue share fee	11,573		10,272
Prepaid expenses and other current assets	Prepaid expenses and other current assets	14,465		11,210		Prepaid expenses and other current assets	15,760		22,140
Total current assets	Total current assets	700,555		171,636		Total current assets	668,345		653,078

Property and equipment, net	Property and equipment, net	45,875		35,241		Property and equipment, net	46,123		44,522
Right of use asset, net						Right of use asset, net	24,625		—
Intangible assets, net	Intangible assets, net	2,267		1,564		Intangible assets, net	24,238		22,933
Goodwill						Goodwill	58,381		59,792
Restricted cash	Restricted cash	22,835		22,856		Restricted cash	29,241		29,019
Other assets	Other assets	1,694		971		Other assets	3,102		3,406
Total assets	Total assets	$	773,226	$	232,268	Total assets	$	854,055	$	812,750

Liabilities, redeemable capital units and stockholders' equity
Liabilities and stockholders' equity						Liabilities and stockholders' equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	10,034	$	8,518	Accounts payable	$	6,701	$	8,808
Accrued liabilities	Accrued liabilities	45,194		18,304		Accrued liabilities	77,909		67,220
Warrant liabilities		—		17,740
Deferred revenue	Deferred revenue	159,589		101,542		Deferred revenue	205,795		188,563
Total current liabilities	Total current liabilities	214,817		146,104		Total current liabilities	290,405		264,591

Deferred rent		3,428		3,809
Other long term liabilities						Other long term liabilities	31,234		8,691
Total liabilities	Total liabilities	218,245		149,913		Total liabilities	321,639		273,282

Commitments and contingencies (Note 17)		0		0
Commitments and contingencies (Note 19)						Commitments and contingencies (Note 19)	0		0

Redeemable capital units		—		569,251

Class A common stock, $0.00001 par value- 1,000,000,000 shares authorized; 74,420,306 shares issued and 74,347,905 shares outstanding as of September 30, 2021		1		—
Class B common stock, $0.00001 par value—100,000,000 shares authorized; 1,042,234 shares issued and outstanding as of September 30, 2021		—		—
Class C common stock, $0.00001 par value—200,000,000 shares authorized; 44,598,167 shares issued and outstanding as of September 30, 2021		—		—
Class D common stock, $0.00001 par value—100,000,000 shares authorized; 26,709,821 shares issued and outstanding as of September 30, 2021		—		—
Profit Units		—		7,846
Accumulated other comprehensive income		(48)		27
Treasury stock at cost, 72,401 shares as of September 30, 2021		—		—
Class A common stock, $0.00001 par value- 1,000,000,000 shares authorized; 78,849,574 shares issued and 78,566,156 shares outstanding as of March 31, 2022						Class A common stock, $0.00001 par value- 1,000,000,000 shares authorized; 78,849,574 shares issued and 78,566,156 shares outstanding as of March 31, 2022	1		1
Class B common stock, $0.00001 par value—100,000,000 shares authorized; 1,042,234 shares issued and outstanding as of March 31, 2022						Class B common stock, $0.00001 par value—100,000,000 shares authorized; 1,042,234 shares issued and outstanding as of March 31, 2022	—		—
Class C common stock, $0.00001 par value—200,000,000 shares authorized; 43,577,355 shares issued and outstanding as of March 31, 2022						Class C common stock, $0.00001 par value—200,000,000 shares authorized; 43,577,355 shares issued and outstanding as of March 31, 2022	—		—
Class D common stock, $0.00001 par value—100,000,000 shares authorized; 26,705,315 shares issued and outstanding as of March 31, 2022						Class D common stock, $0.00001 par value—100,000,000 shares authorized; 26,705,315 shares issued and outstanding as of March 31, 2022	—		—
Accumulated other comprehensive loss						Accumulated other comprehensive loss	(673)		(103)
Treasury stock at cost, 283,418 shares as of March 31, 2022						Treasury stock at cost, 283,418 shares as of March 31, 2022	—		—
Accumulated deficit	Accumulated deficit	(18,976)		(494,769)		Accumulated deficit	(46,457)		(36,130)
Additional paid-in capital	Additional paid-in capital	305,307		—		Additional paid-in capital	326,767		313,845
Total stockholders’ equity attributable to Clear Secure, Inc.	Total stockholders’ equity attributable to Clear Secure, Inc.	286,284		—		Total stockholders’ equity attributable to Clear Secure, Inc.	279,638		277,613
Non-controlling interest	Non-controlling interest	268,697		—		Non-controlling interest	252,778		261,855
Total stockholders’ equity	Total stockholders’ equity	554,981		(486,896)		Total stockholders’ equity	532,416		539,468
Total liabilities, redeemable capital units and stockholders’ equity		$	773,226	$	232,268
Total liabilities and stockholders’ equity						Total liabilities and stockholders’ equity	$	854,055	$	812,750

See notes to condensed consolidated financial statements

Table of Contents

CLEAR SECURE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(dollars in thousands, except per share data)


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020			March 31, 2022		March 31, 2021

Revenue	Revenue	$	67,558	$	56,375	$	173,294	$	177,641	Revenue	$	90,539	$	50,558

Operating expenses:	Operating expenses:									Operating expenses:
Cost of revenue share fee	Cost of revenue share fee	9,926		8,298		25,995		25,707		Cost of revenue share fee	12,142		7,769
Cost of direct salaries and benefits	Cost of direct salaries and benefits	18,128		7,751		46,113		31,504		Cost of direct salaries and benefits	22,980		12,149
Research and development	Research and development	13,347		6,297		33,293		23,358		Research and development	15,512		9,005
Sales and marketing	Sales and marketing	9,949		3,291		25,806		11,479		Sales and marketing	7,826		4,956
General and administrative	General and administrative	44,816		17,734		116,290		97,532		General and administrative	45,926		27,192
Depreciation and amortization	Depreciation and amortization	3,988		2,322		9,190		6,945		Depreciation and amortization	4,384		2,538
Operating income (loss)		(32,596)		10,682		(83,393)		(18,884)
Operating loss										Operating loss	(18,231)		(13,051)

Other income (expense)	Other income (expense)									Other income (expense)
Interest income (expense), net	Interest income (expense), net	(120)		(12)		(333)		657		Interest income (expense), net	7		(71)
Other income (expense), net	Other income (expense), net	(11)		477		(11)		477		Other income (expense), net	(268)		—
Income (loss) before tax		(32,727)		11,147		(83,737)		(17,750)
Loss before tax										Loss before tax	(18,492)		(13,122)
Income tax expense	Income tax expense	(60)		(4)		(277)		(14)		Income tax expense	(302)		(6)
Net income (loss)		(32,787)		11,143		(84,014)		(17,764)
Less: net income (loss) attributable to non-controlling interests		(15,872)				(65,095)
Net loss										Net loss	(18,794)		(13,128)
Less: net loss attributable to non-controlling interests										Less: net loss attributable to non-controlling interests	(8,467)		0
Net loss attributable to Clear Secure, Inc.	Net loss attributable to Clear Secure, Inc.	$	(16,915)			$	(18,919)			Net loss attributable to Clear Secure, Inc.	$	(10,327)	0

Net loss per common share of Class A and B common stock (Note 15)
Net loss per share of Class A Common Stock and Class B Common Stock (Note 17)										Net loss per share of Class A Common Stock and Class B Common Stock (Note 17)
Basic and Diluted	Basic and Diluted	$	(0.23)			$	(0.26)			Basic and Diluted	$	(0.13)	0000
Weighted-average shares of Common A stock outstanding		72,285,100				72,124,741
Weighted-average shares of Common B stock outstanding		1,042,234				1,042,234
Weighted-average shares of Class A Common Stock outstanding										Weighted-average shares of Class A Common Stock outstanding	76,672,530		00
Weighted-average shares of Class B Common Stock outstanding										Weighted-average shares of Class B Common Stock outstanding	1,042,234		00

See notes to condensed consolidated financial statements

Table of Contents

CLEAR SECURE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~INCOME/(LOSS)~~LOSS

(UNAUDITED)

(dollars in thousands)

Three Months Ended Nine Months Ended
September 30,
2021 September 30,
2020 September 30,
2021 September 30,
2020
Net income (loss) $ (32,787) $ 11,143 $ (84,014) $ (17,764)
Other comprehensive income
Currency translation 15 — 18 —
Unrealized gain (loss) on fair value of marketable debt securities (108) (32) (80) 32
Total other comprehensive income (93) (32) (62) 32
Comprehensive income (loss) (32,880) 11,111 (84,076) (17,732)
Less: comprehensive loss attributable to non-controlling interests (15,917) (65,109)
Comprehensive loss attributable to Clear Secure, Inc. $ (16,963) $ (18,967)


	Three Months Ended
	March 31, 2022		March 31, 2021
Net loss	$	(18,794)	$	(13,128)
Other comprehensive loss
Foreign currency translation	(50)		—
Unrealized loss on fair value of marketable securities	(1,041)		25
Total other comprehensive loss	(1,091)		25
Comprehensive loss	(19,885)		(13,103)
Less: comprehensive loss attributable to non-controlling interests	(8,988)		0
Comprehensive loss attributable to Clear Secure, Inc.	$	(10,897)	0

See notes to condensed consolidated financial statements

Table of Contents

CLEAR SECURE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CAPITAL UNITS AND STOCKHOLDERS’ EQUITY

(UNAUDITED)

(dollars in thousands, except per share data)


				Class A			Class B			Class C			Class D					Profit Units					Accumulated other comprehensive income					Treasury Stock				Accumulated deficit						Total stockholders’ equity attributable to Clear Secure, Inc.			Non-Controlling Interest		Total stockholders’ equity							Class A											Class B								Class C											Class D																Profit Units							Accumulated other comprehensive income				Treasury Stock					Accumulated deficit				Total stockholders’ equity attributable to Clear Secure, Inc.			Non-Controlling Interest		Total stockholders’ equity
		Total redeemable capital units		Number of shares	Amount		Number of Shares	Amount		Number of Shares	Amount		Number of Shares	Amount		Additional paid in capital		Number of Units		Amount											Total redeemable capital units				Number of shares														Amount					Number of Shares						Amount				Number of Shares				Amount				Number of Shares						Amount					Additional paid in capital						Number of Units					Amount						Number of Shares		Amount
Balance, January 1, 2021	Balance, January 1, 2021	$	569,251	—	$	—	—	$	—	—	—		—	$	—	—		1,868,322		$	7,846				$	27								$	—					$	(494,769)				$	(486,896)		—		$	(486,896)		Balance, January 1, 2021		$	569,251		—				$	—				—			$	—					—					$	—					—					$	—				—				1,868,322				$	7,846			$	27				—	$	—		$	(494,769)				$	(486,896)	—	$	(486,896)
Net loss	Net loss	—		—	—		—	—		—	—		—	—		—		—		—			—					—				(13,128)						(13,128)			—		(13,128)			Net loss		—		—						—					—				—				—					—						—					—					—						—			—					—				—			—		(13,128)				(13,128)			—		(13,128)
Other comprehensive loss	Other comprehensive loss	—		—	—		—	—		—	—		—	—		—		—		—			25					—				—						25			—		25			Other comprehensive loss		—		—						—					—				—				—					—						—					—					—						—			—				25				—			—		—				25			—		25
Issuance of member units, net of costs	Issuance of member units, net of costs	81,567		—	—		—	—		—	—		—	—		—		—		—			—					—				—						—			—		—			Issuance of member units, net of costs		81,567		—						—					—				—				—					—						—					—					—						—			—				—				—			—		—				—			—		—
Repurchase and retirement of capital units	Repurchase and retirement of capital units	(439)		—	—		—	—		—	—		—	—		—		—		—			—					—				(3,005)						(3,005)			—		(3,005)			Repurchase and retirement of capital units		(439)		—						—					—				—				—					—						—					—					—						—			—				—				—			—		(3,005)				(3,005)			—		(3,005)
Repurchase, forfeitures and retirement of profit units	Repurchase, forfeitures and retirement of profit units	—		—	—		—	—		—	—		—	—		—		(71,247)		(56)			—					—				(8,246)						(8,302)			—		(8,302)			Repurchase, forfeitures and retirement of profit units		—		—						—					—				—				—					—						—					—					—						(71,247)			(56)				—				—			—		(8,246)				(8,302)			—		(8,302)
Warrant expense	Warrant expense	281		—	—		—	—		—	—		—	—		—		—		—			—					—				—						—			—		—			Warrant expense		281		—						—					—				—				—					—						—					—					—						—			—				—				—			—		—				—			—		—
Equity-based compensation expense, net of forfeitures	Equity-based compensation expense, net of forfeitures	—		—	—		—	—		—	—		—	—		—		—		327			—					—				—						327			—		327			Equity-based compensation expense, net of forfeitures		—		—						—					—				—				—					—						—					—					—						—			327				—				—			—		—				327			—		327
Balance, March 31, 2021	Balance, March 31, 2021	$	650,660	—	$	—	—	$	—	—	$	—	—	$	—	$	—	1,797,075		$	8,117		$	52				$	—			$	(519,148)					$	(510,979)		$	—	$	(510,979)		Balance, March 31, 2021		$	650,660	—						$	—				—				$	—			—					$	—					—					$	—				$	—					1,797,075			$	8,117			$	52			—			$	—	$	(519,148)			$	(510,979)		$	—	$	(510,979)
Net loss prior to reorganization transaction		—		—	—		—	—		—	—		—	—		—				—			—					—				(33,720)						(33,720)			—		(33,720)
Other comprehensive income		—		—	—		—	—		—	—		—	—		—		—		—			—					—				—						—			6		6
Equity-based compensation expense, net of forfeitures		—		—	—		—	—		—	—		—	—		1,786		(26,925)		353			—					—				—						2,139			2,114		4,253
Warrant expense		819		—	—		—	—		—	—		—	—		—		—		—			—					—				—						—			—		—
Exercise of warrants prior to the reorganization transaction		34,224		—	—		—	—		—	—		—	—		—		—		—			—					—				—						—			—		—
Tax distribution to members		—		—	—		—	—		—	—		—	—		—		—		—			—					—				(4,018)						(4,018)			—		(4,018)
Effect of reorganization transaction		(685,703)		59,240,306	1		1,042,234	—		—	—		—	—		62,858		(1,770,150)		(8,470)			(52)					—				556,886						611,223			74,480		685,703
Issuance of common stock upon reorganization		—		—	—		—	—		44,598,167	—		26,709,821	—		—		—		—			—					—				—						—			—		—
Net loss post reorganization transaction		—		—	—		—	—		—	—		—	—		—		—		—			—					—				(2,004)						(2,004)			(2,375)		(4,379)
Balance, June 30, 2021		—		59,240,306	$	1	1,042,234	$	—	44,598,167	$	—	26,709,821	$	—	$	64,644	—		$	—		$	—				$	—			$	(2,004)					$	62,641		$	74,225	$	136,866
Balance, January 1, 2022																			Balance, January 1, 2022		—	76,393,256				$	1			1,042,234						$	—					44,598,167					$	—				26,709,821						$	—			$	313,845				—			$	—					$	(103)				223,069			$	—		$	(36,130)				$	277,613		$	261,855	$	539,468
Net loss	Net loss	—		—	—		—	—		—	—		—	—		—		—		—			—					—				(16,915)						(16,915)			(15,872)		(32,787)			Net loss		—		—						—					—				—				—					—						—					—					—						—			—				—				—			—		(10,327)				(10,327)			(8,467)		(18,794)
Other comprehensive loss	Other comprehensive loss	—		—	—		—	—		—	—		—	—		—		—		—			(48)					—				—						(48)			(45)		(93)			Other comprehensive loss		—		—						—					—				—				—					—						—					—					—						—			—				(570)				—			—		—				(570)			(521)		(1,091)
Equity-based compensation expense, net of forfeitures	Equity-based compensation expense, net of forfeitures	—		—	—		—	—		—	—		—	—		6,569		—		—			—									—						6,569			6,060		12,629			Equity-based compensation expense, net of forfeitures		—		(60,349)						—					—				—				—					—						—					—					7,365						—			—				—				60,349			—		—				7,365			5,694		13,059
Warrant expense	Warrant expense	—		—	—		—	—		—	—		—	—		778		—		—			—					—				—						778			731		1,509			Warrant expense		—		—						—					—				—				—					—						—					—					37						—			—				—				—			—		—				37			34		70
Tax distribution to members		—		—	—		—	—		—	—		—	—		—		—		—			—					—				(57)						(57)			(54)		(111)
Proceeds from IPO, net of costs		—		15,180,000	—		—	—		—	—		—	—		233,316		—		—			—					—				—						233,316			203,652		436,968
Balance, September 30, 2021		—		74,420,306	$	1	1,042,234	$	—	44,598,167	$	—	26,709,821	$	—	$	305,307	—		$	—		$	(48)				$	—			$	(18,976)					$	286,284		$	268,697	$	554,981
Redemption of Alclear units																			Redemption of Alclear units		—	1,025,318				—				—						—						(1,020,812)					—					(4,506)						—				2,606					—			—			—			—			—		—			—			—					2,606			(2,606)		—
Exercise of warrants																			Exercise of warrants		—	1,207,931				—				—						—						—					—					—						—				3,070					—			—						—					—			—			—					3,070			(3,070)		—
IPO expenses																			IPO expenses		—	—				—				—						—						—					—					—						—				(156)					—			—						—					—			—			—					(156)			(141)		(297)
Balance, March 31, 2022																			Balance, March 31, 2022		—	78,566,156				$	1			1,042,234						$	—					43,577,355					$	—				26,705,315						$	—			$	326,767				—			$	—					$	(673)				283,418			$	—		$	(46,457)				$	279,638		$	252,778	$	532,416

See notes to condensed consolidated financial statements

~~Table of Contents~~

~~CLEAR SECURE, INC.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CAPITAL UNITS AND MEMBERS’ DEFICIT~~

~~(UNAUDITED)~~

~~(dollars in thousands, except per share data)~~

Redeemable Capital Units Members’ Deficit
Class A Units Class B Units Class C Units Profit Units Accumulated other comprehensive income (loss) Accumulated deficit Members' deficit total
Number of Units Amount Number of Units Amount Number of Units Amount Number of Profit Units Amount
Balance, January 1, 2020 316,785 $ 3,168 4,759,569 $432,062 — — 2,113,008 $ 8,022 $ 3 $ (291,354) $ (283,329)
Net loss — — — — — — — — — (51,253) (51,253)
Other comprehensive loss — — — — — — — — (64) — (64)
Issuance of member units, net of costs — — 422,039 113,944 — — 37,700 — — — —
Repurchase and retirement of capital units (54,843) (548) (677,387) (14,053) — — — — — (183,102) (183,102)
Repurchase, forfeitures and retirement of profit units — — — — — — (328,834) (1,630) — (10,829) (12,459)
Warrant expense — — — 1,441 — — — — — — —
Equity-based compensation expense — — — — — — — 351 — — 351
Balance, March 31, 2020 261,942 $ 2,620 4,504,221 $ 533,394 — $ — 1,821,874 $ 6,743 $ (61) $ (536,538) (529,856)
Net income — — — — — — — — — 22,346 22,346
Other comprehensive income — — — — — — — — 128 — 128
Repurchase, forfeitures and retirement of profit units — — — — — — (57,050) (3) — (123) (126)
Warrant expense — — — 141 — — — — — — —
Equity-based compensation expense — — — — — — — 328 — — 328
Balance, June 30, 2020 261,942 $ 2,620 4,504,221 $ 533,535 — $ — 1,764,824 $ 7,068 $ 67 $ (514,315) (507,180)
Net income — — — — — — — — — 11,143 11,143
Other comprehensive loss — — — — — — — — (32) — (32)
Issuance of member units, net of costs — — — — — — 130,628 — — — —
Repurchase, forfeitures and retirement of profit units — — — — — — (19,125) — — (23) (23)
Warrant expense — — — 143 — — — — — — —
Equity-based compensation expense — — — — — — — 385 — — 385
Balance, September 30, 2020 261,942 $ 2,620 4,504,221 $ 533,678 — $ — 1,876,327 $ 7,453 $ 35 $ (503,195) (495,707)

~~See notes to condensed consolidated financial statements~~

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CLEAR SECURE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CASH FLOWS

(UNAUDITED)

(dollars in thousands)


		Nine Months Ended					Three Months Ended
		September 30, 2021		September 30, 2020			March 31, 2022		March 31, 2021
Cash flows provided by (used in) operating activities:	Cash flows provided by (used in) operating activities:					Cash flows provided by (used in) operating activities:
Net loss	Net loss	$	(84,014)	$	(17,764)	Net loss	$	(18,794)	$	(13,128)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		9,190		6,945
Loss on asset disposal		—		2
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:						Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation on property and equipment						Depreciation on property and equipment	3,489		2,534
Amortization on intangible assets						Amortization on intangible assets	895		4
Noncash lease expense						Noncash lease expense	721		—
Impairment of long-lived assets						Impairment of long-lived assets	313		—
Equity-based compensation	Equity-based compensation	20,642		2,789		Equity-based compensation	13,129		608
Warrant liabilities	Warrant liabilities	12,796		444		Warrant liabilities	—		1,893
Deferred income tax expense						Deferred income tax expense	206		—
Amortization of revolver loan costs	Amortization of revolver loan costs	558		—		Amortization of revolver loan costs	198		—
Amortization, net on marketable securities						Amortization, net on marketable securities	287		—
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	(3,009)		733		Accounts receivable	(2,194)		(165)
Prepaid expenses and other assets	Prepaid expenses and other assets	(3,818)		3,323		Prepaid expenses and other assets	6,472		(2,885)
Prepaid revenue share fee	Prepaid revenue share fee	(3,445)		2,595		Prepaid revenue share fee	(1,300)		(798)
Accounts payable	Accounts payable	2,796		(1,572)		Accounts payable	(2,137)		(1,150)
Accrued liabilities	Accrued liabilities	28,615		(4,998)		Accrued liabilities	7,261		1,366
Deferred revenue	Deferred revenue	58,047		(21,653)		Deferred revenue	17,232		11,528
Operating lease liabilities						Operating lease liabilities	(846)		—
Deferred rent	Deferred rent	(381)		685		Deferred rent	—		(142)
Net cash used provided by (used in) operating activities	Net cash used provided by (used in) operating activities	37,977		(28,471)		Net cash used provided by (used in) operating activities	24,932		(335)

Cash flows used in investing activities:	Cash flows used in investing activities:					Cash flows used in investing activities:
Purchases of marketable debt securities		(689,789)		(104,249)
Sales of marketable debt securities		392,066		99,898
Issuance of loan		—		(250)
Purchases of marketable securities						Purchases of marketable securities	(149,066)		(47,002)
Sales of marketable securities						Sales of marketable securities	149,066		47,090
Purchases of property and equipment	Purchases of property and equipment	(22,042)		(9,181)		Purchases of property and equipment	(5,533)		(8,794)
Capitalized intangible assets	Capitalized intangible assets	(713)		(425)		Capitalized intangible assets	(100)		(204)
Net cash used in investing activities	Net cash used in investing activities	(320,478)		(14,207)		Net cash used in investing activities	(5,633)		(8,910)

Cash flows provided by (used in) financing activities:
IPO proceeds, net of underwriter fees and issuance costs		437,494		—
Cash flows provided by financing activities:						Cash flows provided by financing activities:
Repurchase of members’ equity	Repurchase of members’ equity	(11,744)		(210,310)		Repurchase of members’ equity	—		(11,744)
Proceeds from issuance of members’ equity, net of cost	Proceeds from issuance of members’ equity, net of cost	80,277		113,944		Proceeds from issuance of members’ equity, net of cost	—		80,277
Distribution to post-reorganization members		(4,128)		—
Issuance of warrants	Issuance of warrants	289		—		Issuance of warrants	—		289
Proceeds from the exercise of warrants		2,575		—
Payment of revolver loan costs		(718)		(652)
Net cash provided by (used in) financing activities		504,045		(97,018)
Net cash provided by financing activities						Net cash provided by financing activities	—		68,822

Net increase (decrease) in cash, cash equivalents, and restricted cash		221,544		(139,696)
Net increase in cash, cash equivalents, and restricted cash						Net increase in cash, cash equivalents, and restricted cash	19,299		59,577
Cash, cash equivalents, and restricted cash, beginning of period	Cash, cash equivalents, and restricted cash, beginning of period	139,082		236,051		Cash, cash equivalents, and restricted cash, beginning of period	309,126		139,082
Exchange rate effect on cash and cash equivalents, and restricted cash						Exchange rate effect on cash and cash equivalents, and restricted cash	(50)		—
Cash, cash equivalents, and restricted cash, end of period	Cash, cash equivalents, and restricted cash, end of period	$	360,626	$	96,355	Cash, cash equivalents, and restricted cash, end of period	$	328,375	$	198,659


		September 30, 2021		September 30, 2020			March 31, 2022		March 31, 2021
Cash and cash equivalents	Cash and cash equivalents	$	337,791	$	73,602	Cash and cash equivalents	$	299,134	$	175,730
Restricted cash	Restricted cash	22,835		22,753		Restricted cash	29,241		22,929
Total cash, cash equivalents, and restricted cash	Total cash, cash equivalents, and restricted cash	$	360,626	$	96,355	Total cash, cash equivalents, and restricted cash	$	328,375	$	198,659

~~Supplemental Noncash Investing and Financing Activities~~

Purchases of property and equipment with unpaid costs in accounts payable and accrued liabilities as of September 30, 2021were $890 and $727, respectively and $1,485 and $630 as of September 30, 2020, respectively. Issuance of member units upon exercise and derecognition of certain warrant liabilities during nine months ended September 30, 2021 was $30,825. Unpaid issuance costs in accounts payable was $526 as of September 30, 2021.

See notes to condensed consolidated financial statements

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CLEAR SECURE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in thousands, except for per share data, unless otherwise noted)

1. Description of Business and Recent Accounting Developments

Description and Organization

Clear Secure, Inc. (the “Company”~~) was incorporated as a Delaware corporation on March 2, 2021 for the purpose of facilitating an initial public offering (“IPO”)~~ and ~~other related transactions in order to carry on the business of Alclear Holdings, LLC and its wholly owned subsidiaries (collectively referred to as “Alclear”).~~

~~The Company (together~~together with its consolidated subsidiaries, ~~“CLEAR”, “we”, “us”,~~“CLEAR,” “we,” “us,” “our”) is a holding company and its principal asset is the controlling equity interest in ~~Alclear.~~Alclear Holdings, LLC (“Alclear”). Alclear was formed as a Delaware limited liability company on January 21, 2010 and operates under the terms of the Amended and Restated Operating Agreement dated June 29, 2021 (the “Operating Agreement”). As the sole managing member of Alclear, the Company operates and controls all of the business and affairs of Alclear, and through Alclear and its subsidiaries, conducts the Company’s business.

The Company operates a secure identity platform ~~operating~~ under the brand name CLEAR primarily in the United States. ~~CLEAR’s~~CLEAR's current offerings include: CLEAR Plus, a consumer aviation subscription service, which enables access to predictable and fast experiences through dedicated entry lanes in airport security checkpoints ~~nationwide,~~nationwide; the flagship CLEAR App including Home to Gate and Health ~~Pass,~~Pass; and Reserve powered by CLEAR, ~~Pass for U.S. Customs and Border Protection ("CBP") Mobile Passport Control, a free~~our virtual queuing technology that enables customers to ~~use mobile app, that streamlines entry into the United States.~~manage lines.

Reorganization and Initial Public Offering

On June 29, 2021, prior to the completion of the ~~IPO~~initial public offering (“IPO”) of the Company’s shares of Class A common stock, $0.00001 par value per share (the “Class A ~~common stock”~~Common Stock”), the Company, Alclear and its subsidiaries consummated an internal reorganization (the “Reorganization”) which resulted in the following:

•Clear Secure, Inc. became the sole managing member of Alclear.

•The certificate of incorporation of Clear Secure, Inc. was amended and restated to authorize the Company to issue four classes of ~~common stock:~~Common Stock: Class A ~~common stock,~~Common Stock, Class B common stock, $0.00001 par value per share (the “Class B Common Stock”), Class C common stock, $0.00001 par value per share (the “Class C Common Stock”) and Class D common ~~stock.~~stock, $0.00001 par value per share (the “Class D Common Stock” and, together with the Class A Common Stock, Class B Common Stock and Class C Common Stock, collectively, “Common Stock”). The Class A ~~common stock~~Common Stock and Class C ~~common stock~~Common Stock provide holders with 1 vote per share on all matters submitted to a vote of stockholders, and the Class B ~~common stock~~Common Stock and Class D ~~common stock~~Common Stock provide holders with 20 votes per share on all matters submitted to a vote of stockholders. The holders of Class C ~~common stock~~Common Stock and Class D ~~common stock~~Common Stock do not have any of the economic rights (including rights to dividends and distributions upon liquidation) provided to holders of Class A ~~common stock~~Common Stock and Class B ~~common stock.~~Common Stock.

•All Alclear’s outstanding equity interests (including Class A units, Class B units and profit units) were reclassified into Alclear non-voting common units (“Alclear Units”). The ~~Company converted all issued units in Alclear to~~number of Alclear Units (“issued to each member of Alclear ~~Units”) having a value equal to the amount that would have been distributed in~~was determined based on a hypothetical liquidation of Alclear and ~~certain~~the initial public offering price per share of the Company’s Class A Common Stock in the IPO. Certain members exchanged their Alclear Units for an equal number of Class A ~~common stock.~~Common Stock.

•Alclear Investments, LLC, an entity controlled by ~~Ms.~~ Caryn Seidman-Becker, the Chair of our Board, our Co-Founder and our Chief Executive Officer, ~~and co-founder,~~ and Alclear Investments II, LLC, an entity controlled by ~~Mr.~~ Kenneth Cornick, our Co-Founder, President and Chief Financial Officer, ~~and co-founder, each exchanged certain~~contributed a portion of their Alclear Units to us in exchange for ~~shares of~~ Class B ~~common stock.~~Common Stock.

•The remaining members of Alclear, including Alclear Investments, LLC and Alclear Investments II, LLC (“Alclear members”) subscribed for and purchased shares of the Company’s Class C ~~common stock~~Common Stock and Class D ~~common stock~~Common Stock at a purchase price of $0.00001 per share and in an amount equal to the number of Alclear Units held by such members.

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CLEAR SECURE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except for per share data, unless otherwise noted)

• The Company entered into a Tax Receivable Agreement (“TRA”) which generally provides for payment by the Company to the remaining members of Alclear, the “TRA ~~Holders”,~~Holders,” of 85% of the net cash savings, if any, in U.S. federal, state and local income tax and franchise tax that the Company actually realizes or is deemed to realize in certain circumstances. The Company will retain the benefit of the remaining 15% of these net cash savings.

~~Table of Contents~~

~~CLEAR SECURE, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(dollars in thousands, except for per share data, unless otherwise noted)~~

•Alclear is treated as a partnership for U.S. federal income tax purposes and, as such, is itself generally not subject to U.S. federal income tax under current U.S. tax laws. Clear Secure, Inc, as a member of Alclear, will be required to take into account for U.S. federal income tax purposes its distributive share of the items of income, gain, loss and deduction of Alclear.

As the Reorganization is considered a transaction between entities under common control, the condensed consolidated financial statements for periods prior to the IPO and Reorganization have been adjusted to combine the previously separate entities for presentation purposes. Prior to the Reorganization, Clear Secure, Inc. had not engaged in any business or other activities, except in connection with its formation.

On July 2, 2021, the Company completed the IPO of its Class A ~~common stock.~~Common Stock. In the IPO, the Company sold an aggregate of 15,180,000 shares of Class A ~~common stock,~~Common Stock, $0.00001 par value per share, at an offering price of $31 per share including as a result of the underwriters exercising their option to purchase up to 1,980,000 shares of Class A ~~common stock.~~Common Stock. As a result, Clear Secure, Inc. received net proceeds from the IPO of approximately $445,875 after deducting underwriting discounts and commissions. As a result of the IPO, the Company contributed the net IPO Proceeds to Alclear in exchange for 15,180,000 Alclear Units. For the ~~nine~~three months ended ~~September 30,~~March 31, 2022, and the year ended December 31, 2021, the Company ~~also~~ incurred ~~$8,907~~$297 and $9,038 of issuance related costs as a result of the IPO, respectively, that were recorded within additional paid in capital within the condensed consolidated balance sheets.

Recently Adopted Accounting Pronouncements

Emerging Growth Company Status

The Company is an emerging growth company (“EGC”), as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies, until the earlier of the date that it (i) is no longer an EGC or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these condensed consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

~~Intangibles Assets~~Leases

In August 2018, the Financial Accounting Standards Board (“FASB”) issued updated guidance on accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. The Company adopted this guidance as

As of January 1, ~~2021 and in accordance~~2022, the Company adopted ASU No. 2016-02, Leases (Topic 842) (ASU 2016-02) on a modified retrospective basis with ~~the new guidance, applied it prospectively~~respect to ~~implementation costs incurred after~~all lease arrangements that existed as of the adoption ~~as allowed by~~date. Refer to Note 8 for further details.

Current Expected Credit Losses

As of January 1, 2022, the ~~standard. The adoption did not have a material effect~~Company adopted, ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13). There was no significant impact within the ~~Company’s~~ condensed consolidated financial ~~statements.~~statements as a result of adoption.

~~Simplifying~~Business Combinations

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805), Accounting for ~~Income Taxes~~

~~In December 2019, FASB issued updated guidance simplifying the accounting for income taxes by eliminating certain exceptions~~Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). ASU 2021-08 addresses inconsistency related to the ~~guidance in ASC 740 related to intra-period tax allocations~~recognition and ~~the methodology for calculating income taxes in an interim period. The guidance also simplifies aspects~~measurement of ~~the accounting for franchise taxes as well as enacted changes in tax laws or rates~~contract assets and ~~clarifies the accounting for transactions that result~~contract liabilities acquired in a step-up in the tax basis of goodwill. The Company adopted this guidance as of January 1, 2021. The adoption of this accounting pronouncement did not have a material impact on the Company’s condensed consolidated financial statements.business combination. ASU

107

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CLEAR SECURE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except for per share data, unless otherwise noted)

~~Related Party Guidance~~2021-08 requires that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination as if it had originated the contracts, in accordance with Topic 606, Revenue from Contracts with Customers. The guidance is effective for ~~Variable Interest Entities~~fiscal years beginning after December 15, 2022 and interim periods within those fiscal years. Early adoption of the amendments is permitted and an entity that early adopts should apply the amendments (1) retrospectively to all business combinations for which the acquisition date occurs on or after the beginning of the fiscal year that includes the interim period of early application and (2) prospectively to all business combinations that occur on or after the date of initial application. The Company continues to evaluate the impact of this standard on its consolidated financial statements.

~~In October 2018,~~Other Recent Accounting Pronouncements Adopted and New Standards and Interpretations Not Yet Effective

Other than the items discussed above, there are no standards issued by the FASB ~~issued updated guidance that requires consideration of indirect interest held through related parties under common control for determining whether fees paid to decision makers~~ and ~~service providers are variable interests. The amendments are required to be applied retrospectively with a cumulative-effect adjustment. The~~adopted by the Company ~~adopted the new guidance~~effective as of January 1, ~~2021 and its application did not have~~2022 that had a material impact toon the Company’s condensed consolidated financial statements.

~~Recent Accounting Pronouncements Not Yet Adopted~~

~~Leases~~

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (ASU 2016-02), which will require lessees to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, on the balance sheets for substantially all leases. This update also requires lessees to recognize a single lease cost for operating leases, calculated so Additionally, there are no standards that the cost of the lease is allocated over the lease term, generally on a straight-line basis. Public companies were required to adopt ASU 2016-02 for reporting periods after December 15, 2018. In 2020, ASU 2016-02 was amended to extend the adoption date for nonpublic entities and EGCs. Accordingly, theare not yet effective date of ASU 2016-02, as amended, is fiscal periods beginning after December 15, 2021, with early adoption permitted. The Company plans to adopt this guidance as of January 1, 2022 using the modified-retrospective approach as of the date of adoption which will not require the restatement of comparative periods. While the Company continues to evaluate the effect of the standard on its financial reporting, the Company anticipates that the adoption of the standard will have a material impact to the consolidated balance sheet with the primary effect being the recognition of right-of-use assets and corresponding lease liabilities for substantially all of the Company’s leases. The adoption is notare expected to have a material impact on the ~~Company's~~Company’s condensed consolidated ~~statements of operations or cash flows.~~

~~Current Expected Credit Losses~~

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), to replace the incurred loss impairment methodology under current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The Company will be required to use a forward-looking expected credit loss model for accounts receivable, loans, and other financial instruments. Public companies were required to adopt ASU 2016-13 for reporting periods after December 15, 2019. In 2019, ASU 2016-13 was amended to extend the adoption date for nonpublic entities and EGCs. The Company plans to adopt this guidance as of January 1, 2022 and is currently evaluating the potential impact of adopting this new accounting guidance.statements.

2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The ~~accompanying~~ condensed consolidated financial statements of the Company have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the ~~final prospectus~~Company’s Annual Report on Form 10-K (the ~~“Prospectus”) dated June 29, 2021 and filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the “Securities Act”)~~“Form 10-K).

Preparing financial statements requires management to make estimates and assumptions that affect the amounts that are reported in the financial statements and the accompanying disclosures, including the vesting of share-based and other deferred compensation plan awards. Although these estimates are based on management’s knowledge of current events and actions that the Company may undertake in the future, actual results may differ materially from the estimates. ~~These~~

Intercompany transactions and balances are eliminated upon consolidation.

The Company has 1 operating and reportable segment, which includes the operations of the businesses acquired during the year ended December 31, 2021.

Items included in the financial statements of each of the Company’s consolidated entities are measured using the currency of the primary economic environment in which the entity operates. The condensed consolidated financial statements are presented in ~~U.S. Dollars.~~US Dollars, which is the Company’s reporting currency.

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at period-end exchange rates are recognized in other income (expense), net within the condensed consolidated statement of operations.

The results and financial position of all the Company entities that have a functional currency different from the Company's reporting currency are translated into US Dollars as follows:

•Assets and liabilities are translated at the closing rate at the reporting date;

•Income and expenses for each statement of operation are translated at average exchange rates; and

•All resulting exchange differences are recognized in other comprehensive loss.

3. Business Combinations

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CLEAR SECURE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except for per share data, unless otherwise noted)

During the year ended December 31, 2021, the Company completed two acquisitions, which are described further below. Both acquisitions were accounted for as business combinations. The ~~Company’s policy is~~goodwill for both acquisitions represents the future economic benefits expected to ~~consolidate entities in which it has a controlling financial interest.~~arise from other intangible assets acquired that do not qualify for separate recognition, including expected future synergies and technical expertise of the acquired workforce

For both acquisitions, the intangible assets acquired primarily relate to existing technology, customer relationships and brand names. The useful life of these intangible assets range from 3-11 years. The Company ~~consolidates:~~valued the intangible assets using the relief from royalty method and the multi-period excess earnings method, both under the income approach.

~~• Voting interest entities (“VOEs”) where~~For both acquisitions, the Company’s allocation of purchase price was based upon valuations performed to determine the fair value of the net assets as of the acquisition date and is therefore subject to adjustments for up to one year after the closing date of the acquisition to reflect final valuations.

As a result of the acquisitions, the Company ~~holds~~recognized $1,391 of acquisition-related costs during the year ended December 31, 2021, which are recorded in general and administrative within the condensed consolidated statement of operations. Revenues and operating loss related to these acquisitions for the three months ended March 31, 2022 were not material to the condensed consolidated financial statements. Refer below for additional details on the acquisitions.

Whyline, Inc.

On December 29, 2021, Alclear acquired 100% of Whyline, Inc., a ~~majority~~provider of virtual queuing and appointment technology that the Company operates under the product name, Reserve powered by CLEAR.

The cash consideration of $67,500 was transferred upon closing, and there was an estimated contingent consideration of $100. The acquisition was accounted for as a business combination. In the Company’s preliminary allocation of the ~~voting interest in such VOEs;~~purchase consideration, $54,792 was initially recorded as goodwill, $16,601 as acquired intangible assets, $3,792 as net deferred tax liabilities and

~~• Variable interest entities (“VIEs”) where the Company is the primary beneficiary.~~

Since the Company is the sole managing member of Alclear, it consolidates the financial results of Alclear. Therefore, the Company reports a non-controlling interest based on Alclear Units held by the members of Alclear $99 as net operating assets on the condensed consolidated balance sheets. ~~Income or loss~~None of the goodwill recognized is ~~attributed~~expected to be deductible for tax purposes. During the three months ended March 31, 2022, and in accordance with the election described above, the Company recorded a $1,411 decrease to goodwill, a $2,100 increase to acquired intangible assets and a $689 increase to deferred tax liabilities. The accounting for the acquisition is not complete as the valuation for certain acquired assets and liabilities have not been finalized. These final valuations of the assets and liabilities could have a material impact on the preliminary purchase price allocation disclosed above.

In conjunction with the acquisition, the Company entered into an agreement to issue shares of Class A Common Stock upon satisfaction of terms related to the ~~non-controlling interests~~contingent consideration and remuneration for post-combination services (collectively referred to as the “Earn-Out”). The first tranche will be settled upon the achievement of specified operating metrics during the twelve month period ended December 31, 2022. The second tranche will be settled upon the achievement of specified operating metrics during the twelve month period ended December 31, 2023.

The maximum settlement of the contingent consideration is $6,666, which is not subject to the satisfaction of service based criteria. For remuneration for post-combination services, there is a maximum settlement of $13,334 that is based on performance and service based criteria being met; portions of these amounts will automatically be forfeited if the ~~weighted average common units outstanding during~~employment of specified individuals terminates prior to the ~~period~~end of the Earn-Out period. To the extent probable, the post-combination remuneration amount is allocated evenly to the 2022 operating metrics and 2023 operating metrics targets. The Company has not recorded any compensation expense for three months ended March 31, 2022 as the performance criteria is not probable.

The estimated fair value of the contingent consideration is determined using an option pricing model and is ~~presented on~~based upon available information and certain assumptions, known as of the reporting date, which management believes are reasonable. Any differences in the actual contingent consideration liability compared to the fair value as of the previous reporting date will be recorded within general and administrative within the condensed consolidated statements of ~~operations and comprehensive income/(loss). Refer to Note 13~~operations. The Company has not recorded any fair value adjustments on its contingent consideration for ~~more information.~~

~~Intercompany transactions and balances are eliminated upon consolidation.~~

~~Significant Accounting Policies~~

The Company’s significant accounting policies are discussed in “Notes to Consolidated Financial Statements–Note 2. Summary of Significant Accounting Policies” in its Registration Statement on Form S-1 (File No. 333-256851) and the Prospectus included therein. With the exception of the accounting policies described below, there have been no significant changes to the accounting policies during the ninethree months ended ~~September 30, 2021.~~March 31, 2022 as there was no change in assumptions.

~~Basic and Diluted Earnings (Loss) Per Share~~

The Company applies the two-class method for calculating and presenting earnings (loss) per share by presenting earnings (loss) per share for Class A common stock and Class B common stock. In applying the two-class method, the Company allocates undistributed earnings equally on a per share basis between Class A common stock and Class B common stock. According to the Company’s certificate of incorporation, the holders of the Class A common stock and Class B common stock are entitled to participate in earnings equally on a per-share basis, as if all shares of common stock were of a single class. Holders of the Class A common stock and Class B common stock also have equal priority in liquidation and dividend distributions. Shares of Class C common stock and Class D common stock do not participate in earnings of the Company. As a result, the shares of Class C common stock and Class D common stock are not considered participating securities and are not included in the weighted-average shares outstanding for purposes of earnings (loss) per share.

Basic loss per share of Class A common stock and Class B common stock is computed by dividing net loss available to Clear Secure, Inc. by the respective weighted-average number of shares of common stock outstanding during the period. The Company applies the two-class method to calculate earnings per share for Class A and Class B shares. Accordingly, the Class A common stock and Class B common stock share equally in the Company’s net income and losses. Diluted earnings per share of common stock is computed by dividing net income attributable to Clear Secure, Inc., adjusted for the assumed exchange of all potentially dilutive instruments for common stock, by the weighted-average number of shares of common stock outstanding, adjusted to give effect to potentially dilutive securities. Refer to Note 15.

~~3. Revenue~~

The Company derives substantially all of its revenue from subscriptions to its consumer aviation service, CLEAR Plus. For the three and nine months ended September 30, 2021 and 2020, no individual airport accounted for more than 10% of membership revenue.

The Company elected the practical expedient permitted to not adjust the transaction price of contracts with a duration of one year or less for the effects of a significant financing component at contract inception.

~~Revenue by Geography~~

129

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CLEAR SECURE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except for per share data, unless otherwise noted)

The final number of shares to be issued upon satisfaction of the Earn-Out will be based on the average of the volume-weighted average trading price on the New York Stock Exchange for one share of Class A Common Stock for each of the 30 full trading days ending on and including the full trading day immediately prior to the applicable Earn-Out payment date.

Atlas Certified, LLC.

On December 30, 2021, Alclear acquired certain assets of Atlas Certified, LLC, which provides an automated solution to verify professional licenses and certification data across industries by communicating with certifying organizations for on demand, current and trusted data.

The fair value of the purchase consideration was $9,000. The acquisition was accounted for as a business combination. In the Company’s preliminary allocation of the purchase consideration $5,000 was recorded as goodwill and $4,000 as acquired intangible assets on the condensed consolidated balance sheets. The goodwill recognized is expected to be deductible for tax purposes. During the three months ended March 31, 2022, there were no adjustments to the preliminary allocation. The accounting for the acquisition is not complete as the valuation for certain acquired assets and liabilities have not been finalized. These final valuations of the assets and liabilities could have a material impact on the preliminary purchase price allocation disclosed above.

4. Revenue

The Company derives substantially all of its revenue from subscriptions to its consumer aviation service, CLEAR Plus. For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, no individual airport accounted for more than 10% of membership revenue.

Revenue by Geography

For the three months ended March 31, 2022 and ~~2020,~~2021, substantially all of the Company’s revenue was generated in the United States.

Contract liabilities and assets

The Company’s deferred revenue balance primarily relates to amounts received from customers for subscriptions paid in advance of the services being provided that will be earned within the next twelve months. The following table presents changes in the deferred revenue balance as of ~~September 30:~~March 31:


		2021		2020			2022		2021
Balance as of January 1	Balance as of January 1	$	101,542	$	121,339	Balance as of January 1	$	188,563	$	101,542
Deferral of revenue	Deferral of revenue	230,458		155,992		Deferral of revenue	105,824		62,057
Recognition of deferred revenue	Recognition of deferred revenue	(172,411)		(177,645)		Recognition of deferred revenue	(88,592)		(50,529)
Balance as of September 30		$	159,589	$	99,686
Balance as of March 31						Balance as of March 31	$	205,795	$	113,070

The Company has obligations for refunds and other similar items of ~~$2,994~~$2,633 as of ~~September 30, 2021.~~March 31, 2022. The Company does not have any material variable consideration.

4.5. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 consist of the following:

September 30,
2021 December 31,
2020
Prepaid software licenses $ 5,701 $ 5,504
Coronavirus aid, relief, and economic security act retention credit 2,036 2,036
Prepaid insurance costs 3,970 772
Other current assets 2,758 2,898
Total $ 14,465 $ 11,210

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CLEAR SECURE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except for per share data, unless otherwise noted)


	March 31, 2022		December 31, 2021
Prepaid software licenses	$	6,799	$	4,347
Coronavirus aid, relief, and economic security act retention credit	2,036		2,036
Prepaid insurance costs	1,514		2,845
Other current assets	5,411		12,912
Total	$	15,760	$	22,140

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) is intended to provide economic relief resulting from the COVID-19 pandemic which includes, but is not limited to, employment related costs. For the year ended December 31, 2020, the Company recorded a receivable of $2,036 related to submissions made under the CARES Act. The Company expects to receive payment within twelve months.

5.6. Fair Value Measurements

The Company values its available-for-sale ~~debt~~ securities and certain liabilities based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, a fair value hierarchy that prioritizes observable and unobservable inputs is used to measure fair value into three broad levels, which are described below:

Level 1 – Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in inactive markets or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated with observable market data.

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~~CLEAR SECURE, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(dollars in thousands, except for per share data, unless otherwise noted)~~

Level 3 – Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs to the extent possible. In addition, the Company considers counterparty credit risk in its assessment of fair value.

The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

The following is a description of the valuation methodologies used for assets and liabilities measured at fair value.

Corporate bonds – Valued at the closing price reported on the active market on which the individual securities, all of which have counterparts with high credit ratings, are traded.

Commercial paper – Value is based on yields currently available on comparable securities of issuers with similar credit ratings.

Money market funds – Valued at the net asset value (“NAV”) of units of a collective fund. The NAV is used as a practical expedient to estimate fair value. This practical expedient is not used when it is determined to be probable that the fund will sell the investment for an amount different than the reported NAV.

Contingent consideration – Valued at fair value using a simulation of targeted outcomes.

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CLEAR SECURE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except for per share data, unless otherwise noted)

Warrant liabilities – ~~– Valued~~The Company had certain outstanding warrant liabilities prior to the Reorganization. These were valued based on significant inputs not observed in the market and, thus, ~~represents~~represented a Level 3 measurement. The Company estimated the fair value of the liability using the Black-Scholes option pricing model and the change in fair value was recognized in general and administrative expenses. Refer to Note 1113 for further information.

The contractual maturities of investments classified as marketable ~~debt~~ securities are as ~~follows as of September 30, 2021 and December 31, 2020:~~follows:


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Due within 1 year	Due within 1 year	$	335,457	$	37,813	Due within 1 year	$	301,021	$	288,036
Total marketable debt securities		$	335,457	$	37,813
Total marketable securities						Total marketable securities	$	301,021	$	288,036


		Fair Value as of September 30, 2021									Fair Value as of March 31, 2022
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Commercial paper	Commercial paper	$	—	$	131,466	$	—	$	131,466	Commercial paper	$	—	$	117,501	$	—	$	117,501
U.S. Treasuries	U.S. Treasuries	77,804		—		—		77,804		U.S. Treasuries	89,952		—		—		89,952
Corporate bonds	Corporate bonds	—		109,972		—		109,972		Corporate bonds	—		124,092		—		124,092
Total assets in the fair value hierarchy	Total assets in the fair value hierarchy	77,804		241,438		—		319,242		Total assets in the fair value hierarchy	89,952		241,593		—		331,545
Money market funds measured at NAV(a)	Money market funds measured at NAV(a)	—		—		—		16,215		Money market funds measured at NAV(a)	—		—		—		2,808
Total investments at fair value		$	77,804	$	241,438	$	—	$	335,457
Total assets at fair value										Total assets at fair value	$	89,952	$	241,593	$	—	$	334,353

Warrant liabilities		—		—		—		—
Total warrant liabilities at fair value		$	—	$	—	$	—	$	—
Contingent consideration										Contingent consideration	—		—		(100)		(100)
Total liabilities at fair value										Total liabilities at fair value	$	—	$	—	$	(100)	$	(100)

~~Table of Contents~~

~~CLEAR SECURE, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(dollars in thousands, except for per share data, unless otherwise noted)~~


		Fair Value as of December 31, 2020									Fair Value as of December 31, 2021
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Commercial paper	Commercial paper	$	—	$	11,932	$	—	$	11,932	Commercial paper	$	—	$	128,867	$	—	$	128,867
U.S. Treasuries	U.S. Treasuries	5,380		—		—		5,380		U.S. Treasuries	82,472		—		—		82,472
Corporate bonds	Corporate bonds	—		20,444		—		20,444		Corporate bonds	—		114,965		—		114,965
Total assets in the fair value hierarchy	Total assets in the fair value hierarchy	5,380		32,376		—		37,756		Total assets in the fair value hierarchy	82,472		243,832		—		326,304
Money market funds measured at NAV(a)	Money market funds measured at NAV(a)	—		—		—		57		Money market funds measured at NAV(a)	—		—		—		8,924
Total investments at fair value		$	5,380	$	32,376	$	—	$	37,813
Total assets at fair value										Total assets at fair value	$	82,472	$	243,832	$	—	$	335,228

Warrant liabilities		$	—	$	—	$	(17,740)	$	(17,740)
Total warrant liabilities at fair value		$	—	$	—	$	(17,740)	$	(17,740)
Contingent consideration										Contingent consideration	—		—		$	(100)	(100)
Total liabilities at fair value										Total liabilities at fair value	$	—	$	—	$	(100)	$	(100)

____________________________

(a)Certain money market funds that were measured at NAV per share (or its equivalent) have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the line items presented in the condensed consolidated balance sheets.

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CLEAR SECURE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except for per share data, unless otherwise noted)

The Company had no continuous unrealized loss position from marketable securities as of ~~September 30, 2021.~~March 31, 2022 that was a result of a credit deterioration.

The following table provides a summary of changes in fair value of the Company’s Level 3 warrant liabilities ~~for~~prior to the ~~nine months ended September 30, 2021 and 2020:~~Reorganization. The Company has no outstanding warrant liabilities as of March 31, 2022.

2021 2020
Balance as of January 1 $ (17,740) $ (16,853)
Warrants issued (289) —
Issuance of equity upon exercise of certain warrants 30,206 —
Issuance of equity upon settlement of certain warrants 619 —
Fair value adjustments (12,796) (444)
Balance as of September 30 $ — $ (17,297)


Balance as of January 1, 2021	$	(17,740)
Warrants issued	(289)
Issuance of equity upon exercise of certain warrants	30,206
Reclassification of certain warrant liabilities to equity	619
Fair value adjustments	(12,796)
Balance prior to Reorganization	$	—

See Note 1113 for further information regarding ~~these~~warrants.

Contingent consideration

The following table provides a summary of changes in fair value of the Company’s Level 3 ~~fair value measurements.~~contingent consideration, issued in conjunction with the acquisition of Whyline, Inc.


Balance as of January 1, 2022	$	(100)
Fair value adjustments	—
Balance as of March 31, 2022	$	(100)

For certain other financial instruments, including accounts receivable, accounts payable, accrued liabilities, as well as other current liabilities, the carrying amounts approximate the fair value of such instruments due to the short maturity of these balances.

6.7. Property and Equipment, net

Property and equipment as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 consist of the following:


	Depreciation period in years	March 31, 2022		December 31, 2021
Internally developed software	3 - 5	$	44,338	$	40,788
Acquired software	3	6,396		6,396
Equipment	5	26,715		26,322
Leasehold improvements	1-10	7,706		7,671
Furniture and fixtures	5	2,292		2,281
Construction in progress		3,340		2,239
Total property and equipment, cost		90,787		85,697
Less: accumulated depreciation		(44,664)		(41,175)
Total property and equipment, net		$	46,123	$	44,522

Depreciation and amortization expense related to property and equipment for three months ended March 31, 2022 and 2021 was $3,489 and $2,534, respectively.

During the three months ended March 31, 2022, $3,552 was capitalized in connection with internally developed software. Amortization expense was $1,737 and $1,131 for the three months ended March 31, 2022 and 2021, respectively.

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CLEAR SECURE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except for per share data, unless otherwise noted)

During the three months ended March 31, 2022 and 2021, the Company recognized impairment charges of $313 and $0, respectively, on certain long-lived assets within other income (expense), net in the condensed consolidated statements of operations.

Purchases of property and equipment with unpaid costs in accounts payable and accrued liabilities as of March 31, 2022 were $1,261 and $427, respectively, and $134 and $1,438 as of March 31, 2021, respectively.

8. Leases

As discussed in Note 2, on January 1, 2022, the Company adopted the new accounting standard ASC 842, Leases, using the modified retrospective method. As a result, and as permitted by the standard, the Company has not updated financial information or related disclosures under ASC 842 for, periods prior to January 1, 2022. Upon adoption, the Company recognized $25,346 of right of use (“ROU”) assets, $29,139 of lease liabilities and derecognized $3,793 of deferred rent on the condensed consolidated balance sheets. The short term portion of the operating lease liabilities is included within accrued liabilities and the long term portion is included within other long term liabilities on the condensed consolidated balance sheets.

The Company has entered into agreements to lease certain office spaces. These leases require monthly lease payments that may be subject to annual increases throughout the lease term. Certain of these leases also include renewal options at the election of the Company to renew or extend the lease for an additional three years. Additionally, certain of these leases contain termination options. These optional periods have not been considered in the determination of the ROU assets or lease liabilities as the Company did not consider it reasonably certain it would exercise the options. The Company performed evaluations of its contracts and determined it only has operating leases. The lease terms are between 1 and 12 years.

Most of the Company’s lease agreements require payment of certain operating expenses in addition to base rent, such as taxes, insurance and maintenance costs. As allowed under ASC 842, the Company considers these as non-lease components and has elected to exclude these components from the measurement of its lease liabilities. The Company has also elected to apply the recognition requirement of ASC 842 to leases with a term of 12 months or less for all classes of assets.

The Company has elected to utilize the following practical expedients available under the transition guidance in ASC 842:

•The Company did not reassess whether any expired or existing contracts are or contain leases;

•The Company did not reassess the lease classification for any expired or existing leases; and

•The Company did not reassess initial direct costs for any existing leases.

The Company did not elect the practical expedient available under the transition guidance in ASC 842 to use hindsight in determining the lease term and in assessing impairment of the Company’s ROU assets

The Company determines if an arrangement is a lease at inception and recognizes ROU assets and lease liabilities upon commencement. ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. The classification of the Company's leases as operating or finance leases along with the initial measurement and recognition of the associated ROU assets and lease liabilities is performed at the lease commencement date. The measurement of lease liabilities is based on the present value of future lease payments over the lease term. As the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future lease payments. The ROU asset is based on the measurement of the lease liability and also includes any lease payments made prior to or on lease commencement and excludes lease incentives and initial direct costs incurred, as applicable. Rent expense for the Company's operating leases is recognized on a straight-line basis over the lease term.

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CLEAR SECURE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except for per share data, unless otherwise noted)

The Company has an additional operating lease for real estate space to house the Company’s corporate headquarters. The lease agreement provides for a commencement on the later of October 1, 2022 or the date on which the landlord delivers possession of the premises with certain agreed upon completed improvements to be made by the landlord. The term of the lease is fifteen years after the date the rent obligations begin, with an option to renew for 1 5-year period or 10-year period at Fair Market Value (as defined in the lease agreement) by providing the Landlord with eighteen months’ notice and meeting certain other requirements. The aggregate undiscounted future minimum lease payments are approximately $177,400 beginning on April 1, 2023 and ending on April 1, 2038. The lease has not been recognized on the Company's condensed consolidated balance sheets. This operating lease is expected to commence in 2022.

Below is a reconciliation of the amounts reported on the condensed consolidated balance sheets with respect to the Company’s operating leases:


	March 31, 2022
2022	$	3,453
2023	3,729
2024	4,402
2025	4,478
2026	4,478
Thereafter	12,868
Total future operating lease payments	33,408
Less: imputed interest	(5,115)
Lease liabilities, current	3,338
Lease liabilities, non-current	24,955
Total lease liabilities	$	28,293

As of March 31, 2022, the weighted-average incremental borrowing rate applied to lease liabilities at the date of adoption was 4.3%. Additionally, the weighted-average remaining lease term was 7.7 years.

Total operating lease expense recognized on the condensed consolidated statements of operations for the three months ended March 31, 2022 was $1,035. Cash paid for amounts included in the measurement of operating lease liabilities for the three months ended March 31, 2022 was $1,155.

9. Intangible Assets, net and Goodwill

See below for Intangible assets, net and Goodwill as of March 31, 2022 and December 31, 2021:


	Amortization Period in Years	March 31, 2022		December 31, 2021
Patents	20	$	2,216	$	2,115
Acquired intangibles	1-10	22,700		20,601
Other indefinite lived intangible assets		310		310
Total intangible assets, cost		25,226		23,026
Less: accumulated amortization		(988)		(93)
Intangible assets, net		$	24,238	$	22,933
Goodwill		$	58,381	$	59,792

Acquired intangibles, net as of March 31, 2022 and December 31, 2021 is comprised of the following:

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CLEAR SECURE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except for per share data, unless otherwise noted)

Depreciation Period in Years September 30,
2021 December 31,
2020
Internally developed software 5 $ 36,746 $ 23,545
Acquired software 3 7,539 7,538
Equipment 5 20,821 18,210
Leasehold improvements 1-10 6,982 6,548
Furniture and fixtures 5 2,259 2,181
Construction in progress 10,754 7,255
Total property and equipment, cost 85,101 65,277
Less: accumulated depreciation (39,226) (30,036)
Total property and equipment, net $ 45,875 $ 35,241


	Amortization Period in Years	March 31, 2022		December 31, 2021
Technology	3	$	4,300	$	5,600
Customer relationships	11	$	17,900	$	14,501
Brand names	5	$	500	$	500
Total intangible assets, cost		$	22,700	$	20,601
Less: accumulated amortization		$	(869)	$	—
Total acquired intangibles		$	21,831	$	20,601

Depreciation and amortization expense related to property and equipment for three months ended September 30, 2021 and 2020, was $3,988 and $2,318, respectively. For the nine months ended September 30, 2021 and 2020, it was approximately $9,190 and $6,933, respectively.

During the nine months ended September 30, 2021 and 2020, $13,199 and $4,561 was capitalized in connection with internally developed software. Amortization expense was $1,470 and $915 for the three months ended September 30, 2021 and 2020, respectively. Amortization expense was $3,855 and $2,611 for the nine months ended September 30, 2021 and 2020, respectively.

~~7. Intangible Assets, net~~

~~Intangible assets consist as of September 30, 2021 and December 31, 2020 of the following:~~

Amortization
Period in
Years September 30, 2021 December 31, 2020
Patents 20 $ 2,007 $ 1,293
Other indefinite lived intangible assets 310 310
Total intangible assets, cost 2,317 1,603
Less: accumulated amortization (50) (39)
Intangible assets, net $ 2,267 $ 1,564

Amortization expense of intangible assets was ~~$11~~$895 and ~~$12~~$4 for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. The Company did not recognize any impairment charges on intangible assets, net or goodwill for the periods presented.

8.10. Restricted Cash

As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Company maintained bank deposits of ~~$6,835~~$13,241 and ~~$6,856,~~$6,938, respectively, which were pledged as collateral for long-term letters of credit issued in favor of airports, in connection with the Company’s obligations under the revenue share agreements. Such amounts also include a letter of credit for the Company’s New York City corporate headquarters lease ~~agreement.~~agreement entered into in 2021.

In addition, the Company also has a $16,000 restricted cash account against a letter of credit with a credit card company as a reserve against potential future refunds and chargebacks as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.

9.11. Other Assets

Other assets as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 consist of the following:


	March 31, 2022		December 31, 2021
Security deposits	$	247	$	242
Loan fees	232		376
Certificates of deposit	459		459
Other long-term assets	2,164		2,329
Total	$	3,102	$	3,406

12. Accrued Liabilities and Other Long Term Liabilities

Accrued liabilities consist of the following as of March 31, 2022 and December 31, 2021:


	March 31, 2022		December 31, 2021
Accrued compensation and benefits	$	10,472	$	18,133

Accrued partnership liabilities	50,208		33,442
Lease liability	3,338		—
Other accrued liabilities	13,891		15,645
Total	$	77,909	$	67,220

The Company has estimated accrued partnership liabilities related to a portion of merchant credit card benefits that it expects to fund.

Other long term liabilities consist of the following as of March 31, 2022 and December 31, 2021:

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CLEAR SECURE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except for per share data, unless otherwise noted)

September 30,
2021 December 31,
2020
Security deposits $ 242 $ 171
Loan fees 550 279
Certificates of deposit 459 459
Other long-term assets 443 62
Total $ 1,694 $ 971


	March 31, 2022		December 31, 2021
Deferred tax liability	$	4,687	$	3,792
Lease liability	24,955		—
Other accrued liabilities	1,592		4,899
Total	$	31,234	$	8,691

~~10. Accrued Liabilities~~13. Warrants

~~Accrued liabilities consist of the following as of September 30, 2021 and December 31, 2020:~~

September 30,
2021 December 31,
2020
Accrued compensation and benefits $ 13,729�� $ 9,626
Accrued partnership liabilities 17,933 —
Other accrued liabilities 13,532 8,678
Total $ 45,194 $ 18,304

~~The Company has estimated accrued partnership liabilities related to a portion of merchant credit card benefits that it expects to fund.~~

~~11. Warrants~~

Historically, Alclear issued warrants for their holders to purchase shares of Class B redeemable capital units. These warrants were generally subject to performance-based vesting criteria, such as criteria related to new customer enrollments and technological innovations. The Company recognizes the expense for those warrants expected to vest on a straight-line basis over the requisite service period of the warrants, which generally ranges from three months to six years. For warrants that vest upon issuance, the entire cost is expensed immediately.

As of ~~January 1, 2021,~~December 31, 2020, Alclear had 658,382 equity warrants outstanding at a weighted-average exercise price of $222.15 and 70,000 liability warrants outstanding at a weighted-average exercise price of $36.74.

Prior to the ~~reorganization,~~Reorganization, in 2021, Alclear issued the following warrants for Class B redeemable capital units as follows:


	Number of Units	Weighted-average exercise price
Liability awards	1,000	$	1.00
Equity awards	114,797	$	194.85

The fair values of warrants granted in 2021 were estimated based on the Black-Scholes option pricing model using the weighted-average significant unobservable inputs (Level 3 inputs) as follows:


			2021
Risk-free interest rate			0.36% - 0.92%
Exercise price			$1.00-$290.00
Expected term			3-5 years
Expected volatility			45.0% - 50.8%

The 114,797 equity classified warrants issued during 2021 had a weighted average grant date fair value per warrant of $287.55.

Prior to the Reorganization, certain warrant holders exercised their warrants for Class B redeemable capital units as follows:


	Number of Warrants	Weighted-average exercise price
Liability awards	70,000	$	36.74
Equity awards	3,400	$	1.00

On the date of exercise, the Company recognized a fair value adjustment to the outstanding liability classified warrants which was estimated based on a Black-Scholes option pricing model using the weighted-average significant unobservable inputs (Level 3 inputs) as follows:

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CLEAR SECURE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except for per share data, unless otherwise noted)

Number of Warrants Weighted-average exercise price
Liability awards 70,000 $ 36.74
Equity awards 3,400 $ 1.00

On the date of exercise, the fair value of these warrants was estimated based on a Black-Scholes option pricing model using the weighted-average significant unobservable inputs (Level 3 inputs) as follows:



Risk-free interest rate			0.16% -0.19%
Exercise price			$1.00- $36.74
Expected term			2-3 years
Expected volatility			35.1% - 45.0%

Subsequent to the Reorganization, there were no unvested warrants classified as liability awards.

As part of the Reorganization, the remaining Alclear warrants were either exchanged for Clear Secure, Inc. warrants representing the right to receive Class A ~~common stock~~Common Stock or remained at Alclear and continue to be exercisable for Alclear Units. The exchange was completed at an approximate 19.98 per unit ratio, using a cashless exercise conversion method. The Clear Secure, Inc. warrants are subject to the same vesting terms as applied to Alclear warrants and maintained the same fair value immediately before and after the exchange of the warrants. As such, there was no additional expense that was recorded as a result of the exchange of the warrants.

In December 2021, certain warrant holders exercised 2,000,000 vested warrants with an intrinsic value of $54,120. In January 2022, the same warrant holders exercised 1,207,932 vested warrants with an intrinsic value of $32,457. These exercises resulted in the Company issuing shares of its Class A Common Stock and were completed in a cashless transaction.

The following warrants remained ~~issued after giving effect to the reorganization:~~outstanding as of March 31, 2022:


		Classification	Number of Warrants	Weighted-Average Exercise Price		Weighted average Remaining Contractual Term (years)		Classification	Number of Warrants	Weighted-Average Exercise Price		Weighted average Remaining Contractual Term (years)
Exercisable for Class A common stock		Equity awards	7,674,502	$	0.01	1.04
Exercisable for Class A Common Stock							Exercisable for Class A Common Stock	Equity awards	4,466,571	$	0.01	0.73
Exercisable for Alclear Units	Exercisable for Alclear Units	Equity awards	968,043	$	0.01	2.96	Exercisable for Alclear Units	Equity awards	968,043	$	0.01	2.46

As of ~~September 30, 2021, 3,207,922~~March 31, 2022, there were no vested warrants that were ~~vested and~~ exercisable for Class A ~~common stock and 71,782~~Common Stock. As of March 31, 2022, 194,108 warrants were vested and exercisable for Alclear Units ~~at a weighted-average exercise~~with an intrinsic value of ~~price of $0.01.~~ $5,215.

The balance of the outstanding warrants are subject to certain performance based vesting criteria which the Company evaluates at each reporting period to determine the likelihood of achievement. Based on the likelihood of achievement of the vesting criteria, as of ~~September 30, 2021~~March 31, 2022 the Company estimated unrecognized warrant expense is ~~$1,204.~~$322.

The Company recorded the following within general and administrative expense in the condensed consolidated statements of operations:


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020			March 31, 2022		March 31, 2021
Liability awards	Liability awards	$	—	$	444	$	12,796	$	444	Liability awards	$	—	$	1,893
Equity awards	Equity awards	1,509		1,698		3,431		1,698		Equity awards	70		281
Total	Total	$	1,509	$	2,142	$	16,227	$	2,142	Total	$	70	$	2,174

~~12.~~14. Redeemable Capital Units

Prior to the Reorganization and IPO, Alclear’s redeemable capital units were comprised of Class A and Class B redeemable capital units, which contained similar capital voting and economic rights. Class A and Class B redeemable capital units were classified as temporary equity given the redemption features that were outside of Alclear’s control.

~~The total balance of the Class A and Class B redeemable capital units as of the following periods were:~~

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~~CLEAR SECURE, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(dollars in thousands, except for per share data, unless otherwise noted)~~


	~~September 30, 2021~~		~~December 31, 2020~~
~~Class A redeemable capital units~~	$	—	$	~~2,620~~
~~Class B redeemable capital units~~	—		~~566,631~~
~~Total~~	$	—	$	~~569,251~~

As of December 31, 2020, there were 261,942 Class A redeemable capital units authorized, issued and outstanding. As of December 31, 2020, there were 5,631,085 Class B redeemable capital units authorized, and 4,621,459 Class B redeemable capital units issued and outstanding.

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CLEAR SECURE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except for per share data, unless otherwise noted)

Prior to the Reorganization, during the three months ended March 31, 2021, Alclear issued 277,813 Class B units through private offerings resulting in gross proceeds of $80,566 and issued 5,310 Class B units with a fair value of $1,540 in exchange for services related to the private offerings. In addition, Alclear repurchased and retired 11,869 Class B units for a total repurchase of $3,442. Alclear also issued 70,000 Class B units upon the exercise of certain warrants for exercise proceeds of $2,575.

During the nine months ended September 30, 2020, Alclear issued 422,039 Class B units through private offerings for proceeds of $113,944, net of offering costs. In addition, there were tender offers where Alclear repurchased and retired 677,387 Class B units for gross purchase of $14,053 and where Alclear repurchased and retired 54,843 Class A units for gross purchase of $548.

Upon the Reorganization, the Class A and B redeemable capital units were converted to Alclear Units in an aggregate amount equal to the total equity value of all outstanding units. As described in Note 1, certain of the Alclear Units received upon conversion of the Class A and B redeemable capital units were exchanged for either Class A ~~common stock~~Common Stock or Class B ~~common stock.~~Common Stock.

~~13.~~15. Stockholders’ Equity

Members’ Equity

As a result of the Reorganization, members’ equity was ~~zero~~$0 as ~~of September, 30, 2021. As~~ of December 31, ~~2020,~~2021. Additionally prior to the Reorganization, the Company had 21,042 authorized and 0 issued and outstanding Class C Capital Units, which were granted to employees as part of the Company’s annual compensation process.

Prior to the Reorganization, Alclear also had 27 classes of nonvoting, non-capital units, of which 16 were issued as equity-based compensation and reflects equity-based compensation recorded for units granted and expected to vest based on the probability of achieving performance-based vesting conditions. From time to time, Alclear repurchased vested profit units and, to the extent the amount paid for profit units repurchased was in excess of the fair value, such excess was recorded in accumulated deficit.

Prior to the Reorganization, during 2021, the Company repurchased 31,972 profit units for a total repurchase of $8,259. ~~During the nine months ended September 30, 2020, the Company repurchased 283,759 profit units for a total repurchase of $1,633.~~

Since such repurchases were at amounts that exceeded the then fair value of the units, the Company recorded expense of ~~$0 and~~ $712 for the three ~~and nine~~ months ended ~~September 30, 2021, respectively. The Company also recorded expense of $67 and $50,465 for the three and nine months ended September 30, 2020, respectively.~~

~~During the nine months ended September 30, 2021,~~March 31, 2021. $697 was recorded within general and administrative expense and $15 within research and development within the condensed consolidated statements of operations. During the nine months ended September 30, 2020, $44,514 was recorded within general and administrative expense, $5,910 was recorded within research and development and $41 was recorded within sales and marketing.

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~~CLEAR SECURE, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(dollars in thousands, except for per share data, unless otherwise noted)~~

1,868,322 profit units were authorized, issued and outstanding at December 31, 2020. All profit units were converted in conjunction with the ~~Reorganization, see Note 14 for additional information.~~Reorganization.

Common Stock

As discussed in Note 1, upon the Reorganization, the Company issued 59,240,306 shares of Class A ~~common stock~~Common Stock and 1,042,234 shares of Class B ~~common stock~~Common Stock in exchange for an equivalent amount of Alclear Units. In addition, Alclear members purchased 44,598,167 shares of Class C ~~common~~Common stock and Alclear Investments, LLC and Alclear Investments II, LLC collectively purchased 26,709,821 shares of Class D Common stock ~~which have voting rights~~ equal to the number of Alclear Units held by the members of Alclear (“Alclear Members”).

As part of the IPO, the Company issued an additional 15,180,000 shares of Class A ~~common stock with a par value of $0.00001~~Common Stock on July 2, 2021.

Treasury Stock

The Company does not have a share repurchase program. The Company’s treasury stock consists of forfeited Restricted Stock Awards that are legally issued shares held by the Company that can be utilized to settle equity-based compensation awards issued by the Company and is recorded at par value. These shares are excluded from the calculation of the non-controlling interest ownership ~~percentage below. As of September 30, 2021, the Company had 72,401 shares in treasury stock.~~percentage.

Non-Controlling Interest

The non-controlling interest balance represents the economic interest in Alclear held by the founders and members of Alclear. The following table summarizes the ownership of ~~Common~~Alclear Units ~~in Alclear~~ as of ~~September 30, 2021:~~March 31, 2022:

Alclear Units Ownership Percentage
Alclear Holding Units held by post-reorganization members 44,407,609 31.08 %
Alclear Holding Units held by Alclear Investments, LLC and Alclear Investments II, LLC 24,756,018 17.33 %
Total 69,163,627 48.41 %

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CLEAR SECURE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except for per share data, unless otherwise noted)


	Alclear Units	Ownership Percentage
Alclear Units held by post-reorganization members	43,386,797	29.21	%
Alclear Units held by Alclear Investments, LLC and Alclear Investments II, LLC	26,705,315	17.98	%
Total	70,092,112	47.19	%

The non-controlling interest holders have the right to exchange Alclear Units, together with a corresponding number of shares of Class C ~~common stock~~Common Stock for Class A ~~common stock~~Common Stock or Class D ~~common stock~~Common Stock for Class B ~~common stock.~~Common Stock. As such, exchanges by non-controlling interest holders will result in a change in ownership and reduce the amount recorded as non-controlling interest and increase Class A ~~common stock~~Common Stock or B Common Stock and additional paid-in-capital for the Company. Upon the issuance of shares Class A Common Stock or B Common Stock, the Company issues a proportionate number of Alclear Units in conjunction with the terms of the Reorganization.

During the three months ended March 31, 2022, certain non-controlling interest holders exchanged their Alclear Units and corresponding shares of Class C Common Stock or Class D Common Stock for shares of the Company’s Class A Common Stock or Class B Common Stock, as applicable. As a result, the Company issued 1,025,318 shares of Class A Common Stock and 4,506 shares of Class B Common Stock. The 4,506 shares of Class B Common Stock were ultimately converted to shares of Class A Common Stock in connection with their sale, as required by the terms of the Company’s Second Amended and Restated Certificate of Incorporation.

The non-controlling interest ownership percentage changed from ~~54.21%~~48.33% as of ~~June 30,~~December 31, 2021 to ~~48.41%~~47.19% as of ~~September 30, 2021.~~March 31, 2022. The primary driver of this decrease was attributable to the issuance of shares of Class A ~~shares, as well as related adjustments,~~Common Stock, due to the ~~IPO.~~

Asexercise of ~~September, 30 2021, no Alclear Units have been exchanged.~~certain warrants and exchanges described above.

~~14.~~16. Incentive Plans

2021 Omnibus Incentive Plan

The Clear Secure, Inc 2021 Omnibus Incentive Plan (“2021 Omnibus Incentive Plan”) became effective on June 29, 2021 to provide grants of equity-based awards to the employees, consultants, and directors of the Company and its affiliates.

The 2021 Omnibus Incentive Plan authorized the issuance of up to 20,000,000 shares of Class A ~~common stock~~Common Stock as of the date of the Reorganization. The 2021 Omnibus Incentive Plan authorized the issuance of shares pursuant to the grant,

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~~CLEAR SECURE, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(dollars in thousands, except for per share data, unless otherwise noted)~~

settlement or exercise of restricted stock units (“RSUs”), restricted stock (“RSAs”), stock options and other share-based awards. Beginning with the first business day of each calendar year beginning in 2022 through 2031, the number of shares available will increase in an amount up to 5% of the total number of common shares outstanding (assuming exchange and/or conversion of all classes of common shares into Class A ~~common stock)~~Common Stock) as of the last day of the immediately preceding year or a lesser amount approved by our board of directors or its compensation committee, so long as the total share reserve available for future awards at the time is not more than 12% of common shares outstanding (assuming exchange and/or conversion of all classes of common shares into Class A common stock). As a result of this provision, in March 2022, the Company filed a Registration Statement on Form S-8 registering the issuance of an additional 5,693,082 shares of Class A Common Stock that are reserved for issuance in respect of awards that may be granted under the 2021 Omnibus Incentive Plan.

Alclear Holdings, LLC Equity Incentive Plan

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CLEAR SECURE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except for per share data, unless otherwise noted)

Prior to the Reorganization, Alclear granted profit unit awards and RSUs to various employees of the Company. In connection with the Company’s Reorganization described in Note 1, these awards were substituted as follows:

•The Company substituted Alclear’s RSUs with RSUs under the 2021 Omnibus Incentive Plan.

•The Company substituted Alclear’s performance vesting profit units with performance vesting RSUs under the 2021 Omnibus Incentive Plan.

•The Company substituted Alclear’s other profit units with only a service vesting condition to RSAs under the 2021 Omnibus Incentive Plan.

In all cases of the respective substitutions, the new awards retained the same terms and conditions (including applicable vesting requirements). Each award was converted to reflect the $31.00 share price contemplated in the Company’s IPO while retaining the same fair value. The RSUs originally granted by Alclear were subject to both service and liquidity event vesting conditions. The Company concluded that the Reorganization represented a qualifying liquidity event that would cause the RSUs’ liquidity event vesting conditions to be met.

The following table summarizes information about the unvested profit units and RSUs in Alclear that were reclassified to RSAs or RSUs in the ~~Company:~~Company upon the Reorganization:


		Alclear RSU’s	Weighted- Average Grant-Date Fair Value		Profit Units	Weighted- Average Grant-Date Fair Value			Alclear RSU’s	Weighted- Average Grant-Date Fair Value		Profit Units	Weighted- Average Grant-Date Fair Value
Unvested balance, January 1, 2021	Unvested balance, January 1, 2021	453,350	$	14.51	9,085,704	$	1.12	Unvested balance, January 1, 2021	453,350	$	14.51	9,085,704	$	1.12
Granted	Granted	860,357	15.33		—	—		Granted	860,357	15.33		—	0.64
Vested	Vested	—	—		(345,703)	(0.40)		Vested	—	—		(345,703)	(0.40)
Forfeited	Forfeited	(25,479)	(15.36)		(881,227)	(0.90)		Forfeited	(25,479)	(15.36)		(881,227)	(0.90)
Effect of reorganization	Effect of reorganization	(1,288,228)	(15.04)		(7,858,774)	(1.17)		Effect of reorganization	(1,288,228)	(15.04)		(7,858,774)	(1.17)
Unvested balance, September 30, 2021		—	—		—	—
Unvested balance upon IPO								Unvested balance upon IPO	—	—		—	—

Restricted Stock Awards

In accordance with the Reorganization, ~~Agreement,~~ the Company substituted Alclear Holdings’ profit units with service vesting conditions with RSAs, which are subject to the same vesting terms as applied to Alclear’s profit units; each also maintained the same fair value immediately before and after the exchange of the award. As such, there was no additional compensation expense that was recorded as a result of the substitution of the awards.

The RSAs are subject to service-based vesting conditions and will vest on a specified date, provided the applicable service, generally three years, has been satisfied.

The Company determines the fair value of each RSA based on the grant date and records the expense over the vesting period or requisite service period.

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CLEAR SECURE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except for per share data, unless otherwise noted)

The following is a summary of activity related to the RSAs associated with compensation arrangements during ~~nine~~the three months ended ~~September 30, 2021.~~March 31, 2022.

RSA - Class A Common Stock Weighted-
Average
Grant-Date
Fair Value RSA - Alclear Units Weighted-
Average
Grant-Date
Fair Value
Balance upon effect of reorganization* 1,878,986 $ 1.03 2,144,361 $ 1.29
Granted — — — —
Vested (115,783) (0.92) — —
Forfeited (72,401) (1.97) — —
Unvested balance, September 30, 2021 1,690,802 $ 1.00 2,144,361 $ 1.29

*The amounts above reflect the Reorganization and maintain the fair value for the substitution of profit units to RSAs.


	RSA - Class A Common Stock	Weighted- Average Grant-Date Fair Value		RSA - Alclear Units	Weighted- Average Grant-Date Fair Value
Unvested balance as of January 1, 2022	1,429,883	$	1.04	190,558	$	1.29
Granted	—	—		—	—
Vested	(213,720)	(1.29)		—	—
Forfeited	(60,349)	(0.87)		—	—
Unvested balance as of March 31, 2022	1,155,814	$	1.00	190,558	$	1.29

Below is the compensation expense (credit) related to the RSAs:


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020			March 31, 2022		March 31, 2021
Cost of direct salaries and benefits	Cost of direct salaries and benefits	$	(7)	$	—	$	(7)	$	—	Cost of direct salaries and benefits	$	2	$	—
General and administrative	General and administrative	284		279		$	884	$	805	General and administrative	63		301
Research and development	Research and development	41		96		149		234		Research and development	44		47
Sales and marketing	Sales and marketing	(3)		10		(31)		23		Sales and marketing	1		(21)
Total	Total	$	315	$	385	$	995	$	1,062	Total	$	110	$	327

As of ~~September 30, 2021,~~March 31, 2022, estimated unrecognized expense for RSAs that are probable of vesting was ~~$826~~$297 with such expense to be recognized over a weighted-average period of approximately ~~0.6~~0.4 years subsequent to ~~September 30, 2021.~~March 31, 2022.

Restricted Stock Units

The RSUs granted under the 2021 Omnibus Incentive Plan in substitution of Alclear awards were subject to the same vesting terms as applied to the Alclear awards and maintained the same fair value immediately before and after the exchange of the award. The RSUs are subject to both service-based and, in some cases, business performance-based vesting conditions. RSUs will vest on a specified date, provided the applicable service (generally three years) and, if applicable, business performance condition, have been satisfied. The RSUs with performance conditions issued are also subject to long-term revenue and cash-basis earnings performance hurdles (the “Financial Targets”). The Company determines the fair value of each RSU based on the grant date and records the expense over the vesting period or requisite service period.

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CLEAR SECURE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except for per share data, unless otherwise noted)

The following is a summary of activity related to the RSUs associated with compensation arrangements during ~~nine~~the three months ended ~~September 30, 2021:~~March 31, 2022:

RSU’s Weighted-
Average
Grant-Date
Fair Value RSU Units - Class B Common Stock Weighted-
Average
Grant-Date
Fair Value
Balance upon effect of Reorganization* 3,009,982 $ 7.23 2,113,672 $ 2.29
Granted 1,240,853 42.10 — —
Vested — — — —
Forfeited (292,213) (3.27) (1,953,803) (1.29)
Unvested balance, September 30, 2021 3,958,622 $ 18.45 159,869 $ 14.51

*The amounts above reflect the Reorganization and maintain the fair value for the substitution of Alclear RSUs to RSUs.


	RSU’s	Weighted- Average Grant-Date Fair Value
Unvested balance as of January 1, 2022	3,418,125	$	23.56
Granted	1,312,449	24.66
Vested	—	—
Forfeited	(293,410)	(12.52)
Unvested balance as of March 31, 2022	4,437,164	$	24.62

Below is the compensation expense recognized related to the RSUs:

Three Months Ended Nine Months Ended
September 30, 2021 September 30, 2021
Cost of direct salaries and benefits $ 226 $ 226
General and administrative 2,913 5,882
Research and development 2,428 3,135
Sales and marketing 118 203
Total $ 5,685 $ 9,446


	Three Months Ended
	March 31, 2022		March 31, 2021
Cost of direct salaries and benefits	$	91	$	—
General and administrative	2,628		—
Research and development	3,697		—
Sales and marketing	48		—
Total	$	6,464	$	—

As of ~~September 30, 2021,~~March 31, 2022, estimated unrecognized expense for RSUs that are probable of vesting was ~~$61,498~~$68,703 with such expense to be recognized over a weighted-average period of ~~approximately1.3~~approximately 1.2 years.

Founder PSUs

During June 2021, the Company established a long-term incentive compensation plan for the co-founders, which consists of performance restricted stock-unit awards (the “Founder PSUs”), that will be settled in shares of Class A ~~common stock~~Common Stock pursuant to the 2021 Omnibus Incentive Plan, subject to the satisfaction of both service and market based vesting conditions.

The grant date fair value for the Founder PSUs was determined by a Monte Carlo simulation and discounted by the risk-free rate on the grant date and an expected volatility of 45%. The Founder PSUs are estimated to vest over a five year period, based on the achievement of specified price hurdles of the Company’s Class A ~~common stock.~~Common Stock. The specified price hurdles of the Company’s Class A ~~common stock~~Common Stock will be measured on the volume-weighted average price per share for the trailing days during any 180 day period that ends within the applicable measurement period. In June 2021, the Company granted 4,208,617 Founder PSUs at a weighted average grant date fair value of $16.54. The Company recorded the expense related to these awards within general and administrative in the condensed consolidated statements of operations.

As of ~~September 30, 2021,~~March 31, 2022, estimated unrecognized expense for Founder PSUs was ~~$62,845~~$49,731 with such expense to be recognized over a weighted-average period of approximately ~~1.34~~1.10 years.

Below is a summary of total compensation expense recorded in relation to the Company’s incentive plans, excluding additional expense related to repurchases:


	Three Months Ended
	March 31, 2022		March 31, 2021
RSAs	$	110	$	327
RSUs	6,464		—
Founder PSUs	6,485		—
Total	$	13,059	$	327

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CLEAR SECURE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except for per share data, unless otherwise noted)

Three Months Ended Nine Months Ended
September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
RSAs $ 315 $ 385 $ 995 $ 1,062
RSUs 5,685 — 9,446 —
Founder PSUs 6,629 — 6,768 —
Total $ 12,629 $ 385 $ 17,209 $ 1,062


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020			March 31, 2022		March 31, 2021
Cost of direct salaries and benefits	Cost of direct salaries and benefits	$	219	$	—	$	219	$	—	Cost of direct salaries and benefits	$	94	$	—
General and administrative	General and administrative	9,826		279		13,534		805		General and administrative	9,176		301
Research and development	Research and development	2,469		96		3,284		234		Research and development	3,741		47
Sales and marketing	Sales and marketing	115		10		172		23		Sales and marketing	48		(21)
Total	Total	$	12,629	$	385	$	17,209	$	1,062	Total	$	13,059	$	327

~~15.~~17. Earnings (Loss) per Share

Basic earnings (loss) per share of Class A common stock and Class B common stock is computed by dividing net loss available to Clear Secure, Inc. by the respective weighted-average number of shares of common stock outstanding during the period. The Company applies the two-class method to calculate earnings per share for Class A and Class B shares. Accordingly, the Class A common stock and Class B common stock share equally in the Company’s net income and losses. Diluted earnings per share of common stock is computed by dividing net earnings (loss) attributable to Clear Secure, Inc., adjusted for the assumed exchange of all potentially dilutive instruments for common stock, by the weighted-average number of shares of common stock outstanding, adjusted to give effect to potentially dilutive securities.

As described in Note 1, on June 29, 2021, the Operating Agreement was amended and restated to, among other things, (i) provide for a new single class of common membership interests, the Alclear Units, and (ii) exchange all of the then-existing membership interests of the original Alclear equity owners for Alclear Units.

Basic and diluted earnings per share of Class A Common Stock and Class B ~~common stock~~Common Stock is applicable only for periods after June 29, 2021, post the Reorganization, when the Company had outstanding shares of Class A Common Stock and Class B ~~common stock.~~Common Stock.

Shares of the Company’s Class C Common Stock and Class D ~~common stock~~Common Stock do not participate in the earnings or losses of the Company and are therefore not participating securities. As such, separate presentation of basic and diluted earnings (loss) per share of Class C ~~common stock~~Common Stock and Class D ~~common stock~~Common Stock under the two-class method has not been presented. Each share of Class C ~~common stock~~Common Stock (together with a corresponding Alclear Unit) is exchangeable for one share of Class A ~~common stock~~Common Stock and each share of Class D ~~common stock~~Common Stock (together with a corresponding Alclear Unit) is exchangeable for one share of Class B ~~common stock.~~Common Stock.

Shares classified as treasury stock within the condensed consolidated balance sheets are excluded from the calculation of earnings (loss) per share. Additionally, the Company assumes the exercise for certain vested warrants exercisable for little to no consideration in the calculation of basic earnings per share.

Below is the calculation of basic and diluted net loss per share:


	Three Months Ended March 31, 2022
	Class A		Class B
Basic:
Net loss attributable to Clear Secure, Inc.	$	(10,189)	$	(138)
Weighted-average number of shares outstanding, basic	76,672,530		1,042,234
Net loss per common share, basic:	$	(0.13)	$	(0.13)

Diluted:
Net loss attributable to Clear Secure, Inc.	$	(10,189)	$	(138)
Weighted-average number of shares outstanding, basic	76,672,530		1,042,234
Effect of dilutive shares	—		—
Weighted-average number of shares outstanding, diluted	76,672,530		1,042,234
Net loss per common share, diluted:	$	(0.13)	$	(0.13)

Due to the net loss for the periods presented, the following potential shares of common stock were determined to be anti-dilutive and were therefore excluded from the weighted-average share count in the computation of net loss per common share.

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CLEAR SECURE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except for per share data, unless otherwise noted)

Three Months Ended September 30, 2021
Class A Class B
Basic:
Net loss attributable to Clear Secure, Inc. $ (16,675) $ (240)
Weighted-average number of shares outstanding, basic 72,285,100 1,042,234
Net loss per common share, basic: $ (0.23) $ (0.23)
Diluted:
Net loss attributable to Clear Secure, Inc. $ (16,675) $ (240)
Weighted-average number of shares outstanding, basic 72,285,100 1,042,234
Potentially dilutive shares — —
Weighted-average number of shares outstanding, diluted 72,285,100 1,042,234
Net loss per common share, diluted: $ (0.23) $ (0.23)


	Three Months Ended March 31, 2022
	Class A	Class B
Exchangeable Alclear Units	43,580,905	26,705,315
Dilutive RSA’s	1,346,372	—
Dilutive RSU’s	2,915,337	—
Total	47,842,614	26,705,315

Nine Months Ended September 30, 2021
Class A Class B
Basic:
Net loss attributable to Clear Secure, Inc. $ (18,650) $ (269)
Weighted-average number of shares outstanding, basic 72,124,741 1,042,234
Net loss per common share, basic: $ (0.26) $ (0.26)
Diluted:
Net loss attributable to Clear Secure, Inc. $ (18,650) $ (269)
Weighted-average number of shares outstanding, basic 72,124,741 1,042,234
Potentially dilutive shares — —
Weighted-average number of shares outstanding, diluted 72,124,741 1,042,234
Net loss per common share, diluted: $ (0.26) $ (0.26)

~~Due to~~The Company has excluded certain potentially dilutive shares from the ~~net loss for~~table above as they had performance conditions that were not achieved as of the ~~periods presented,~~end of the ~~following potential shares of common stock were determined to be anti-dilutive:~~

Three and Nine Months Ended September 30, 2021
Class A Class B
Potentially dilutive warrants 3,279,705 —
Potentially dilutive exchangeable Alclear Units 44,598,167 26,709,821
Potentially dilutive RSA’s 2,347,002 1,953,803
Potentially dilutive RSU’s 1,325,851 159,869
Potentially dilutive shares 51,550,725 28,823,493
reporting period.

~~16.~~18. Income Taxes

As a result of the IPO and Reorganization, the Company became the sole managing member of Alclear, which is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, Alclear is generally not subject to U.S. federal and most state and local income taxes. Any taxable income or loss generated by Alclear is passed through to and included in the taxable income or loss of its members, including us, on a pro rata basis. The Company is subject to U.S. federal income taxes, in addition to state and local income taxes with respect to our allocable share of any taxable income or loss of Alclear, as well as any stand-alone income or loss generated by the Company. The Company is also subject to income taxes in ~~Israel.~~

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~~CLEAR SECURE, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(dollars in thousands, except for per share data, unless otherwise noted)~~

Israel, Argentina, and Mexico.

The Company reported a tax provision of ~~$60~~$302 on a pretax loss of ~~$32,727~~$(18,492) for the three months ended ~~September 30, 2021~~March 31, 2022 as compared to $4$6 on pretax ~~income~~loss of ~~$11,147~~$(13,122) for the three months ended ~~September 30, 2020.~~March 31, 2021. This resulted in an effective tax rate of ~~(0.18)~~(1.63)% for the three months ended ~~September 30, 2021~~March 31, 2022 as compared to ~~0.04%~~(0.04)% percent for the three months ended September 30, 2020. The Company reported a tax provision of $277 on a pretax loss of $83,737 for the nine months ended September 30, 2021, as compared to $14 on a pretax loss of $17,750 for the nine months ended September 30, 2020. This resulted in an effective tax rate of (0.33)% for the nine months ended September 30, 2021 as compared to (0.09)% for the nine months ended September 30, 2020.March 31, 2021. The Company's effective tax rate differs from the statutory rate primarily due to the following: (1) the impact of Alclear being a partnership and it allocating its taxable results to its non-controlling members, (2) movement in valuation allowance and (3) the impact of state and foreign taxes.

The Company ~~has~~did not ~~recorded any uncertain~~have significant unrecognized tax ~~positions~~benefits and interest and penalties as of ~~September 30, 2021. Clear Secure, Inc. was formed~~March 31, 2022. The Company is subject to income taxes in ~~March 2021~~the U.S., Israel, Argentina, and ~~did not engage in any operations prior~~Mexico. The statute of limitations for adjustments to ~~the IPO and the Reorganization. Additionally, although Alclear is treated as a partnership~~our historic tax obligations will vary from jurisdiction to jurisdiction. The tax years for U.S. federal and state income ~~taxes~~tax purposes ~~it is still required to file an annual U.S. Return of Partnership Income, which is subject to~~open for examination byare for the ~~Internal Revenue Service (“IRS”).~~years ending December 31, 2018 and forward. The ~~statute of limitations has expired for~~ tax years ~~through~~for foreign jurisdictions open for examination are for the years ending December 31, 2016 ~~for Alclear.~~and forward.

Tax Receivable Agreement

The Company expects to obtain an increase in the share of the tax basis of its share of the assets of Alclear when Alclear Units are redeemed or exchanged by Alclear Members and other qualifying transactions. This increase in tax basis may have the effect of reducing the amounts that the Company would otherwise pay in the future to various tax authorities. The increase in tax basis may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets.

As stated in Note 1, in connection with the IPO, the Company entered into the TRA, which generally provides for payment by the Company to the TRA Holders of 85% of the net cash savings, if any, in U.S. federal, state and local income tax and franchise tax that Clear Secure, Inc. actually realizes or is deemed to realize as a result of (i) any increase in tax basis in Alclear’s assets resulting from (a) exchanges by Alclear members (or their transferees or other assignees) of Alclear Units (along with the corresponding shares of our Class C ~~common stock~~Common Stock or Class D common stock, as applicable) for shares of the Company’s Class A ~~common stock~~Common Stock or Class B ~~common stock,~~Common Stock, as applicable, and purchases of Alclear Units and corresponding shares of Class C ~~common stock~~Common Stock or Class D ~~common stock,~~Common Stock, as the case may be, from the Alclear members (or their transferees or other assignees) or (b) payments under the TRA, and (ii) tax benefits related to imputed interest deemed arising as a result of payments made under the TRA. The Company will retain the benefit of the remaining 15% of these net cash savings.

The TRA liability is calculated by determining the tax basis subject to TRA (“tax basis”) and applying a blended tax rate to the basis differences and calculating the iterative impact. The blended tax rate consists of the U.S. federal income tax rate and an assumed combined state and local income tax rate driven by the apportionment factors applicable to each state. Subsequent changes to the measurement of the TRA liability are recognized in the statements of operations as a component of other income (expense), net. As

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CLEAR SECURE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except for per share data, unless otherwise noted)

The Company expects to obtain an increase in the share of the tax basis of its share of the assets of Alclear when Alclear Units are redeemed or exchanged by Alclear Members and other qualifying transactions. This increase in tax basis may have the effect of reducing the amounts that the Company ~~did~~would otherwise pay in the future to various tax authorities. The increase in tax basis may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets.

During the three months ended March 31, 2022, the Company acquired 1,025,318 Alclear Units from certain stock holders. These exchanges resulted in a tax basis increase subject to the provisions of the TRA. The Company has not ~~record a~~recognized the deferred tax asset for the step-up in tax basis, as the asset is not more-likely-than-not to be realized. Additionally, the Company has not recognized the TRA liability, ~~from~~as it is not probable that the ~~TRA.~~TRA payments would be paid based on the Company’s historical loss position and would not be payable until the Company realizes tax benefit.

~~17.~~19. Commitments and Contingencies

Litigation

From time to time, the Company is involved in various legal proceedings arising in the ordinary course of business. The Company records a liability when it believes that it is probable that a loss will be incurred and the amount of loss or range of loss can be reasonably estimated. Based on the currently available information, the Company does not believe that there are claims or legal proceedings that would have a material adverse effect on the business, or the condensed consolidated financial statements of the Company.

~~Leases, Sports Stadiums,~~Commitments other than leases

The Company is subject to minimum spend commitments of $13,191 over the next two years under certain service arrangements.

The Company has commitments for future marketing expenditures to sports stadiums of $3,054 through 2026. For the three months ended March 31, 2022 and ~~Airport Agreements~~2021, marketing expenses related to sports stadiums were approximately $905 and $—, respectively.

In conjunction with the Company’s revenue share agreements with the airports, certain agreements contain minimum annual contracted fees. These future minimum payments are as follows as of March 31, 2022:



2022	$	13,036
2023	14,742
2024	8,150
2025	3,408
2026	457
Thereafter	—
Total	$	39,793

Refer to Note 8 for the Company’s lease commitments.

20. Related-Party Transactions

As of March 31, 2022, and December 31, 2021, the Company had total payables to certain related parties of $2,828 and $1,180, respectively.

For the three months ended March 31, 2022 and 2021, the Company recorded $2,054 and $1,694, respectively, in cost of revenue share fee within the condensed consolidated statements of operations, in connection with certain related parties.

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CLEAR SECURE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except for per share data, unless otherwise noted)

During 2018, the Company entered into a lease for its new headquarters in New York City, which expires in 2030. Additionally, the Company rents floor and office space in airports under leases expiring through 2026, which include fixed monthly payments. The Company’s lease agreements, in addition to base rentals, generally are subject to escalation provisions based on certain costs incurred by the landlord. Certain leases have renewal options that can be exercised at the discretion of the Company.

For the three months ended September 30, 2021 and 2020, the Company recorded rent expense of $1,618 and $1,461, respectively, and Revenue Share fee expense of $9,926 and $8,298, respectively. For the nine months ended September 30, 2021 and 2020, the Company recorded rent expense of $4,754 and $4,468, respectively, and Revenue Share fee expense of $25,995 and $25,707, respectively.

The Company has commitments for future marketing expenditures to sports stadiums of $5,517 through 2026. For the three months ended September 30, 2021 and 2020, marketing expenses related to sports stadiums were approximately $1,503 and $—, respectively. For the nine months ended September 30, 2021 and 2020, marketing expenses related to sports stadiums were approximately $2,655 and $377, respectively.

~~Future minimum payments under lease and airport agreements are as follows as of September 30, 2021:~~

2021 $ 4,093
2022 16,104
2023 14,941
2024 11,284
2025 9,773
Thereafter 21,803
Total $ 77,998

~~18. Related-Party Transactions~~

~~As of September 30, 2021, and December 31, 2020, the Company had total payables to certain related parties of $1,839 and $1,606.~~

Additionally, for the three months ended September 30, 2021 and 2020, the Company recorded $2,084 and $1,855 in cost of revenue share within the condensed consolidated statements of operations, respectively in connection with certain related parties. For the nine months ended September 30, 2021 and 2020, the Company recorded $5,428 and $5,084, respectively in connection with certain related parties.

Refer to Note 1618 for information regarding the TRA liability.

~~19.~~21. Employee Benefit Plan

The Company has a 401(k) retirement, savings and investment plan (the “401(k) Plan”). Participants make contributions to the 401(k) Plan in varying amounts, up to the maximum limits allowable under the Code. For the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the Company recorded ~~discretionary employer contributions~~expense of ~~$191~~$745 and ~~$81,~~$405, respectively, ~~that was remitted to~~within the ~~plan. For the nine months ended September 30, 2021 and 2020, the Company recorded $828 and $311, respectively.~~condensed consolidated statements of operations.

~~20.~~22. Debt

In March 2020, the Company entered into a credit agreement for a three-year $50,000 revolving credit facility, with a group of lenders. In April 2021, the Company increased the commitments under the revolving credit facility to $100,000, which matures three years from the date of the increase. The line of credit has not been drawn against as of ~~September 30, 2021.~~March 31, 2022. Prepaid loan fees related to this facility are presented within Other assets with the current portion being presented within

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~~CLEAR SECURE, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(dollars in thousands, except for per share data, unless otherwise noted)~~

prepaid and other current assets and will be amortized over the term of the credit agreement. As of ~~September 30, 2021,~~March 31, 2022, the balance of these loan fees was ~~$1,004.~~$673.

The credit agreement contains customary terms and conditions, including limitations on consolidations, mergers, indebtedness, and certain payments, as well as a financial covenant relating to leverage. Borrowings under the credit agreement generally will bear a floating interest rate per year and will also include interest based on the greater of the prime rate, London InterBank Offered Rate (LIBOR) or New York Federal Reserve Bank (NYFRB) rate, plus an applicable margin for specific interest periods.

In addition, the credit agreement contains certain other covenants (none of which relate to financial condition), events of default and other customary provisions, and also contains customary LIBOR replacement mechanics. ~~At September 30, 2021,~~As of March 31, 2022, the Company was in compliance with all of the financial and non-financial ~~covenants.~~covenants of the Credit Agreement.

~~21.~~23. Subsequent Events

Subsequent to March 31, 2022, certain non-controlling interest holders exchanged their Alclear Units and corresponding shares of Class C Common Stock for 50,000 shares of the Company’s Class A Common Stock.

On ~~November 4, 2021,~~May 13, 2022, the ~~Company and 85 Tenth Avenue Associates, L.L.C. (“Landlord”) entered into~~Company's Board authorized a ~~Lease (the “Lease Agreement”)~~share repurchase program pursuant to which the Company may purchase up to $100,000 of its Class A Common Stock. Under the repurchase program, the Company may purchase shares of its Class A Common Stock on a discretionary basis from time to time through open market repurchases, privately negotiated transactions, or other means, including through Rule 10b5-1 trading plans. The timing and actual number of shares repurchased will ~~lease approximately 120,000 square feet~~be determined by management depending on a variety of ~~an office building to house the Company’s corporate headquarters.~~factors, including stock price, trading volume, market conditions, and other general business considerations. The ~~Lease Agreement provides for a commencement on the later of October 1, 2022~~repurchase program has no expiration date and may be modified, suspended, or the date on which the Landlord delivers possession of the premises with certain agreed upon completed improvements to be made by the Landlord. The term of the Lease Agreement is fifteen years after the date the rent obligations begin, with an option to renew for 1 5-year or 10-year periodterminated at ~~Fair Market Value (as defined in the Lease Agreement) by providing the Landlord with eighteen months’ notice and meeting certain other requirements.~~any time.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following ~~discussion~~Management’s Discussion and ~~analysis~~Analysis of ~~the~~Financial Condition and Results of Operations (“MD&A”) is intended to help readers understand our results of operations, financial condition and ~~results of our operations~~cash flows and should be read in conjunction with the ~~unaudited condensed~~audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the ~~three and nine months~~fiscal year ended ~~September 30,~~December 31, 2021 ~~and 2020 included elsewhere within this report.~~(“Annual Report on Form 10-K”). This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. ~~Unless otherwise stated, all amounts are presented in millions.~~

For purposes of this ~~“Management’s Discussion and Analysis of Financial Condition and Results of Operations, “the~~MD&A, the term “we” and other forms thereof refer to ~~the Company~~Clear Secure, Inc. and its subsidiaries (collectively, the “Company”), which includes ~~Alclear.~~Alclear Holdings, LLC (“Alclear”).

Forward-Looking Statements

This quarterly report includes certain forward-looking statements within the meaning of the federal securities laws regarding, among other things, our or management’s intentions, plans, beliefs, expectations or predictions of future events, which are considered forward-looking statements. You should not place undue reliance on those statements because they are subject to numerous uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Forward-looking statements include information concerning our possible or assumed future results of operations, including descriptions of our business strategy. These statements often include words such as ~~“may”, “will”, “should”,~~“may,” “will,” “should,” “believe,” ~~“expect”, “anticipate”, “intend”, “plan”, “estimate”,~~“expect,” “anticipate,” “intend,” “plan,” “estimate,” or similar expressions. These statements are based upon assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors that we believe are appropriate under the circumstances. As you read this quarterly report, you should understand that these statements are not guarantees of performance or results. They involve known and unknown risks, uncertainties and assumptions, including those described under the heading “Risk Factors” in our ~~Registration Statement~~Annual Report on Form ~~S-1 (File No. 333-256851), as amended (the “Registration Statement”), and the final prospectus dated June 29, 2021 (the “Prospectus”).~~10-K. Although we believe that these forward-looking statements are based upon reasonable assumptions, you should be aware that many factors, including those described under the heading “Risk Factors” in our ~~Registration Statement and the Prospectus,~~Annual Report on Form 10-K, could affect our actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements.

Our forward-looking statements made herein are made only as of the date of this quarterly report. We expressly disclaim any intent, obligation or undertaking to update or revise any forward-looking statements made herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained in this quarterly report.

Overview

We are a member-centric secure identity platform operating under the brand name CLEAR. At CLEAR we know that you are always you—your biometric identity is foundational to helping enable frictionless everyday experiences, connecting you to all the ~~cards in your wallet~~things that make you, YOU, and transforming the way you live, work and travel. Members enroll in CLEAR to create an unbreakable link between their identity and biometrics (e.g., eyes, face and fingerprints). CLEAR's current offerings include: CLEAR Plus, a consumer aviation subscription service, which enables access to predictable and fast experiences through dedicated entry lanes in airport security checkpoints nationwide; the flagship CLEAR App including Home to Gate and Health Pass; and Reserve powered by CLEAR, ~~Pass for CBP Mobile Passport Control, a free~~our virtual queuing technology that enables customers to ~~use mobile app that streamlines entry into the United States.~~manage lines. CLEAR also has ~~extensive SDK~~software development kits, (“SDK”) and ~~API~~application programming interface (“API”) capabilities to enable our partners to seamlessly integrate directly into our platform to enable better, faster and more frictionless experiences for our partners' customers. Use cases enabled by SDKs and APIs include identity validation, identity verification, attribute validation such as age validation, vaccine status and payment, among others.

~~Non-GAAP Financial Measures~~

In addition to our results as determined in accordance with GAAP, we disclose Adjusted EBITDA and Free Cash Flow as non-GAAP financial measures that management believes provide useful information to investors. These measures are not financial measures calculated in accordance with GAAP and should not be considered as a substitute for net income (loss), or any other operating performance measure calculated in accordance with GAAP, and may not be comparable to a similarly titled measure reported by other companies. The amounts below are expressed in thousands.

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~~Adjusted EBITDA~~

We define Adjusted EBITDA as net income (loss) adjusted for income taxes, interest (income) expense net, depreciation and amortization, losses on asset disposals, equity-based compensation expense, mark to market of warrant liabilities and other income (expense), net. Adjusted EBITDA is an important financial measure used by management and our board of directors in determining performance-based compensation for our management and key employees.

~~Free Cash Flow~~

We define Free Cash Flow as net cash provided by (used in) operating activities adjusted for purchases of property and equipment plus the value of share repurchases over fair value. With regards to our CLEAR Plus subscription service, we generally collect cash from our members upfront for annual subscriptions. As a result, when the business is growing Free Cash Flow can be a real time indicator of the current trajectory of the business.

~~See below for reconciliations of these non-GAAP financial measures to their most comparable GAAP measures.~~

~~Reconciliation of Net income (loss) to Adjusted EBITDA:~~

Three Months Ended Nine Months Ended
(In thousands) September 30,
2021 September 30,
2020 September 30,
2021 September 30,
2020
Net income (loss) $ (32,787) $ 11,143 $ (84,014) $ (17,764)
Income taxes 60 4 277 14
Interest income (expense), net 120 12 333 (657)
Other income (expense), net 11 (477) 11 (477)
Depreciation and amortization 3,988 2,322 9,190 6,945
Loss on asset disposal — 2 — 2
Equity-based compensation expense 14,138 595 21,354 53,252
Warrant liabilities — 444 12,796 444
Adjusted EBITDA $ (14,470) $ 14,045 $ (40,053) $ 41,759

~~Reconciliation of Net cash provided by (used in) operating activities to Free Cash Flow:~~

Three Months Ended Nine Months Ended
(In thousands) September 30,
2021 September 30,
2020 September 30,
2021 September 30,
2020
Net cash provided by (used in) operating activities $ 34,893 $ 16,808 $ 37,977 $ (28,471)
Purchases of property and equipment (6,832) (2,743) (22,042) (9,181)
Share repurchases over fair value — 67 712 50,465
Free Cash Flow $ 28,061 $ 14,132 $ 16,647 $ 12,813

~~Key Performance Indicators~~

To evaluate performance of the business, we utilize a variety of other non-GAAP financial reporting and performance measures. These key measures include Total Bookings, Total Cumulative Enrollments, Total Cumulative Platform Uses, and Annual CLEAR Plus Net Member Retention.

~~Total Bookings~~

Total Bookings represent our total revenue plus the change in deferred revenue during the period. Total Bookings in any particular period reflect sales to new and renewing CLEAR Plus subscribers plus any accrued billings to partners. Management believes that Total Bookings is an important measure of the current health and growth of the business and views it as a leading indicator.

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Three Months Ended Nine Months Ended
September 30,
2021 September 30,
2020 $ Change % Change September 30,
2021 September 30,
2020 $ Change % Change
Total Bookings (in millions) $99.3 $52.5 $46.8 89% $231.4 $156.1 $75.3 48%

Total Bookings increased by $46.8 million, or 89%, for the three months ended September 30, 2021 compared to the three months ended September 30, 2020. The increase was primarily driven by the continued rebound in air travel and the launch of a new credit card partnership on July 1, 2021, resulting in higher new member enrollments and higher member retention rates.

Total Bookings increased by $75.3 million, or 48%, for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020. The increase was primarily driven by the rebound in air travel following the trough in the second quarter of 2020 due to the COVID-19 pandemic and the launch of a new credit card partnership on July 1, 2021, resulting in higher new member enrollments and higher member retention rates.

~~Total Cumulative Enrollments~~

We define Total Cumulative Enrollments as the number of enrollments since inception as of the end of the period. An Enrollment is defined as any member who has registered for the CLEAR platform since inception and has a profile (including limited time free trials regardless of conversion to paid membership) net of duplicate and/or purged accounts. This includes CLEAR Plus members who have completed enrollment with CLEAR and have ever activated a payment method, plus associated family accounts. Management views this metric as an important tool to analyze the efficacy of our growth and marketing initiatives as new members are potentially a current and leading indicator of revenues.

As of
September 30,
2021 September 30,
2020 Change % Change
Total Cumulative Enrollments (in thousands) 8,076 5,118 2,958 58%

Total Cumulative Enrollments were 8,076 as of September 30, 2021 and 5,118 as of September 30, 2020, which represented a 58% increase. The year over year acceleration to 8,076 was driven by strength in both CLEAR Plus enrollments and platform enrollments. New enrollments in the quarter were 1,755, more than double the second quarter of 2021.

~~Total Cumulative Platform Uses~~

We define Total Cumulative Platform Uses as the number of individual engagements across CLEAR use cases, including in-airport verifications, since inception as of the end of the period. We also include airport lounge access verifications, sports and entertainment venue verifications and Health Pass surveys since inception as of the end of the period. Management views this metric as an important tool to analyze the level of engagement of our member base which can be a leading indicator of future growth, retention and revenue.

As of
September 30,
2021 September 30,
2020 Change % Change
Total Cumulative Platform Uses (in thousands) 72,184 56,681 15,503 27%

Total Cumulative Platform Uses was 72,184 as of September 30, 2021 and 56,681 as of September 30, 2020, which represented a 27% increase, driven by the rapid growth of Health Pass usage and a continued rebound in CLEAR Plus verifications. Platform (mobile) members continued to represent an increased mix in the quarter which in the short term may demonstrate lower frequency usage trends than CLEAR Plus members.

~~Annual CLEAR Plus Net Member Retention~~

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We define Annual CLEAR Plus Net Member Retention as one minus the CLEAR Plus net member churn on a rolling 12 month basis. We define “CLEAR Plus net member churn” as total cancellations net of winbacks in the trailing 12 month period divided by the average active CLEAR Plus members as of the beginning of each month within the same 12 month period. Winbacks are defined as reactivated members who have been cancelled for at least 60 days. Active CLEAR Plus members are defined as members who have completed enrollment with CLEAR and have activated a payment method for our in-airport CLEAR Plus service, including their registered family plan members. Active CLEAR Plus members also include those in a grace period of up to 45 days after a billing failure during which time we attempt to collect updated payment information. Management views this metric as an important tool to analyze the level of engagement of our member base, which can be a leading indicator of future growth and revenue, as well as an indicator of customer satisfaction and long term business economics.

As of
September 30,
2021 September 30,
2020 Change
Annual CLEAR Plus Net Member Retention 87.4% 81.2% 6.2%

Annual CLEAR Plus Net Member Retention was 87.4% as of September 30, 2021 and 81.2% as of September 30, 2020, a year-over year increase of 620 basis points. Given this is a trailing 12-month metric, the 680 basis point sequential increase vs. 80.6% as of June 30, 2021 implies particularly strong quarterly retention. The performance was driven by strength in gross renewals and winbacks of previously cancelled members. Retention is now above pre-COVID19 pandemic levels. A significant number of members who cancelled their CLEAR Plus subscriptions in 2020 have reactivated this year.

Key Factors Affecting Performance

We believe that our current and future financial growth are dependent upon many factors, including the key factors affecting performance described below.

Ability to Grow Total Cumulative Enrollments

We are focused on growing Total Cumulative Enrollments and the number of members that engage with our platform. Our operating results and growth opportunities depend, in part, on our ability to attract new members, including paying

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members (CLEAR Plus members) as well as new platform members. We rely on multiple channels to attract new CLEAR Plus members, including in-airport (our largest channel) which in turn is dependent on the ongoing ability of our ambassadors to successfully engage with the traveling public. We also rely on numerous digital channels such as paid search and partnerships. In many cases, we offer limited time free trials to new members who may convert to paying members upon the completion of their trial. Our future success is dependent on those channels continuing to drive new members and our ability to convert free trial members into paying members.

We believe we will see an acceleration of Total Cumulative Platform Uses relative to Total Cumulative Enrollments over time as our members use our products across multiple locations and use cases. We believe this dynamic will grow the long-term economic value of our platform by increasing total engagement, expanding our margins and maximizing our revenue. Our future success is dependent upon maintaining and growing our partnerships as well as ensuring our platform remains compelling to members.

Although we have historically grown the number of new members over time and successfully converted some free trial members to paying members, our future success is dependent upon our ongoing ability to do so.

Ability to retain CLEAR Plus members

Our ability to execute on our growth strategy is focused, in part, on our ability to retain our existing CLEAR Plus members. Frequency and recency of usage are the leading indicators of retention, and we must continue to provide frictionless and predictable experiences that our members will use in their daily lives. The value of the CLEAR platform to our members increases as we add more use cases and partnerships, which in turn drives more frequent usage and increases retention. Historically, CLEAR Plus members who used CLEAR in both aviation and non-aviation venues renewed at rates materially above those who used CLEAR only in aviation. We cannot be sure that we will be successful in retaining our members due to any number of factors such as our inability to successfully implement a new product, adoption of our technology, harm to our brand or other factors.

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Ability to add new partners, retain existing partners and generate new revenue streams

Our partners include local airport authorities, airlines and other businesses. Our future success depends on maintaining those relationships, adding new relationships and maintaining favorable business terms. In addition, our growth strategy relies on creating new revenue streams such as per partner, per member or per use transaction fees. Although we believe our service provides significant value to our partners, our success depends on creating mutually beneficial partnership agreements. We are focused on innovating both our product and our platform to improve our members’ experience, improve safety and security and introduce new use cases. We intend to accelerate our pace of innovation to add more features and use cases, to ultimately deliver greater value to our members and partners. In the near term, we believe that growing our member base facilitates our ability to add new partnerships and provide additional offerings, which we expect will lead to revenue generation opportunities in the long term.

Timing of new partner, product and location launches

Our financial performance is dependent in part on new partner, product and location launches. In many cases, we cannot predict the exact timing of those launches. Delays, resulting either from internal or external factors may have a material effect on ~~quarterly~~our financial results.

Timing of expenses; Discretionary investments

Although many of our expenses occur in a predictable fashion, certain expenses may fluctuate from period to period due to timing.

In addition, management may make discretionary investments when it sees an opportunity to accelerate growth, add a new partner or acquire talent, among other reasons. This may lead to volatility or unpredictability in our expense base and in our profitability.

Maintaining strong unit economics

Our business model is powered by network effects and has historically been characterized by efficient member acquisition and high member retention rates. This is evident by our approximately 1618 times Lifetime Value relative to our Customer Acquisition Cost for CLEAR Plus members who joined during ~~2019.~~2021. The Lifetime Value relative to our Customer

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Acquisition Cost for CLEAR Plus members who joined during ~~2019~~2021 is consistent with the average for prior periods. While we believe our unit economics will remain attractive, this is dependent on our ability to add new members efficiently and maintain our historically strong retention rates. As we grow our market penetration, the cost to acquire new members could increase and the experience we deliver to members could degrade, causing lower retention rates.

Changes to the macro environment

Our business is dependent on macroeconomic and other events outside of our control, such as decreased levels of travel or attendance at events, terrorism, civil unrest, political instability, union and other transit related strikes and other general economic conditions. We are also subject to changes in discretionary consumer spending.

Impact of Coronavirus (COVID-19) Pandemic

As the impact of the COVID-19 pandemic subsides and the demand for our services increases, we expect our expenses to increase, in some cases significantly, in comparison to the first quarter of 2021 and the 2020 fiscal year when we had lower staffing needs and proactively reduced our operating expenses. These increased expenses will include higher cost of direct salaries and benefits driven by field labor, sales and marketing, research and development costs, and general and administrative (including costs associated with being a public company and increased equity-based compensation expense). Due to the nature of our revenue recognition policy (e.g., CLEAR Plus revenues are recognized over the life of a subscription, which is typically 12 months), our reported revenues are expected to lag behind Total Bookings. We may incur net losses and negative adjusted EBITDA in the long term if we are required to increase expenses to support our growth. See “Risk Factors—Risks Related to Our Financial Performance” in our ~~Registration Statement and Prospectus.~~Annual Report on Form-10K.

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The Reorganization Transactions

Prior to the completion of ~~the IPO,~~our initial public offering (“IPO”), we undertook certain reorganization transactions (the “Reorganization Transactions”) such that Clear Secure, Inc. is now a holding company, and its sole material asset is a controlling equity interest in ~~Alclear Holdings, LLC.~~Alclear. As the general partner of Alclear, ~~Holdings, LLC,~~ Clear Secure, Inc. ~~now~~ operates and controls all of the business and affairs of Alclear, ~~Holdings, LLC,~~ has the obligation to absorb losses and receive benefits from Alclear ~~Holdings, LLC~~ and, through Alclear ~~Holdings, LLC~~ and its subsidiaries, conducts our business.

The Reorganization Transactions were accounted for as a reorganization of entities under common control. As a result, the consolidated financial statements of ~~Clear Secure, Inc.~~the Company recognized the assets and liabilities received in the Reorganization Transactions at their historical carrying amounts, as reflected in the historical financial statements of ~~Alclear Holdings, LLC. Clear Secure, Inc.~~Alclear. The Company consolidates Alclear ~~Holdings, LLC~~ on its ~~condensed~~ consolidated financial statements and records a non-controlling interest, related to the Alclear ~~Units~~non-voting common units (“Alclear Units”) held by our Founders and pre-IPO members, on its ~~condensed~~ consolidated balance sheets and statement of operations. See Note 1 in our condensed consolidated financial statements for a more detailed discussion of the Reorganization Transactions.

Taxation and Expenses

After the consummation of our IPO, we became subject to U.S. federal, state and local income taxes with respect to our allocable share of any taxable income of Alclear and will be taxed at the prevailing corporate tax rates. Alclear, ~~Holdings, LLC,~~ is treated as flow-through entities for U.S. federal income tax purposes, and as such, has generally not been subject to U.S. federal income tax at the entity level. Accordingly, the historical results of operations and other financial information set forth in ~~this Quarterly~~the Annual Report on Form 10-K do not include any material provisions for U.S. federal income tax for the periods prior to our IPO.

In addition to tax expense, we incur expenses related to our operations, plus payments under the tax receivable agreement (“TRA”) described below, which we expect to be significant. We intend to cause Alclear to make distributions in an amount sufficient to allow us to pay our tax obligations and operating expenses, including distributions to fund any ordinary course payments under the TRA.

~~In addition, in connection with the Reorganization Transactions and~~Following our IPO, we ~~entered into the TRA as described under “Tax Receivable Agreement.”~~

~~In addition,~~have and we ~~will~~expect to continue to incur increased amounts of compensation expense, including related to equity awards granted under the 2021 Omnibus Incentive Plan to both existing employees and newly-hired employees, and grants in connection with new hires could be significant. In addition, as a new public company, we ~~will be~~are implementing additional procedures and processes for the purpose of addressing the standards and requirements applicable to public companies. We expect to incur additional expenses related to these steps and, among other things, additional directors’

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and officers’ liability insurance, director fees, reporting requirements of the SEC, transfer agent fees, hiring additional accounting, legal and administrative personnel, increased auditing and legal fees and similar expenses.

Tax Receivable Agreement

In connection with the IPO we entered into the TRA with the Alclear Members that provides for the payment by us to the Alclear Members of 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax or franchise tax that we actually realize (computed using simplifying assumptions to address the impact of state and local taxes) as a result of (i) any increase in tax basis in Alclear’s assets resulting from (a) exchanges by the Alclear Members (or their transferees or other assignees) of Alclear Units (along with the corresponding shares of our Class C ~~common stock~~Common Stock or Class D ~~common stock,~~Common Stock, as applicable) for shares of our Class A ~~common stock~~Common Stock, $0.00001 par value per share (“Class A Common Stock”) or Class B ~~common stock,~~Common Stock, $0.00001 par value per share (“Class B Common Stock”) as applicable, and purchases of Alclear Units and corresponding shares of Class C ~~common~~Common stock, par value $0.00001 per share (“Class C Common Stock”) or Class D ~~common stock,~~Common Stock, $0.00001 par value per share (“Class D Common Stock” and, together with the Class A Common Stock, Class B Common Stock and Class C Common Stock, collectively, “Common Stock”), as the case may be, from Alclear Members (or their transferees or other assignees) or (b) payments under the TRA, and (ii) tax benefits related to imputed interest deemed arising as a result of payments made under the TRA.

The actual increase in tax basis, as well as the amount and timing of any payments under these agreements, ~~will vary~~varies depending upon a number of factors, including the timing of exchanges by or purchases from the Alclear Members, the price of our Class A ~~common stock~~Common Stock at the time of the exchange, the extent to which such exchanges are taxable, the amount and timing of the taxable income we generate in the future and the tax rate then applicable and the portion of our payments under the TRA constituting imputed interest. During the three months ended March 31, 2022, the Company recognized certain exchanges. As of March 31, 2022, the Company did not record a TRA liability as a result of these exchanges.

Acquisitions

During the year ended December 31, 2021, the Company made strategic acquisitions of Whyline, Inc., our virtual queuing technology that enables customers to manage lines and certain assets of Atlas Certified, LLC., our automated solution to verify professional licenses and certification data across industries. Revenues and operating loss related to these acquisitions were insignificant to the condensed consolidated financial statements.

Key Performance Indicators

Total Bookings


	Three months ended March 31,
	2022		2021		$ Change		% Change
Total Bookings (in millions)	$	107.8	$	62.1	$	45.7	74	%

Total Bookings increased by $45.7 million, or 74%, for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The increase was primarily driven by the continued rebound in air travel and the launch of a new credit card partnership on July 1, 2021, resulting in higher new member enrollments and higher member retention rates.

Total Cumulative Enrollments

3431

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	As of
	March 31, 2022	March 31, 2021	Change	% Change
Total Cumulative Enrollments (in thousands)	11,819	5,562	6,257	112%

Total Cumulative Enrollments were 11,819 as of March 31, 2022 and 5,562 as of March 31, 2021, which represented a 112% increase. The year over year growth was driven by continued strength in air travel and platform (mobile) enrollments.

Total Cumulative Platform Uses


	As of
	March 31, 2022	March 31, 2021	Change	% Change
Total Cumulative Platform Uses (in thousands)	95,283	60,792	34,491	57%

Total Cumulative Platform Uses was 95,283 as of March 31, 2022 and 60,792 as of March 31, 2021, which represented a 57% increase, driven by CLEAR Plus verifications in connection with a rebound in air travel, and continuing use of Health Pass and Digital Vaccine Pass at large events and return to work for enterprise partners.

Annual CLEAR Plus Net Member Retention

We define Annual CLEAR Plus Net Member Retention as one minus the CLEAR Plus net member churn on a rolling 12 month basis. We define “CLEAR Plus net member churn” as total cancellations net of winbacks in the trailing 12 month period divided by the average active CLEAR Plus members as of the beginning of each month within the same 12 month period. Winbacks are defined as reactivated members who have been cancelled for at least 60 days. Active CLEAR Plus members are defined as members who have completed enrollment with CLEAR and have ever activated a payment method for our in-airport CLEAR Plus service, including their registered family plan members. Active CLEAR Plus members also include those in a grace period of up to 45 days after a billing failure during which time we attempt to collect updated payment information. Management views this metric as an important tool to analyze the level of engagement of our member base, which can be a leading indicator of future growth and revenue, as well as an indicator of customer satisfaction and long term business economics.

As of

March 31,
2022

March 31,
2021

Change

Annual CLEAR Plus Net Member Retention

95.3%

77.2%

18.1%

Annual CLEAR Plus Net Member Retention was 95.3% as of March 31, 2022 and 77.2% as of March 31, 2021, a year-over year increase of 1,810 basis points. The performance was driven by strength in gross renewals and winbacks of previously cancelled members.

Non-GAAP Financial Measures

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In addition to our results as determined in accordance with GAAP, we disclose Adjusted EBITDA, Free Cash Flow, Adjusted Net Income (Loss) and Adjusted Net Income (Loss) Per Common Share, Diluted as non-GAAP financial measures that management believes provide useful information to investors. These measures are not financial measures calculated in accordance with GAAP and should not be considered as a substitute for net income (loss), or any other operating performance measure calculated in accordance with GAAP, and may not be comparable to a similarly titled measure reported by other companies. Our Non-GAAP financial measures are expressed in thousands.

Adjusted EBITDA

We define Adjusted EBITDA (Loss) as net income (loss) adjusted for income taxes, interest (income) expense net, depreciation and amortization, losses on asset disposals, equity-based compensation expense, mark to market of warrant liabilities, other income (expense), net, acquisition-related costs and changes in fair value of contingent consideration. Adjusted EBITDA (Loss) is an important financial measure used by management and our board of directors in determining performance-based compensation for our management and key employees.

Adjusted Net Income (Loss)

We define Adjusted Net Income (Loss) as Net income (loss) attributable to Clear Secure, Inc. adjusted for the net income (loss) attributable to non-controlling interests, equity-based compensation expense, amortization of acquired intangible assets, acquisition-related costs, changes in fair value of contingent consideration and the income tax effect of these adjustments. Adjusted Net Income (Loss) is used in the calculation of Adjusted Net Income (Loss) per Common Share as defined below.

Adjusted Net Income (Loss) Per Common Share

We compute Adjusted Net Income (Loss) Per Common Share, Basic as Adjusted Net Income (Loss) divided by Adjusted Weighted-Average Shares Outstanding for our Class A Common Stock, Class B Common Stock, Class C Common Stock and Class D Common Stock assuming the exchange of all vested and outstanding common units in Alclear at the end of each period presented. We do not present Adjusted Net Income (Loss) per Common Share for shares of our Class B Common Stock although they are participating securities based on the assumed conversion of those shares to our Class A Common Stock. We do not present Adjusted Net Income (Loss) per Common Share on a dilutive basis for periods where we have Adjusted Net Loss since we do not assume the conversion of any potentially dilutive equity instruments as the result would be antidilutive. In periods where we have Adjusted Net Income, the Company also calculates Adjusted Net Income (Loss) Per Common Share, Diluted based on the effect of potentially dilutive equity instruments for the periods presented using the treasury stock/if-converted method, as applicable. Adjusted Net Income (Loss) per Common Share is only applicable for periods after June 29, 2021, post the Reorganization Transactions and IPO.

Adjusted Net Income (Loss) and Adjusted Earnings (Loss) Per Common Share exclude, to the extent applicable, the tax effected impact of non-cash expenses and other items that are not directly related to our core operations. These items are excluded because they are connected to the Company’s long term growth plan and not intended to increase short term revenue in a specific period. Further, to the extent that other companies use similar methods in calculating non-GAAP measures, the provision of supplemental non-GAAP information can allow for a comparison of the company’s relative performance against other companies that also report non-GAAP operating results.

Free Cash Flow

See below for reconciliations of these non-GAAP financial measures to their most comparable GAAP measures.

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Reconciliation of Net income (loss) to Adjusted EBITDA (Loss):


	Three Months Ended
(In thousands)	March 31, 2022		March 31, 2021
Net loss	$	(18,794)	$	(13,128)
Income taxes	302		6
Interest (income) expense, net	(7)		71
Other (income) expense, net	268		—
Depreciation and amortization	4,384		2,538
Equity-based compensation expense	13,129		1,319
Warrant liabilities	—		1,893
Adjusted EBITDA (Loss)	$	(718)	$	(7,301)

Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss)


	Three Months Ended
(In thousands)	March 31, 2022		March 31, 2021
Net loss attributable to Clear Secure, Inc.	$	(10,327)	$	—
Reallocation of net loss attributable to non-controlling interests	(8,467)		—
Net loss per above	(18,794)		(13,128)
Equity-based compensation expense	13,129		608
Amortization of acquired intangibles	869		—
Income tax (expense) benefit	(203)		—
Adjusted Net Loss	$	(4,999)	$	(12,520)

As stated above, due to the Company incurring a net loss for the periods presented, the Company has not calculated Adjusted Weighted-Average Shares Outstanding, Dilutive.

Calculation of Adjusted Weighted-Average Shares Outstanding


	As of March 31, 2022	As of March 31, 2021

Weighted-average number of shares outstanding, basic for Class A Common Stock	76,672,530	—
Adjustments
Assumed weighted-average conversion of issued and outstanding Class B Common Stock	1,042,234	—
Assumed weighted-average conversion of issued and outstanding Class C Common Stock	44,000,927	—
Assumed weighted-average conversion of issued and outstanding Class D Common Stock	26,705,415	—
Assumed weighted-average conversion of vested and outstanding warrants	162,957	—
Adjusted Weighted-Average Number of Shares Outstanding, Basic	148,584,063	—

Calculation of Adjusted Net Income (Loss) Per Common Share, Basic


	Three Months Ended March 31, 2022
Adjusted net loss	(4,999)
Adjusted weighted-average number of shares outstanding, basic	148,584,063
Adjusted net loss per common share, basic	$	(0.03)

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Reconciliation of Net cash provided by (used in) operating activities to Free Cash Flow:


	Three Months Ended
(In thousands)	March 31, 2022		March 31, 2021
Net cash provided by (used in) operating activities	$	24,932	$	(335)
Purchases of property and equipment	(5,533)		(8,794)
Share repurchases over fair value	—		712
Free Cash Flow	$	19,399	$	(8,417)

Components of Results of Operations

Revenue

The Company ~~has derived~~derives substantially all of its ~~historical~~ revenue from subscriptions to its consumer aviation service, CLEAR ~~Plus, which enables access to predictable and fast experiences through dedicated entry lanes in airport security checkpoints across the nation as well as our broader network.~~Plus. The Company offers certain limited-time free trials, family pricing, and other beneficial pricing through several channels, including airline and credit card partnerships. Membership subscription revenue is presented net of taxes, refunds, ~~and~~ credit card ~~chargebacks.~~ chargebacks, and estimated amounts due to a credit card partner.

The Company also generates revenue in relation to sports stadiums and Health Pass which are and historically have been ~~historically and continue to be~~ immaterial to our results. Sports stadium revenues consist of fees for use of the Company’s pods for security entry at various ~~sports stadiums,~~venues as well as access for members to dedicated entry lanes at various sports stadiums across the country. Additionally, the Company ~~also~~ generates ~~an immaterial amount of~~ revenue from transaction fees charged either per use or per user over a predefined time period, which ~~may include one-time implementation fees, platform licensing fees, hardware-leasing fees or incremental transaction fees.~~

Other revenue consists of revenue streams relating to sports stadiums and to Health Pass and are immaterial. Sports stadium revenues consist of fees for use of the Company’s pods for security entry at various sports stadiums, as well as access for members to dedicated entry lanes at various sports stadiums across the country. Other revenue also consists of transaction fees charged either per use or per user over a predefined time period, and may include one-time implementation fees, platform licensing fees, hardware-leasing fees or incremental transaction fees.

Operating Expenses

The Company’s expenses consist of cost of revenue share fees, cost of direct salaries and benefits, research and development, sales and marketing, general and administrative expenses and depreciation and amortization expenses.

Cost of Revenue Share Fee

The Company operates as a concessionaire in airports and shares a portion of the gross receipts generated from the Company’s members with the host airports and airlines (“Revenue Share”). The Revenue Share fee is generally prepaid to the host airport in the period collected from the member. The Revenue Share fee is capitalized and subsequently amortized to operating expense over each member’s subscription period, as the payments are refundable on a pro rata basis. Such prepayments are recorded in “Prepaid Revenue Share fee” in the Company’s condensed consolidated balance sheets. Cost of Revenue Share also includes a fixed fee ~~component.~~component which is expensed in the period incurred and certain overhead related expenses paid to the airports in relation to our Revenue Share arrangements.

Cost of Direct Salaries and Benefits

Cost of direct salaries and benefits includes employee-related expenses and allocated overhead associated with our field ambassadors directly assisting members and their corresponding travel related costs. Employee-related costs recorded in direct salaries and benefits consist of salaries, taxes, benefits and equity-based compensation. Such amounts are direct costs of services and are recorded in “Cost of direct salaries and benefits” in the Company’s condensed consolidated statement of operations.

Research and Development

Research and development expenses consist primarily of employee related expenses, ~~and~~ allocated overhead costs and costs for contractors related to the Company’s development of new products and services and improving existing products and services. Research and development costs are generally expensed as incurred, except for costs incurred in connection with the development of internal-use software that qualify for capitalization as described in our internal-use software policy. Employee-related expenses consist of salaries, taxes, benefits and equity-based compensation.

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Sales and Marketing

Sales and marketing expenses consist primarily of costs of general marketing and promotional activities, advertising fees used to drive subscriber acquisition, commissions, the production costs to create our advertisements, expenses related to employees who manage our marketing and brand and allocated overhead costs.

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General and Administrative

General and administrative expenses consist primarily of employee-related expenses for the executive, finance, accounting, legal, and human resources functions. Employee-related expenses consist of salaries, taxes, benefits and equity-based compensation. General and administrative costs also include the Company’s warrant ~~expense.~~expense and changes in the fair value of contingent consideration. In addition, general and administrative expenses include non-personnel costs, such as legal, accounting and other professional fees, variable credit card fees and variable mobile enrollment costs, and and all other supporting corporate expenses not allocated to other departments.

Interest Income, Net

Interest Income, net consists of interest income from our investment holdings partially offset by interest expense, which primarily includes amortization of discounts on our marketable securities and issuance costs on our revolving credit facility.

Other Income (Expense), Net

Other Income (Expense), Net consists of certain non-recurring non-operating items including income recognized in relation to a minimum annual guarantee paid to us by a marketing partner and impairment on long-lived assets.

Provision for Income Taxes

As a result of the IPO and Reorganization, the Company became the sole managing member of Alclear, which is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, Alclear is not subject to U.S. federal and most state and local income taxes. Any taxable income or loss generated by Alclear is passed through to and included in the taxable income or loss of its members, including ~~us,~~the Company, based on ~~a pro rata basis. We are~~ownership interest. The Company is subject to U.S. federal income taxes, in addition to state and local income taxes with respect to ~~our~~its allocable share of any taxable income or loss of Alclear, as well as any stand-alone income or loss generated by the Company. ~~We are~~The Company is also subject to income taxes in ~~Israel.~~Israel, Argentina, and Mexico.

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Comparison of the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ (in millions):


		Three Months Ended									Three Months Ended
		September 30, 2021		September 30, 2020		$ Change		% Change			March 31, 2022		March 31, 2021		$ Change		% Change
Revenue	Revenue	$	67.6	$	56.4	$	11.2	20	%	Revenue	$	90.5	$	50.6	$	39.9	79	%
Operating expenses:	Operating expenses:									Operating expenses:
Cost of revenue share fee	Cost of revenue share fee	$	10.0	$	8.3	$	1.7	20	%	Cost of revenue share fee	$	12.1	$	7.8	$	4.3	55	%
Cost of direct salaries and benefits	Cost of direct salaries and benefits	$	18.1	$	7.8	$	10.3	132	%	Cost of direct salaries and benefits	$	23.0	$	12.1	$	10.9	90	%
Research and development	Research and development	$	13.3	$	6.3	$	7.0	111	%	Research and development	$	15.5	$	9.0	$	6.5	72	%
Sales and marketing	Sales and marketing	$	10.0	$	3.3	$	6.7	203	%	Sales and marketing	$	7.8	$	5.0	$	2.8	56	%
General and administrative	General and administrative	$	44.8	$	17.7	$	27.1	153	%	General and administrative	$	45.9	$	27.2	$	18.7	69	%
Depreciation and amortization	Depreciation and amortization	$	4.0	$	2.3	$	1.7	74	%	Depreciation and amortization	$	4.4	$	2.5	$	1.9	76	%
Operating income (loss)		$	(32.6)	$	10.7	$	(43.3)	(405)	%
Operating loss										Operating loss	$	(18.2)	$	(13.0)	$	(5.2)	40	%
Other income (expense)	Other income (expense)									Other income (expense)
Interest income (expense), net	Interest income (expense), net	$	(0.1)	$	—	$	(0.1)	N/A		Interest income (expense), net	$	—	$	(0.1)	$	0.1	N/A
Other income (expense), net	Other income (expense), net	$	—	$	0.5	$	(0.5)	N/A		Other income (expense), net	$	(0.3)	$	—	$	(0.3)	N/A
Income (loss) before tax	Income (loss) before tax	$	(32.7)	$	11.2	$	(43.9)	(392)	%	Income (loss) before tax	$	(18.5)	$	(13.1)	$	(5.4)	41	%
Income tax expense		$	(0.1)	$	—	$	(0.1)	N/A
Income tax benefit (expense)										Income tax benefit (expense)	$	(0.3)	$	—	$	(0.3)	N/A
Net income (loss)	Net income (loss)	$	(32.8)	$	11.2	$	(44.0)	(393)	%	Net income (loss)	$	(18.8)	$	(13.1)	$	(5.7)	44	%

Information about our operating expenses for the three and three months ended March 31, 2022 and 2021 is set forth below.

Nine Months Ended
September 30,
2021 September 30,
2020 $ Change % Change
Revenue $ 173.3 $ 177.6 $ (4.3) (2) %
Operating expenses:
Cost of revenue share fee $ 26.0 $ 25.7 $ 0.3 1 %
Cost of direct salaries and benefits $ 46.1 $ 31.5 $ 14.6 46 %
Research and development $ 33.3 $ 23.4 $ 9.9 42 %
Sales and marketing $ 25.8 $ 11.5 $ 14.3 124 %
General and administrative $ 116.3 $ 97.5 $ 18.8 19 %
Depreciation and amortization $ 9.2 $ 6.9 $ 2.3 33 %
Operating loss $ (83.4) $ (18.9) $ (64.5) 341 %
Other income (expense)
Interest income (expense), net $ (0.3) $ 0.7 $ (1.0) (143) %
Other income (expense), net $ — $ 0.5 $ (0.5) N/A
Income (loss) before tax $ (83.7) $ (17.7) $ (66.0) 373 %
Income tax expense $ (0.3) $ — $ (0.3) N/A
Net income (loss) $ (84.0) $ (17.7) $ (66.3) 375 %
Revenue


	Three Months ended March 31,
	2022		2021		$ Change		% Change
Revenue	$	90.5	$	50.6	$	39.9	79	%

Revenue increased by $39.9 million, or 79%, for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The increase was primarily due to a 73% increase in the number of average CLEAR Plus members, a 3% increase in average revenue per CLEAR Plus member, and a 1,810 bps increase in Annual CLEAR Plus Net Member Retention in the three months ended March 31, 2022 as compared to the three months ended March 31, 2021. Approximately 30% and 27% of paying CLEAR Plus members in the three months ended March 31, 2022 and 2021, respectively, were on a family plan.

Cost of revenue share fee


	Three Months ended March 31,
	2022		2021		$ Change		% Change
Cost of Revenue Share Fee	$	12.1	$	7.8	$	4.3	55	%

Cost of revenue share fee increased by $4.3 million, or 55%, for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The change was driven by an increase of $.8 million due to a 37% increase in fixed airport fees, and $3.5 million due to a 64% increase in per member fees.

Cost of direct salaries and benefits

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~~Revenue~~


	Three Months ended March 31,
	2022		2021		$ Change		% Change
Cost of direct salaries and benefits	$	23.0	$	12.1	$	10.9	90	%

Three Months Ended Nine Months Ended
September 30,
2021 September 30,
2020 $ Change % Change September 30,
2021 September 30,
2020 $ Change % Change
Revenue $67.6 $56.4 $11.2 20% $173.3 $177.6 $(4.3) (2)%

Revenue increased by $11.2 million, or 20%, for the three months ended September 30, 2021 compared to the three months ended September 30, 2020. The increase was due to a 20.4% increase in the number of average monthly CLEAR Plus members offset by a 0.5% decline in average revenue per CLEAR Plus member in the three months ended September 30, 2021 as compared to the three months ended September 30, 2020. Approximately 29% and 27% of paying CLEAR Plus members in the three months ended September 30, 2021 and 2020, respectively, were on a family plan.

Revenue decreased by $4.3 million, or 2%, for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020. The decrease was due to a 2.9% decline in average revenue per CLEAR Plus members, partially offset by a 0.4% increase in the number of average monthly CLEAR Plus members in the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020. Approximately 28% and 27% of paying CLEAR Plus members in the nine months ended September 30, 2021 and 2020, respectively, were on a family plan.

~~Information about our operating expenses for the three and nine months ended September 30, 2021 and 2020 is set forth below.~~

~~Cost of revenue share fee~~

Three Months Ended Nine Months Ended
September 30,
2021 September 30,
2020 $ Change % Change September 30,
2021 September 30,
2020 $ Change % Change
Cost of Revenue Share Fee $ 10.0 $8.3 $1.7 20% $26.0 $25.7 $0.3 1%

Cost of revenue share fee increased by $1.7 million, or 20%, for the three months ended September 30, 2021 compared to the three months ended September 30, 2020. Fixed fees increased by $0.9 million, or 38%, and per member fees increased by $1.4 million, or 23%. The increase was partially offset by $0.7 million increase in airport fee concessions due to the COVID-19 pandemic.

Cost of revenue share fee increased by $0.3 million, or 1%, for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020. Fixed fees increased by 6%, or $0.5 million, and per member fees increased by 3%, or $0.6 million. The increase was partially offset by the $0.8 million increase in airport fee concessions due to the COVID-19 pandemic.

~~Cost of direct salaries and benefits~~

Three Months Ended Nine Months Ended
September 30,
2021 September 30,
2020 $ Change % Change September 30,
2021 September 30,
2020 $ Change % Change
Cost of direct salaries and benefits $18.1 $7.8 $10.3 132% $46.1 $31.5 $14.6 46%

Cost of direct salaries and benefits expenses increased by ~~$10.3~~$10.9 million, or ~~132%~~90%, for the three months ended ~~September 30, 2021~~March 31, 2022 compared to the three months ended ~~September 30, 2020.~~March 31, 2021. The ~~increase~~change was primarily due to growth in employee compensation costs of ~~$10.0~~$10.3 million caused by the increasing travel volumes leading to a higher staffing ~~needs.~~needs and a depressed comparison.

Research and development


	Three Months ended March 31,
	2022		2021		$ Change		% Change
Research and development	$	15.5	$	9.0	$	6.5	72	%

Research and development expenses increased by $6.5 million, or 72%, for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The change was primarily due to an increase of $6.9 million of employee-related expenses, including equity-based compensation, including recent acquisitions and partially offset by a decrease of $0.7 million for professional fees.

Sales and marketing


	Three Months ended March 31,
	2022		2021		$ Change		% Change
Sales and marketing	$	7.8	$	5.0	$	2.8	56	%

Sales and marketing expenses increased by $2.8 million, or 56%, for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The change was driven by an increase ambassador commission expense due to higher new member enrollments and a $0.7 million increase largely driven by employee-related expenses, including equity based compensation, partially offset by a $1.0 million decrease in discretionary marketing expense

General and administrative


	Three Months ended March 31,
	2022		2021		$ Change		% Change
General and administrative	$	45.9	$	27.2	$	18.7	69	%

General and administrative expenses increased by $18.7 million, or 69%, for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The increase was primarily driven by a net increase in equity-based compensation costs of $7.9 million, which was offset by a reduction in the mark to market of warrant liabilities of $1.9 million. Additionally, salaries and benefits increased by $5.2 million and public company expenses as a result of the IPO increased by $1.4 million.

Non-operating income (expense)


	Three Months ended March 31,
	2022		2021		$ Change		% Change
Interest Income (expense), net	$	—	$	(0.1)	$	0.1	N/A

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Cost of direct salaries and benefits expenses increased by $14.6 million, or 46%, for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020. The increase was primarily due to growth in employee compensation costs of $13.8 million caused by the increasing travel volumes leading to a higher staffing needs.

~~Research and development~~

Three Months Ended Nine Months Ended
September 30,
2021 September 30,
2020 $ Change % Change September 30,
2021 September 30,
2020 $ Change % Change
Research and development $13.3 $6.3 $7.0 111% $33.3 $23.4 $9.9 42%

Research and development expenses increased by $7.0 million, or 111%, for the three months ended September 30, 2021 compared to the three months ended September 30, 2020. The change was primarily due to an increase of $6.7 million in compensation and professional services and $0.4 million in technology costs.

Research and development expenses increased by $9.9 million, or 42%, for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020. The change was primarily due to an increase of of $8.8 million in compensation and professional services and $0.9 million in technology costs.

~~Sales and marketing~~

Three Months Ended Nine Months Ended
September 30,
2021 September 30,
2020 $ Change % Change September 30,
2021 September 30,
2020 $ Change % Change
Sales and marketing $ 10.0 $3.3 $6.7 203% $25.8 $11.5 $14.3 124%

Sales and marketing expenses increased by $6.7 million, or 203%, for the three months ended September 30, 2021 compared to the three months ended September 30, 2020. The increase was primarily due to a $3.2 million increase in ambassador commission expense due to higher new member enrollments. The increase was also driven by a $2.9 million increase related to growth in discretionary marketing, promotional, and advertising initiatives.

Sales and marketing expenses increased by $14.3 million, or 124%, for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020. The increase was primarily due to an increase of $7.7 million related to growth in discretionary marketing, promotional and advertising initiatives. The increase was also driven by a $5.4 million increase in ambassador commission expense due to higher new member enrollments.

~~General and administrative~~

Three Months Ended Nine Months Ended
September 30,
2021 September 30,
2020 $ Change % Change September 30,
2021 September 30,
2020 $ Change % Change
General and administrative $44.8 $17.7 $27.1 153% $116.3 $97.5 $18.8 19%

General and administrative expenses increased by $27.1 million, or 153%, for the three months ended September 30, 2021 compared to the three months ended September 30, 2020. The increase was primarily due to a $7.9 million and $2.8 million increase in non-employee and employee equity-based compensation costs, respectively. Additionally, there was a $13.2 million increase due to higher employee related expenses, professional services, technology, insurance and credit card fees.

General and administrative expenses increased by $18.8 million, or 19%, for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 primarily due to an $18.2 million increase as a result of higher professional services, technology, insurance and credit card fees.

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~~Non-operating income (expense)~~

Three Months Ended Nine Months Ended
September 30,
2021 September 30,
2020 $ Change % Change September 30,
2021 September 30,
2020 $ Change % Change
Interest income (expense), net $(0.1) $— $(0.1) N/A $(0.3) $0.7 $(1.0) (143)%

Interest income, net decreased by $0.1 million, or N/A, for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 and by $1.0 million, or 143%, for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020. The decreases were as a result of reduced interest rates and the sales related to the our marketable debt securities.

Three Months Ended Nine Months Ended
September 30,
2021 September 30,
2020 $ Change % Change September 30,
2021 September 30,
2020 $ Change % Change
Other income (expense) $— $0.5 $(0.5) N/A $— $0.5 $(0.5) N/A

Other income (expense), decreased by $(0.5) million, for the three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020. The decrease was primarily due to the one time partnership transaction during the three months ended September 30, 2020.

~~Income tax expense~~

Three Months Ended Nine Months Ended
September 30,
2021 September 30,
2020 $ Change % Change September 30,
2021 September 30,
2020 $ Change % Change
Income tax expense $(0.1) $— $(0.1) N/A $(0.3) $— $(0.3) N/A

~~Income tax expense~~ increased by $0.1 million, for the three months ended ~~September 30, 2021~~March 31, 2022 compared to the three months ended ~~September 30, 2020.~~March 31, 2021. The increase was driven by higher interest income, partially offset by higher amortization of discounts on our marketable securities.


	Three Months ended March 31,
	2022		2021		$ Change		% Change
Other income	$	—	$	—	$	—	N/A
Other expense	$	(0.3)	$	—	$	(0.3)	N/A
Other income (expense), net	$	(0.3)	$	—	$	(0.3)	N/A

Other income (expense), net increased by $0.3 million, for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The increase was primarily due to the impairment of long-lived assets during the current year.

Income tax expense


	Three Months ended March 31,
	2022		2021		$ Change		% Change
Income tax expense	$	(0.3)	$	—	$	(0.3)	N/A

Income tax expense increased by $0.3 million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The increase was primarily due to the impact of Alclear being a partnership and allocating its taxable results to its non-controlling members, ~~including the Company, the movement in the valuation allowance and state and foreign taxes.~~

Income tax expense increased by $0.3 million for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020. The increase was primarily due to the impact of Alclear being a partnership and allocating its taxable results to its non-controlling members, including the Company, the movement in the valuation allowance and state and foreign taxes.

Liquidity and Capital Resources

Our operations have been financed primarily through equity financing and cash flow from operating activities. As of ~~September 30, 2021,~~March 31, 2022, we had cash and cash equivalents of ~~$338~~$299.1 million and marketable securities of ~~$335~~$334.4 million.

Historically, our principal uses of cash have included funding our operations, capital expenditures, repurchases of members’ equity and more recently, business combinations that enhance our strategic positioning. We plan to finance our operations and capital expenses largely through cash generated from the proceeds of our IPO and operations. We believe our existing cash and cash ~~equivalent balances, cash flow from operations,~~equivalents, marketable securities, ~~portfolio~~cash provided by operations and ~~amounts available for borrowing~~the availability of additional funds under our Credit Agreement (as defined below) will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months, including known commitments and contingencies as discussed below. Future capital expenditure will generally relate to building enhancements to the functionality of our current platform, equipment, leasehold improvements and furniture and fixtures related to office expansion and relocation, and general corporate infrastructure. We have planned capital expenditures related to the build out of our new office space of approximately $16.5 million in the next 12 to 24 months. We are still early in this process and engaging vendors for the project, and as is the case with any large-scale construction project, the timing and amounts of these expenditures are therefore subject to uncertainty.

As a result of the COVID-19 pandemic, our operations have been, and we expect they will continue to be, adversely impacted by government mandated regulations, and the social distancing practices and health concerns of our guests and employees. In light of the evolving nature of COVID-19 and the uncertainty it has produced around the world, we do not believe it is possible to predict the cumulative and ultimate impact of the COVID-19 pandemic on our future business, results of operations and financial condition. See “Risk Factors—Risk Related to Our Business, Brand and Operations—The COVID-19 pandemic has impacted, and may continue to impact, our business, results of operations and financial condition” in our Annual Report on Form 10-K.

Credit Agreement

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On March 31, 2020, we entered into a credit agreement (the “Credit Agreement”) for a three-year $50 million revolving credit facility that expires on March 31, 2023. Borrowings under the Credit Agreement generally will bear interest between 1.5% and 2.5% per year and will also include interest based on the greater of the prime rate, LIBOR or New York Federal Reserve Bank (“NYFRB”) rate, plus an applicable margin for specific interest periods. In April 2021, the Company increased the size of the revolving credit facility to $100 million. As of ~~September 30, 2021,~~March 31, 2022, we had not drawn on the revolving credit facility and did not have outstanding borrowings under the Credit Agreement.

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We have the option to repay ~~our~~any borrowings under the Credit Agreement without premium or penalty prior to maturity. In addition, the Credit Agreement contains certain other covenants (none of which relate to financial condition), events of default and other customary provisions, and also contains customary LIBOR replacement mechanics. The Credit Agreement contains customary affirmative covenants, such as financial statement reporting requirements and delivery of borrowing base certificates, as well as customary covenants that restrict our ability to, among other things, incur additional indebtedness, sell certain assets, guarantee obligations of third parties, declare dividends or make certain distributions, and undergo a merger or consolidation or certain other transactions.

At ~~September 30, 2021,~~March 31, 2022, the Company was in compliance with all of the financial and non-financial ~~covenants.~~covenants of the Credit Agreement.

Cash Flow

The following summarizes our cash flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and March 31, 2021 ~~and September 30, 2020~~ (in millions):


		Nine Months Ended September 30,					Three Months Ended March 31,
		2021	2020	$ Change	% Change		2022	2021	$ Change
Net cash provided by (used in) operating activities	Net cash provided by (used in) operating activities	$38.0	($28.5)	$66.5	(233%)	Net cash provided by (used in) operating activities	$24.9	($0.3)	$25.2
Net cash used in investing activities	Net cash used in investing activities	($320.5)	($14.2)	($306.3)	2157%	Net cash used in investing activities	($5.6)	($8.9)	$3.3
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	$504.0	($97.0)	$601.0	(620%)	Net cash provided by (used in) financing activities	$—	$68.8	($68.8)
Net increase (decrease) in cash, cash equivalents, and restricted cash		$221.5	($139.7)	$361.2	(259%)
Net increase in cash, cash equivalents, and restricted cash						Net increase in cash, cash equivalents, and restricted cash	$19.3	$59.6	($40.3)
Cash, cash equivalents, and restricted cash, beginning of year	Cash, cash equivalents, and restricted cash, beginning of year	$139.1	$236.1	($97.0)	(41%)	Cash, cash equivalents, and restricted cash, beginning of year	$309.1	$139.1	$170.0
Cash, cash equivalents, and restricted cash, end of period	Cash, cash equivalents, and restricted cash, end of period	$360.6	$96.4	$264.2	274%	Cash, cash equivalents, and restricted cash, end of period	$328.4	$198.7	$129.7

Cash flows from operating activities

For the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, net cash provided by operating activities was ~~$38.0~~$24.9 million compared to net cash used in operating activities of ~~$28.5~~$0.3 million for the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, an increase of ~~$66.5~~$25.2 million due to ~~benefit~~favorable changes in ~~changes~~ working capital of ~~$99.7~~$16.7 million primarily related to prepaid and other current assets, accrued liabilities and deferred ~~revenue and accrued liabilities.~~revenue. Additionally, there was an increase in non-cash adjustments to net loss of ~~$32.9~~$14.2 million. These increases were offset by an increase in net loss of ~~$66.0~~$5.7 million.

Cash flows from investing activities

For the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, net cash used in investing activities was ~~$320.5~~$5.6 million compared to ~~$14.2~~$8.9 million for the ~~nine~~three months ended ~~September 30, 2020, an increase~~March 31, 2021, a decrease of ~~$306.3~~$3.3 million primarily due to ~~an increase~~a a decrease of ~~$293.4 million related to the net impact of sales and purchases of marketable securities as well as an increase of $12.9~~$3.3 million relating to the purchase of property and equipment.

Cash flows from financing activities

For the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, net cash used in financing activities was $— million compared to net cash provided by financing activities ~~was $504.0 million compared to net cash used in financing activities~~ of ~~$97.0~~$68.8 million for the ~~nine~~three months ended ~~September 30, 2020, an increase~~March 31, 2021, a decrease of ~~$601.0~~$68.8 million. The ~~increase~~decrease was primarily due to IPO proceeds, net of underwriter fees and issuance costs of $437.5 million.. Additionally, there was a decrease in the amounts used to repurchase member’s deficit of $198.6 million. These changes were offset by a decrease of ~~$33.7~~$80.3 million ~~due to a a decrease~~ in the proceeds from the issuance of members’ units ~~net~~offset by a decrease in amounts used to repurchase member’s deficit of ~~costs.~~$11.7 million.

Commitments and Contingencies

The following summarizes expected cash requirements for contractual obligations as of September 30, 2021 (in millions). These cash requirements relate to future minimum payments under lease and airport agreements. See Note 17, Commitments and Contingencies of the notes to the condensed consolidated financial statements included elsewhere in this document for further discussion of contractual obligations and other contingencies.

4140

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Operating Lease Payments
2021 $ 4.1
2022 $ 16.1
2023 $ 14.9
2024 $ 11.3
2025 $ 9.8
Thereafter $ 21.8
Total $ 78.0
We have non-cancelable operating lease arrangements for office space. As of March 31, 2022, we had future minimum payments of $33.4 million, with $3.5 million due in 2022. See Note 8 within the condensed consolidated financial statements for information related to our lease obligations.

~~Additionally,~~On November 4, 2021, the Company entered into a lease of an office building to house the Company’s corporate headquarters. The Lease Agreement provides for a commencement on the later of October 1, 2022 or the date on which the Landlord delivers possession of the premises with certain agreed upon improvements to be made by the Landlord completed. The term of the Lease Agreement is fifteen years after the date that rent obligations begin, with an option to renew for one 5-year or 10-year period at Fair Market Value (as defined in the Lease Agreement) by providing the Landlord with 18 months’ notice and certain other requirements. The aggregate undiscounted future minimum lease payments are approximately $177.5 million.

We enter into agreements with airports for access to floor and office space. As of March 31, 2022, we had future minimum payments of $39.8 million, with $13.0 million due in 2022. See Note 19 within the condensed consolidated financial statements.

The Company has commitments for future marketing expenditures to sports stadiums of ~~$5.5~~$3.1 million as of ~~September 30, 2021.~~March 31, 2022.

The Company is subject to certain minimum spend commitments of approximately $13.2 million over the next two years under service arrangements.

Off Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Critical Accounting Policies and Estimates

~~Except~~The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported periods. The Securities and Exchange Commission (“SEC”) has defined a company’s critical accounting policies as ~~described~~the ones that are most important to the portrayal of a company’s financial condition and results of operations, and which require a company to make its most difficult and subjective judgments. Based on this definition, we have identified the critical accounting policies and judgments addressed below. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates.

Tax Receivable Agreement

The Company entered into a Tax Receivable Agreement (“TRA”) which generally provides for payment by the Company to the remaining members of Alclear, the “TRA Holders,” of 85% of the net cash savings, if any, in U.S. federal, state and local income tax and franchise tax that the Company actually realizes or is deemed to realize in certain circumstances. The Company will retain the benefit of the remaining 15% of these net cash savings. As of March 31, 2022, the Company did not record a liability from the TRA.

Business Combinations

Accounting for business combinations requires us to make significant estimates and assumptions with respect to the the fair value of identifiable assets and liabilities acquired in a business combination, especially with respect to intangible assets. The initial fair values recorded are subject to adjustments for up to one year after the closing date of the acquisition to reflect final valuations.

Recent Accounting Pronouncements

See Note 2, Summary of Significant Accounting Policies within the condensed consolidated financial statements, included elsewhere in this document, there have been no material changes to our critical accounting policies or in the underlying assumptions and estimates used in such policies as reported in our Prospectus for ~~the year ended December 31, 2020.~~

~~Recent Accounting Pronouncements~~

~~See Note 1, Description of Business of the notes to the condensed consolidated financial statements included elsewhere in this document for details of~~ recently issued accounting pronouncements and their expected ~~impact on our condensed consolidated financial statements.~~impact.

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Item 3. Quantitative and Qualitative Disclosure about Market Risk

In the normal course of business, we are subject to a variety of risks which can affect our operations and profitability. We broadly define these areas of risk and interest rate risk.

Interest Rate Risk

We had cash and cash equivalents of $299.1 million as of March 31, 2022. Cash and cash equivalents includes highly liquid securities that have a maturity of three months or less at the date of purchase. The fair value of our cash and cash equivalents would not be significantly affected by either a 10% increase or decrease in interest rates due mainly to the short-term nature of these instruments.

Debt

Interest payable on our revolving credit facility is variable. Borrowings generally will bear ~~interest between 1.5% and 2.5% per year and will also include~~ interest based on the greater of the prime rate, LIBOR or NYFRB rate, plus an applicable margin for specific interest periods. As of ~~September 30,~~December 31, 2021, we had no outstanding borrowings under the revolving credit facility.

~~Risk~~Investments

We had marketable securities totaling $334.4 million as of March 31, 2022. This amount was invested primarily in money market funds, commercial paper, corporate notes and ~~Uncertainties~~

~~In early 2020, the World Health Organization (“WHO”) declared the novel coronavirus (“COVID-19”) outbreak~~bonds, and government securities. Our investments are made for capital preservation purposes and we do not enter into investments for trading or speculative purposes. We are exposed to bemarket risk related to changes in interest rates where a ~~global health pandemic. The pandemic has had a significant~~decline in interest rates would reduce our interest income, net and ~~horrific~~conversely, an increase in interest rates would have an adverse impact on ~~people’s health, safety, and economic well-being. It also has had~~the fair value of our investment portfolio. The effect of a ~~material adverse effect on the global and domestic travel industries, as governments instituted legal restrictions on travel, issued shelter-in- place orders and mandated quarantine periods~~hypothetical 100 basis points increase or decrease in overall interest rate would result in unrealized loss or gain to ~~prevent the spread of the disease. This resulted in a dramatic collapse in United States domestic airline passenger volumes in 2020, which saw a decline~~“available for sale” investment fair value of approximately ~~60% versus 2019.~~$1.4 million that would be recognized in accumulated other comprehensive loss within the condensed consolidated balance sheets.

~~The Company responded swiftly to~~

Foreign Currency Translation Risk

Fluctuations in foreign currencies impact the ~~pandemic~~amount of total assets, liabilities, revenues, operating expenses and ~~related events~~cash flows that we report for our foreign subsidiaries upon the translation of these amounts into USD. Since the majority of our business are transacted in ~~a variety of ways to ensure minimal disruptions to offerings provided to clients and~~ the ~~well-being of employees. During~~U.S. dollar, foreign currency translation risk was insignificant for the pandemic, the Company took early action including eliminating marketing and reducing operating expenses. While the Company expects the pandemic to continue to negatively affect its operating results, there remains uncertainty related to the duration and ultimate impact.

three months ended March 31, 2021.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of ~~the end of the period covered by this quarterly report.~~March 31, 2022. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2022, our disclosure controls and procedures ~~as of the end of the period covered by this Quarterly Report on Form 10-Q~~ were effective in providing reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934, as amended, is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

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Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, with the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error and mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of controls.

The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, a control may become inadequate because of changes in conditions or because the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.

Management’s Report on Internal Control over Financial Reporting

This Form 10-Q does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of the Company’s registered public accounting firm due to a transition period established by the rules of the SEC for newly public companies.

Changes in Internal Control

There were no changes in our internal control over financial reporting identified in management's evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the period covered by this Quarterly Report on Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~Limitations on Effectiveness of Controls and Procedures~~

In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

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PART II - OTHER INFORMATION

Item 1. Legal Matters

We are subject to commercial litigation claims and to administrative and regulatory proceedings and reviews that may be asserted or maintained from time to time. We currently believe that the ultimate outcome of such lawsuits, proceedings and reviews will not, individually or in the aggregate, have a material adverse effect on our condensed consolidated financial statements.

Item 1A. Risk Factors

We have disclosed under the heading “Risk Factors” in our ~~Registration Statement~~Annual Report on Form ~~S-1 (File No. 333-256851) and the Prospectus included therein,~~10-K, the risk factors which materially affect our business, financial condition or results of operations. There have been no material changes from the risk factors previously disclosed. You should carefully consider the risk factors set forth in the ~~Registration Statement and the Prospectus~~Annual Report on Form 10-K and the other information set forth elsewhere in this Quarterly Report on Form 10-Q. You should be aware that these risk factors and other information may not describe every risk facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~Unregistered Sales of Equity Securities~~

During the three months ended ~~September 30, 2021, we did not conduct any sales~~March 31, 2022, certain non-controlling interest holders exchanged their Alclear Units and corresponding shares of ~~equity securities that~~Class C Common Stock or Class D Common Stock for shares of the Company’s Class A Common Stock or Class B Common Stock, as applicable. As a result, the Company issued 1,025,318 shares of Class A Common Stock and 4,506 shares of Class B Common Stock. The 4,506 shares of Class B Common Stock were ~~not registered under~~ultimately converted to shares of Class A Common Stock per the ~~Securities Act~~terms of ~~1933, as amended.~~the Company’s Second Amended and Restated Certificate of Incorporation.

Use of IPO Proceeds

On July 2, 2021, we closed our IPO, in which the Company issued 15,180,000 shares of Class A common stock (which included 1,980,000 shares of Class A common stock as a result of the exercise of the underwriters’ over-allotment option, which was exercised on June 30, 2021). All shares in the IPO were registered under the Securities Act pursuant to a Registration Statement on Form S-1 (File No. 333-256851), which was declared effective by the SEC on June 29, ~~2021.~~2021 (the “Registration Statement”).

Goldman Sachs & Co. was the representative of the underwriters, which comprised Goldman Sachs & Co., J.P. Morgan Securities LLC, Allen & Company LLC, Wells Fargo Securities, LLC, LionTree Advisors LLC, Stifel, Nicolaus & Company, Incorporated, Telsey Advisory Group LLC, Centerview Partners LLC, Loop Capital Markets LLC, and Roberts & Ryan Investments, Inc. The lead book-runners of our IPO were Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Allen & Company LLC and Wells Fargo Securities, LLC.

The initial offering price to the public in the IPO was $31.00 per share. We received $29.295 per share from the underwriters after deducting underwriting discounts and commissions of $1.705 per share. We incurred underwriting discounts and commissions of approximately $25.9 million, including the effect of the exercise of the over-allotment option.. Thus, our net offering proceeds, after deducting underwriting discounts and commissions, net of the rebate on the over-allotment option, were approximately $445.9 million, which the Company contributed to Alclear in exchange for 15,180,000 Alclear Units. The Company has caused Alclear to use such contributed amount to pay offering expenses of approximately ~~$8.9~~$9.0 million, and for general corporate purposes. There has been no material change in the planned use of the IPO net proceeds from what is described in the Company’s Registration Statement. No payments were made to our directors or officers or their associates, holders of 10% or more of any class of our equity securities or any affiliates.

Issuer Purchases of Equity Securities

~~We do~~As of March 31, 2022, we did not have a share repurchase program and no shares were repurchased during ~~the three and nine months ended September 30, 2021.~~that period. The Company classifies forfeited unvested restricted stock awards as treasury stock within the condensed consolidated balance sheets.

Item 3. Defaults Upon Senior Securities.

~~None~~

Table of Contents

None

Item 4. Mine Safety Disclosures.

Not applicable

Item 5. Other Information.

None

Table of Contents

Item 6. Exhibits

The documents listed in the Index to Exhibits of this quarterly report on Form 10-Q are incorporated by reference or are filed with this quarterly report on Form 10-Q, in each case as indicated therein.


Exhibit Number						Description

31.1						Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2						Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1						Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2						Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS						Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH						Inline XBRL Taxonomy Extension Schema Document
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document
104						Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on ~~November 15, 2021.~~May 16, 2022.

Date:

~~November 15, 2021~~May 16, 2022

By:

/s/ Caryn Seidman-Becker

Caryn Seidman-Becker

Chief Executive Officer

~~(Principal Executive Officer)~~

Date:

~~November 15, 2021~~May 16, 2022

By:

/s/ Kenneth Cornick

Kenneth Cornick

President and Chief Financial Officer

~~(Principal Financial and Accounting Officer)~~


	Redeemable Capital Units						Members’ Deficit
	Class A Units			Class B Units			Class C Units			Profit Units			Accumulated other comprehensive income (loss)		Accumulated deficit		Members' deficit total
	Number of Units	Amount		Number of Units	Amount		Number of Units	Amount		Number of Profit Units	Amount
Balance, January 1, 2020	316,785	$	3,168	4,759,569	$432,062		—	—		2,113,008	$	8,022	$	3	$	(291,354)	$	(283,329)
Net loss	—	—		—	—		—	—		—	—		—		(51,253)		(51,253)
Other comprehensive loss	—	—		—	—		—	—		—	—		(64)		—		(64)
Issuance of member units, net of costs	—	—		422,039	113,944		—	—		37,700	—		—		—		—
Repurchase and retirement of capital units	(54,843)	(548)		(677,387)	(14,053)		—	—		—	—		—		(183,102)		(183,102)
Repurchase, forfeitures and retirement of profit units	—	—		—	—		—	—		(328,834)	(1,630)		—		(10,829)		(12,459)
Warrant expense	—	—		—	1,441		—	—		—	—		—		—		—
Equity-based compensation expense	—	—		—	—		—	—		—	351		—		—		351
Balance, March 31, 2020	261,942	$	2,620	4,504,221	$	533,394	—	$	—	1,821,874	$	6,743	$	(61)	$	(536,538)	(529,856)
Net income	—	—		—	—		—	—		—	—		—		22,346		22,346
Other comprehensive income	—	—		—	—		—	—		—	—		128		—		128


Repurchase, forfeitures and retirement of profit units	—	—		—	—		—	—		(57,050)	(3)		—		(123)		(126)
Warrant expense	—	—		—	141		—	—		—	—		—		—		—
Equity-based compensation expense	—	—		—	—		—	—		—	328		—		—		328
Balance, June 30, 2020	261,942	$	2,620	4,504,221	$	533,535	—	$	—	1,764,824	$	7,068	$	67	$	(514,315)	(507,180)
Net income	—	—		—	—		—	—		—	—		—		11,143		11,143
Other comprehensive loss	—	—		—	—		—	—		—	—		(32)		—		(32)
Issuance of member units, net of costs	—	—		—	—		—	—		130,628	—		—		—		—

Repurchase, forfeitures and retirement of profit units	—	—		—	—		—	—		(19,125)	—		—		(23)		(23)
Warrant expense	—	—		—	143		—	—		—	—		—		—		—
Equity-based compensation expense	—	—		—	—		—	—		—	385		—		—		385
Balance, September 30, 2020	261,942	$	2,620	4,504,221	$	533,678	—	$	—	1,876,327	$	7,453	$	35	$	(503,195)	(495,707)


	Amortization Period in Years	September 30, 2021		December 31, 2020
Patents	20	$	2,007	$	1,293
Other indefinite lived intangible assets		310		310
Total intangible assets, cost		2,317		1,603
Less: accumulated amortization		(50)		(39)
Intangible assets, net		$	2,267	$	1,564


	Alclear Units	Ownership Percentage
Alclear Holding Units held by post-reorganization members	44,407,609	31.08	%
Alclear Holding Units held by Alclear Investments, LLC and Alclear Investments II, LLC	24,756,018	17.33	%
Total	69,163,627	48.41	%


	RSU’s	Weighted- Average Grant-Date Fair Value		RSU Units - Class B Common Stock	Weighted- Average Grant-Date Fair Value
Balance upon effect of Reorganization*	3,009,982	$	7.23	2,113,672	$	2.29
Granted	1,240,853	42.10		—	—
Vested	—	—		—	—
Forfeited	(292,213)	(3.27)		(1,953,803)	(1.29)
Unvested balance, September 30, 2021	3,958,622	$	18.45	159,869	$	14.51


	Three Months Ended September 30, 2021
	Class A		Class B
Basic:
Net loss attributable to Clear Secure, Inc.	$	(16,675)	$	(240)
Weighted-average number of shares outstanding, basic	72,285,100		1,042,234
Net loss per common share, basic:	$	(0.23)	$	(0.23)

Diluted:
Net loss attributable to Clear Secure, Inc.	$	(16,675)	$	(240)
Weighted-average number of shares outstanding, basic	72,285,100		1,042,234
Potentially dilutive shares	—		—
Weighted-average number of shares outstanding, diluted	72,285,100		1,042,234
Net loss per common share, diluted:	$	(0.23)	$	(0.23)


	Nine Months Ended September 30, 2021
	Class A		Class B
Basic:
Net loss attributable to Clear Secure, Inc.	$	(18,650)	$	(269)
Weighted-average number of shares outstanding, basic	72,124,741		1,042,234
Net loss per common share, basic:	$	(0.26)	$	(0.26)

Diluted:
Net loss attributable to Clear Secure, Inc.	$	(18,650)	$	(269)
Weighted-average number of shares outstanding, basic	72,124,741		1,042,234
Potentially dilutive shares	—		—
Weighted-average number of shares outstanding, diluted	72,124,741		1,042,234
Net loss per common share, diluted:	$	(0.26)	$	(0.26)



2021	$	4,093
2022	16,104
2023	14,941
2024	11,284
2025	9,773
Thereafter	21,803
Total	$	77,998


	Operating Lease Payments
2021	$	4.1
2022	$	16.1
2023	$	14.9
2024	$	11.3
2025	$	9.8
Thereafter	$	21.8
Total	$	78.0