Evolv Technologies (US:EVLV)2025-08-14 20:35Part I Financial Information Presents the company's unaudited financial statements, management's analysis, and disclosures on market risk and internal controls Item 1. Financial Statements Presents unaudited condensed consolidated financial statements, highlighting a restatement of prior period financials due to an internal investigation Condensed Consolidated Balance Sheets Total assets grew to $280.4 million, while a significant rise in liabilities led to a decrease in stockholders' equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $280,422 | $268,059 | | Cash and cash equivalents | $36,942 | $37,015 | | Accounts receivable, net | $41,802 | $28,392 | | Property and equipment, net | $125,478 | $123,661 | | Total Liabilities | $187,772 | $150,408 | | Accrued expenses and other current liabilities | $38,170 | $19,508 | | Total deferred revenue | $91,372 | $84,772 | | Contingent earn-out liability | $18,033 | $12,809 | | Total Stockholders' Equity | $92,650 | $117,651 | Condensed Consolidated Statements of Operations and Comprehensive Loss Q2 revenue grew 29% YoY to $32.5 million, but a net loss of $40.5 million was reported due to non-cash expenses Q2 2025 vs. Q2 2024 (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 (Restated) | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | $32,544 | $25,224 | +29.0% | | Gross Profit | $16,218 | $14,757 | +9.9% | | Loss from Operations | ($17,493) | ($22,371) | +21.8% | | Net (Loss) Income | ($40,535) | $3,418 | -1286% | | Net Loss Per Share (Diluted) | ($0.25) | $0.02 | -1350% | Six Months Ended June 30, 2025 vs. 2024 (in thousands, except per share data) | Metric | H1 2025 | H1 2024 (Restated) | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | $64,551 | $47,405 | +36.2% | | Gross Profit | $35,368 | $26,912 | +31.4% | | Loss from Operations | ($31,882) | ($44,277) | +28.0% | | Net Loss | ($42,224) | ($7,854) | -437.6% | | Net Loss Per Share (Diluted) | ($0.26) | ($0.05) | -420.0% | Condensed Consolidated Statements of Cash Flows Net cash used in operations improved to $0.4 million for H1 2025, with the company's cash position remaining stable Six Months Ended June 30 Cash Flow Summary (in thousands) | Cash Flow Category | 2025 | 2024 (Restated) | | :--- | :--- | :--- | | Net cash used in operating activities | ($426) | ($37,732) | | Net cash (used in) provided by investing activities | ($3,611) | $5,621 | | Net cash provided by financing activities | $4,095 | $636 | | Net decrease in cash | ($73) | ($31,464) | | Cash at end of period | $36,942 | $35,973 | Notes to Consolidated Financial Statements Discloses details on a financial restatement, legal contingencies, and a new $75 million credit facility secured post-quarter - The company designs and sells AI-powered security screening and analytics systems, including its new Evolv eXpedite™ product for bags, to enhance security at venues like schools, hospitals, and stadiums2324 - An internal investigation found that certain sales were subject to extra-contractual terms not shared with accounting personnel, leading to premature or incorrect revenue recognition, which resulted in the resignation of the CFO, termination of other employees, and a restatement of financial statements383940 - The company is involved in a class-action lawsuit alleging false statements about product effectiveness and revenue recognition, for which a settlement in principle of $15.0 million was reached, with $14.0 million expected to be covered by D&O insurance123127 - Subsequent to the quarter end, on July 29, 2025, the company entered into a $75.0 million credit agreement to be used for general corporate purposes, including supporting its subscription sales model29144145 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Discusses a 36% H1 revenue increase to $64.6 million, a widening net loss, and the impact of the financial restatement Results of Operations H1 revenue grew 36% to $64.6 million, while a narrowed operating loss was offset by non-cash expenses, widening the net loss Revenue by Type - Six Months Ended June 30 (in thousands) | Revenue Type | 2025 | 2024 (Restated) | % Change | | :--- | :--- | :--- | :--- | | Product revenue | $4,850 | $3,445 | +41% | | Subscription revenue | $39,437 | $29,874 | +32% | | Service revenue | $13,416 | $10,818 | +24% | | License fee and other revenue | $6,848 | $3,268 | +110% | | Total Revenue | $64,551 | $47,405 | +36% | Operating Expenses - Six Months Ended June 30 (in thousands) | Expense Category | 2025 | 2024 (Restated) | % Change | | :--- | :--- | :--- | :--- | | Research and development | $9,599 | $12,246 | -22% | | Sales and marketing | $22,779 | $32,216 | -29% | | General and administrative | $32,210 | $25,867 | +25% | | Restructuring costs | $2,662 | $860 | +210% | | Total Operating Expenses | $67,250 | $71,189 | -6% | - The decrease in Sales & Marketing and R&D expenses was primarily due to reductions in force implemented in May 2024 and January 2025218219 - The increase in General & Administrative expenses was driven by a $11.5 million increase in consulting and legal fees related to the internal investigation and restatement, partially offset by $5.6 million in insurance recoveries220 Liquidity and Capital Resources The company held $36.9 million in cash and secured a new $75.0 million credit facility to ensure sufficient liquidity - The company entered into a new $75.0 million credit agreement with MidCap Financial Trust on July 29, 2025, receiving initial net proceeds of $26.6 million228231 - Management expects that current cash reserves, along with cash from operations and the new credit facility, will be sufficient to fund operating expenses and capital requirements for at least the next twelve months229 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is exempt from this disclosure as a smaller reporting company - The company is exempt from this disclosure requirement due to its status as a smaller reporting company250 Item 4. Controls and Procedures Management concluded disclosure controls were ineffective due to material weaknesses and has initiated a detailed remediation plan - Management concluded that disclosure controls and procedures were not effective as of June 30, 2025, due to material weaknesses in internal control over financial reporting252 - Identified material weaknesses include an ineffective control environment, lack of sufficient accounting personnel, ineffective communication between departments, and ineffective IT general controls for financial systems253256 - The company's remediation plan includes hiring a new Chief Accounting Officer and Chief Revenue Officer, implementing a new channel partner program, enhancing training, and engaging a national advisory firm to assist in designing controls260261 Part II Other Information Covers legal proceedings, risk factors, equity sales, and other corporate disclosures Item 1. Legal Proceedings Details a $15.0 million class action settlement, an FTC settlement, and an ongoing SEC investigation - This section incorporates by reference the information from Note 14 (Commitments and Contingencies) regarding legal matters267 Item 1A. Risk Factors Outlines risks from the financial restatement, material weaknesses, a history of losses, and regulatory scrutiny - The financial restatement has exposed the company to additional risks, including litigation, regulatory enforcement, and reputational harm271272 - The company has identified multiple material weaknesses in its internal control over financial reporting, which could lead to future misstatements and adversely affect its reputation and stock price273276 - The company has a history of losses ($396.9 million accumulated deficit as of June 30, 2025) and may not achieve or maintain profitability in the future278 - The company is subject to ongoing legal and regulatory matters, including a settlement with the FTC and investigations by the SEC, which could result in monetary and injunctive relief387388389 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities occurred during the three months ended June 30, 2025 Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period Item 4. Mine Safety Disclosures This disclosure is not applicable to the company's operations Item 5. Other Information Discloses the adoption of Rule 10b5-1 trading plans by two company officers during the quarter - On June 12, 2025, two executives adopted Rule 10b5-1 trading plans for the sale of company common stock underlying stock options and restricted stock units420 Item 6. Exhibits Provides an index of exhibits filed with the report, including officer certifications and interactive data files