0001558370-21-015999.txt : 20211115 0001558370-21-015999.hdr.sgml : 20211115 20211115162747 ACCESSION NUMBER: 0001558370-21-015999 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 118 CONFORMED PERIOD OF REPORT: 20210930 FILED AS OF DATE: 20211115 DATE AS OF CHANGE: 20211115 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Evolv Technologies Holdings, Inc. CENTRAL INDEX KEY: 0001805385 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER PERIPHERAL EQUIPMENT, NEC [3577] IRS NUMBER: 844473840 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-39417 FILM NUMBER: 211411200 BUSINESS ADDRESS: STREET 1: 12141 WICKCHESTER LN., SUITE 325 CITY: HOUSTON STATE: TX ZIP: 77079 BUSINESS PHONE: 212-653-0153 MAIL ADDRESS: STREET 1: 12141 WICKCHESTER LN., SUITE 325 CITY: HOUSTON STATE: TX ZIP: 77079 FORMER COMPANY: FORMER CONFORMED NAME: NewHold Investment Corp. DATE OF NAME CHANGE: 20200303 10-Q 1 nhic-20210930x10q.htm 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

or

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: 001-39417

Evolv Technologies Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware

84-4473840

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

500 Totten Pond Road, 4th Floor

Waltham, Massachusetts 02451

(Address of Principal Executive Offices)

(781) 374-8100

(Registrant’s telephone number)

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

Title of Each Class

Trading symbol

Name of Exchange on which registered

Class A common stock, par value $0.0001 per share

EVLV

The Nasdaq Stock Market

Warrants to purchase one share of Class A common stock

EVLVW

The Nasdaq Stock Market

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       No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).    Yes       No  

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

Large accelerated filer

¨

Accelerated filer

¨

Non-accelerated filer

  

Smaller reporting company

Emerging growth company

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.

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

As of October 31, 2021, there were 142,435,281 of the registrant’s ordinary shares outstanding.

TABLE OF CONTENTS

    

    

Page

Part I

Financial Information

Item 1.

Financial Statements

Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020 (Unaudited)

F-1

Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, 2021 and 2020 (Unaudited)

F-2

Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the three and nine months ended September 30, 2021 and 2020 (Unaudited)

F-3

Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020 (Unaudited)

F-4

Notes to Consolidated Financial Statements (Unaudited)

F-5

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

1

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

25

Item 4.

Controls and Procedures

26

Part II

Other Information

28

Item 1.

Legal Proceedings

28

Item 1A.

Risk Factors

28

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

28

Item 3.

Defaults Upon Senior Securities

29

Item 4.

Mine Safety Disclosures

29

Item 5.

Other Information

29

Item 6.

Exhibits

30

Signatures

i

EXPLANATORY NOTE

On July 16, 2021, we consummated the business combination (the “Merger”), contemplated by the Agreement and Plan of Merger, dated March 5, 2021, with NHIC Sub Inc. (“Merger Sub”), a wholly-owned subsidiary of NewHold Investment Corp. (“NHIC”), a special purpose acquisition company, which is our predecessor, and Evolv Technologies, Inc. dba Evolv Technology, Inc. (“Legacy Evolv”), as amended by that certain First Amendment to Agreement and Plan of Merger dated June 5, 2021 by and among NHIC, Merger Sub and Legacy Evolv (the “Amendment” and as amended, the “Merger Agreement”). Pursuant to the Merger Agreement, Merger Sub was merged with and into Legacy Evolv, with Legacy Evolv surviving the merger as a wholly owned subsidiary of NHIC. Upon the closing of the Merger, NHIC changed its name to Evolv Technologies Holdings, Inc. Evolv Technologies Holdings, Inc. became the successor entity to NHIC pursuant to Rule 12g-3(a) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

As used in this Quarterly Report on Form 10-Q, unless otherwise indicated or the context otherwise requires, references to “we,” “us,” “our,” the “company” and “Evolv” refer to the consolidated operations of Evolv Technologies Holdings, Inc. and its subsidiaries. References to “NHIC” refer to the company prior to the consummation of the Merger and references to “Legacy Evolv” refer to Evolv Technologies, Inc. dba Evolv Technology, Inc. prior to the consummation of the Merger.

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, business strategy, plans and prospects, existing and prospective products, research and development costs, timing and likelihood of success, and plans and objectives of management for future operations and results, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of important factors that could cause actual results to differ materially from those in the forward-looking statements, including the risks, uncertainties and assumptions described under the section titled “Risk Factors” in our final prospectus dated and filed with the Securities and Exchange Commission on September 3, 2021. These forward-looking statements are subject to numerous risks, including, without limitation, the following:

expectations regarding Evolv’s strategies and future financial performance, including its future business plans or objectives, prospective performance and opportunities and competitors, revenues, products and services, pricing, operating expenses, market trends, liquidity, cash flows and uses of cash, capital expenditures, and Evolv’s ability to invest in growth initiatives and pursue acquisition opportunities;
the risk that the consummation of the Merger disrupts Evolv’s current plans;
the ability to recognize the anticipated benefits of the Merger;

unexpected costs related to the Merger;
limited liquidity and trading of Evolv’s securities;
geopolitical risk and changes in applicable laws or regulations;
the possibility that Evolv may be adversely affected by other economic, business, and/or competitive factors;
operational risk;
risk that the COVID-19 pandemic, including variants, and local, state, and federal responses to addressing the pandemic may have an adverse effect on our business operations, as well as our financial condition and results of operations;
litigation and regulatory enforcement risks, including the diversion of management time and attention and the additional costs and demands on Evolv’s resources; and
our ability to successfully deploy the proceeds from the Merger.

Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur, and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. As a result of these factors, we cannot assure you that the forward- looking statements in this Quarterly Report on Form 10-Q will prove to be accurate. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances, or otherwise.

You should read this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

GENERAL

We may announce material business and financial information to our investors using our investor relations website at https://ir.evolvtechnology.com/. We therefore encourage investors and others interested in Evolv to review the information that we make available on our website, in addition to following our filings with the SEC, webcasts, press releases and conference calls. Information contained on our website is not part of this Quarterly Report on Form 10-Q.

WHERE YOU CAN FIND MORE INFORMATION

All reports we file with the SEC are available for download free of charge via the Electronic Data Gathering Analysis and Retrieval (EDGAR) System on the SEC’s website at www.sec.gov. We also make electronic copies of our reports available for download, free of charge, through our website at www.evolvtechnology.com as soon as reasonably practicable after filing such material with the SEC. Information contained on our website is not part of this Quarterly Report on Form 10-Q.

EVOLV TECHNOLOGIES HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)

September 30, 

December 31, 

    

2021

    

2020

Assets

 

  

 

  

Current assets:

 

  

 

  

Cash and cash equivalents

$

333,747

$

4,704

Restricted cash

400

Accounts receivable, net

 

7,330

 

1,401

Inventory

 

3,530

 

2,742

Current portion of commission asset

 

1,084

 

562

Prepaid expenses and other current assets

 

13,672

 

900

Total current assets

 

359,763

 

10,309

Commission asset, noncurrent

2,310

1,730

Property and equipment, net

 

17,783

 

9,316

Restricted cash, noncurrent

275

Long-term contract assets

 

2,582

 

Total assets

$

382,713

$

21,355

Liabilities, Convertible Preferred Stock and Stockholders’ Equity (Deficit)

 

  

 

  

Current liabilities:

 

  

 

  

Accounts payable

$

8,460

$

4,437

Accrued expenses and other current liabilities

 

6,169

 

3,727

Current portion of deferred revenue

 

5,668

 

3,717

Current portion of deferred rent

 

37

 

11

Current portion of financing obligation

 

 

227

Current portion of long-term debt

 

1,000

 

Total current liabilities

 

21,334

 

12,119

Deferred revenue, noncurrent

 

988

 

480

Noncurrent portion of deferred rent

371

Derivative liability

 

 

1,000

Contingent earn-out liability

 

35,027

 

Contingently issuable common stock liability

5,952

Public warrant liability

20,484

Common stock warrant liability

1

Financing obligation, noncurrent

 

 

132

Long-term debt, noncurrent

 

14,359

 

16,432

Total liabilities

 

98,515

 

30,164

Commitments and contingencies (Note 17)

 

  

 

  

Convertible preferred stock; (Series A, A-1, B, and B-1), $0.001 par value; 0 and 207,390,039 shares authorized at September 30, 2021 and December 31, 2020, respectively; 0 and 77,377,987 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively; liquidation preference of $0 at September 30, 2021

 

 

75,877

Stockholders’ equity (deficit):

 

  

 

  

Common stock, $0.0001 par value; 1,100,000,000 and 305,491,899 shares authorized at September 30, 2021 and December 31, 2020, respectively; 142,418,469 and 9,845,192 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

 

14

 

1

Preferred stock, $0.0001 par value; 100,000,000 and 0 shares authorized at September 30, 2021 and December 31, 2020, respectively; 0 and 0 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

Additional paid-in capital

 

391,440

 

9,194

Accumulated deficit

 

(107,256)

 

(93,881)

Stockholders’ equity (deficit)

 

284,198

 

(84,686)

Total liabilities, convertible preferred stock and stockholders’ equity (deficit)

$

382,713

$

21,355

The accompanying notes are an integral part of these consolidated financial statements.

F-1

EVOLV TECHNOLOGIES HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(In thousands, except share and per share amounts)

(Unaudited)

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

    

2021

2020

2021

2020

Revenue:

 

Product revenue

$

5,345

$

349

$

10,299

$

422

Subscription revenue

2,305

794

5,118

1,743

Service revenue

717

318

1,429

585

Total revenue

8,367

1,461

16,846

2,750

Cost of revenues:

Cost of product revenue

2,933

163

7,237

361

Cost of subscription revenue

1,086

490

2,542

1,192

Cost of service revenue

192

169

732

376

Total cost of revenue

4,211

822

10,511

1,929

Gross profit

4,156

639

6,335

821

Operating expenses:

Research and development

3,641

4,088

8,330

10,629

Sales and marketing

8,510

1,552

17,284

5,105

General and administrative

6,983

1,177

11,162

2,676

Loss from impairment of property and equipment

1,656

1,656

Total operating expenses

20,790

6,817

38,432

18,410

Loss from operations

 

(16,634)

(6,178)

(32,097)

 

(17,589)

Other income (expense), net:

Interest expense

 

(286)

(84)

(5,988)

 

(207)

Other expense, net

(669)

(669)

Loss on extinguishment of debt

(865)

(12,685)

Change in fair value of derivative liability

475

(1,745)

Change in fair value of contingent earn-out liability

31,818

31,818

Change in fair value of contingently issuable common stock liability

5,718

5,718

Change in fair value of public warrant liability

3,152

3,152

Change in fair value of common stock warrant liability

42

(879)

Total other income (expense), net

 

39,385

(84)

18,722

 

(207)

Net income (loss) and comprehensive income (loss) attributable to common stockholders – basic

$

22,751

$

(6,262)

$

(13,375)

$

(17,796)

Net income (loss) and comprehensive income (loss) attributable to common stockholders – diluted

$

23,222

$

(6,262)

$

(13,375)

$

(17,796)

Net income (loss) per share attributable to common stockholders – basic

$

0.19

$

(0.70)

$

(0.28)

$

(2.00)

Net income (loss) per share attributable to common stockholders – diluted

$

0.15

$

(0.70)

$

(0.28)

$

(2.00)

Weighted average common shares outstanding – basic

119,745,196

8,917,855

47,772,253

8,892,564

Weighted average common shares outstanding – diluted

153,867,300

8,917,855

47,772,253

8,892,564

The accompanying notes are an integral part of these consolidated financial statements.

F-2

EVOLV TECHNOLOGIES HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND

STOCKHOLDERS' EQUITY (DEFICIT)

(In thousands, except share amounts)

(Unaudited)

Convertible

Additional

Total

Preferred Stock

Common Stock

Paid-in

Accumulated

Stockholders’

    

Shares (1)

    

Amount

    

    

Shares (1)

    

Amount

    

Capital

    

Deficit

    

Equity (Deficit)

Balances at December 31, 2020

 

77,377,987

$

75,877

 

9,845,192

$

1

$

9,194

$

(93,881)

$

(84,686)

Issuance of warrant to purchase common stock

 

 

 

 

 

1

 

 

1

Issuance of common stock upon exercise of stock options

 

 

 

1,563,950

 

 

455

 

 

455

Stock-based compensation expense

 

 

 

 

 

1,082

 

 

1,082

Net loss

 

 

 

 

 

 

(13,755)

 

(13,755)

Balances at March 31, 2021

77,377,987

75,877

11,409,142

1

10,732

(107,636)

(96,903)

Issuance of warrant to purchase common stock

Issuance of common stock upon exercise of stock options

1,993,936

202

202

Stock-based compensation expense

535

535

Net loss

(22,371)

(22,371)

Balances at June 30, 2021

 

77,377,987

 

75,877

 

13,403,078

 

1

 

11,469

(130,007)

 

(118,537)

Conversion of convertible preferred stock into common stock in connection with the closing of the Merger

 

(77,377,987)

 

(75,877)

 

80,873,772

 

8

 

75,869

 

 

75,877

Issuance of common stock in connection with the closing of the Merger

 

 

 

10,391,513

 

1

 

84,944

 

 

84,945

Issuance of common stock in connection with the consummation of the PIPE Investment

30,000,000

3

299,997

300,000

Issuance of common stock for net settlement of common stock and preferred stock warrants upon settlement of the Merger

2,029,712

880

880

Issuance of common stock for the conversion of convertible notes

5,408,672

1

53,644

53,645

Issuance of public warrant in connection with the closing of the Merger

(23,636)

(23,636)

Payment of deferred offering costs in connection with the closing of the Merger and PIPE Investment

 

 

 

 

(35,728)

 

 

(35,728)

Initial fair value of contingent earn-out liability recognized upon the closing of the Merger

 

 

 

(66,845)

 

 

(66,845)

Initial fair value of contingently issuable common stock liability recognized upon the closing of the Merger

(11,670)

(11,670)

Issuance of common stock upon exercise of stock options

311,722

120

120

Stock-based compensation expense

2,396

2,396

Net income

 

 

 

 

 

 

22,751

 

22,751

Balances at September 30, 2021

 

$

 

142,418,469

$

14

$

391,440

$

(107,256)

$

284,198

Balances at December 31, 2019

 

74,170,214

$

72,883

 

8,621,846

$

1

$

7,978

$

(66,489)

$

(58,510)

Issuance of Series B-1 convertible preferred stock, net of issuance costs of $106

 

3,207,773

 

2,994

 

 

 

 

 

Issuance of warrant to purchase common stock

 

 

 

 

 

45

 

 

45

Issuance of common stock upon exercise of stock options

 

 

 

281,500

 

 

67

 

 

67

Stock-based compensation expense

 

 

 

 

 

62

 

 

62

Net loss

 

 

 

 

 

 

(6,430)

 

(6,430)

Balances at March 31, 2020

77,377,987

75,877

8,903,346

1

8,152

(72,919)

(64,766)

Issuance of common stock upon exercise of stock options

11,024

3

3

Stock-based compensation expense

60

60

Net loss

(5,104)

(5,104)

Balances at June 30, 2020

 

77,377,987

 

75,877

 

8,914,370

 

1

 

8,215

 

(78,023)

 

(69,807)

Issuance of common stock upon exercise of stock options

 

 

 

14,804

 

 

348

 

 

348

Stock-based compensation expense

 

 

 

 

 

403

 

 

403

Net loss

 

 

 

 

 

 

(6,262)

 

(6,262)

Balances at September 30, 2020

 

77,377,987

$

75,877

 

8,929,174

$

1

$

8,966

$

(84,285)

$

(75,318)

(1)The shares of the Company’s convertible preferred stock and common stock, prior to the Merger (as defined in Note 1) have been retrospectively restated to reflect the exchange ratio of 0.378 established in the Merger as described in Note 3.

The accompanying notes are an integral part of these consolidated financial statements.

F-3

EVOLV TECHNOLOGIES HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Nine Months Ended

September 30, 

    

2021

    

2020

Cash flows from operating activities:

 

  

  

Net loss

$

(13,375)

$

(17,796)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

Depreciation and amortization

 

1,948

 

685

Write-off of inventory

400

Loss from impairment of property and equipment

1,656

Loss on disposal of property and equipment

659

Stock-based compensation

 

4,013

 

525

Noncash interest expense

 

5,561

 

Provision recorded for allowance for doubtful accounts

(63)

(16)

Loss on extinguishment of debt

12,685

Change in fair value of derivative liability

1,745

Change in fair value of common stock warrant liability

879

Change in fair value of earn-out liability

(31,818)

Change in fair value of contingently issuable common stock

(5,718)

Change in fair value of public warrant liability

(3,152)

Changes in operating assets and liabilities

Accounts receivable

(5,866)

(1,956)

Inventory

(10,836)

(1,123)

Commission assets

(1,102)

(1,282)

Contract assets

(2,582)

Prepaid expenses and other current assets

(12,772)

 

(393)

Accounts payable

 

2,264

 

1,041

Deferred revenue

 

2,459

1,889

Deferred rent

 

397

 

(24)

Warranty Reserve

(42)

(56)

Accrued expenses and other current liabilities

 

2,183

 

109

Net cash used in operating activities

 

(50,477)

 

(18,397)

Cash flows from investing activities: