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, 4^th 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: