Reaffirms Revenue Recognition Impact of $4 to
$6 million
Ending Cash Position of Approximately $56
Million as of September 30, 2024, Consistent with Internal
Forecasts
Announces Remedial Actions and Organizational
Changes, Including the Resignation of the Company’s Chief Financial
Officer
Hires Leading Business Advisory Firm,
AlixPartners, to Provide Interim Finance and Accounting
Resources
Evolv Technology (“Evolv” or the “Company”) (NASDAQ: EVLV), a
leading security technology company pioneering AI-based solutions
designed to create safer experiences, today announced the results
of the internal investigation previously disclosed on October 25,
2024, into certain sales practices that impacted revenue
recognition and other metrics.
Results of the Internal Investigation
The investigation is being conducted by an ad hoc committee of
independent directors (the “Ad Hoc Committee”) of the Board of
Directors (the “Board”) and with the assistance of Debevoise &
Plimpton LLP as its legal counsel, Cleary Gottlieb Steen &
Hamilton LLP as its independent legal counsel, and Ankura
Consulting Group as its forensic accounting firm.
Based on the results of the investigation to date, the Ad Hoc
Committee concluded that accounting for certain transactions,
including sales to one of the Company’s largest channel partners,
was inaccurate and that, among other things, revenue was
prematurely or incorrectly recognized in connection with financial
statements prepared for the periods between the second quarter of
2022 and the second quarter of 2024 (the “affected periods”). The
Company is continuing to evaluate the impact on internal control
over financial reporting and expects to report one or more
additional material weaknesses in internal control over financial
reporting related to this matter.
The Ad Hoc Committee’s previously disclosed estimate that, on a
net basis (taking into account revenue that was prematurely
recognized but offset by amounts appropriately recognized in
subsequent periods), the sales transactions at issue have resulted
in premature or incorrect revenue recognition of $4 million to $6
million through June 30, 2024, has not changed, and it is still the
case that the vast majority of such revenue was prematurely rather
than incorrectly recognized and is expected to be recognized in
future periods.
The Ad Hoc Committee confirmed that the errors in revenue
recognition did not impact the Company’s cash position. The Company
had cash, cash equivalents, marketable securities and restricted
cash of approximately $56 million as of the quarter ended September
30, 2024, which was consistent with the Company’s internal
forecasts. The Company had no debt as of the end of the
quarter.
The Ad Hoc Committee’s key findings also include the
following:
- As previously disclosed, certain sales of products and
subscriptions to channel partners and end users, including sales to
one of its largest channel partners, were subject to
extra-contractual terms and conditions that impacted revenue
recognition and other metrics. In addition, the Ad Hoc Committee
determined that some of these extra-contractual terms and
conditions were not shared with the Company’s accounting personnel,
and that certain Company personnel engaged in misconduct in
connection with those transactions. Furthermore, these
extra-contractual terms and conditions were withheld from the Audit
Committee of the Board and the Company’s independent registered
public accounting firm, PricewaterhouseCoopers LLP (“PWC”).
- In addition to the preliminary findings disclosed on October
25, 2024, the investigation found that certain accounting personnel
were aware of indications of those extra-contractual terms and
conditions during affected periods, and that related allegations
were raised internally in July 2024 and known to senior finance and
accounting personnel, but those allegations were not escalated to
the Audit Committee of the Board or communicated to PWC, prior to
the filing of the Company’s second quarter 2024 financial
statements.
The investigation is largely complete, and the Board does not
expect these key findings to change.
Organizational Changes
The Board has determined that new leadership is critical to
moving the Company forward. Mark Donohue, the Company’s Chief
Financial Officer and principal financial officer and principal
accounting officer, resigned. To date, as a result of the
investigation, four other employees, including personnel from the
Company’s sales, accounting and finance departments, were
terminated or resigned.
Retention of AlixPartners to Provide Interim Support and
Expedite Reporting Process
The Company has engaged AlixPartners LLP (“AlixPartners”), a
leading global business advisory firm, to provide interim finance
and accounting support and assist with and expedite the timely
preparation of the Company’s restated financial statements and
related filings.
Dave Rawden from AlixPartners, a seasoned financial expert with
decades of experience serving in senior financial roles, has been
appointed as Interim Chief Financial Officer.
Planned Remedial Actions
The Board and management team intend to take further remedial
actions over the coming months to enhance risk management,
strengthen internal controls and ensure timely and accurate
financial reporting. In addition, the Board intends to take steps
to further enhance Board oversight and composition, and promote
corporate governance and compensation best practices.
The Board, commenting on the internal investigation, stated:
We are grateful for the diligent work of the
Ad Hoc Committee, the guidance of our outside experts, tireless
effort from our senior management, continued dedication of our
employees and patience of our shareholders and other stakeholders
throughout this process.
With the investigation concluding, our
attention has turned to addressing the issues that led to the
misconduct, ensuring that future financial disclosures are timely
and accurate, releasing our financial results for the third quarter
of 2024 and preparing restated financials for the affected periods.
We are committed to pursuing remedial actions that we believe will
enhance the reliability of our financial statements and help
prevent these issues from occurring in the future.
We are confident that Evolv is well
positioned to continue its important work and to achieve its
strategic objectives. The Board embraces the Company’s mission of
making the world safer and will continue to take steps to advance
our vision while delivering long-term value for all
stakeholders.
About Evolv Technology
Evolv Technology (NASDAQ: EVLV) is designed to transform human
security to make a safer, faster, and better experience for the
world’s most iconic venues and companies as well as schools,
hospitals, and public spaces, using industry leading artificial
intelligence (AI)-powered screening and analytics. Its mission is
to transform security to create a safer world to live, work, learn,
and play. Evolv has digitally transformed the gateways in many
places where people gather by enabling seamless integration
combined with powerful analytics and insights. Evolv’s advanced
systems have scanned more than two billion people since 2019. Evolv
has been awarded the U.S. Department of Homeland Security (DHS)
SAFETY Act Designation as a Qualified Anti-Terrorism Technology
(QATT) as well as the Security Industry Association (SIA) New
Products and Solutions (NPS) Award in the Law Enforcement/Public
Safety/Guarding Systems category, as well as Sport Business
Journal’s (SBJ) awards for “Best In Fan Experience Technology” and
“Best In Sports Technology”. Evolv®, Evolv Express®, Evolv
Insights®, Evolv Visual Gun Detection™, Evolv eXpedite™, and Evolv
Eva™ are registered trademarks or trademarks of Evolv Technologies,
Inc. in the United States and other jurisdictions. For more
information, visit evolv.com.
Forward-looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. We intend for 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
and Section 21E of the Securities Exchange Act of 1934, as amended.
All statements other than statements of historical fact are
statements that could be deemed forward-looking statements,
including, but not limited to, statements made in the Board’s
quotes and statements regarding key findings of the investigation,
the impact on internal control over financial reporting, planned
remedial actions, Board oversight and composition, corporate
governance and compensation-related initiatives, the Company’s
ability to achieve strategic objectives and future actions to be
taken by the Board. Forward-looking statements involve known and
unknown risks, uncertainties and other important factors that may
cause our actual results and actions to be materially different
from any future results or actions expressed or implied by the
forward-looking statements, including, but not limited to, the
factors discussed under the caption “Risk Factors” in our Annual
Report on Form 10-K for the year ended December 31, 2023 filed with
the SEC on February 29, 2024, as any such factors may be updated
from time to time in our other filings with the SEC, including the
Quarterly Report on Form 10-Q for the quarter ended June 30, 2024,
as well as risks related to our leadership transition. The
forward-looking statements in this press release are based upon
information available to us as of the date hereof, and while we
believe such information forms a reasonable basis for such
statements, it may be limited or incomplete, and our statements
should not be read to indicate that we have conducted an exhaustive
inquiry into, or review of, all potentially available relevant
information. These statements are inherently uncertain, and
investors are cautioned not to unduly rely upon these
statements.
Except as required by applicable law, we do not plan to publicly
update or revise any forward-looking statements contained in this
press release, whether as a result of any new information, future
events or otherwise.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241121868980/en/
Media Contact: Alexandra Smith Ozerkis
aozerkis@evolvtechnology.com
Investor Contact: Brian Norris
bnorris@evolvtechnology.com
Evolv Technologies (NASDAQ:EVLV)
過去 株価チャート
から 11 2024 まで 12 2024
Evolv Technologies (NASDAQ:EVLV)
過去 株価チャート
から 12 2023 まで 12 2024
