Evolv Technologies Holdings, Inc.

Previous wording

We have restated our previously issued condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q. In addition, we have restated certain previously reported financial information for the quarterly period ended March 31, 2024 in this Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, including but not limited to information within the Results of Operations section. See Note 2 in the notes to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q, for additional information related to the restatement, including descriptions of the misstatements and the impacts on our condensed consolidated financial statements.

Current wording

We have restated our previously issued condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q. In addition, we have restated certain previously reported financial information for the three and six months ended June 30, 2024 in this Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, including but not limited to information within the Results of Operations section. See Note 2, Restatement of Previously Issued Condensed Consolidated Financial Statements in the notes to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q, for additional information related to the restatement, including descriptions of the misstatements and the impacts on our condensed consolidated financial statements.

Previous wording

Our innovative technology is designed to enhance security and provide an efficient, positive visitor and customer security experience. In addition to screening capabilities, our solution includes Evolv Insights®, a powerful software analytics dashboard that allows customers to comprehensively review, analyze, and gather insights from the Evolv Express screening systems at their various venue or facility locations. Available data includes visitor arrival patterns, throughput volumes, system detection performance, alarm statistics, weapons detected and detection settings. Our customers can leverage this data to inform their security operations, while providing end-users with an approachable security experience.

Current wording

Our innovative technology is designed to enhance security and provide an efficient, positive visitor and customer security experience. In addition to screening capabilities, our solution includes Evolv Insights®, a powerful software analytics dashboard that allows customers to comprehensively review, analyze, and gather insights from the Evolv Express screening systems at their various venues or facility locations. Available data includes visitor arrival patterns, throughput volumes, system detection performance, alarm statistics, weapons detected and detection settings. Our customers can leverage this data to inform their security operations, while providing end-users with an approachable security experience.

Previous wording

We are focused on delivering value in the spaces in and around the physical threshold of venues and facilities. We believe that digitally transforming the visitor experience at the entry point to venues and facilities will be a critically important innovation in physical security. We believe that our solutions will not only help make venues and facilities safer and more enjoyable, but also more efficient, and more informed about their visitors’ needs.

Current wording

We are focused on delivering value in the spaces in and around the physical threshold of venues and facilities while offering the ability for connected layers of security. We believe that digitally transforming the visitor experience at the entry point to venues and facilities will be a critically important innovation in physical security. We believe that our solutions will not only help make venues and facilities safer and more enjoyable, but also more efficient, and more informed about their visitors’ and security team needs.

Previous wording

We sell our solutions under two primary sales models. We offer a “pure subscription” model, where the customer leases hardware from us and we provide a multi-year security-as-a-service subscription. For end-user customers that prefer to purchase our hardware outright, we offer our “distributor licensing” model based on the Distribution and License Agreement we entered into with Columbia Tech in March of 2023. Columbia Tech, a wholly-owned subsidiary of Coghlin Companies, currently serves as our primary contract manufacturer. Under this arrangement, we have granted a license of our intellectual property to Columbia Tech, which contracts directly with certain of our resellers to fulfill sales demand where the end-user customer prefers to purchase the hardware equipment. Columbia Tech pays us a hardware license fee for each system it manufactures and sells under this agreement. In these instances, we still contract directly with the reseller to provide a multi-year security-as-a-service subscription to the end-users. We regularly assess our sales and fulfillment models to ensure they align with customer preferences, operational scalability, and our long-term business objectives. We expect our revenue, gross profit, gross margin, and overall profitability in any given fiscal period to be influenced by customer demand for our various sales and fulfillment models, as well as any future strategic management decisions affecting our sales and fulfillment models that may result from such assessments. We have been experiencing a growing mix of customers adopting our full subscription model, which reduces upfront revenue recognition in favor of building a more predictable recurring revenue base.

Current wording

We sell our solutions under two primary sales models. We offer a “pure subscription” model, where the customer leases hardware from us and we provide a multi-year security-as-a-service subscription. For end-user customers that prefer to purchase our hardware outright, we offer our “distributor licensing” model based on the Distribution and License Agreement we entered into with Columbia Tech in March of 2023. Columbia Tech, a wholly-owned subsidiary of Coghlin Companies, currently serves as our primary contract manufacturer. Under this arrangement, we have granted a license of our intellectual property to Columbia Tech, which contracts directly with certain of our resellers to fulfill sales demand where the end-user customer prefers to purchase the hardware equipment. Columbia Tech pays us a hardware license fee for each system it manufactures and sells under this agreement. In these instances, we still contract directly with the reseller to provide a multi-year security-as-a-service subscription to the end-users. In addition to our two primary sales models, end-user customers also have the option of purchasing our hardware outright directly from us through our “purchase subscription” model, and we expect this will displace much of the "distributor licensing" model in the coming months. We regularly assess our sales and fulfillment models to ensure they align with customer preferences, operational scalability, and our long-term business objectives. We expect our revenue, gross profit, gross margin, and overall profitability in any given fiscal period to be influenced by customer demand for our various sales and fulfillment models, as well as any future strategic management decisions affecting our sales and fulfillment models that may result from such assessments. We have been experiencing a growing mix of customers adopting our pure subscription model, which reduces upfront revenue recognition in favor of building a more predictable recurring revenue base and our purchase subscription model, which has more product revenue and no license fee revenue.

Previous wording

Going forward, we expect our products to be adopted in a variety of vertical industry markets and geographic regions, primarily within the United States. Pricing may vary by region or vertical market due to market-specific dynamics. As a result, our financial performance depends, in part, on the mix of sales, bookings, and business in different markets during a given period. In addition, we are subject to price competition, and our ability to compete in key markets will depend on the success of our investments in new technologies and cost improvements as well as our ability to efficiently and reliably introduce cost-effective touchless security screening products to our customers.

Current wording

Going forward, we expect our products to be adopted in a variety of vertical industry markets and geographic regions. While adoption of our products has primarily been within the United States to date, we expect increased adoption of our products in foreign markets in the near future as we explore expansion into international markets. Pricing may vary by region or vertical market due to market-specific dynamics. As a result, our financial performance depends, in part, on the mix of sales, bookings, and business in different markets during a given period. In addition, we are subject to price competition, and our ability to compete in key markets will depend on the success of our investments in new technologies and cost improvements as well as our ability to efficiently and reliably introduce AI-powered security screening solutions to our customers.

Previous wording

Since our inception, we have incurred significant operating losses. Our ability to generate revenue and achieve cost improvements sufficient to achieve profitability will depend on the successful further development and commercialization of our products. We generated revenue of $32.0 million and $22.2 million for the three months ended March 31, 2025 and 2024, respectively. We generated a net loss of $1.7 million and $11.3 million for the three months ended March 31, 2025 and 2024, respectively. We expect to continue to incur operating losses as we focus on growing and establishing recurring commercial sales of our products, including growing our sales and marketing teams, scaling our manufacturing operations, and continuing research and development efforts to develop new products and further enhance our existing products.

Current wording

Since our inception, we have incurred significant operating losses. Our ability to generate revenue and achieve cost improvements sufficient to achieve profitability will depend on the successful further development and commercialization of our products. We generated revenue of $64.6 million and $47.4 million for the six months ended June 30, 2025 and 2024, respectively. We generated a net loss of $42.2 million and $7.9 million for the six months ended June 30, 2025 and 2024, respectively. We expect to continue to incur operating losses as we focus on growing and establishing recurring commercial sales of our products, including growing our sales and marketing teams, scaling our manufacturing operations, and continuing research and development efforts to develop new products and further enhance our existing products.

Previous wording

Because of the numerous risks and uncertainties associated with product development and commercialization, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve or maintain profitability. Until such time, if ever, as we can generate substantial revenue sufficient to achieve profitability, we expect to finance our operations through cash generated from operations, and if necessary, debt financings. However, we may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we are unable to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back or discontinue the further development and commercialization efforts of one or more of our products, or may be forced to reduce or terminate our operations. See “Liquidity and Capital Resources” for more information. Additionally, as discussed in Note 14 (Commitments and Contingencies) to our condensed consolidated financial statements for the three months ended March 31, 2025, we are involved in certain legal proceedings, including government investigations. Given the uncertainty of such matters, no assurance can be given regarding the final outcome of such matters. However, the ultimate amount or range of potential loss, which might result to the Company, may differ materially from our current estimates.

Current wording

Because of the numerous risks and uncertainties associated with product development and commercialization, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve or maintain profitability. Until such time, if ever, as we can generate substantial revenue sufficient to achieve profitability, we expect to finance our operations through cash generated from operations and our Senior Secured Credit Facilities. See “Liquidity and Capital Resources” as well as “Risks Related to Our Financial Condition and Liquidity” for more information. Additionally, as discussed in Note 14, Commitments and Contingencies, to our condensed consolidated financial statements for the three and six months ended June 30, 2025, we are involved in certain legal proceedings, including government investigations. Given the uncertainty of such matters, no assurance can be given regarding the final outcome of such matters. However, the ultimate amount or range of potential loss, which might result to the Company, may differ materially from our current estimates.

Previous wording

We derive revenue from (1) subscription arrangements generally accounted for as operating leases, including SaaS and maintenance, (2) the sale of products, (3) SaaS and maintenance related to products sold to customers either by Evolv or by Columbia Tech pursuant to the Distribution and License Agreement, (4) license fees related to the Distribution and License Agreement, and (5) professional services, including installation, training, and event support. Maintenance consists of preventative maintenance, technical support, bug fixes, and when-and-if available threat updates. Our arrangements are generally noncancelable and nonrefundable after shipment to the customer. Revenue is recognized net of sales tax. We have been experiencing a growing mix of customers adopting our full subscription model, which reduces upfront revenue recognition in favor of building a more predictable recurring revenue base.

Current wording

We derive revenue from (1) subscription arrangements generally accounted for as operating leases, including SaaS and maintenance, (2) the sale of products, (3) SaaS and maintenance related to products sold to customers either by Evolv or by Columbia Tech pursuant to the Distribution and License Agreement, (4) license fees related to the Distribution and License Agreement, and (5) professional services, including installation, training, and event support. Maintenance consists of preventative maintenance, technical support, bug fixes, and when-and-if available threat updates. Our arrangements are generally noncancelable and nonrefundable after shipment to the customer. Revenue is recognized net of sales tax. We have been experiencing a growing mix of customers adopting our pure subscription model, which reduces upfront revenue recognition in favor of building a more predictable recurring revenue base.

Previous wording

We derive a portion of our revenue from the sale of our Evolv Express equipment and related add-on accessories to customers. Revenue is recognized when control of the product has transferred to the customer, which follows the terms of each contract. We anticipate future growth in product revenue to be driven by underlying demand for our solutions as well as by the distribution mix across our various sales and fulfillment models.

Current wording

We derive a portion of our revenue from the sale of our Evolv Express and eXpedite equipment and related add-on accessories to customers. Revenue is recognized when control of the product has transferred to the customer, which follows the terms of each contract. We anticipate future growth in product revenue as more customers purchase systems through our direct purchase subscription model.

Previous wording

Subscription revenue consists of revenue derived from leasing Evolv Express units to our customers. Lease terms are typically four years and customers generally pay either a quarterly or annual fixed payment for the lease, SaaS, and maintenance elements over the contractual lease term. Equipment leases are generally classified as operating leases and recognized ratably over the duration of the lease. There are no contingent lease payments as a part of these arrangements.

Current wording

Subscription revenue consists of revenue derived from leasing Evolv Express and eXpedite systems to our customers. Lease terms are typically four years and customers generally pay either a quarterly or annual fixed payment for the lease, SaaS, and maintenance elements over the contractual lease term. Equipment leases are generally classified as operating leases and recognized ratably over the duration of the lease. There are no contingent lease payments as a part of these arrangements.

Previous wording

Service revenue consists of subscription-based SaaS and maintenance revenue related to Evolv Express units sold to customers. Customers generally pay either a quarterly or annual fixed payment for SaaS and maintenance. SaaS and maintenance revenue is recognized ratably over the period of the arrangement, which is typically four years.

Current wording

Service revenue consists of subscription-based SaaS and maintenance revenue related to Evolv Express and eXpedite systems sold to customers. Customers generally pay either a quarterly or annual fixed payment for SaaS and maintenance. SaaS and maintenance revenue is recognized ratably over the period of the arrangement, which is typically four years.

Previous wording

License fee and other revenue includes license fee revenue from the Distribution and License Agreement, revenue from professional services, and other one-time revenue. License fee revenue is recognized upon the shipment of product from Columbia Tech to the reseller. Revenue for professional services is recognized upon transfer of control of these services, which are normally rendered over a short duration. Revenue for professional services and other one-time revenue, which had previously been included in service revenue, has been reclassified for prior periods to License fee and other revenue on the condensed consolidated statements of operations and comprehensive loss. We anticipate changes in license fee and other revenue to be driven by underlying demand for our solutions as well as any changes in demand for our distributor licensing model.

Current wording

License fee and other revenue includes license fee revenue from the Distribution and License Agreement, revenue from professional services, and other one-time revenue. License fee revenue is recognized upon the shipment of product from Columbia Tech to the reseller. Revenue for professional services is recognized upon transfer of control of these services, which are normally rendered over a short duration. Revenue for professional services and other one-time revenue, which had previously been included in service revenue, has been reclassified for prior periods to License fee and other revenue on the condensed consolidated statements of operations and comprehensive loss. We anticipate license fee and other revenue to decrease going forward as more customers purchase systems through our purchase subscription model.

Previous wording

•Mix of sales between our pure subscription, purchase subscription, and distributor licensing sales models;

Current wording

•Mix of sales between our pure subscription, purchase subscription, and distributor licensing models;

Previous wording

We regularly assess our sales and fulfillment models to ensure they align with customer preferences, operational scalability, and our long-term business objectives. We expect our gross profit and gross margin in any given fiscal period to be influenced by customer demand for our various sales and fulfillment models, as well as any future strategic management decisions affecting our sales and fulfillment models that may result from such assessments.

Current wording

We regularly assess our sales and fulfillment models to ensure they align with customer preferences, operational scalability, and our long-term business objectives. We expect our gross profit and gross margin in any given fiscal period to be influenced by customer demand for our various sales and fulfillment models, as well as any future strategic management decisions affecting our sales and fulfillment models that may result from such assessments. We currently expect gross margins in the near term to decrease due to certain significant opportunities in our pipeline that are expected to be fulfilled through our purchase subscription model.

Previous wording

General and administrative expenses consist primarily of personnel-related expenses associated with our executive, finance, investor relations, legal, information technology, and human resources functions, as well as professional fees for legal, audit, accounting and other consulting services, stock-based compensation, and insurance, net of any probable and reasonably estimable insurance recoveries or received insurance recoveries. During the year ended 2024, we experienced a significant increase in general and administrative expenses, primarily for legal fees and consulting expenses, as a result of the Investigation and related actions, as described in Note 2, Restatement of Previously Issued Condensed Consolidated Financial Statements. We expect this increased level of expenses to continue through the second quarter of 2025. As such actions become completed, we expect our general and administrative expenses to decrease in the second half of 2025 and to remain consistent at more normalized levels thereafter.

Current wording

General and administrative expenses consist primarily of personnel related expenses associated with our executive, finance, investor relations, legal, information technology, and human resources functions, as well as professional fees for legal, audit, accounting and other consulting services, stock-based compensation, and insurance, net of any probable and reasonably estimable insurance recoveries or received insurance recoveries. During the year ended 2024, we experienced a significant increase in general and administrative expenses, primarily for legal fees and consulting expenses, as a result of the Investigation and related actions, as described in Note 2, Restatement of Previously Issued Condensed Consolidated Financial Statements. This increased level of expenses continued through the second quarter of 2025. As such actions have been completed, we expect our general and administrative expenses to decrease in the second half of 2025 and to remain consistent at more normalized levels thereafter.

Previous wording

Restructuring costs consists of termination charges arising from severance obligations, incremental non-cash expense related to extended eligibility for the vesting of certain equity awards, and other customary employee benefit payments in connection with a reduction in force. See Note 16 for additional information.

Current wording

Restructuring costs consists of termination charges arising from severance obligations, incremental non-cash expense related to extended eligibility for the vesting of certain equity awards, and other customary employee benefit payments in connection with a reduction in force. See Note 16, Restructuring Charges for additional information.

Previous wording

Interest income relates to interest earned on money market fundsand treasury bills, and interest earned on our lease receivables for our Evolv Express units recognized as sales-type leases.

Current wording

Interest income relates to interest earned on money market fundsand treasury bills, and interest earned on our lease receivables for our Evolv Express systems recognized as sales-type leases.

Previous wording

We believe there are several key trends that are continuing to drive increased adoption of our solutions and growth in our sales, including (i) escalating gun violence, which has created stronger demand for security screening solutions for customers and prospects in our key vertical markets, (ii) customer acquisition activities which led to the addition of 54 new customers during the three months ended March 31, 2025, (iii) the expansion of our existing customers' initial Evolv Express deployments to other venues and locations as well as expanding their fleet with our Evolv eXpedite offering, and (iv) growing momentum with our channel partners which helps us extend our reach in certain geographies or vertical markets.

Current wording

We believe there are several key trends that are continuing to drive increased adoption of our solutions and growth in our sales, including (i) escalating gun violence, which has created stronger demand for security screening solutions for customers and prospects in our key vertical markets, (ii) customer acquisition activities which led to the addition of 63 new customers during the three months ended June 30, 2025, (iii) the expansion of our existing customers' initial Evolv Express deployments to other venues and locations as well as expanding their fleet with our Evolv eXpedite offering, and (iv) growing momentum with our channel partners which helps us extend our reach in certain geographies or vertical markets.

Previous wording

The increases in subscription revenue, cost of subscription revenue, and subscription gross profit are primarily due to continued growth in our customer base as of March 31, 2025 compared to the prior year, which was due to a higher number of active Evolv Express units deployed under our pure subscription model. The decrease in gross profit margin is due to increased amortization of capitalized software costs during the three months ended March 31, 2025 of $0.4 million due to the release of Evolv eXpedite and our second generation of Evolv Express.

Current wording

The increases in subscription revenue, cost of subscription revenue, and subscription gross profit are primarily due to continued growth in our customer base as of June 30, 2025 compared to the prior year, with a higher number of active Evolv Express systems deployed under our pure subscription model and an increase in short term rental subscription revenue during the three months ended June 30, 2025. Gross profit margin decreased primarily due to an increase of $1.3 million of expense related to disposals of certain first generation Evolv Express systems, partially offset by our ability to leverage our fixed costs over a higher revenue base and lower costs related to our second generation of Evolv Express systems.

Previous wording

The increases in service revenue, cost of service revenue, and gross profit are primarily due to an increased number of active revenue-generating purchase subscription units, as well as active revenue-generating units purchased by customers directly from Columbia Tech under our distributor model, for the three months ended March 31, 2025 compared to the prior year period.

Current wording

The increases in service revenue, cost of service revenue, and service gross profit are primarily due to an increased number of active revenue-generating purchase subscription units, as well as active revenue-generating units purchased by customers directly from Columbia Tech under our distributor licensing model, for the three months ended June 30, 2025 compared to the prior year period. The decrease in gross profit margin is primarily due to a $0.2 million expense related to certain accrued service fees and a $0.2 million increase in amortization of capitalized software costs during the three months ended June 30, 2025 due to the release of Evolv eXpedite and our second generation of Evolv Express systems.

Previous wording

The decrease in personnel related expenses is due to a decrease in payroll costs and stock-based compensation of $3.2 million, which resulted primarily from the reductions in force in May 2024 and January 2025. Stock compensation expense included in sales and marketing expenses was $1.0 million for the three months ended March 31, 2025 compared to $3.0 million for the three months ended March 31, 2024. The decrease in advertising and direct marketing expense is primarily due to a decrease in sponsorship fees of $0.2 million. The decrease in travel and entertainment expense of $0.7 million is due to a decrease in travel costs for in-person sales personnel meetings as our sales and marketing headcount decreased as a result of our reductions in force. Professional fees decreased due to a decrease in marketing consulting costs of $0.3 million.

Current wording

The decrease in personnel related expenses is due to a decrease in payroll costs and stock-based compensation of $3.3 million, which resulted primarily from the reductions in force in May 2024 and January 2025, partially offset by an increase in severance cost of $0.5 million. Stock compensation expense included in sales and marketing expenses was $1.7 million for the three months ended June 30, 2025 compared to $2.7 million for the three months ended June 30, 2024. The decrease in advertising and direct marketing expense is primarily due to a decrease in sponsorship fees of $0.2 million. The decrease in travel and entertainment expense of $0.7 million is due to a decrease in travel costs for in-person sales meetings as a result of our reductions in force. Professional fees decreased due to a decrease in marketing consulting costs. Other expense decreased primarily due to reduction in shipping costs related to demo units of $0.2 million.

Previous wording

The decrease in personnel related expenses is due to an decrease in payroll costs and stock-based compensation of $0.8 million, which resulted primarily from the reduction in force in January 2025. Stock compensation expense included in general and administrative expenses was $2.0 million for the three months ended March 31, 2025 compared to $2.4 million for the three months ended March 31, 2024. Non-recurring professional fees and other expense increased primarily due to a $6.9 million increase in consulting and legal fees related to the Investigation (as defined in Note 2 in the notes to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q) and related matters, partially offset by estimated insurance recoveries of $3.9 million, as well as additional audit fees incurred in connection with the restatement of prior period financial statements, an increase in rent of $0.4 million for additional leased space, and an increase in expected credit loss expense of $0.3 million.

Current wording

The decrease in personnel related expenses is due to a decrease in stock-based compensation of $0.9 million, which resulted primarily from the termination of certain executives as well as the reduction in force in January 2025, partially offset by an increase in severance costs of $0.2 million. Stock compensation expense included in general and administrative expenses was $2.4 million for the three months ended June 30, 2025 compared to $3.3 million for the three months ended June 30, 2024. Professional fees increased primarily due to an increase in outsourced accounting consultancy of $0.6 million. Non-recurring professional fees and other expense increased primarily due to a $4.5 million increase in consulting and legal fees related to the Investigation (as defined in Note 2 in the notes to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q) and related matters, as well as additional audit fees incurred in connection with the restatement of prior period financial statements, partially offset by insurance recoveries of $1.7 million, $1.0 million of estimated net losses related to ongoing legal matters, and an increase in rent of $0.3 million for additional leased space, partially offset by a decrease in expected credit loss expense of $0.3 million.

Previous wording

Restructuring costs of $2.7 million for the three months ended March 31, 2025 resulted from the reduction in force in January 2025. Stock compensation expense included in restructuring costs was $0.5 million for the three months ended March 31, 2025.

Current wording

Restructuring costs of $0.9 million for the three months ended June 30, 2024 resulted from the reduction in force in May 2024. No restructuring cost was recognized for the three months ended June 30, 2025.

Previous wording

Interest income of $0.4 million for the three months ended March 31, 2025 and $1.1 million for the three months ended March 31, 2024 related primarily to interest earned on money market funds and the accretion of discounts on treasury bills.

Current wording

Interest income of $0.2 million for the three months ended June 30, 2025 and $0.7 million for the three months ended June 30, 2024 related primarily to interest earned on money market funds and the accretion of discounts on treasury bills. The interest earned decreased primarily due to lower average balances in interest-bearing accounts during the three months ended June 30, 2025 compared to during the three months ended June 30, 2024.

Previous wording

Change in the fair value of the contingent earn-out liability resulted in gains of $9.0 million and $6.9 million for the three months ended March 31, 2025 and 2024, respectively, resulting from quarterly mark-to-market adjustments. The contingent earn-out liability was established in connection with the closing of the Merger.

Current wording

Change in the fair value of the contingent earn-out liability resulted in a $14.2 million loss and $16.5 million gain for the three months ended June 30, 2025 and 2024, respectively, resulting from quarterly mark-to-market adjustments. The contingent earn-out liability was established in connection with the closing of the Merger.

Previous wording

Change in the fair value of the contingently issuable common stock liability resulted in gains of $1.7 million and $0.5 million for the three months ended March 31, 2025 and 2024, respectively, resulting from quarterly mark-to-market adjustments. The contingently issuable common stock liability was established in connection with the closing of the Merger.

Current wording

Change in the fair value of the contingently issuable common stock liability resulted in a $3.9 million loss and $3.7 million gain for the three months ended June 30, 2025 and 2024, respectively, resulting from quarterly mark-to-market adjustments. The contingently issuable common stock liability was established in connection with the closing of the Merger.

Previous wording

Change in the fair value of the public warrant liability resulted in gains of $1.7 million and $2.2 million for the three months ended March 31, 2025 and 2024, respectively, resulting from quarterly mark-to-market adjustments. The public warrant liability was established in connection with the closing of the Merger.

Current wording

Change in the fair value of the public warrant liability resulted in a $5.3 million loss and $4.9 million gain for the three months ended June 30, 2025 and 2024, respectively, resulting from quarterly mark-to-market adjustments. The public warrant liability was established in connection with the closing of the Merger.

Previous wording

The increases in license fee and other revenue and gross profit are primarily driven by $3.2 million of license fee revenue earned during the three months ended March 31, 2025 compared to $0.7 million earned during the prior year period under the Distribution and License Agreement with Columbia Tech. License fee revenue earned under the agreement have no associated cost of revenue.

Current wording

The increase in license fee and other revenue and gross profit was primarily driven by $5.5 million of license fees earned during the six months ended June 30, 2025 compared to $2.4 million earned during the six months ended June 30, 2024 under the Distribution and License Agreement which was executed in March 2023. In addition to the increase in the unit sales through our distributor licensing model, per-unit license fees also increased for our second generation of Evolv Express systems. License fee revenue earned under the agreement has no associated cost of revenue.

Previous wording

The decrease in personnel related expenses is due to a decrease in payroll costs of $0.2 million and a higher amount of payroll costs capitalized related to internal-use software and software embedded in products to be sold or leased of $0.3 million, partially offset by a $0.2 million increase in stock-based compensation resulting primarily from new hires in our research and development function during the past twelve months. The decrease in materials and prototypes expense is due to a decrease of $0.4 million in design and engineering costs related to the development of the next generation of our Evolv Express system and new product offerings and a $0.4 million decrease in inventory reserve charges during the prior year period, which also relate primarily to the development of the next generation of our Evolv Express system. The decrease in professional fees primarily relates to a decrease in consulting costs incurred for product development and engineering of $0.5 million, partially offset by lower amount of costs capitalized related to internal-use software and software embedded in products to be sold or leased of $0.2 million. The decrease in other expense primarily relates to a decrease in supplies and IT and software subscription costs of $0.2 million.

Current wording

The decrease in personnel related expenses is primarily due to the January 2025 reductions in force, which resulted in a decrease in payroll costs of $0.8 million, partially offset by a $0.2 million increase in stock-based compensation. The decrease in materials and prototypes expense is primarily due to a decrease of $0.5 million in design and engineering costs and $0.4 million inventory reserve on unused components recognized in the prior year, both of which relate primarily to the development of the next generation of our Evolv Express system and new product offerings. The decrease in professional fees primarily relates to a decrease in consulting costs incurred for product development and engineering of $0.5 million. The decrease in other expense is primarily due to a decrease in IT and software subscription and supplies costs of $0.2 million.

Previous wording

Our financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities in the ordinary course of business. Our primary requirements for liquidity and capital are working capital, inventory management, capital expenditures and general corporate needs. We expect these needs to continue as we develop and grow our business. As of March 31, 2025, we had $35.0 million in cash, cash equivalents, and marketable securities. We incurred a net loss of $1.7 million and a net income of $11.3 million for the three months ended March 31, 2025 and 2024, respectively. We incurred cash outflows from operating activities of $2.5 million and $16.2 million during the three months ended March 31, 2025 and 2024, respectively. We expect to continue to generate losses for the foreseeable future.

Current wording

Our financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities in the ordinary course of business. Our primary requirements for liquidity and capital are working capital, inventory management, capital expenditures and general corporate needs. We expect these needs to continue as we develop and grow our business. As of June 30, 2025, we had $36.9 million in cash, cash equivalents, and marketable securities. We incurred a net loss of $40.5 million and a net income of $3.4 million (as restated) for the three months ended June 30, 2025 and 2024, respectively, and incurred a net loss of $42.2 million and $7.9 million (as restated) for the six months ended June 30, 2025 and 2024, respectively. We incurred cash outflows from operating activities of $0.4 million and $37.7 million (as restated) during the six months ended June 30, 2025 and 2024, respectively. We expect to continue to generate net losses for the foreseeable future.

Previous wording

We expect our cash, cash equivalents, and marketable securities of $35.0 million as of March 31, 2025, together with cash we expect to generate from future operations, will be sufficient to fund our operating expenses and capital expenditure requirements for a period of at least twelve months and thereafter from the date of this Quarterly Report on Form 10-Q. As we are in the growth stage of our business and operate in an emerging field of technology, we expect to continue to strategically and carefully invest in various areas of the business to support that growth. We may require additional capital to respond to expected growth in the demand for equipment to support our “leased equipment” offering, technological advancements, competitive dynamics or technologies, customer demands, business opportunities, challenges, acquisitions, or unforeseen circumstances. To the extent that our projected revenue growth does not materialize, we have established plans to preserve existing cash liquidity, which includes additional reductions operating expenses and capital expenditures.

Current wording

We expect our cash, cash equivalents, and marketable securities of $36.9 million as of June 30, 2025, together with cash we expect to generate from future operations and our borrowing availability under our Senior Secured Credit Facilities, will be sufficient to fund our operating expenses and capital expenditure requirements for a period of at least twelve months and thereafter from the date of this Quarterly Report on Form 10-Q. As we are in the growth stage of our business and operate in an emerging field of technology, we expect to continue to strategically and carefully invest in various areas of the business to support that growth.

Previous wording

The following is a description of commitments for capital expenditures and other known and reasonably likely cash requirements as of March 31, 2025. We anticipate fulfilling such commitments with our existing cash, cash equivalents, and marketable securities, as well as cash and cash equivalents obtained through operations and, if necessary, proceeds from long-term debt. Cash, cash equivalents, and marketable securities amounted to $35.0 million as of March 31, 2025.

Current wording

The following is a description of commitments for capital expenditures and other known and reasonably likely cash requirements as of June 30, 2025. We anticipate fulfilling such commitments with our existing cash, cash equivalents, and marketable securities, as well as cash and cash equivalents obtained through operations and the proceeds from our Senior Secured Credit Facilities. Cash, cash equivalents, and marketable securities amounted to $36.9 million as of June 30, 2025.

Previous wording

We are party to a lease agreement for office space at our headquarters in Waltham, MA. During the three months ended March 31, 2024, we amended the lease agreement to extend the term through October 31, 2025, with the option to further extend through June 30, 2031 with written notice. Additionally, in August 2024, we amended the lease agreement again to expand our footprint in our headquarters and extend the term of the lease through May 2031. Per the second lease amendment, we are no longer required to maintain a minimum cash balance of $0.3 million as a security deposit on the leased space. This amount was previously classified as restricted cash, non-current, as shown in the condensed consolidated statement of cash flows as of March 31, 2024. Total future minimum lease payments under this noncancelable operating lease amount to $19.1 million as of March 31, 2025.

Current wording

We are party to a lease agreement for office space at our headquarters in Waltham, MA. During the three months ended March 31, 2024, we amended the lease agreement to extend the term through October 31, 2025, with the option to further extend through June 30, 2031 with written notice. Additionally, in August 2024, we amended the lease agreement again to expand our footprint in our headquarters and extend the term of the lease through May 2031. Per the second lease amendment, we are no longer required to maintain a minimum cash balance of $0.3 million as a security deposit on the leased space. This amount was previously classified as restricted cash, non-current, as shown in the condensed consolidated statement of cash flows as of March 31, 2024. Total future minimum lease payments under this noncancelable operating lease amount to $18.6 million as of June 30, 2025.

Previous wording

Net loss decreased from $11.3 million (as restated) for the three months ended March 31, 2024 to $1.7 million for the three months ended March 31, 2025, as discussed in “Results of Operations” above.

Current wording

Net loss increased from $7.9 million (as restated) for the six months ended June 30, 2024 to $42.2 million for the six months ended June 30, 2025, as discussed in “Results of Operations” above.

Previous wording

Non-cash expense for the three months ended March 31, 2025 is primarily attributable to $12.4 million of an aggregate change in fair value of the earn-out liability, contingently issuable common stock warrant liability, and public warrant liability, offset by $4.9 million of stock-based compensation expense and $5.5 million of depreciation and amortization. Non-cash expense for the three months ended March 31, 2024 is primarily attributable to $6.4 million of stock-based compensation expense, $3.5 million of depreciation and amortization, and $9.6 million of an aggregate change in fair value of the earn-out liability, contingently issuable common stock liability, and public warrant liability.

Current wording

Adjustments to reconcile net loss to net cash used in operating activities for the six months ended June 30, 2025 include $11.1 million of an aggregate change in fair value of the earn-out liability, contingently issuable common stock warrant liability, and public warrant liability, $10.4 million of stock-based compensation expense, and $11.3 million of depreciation and amortization. For the six months ended June 30, 2024, such adjustments included $13.9 million (as restated) of stock-based compensation expense, $7.4 million of depreciation and amortization, and $34.7 million of an aggregate change in fair value of the earn-out liability, contingently issuable common stock liability, and public warrant liability.

Previous wording

Changes in operating assets and liabilities for the three months ended March 31, 2025 are primarily related to the following:

Current wording

Changes in operating assets and liabilities for the six months ended June 30, 2025 are primarily related to the following:

Previous wording

•$2.8 million increase in accounts payable (excluding the non-cash portion related to capital expenditures incurred but not yet paid from December 31, 2024 to March 31, 2025) due primarily to the timing of vendor payments; and

Current wording

•$6.1 million increase in accounts payable (excluding the non-cash portion related to capital expenditures incurred but not yet paid from December 31, 2024 to June 30, 2025) due primarily to the timing of vendor payments;

Previous wording

•$0.5 million increase in deferred revenue due to a higher volume of sales; partially offset by

Current wording

•$6.2 million increase in deferred revenue due to a higher volume of sales;

Previous wording

•$7.2 million decrease in inventory primarily due to an increase in products expected to be leased to customers and an increased focus on efficient inventory management;

Current wording

•$6.1 million decrease in inventory primarily due to an increased focus on efficient inventory management, partially offset by a decrease in products expected to be leased to customers; and

Previous wording

•$6.1 million increase in accounts receivable primarily due to higher sales and the timing of billings to customers;

Current wording

•$13.3 million increase in accounts receivable primarily due to higher sales and the timing of billings to customers; and