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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended June 30, 2025


¨			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 No.)

500 Totten Pond Road, 4th Floor

Waltham, Massachusetts 02451

(Address of Principal Executive Offices)

(781) 374-8100

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

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 x No o

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 x No o

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. o

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

As of August 11, 2025, there were 171,891,467 shares of Class A common stock, par value $0.0001 per share, outstanding.

Table of Contents

TABLE OF CONTENTS


		Page
Part I	Financial Information

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets (Unaudited)	F-1

	Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)	F-2

	Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)	F-4

	Condensed Consolidated Statements of Cash Flows (Unaudited)	F-5

	Notes to Consolidated Financial Statements (Unaudited)	F-6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21

Item 4.	Controls and Procedures	21

Part II	Other Information	24

Item 1.	Legal Proceedings	25

Item 1A.	Risk Factors	25

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	53

Item 3.	Defaults Upon Senior Securities	53

Item 4.	Mine Safety Disclosures	54

Item 5.	Other Information	54

Item 6.	Exhibits	55

Signatures

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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 (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements contained in this Quarterly Report on Form 10-Q, other than statements of historical fact, including, without limitation, statements regarding our results of operations and financial position, business strategy, plans and prospects, our relationship with significant manufacturers and suppliers, our ability to obtain new customers and retain existing customers, and sell existing and prospective products, research and development costs, our ability to recruit, retain and train staff, the potential benefits of any change in our sales and fulfillment model, timing and likelihood of success, macroeconomic, market and technology trends, the government regulations that we are subject to, potential exposure to litigation, and plans and objectives of management for future operations and results, are forward-looking statements. The words “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “forecasts,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions are intended to identify forward-looking statements though not all forward-looking statement use these word or 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. Forward-looking 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, including, without limitation the important factors discussed in Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q, as any such factors may be updated from time to time in its other filings with the Securities and Exchange Act (the “SEC”). The forward-looking statements in this Quarterly Report on Form 10-Q are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, 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.

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this Quarterly Report on Form 10-Q, whether as a result of any new information, future events or otherwise.

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.

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EVOLV TECHNOLOGIES HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)


	June 30, 2025		December 31, 2024
Assets
Current assets:
Cash and cash equivalents	$	36,942	$	37,015

Marketable securities	—		14,927
Accounts receivable, net of allowance for expected credit losses of $900 and $734 as of June 30, 2025 and December 31, 2024, respectively	41,802		28,392
Inventory	12,142		16,963
Current portion of contract assets	847		799
Current portion of commission asset	5,592		5,429
Prepaid expenses and other current assets	35,756		17,921
Total current assets	133,081		121,446

Contract assets, noncurrent	845		657
Commission asset, noncurrent	7,331		7,567
Property and equipment, net	125,478		123,661
Operating lease right-of-use assets	13,149		13,993
Other assets	538		735
Total assets	$	280,422	$	268,059

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	11,804	$	10,492
Accrued expenses and other current liabilities	38,170		19,508
Current portion of deferred revenue	72,164		64,506

Current portion of operating lease liabilities	2,716		2,203
Current portion of contingent earn-out liability	18,033		—
Total current liabilities	142,887		96,709
Deferred revenue, noncurrent	19,208		20,266

Operating lease liabilities, noncurrent	11,550		12,326
Contingent earn-out liability, non-current	—		12,809
Contingently issuable common stock liability	6,248		4,001
Public warrant liability	7,879		4,297
Total liabilities	187,772		150,408
Commitments and contingencies (Note 14)

Stockholders’ equity:
Preferred stock, $0.0001 par value; 100,000,000 authorized at June 30, 2025 and December 31, 2024; no shares issued and outstanding at June 30, 2025 and December 31, 2024	—		—
Common stock, $0.0001 par value; 1,100,000,000 shares authorized at June 30, 2025 and December 31, 2024; 170,626,362 and 159,602,069 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively	17		16
Additional paid-in capital	489,684		472,331
Accumulated other comprehensive loss	(163)		(32)
Accumulated deficit	(396,888)		(354,664)
Stockholders’ equity	92,650		117,651
Total liabilities and stockholders’ equity	$	280,422	$	268,059

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

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EVOLV TECHNOLOGIES HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except share and per share amounts)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
			(As Restated)				(As Restated)
Revenue:
Product revenue	$	2,528	$	1,954	$	4,850	$	3,445
Subscription revenue	20,200		15,655		39,437		29,874
Service revenue	6,686		5,566		13,416		10,818
License fee and other revenue	3,130		2,049		6,848		3,268
Total revenue *	32,544		25,224		64,551		47,405
Cost of revenue:
Cost of product revenue	5,351		2,839		8,535		5,953
Cost of subscription revenue	8,894		6,309		16,790		11,894
Cost of service revenue	1,710		1,147		3,415		2,345
Cost of license fee and other revenue	371		172		443		301
Total cost of revenue	16,326		10,467		29,183		20,493
Gross profit	16,218		14,757		35,368		26,912
Operating expenses:
Research and development	4,737		5,850		9,599		12,246
Sales and marketing	11,736		16,357		22,779		32,216
General and administrative	17,238		14,061		32,210		25,867
Restructuring costs	—		860		2,662		860

Total operating expenses	33,711		37,128		67,250		71,189
Loss from operations	(17,493)		(22,371)		(31,882)		(44,277)
Other (expense) income, net:
Interest expense	—		—		(1)		—
Interest income	224		681		613		1,766
Other income (expense), net	136		(39)		161		(67)

Change in fair value of contingent earn-out liability	(14,200)		16,514		(5,224)		23,413
Change in fair value of contingently issuable common stock liability	(3,900)		3,747		(2,247)		4,274
Change in fair value of public warrant liability	(5,303)		4,886		(3,582)		7,037
Total other (expense) income, net	(23,043)		25,789		(10,280)		36,423
(Loss) income before income taxes	(40,536)		3,418		(42,162)		(7,854)
(Benefit) provision for income taxes	(1)		—		62		—
Net (loss) income	$	(40,535)	$	3,418	$	(42,224)	$	(7,854)


Net (loss) income attributable to common stockholders – basic and diluted (Note 12)	$	(40,535)	$	3,377	$	(42,224)	$	(7,854)

Weighted average common shares outstanding
Basic	165,252,554		156,473,080		163,042,749		154,774,899
Diluted	165,252,554		171,563,943		163,042,749		154,774,899
Net loss per share
Basic	$	(0.25)	$	0.02	$	(0.26)	$	(0.05)
Diluted	$	(0.25)	$	0.02	$	(0.26)	$	(0.05)




Net (loss) income	$	(40,535)	$	3,418	$	(42,224)	$	(7,854)
Other comprehensive (loss) income
Cumulative translation adjustment	(85)		8		(131)		11
Total other comprehensive (loss) income	(85)		8		(131)		11
Total comprehensive (loss) income	$	(40,620)	$	3,426	$	(42,355)	$	(7,843)

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*Includes related party revenue of $1.9 million (as restated) and $3.9 million (as restated) for the three and six months ended June 30, 2024, respectively. There was no related party revenue for the three and six months ended June 30, 2025.

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

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EVOLV TECHNOLOGIES HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands, except share amounts)

(Unaudited)


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balances at December 31, 2024	159,602,069	$	16	$	472,331	$	(32)	$	(354,664)	$	117,651
Issuance of common stock upon net exercise of stock options	281,709	—		20		—		—		20
Issuance of common stock upon vesting of restricted stock units	3,389,364	—		—		—		—		—

Stock-based compensation cost	—	—		5,125		—		—		5,125
Cumulative translation adjustment	—	—		—		(46)		—		(46)
Net loss	—	—		—		—		(1,689)		(1,689)
Balances at March 31, 2025	163,273,142	$	16	$	477,476	$	(78)	$	(356,353)	$	121,061
Issuance of common stock upon net exercise of stock options	5,628,670	1		6,427		—		—		6,428
Issuance of common stock upon vesting of restricted stock units	1,724,550	—		—		—		—		—

Stock-based compensation cost	—	—		5,781		—		—		5,781
Cumulative translation adjustment	—	—		—		(85)		—		(85)
Net loss	—	—		—		—		(40,535)		(40,535)
Balances at June 30, 2025	170,626,362	$	17	$	489,684	$	(163)	$	(396,888)	$	92,650








Balances at December 31, 2023	151,310,080	$	15	$	444,825	$	(53)	$	(300,647)	$	144,140
Issuance of common stock upon net exercise of stock options	519,089	1		301		—		—		302
Issuance of common stock upon vesting of restricted stock units	3,527,778	—		—		—		—		—

Stock-based compensation cost	—	—		6,605		—		—		6,605
Cumulative translation adjustment	—	—		—		3		—		3
Net loss (as restated)	—	—		—		—		(11,272)		(11,272)
Balances at March 31, 2024 (as restated)	155,356,947	$	16	$	451,731	$	(50)	$	(311,919)	$	139,778
Issuance of common stock upon net exercise of stock options	823,047	—		335		—		—		335
Issuance of common stock upon vesting of restricted stock units	1,294,128	—		—		—		—		—

Stock-based compensation cost	—	—		7,679		—		—		7,679
Cumulative translation adjustment	—	—		—		8		—		8
Net income (as restated)	—	—		—		—		3,418		3,418
Balances at June 30, 2024 (as restated)	157,474,122	$	16	$	459,745	$	(42)	$	(308,501)	$	151,218

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

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EVOLV TECHNOLOGIES HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Six Months Ended June 30,
	2025		2024
			(As Restated)
Cash flows from operating activities:
Net loss	$	(42,224)	$	(7,854)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	11,318		7,358
Write-off of inventory and change in inventory reserve	1,794		1,725


Loss on disposal of property and equipment	1,633		—

Stock-based compensation	10,426		13,857

Amortization of premium on marketable securities, net of change in accrued interest	127		181
Non-cash lease expense	844		728
Change in allowance for expected credit losses	166		203

Change in fair value of earn-out liability	5,224		(23,413)
Change in fair value of contingently issuable common stock	2,247		(4,274)
Change in fair value of public warrant liability	3,582		(7,037)
Changes in operating assets and liabilities
Accounts receivable	(13,325)		(14,067)
Inventory	6,141		(10,042)
Commission assets	73		(521)
Contract assets	(236)		237
Other assets	197		337
Prepaid expenses and other current assets	(18,849)		(2,957)
Accounts payable	6,120		(1,653)
Deferred revenue	6,205		10,271
Accrued expenses and other current liabilities	18,374		(46)
Operating lease liability	(263)		(765)
Net cash used in operating activities	(426)		(37,732)
Cash flows from investing activities:
Development of internal-use software	(3,112)		(3,112)
Purchases of property and equipment	(15,299)		(21,618)

Purchases of marketable securities	(9,875)		(14,567)
Proceeds from maturities of marketable securities	24,675		44,918
Net cash (used in) provided by investing activities	(3,611)		5,621
Cash flows from financing activities:
Proceeds from exercise of stock options	4,095		636




Net cash provided by financing activities	4,095		636
Effect of exchange rate changes on cash and cash equivalents	(131)		11
Net decrease in cash, cash equivalents and restricted cash	(73)		(31,464)
Cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of period	37,015		67,437
Cash, cash equivalents and restricted cash at end of period	$	36,942	$	35,973



Supplemental disclosure of non-cash activities
Transfer of property and equipment to inventory	$	3,297	$	468
Capital expenditures incurred but not yet paid	4,340		3,407
Capitalization of stock compensation	480		427

Operating lease liabilities arising from obtaining right-of-use assets	—		1,694
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	36,942	$	35,698

Restricted cash, noncurrent	—		275
Total cash, cash equivalents and restricted cash shown in the statements of cash flows	$	36,942	$	35,973

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

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EVOLV TECHNOLOGIES HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Nature of the Business and Basis of Presentation

Evolv Technologies Holdings, Inc. (the “Company”), a Delaware corporation, is a leading security technology company with products 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.

The Company recently launched a new product offering, Evolv eXpedite™, an autonomous AI-based weapons detection system for bags. This new offering, as well as existing products such as Evolv Express®, are designed to be integrated layers for detection as part of a unified Evolv Safer Experience System™. These products and their associated services are designed to capture valuable visitor data customers can leverage to inform their security operations, while providing end-users with an approachable and non-intrusive security experience. The Company is headquartered in Waltham, Massachusetts.

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 wholly owned subsidiaries, which include Evolv Technologies, Inc., Evolv Technologies UK Ltd. (“Evolv UK”) and Give Evolv LLC. References to “NHIC” refer to our legal predecessor, a special-purpose acquisition company, prior to the consummation of our business combination on July 16, 2021 (the “Merger”), and references to “Legacy Evolv” refer to Evolv Technologies, Inc. dba Evolv Technology, Inc. prior to the consummation of the Merger. The Merger was contemplated by the Agreement and Plan of Merger, dated March 5, 2021, with NHIC Sub Inc., NHIC, and Legacy Evolv, as amended by that certain First Amendment to Agreement and Plan of Merger dated June 5, 2021 (as amended, the “Merger Agreement”).

Basis of presentation

The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).

Liquidity and capital resources

The Company’s 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. The Company's primary requirements for liquidity and capital are working capital, inventory management, capital expenditures and general corporate needs. The Company expects these needs to continue as it develops and grows its business. As of June 30, 2025, the Company had $36.9 million in cash, cash equivalents, and marketable securities. The Company incurred a net loss of $42.2 million and $7.9 million for the six months ended June 30, 2025 and 2024, respectively. The Company incurred cash outflows from operating activities of $0.4 million and $37.7 million during the six months ended June 30, 2025 and 2024, respectively. The Company expects to continue to generate losses for the foreseeable future.

The Company maintains substantially all of its cash, cash equivalents, and marketable securities in accounts with U.S. and multi-national financial institutions and its cash deposits at these institutions exceed Federal Deposit Insurance Corporation insured limits. The Company does not believe it is exposed to any unusual credit risk or deposit concentration risk beyond the ordinary credit risk associated with commercial banking relationships.

On July 29, 2025, the Company entered into a $75.0 million credit, security, and guaranty agreement with MidCap Financial Trust and the other lenders party thereto (the “MidCap Credit Agreement”), the proceeds of which will be used for general corporate purposes, including to support growing long-term demand for the Company's subscription sales model. The MidCap Credit Agreement provides for an initial $30.0 million term loan facility, a $30.0 million delayed draw facility (available for drawdown during the two-year period following the closing date), and a $15.0 million revolving line

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EVOLV TECHNOLOGIES HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

of credit, each with a term of five years (collectively, the "Senior Secured Credit Facilities"). At closing, the Company received net proceeds of $26.6 million, after deducting $3.4 million in debt issuance costs incurred in connection with the closing of MidCap Credit Agreement. See Note 17, Subsequent Events for additional information.

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

Additionally, there continues to be significant uncertainty regarding recent changes and potential future developments related to increased trade restrictions, tariffs or taxes on imports or exports relating to countries where we source or sell materials or products. The exact magnitude of any potential impact remains uncertain, as there may be further changes to tariffs and policies and, consequently, potential increased tension between the U.S. and targeted countries, and the Company's financial condition and results of operations could be adversely affected.

Unaudited Interim Financial Information

The accompanying unaudited condensed consolidated financial statements as of June 30, 2025, and for the three and six months ended June 30, 2025 and 2024 have been prepared on the same basis as the audited annual consolidated financial statements as of December 31, 2024 and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of June 30, 2025, the results of its operations for the three and six months ended June 30, 2025 and 2024 and cash flows for the six months ended June 30, 2025 and 2024. The results for the three and six months ended June 30, 2025 are not necessarily indicative of results to be expected for the year ending December 31, 2025, any other interim periods, or any future year or period. These interim unaudited condensed consolidated financial statements should be read in conjunction with the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Reclassifications

During the three months ended March 31, 2025, the Company began classifying restructuring charges, which includes termination charges arising from severance obligations, incremental non-cash expense, and other customary employee benefit payments in connection with a reduction in force, within restructuring costs on the condensed consolidated statements of operations and comprehensive loss, whereas the restructuring costs for these services had previously been included in cost of service revenue, research and development expenses, sales and marketing expenses, and general and administrative expenses. These reclassifications were made to align the presentation of restructuring charges with the Company's internal reporting and analysis. The reclassifications increased gross profit by $0.2 million for both the three and six months ended June 30, 2024 and did not impact total loss from operations or total net loss for any period. Prior year amounts included in this Quarterly Report on Form 10-Q have been reclassified to conform to the current presentation.

For both the three and six months ended June 30, 2024, the reclassifications resulted in an increase in restructuring costs of $0.9 million, and a corresponding decrease in cost of service revenue, sales and marketing expenses, and general and administrative expenses of $0.2 million, $0.7 million, and less than $0.1 million, respectively.

2. Restatement of Previously Issued Condensed Consolidated Financial Statements

We have restated herein our condensed consolidated financial statements for the three and six months ended June 30, 2024. We have also restated impacted amounts within the accompanying notes to the condensed consolidated financial statements, as applicable. The restatement of our condensed consolidated financial statements for the three and six

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EVOLV TECHNOLOGIES HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

months ended June 30, 2024 was previously reported in our Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”).

Restatement Background

In September 2024, an ad hoc committee of independent directors (the “Committee”) of the Company's Board of Directors (the “Board”), under the direction of the Board, commenced an investigation (the “Investigation”) of the Company’s sales practices, including whether certain sales of products and subscriptions to channel partners and end users were subject to extra-contractual terms and conditions that impacted revenue recognition and other metrics, and if so, when senior Company personnel became aware of these issues.

As a result of the Investigation, the Committee determined that certain sales, including sales to one of its largest channel partners, were subject to extra-contractual terms and conditions, some of which 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 Company’s Audit Committee of the Board (the “Audit Committee”) and the Company’s independent registered public accounting firm, PricewaterhouseCoopers LLP (“PwC”). The Committee also determined that certain accounting personnel were aware of indications of these 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 that those allegations were not escalated to the Audit Committee or communicated to PwC prior to the filing of the Company’s second quarter 2024 financial statements. As a result of the Investigation, the Board determined that new leadership was critical to moving the Company forward. In November 2024, the Company’s Chief Financial Officer resigned. Additionally, four other employees, including personnel from its sales, finance and accounting departments were terminated or resigned as a result of the Investigation.

In connection with the Investigation, the Committee determined that the accounting for certain sales transactions was materially inaccurate and that, among other things, revenue was prematurely or incorrectly recognized (the “Impacted Transactions”) in connection with financial statements prepared for the fiscal years ended December 31, 2022 and December 31, 2023 contained in its Annual Report on Form 10-K for the year-ended December 31, 2023, and its condensed consolidated financial statements for the quarters and year-to-date periods ended June 30, 2022, September 30, 2022, March 31, 2023, June 30, 2023, September 30, 2023, March 31, 2024 and June 30, 2024 contained in its Quarterly Reports on Form 10-Q.

A review of the transactions identified in the Investigation determined that restatement changes were necessary due to:

•an overstatement or understatement of revenue and cost of revenue depending on the changes to revenue recognition start dates in each period of the consolidated statement of operations; and

•an overstatement or understatement of other accounts affected by changes to revenue recognition start dates, including accounts receivable, inventory, contract assets, commission assets, property and equipment, net, deferred revenue, and sales and marketing expense.

Misstatements related to the Impacted Transactions identified in the Investigation

Revenue

As discussed above, the Company became aware of the presence of extra-contractual terms and conditions through the Investigation. The extra-contractual terms and conditions created ambiguity with regard to whether the Company and its customers had reached a mutual understanding of the terms of the contracts. Ultimately, the Company decided to honor the customers’ understanding of the contracts, including the terms and conditions granted outside the written contracts.

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EVOLV TECHNOLOGIES HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The extra-contractual terms and conditions affected the dates on which it was appropriate for the Company to recognize revenue, or commence revenue recognition for the Impacted Transactions. In order to correct the revenue recognition start dates for each of the Impacted Transactions to be restated, the Company reviewed the terms and circumstances of each transaction, including the contractual and extra-contractual terms and conditions.

As described above, the Company offers products for purchase or multi-year subscription leases. All products are sold with an underlying subscription for software and services. Contracts may include multiple performance obligations when customers purchase a combination of products and services. For equipment sales, revenue is recognized at a point in time, whereas for leased equipment and software, revenue is recognized ratably over the term (“over time”).

GAAP requires that revenue is recognized when (or as) the entity satisfies a performance obligation by transferring the underlying asset to a customer. An asset is transferred when (or as) the customer obtains control of that asset. Further, GAAP defines control as “…the ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset.”

Historically, the Company has recognized revenue, or commenced revenue recognition, upon shipment or delivery of the product to the customer, or to the end-user as directed by the customer, if the customer is a reseller. The findings of the Investigation and Financial Statement Review, as defined below, impact the timing of when revenue recognition should begin on certain arrangements. The Company determined that it should recognize or begin to recognize revenue on the Impacted Transactions at the point in time that the Company has an enforceable contract with the customer and control transfers to the customer, which, for the Impacted Transactions, was often the installation date, which is later than the shipment or delivery date. The extra-contractual terms created in substance consignment arrangements with customers, which resulted in no revenue recognition until control of the product was transferred to the customer (i.e., the installation date).

For most of the Impacted Transactions, the Company determined that the customer was only committed to the agreement and began to receive and consume the benefits provided by the Company’s performance on the date the security screening system(s) and Software as a Service (“SaaS”) portal were both installed and activated at the end user site. Therefore, revenue recognition for over time performance obligations was determined to begin at the installation date and recognized over the period in which the benefits are consumed (e.g., the subscription term). Product sales were also restated to be recorded at the installation date where appropriate. For point-in-time performance obligations, revenue was recognized at the installation date.

Property, and Equipment / Inventory

As stated above, the Company offers products for purchase or multi-year subscription leases. For equipment for which the revenue recognition start date was moved to a later date due to the timing of the transfer of control, the equipment cost was reclassified from Leased equipment to Equipment held for lease within Property and Equipment (for leased equipment), or added back to finished goods Inventory (for equipment sales) until the point in time that the Company transferred control of the equipment to the customer, corresponding to the revenue recognition start date.

Cost of Product Revenue / Cost of Subscription Revenue

For leased equipment reclassified to equipment held for lease, as described above, the Company adjusted the dates placed in service to correspond to the revised date upon which revenue recognition commenced, thus achieving appropriate alignment of revenue recognition with the recognition of depreciation expense (cost of revenue), consistent with the company’s accounting policies. For equipment added back to inventory related to sales of equipment, the Company added back the associated cost of revenue in the period it was originally recognized, and restated the cost of revenue to correspond with the revenue recognition start date.

Commissions Asset / Commissions Expense

Commissions on product sales and services are expensed in the period in which the related revenue is recognized. Commissions on subscription arrangements and maintenance are expensed ratably over the life of the contract, which

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EVOLV TECHNOLOGIES HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

generally begins upon transfer of control. For the Impacted Transactions on which the Company adjusted the revenue recognition start date, the amortization of the corresponding commission expense was adjusted to conform to the adjusted revenue recognition start date.

Accounts Receivable, Contract Assets, Deferred Revenue

Deferred Revenue, Contract Assets and Accounts Receivable relating to affected customer arrangements were adjusted to reflect the corresponding changes in revenue recognition start dates.

Additional errors identified through the Financial Statement Review

Following the Investigation, the Company completed a comprehensive review of its previously issued financial statements (the “Financial Statement Review”), which resulted in the identification of additional errors. These adjustments included:

•an understatement of research and development expense and overstatement of property, plant and equipment in certain periods due to an error in the calculation of internal-use software costs in the first and second quarters of 2024;

•an overstatement of cost of revenue and understatement of inventory and property and equipment, net in the first and second quarters of 2024 related to the expensing of inbound freight costs that should have been capitalized into inventory or property and equipment, net; and

•an overstatement of accounts receivable and contract assets and corresponding understatement of deferred revenue in each period related to the incorrect classification of amounts due to the Company resulting from its contracts with customers.

The impact of the correction of the misstatements and errors resulting from the Investigation and Financial Statement Review on the condensed consolidated financial statements in this Quarterly Report on Form 10-Q, as well as previously identified immaterial errors which have now been corrected, are summarized below. The applicable accompanying notes to the condensed consolidated financial statements have also been updated.

The impact of the correction of the misstatements on the condensed consolidated statements of stockholders' equity were solely within net loss for errors impacting accumulated deficit. Errors impacting accumulated paid in capital were limited to periods prior to December 31, 2023 and therefore only impact the opening balance in the condensed consolidated statements of stockholders' equity for the periods ended March 31, 2024 and June 30, 2024.

The impact of the correction of the misstatements and errors on the condensed consolidated statements of cash flows were driven by changes in the related condensed consolidated balance sheets and condensed consolidated statement of operations and comprehensive loss line items, except as noted by footnote under each applicable table below.

Where adjustments in the below tables relate to multiple categories, the adjustment amounts of each category are noted below each table and sum to the total adjustment reflected. Restatement adjustments are reflected as follows:

ADJ 1: related to revenue recognition misstatements identified as part of the Investigation.

ADJ 2: related to errors in capitalized internal-use software costs.

ADJ 3: related to errors in capitalized freight costs.

ADJ 4: other immaterial errors previously identified in prior periods corrected as part of the restatement.

For the Three and Six Months Ended June 30, 2024

Restated Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) Data

(In thousands, except share and per share amounts)

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EVOLV TECHNOLOGIES HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


		Three Months Ended June 30, 2024						Six Months Ended June 30, 2024
	Adj. Reference(a)	As Reported		Adjustment		As Restated		As Reported		Adjustment		As Restated
Revenue:
Product revenue	ADJ 1	$	2,044	$	(90)	$	1,954	$	2,647	$	798	$	3,445
Subscription revenue	ADJ 1	15,903		(248)		15,655		30,406		(532)		29,874
Service revenue	ADJ 1	5,553		13		5,566		10,937		(119)		10,818
License fee and other revenue	ADJ 1	2,040		9		2,049		3,218		50		3,268
Total revenue		25,540		(316)		25,224		47,208		197		47,405
Cost of revenue:
Cost of product revenue	ADJ 1, ADJ 3, ADJ 4	3,149		(310)		2,839		5,926		27		5,953
Cost of subscription revenue	ADJ 1, ADJ 2, ADJ 3, ADJ 4	6,436		(127)		6,309		12,215		(321)		11,894
Cost of service revenue	ADJ 1, ADJ 2, ADJ 4	1,311		10		1,321		2,522		(3)		2,519
Cost of license fee and other revenue		172		—		172		301		—		301
Total cost of revenue		11,068		(427)		10,641		20,964		(297)		20,667
Gross profit		14,472		111		14,583		26,244		494		26,738
Operating expenses:
Research and development	ADJ 2, ADJ 4	5,722		128		5,850		11,927		319		12,246
Sales and marketing	ADJ 1, ADJ 4	16,892		119		17,011		32,897		(27)		32,870
General and administrative	ADJ 4	14,185		(92)		14,093		26,025		(126)		25,899

Total operating expenses		36,799		155		36,954		70,849		166		71,015
Loss from operations		(22,327)		(44)		(22,371)		(44,605)		328		(44,277)
Other income (expense), net:

Interest income		681		—		681		1,766		—		1,766
Other expense, net		(39)		—		(39)		(67)		—		(67)

Change in fair value of contingent earn-out liability		16,514		—		16,514		23,413		—		23,413
Change in fair value of contingently issuable common stock liability		3,747		—		3,747		4,274		—		4,274
Change in fair value of public warrant liability		4,886		—		4,886		7,037		—		7,037
Total other income (expense), net		25,789		—		25,789		36,423		—		36,423
Loss before income taxes		3,462		(44)		3,418		(8,182)		328		(7,854)

Net income (loss)		$	3,462	$	(44)	$	3,418	$	(8,182)	$	328	$	(7,854)
Net income (loss) attributable to common stockholders - basic and diluted		$	3,421	$	(44)	$	3,377	$	(8,182)	$	328	$	(7,854)

Weighted average common shares outstanding
Basic		156,473,080		—		156,473,080		154,774,899		—		154,774,899
Diluted		171,563,943		—		171,563,943		154,774,899		—		154,774,899
Net income (loss) per share
Basic		$	0.02	$	—	$	0.02	$	(0.05)	$	—	$	(0.05)
Diluted		$	0.02	$	—	$	0.02	$	(0.05)	$	—	$	(0.05)

Net income (loss)		$	3,462	$	(44)	$	3,418	$	(8,182)	$	328	$	(7,854)
Other comprehensive income (loss)
Cumulative translation adjustment		8		—		8		11		—		11
Total other comprehensive income (loss)		8		—		8		11		—		11
Total comprehensive income (loss)		$	3,470	$	(44)	$	3,426	$	(8,171)	$	328	$	(7,843)

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EVOLV TECHNOLOGIES HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(a) Category references are described in Note 2. Restatement of Financial Statements. Where adjustments relate to multiple categories, the adjustment amounts of each category are noted below and sum to the total adjustment reflected in the table above:

Three months ended:

Cost of product revenue: ADJ 1 = $12, ADJ 3 = ($270), ADJ 4 = ($52)

Cost of subscription revenue: ADJ 1 = ($60), ADJ 2 = ($2), ADJ 3 = ($64), ADJ 4 = ($1)

Cost of service revenue: ADJ 1 = $1, ADJ 2 = ($2), ADJ 4 = $11

Research and development: ADJ 2 = $70, ADJ 4 = $58

Sales and marketing: ADJ 1 = ($16), ADJ 4 = $135

Six months ended:

Cost of product revenue: ADJ 1 = $397, ADJ 3 = ($314), ADJ 4 = ($56)

Cost of subscription revenue: ADJ 1 = ($116), ADJ 2 = ($3), ADJ 3 = ($235), ADJ 4 = $33

Cost of service revenue: ADJ 2 = ($2), ADJ 4 = ($1)

Research and development: ADJ 2 = $319

Sales and marketing: ADJ 1 = ($27)

Restated Condensed Consolidated Statement of Cash Flows

(In thousands)


	Six Months Ended June 30, 2024
	As Reported		Adjustment		As Restated
Cash flows from operating activities:
Net loss	$	(8,182)	$	328	$	(7,854)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	7,442		(84)		7,358
Write-off of inventory and change in inventory reserve	1,725		—		1,725



Stock-based compensation	13,834		23		13,857

Amortization (accretion) of premium (discount) on marketable securities, net of change in accrued interest	181		—		181
Non-cash lease expense	728		—		728
Change in allowance for expected credit losses	203		—		203

Change in fair value of earn-out liability	(23,413)		—		(23,413)
Change in fair value of contingently issuable common stock	(4,274)		—		(4,274)
Change in fair value of public warrant liability	(7,037)		—		(7,037)
Changes in operating assets and liabilities
Accounts receivable	(14,020)		(47)		(14,067)
Inventory	(10,354)		312		(10,042)
Commission assets	(492)		(29)		(521)
Contract assets	2,324		(2,087)		237
Other assets	337		—		337
Prepaid expenses and other current assets	(2,958)		1		(2,957)
Accounts payable	(1,653)		—		(1,653)
Deferred revenue	8,333		1,938		10,271
Accrued expenses and other current liabilities	79		(125)		(46)
Operating lease liability	(765)		—		(765)
Net cash used in operating activities	(37,962)		230		(37,732)
Cash flows from investing activities:
Development of internal-use software(1)	(3,408)		296		(3,112)
Purchases of property and equipment(2)	(21,092)		(526)		(21,618)

Purchases of marketable securities	(14,567)		—		(14,567)
Proceeds from maturities of marketable securities	44,918		—		44,918

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EVOLV TECHNOLOGIES HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


Net cash provided by investing activities	5,851		(230)		5,621
Cash flows from financing activities:
Proceeds from exercise of stock options	636		—		636




Net cash provided by financing activities	636		—		636
Effect of exchange rate changes on cash and cash equivalents	11		—		11
Net decrease in cash, cash equivalents and restricted cash	(31,464)		—		(31,464)
Cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of period	67,437		—		67,437
Cash, cash equivalents and restricted cash at end of period	$	35,973	$	—	$	35,973


Supplemental disclosure of non-cash activities
Transfer of property and equipment to inventory	$	468	$	—	$	468
Capital expenditures incurred but not yet paid	3,407		—		3,407
Capitalization of stock compensation	450		(23)		427

Operating lease liabilities arising from obtaining right-of-use assets	1,694		—		1,694
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	35,698	$	—	$	35,698

Restricted cash, noncurrent	275		—		275
Total cash, cash equivalents and restricted cash shown in the statements of cash flows	$	35,973	$	—	$	35,973

(1) Relates to adjustments related to ADJ 2.

(2) Relates to the following adjustments: ADJ 3 = ($464), ADJ 4 = ($62)

3. Summary of Significant Accounting Policies

Significant Accounting Policies

The significant accounting policies and estimates used in preparation of the unaudited condensed consolidated financial statements are described in the Company’s audited consolidated financial statements as of and for the year ended December 31, 2024, and the notes thereto, which are included in our 2024 Form 10-K. Except for the partner rebate program and the estimates used to determine the grant date valuation for certain market-based stock units (“MSUs”), as described below, there have been no material changes to the Company’s significant accounting policies during the six months ended June 30, 2025.

Partner Rebate Program

For the fiscal year 2025, the Company implemented a channel partner rebate program (the “Rebate Program”) for eligible resellers. Under the Rebate Program, eligible resellers that attain at least 25% of their current fiscal year total contract value (“TCV”) target (“Annual Target”) in a given quarter are eligible for a rebate based upon a percentage of their TCV for that quarter. In addition, resellers that meet their Annual Target are eligible for a one-time rebate based upon a percentage of their total fiscal year TCV, applied as a credit in the subsequent fiscal year. All rebates are issued as credits against future purchases, and no cash rebates are paid. Unused rebate credits are forfeited in the event of a reseller agreement termination.

The Company recognizes an accrued liability related to the Rebate Program in accrued expenses and other current liabilities in our condensed consolidated balance sheets and recognizes the rebates as reduction of revenue.

Market-based Stock Units

The estimated grant date fair value of MSUs granted by the Company is determined using a Monte Carlo simulation that simulates the future path of the Company’s stock price throughout the performance period. The

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EVOLV TECHNOLOGIES HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

assumptions utilized in the calculation are based on the achievement of certain stock price milestones including expected stock price volatility, risk-free rate of return, and remaining term.

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” ASU 2023-09 is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. Early adoption is permitted. A public entity may apply the amendments in ASU 2023-09 either prospectively to all annual periods beginning after December 15, 2024, or retrospectively to prior periods. The Company determined that ASU 2023-09 is applicable and will be adopted in our Annual Report on Form 10-K for the year ended December 31, 2025. It addresses disclosures only, the Company expects it will not have any material effects on its financial condition, results of operations, or cash flows.

In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.”, which includes amendments to require the disclosure of certain specific costs and expenses that are included in a relevant expense caption on the face of the income statement. Specific costs and expenses that would be required to be disclosed include: purchases of inventory, employee compensation, depreciation, and intangible asset amortization. Additionally, a qualitative description of other items is required, equal to the difference between the relevant expense caption and the separately disclosed specific costs. Early adoption is permitted. A public entity should apply the amendments in ASU 2024-03 prospectively to all annual periods beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. The Company is currently evaluating the impact of this standard on the disclosures within the consolidated financial statements.

In July 2025, the FASB issued ASU 2025-05, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets.” The amendment in ASU 2025-05 provides entities with a practical expedient to simplify the estimation of expected credit losses by assuming that the current conditions as of the balance sheet date will not change for the remaining life of the asset. Early adoption is permitted, and this amendment is applied prospectively. ASU 2025-05 is effective for all annual periods beginning after December 15, 2025 and interim periods within those annual periods. The Company is currently evaluating the impact of this standard on the disclosures within the consolidated financial statements.

4. Marketable Securities

All marketable securities fully matured as of June 30, 2025. Marketable securities as of December 31, 2024 consisted of the following:


	December 31, 2024
	Amortized Cost		Unrealized Gain/(Loss)		Fair Value
U.S. Treasury bills	$	14,927	$	—	$	14,927
Total marketable securities	$	14,927	$	—	$	14,927

Marketable securities at December 31, 2024 are comprised solely of zero coupon U.S. treasury bills with maturities of greater than three months but less than one year that are classified as available-for-sale debt securities. Unrealized gains or losses were not material for each of the three and six months ended June 30, 2025 and 2024. The accretion of discounts on marketable securities is included in interest income on the condensed consolidated statements of operations and comprehensive loss.

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EVOLV TECHNOLOGIES HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

5. Fair Value Measurements

The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis and indicate the level of the fair value hierarchy used to determine such fair values (in thousands):


	Fair Value Measurements at June 30, 2025
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	15,422	$	—	$	—	$	15,422
Treasury bills	—		2,999		—		2,999
	$	15,422	$	2,999	$	—	$	18,421
Liabilities:
Contingent earn-out liability	$	—	$	—	$	18,033	$	18,033
Contingently issuable common stock liability	—		—		6,248		6,248
Public Warrant liability	7,879		—		—		7,879
	$	7,879	$	—	$	24,281	$	32,160


	Fair Value Measurements at December 31, 2024
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	28,946	$	—	$	—	$	28,946
Treasury bills	—		27,417		—		27,417
	$	28,946	$	27,417	$	—	$	56,363
Liabilities:
Contingent earn-out liability	$	—	$	—	$	12,809	$	12,809
Contingently issuable common stock liability	—		—		4,001		4,001
Public Warrant liability	4,297		—		—		4,297
	$	4,297	$	—	$	16,810	$	21,107

Money market funds are included in cash and cash equivalents on the condensed consolidated balance sheets. As of June 30, 2025, U.S. treasury bills with maturities less than 3 months, which totaled $3.0 million, are included in cash and cash equivalents. As of December 31, 2024, U.S. treasury bills with maturities less than 3 months, which totaled $12.5 million, are included in cash and cash equivalents, while treasury bills with maturities greater than 3 months, which totaled $14.9 million, are reflected as marketable securities. The fair value of the treasury bills, which are classified as Level 2 securities, is calculated by a third-party pricing service and is based on estimates obtained from various sources.

The Company may also value its non-financial assets and liabilities, including items such as inventories and property and equipment, at fair value on a non-recurring basis if it is determined that impairment has occurred. Such fair value measurements use significant unobservable inputs and are classified as Level 3.

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, and other accrued expenses approximate fair value because of their short maturity.

During each of the six months ended June 30, 2025 and 2024, there were no transfers between Level 1, Level 2 and Level 3.

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EVOLV TECHNOLOGIES HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Valuation of Contingent Earn-out

Pursuant to the Merger Agreement, the Legacy Evolv stockholders, immediately prior to the Merger, were entitled to receive additional shares of the Company’s common stock upon the Company achieving certain milestones as described in Note 3 of our consolidated financial statements of our 2024 Form 10-K. The Company’s contingent earn-out shares were recorded at fair value as contingent earn-out liability upon the closing of the Merger and are remeasured each reporting period. As of June 30, 2025, no milestones have been achieved.

The fair value of the contingent earn-out is calculated using a Monte Carlo analysis in order to simulate the future path of the Company’s stock price over the earn-out period. The carrying amount of the liability may fluctuate significantly and actual amounts paid may be materially different from the liability’s estimated value. The significant assumptions used in the Monte Carlo model as of June 30, 2025 were as follows: 85% expected stock price volatility, a risk-free rate of return of 4.2%, a 15% likelihood of change in control and a remaining term of 0.7 years. The assumed likelihood of change in control was reduced to 15% as of June 30, 2025 from 25% as of March 31, 2025, reflecting the shortened remaining term of less than one year.

The following table provides a rollforward of the contingent earn-out liability (in thousands):


Balance at December 31, 2024	$	12,809
Change in fair value	5,224
Balance at June 30, 2025	$	18,033

The increase in fair value of the contingent earn-out liability is primarily due to the increase in the Company's current stock price.

Valuation of Contingently Issuable Common Stock

Prior to the Merger, certain NHIC stockholders owned 4,312,500 shares of NHIC Class B common stock which were converted into shares of the Company's stock in connection with the Merger (the “Founder Shares”). Of these shares, 1,897,500 shares vested at the closing of the Merger, 517,500 shares were transferred back to NHIC and then contributed to Give Evolv LLC, and the remaining 1,897,500 outstanding shares will vest upon the Company achieving certain milestones as described in Note 3 of our consolidated financial statements of our 2024 Form 10-K. The Company’s contingently issuable common shares were recorded at fair value on the closing of the Merger and are remeasured each reporting period. As of June 30, 2025, no milestones have been achieved.

The fair value of the contingently issued common shares is determined using a Monte Carlo analysis in order to simulate the future path of the Company’s stock price over the vesting period. The carrying amount of the liability may fluctuate significantly and actual amounts paid may be materially different from the liability’s estimated value. The significant assumptions used in the Monte Carlo model as of June 30, 2025 were as follows: 82.5% expected stock price volatility, a risk-free rate of return of 3.9%, a 25% likelihood of change in control and a remaining term of 1.0 years.

The following table provides a rollforward of the contingently issuable common shares (in thousands):


Balance at December 31, 2024	$	4,001
Change in fair value	2,247
Balance at June 30, 2025	$	6,248

Valuation of Public Warrant Liability

In connection with the closing of the Merger, the Company assumed warrants to purchase 14,325,000 shares of common stock (the “Public Warrants”) at an exercise price of $11.50. The Public Warrants are immediately exercisable and expire in July 2026. The Public Warrants are classified as a liability and are subsequently remeasured to fair value at

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EVOLV TECHNOLOGIES HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

each reporting date based on the closing price as reported by Nasdaq on the last date of the reporting period. As of June 30, 2025, 14,324,893 Public Warrants are outstanding.

The following table provides a rollforward of the public warrant liability (in thousands):


Balance at December 31, 2024	$	4,297
Change in fair value	3,582
Balance at June 30, 2025	$	7,879

6. Revenue Recognition

The Company recognizes revenue in accordance with Accounting Standards Codification 606 – Revenue from Contracts with Customers (“ASC 606”). Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In order to achieve this core principle, the Company applies the following five steps when recording revenue: (1) identify the contract, or contracts, with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when, or as, performance obligations are satisfied.

The Company derives 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 the Company or by Columbia Tech pursuant to the Distribution and License Agreement (as defined below), (4) license fees related to the Distribution and License Agreement (as defined below), 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 control passes to the customer. Revenue is recognized net of sales tax.

Distribution and License Agreement

In March 2023, the Company entered into a distributor licensing agreement (the “Distribution and License Agreement”) with Columbia Electrical Contractors, Inc. (“Columbia Tech”). Columbia Tech, a wholly-owned subsidiary of Coghlin Companies, which serves as the Company's primary contract manufacturer. Under this arrangement, the Company has granted a license of its intellectual property to Columbia Tech, which contracts directly with certain of the Company's resellers to fulfill sales demand where the end-user customer prefers to purchase the hardware equipment as opposed to lease the equipment. Columbia Tech pays the Company a hardware license fee for each system it manufactures and sells under the agreement. In these instances, the Company still contracts directly with the reseller to provide a multi-year SaaS and maintenance subscription to the end-users.

The Company has assessed whether it operates as the principal or as an agent in relation to the sale of product made by Columbia Tech to the Company's resellers pursuant to the Distribution and License Agreement. The Company considered various factors, including but not limited to, inventory risk, discretion in establishing pricing, and which entity is primarily responsible for fulfillment. Based on an evaluation of the facts and circumstances, the Company concluded that Columbia Tech is the principal in the arrangement. The Company therefore does not recognize revenue in relation to sales of product pursuant to the Distribution and License Agreement, but does recognize revenue in relation to license fees received from Columbia Tech and the SaaS and maintenance subscription contracts.

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EVOLV TECHNOLOGIES HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Remaining Performance Obligations

The following table includes estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially satisfied) as of June 30, 2025:


	Less than 1 year		1 - 2 years		More than 2 years		Total
Product revenue	$	5,193	$	—	$	—	$	5,193
Subscription revenue	81,278		65,764		55,269		202,311
Service revenue	29,277		20,787		17,148		67,212
License fee and other revenue	440		99		196		735
Total revenue	$	116,188	$	86,650	$	72,613	$	275,451

Contract Balances from Contracts with Customers

Contract assets arise from unbilled amounts in customer arrangements when revenue recognized exceeds the amount billed to the customer and the Company’s right to payment is conditional and not only subject to the passage of time. As of June 30, 2025 and December 31, 2024, the Company had $0.8 million and $0.8 million in current portion of contract assets and $0.8 million and $0.7 million in contract assets, noncurrent on the condensed consolidated balance sheets, respectively.

Contract liabilities represent the Company’s obligation to transfer goods or services to a customer for which it has received consideration (or the amount is due) from the customer. The Company has a contract liability related to service revenue, which consists of amounts that have been invoiced but that have not been recognized as revenue. Amounts expected to be recognized as revenue within 12 months of the balance sheet date are classified as current deferred revenue and amounts expected to be recognized as revenue beyond 12 months of the balance sheet date are classified as deferred revenue, noncurrent. The Company recognized revenue of $19.4 million and $44.1 million during the three and six months ended June 30, 2025, respectively, that was included in the December 31, 2024 deferred revenue balance. The Company recognized revenue of $13.8 million (as restated) and $30.7 million (as restated) during the three and six months ended June 30, 2024, respectively, that was included in the December 31, 2023 deferred revenue balance.

The following table provides a rollforward of deferred revenue (in thousands):


Balance at December 31, 2024	$	84,772
Revenue recognized in relation to the beginning of the year contract liability balance	(44,110)
Revenue deferred	50,710
Balance at June 30, 2025	$	91,372

The following table presents the Company’s components of lease revenue (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
			(Restated)				(Restated)

Interest income on lease receivables	$	27	$	41	$	56	$	83
Lease income - operating leases	20,200		15,655		39,437		29,874
Total lease revenue	$	20,227	$	15,696	$	39,493	$	29,957

The interest income on lease receivables is classified under interest income in the condensed consolidated statements of operations and comprehensive loss. Lease income from operating leases is related to the leased equipment

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

under subscription arrangements and is classified as subscription revenue in the condensed consolidated statements of operations and comprehensive loss. Revenue related to leases entered into with related parties was $0.3 million and $0.6 million during the three and six months ended June 30, 2024, respectively. There was no revenue related to leases entered into with related parties during the three and six months ended June 30, 2025.

Disaggregated Revenue

The following table presents the Company’s revenue by revenue stream (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
			(Restated)				(Restated)
Product revenue	$	2,528	$	1,954	$	4,850	$	3,445
Subscription revenue	20,200		15,655		39,437		29,874
Service revenue	6,686		5,566		13,416		10,818
License fees	2,291		1,717		5,494		2,441
Professional services and other revenue	839		332		1,354		827
Total revenue	$	32,544	$	25,224	$	64,551	$	47,405

Partner Rebate Program

As discussed in Note 3, Summary of Significant Accounting Policies, the Company implemented a new Rebate Program for eligible resellers. As of June 30, 2025, the Company has accrued $0.4 million related to the Rebate Program, which is included in accrued expenses and other current liabilities in our condensed consolidated balance sheets. As a substantial amount of the Company's revenue with eligible resellers is recognized over-time, the Company recognized less than $0.1 million and $0.2 million of current portion of contract asset and contract asset, noncurrent in our condensed consolidated balance sheets, respectively, as of June 30, 2025 and recognized $0.1 million and $0.2 million as reduction of revenue for the three and six months ended June 30, 2025, respectively.

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EVOLV TECHNOLOGIES HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Commissions

The Company incurs and pays commissions on sales of its products and services. The Company applies the practical expedient for contracts less than one year in duration to expense the commission costs in the period in which they were incurred. Commissions on product sales and services are expensed in the period in which the related revenue is recognized. Commissions on subscription arrangements and maintenance are expensed ratably over the life of the contract. The Company had a deferred asset related to commissions of $12.9 million and $13.0 million as of June 30, 2025 and December 31, 2024, respectively. During the three months ended June 30, 2025 and 2024, the Company recognized commission expense of $1.8 million and $1.6 million (as restated), respectively. During the six months ended June 30, 2025 and 2024, the Company recognized commission expense of $3.3 million and $2.9 million (as restated), respectively.

Leases

As of June 30, 2025, future minimum noncancelable payments related to leases of the Company's equipment are as follows (in thousands):


Year Ending December 31:
2025 (six months remaining)	$	41,984
2026	74,372
2027	53,103
2028	26,720
2029	5,872
Thereafter	260
	$	202,311

7. Accounts Receivable

Allowance for Expected Credit Losses

Changes in the allowance for expected credit losses were as follows (in thousands):


	Allowance for Expected Credit Losses
Balance at December 31, 2024	$	(734)
Provisions	(166)
Write-offs, net of recoveries	—
Balance at June 30, 2025	$	(900)

8. Inventory

Inventory consisted of the following (in thousands):


	June 30, 2025		December 31, 2024
Raw materials	$	7,170	$	4,362
Finished goods
Finished goods inventory	4,798		12,153
Uninstalled inventory	174		448
Total	$	12,142	$	16,963

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EVOLV TECHNOLOGIES HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

As discussed in Note 2, Restatement of Previously Issued Condensed Consolidated Financial Statements, the Company offers products for purchase or multi-year subscription leases. For equipment for which the revenue recognition start date was moved to a later date due to the timing of the transfer of control, the equipment cost was added back to finished goods inventory (for equipment sales) until the point in time that the Company transferred control of the equipment to the customer, corresponding to the revenue recognition start date. Amounts added back to finished goods inventory are included in Uninstalled inventory in the table above.

9. Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):


	June 30, 2025		December 31, 2024
Computers and telecom equipment	$	2,094	$	2,064
Lab equipment	5,531		5,564
Furniture and fixtures	111		111
Leasehold improvements	607		607
Leased equipment	125,781		112,078
Capitalized software	17,885		14,555
Sales demo equipment	2,989		3,649
Vehicles	604		604
Equipment held for lease1	11,252		17,347
Construction in progress	668		477
	167,522		157,056
Less: Accumulated depreciation and amortization	(42,044)		(33,395)
	$	125,478	$	123,661

1 Represents equipment that has not yet been deployed to a customer and, accordingly, is not being depreciated.

As of June 30, 2025 and December 31, 2024, the net book value of capitalized software was $12.7 million and $11.1 million, respectively. These amounts include $2.1 million and $1.7 million of capitalized stock compensation costs, respectively. Depreciation and amortization expense related to property and equipment was $5.8 million and $3.9 million (as restated) for the three months ended June 30, 2025 and 2024, respectively, which included amortization expense of capitalized software of $0.9 million and $0.3 million for the three months ended June 30, 2025 and 2024, respectively. Depreciation and amortization expense related to property and equipment was $11.3 million and $7.4 million for the six months ended June 30, 2025 and 2024, respectively, which included amortization expense of capitalized software of $1.8 million and $0.6 million for the six months ended June 30, 2025 and 2024, respectively.

Leased equipment and the related accumulated depreciation were as follows:


	June 30, 2025		December 31, 2024
Leased equipment	$	125,781	$	112,078
Accumulated depreciation	(31,862)		(25,726)
Leased equipment, net	$	93,919	$	86,352

Depreciation expense related to leased equipment was $4.3 million and $3.2 million during the three months ended June 30, 2025 and 2024, respectively. Depreciation expense related to leased equipment was $8.4 million and $6.0 million (as restated) during the six months ended June 30, 2025 and 2024, respectively. Depreciable lives are generally 7 years, consistent with the Company’s planned and historical usage of the equipment subject to operating leases.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The Company recorded losses of $1.3 million and $1.6 million from disposals of property and equipment during the three and six months ended June 30, 2025, respectively, primarily related to the disposal of previously leased Evolv Express systems, which were recorded in cost of subscription revenue. The Company did not record any loss from disposal of property and equipment during the three and six months ended June 30, 2024.

10. Stock-Based Compensation

Stock Options

The following table presents, on a weighted average basis, the assumptions used in the Black-Scholes option-pricing model to determine the grant-date fair value of stock options granted during the six months ended June 30, 2024. No option grants were issued during the six months ended June 30, 2025.


									Six Months Ended June 30,
									2024
Risk-free interest rate									4.1%
Expected term (in years)									6.1
Expected volatility									90.0%
Expected dividend yield									0.0%

The following table summarizes the Company’s stock option activity since December 31, 2024 (in thousands, except for share and per share data):


	Number of Shares	Weighted Average Exercise Price

Outstanding as of December 31, 2024	18,125,937	$	1.18
Granted	—	—
Exercised	(5,948,881)	1.10
Forfeited	(525,981)	3.61
Expired	(20,306)	3.63
Outstanding as of June 30, 2025	11,630,769	$	1.11

Restricted Stock Units

The following table summarizes the Company's restricted stock units activity since December 31, 2024:


	Number of Shares	Grant Date Fair Value

Nonvested as of December 31, 2024	12,115,657	$	3.50
Granted	7,120,531	3.53
Vested	(5,113,914)	3.31
Forfeited	(3,539,790)	3.73
Nonvested as of June 30, 2025	10,582,484	$	3.54

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EVOLV TECHNOLOGIES HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Market-based Stock Units

During the six months ended June 30, 2025, the Company granted market-based stock units ("MSUs") for which the vesting conditions consist of market-based vesting conditions, determined by the Company's level of achievement of pre-established parameters relating to the performance of the Company's stock price as set by the Board as well as service-based vesting conditions. Vesting may range from 0% to 200% of the target MSUs granted, based on the achievement of specified market conditions. The awards will be measured at each anniversary of the grant date and will vest following the completion of a performance period, which is generally three years unless shortened in the event of a change in control.

Compensation expense for MSUs is based on the estimated value of the awards on the grant date, and is recognized over the period from the grant date through the expected vest date, regardless of level of achievement of the market conditions. The fair value of the awards were estimated based on a Monte Carlo simulation model applying the following key assumptions, on a weighted average basis:


			Six Months Ended June 30,
			2025
Risk-free interest rate			3.9%
Expected term (in years)			3.0
Expected volatility			90.5%
Expected dividend yield			0.0%

The following table summarizes the Company's market-based stock units activity since December 31, 2024:


	Number of Shares	Grant Date Fair Value

Nonvested as of December 31, 2024	—	$	—
Granted	1,755,370	5.14
Vested	—	—
Forfeited	(85,227)	4.40
Nonvested as of June 30, 2025	1,670,143	$	5.17

Finback Common Stock Warrants

In January 2021, the Company granted equity classified warrants (the “Finback Common Stock Warrants”) to purchase 2,552,913 shares of the Company's Class A common stock at an exercise price of $0.42 per share to Finback Evolv OBH, LLC (“Finback”), a consulting group affiliated with one of the Company's stockholders. The Finback Common Stock Warrants vest upon meeting certain sales criteria as defined in a business development agreement (the “Finback BDA”), which had a term of 3 years. The Finback BDA expired on January 1, 2023 but included a 1-year “tail period” expiring on January 1, 2024. During the tail period, the Finback Common Stock Warrants continued to vest related to any sale consummated by the Company for which it was determined Finback provided services prior to January 1, 2023 in furtherance of the sale. The Finback Common Stock Warrants expire in January 2031. The Finback Common Stock Warrants are accounted for under ASC 718 Compensation – Stock Compensation as the warrants vest upon certain performance conditions being met.

As of June 30, 2025, 117,423 Finback Common Stock Warrants were exercisable at a total aggregate intrinsic value of $0.7 million, and there were no Finback Common Stock Warrants that were unvested, given the expiration of the 1-year tail period on January 1, 2024. The Company recognized compensation expense for the Finback Common Stock Warrants when the warrants vested based on meeting the specified sales criteria. During the three and six months ended

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

June 30, 2025 and 2024, there was no stock-based compensation expense within sales and marketing expense related to the Finback Common Stock Warrants.

Stock-Based Compensation

Stock-based compensation expense was classified in the condensed consolidated statements of operations and comprehensive loss as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
			(Restated)				(Restated)
Cost of revenue	$	282	$	173	$	501	$	311
Research and development	1,154		1,222		2,269		2,124
Sales and marketing	1,710		2,724		2,758		5,683
General and administrative	2,401		3,308		4,373		5,739
Restructuring costs	$	—	$	—	$	525	$	—
Total stock-based compensation expense	$	5,547	$	7,427	$	10,426	$	13,857

11. Income Taxes

The Company regularly evaluates the realizability of its deferred tax assets by considering all available positive and negative evidence, including consideration of future taxable income. Primarily due to the Company’s history of incurred net losses, the Company maintains a full valuation allowance against its deferred tax assets, as it is not more likely than not that these assets will be realized. Thus, the Company has not recognized material provisions or benefits for income taxes.

The Company’s tax provision and resulting effective tax rate for interim periods are determined using the estimated annual effective tax rate (“AETR”), which is updated each quarter and adjusted for discrete items recognized in the period. For the three and six months ended June 30, 2025, the AETR reflects expected taxable income of Evolv UK, consistent with its intercompany transfer pricing policy. The forecast is consistent with year-to-date actual results through June 30, 2025, and excludes any mark-to-market adjustments. While the overall tax provision remains immaterial due to the Company's full valuation allowance, a portion of the prior-year net operating losses of Evolv UK expected to be utilized is subject to uncertainty. As a result, a corresponding unrecognized tax benefit has been included within the AETR.

The Company's income tax provision reflects an estimate of federal, state, and foreign income taxes based on enacted tax rates in the jurisdictions in which we operate. The provision is adjusted for the impact of allowable tax credits and deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in tax law. The Company has historically incurred net operating losses.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law in the United States. The OBBBA introduces various corporate and international tax law changes with staggered effective dates through 2027. Key provisions include immediate R&D expensing, permanent bonus depreciation, modifications to interest expense limitations, and changes to certain international tax rules. While the Company continues to evaluate the potential impact of the OBBBA on its consolidated financial statements, due to its full valuation allowance position on U.S. deferred tax assets, immaterial current tax liabilities, and insignificant foreign earnings from Evolv UK, the Company does not expect the OBBBA to have a material impact on its financial position, results of operations, or effective tax rate.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

12. Net (Loss) Income per Share

Basic and diluted net (loss) income per share attributable to common stockholders are calculated as follows (in thousands, except share and per share amounts):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
			(Restated)				(Restated)
Numerator:







Net (loss) income	$	(40,535)	$	3,418	$	(42,224)	$	(7,854)
Reallocation of net income attributable to participating securities	—		(41)		—		—
Net (loss) income attributable to common stockholders – basic and diluted	$	(40,535)	$	3,377	$	(42,224)	$	(7,854)

Denominator:
Weighted average common shares outstanding – basic	165,252,554		156,473,080		163,042,749		154,774,899
Weighted average effect of potentially dilutive securities:

Stock options	—		13,047,919		—		—
Restricted stock units	—		1,940,411		—		—

Finback Common Stock Warrants	—		102,533		—		—
Total potentially dilutive securities	—		15,090,863		—		—
Weighted average common shares outstanding – diluted	165,252,554		171,563,943		163,042,749		154,774,899
Net (loss) income per share attributable to common stockholders - basic	$	(0.25)	$	0.02	$	(0.26)	$	(0.05)
Net (loss) income per share attributable to common stockholders - diluted	$	(0.25)	$	0.02	$	(0.26)	$	(0.05)

The following potentially dilutive outstanding securities were excluded from the computation of diluted net (loss) income per share attributable to common stockholders because their effect would have been anti-dilutive or issuance of such shares is contingent upon the satisfaction of certain conditions which were not satisfied by the end of the period:


	Three Months Ended June 30,		Six Months Ended June 30,
	2025	2024	2025	2024
Options issued and outstanding	11,630,769	7,237,746	11,630,769	21,681,791
Public Warrants to purchase common stock	14,324,893	14,324,893	14,324,893	14,324,893
Warrants to purchase common stock (Finback)	117,423	—	117,423	117,423
Unvested restricted stock units	10,582,484	8,843,186	10,582,484	16,117,388
Unvested market-based stock units*	1,670,143	—	1,670,143	—
Earn-out shares*	15,000,000	15,000,000	15,000,000	15,000,000
Contingently issuable common stock*	1,897,500	1,897,500	1,897,500	1,897,500
	55,223,212	47,303,325	55,223,212	69,138,995

*Issuance of Market-based stock units, Earn-out shares and Contingently issuable common stock is contingent upon the satisfaction of certain conditions, which were not satisfied by the end of the period.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

13. Related Party Transactions

Original Equipment Manufacturer Partnership Agreement with Motorola

In December 2020, the Company entered into an original equipment manufacturer partnership agreement with Motorola Solutions, Inc. (“Motorola”), an investor in the Company. The partnership agreement has since been amended and restated. Motorola sells Motorola-branded premium products based on the Evolv Express platform through their worldwide network of over 2,000 resellers and integration partners, and has integrated the Evolv Express platform with Motorola products. While the partnership agreement is still in effect, effective in the fourth quarter of 2024, Motorola is no longer considered a related party. During the three and six months ended June 30, 2024, revenue from Motorola's distributor services was $1.9 million (as restated) and $3.9 million (as restated), respectively.

14. Commitments and Contingencies

At each reporting date, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. The Company expenses the costs related to such legal proceedings as incurred. Insurance proceeds, if any, will be recognized as reductions to the related expenses in the period the proceeds are probable. Below is a summary of the various types of matters subject to this guidance.

Indemnification Agreements

In the ordinary course of business, the Company provides indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its Board of Directors and certain of its executive officers and employees that require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their role, status or service as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. Based on historical experience and evaluation of the agreements, we do not believe that any payments related to our indemnities will have a material impact on our financial condition or results of operations.

Legal Proceedings

We are from time to time subject to various claims, lawsuits, government and regulatory examinations, inquiries, information requests and investigations, and other legal and administrative proceedings arising in the ordinary course of business. The Company has identified certain claims as a result of which a loss may be incurred. This assessment is based on our current understanding of relevant facts and circumstances. As such, our view of these matters is subject to inherent uncertainties and may change in the future. Significant judgment is required in both the determination of probability and the determination as to whether an exposure is reasonably estimable. Actual outcomes of these legal and regulatory proceedings may materially differ from our current estimates. The pending proceedings involve complex questions of fact and law and may require the expenditure of significant funds and the diversion of other resources. The results of legal proceedings are inherently uncertain, and material adverse outcomes are reasonably possible.

General Litigation

On March 25, 2024 and November 1, 2024, putative class action lawsuits were filed against the Company in the United States District Court for the District of Massachusetts. On December 13, 2024, the Court consolidated the two lawsuits into one action (the “Class Action”), pursuant to which a consolidated amended complaint was filed against the Company, certain former executives, a current director, and individuals associated with NewHold Investment Corp. Lead Plaintiff Robert Falk and additional plaintiffs Chris Williams, Tim R. Carrillo and Chris Swanson (“Class Action Plaintiffs”) allege that the Company violated federal securities laws by making false or misleading statements relating to the effectiveness of certain products and the Company’s revenue recognition. The Class Action Plaintiffs seek various forms of relief, including compensatory damages, reasonable costs and expenses, attorneys’ fees, and expert fees. The

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Company filed its motion to dismiss the Class Action on March 28, 2025, and the Class Action Plaintiffs filed their opposition to the motion to dismiss on June 24, 2025. On June 30, 2025, the Court issued an order staying the Class Action, including disposition on the motion to dismiss, pending settlement negotiations.

On November 12, 2024, a shareholder derivative lawsuit was filed in the United States District Court for the District of Massachusetts (the “Massachusetts Derivative Action”). The Massachusetts Derivative Action is a consolidation of two shareholder derivative lawsuits based on the same allegations in the Class Action, and filed against certain former and current officers and directors, and nominally against the Company. Plaintiff Bonnie Maas, derivatively on behalf of nominal defendant the Company, brought claims for breach of fiduciary duty, violation of federal securities law, unjust enrichment, waste of corporate assets, and gross mismanagement, seeking monetary damages, including restitution and fees, equitable relief, and an order directing the Company to take all necessary actions to reform and improve its corporate governance and internal procedures. The Massachusetts Derivative Action is stayed pending the outcome of the motion to dismiss in the Class Action or a final order dismissing the Class Action with prejudice.

On March 10, 2025, a shareholder derivative lawsuit was filed in the Delaware Court of Chancery (the “Delaware Derivative Action”). The Delaware Derivative Action is based on the same allegations in the Class Action, and was filed against certain former and current officers, and nominally against the Company. Plaintiff Steve Bersch, derivatively on behalf of nominal defendant Evolv, brought claims for breach of fiduciary duty, unjust enrichment, and insider trading, seeking various forms of relief, including equitable relief, monetary damages, including restitution and fees, and a declaratory judgment. The Delaware Derivative Action is stayed pending the outcome of the motion to dismiss in the Class Action or a final order dismissing the Class Action with prejudice.

The Company expects to incur legal and professional services expenses associated with this litigation in future periods. The Company will recognize these expenses as services are received. We cannot reasonably estimate a range of possible losses at this time for the derivative lawsuits, as the proceedings remain in the early stages, alleged damages have not been specified, and the derivative actions are stayed. For these reasons, the Company has not recorded a loss contingency liability for the derivative lawsuits as of June 30, 2025. On August 5, 2025, the parties to the Class Action engaged in mediation and reached a settlement in principle in the amount of $15.0 million, which is subject to negotiation of definitive documentation and court approval, of which the Company estimated that $14.0 million would be funded by D&O insurance. As of June 30, 2025, the Company recognized a settlement accrual of $15.0 million and an estimated insurance recovery of $14.0 million, which are included in accrued expenses and other current liabilities and prepaid and other current assets in the condensed consolidated balance sheets, respectively. The Company recognized the net $1.0 million as an estimated loss in general and administrative expense in the condensed consolidated statements of operations and comprehensive loss for both the three and six months ended June 30, 2025.

Regulatory and Governmental Matters

As previously disclosed, on October 12, 2023, the Company announced that the U.S. Federal Trade Commission (the “FTC”) had requested information about certain aspects of its marketing practices. The Company reached a settlement with the FTC and on December 5, 2024, a Stipulated Order for Permanent Injunction and Other Relief (the “Order”) was entered in the United States District Court for the District of Massachusetts Eastern Division. The Order (i) required that the Company permit a limited cohort of school customers to cancel their contracts, (ii) required that the Company take certain compliance actions and meet record keeping obligations, and (iii) enjoined the Company from making misleading or unsubstantiated marketing claims. The Order did not include any monetary relief. The period during which eligible customers may cancel closed on March 30, 2025. Any inability to adequately comply with the terms of the Order could result in enforcement actions or penalties imposed by the FTC.

As part of the Order, the Company agreed to offer a limited number of its K-12 education customers the option to cancel the remainder of their current contracts during a 60-day cancellation period. 65 education customers were offered the cancellation period, and of these, 5 customers representing 24 Evolv Express systems elected to cancel their contracts with the Company. Amounts that customers had paid to the Company related to portions of their contracts that were cancelled are required to be returned to the customer, but these amounts were immaterial for the year ended December 31, 2024 and therefore the Company did not book a liability in its consolidated financial statements. There is no impact to revenue or cost of revenue amounts for the three and six months ended June 30, 2025, as revenue continued to be

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

recognized on these deals through the cancellation dates of each contract, all of which were in June 2025, and all systems have been removed from our subscription base as of June 30, 2025. The Company determined that $0.9 million of its revenues previously expected to be recognized over the next two years related to performance obligations that were unsatisfied (or partially satisfied) as of the effective date of the Order were impacted by the cancellations, which has been excluded from the remaining performance obligations disclosed in Note 6 Revenue Recognition.

As previously disclosed, in February 2024, the Company received a subpoena from the Division of Enforcement of the Securities and Exchange Commission (the “SEC”), requesting documents and information relating to certain aspects of the Company’s marketing practices, and the Company has since received additional related requests. The Company is cooperating with the SEC’s investigation.

As previously reported, the Company self-reported the Investigation to the Division of Enforcement of the SEC. The Company has since received requests for documents and information from the SEC relating to this matter. The Company is cooperating with this investigation. On November 1, 2024, the Company received a voluntary document request from the U.S. Attorney’s Office of the Southern District of New York ("DOJ") relating to these same issues, and has since received additional requests for documents and information relating to this matter. By letter dated August 7, 2025, the DOJ informed the Company that the Company is no longer the subject of a DOJ investigation.

In view of the inherent unpredictability of such regulatory and governmental matters, the Company cannot determine with certainty the timing or ultimate resolution of legal and regulatory matters or the eventual loss, fines or penalties, if any, that may result from such matters. The Company establishes reserves for such matters when those matters present loss contingencies that are both probable and can be reasonably estimated. The actual costs of resolving such matters, however, may be substantially higher than the amounts reserved for those matters, and an adverse outcome in certain of these matters could have a material adverse effect on the consolidated financial statements in particular quarterly or annual periods. The Company accrues amounts for certain matters for which losses are considered to be probable of occurring based on its reasonable estimate of the most likely outcome. It is reasonably possible actual losses could be significantly different from the Company's current estimates. In addition, there are some matters for which it is reasonably possible that a loss will occur, however the Company cannot estimate a range of the potential losses for these matters.

Any resolution or litigation with the SEC or other parties, could ultimately result in monetary and injunctive relief that may impose costs on the Company and/or require it to make changes to its business practices. These costs and requirements may be material both individually and in the aggregate, but we have not accrued a loss pertaining to SEC matter. In addition to the expected insurance recovery discussed above related to the Class Action litigation, the Company's defense costs for counsel and consultants in connection with the securities litigation and the related SEC and DOJ matter, including certain expenses that have previously been paid, are also expected to be reimbursed. As of June 30, 2025, the Company recognized an estimated loss recovery related to insurance coverage for these matters of $1.7 million and $5.6 million for the three and six months ended June 30, 2025, respectively, which was recorded as a reduction of general and administrative expense in the condensed consolidated statements of operations and comprehensive loss. As of June 30, 2025, $0.9 million of these recoveries have been paid out by the Company's insurance provider. The $4.7 million remaining estimated recovery is included in prepaid and other current assets in the condensed consolidated balance sheets as of June 30, 2025. This amount reflects costs that have been confirmed covered by the Company’s insurance providers, as well as an estimate of other claims the Company has determined are probable of recovery. $4.1 million of recoveries were paid out in July 2025. As it relates to these losses for which the Company has determined recovery to be probable, the Company cannot provide any assurance that additional costs related to these matters will not exceed the limits of its insurance policies, that other such claims, for which a loss recovery could not be estimated, are covered by the terms of its insurance policies or that its insurance carrier will be able to cover all related claims. There can be no assurance as to the timing or the terms of the ultimate outcome of these investigations or their potential effect, if any, on us or our results of operations. We expect to incur legal and professional services expenses associated with this litigation in future periods. We will recognize these expenses as services are received, net of estimated insurance recoveries. There can be no assurance whether there will be further information requests or potential enforcement action or litigation, which is necessarily uncertain.

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EVOLV TECHNOLOGIES HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Contract manufacturers

The Company generally contracts with its contract manufacturer, Columbia Tech, on a cancellable, purchase-order basis. The Company has a contract in the normal course of business with Columbia Tech to provide manufacturing services for the Company's equipment sold or leased to customers. While these contracts are cancellable by the Company upon prior notice, payments due upon cancellation consist of payments for services provided or expenses incurred, including noncancelable obligations of our service providers, up to the date of cancellation. These payments are not determinable, but could result in a material purchase commitment if the Company were to cancel their open purchase orders.

15. Segment Information

The Company determined that it has one operating and reporting segment after considering the Company’s organizational structure and the information regularly reviewed and evaluated by the Company’s Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources and assess performance. The Company has determined that its CODM is its President and Chief Executive Officer. The CODM evaluates the performance of our segment based upon consolidated net income and considers budget-to-actual or forecast-to-actual variances to assess performance and make decisions about allocating resources. The CODM evaluates segment assets based on total assets on the condensed consolidated balance sheets. Asset information is not presented here because its presentation here would be duplicative of the condensed consolidated balance sheets. On the basis of these factors, the Company determined that it operates and manages its business as one operating and reporting segment, that develops, manufactures, markets and sells security screening products and specific services, and accordingly has one reportable segment for financial reporting purposes.

Information by reportable segment is as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
			(As Restated)				(As Restated)
Segment revenue	$	32,544	$	25,224	$	64,551	$	47,405
Less:
Employee expense	15,739		17,819		32,108		35,660
Travel and expense	1,101		1,674		1,892		3,188
Capitalized R&D expense	(1,361)		(1,568)		(2,850)		(3,022)
Stock-based compensation expense1	5,547		7,427		9,901		13,857
Other non-recurring expenses2	6,812		2,287		10,373		3,967
Consulting and contract staffing	3,046		3,120		6,323		6,436
Software subscriptions	1,569		1,637		3,104		3,095
Depreciation and amortization	5,790		3,901		11,319		7,358
Restructuring costs	—		860		2,662		860
Disposal of property and equipment	1,312		—		1,633		—
Other cost of revenue	6,894		5,261		12,014		9,274
Other operating expenses	3,588		5,177		7,954		11,009
Other segment items3	23,042		(25,789)		10,342		(36,423)


Segment net (loss) income	$	(40,535)	$	3,418	$	(42,224)	$	(7,854)

1 Excludes incremental expense related to modified awards included in the Restructuring costs line. See Note 16, Restructuring Charges for additional information.

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EVOLV TECHNOLOGIES HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

2 For the three and six months ended June 30, 2025, includes consulting and legal fees related to the Investigation (as defined in Note 2) and related matters, additional audit fees incurred in connection with the restatement of prior period financial statements, net of estimated insurance recoveries, as well as estimated net losses related to ongoing legal matters. For the three and six months ended June 30, 2024, includes costs associated with adverse non-cancellable inventory purchase commitments and severance expense.

3 Refer to Total other (expense) income, net and (Benefit) provision for income taxes in the condensed consolidated statements of operations and comprehensive loss.

16. Restructuring Charges

In January 2025, the Company implemented a Board-approved reduction in force affecting 41 members of its workforce. This action is part of the Company’s initiative to increase its profitability and cash flow as the Company seeks further flexibility to pursue its investment strategy with certain growth opportunities.

The Company incurred charges of $2.7 million for the reduction in force during the three months ended March 31, 2025. These charges consisted of termination charges arising from severance obligations of approximately $2.0 million, extended eligibility for the vesting of certain equity awards originally scheduled to vest on or before March 1, 2025, resulting in incremental non-cash expense of $0.5 million, and other customary employee benefit payments in connection with a reduction in force of $0.2 million. All of these restructuring costs are reported within restructuring costs in our condensed consolidated statements of operations and comprehensive loss.

All actions related to the reduction in force were completed by March 31, 2025, with the exception of certain severance obligations that are payable over various periods through November 2025 under the Company's Severance And Change In Control Plan.

To align the presentation of restructuring charges, the Company reclassified the comparative financial statements for the three and six months ended June 30, 2024. For both the three and six months ended June 30, 2024, the reclassifications resulted in an increase in restructuring costs of $0.9 million, and a corresponding decrease in cost of service revenue, sales and marketing expenses, and general and administrative expenses of $0.2 million, $0.7 million, and less than $0.1 million, respectively. The prior year activity was limited in scope, and the reclassifications did not impact total loss from operations or total net income (loss). All actions related to the prior year reduction in force were completed by June 30, 2024.

The following table summarizes the liabilities recognized in relation to the cash obligations from reduction in force, which are included in accrued expenses and other current liabilities in our condensed consolidated balance sheets (in thousands):


Balance at December 31, 2023	$	—
Charges incurred	860
Cash payments	(860)
Balance at December 31, 2024	—
Charges incurred	2,137
Cash payments	(1,849)
Balance at June 30, 2025	$	288

17. Subsequent Events

Senior Secured Credit Facilities

As described in Note 2, on July 29, 2025, the Company entered into the $75.0 million MidCap Credit Agreement, the proceeds of which will be used for general corporate purposes, including to support growing long-term demand for the

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EVOLV TECHNOLOGIES HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Company's subscription sales model. The MidCap Credit Agreement provides for the Senior Secured Credit Facilities, which include an initial $30.0 million term loan facility, a $30.0 million delayed draw facility (available for drawdown during the two-year period following the closing date), and a $15.0 million revolving line of credit, each with a term of five years. At closing, the Company received net proceeds of $26.6 million, after deducting $3.4 million in debt issuance costs incurred in connection with the closing of MidCap Credit Agreement.

The Senior Secured Credit Facilities are guaranteed by the Company, and in the future, may be guaranteed by certain material subsidiaries. The Senior Secured Credit Facilities are secured by a first lien on substantially all of the assets of the Company. The borrowings under the Senior Secured Credit Facilities bear interest at a fluctuating rate per annum equal to (x) a base rate determined by reference to the higher of (1) the prime rate of Wells Fargo and (2) 2.00% or (y) Term Secured Overnight Financing Rate (“Term SOFR”), in each case, plus an applicable margin calculated based on earnings before interest, taxes, depreciation, and amortization (“EBITDA”). At closing, the applicable margin on Term SOFR loans was 5.25%. Interest and principal are payable monthly. The term loan facilities require interest-only payments during the initial 48-month period, with principal repayment amortized on a straight-line basis over the remaining 12 months of the term.

Under the MidCap Credit Agreement, the Company is also required to comply with certain customary affirmative and negative covenants, including a minimum annual recurring revenue covenant, a minimum EBITDA covenant that takes effect on the second anniversary of the closing date, and a minimum liquidity covenant that would cease to apply following the resolution of certain litigation and regulatory matters, in addition to customary reporting requirements of periodic financial results.

Departure of Officer

On August 13, 2025, Mr. Michael Ellenbogen, Chief Innovation Officer and a member of the Board of Directors (the “Board”) of the Company, informed the Company that he would be resigning as Chief Innovation Officer, effective as of September 5, 2025, citing new time commitments. Mr. Ellenbogen’s decision to resign is not due any disagreements with the Company. Mr. Ellenbogen will continue to serve as a member of the Board and will be eligible to receive compensation as a non-employee director pursuant to the Company's Director Compensation Policy.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”). This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties. This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” section of this Quarterly Report on Form 10-Q and our 2024 Form 10-K and in other parts of this Quarterly Report on Form 10-Q.

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 our business combination (the “Merger”) and references to “Legacy Evolv” refer to Evolv Technologies, Inc. dba Evolv Technology, Inc. prior to the consummation of the Merger.

Restatement of Prior Period Financial Statements

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.

Business Overview

Evolv is a leading security technology company pioneering Artificial Intelligence (“AI”)-powered screening designed to help create safer experiences, with key market categories that include education, healthcare, sports, live entertainment, and industrial workplaces. Our mission is to make the world a safer and more enjoyable place to live, work, learn, and play. Our goal is to help facility operators address the chronic epidemic of escalating gun violence, mass shootings and terrorist attacks while maintaining a positive visitor experience.

Our solutions combine proprietary software and hardware, delivered as a long-term Security-as-a-Service (“SaaS”) subscription model and are designed to enhance security and improve the visitor experience. Evolv provides a cloud-connected, AI-driven approach to security that goes beyond just hardware, supporting the end-to-end screening experience. Our focus is weapons detection, and we offer two core solutions: Evolv Express® and Evolv eXpedite™, designed to efficiently screen high volumes of people and bags for concealed threats.

Our flagship product, Evolv Express, uses advanced sensors, AI-powered software, and cloud services to not only consistently detect firearms, improvised explosives, and certain types of knives and distinguish them from many harmless items such as cell phones and keys, but also visualize the location of the potential threat helping to enable security personnel to conduct targeted, minimally intrusive secondary screenings. Evolv eXpedite, our high-speed autonomous X-ray bag scanning solution, works with Evolv Express to provide a layered approach to security for concealed weapons detection in high clutter environments. Using eXpedite with Express aims to allow the checkpoint to operate at heightened sensitivity while potentially reducing the burden on security staff and optimizing the visitor experience.

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.

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Our products, which are offered to our customers primarily under a multi-year subscription model, provide predictable revenue streams for us in addition to value for our customers.

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.

Key Factors Affecting Our Operating Results

We believe that our performance and future success depend on many factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in the “Risk Factors” section of this Quarterly Report on Form 10-Q.

General Economic and Market Conditions

We expect that our results of operations, including our revenue and cost of revenue, may fluctuate or continue to fluctuate based on, among other things, the impact of rising inflation and interest rates on business spending; supply chain issues and the impacts on our manufacturing capabilities; public health emergencies; geopolitical conflicts and war, including the conflicts in Europe and the Middle East; and recessionary trends. See the risk factor titled “Our operating results may fluctuate for a variety of reasons, including our failure to close large volume opportunity customer sales” in the “Risk Factors” section in this Quarterly Report on Form 10-Q. While these factors continue to evolve, we plan to remain flexible and optimize our business as appropriate and allocate resources, as necessary.

Adoption of our Security Screening Products

We believe the world will continue to focus on the safety and security of people in the places where they gather. Many of these locations, such as professional sports venues, educational institutions, and healthcare facilities, are moving toward a more frictionless security screening experience. We are well-positioned to take advantage of this opportunity due to our proprietary technologies and distribution capabilities. Our products are designed to empower venues and facilities to realize the full benefits of touchless security screening, including a rapid visitor throughput and minimal security staff to screened visitor physical contact. We expect that our results of operations, including revenue, will fluctuate for the foreseeable future as venues and facilities continue to shift away from conventional security screening processes towards touchless security screening or consider security screening processes for the first time. The degree to which potential and current customers recognize these benefits and invest in our products will affect our financial results.

Sales Mix, Pricing, Product Cost and Margins

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.

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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.

Development and Commercialization of our Products

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.

Liquidity and Capital Resources

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.

Components of Results of Operations

Revenue

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.

Product Revenue

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.

Subscription Revenue

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

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operating leases and recognized ratably over the duration of the lease. There are no contingent lease payments as a part of these arrangements.

Lease arrangements generally include both lease and non-lease components. The non-lease components relate to (1) distinct services, including professional services, SaaS, and maintenance, and (2) any add-on accessories. Professional services are included in license fees and other revenue as described below, and add-on accessories are included in product revenue as described above. Because the equipment lease, SaaS, and maintenance components of a subscription arrangement are recognized as revenue over the same time period and in the same pattern, the equipment lease and SaaS/maintenance performance obligations are classified as a single category of subscription revenue in our condensed consolidated statements of operations and comprehensive loss.

Service Revenue

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.

License Fee and Other Revenue

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.

Cost of Revenue

We recognize cost of revenue in the same manner that the related revenue is recognized.

Cost of Product Revenue

Cost of product revenue consists primarily of costs paid to our third-party manufacturer and other suppliers, labor costs (including stock-based compensation), and shipping costs.

Cost of Subscription Revenue

Cost of subscription revenue consists primarily of depreciation expense related to leased units, an allocated portion of internal-use software amortization expense, shipping costs, and maintenance costs related to leased units. Maintenance costs consist primarily of labor (including stock-based compensation), spare parts, shipping costs, field service repair costs, equipment, and supplies.

Cost of Service Revenue

Cost of services revenue consists of maintenance costs related to units purchased by customers and an allocated portion of internal-use software amortization expense. Maintenance costs consist primarily of labor (including stock-based compensation), spare parts, field service repair costs, equipment, and supplies.

Cost of License Fee and Other Revenue

Cost of license fees and other revenue consists primarily of internal and third-party costs related to professional services, such as installation, training, and event support. License fee revenue earned under our Distribution and License Agreement with Columbia Tech has no associated cost of revenue.

Gross Profit and Gross Margin

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Our gross profit is calculated based on the difference between our revenues and cost of revenues. Gross margin is the percentage obtained by dividing gross profit by our revenue.

We expect our gross margins to fluctuate over time based on the following factors:

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

•Market conditions that may impact our pricing;

•Product mix changes between established products and new products;

•Our cost structure for manufacturing operations, including contract manufacturers, relative to volume, and our product support obligations;

•Our ability to maintain our costs on the components that go into the manufacture of our products; and

•Write-offs of inventory.

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.

Research and Development

Our research and development expenses represent costs incurred to support activities that advance the development of innovative security screening technologies, new product platforms, as well as activities that enhance the capabilities of our existing product platforms. Our research and development expenses consist primarily of salaries and bonuses, employee benefits, stock-based compensation, prototypes, design expenses, and consulting and contractor costs. We expect our research and development costs will remain relatively consistent for the year ending December 31, 2025 compared to the year ended December 31, 2024 as we look to leverage previous investments made in people and processes.

Sales and Marketing

Sales and marketing expenses consist primarily of personnel related expenses associated with our sales and marketing, customer success, business development, and strategy functions, as well as costs related to trade shows and events, and stock-based compensation. We expect our sales and marketing costs will decrease for the year ending December 31, 2025 compared to the year ended December 31, 2024 as a result of certain cost cutting measures we have taken, including the reduction in force implemented in January 2025.

General and Administrative

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.

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Restructuring Costs

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.

The restructuring charges, which had previously been included in cost of service revenue, research and development expenses, sales and marketing expenses, and general and administrative expenses, has been reclassified for prior periods to restructuring costs on the condensed consolidated statements of operations and comprehensive loss. See “Reclassifications” below and Note 1 for additional information.

Interest Expense

Interest expense includes cash interest paid on long-term debt and amortization of deferred financing fees and costs.

Interest Income

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

Change in Fair Value of Contingent Earn-out Liability

In connection with the Merger and pursuant to the Merger Agreement, certain of Legacy Evolv’s initial shareholders are entitled to receive additional shares of our common stock upon us achieving certain milestones. The earn-out arrangement with the Legacy Evolv shareholders is accounted for as a liability and subsequently remeasured at each reporting date with changes in fair value recorded as a component of other income (expense), net in the condensed consolidated statements of operations and comprehensive loss.

Change in Fair Value of Contingently Issuable Common Stock Liability

Prior to the Merger, certain NHIC stockholders owned 4,312,500 shares of NHIC Class B common stock, referred to as Founder Shares. Upon the closing of the Merger, NHIC Class A and Class B common stock became the Company's common stock. 1,897,500 Founder Shares vested at the closing of the Merger, 1,897,500 Founder Shares are contingently issuable and shall vest upon the Company achieving certain milestones, and 517,500 Founder Shares were contributed to Give Evolv LLC. The 1,897,500 outstanding contingently issuable common shares are accounted for as a liability and subsequently remeasured at each reporting date with changes in fair value recorded as a component of other income (expense), net in the condensed consolidated statements of operations and comprehensive loss.

Change in Fair Value of Public Warrant Liability

In connection with the closing of the Merger, the Company assumed warrants to purchase 14,325,000 shares of common stock (the “Public Warrants”) at an exercise price of $11.50. The Public Warrants are currently exercisable and expire in July 2026. We assessed the features of these warrants and determined that they qualify for classification as a liability. Accordingly, we recorded the warrants at fair value upon the closing of the Merger as a component of other income (expense), net in the condensed consolidated statements of operations and comprehensive loss with the offset to additional paid-in capital.

Income Taxes

Our income tax provision consists of an estimate for federal, state, and foreign income taxes based on enacted rates in the jurisdictions in which we operate, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities and changes in tax law. We have historically incurred net operating losses and maintain a full valuation allowance against our deferred tax assets.

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limitations, and changes to certain international tax rules. While we continue to evaluate the potential impact of the OBBBA on our consolidated financial statements, due to our full valuation allowance position on U.S. deferred tax assets, immaterial current tax liabilities, and insignificant foreign earnings from Evolv Technologies UK Ltd., we do not expect the OBBBA to have a material impact on our financial position, results of operations, or effective tax rate.

Reclassifications

During the three months ended March 31, 2025, the Company began classifying restructuring charges, which includes termination charges arising from severance obligations, incremental non-cash expense, and other customary employee benefit payments in connection with a reduction in force, within restructuring costs on the condensed consolidated statements of operations and comprehensive loss, whereas the restructuring costs for these services has previously been included in cost of service revenue, research and development expenses, sales and marketing expenses, and general and administrative expenses. These reclassifications were made to align the presentation of restructuring charges with the Company's internal reporting and analysis. See Note 1, Nature of the Business and Basis of Presentation for additional information.

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Results of Operations

Comparison of the Three Months Ended June 30, 2025 and 2024

The following table summarizes our results of operations for the three months ended June 30, 2025 and 2024 (in thousands):


	Three Months Ended June 30,
	2025		2024		$ Change		% Change
			(Restated)
Revenue:
Product revenue	$	2,528	$	1,954	$	574	29	%
Subscription revenue	20,200		15,655		4,545		29
Service revenue	6,686		5,566		1,120		20
License fee and other revenue	3,130		2,049		1,081		53
Total revenue	32,544		25,224		7,320		29
Cost of revenue:
Cost of product revenue	5,351		2,839		2,512		88
Cost of subscription revenue	8,894		6,309		2,585		41
Cost of service revenue	1,710		1,147		563		49
Cost of license fee and other revenue	371		172		199		116
Total cost of revenue	16,326		10,467		5,859		56
Gross profit	16,218		14,757		1,461		10
Operating expenses:
Research and development	4,737		5,850		(1,113)		(19)
Sales and marketing	11,736		16,357		(4,621)		(28)
General and administrative	17,238		14,061		3,177		23
Restructuring costs	—		860		(860)		(100)

Total operating expenses	33,711		37,128		(3,417)		(9)
Loss from operations	(17,493)		(22,371)		4,878		22
Other (expense) income, net:

Interest income	224		681		(457)		(67)
Other income (expense), net	136		(39)		175		449

Change in fair value of contingent earn-out liability	(14,200)		16,514		(30,714)		(186)
Change in fair value of contingently issuable common stock liability	(3,900)		3,747		(7,647)		(204)
Change in fair value of public warrant liability	(5,303)		4,886		(10,189)		(209)
Total other (expense) income, net	(23,043)		25,789		(48,832)		(189)
(Loss) income before income taxes	$	(40,536)	$	3,418	$	(43,954)	(1286)	%
Benefit for income taxes	$	(1)	$	—	$	(1)	*
Net (loss) income	$	(40,535)	$	3,418	$	(43,953)	(1286)	%

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Revenue, Cost of Revenue and Gross Profit

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.

Product Revenue


	Three Months Ended June 30,
	2025			2024			$ Change		% Change
				(Restated)
Product revenue	$	2,528		$	1,954		$	574	29	%
Cost of product revenue	$	5,351		$	2,839		$	2,512	88	%
Gross loss - Product revenue	$	(2,823)		$	(885)		$	(1,938)	(219)	%
Gross profit margin - Product revenue	(112)		%	(45)		%	N/A		(66)	%

Subscription Revenue


	Three Months Ended June 30,
	2025			2024			$ Change		% Change
				(Restated)
Subscription revenue	$	20,200		$	15,655		$	4,545	29	%
Cost of subscription revenue	$	8,894		$	6,309		$	2,585	41	%
Gross profit - Subscription revenue	$	11,306		$	9,346		$	1,960	21	%
Gross profit margin - Subscription revenue	56		%	60		%	N/A		(4)	%

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.

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Service Revenue


	Three Months Ended June 30,
	2025			2024			$ Change		% Change
				(Restated)
Service revenue	$	6,686		$	5,566		$	1,120	20	%
Cost of service revenue	$	1,710		$	1,147		$	563	49	%
Gross profit - Service revenue	$	4,976		$	4,419		$	557	13	%
Gross profit margin - Service revenue	74		%	79		%	N/A		(5)	%

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.

License fee and other revenue


	Three Months Ended June 30,
	2025			2024			$ Change		% Change
				(Restated)
License fee and other revenue	$	3,130		$	2,049		$	1,081	53	%
Cost of license fee and other revenue	$	371		$	172		$	199	116	%
Gross profit - License fee and other revenue	$	2,759		$	1,877		$	882	47	%
Gross profit margin - License fee and other revenue	88		%	92		%	N/A		(3)	%

The increases in license fee and other revenue and gross profit are primarily driven by $2.3 million of license fee revenue earned during the three months ended June 30, 2025 compared to $1.7 million earned during the prior year period under the Distribution and License Agreement with Columbia Tech. Although the unit sales through our distributor licensing model declined, the license fee and other revenue increased due to an increase in per-unit license fees for our second generation of Evolv Express systems. Product gross profit margin decreased for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 due to an increase in personnel and overhead costs of $0.3 million.

Research and Development Expenses


	Three Months Ended June 30,
	2025		2024		$ Change		% Change
			(Restated)
Personnel related (including stock-based compensation)	$	3,544	$	4,071	$	(527)	(13)	%
Materials and prototypes	173		504		(331)		(66)	%
Professional fees	658		929		(271)		(29)	%
Other	362		346		16		5	%
	$	4,737	$	5,850	$	(1,113)	(19)	%

The decrease in personnel related expenses is due to the January 2025 reductions in force, which resulted in a decrease in payroll costs of $0.6 million, partially offset by a lower amount of payroll costs capitalized related to internal-use software and software embedded in products to be sold or leased of $0.2 million. The decrease in materials and prototypes expense is due to a decrease of $0.2 million in design and engineering costs related to the development of the

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next generation of our Evolv Express system and new product offerings in the prior year. The decrease in professional fees primarily relates to a decrease in consulting costs incurred for product development and engineering of $0.3 million.

Sales and Marketing Expenses


	Three Months Ended June 30,
	2025		2024		$ Change		% Change
			(Restated)
Personnel related (including stock-based compensation)	$	9,134	$	11,979	$	(2,845)	(24)	%
Advertising and direct marketing	693		1,044		(351)		(34)	%
Travel and entertainment	656		1,388		(732)		(53)	%
Professional fees	584		880		(296)		(34)	%
Other	669		1,066		(397)		(37)	%
	$	11,736	$	16,357	$	(4,621)	(28)	%

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.

General and Administrative Expenses


	Three Months Ended June 30,
	2025		2024		$ Change		% Change
			(Restated)
Personnel related (including stock-based compensation)	$	6,206	$	6,931	$	(725)	(10)	%
Professional fees	2,191		1,654		537		32	%
Insurance costs	775		766		9		1	%

Non-recurring professional and other expense	8,066		4,710		3,356		71	%
	$	17,238	$	14,061	$	3,177	23	%

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.

Restructuring Costs

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.

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Interest Income

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.

Change in Fair Value of Contingent Earn-out Liability

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.

Change in Fair Value of Contingently Issuable Common Stock Liability

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.

Change in Fair Value of Public Warrant Liability

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.

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Comparison of the Six Months Ended June 30, 2025 and 2024

The following table summarizes our results of operations for the six months ended June 30, 2025 and 2024 (in thousands):


	Six Months Ended June 30,
	2025		2024		$ Change		% Change
Revenue:
Product revenue	$	4,850	$	3,445	$	1,405	41	%
Subscription revenue	39,437		29,874		9,563		32
Service revenue	13,416		10,818		2,598		24
License fee and other revenue	6,848		3,268		3,580		110
Total revenue	64,551		47,405		17,146		36
Cost of revenue:
Cost of product revenue	8,535		5,953		2,582		43
Cost of subscription revenue	16,790		11,894		4,896		41
Cost of service revenue	3,415		2,345		1,070		46
Cost of license fee and other revenue	443		301		142		47
Total cost of revenue	29,183		20,493		8,690		42
Gross profit	35,368		26,912		8,456		31
Operating expenses:
Research and development	9,599		12,246		(2,647)		(22)
Sales and marketing	22,779		32,216		(9,437)		(29)
General and administrative	32,210		25,867		6,343		25
Restructuring costs	2,662		860		1,802		210

Total operating expenses	67,250		71,189		(3,939)		(6)
Loss from operations	(31,882)		(44,277)		12,395		28
Other (expense) income, net:
Interest expense	(1)		—		(1)		*
Interest income	613		1,766		(1,153)		(65)
Other income (expense), net	161		(67)		228		340

Change in fair value of contingent earn-out liability	(5,224)		23,413		(28,637)		(122)
Change in fair value of contingently issuable common stock liability	(2,247)		4,274		(6,521)		(153)
Change in fair value of public warrant liability	(3,582)		7,037		(10,619)		(151)
Total other (expense) income, net	(10,280)		36,423		(46,703)		(128)
Loss before income taxes	$	(42,162)	$	(7,854)	$	(34,308)	(437)	%
Provision for income taxes	$	62	$	—	$	62	*
Net loss	$	(42,224)	$	(7,854)	$	(34,370)	(438)	%

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Revenue, Cost of Revenue and Gross Profit

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 117 new customers during the six 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.

Product Revenue


	Six Months Ended June 30,
	2025			2024			$ Change		% Change
Product revenue	$	4,850		$	3,445		$	1,405	41	%
Cost of product revenue	$	8,535		$	5,953		$	2,582	43	%
Gross loss - Product revenue	$	(3,685)		$	(2,508)		$	(1,177)	(47)	%
Gross profit margin - Product revenue	(76)		%	(73)		%	N/A		(3)	%

The increases in product revenue and cost of product revenue are primarily due to an increased utilization of our purchase subscription model, in which the customers purchase Evolv Express and Evolv eXpedite systems directly from us, for the six months ended June 30, 2025 compared to the prior year period. The decrease in product gross profit margin for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 is primarily due to a $0.8 million increase in inventory reserves during the six months ended June 30, 2025, partially offset by a $1.1 million expense associated with adverse non-cancellable inventory purchase commitments recognized during the six months ended June 30, 2024, and a net $0.6 million decrease in manufacturing expense during the six months ended June 30, 2025, primarily related to the deployments of second generation of Evolv Express systems, which provide improved gross margins as compared to the first generation products, partially offset by the initial deployments of Evolv eXpedite systems, which, as a new product offering, reflect a higher initial cost to produce that we expect to gradually decline in the future.

Subscription Revenue


	Six Months Ended June 30,
	2025			2024			$ Change		% Change
Subscription revenue	$	39,437		$	29,874		$	9,563	32	%
Cost of subscription revenue	$	16,790		$	11,894		$	4,896	41	%
Gross profit - Subscription revenue	$	22,647		$	17,980		$	4,667	26	%
Gross profit margin - Subscription revenue	57		%	60		%	N/A		(3)	%

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 six months ended June 30, 2025. Gross profit margin decreased primarily due to a $1.3 million of loss on 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.

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Service Revenue


	Six Months Ended June 30,
	2025			2024			$ Change		% Change
Service revenue	$	13,416		$	10,818		$	2,598	24	%
Cost of service revenue	$	3,415		$	2,345		$	1,070	46	%
Gross profit - Service revenue	$	10,001		$	8,473		$	1,528	18	%
Gross profit margin - Service revenue	75		%	78		%	N/A		(4)	%

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 licensing model, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The decrease in gross profit margin is primarily due to a $0.2 million expense related to certain accrued service fees and increased amortization of capitalized software costs during the six months ended June 30, 2025 of $0.4 million due to the release of Evolv eXpedite and our second generation of Evolv Express systems.

License fee and other revenue


	Six Months Ended June 30,
	2025			2024			$ Change		% Change
License fee and other revenue	$	6,848		$	3,268		$	3,580	110	%
Cost of license fee and other revenue	$	443		$	301		$	142	47	%
Gross profit - License fee and other revenue	$	6,405		$	2,967		$	3,438	116	%
Gross profit margin - License fee and other revenue	94		%	91		%	N/A		3	%

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.

Research and Development Expenses


	Six Months Ended June 30,
	2025		2024		$ Change		% Change
Personnel related (including stock-based compensation)	$	7,394	$	8,249	$	(855)	(10)	%
Materials and prototypes	240		1,343		(1,103)		(82)	%
Professional fees	1,330		1,846		(516)		(28)	%
Other	635		808		(173)		(21)	%
	$	9,599	$	12,246	$	(2,647)	(22)	%

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.

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Sales and Marketing Expenses


	Six Months Ended June 30,
	2025		2024		$ Change		% Change
Personnel related (including stock-based compensation)	$	17,638	$	23,825	$	(6,187)	(26)	%
Advertising and direct marketing	1,276		1,854		(578)		(31)	%
Travel and entertainment	1,200		2,658		(1,458)		(55)	%
Professional fees	1,229		1,839		(610)		(33)	%
Other	1,436		2,040		(604)		(30)	%
	$	22,779	$	32,216	$	(9,437)	(29)	%

The decrease in personnel related expenses is due to a decrease in payroll costs and stock-based compensation of $6.5 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 $2.8 million for the six months ended June 30, 2025 compared to $5.7 million for the six months ended June 30, 2024. The decrease in advertising and direct marketing expense is primarily due to a decrease in sponsorship fees of $0.4 million. The decrease in travel and entertainment expense of $1.5 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 of $0.6 million. Other expense decreased primarily due to reduction in shipping costs related to demo units of $0.3 million and supplies costs of $0.2 million.

General and Administrative Expenses


	Six Months Ended June 30,
	2025		2024		$ Change		% Change
Personnel related (including stock-based compensation)	$	11,510	$	13,123	$	(1,613)	(12)	%
Professional fees	4,849		4,212		637		15	%
Insurance costs	1,506		1,508		(2)		—	%

Non-recurring professional and other expense	14,345		7,024		7,321		104	%
	$	32,210	$	25,867	$	6,343	25	%

The decrease in personnel related expenses is due to a decrease in payroll costs and stock-based compensation of $1.7 million, which resulted primarily from the termination of certain executives and 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 $4.4 million for the six months ended June 30, 2025 compared to $5.7 million for the six months ended June 30, 2024. Professional fees increased primarily due to an increase in outsourced accounting consultancy of $1.3 million, partially offset by a decrease in audit and tax fees of $0.7 million. Non-recurring professional fees and other expense increased primarily due to a $11.5 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, $1.0 million of estimated net losses related to ongoing legal matters, and an increase in rent of $0.7 million for additional leased space, partially offset by insurance recoveries of $5.6 million.

Restructuring Costs

Restructuring costs of $2.7 million for the six months ended June 30, 2025 resulted from the reduction in force in January 2025. Stock compensation expense included in restructuring costs was $0.5 million for the six months ended June 30, 2025. Smaller restructuring costs of $0.9 million for the six months ended June 30, 2024 resulted from the reduction in force in May 2024.

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Interest Income

Interest income of $0.6 million and $1.8 million for the six months ended June 30, 2025 and 2024, respectively, 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 six months ended June 30, 2025 compared to during the six months ended June 30, 2024.

Change in Fair Value of Contingent Earn-out Liability

Change in the fair value of the contingent earn-out liability resulted in a $5.2 million loss and $23.4 million gain for the six 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.

Change in Fair Value of Contingently Issuable Common Stock Liability

Change in the fair value of the contingently issuable common stock liability resulted in a $2.2 million loss and $4.3 million gain for the six 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.

Change in Fair Value of Public Warrant Liability

Change in the fair value of the public warrant liability resulted in a $3.6 million loss and a $7.0 million gain for the six 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.

Liquidity and Capital Resources

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.

We maintain substantially all of our cash, cash equivalents, and marketable securities in accounts with U.S. and multi-national financial institutions and our cash deposits at these institutions exceed Federal Deposit Insurance Corporation insured limits. We do not believe we are exposed to any unusual credit risk or deposit concentration risk beyond the ordinary credit risk associated with commercial banking relationships.

As described below in the Financing Agreement sub-section, on July 29, 2025, Evolv Technologies, Inc. entered into the $75.0 million MidCap Credit Agreement (as defined below), the proceeds of which will be used for general corporate purposes, including to support growing long-term demand for the Company's subscription sales model. The MidCap Credit Agreement provides for an initial $30.0 million term loan facility, a $30.0 million delayed draw facility (available for drawdown during the two-year period following the closing date), and a $15.0 million revolving line of credit. At closing, the Company received net proceeds of $26.6 million, after deducting $3.4 million in debt issuance costs incurred in connection with the closing of MidCap Credit Agreement.

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.

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Financing Arrangement

The Senior Secured Credit Facilities are guaranteed by the Company, and in the future, may be guaranteed by certain material subsidiaries. The Senior Secured Credit Facilities are secured by a first lien on substantially all of the assets of the Company. The borrowings under the Senior Secured Credit Facilities bear interest at a fluctuating rate per annum equal to (x) a base rate determined by reference to the higher of (1) the prime rate of Wells Fargo and (2) 2.00% or (y) Term Secured Overnight Financing Rate ("Term SOFR"), in each case, plus an applicable margin calculated depending on earnings before interest, taxes, depreciation, and amortization ("EBITDA"). At closing, the applicable margin on Term SOFR loans was 5.25%. Interest and principal are payable monthly. Principal is repaid on a straight-line basis over the remaining 12 months of the term.

Material Cash Requirements for Known Contractual and Other Obligations

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.

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.

We generally contract with our contract manufacturer, Columbia Tech, on a cancellable, purchase-order basis. We have a contract in the normal course of business with Columbia Tech to provide manufacturing services for our equipment sold or leased to customers. While these contracts are cancellable by us upon prior notice, payments due upon cancellation consist of payments for services provided or expenses incurred, including noncancelable obligations of our service providers, up to the date of cancellation. These payments are not determinable, but could result in a material purchase commitment if we were to cancel our open purchase orders.

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Cash Flows

The following table sets forth a summary of cash flows for the periods presented:


	Six Months Ended June 30,
	2025		2024
			(Restated)
Net cash used in operating activities	$	(426)	$	(37,732)
Net cash (used in) provided by investing activities	(3,611)		5,621
Net cash provided by financing activities	4,095		636
Effect of exchange rate changes on cash and cash equivalents	(131)		11
Net decrease in cash, cash equivalents and restricted cash	$	(73)

Evolv Technologies Holdings, Inc. 10-Q