Evolv Technologies Holdings, Inc. — Q2 2021 Form 10-Q
Reporting period: Three and six months ended June 30, 2021; unaudited. The reported statements are for NewHold Investment Corp., a SPAC that had not begun operations—not for Evolv’s security-screening business. The merger with Legacy Evolv closed on July 16, 2021, after quarter-end.
Financial results and position
| Metric | Q2 2021 | Six months 2021 | Comparable 2020 period |
|---|---|---|---|
| Revenue | $0 | $0 | $0 |
| General and administrative expense | $6.677 million | $8.132 million | $2,000 in Q2 and inception-to-June 30, 2020 |
| Net loss | $7.626 million | $11.708 million | $2,000 in Q2 and inception-to-June 30, 2020 |
| Cash used in operating activities | Not separately presented | $1.147 million | $0 from inception to June 30, 2020 |
- At June 30, cash outside the trust was $181,000; trust assets were $172.608 million and were generally unavailable for operations before the business combination.
- Current liabilities were $7.706 million, including approximately $7.3 million of professional-service accruals payable upon transaction closing. Management said liquidity was sufficient through the business combination or for one year from issuance.
- Total liabilities were $38.868 million, including a $25.124 million warrant liability and $6.038 million deferred underwriting compensation. The filing reports no long-term debt.
- Warrant remeasurement produced a noncash expense of $959,000 in Q2 and $3.605 million for the first half. Interest income from the trust was $10,000 and $29,000, respectively.
Changes, transaction, and outlook
- Compared with the very small 2020 inception-period expenses, 2021 costs rose sharply, largely from business-combination diligence and professional fees. The filing reports $6.360 million of such fees in Q2 and $7.539 million for the first half.
- On July 16, 2021, NewHold completed its merger with Evolv Technologies, Inc., which provides AI-enabled touchless security screening, and renamed itself Evolv Technologies Holdings, Inc. The transaction included $300 million in aggregate gross PIPE proceeds.
- Holders redeemed 8,755,987 shares for approximately $87.564 million. The remaining trust balance funded the business combination. As of August 11, 2021, 144,157,228 Class A shares were outstanding.
- No operating-company revenue forecast or specific financial guidance is provided in this filing. The reported results predate the merger and should not be treated as Evolv’s post-combination operating results.
Risks, controls, and unusual items
- Management disclosed a material weakness in internal control over financial reporting relating to warrant classification, following an SEC staff statement that led the company to restate previously issued financial statements. Management concluded disclosure controls were ineffective as of June 30, 2021. Planned remediation included technical accounting and valuation consultants; the filing gives no assurance remediation will be sufficient.
- Warrants were recorded as liabilities and remeasured at fair value, creating earnings volatility unrelated to operating cash flows. Private-warrant valuation used Level 3 inputs.
- Management said COVID-19 could adversely affect the company or a target business, but the impact was not determinable; no related adjustment was recorded.
- The filing cites potential dilution from equity issuance and financing risks if debt is used. It also notes trust assets could be subject to creditor claims. No legal proceedings were reported.
Most important facts for investors to verify
- Review post-merger filings for Evolv’s actual revenue, margins, cash burn, liquidity, and use of PIPE and trust proceeds; these are not shown in this quarter’s SPAC statements.
- Confirm the final share count, redemption effects, warrant terms, and resulting dilution.
- Track the material-weakness remediation and any further restatements or control findings.
- Reconcile transaction-related accrued fees and deferred underwriting compensation to post-closing cash payments.