Evolv delays Q3 release, says certain prior financials shouldn’t be relied upon

Earlier, Evolv (EVLV) Technology announced that shareholders and others should not rely upon certain of the company’s previously issued financial statements and that it will delay filing its Quarterly Report on Form 10-Q for the period ended September 30. “An ad hoc committee of independent directors of the Board of Directors of the Company, under the direction of the Board, is conducting an internal investigation that is focused on 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. While the committee’s investigation is ongoing, the committee has made a preliminary determination 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 and the Company’s independent registered public accounting firm, PricewaterhouseCoopers LLP,” the company stated. The Board commented, “We recognize the importance of timely and accurate financial disclosures and are working expeditiously to conclude our thorough investigation. The Board is committed to taking whatever remedial actions are necessary, so that the Company can provide reliable information to our key stakeholders. The fundamentals of our business remain strong. We are seeing demand for our products and services that is in line with our internal forecasts and consistent with our long-term expectations of advancing our distribution model and achieving the Rule of 40.” The company added that it has self-reported these issues to the Division of Enforcement of the U.S. Securities and Exchange Commission, which had been conducting a previously disclosed and unrelated investigation, and said that the company is “continuing to cooperate with the SEC investigation.”