FORM 10-Q
(Mark One)
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| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
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Evolv Technologies Holdings, Inc.
nameName of registrantRegistrant as specifiedSpecified in its charter)Its Charter)
Delaware | 84-4473840 | ||||
(State or
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500 Totten Pond Road 4th Floor
Waltham, 4th Floor
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 | |||||||||||
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Warrants to purchase one share of Class A common stock |
| EVLVW | The Nasdaq Stock Market |
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Large accelerated filer |
| Accelerated filer |
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Non-accelerated filer |
| Smaller reporting company |
| Emerging growth company |
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| Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) |
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| Condensed Consolidated Statements of Cash Flows |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Quantitative and Qualitative Disclosures |
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EXPLANATORY NOTE
On July 16, 2021, we consummated the business combination (the “Merger”), contemplated by the Agreement and Plan of Merger, dated March 5, 2021, with NHIC Sub Inc. (“Merger Sub”), a wholly-owned subsidiary of NewHold Investment Corp. (“NHIC”), a special purpose acquisition company, which is our predecessor, and Evolv Technologies, Inc. dba Evolv Technology, Inc. (“Legacy Evolv”), as amended by that certain First Amendment to Agreement and Plan of Merger dated June 5, 2021 by and among NHIC, Merger Sub and Legacy Evolv (the “Amendment” and as amended, the “Merger Agreement”). Pursuant to the Merger Agreement, Merger Sub was merged with and into Legacy Evolv, with Legacy Evolv surviving the merger as a wholly owned subsidiary of NHIC. Upon the closing of the Merger, NHIC changed its name to Evolv Technologies Holdings, Inc. Evolv Technologies Holdings, Inc. became the successor entity to NHIC pursuant to Rule 12g-3(a) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
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 the Merger and references to “Legacy Evolv” refer to Evolv Technologies, Inc. dba Evolv Technology, Inc. prior to the consummation of the Merger.
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions. results.
Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflectedimportant factors discussed in Part I, Item 1A, “Risk Factors” in our forward-looking statements may not be achieved or occur, and actual results could differ materially from those projected inAnnual Report on Form 10-K for the fiscal year ended December 31, 2021. The forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. As a result of these factors, we cannot assure you that the forward- looking statements in this Quarterly Report on Form 10-Q will proveare 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 accurate.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 completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.
WHERE YOU CAN FIND MORE INFORMATION
All reports we file with the SEC are available for download freeTable of charge via the Electronic Data Gathering Analysis and Retrieval (EDGAR) System on the SEC’s website at www.sec.gov. We also make electronic copies of our reports available for download, free of charge, through our website at www.evolvtechnology.com as soon as reasonably practicable after filing such material with the SEC. Information contained on our website is not part of this Quarterly Report on Form 10-Q.
Contents
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| | September 30, | | December 31, | | ||
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| 2021 |
| 2020 | | ||
Assets |
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Current assets: |
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Cash and cash equivalents | | $ | 333,747 | | $ | 4,704 | |
Restricted cash | | | 400 | | | — | |
Accounts receivable, net | |
| 7,330 | |
| 1,401 | |
Inventory | |
| 3,530 | |
| 2,742 | |
Current portion of commission asset | |
| 1,084 | |
| 562 | |
Prepaid expenses and other current assets | |
| 13,672 | |
| 900 | |
Total current assets | |
| 359,763 | |
| 10,309 | |
Commission asset, noncurrent | | | 2,310 | | | 1,730 | |
Property and equipment, net | |
| 17,783 | |
| 9,316 | |
Restricted cash, noncurrent | | | 275 | | | — | |
Long-term contract assets | |
| 2,582 | |
| — | |
Total assets | | $ | 382,713 | | $ | 21,355 | |
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Liabilities, Convertible Preferred Stock and Stockholders’ Equity (Deficit) | |
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Current liabilities: | |
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Accounts payable | | $ | 8,460 | | $ | 4,437 | |
Accrued expenses and other current liabilities | |
| 6,169 | |
| 3,727 | |
Current portion of deferred revenue | |
| 5,668 | |
| 3,717 | |
Current portion of deferred rent | |
| 37 | |
| 11 | |
Current portion of financing obligation | |
| — | |
| 227 | |
Current portion of long-term debt | |
| 1,000 | |
| — | |
Total current liabilities | |
| 21,334 | |
| 12,119 | |
Deferred revenue, noncurrent | |
| 988 | |
| 480 | |
Noncurrent portion of deferred rent | | | 371 | | | — | |
Derivative liability | |
| — | |
| 1,000 | |
Contingent earn-out liability | |
| 35,027 | |
| — | |
Contingently issuable common stock liability | | | 5,952 | | | — | |
Public warrant liability | | | 20,484 | | | — | |
Common stock warrant liability | | | — | | | 1 | |
Financing obligation, noncurrent | |
| — | |
| 132 | |
Long-term debt, noncurrent | |
| 14,359 | |
| 16,432 | |
Total liabilities | |
| 98,515 | |
| 30,164 | |
Commitments and contingencies (Note 17) | |
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Convertible preferred stock; (Series A, A-1, B, and B-1), $0.001 par value; 0 and 207,390,039 shares authorized at September 30, 2021 and December 31, 2020, respectively; 0 and 77,377,987 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively; liquidation preference of $0 at September 30, 2021 | |
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| 75,877 | |
Stockholders’ equity (deficit): | |
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Common stock, $0.0001 par value; 1,100,000,000 and 305,491,899 shares authorized at September 30, 2021 and December 31, 2020, respectively; 142,418,469 and 9,845,192 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively | |
| 14 | |
| 1 | |
Preferred stock, $0.0001 par value; 100,000,000 and 0 shares authorized at September 30, 2021 and December 31, 2020, respectively; 0 and 0 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively | | | — | | | — | |
Additional paid-in capital | |
| 391,440 | |
| 9,194 | |
Accumulated deficit | |
| (107,256) | |
| (93,881) | |
Stockholders’ equity (deficit) | |
| 284,198 | |
| (84,686) | |
Total liabilities, convertible preferred stock and stockholders’ equity (deficit) | | $ | 382,713 | | $ | 21,355 | |
June 30, 2022 | December 31, 2021 | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 242,691 | $ | 307,492 | |||||||
Restricted cash | 400 | 400 | |||||||||
Accounts receivable, net | 12,183 | 6,477 | |||||||||
Inventory | 6,010 | 2,890 | |||||||||
Current portion of contract assets | 3,070 | 1,459 | |||||||||
Current portion of commission asset | 2,079 | 1,645 | |||||||||
Prepaid expenses and other current assets | 20,920 | 10,757 | |||||||||
Total current assets | 287,353 | 331,120 | |||||||||
Restricted cash, noncurrent | 275 | 275 | |||||||||
Contract assets, noncurrent | 3,159 | 3,418 | |||||||||
Commission asset, noncurrent | 3,624 | 3,719 | |||||||||
Property and equipment, net | 34,379 | 23,783 | |||||||||
Operating lease right-of-use assets | 2,092 | — | |||||||||
Other assets | 2,172 | 542 | |||||||||
Total assets | $ | 333,054 | $ | 362,857 | |||||||
Liabilities and Stockholders’ Equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 9,427 | $ | 6,045 | |||||||
Accrued expenses and other current liabilities | 7,759 | 9,551 | |||||||||
Current portion of deferred revenue | 10,782 | 6,599 | |||||||||
Current portion of deferred rent | — | 135 | |||||||||
Current portion of long-term debt | 4,000 | 2,000 | |||||||||
Current portion of operating lease liabilities | 1,097 | — | |||||||||
Total current liabilities | 33,065 | 24,330 | |||||||||
Deferred revenue, noncurrent | 4,330 | 2,475 | |||||||||
Deferred rent, noncurrent | — | 333 | |||||||||
Long-term debt, noncurrent | 5,955 | 7,945 | |||||||||
Operating lease liabilities, noncurrent | 1,398 | — | |||||||||
Contingent earn-out liability | 18,697 | 21,206 | |||||||||
Contingently issuable common stock liability | 3,816 | 5,264 | |||||||||
Public warrant liability | 5,587 | 11,030 | |||||||||
Total liabilities | 72,848 | 72,583 | |||||||||
Commitments and contingencies (Note 20) | 0 | 0 | |||||||||
Stockholders’ equity: | |||||||||||
Preferred stock, $0.0001 par value; 100,000,000 authorized at June 30, 2022 and December 31, 2021; no shares issued and outstanding at June 30, 2022 and December 31, 2021 | — | — | |||||||||
Common stock, $0.0001 par value; 1,100,000,000 shares authorized at June 30, 2022 and December 31, 2021; 143,829,995 and 142,745,021 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively | 14 | 14 | |||||||||
Additional paid-in capital | 405,493 | 396,064 | |||||||||
Accumulated other comprehensive loss | (10) | — | |||||||||
Accumulated deficit | (145,291) | (105,804) | |||||||||
Stockholders’ equity | 260,206 | 290,274 | |||||||||
Total liabilities and stockholders’ equity | $ | 333,054 | $ | 362,857 |
LOSS
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| | Three Months Ended | | Nine Months Ended | | ||||||||||
| | September 30, | | September 30, | | ||||||||||
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| 2021 | | | 2020 | | 2021 | | | 2020 | | ||||
Revenue: |
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Product revenue | | $ | 5,345 | | | $ | 349 | | $ | 10,299 | | | $ | 422 | |
Subscription revenue | | | 2,305 | | | | 794 | | | 5,118 | | | | 1,743 | |
Service revenue | | | 717 | | | | 318 | | | 1,429 | | | | 585 | |
Total revenue | | | 8,367 | | | | 1,461 | | | 16,846 | | | | 2,750 | |
Cost of revenues: | | | | | | | | | | | | | | | |
Cost of product revenue | | | 2,933 | | | | 163 | | | 7,237 | | | | 361 | |
Cost of subscription revenue | | | 1,086 | | | | 490 | | | 2,542 | | | | 1,192 | |
Cost of service revenue | | | 192 | | | | 169 | | | 732 | | | | 376 | |
Total cost of revenue | | | 4,211 | | | | 822 | | | 10,511 | | | | 1,929 | |
Gross profit | | | 4,156 | | | | 639 | | | 6,335 | | | | 821 | |
Operating expenses: | | | | | | | | | | | | | | | |
Research and development | | | 3,641 | | | | 4,088 | | | 8,330 | | | | 10,629 | |
Sales and marketing | | | 8,510 | | | | 1,552 | | | 17,284 | | | | 5,105 | |
General and administrative | | | 6,983 | | | | 1,177 | | | 11,162 | | | | 2,676 | |
Loss from impairment of property and equipment | | | 1,656 | | | | — | | | 1,656 | | | | — | |
Total operating expenses | | | 20,790 | | | | 6,817 | | | 38,432 | | | | 18,410 | |
Loss from operations | |
| (16,634) | | | | (6,178) | | | (32,097) | | |
| (17,589) | |
Other income (expense), net: | | | | | | | | | | | | | | | |
Interest expense | |
| (286) | | | | (84) | | | (5,988) | | |
| (207) | |
Other expense, net | | | (669) | | | | — | | | (669) | | | | — | |
Loss on extinguishment of debt | | | (865) | | | | — | | | (12,685) | | | | — | |
Change in fair value of derivative liability | | | 475 | | | | — | | | (1,745) | | | | — | |
Change in fair value of contingent earn-out liability | | | 31,818 | | | | — | | | 31,818 | | | | — | |
Change in fair value of contingently issuable common stock liability | | | 5,718 | | | | — | | | 5,718 | | | | — | |
Change in fair value of public warrant liability | | | 3,152 | | | | — | | | 3,152 | | | | — | |
Change in fair value of common stock warrant liability | | | 42 | | | | — | | | (879) | | | | — | |
Total other income (expense), net | |
| 39,385 | | | | (84) | | | 18,722 | | |
| (207) | |
Net income (loss) and comprehensive income (loss) attributable to common stockholders – basic | | $ | 22,751 | | | $ | (6,262) | | $ | (13,375) | | | $ | (17,796) | |
Net income (loss) and comprehensive income (loss) attributable to common stockholders – diluted | | $ | 23,222 | | | $ | (6,262) | | $ | (13,375) | | | $ | (17,796) | |
Net income (loss) per share attributable to common stockholders – basic | | $ | 0.19 | | | $ | (0.70) | | $ | (0.28) | | | $ | (2.00) | |
Net income (loss) per share attributable to common stockholders – diluted | | $ | 0.15 | | | $ | (0.70) | | $ | (0.28) | | | $ | (2.00) | |
Weighted average common shares outstanding – basic | | | 119,745,196 | | | | 8,917,855 | | | 47,772,253 | | | | 8,892,564 | |
Weighted average common shares outstanding – diluted | | | 153,867,300 | | | | 8,917,855 | | | 47,772,253 | | | | 8,892,564 | |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Revenue: | |||||||||||||||||||||||
Product revenue | $ | 4,146 | $ | 2,617 | $ | 9,340 | $ | 4,884 | |||||||||||||||
Subscription revenue | 4,006 | 1,521 | 7,010 | 2,748 | |||||||||||||||||||
Service revenue | 918 | 540 | 1,430 | 739 | |||||||||||||||||||
Total revenue | 9,070 | 4,678 | 17,780 | 8,371 | |||||||||||||||||||
Cost of revenue: | |||||||||||||||||||||||
Cost of product revenue | 5,347 | 2,203 | 10,553 | 4,419 | |||||||||||||||||||
Cost of subscription revenue | 1,981 | 1,060 | 3,523 | 1,803 | |||||||||||||||||||
Cost of service revenue | 1,189 | 687 | 2,254 | 972 | |||||||||||||||||||
Total cost of revenue | 8,517 | 3,950 | 16,330 | 7,194 | |||||||||||||||||||
Gross profit | 553 | 728 | 1,450 | 1,177 | |||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Research and development | 4,156 | 1,047 | 8,331 | 4,787 | |||||||||||||||||||
Sales and marketing | 11,751 | 5,124 | 21,423 | 7,732 | |||||||||||||||||||
General and administrative | 9,612 | 1,471 | 20,429 | 4,523 | |||||||||||||||||||
Loss from impairment of property and equipment | 316 | — | 412 | — | |||||||||||||||||||
Total operating expenses | 25,835 | 7,642 | 50,595 | 17,042 | |||||||||||||||||||
Loss from operations | (25,282) | (6,914) | (49,145) | (15,865) | |||||||||||||||||||
Other income (expense), net: | |||||||||||||||||||||||
Interest expense | (159) | (3,263) | (301) | (5,657) | |||||||||||||||||||
Interest income | 491 | — | 559 | — | |||||||||||||||||||
Loss on extinguishment of debt | — | (11,820) | — | (11,820) | |||||||||||||||||||
Change in fair value of derivative liability | — | (795) | — | (2,220) | |||||||||||||||||||
Change in fair value of contingent earn-out liability | (569) | — | 2,509 | — | |||||||||||||||||||
Change in fair value of contingently issuable common stock liability | (24) | — | 1,448 | — | |||||||||||||||||||
Change in fair value of public warrant liability | (143) | — | 5,443 | — | |||||||||||||||||||
Change in fair value of common stock warrant liability | — | (185) | — | (921) | |||||||||||||||||||
Total other income (expense), net | (404) | (16,063) | 9,658 | (20,618) | |||||||||||||||||||
Net loss | $ | (25,686) | $ | (22,977) | $ | (39,487) | $ | (36,483) | |||||||||||||||
Weighted average common shares outstanding - basic and diluted | 143,552,032 | 11,922,270 | 143,220,268 | 11,186,204 | |||||||||||||||||||
Net loss per share - basic and diluted | $ | (0.18) | $ | (1.93) | $ | (0.28) | $ | (3.26) | |||||||||||||||
Net loss | $ | (25,686) | $ | (22,977) | $ | (39,487) | $ | (36,483) | |||||||||||||||
Other comprehensive loss | |||||||||||||||||||||||
Cumulative translation adjustment | (10) | — | (10) | — | |||||||||||||||||||
Total other comprehensive loss | (10) | — | (10) | — | |||||||||||||||||||
Total comprehensive loss | $ | (25,696) | $ | (22,977) | $ | (39,497) | $ | (36,483) |
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| | Convertible | | | | | | | | Additional | | | | | Total | |||||
| | Preferred Stock | | | Common Stock | | Paid-in | | Accumulated | | Stockholders’ | |||||||||
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| Shares (1) |
| Amount |
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| Shares (1) |
| Amount |
| Capital |
| Deficit |
| Equity (Deficit) | |||||
Balances at December 31, 2020 |
| 77,377,987 | | $ | 75,877 | |
| 9,845,192 | | $ | 1 | | $ | 9,194 | | $ | (93,881) | | $ | (84,686) |
Issuance of warrant to purchase common stock |
| — | | �� | — | |
| — | |
| — | |
| 1 | |
| — | |
| 1 |
Issuance of common stock upon exercise of stock options |
| — | |
| — | |
| 1,563,950 | |
| — | |
| 455 | |
| — | |
| 455 |
Stock-based compensation expense |
| — | |
| — | |
| — | |
| — | |
| 1,082 | |
| — | |
| 1,082 |
Net loss |
| — | |
| — | |
| — | |
| — | |
| — | |
| (13,755) | |
| (13,755) |
Balances at March 31, 2021 | | 77,377,987 | | | 75,877 | | | 11,409,142 | | | 1 | | | 10,732 | | | (107,636) | | | (96,903) |
Issuance of warrant to purchase common stock | | — | | | — | | | — | | | — | | | — | | | — | | | — |
Issuance of common stock upon exercise of stock options | | — | | | — | | | 1,993,936 | | | — | | | 202 | | | — | | | 202 |
Stock-based compensation expense | | — | | | — | | | — | | | — | | | 535 | | | — | | | 535 |
Net loss | | — | | | — | | | — | | | — | | | — | | | (22,371) | | | (22,371) |
Balances at June 30, 2021 |
| 77,377,987 | |
| 75,877 | |
| 13,403,078 | |
| 1 | |
| 11,469 | | | (130,007) | |
| (118,537) |
Conversion of convertible preferred stock into common stock in connection with the closing of the Merger |
| (77,377,987) | |
| (75,877) | |
| 80,873,772 | |
| 8 | |
| 75,869 | |
| — | |
| 75,877 |
Issuance of common stock in connection with the closing of the Merger |
| — | |
| — | |
| 10,391,513 | |
| 1 | |
| 84,944 | |
| — | |
| 84,945 |
Issuance of common stock in connection with the consummation of the PIPE Investment | | — | | | — | | | 30,000,000 | | | 3 | | | 299,997 | | | — | | | 300,000 |
Issuance of common stock for net settlement of common stock and preferred stock warrants upon settlement of the Merger | | — | | | — | | | 2,029,712 | | | — | | | 880 | | | — | | | 880 |
Issuance of common stock for the conversion of convertible notes | | — | | | — | | | 5,408,672 | | | 1 | | | 53,644 | | | — | | | 53,645 |
Issuance of public warrant in connection with the closing of the Merger | | — | | | — | | | — | | | | | | (23,636) | | | — | | | (23,636) |
Payment of deferred offering costs in connection with the closing of the Merger and PIPE Investment | | — | |
| — | |
| — | |
| — | |
| (35,728) | |
| — | |
| (35,728) |
Initial fair value of contingent earn-out liability recognized upon the closing of the Merger | | — | | | — | |
| — | |
| — | |
| (66,845) | |
| — | |
| (66,845) |
Initial fair value of contingently issuable common stock liability recognized upon the closing of the Merger | | — | | | — | | | — | | | — | | | (11,670) | | | — | | | (11,670) |
Issuance of common stock upon exercise of stock options | | — | | | — | | | 311,722 | | | — | | | 120 | | | — | | | 120 |
Stock-based compensation expense | | — | | | — | | | — | | | — | | | 2,396 | | | — | | | 2,396 |
Net income |
| — | |
| — | |
| — | |
| — | |
| — | |
| 22,751 | |
| 22,751 |
Balances at September 30, 2021 |
| — | | $ | — | |
| 142,418,469 | | $ | 14 | | $ | 391,440 | | $ | (107,256) | | $ | 284,198 |
| | | | | | | | | | | | | | | | | | | | |
Balances at December 31, 2019 |
| 74,170,214 | | $ | 72,883 | |
| 8,621,846 | | $ | 1 | | $ | 7,978 | | $ | (66,489) | | $ | (58,510) |
Issuance of Series B-1 convertible preferred stock, net of issuance costs of $106 |
| 3,207,773 | |
| 2,994 | |
| — | |
| — | |
| — | |
| — | |
| — |
Issuance of warrant to purchase common stock |
| — | |
| — | |
| — | |
| — | |
| 45 | |
| — | |
| 45 |
Issuance of common stock upon exercise of stock options |
| — | |
| — | |
| 281,500 | |
| — | |
| 67 | |
| — | |
| 67 |
Stock-based compensation expense |
| — | |
| — | |
| — | |
| — | |
| 62 | |
| — | |
| 62 |
Net loss |
| — | |
| — | |
| — | |
| — | |
| — | |
| (6,430) | |
| (6,430) |
Balances at March 31, 2020 | | 77,377,987 | | | 75,877 | | | 8,903,346 | | | 1 | | | 8,152 | | | (72,919) | | | (64,766) |
Issuance of common stock upon exercise of stock options | | — | | | — | | | 11,024 | | | — | | | 3 | | | — | | | 3 |
Stock-based compensation expense | | — | | | — | | | — | | | — | | | 60 | | | — | | | 60 |
Net loss | | — | | | — | | | — | | | — | | | — | | | (5,104) | | | (5,104) |
Balances at June 30, 2020 |
| 77,377,987 | |
| 75,877 | |
| 8,914,370 | |
| 1 | |
| 8,215 | |
| (78,023) | |
| (69,807) |
Issuance of common stock upon exercise of stock options |
| — | |
| — | |
| 14,804 | |
| — | |
| 348 | |
| — | |
| 348 |
Stock-based compensation expense |
| — | |
| — | |
| — | |
| — | |
| 403 | |
| — | |
| 403 |
Net loss |
| — | |
| — | |
| — | |
| — | |
| — | |
| (6,262) | |
| (6,262) |
Balances at September 30, 2020 |
| 77,377,987 | | $ | 75,877 | |
| 8,929,174 | | $ | 1 | | $ | 8,966 | | $ | (84,285) | | $ | (75,318) |
Convertible Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total Stockholders’ Equity (Deficit) | |||||||||||||||||||||||||||||||||||||||||||||
Shares (1) | Amount | Shares (1) | Amount | |||||||||||||||||||||||||||||||||||||||||||||||
Balances at December 31, 2021 | — | $ | — | 142,745,021 | $ | 14 | $ | 396,064 | $ | — | $ | (105,804) | $ | 290,274 | ||||||||||||||||||||||||||||||||||||
Issuance of common stock upon net exercise of stock options | — | — | 496,971 | — | 227 | — | — | 227 | ||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock upon vesting of restricted stock units | — | — | 80,044 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation cost | — | — | — | — | 3,952 | — | — | 3,952 | ||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | (13,801) | (13,801) | ||||||||||||||||||||||||||||||||||||||||||
Balances at March 31, 2022 | — | — | 143,322,036 | 14 | 400,243 | — | (119,605) | 280,652 | ||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock upon net exercise of stock options | — | — | 350,092 | — | 157 | — | — | 157 | ||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock upon vesting of restricted stock units | — | — | 157,867 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation cost | — | — | — | — | 5,093 | — | — | 5,093 | ||||||||||||||||||||||||||||||||||||||||||
Cumulative translation adjustment | — | — | — | — | — | (10) | — | (10) | ||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | (25,686) | (25,686) | ||||||||||||||||||||||||||||||||||||||||||
Balances at June 30, 2022 | — | $ | — | 143,829,995 | $ | 14 | $ | 405,493 | $ | (10) | $ | (145,291) | $ | 260,206 | ||||||||||||||||||||||||||||||||||||
Balances at December 31, 2020 | 77,340,057 | $ | 75,877 | 9,846,830 | $ | 1 | $ | 10,110 | — | $ | (94,916) | $ | (84,805) | |||||||||||||||||||||||||||||||||||||
Issuance of warrant to purchase common stock | — | — | — | — | 1 | — | — | 1 | ||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock upon exercise of stock options | — | — | 1,563,281 | — | 453 | — | — | 453 | ||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation cost | — | — | — | — | 322 | — | — | 322 | ||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | (13,506) | (13,506) | ||||||||||||||||||||||||||||||||||||||||||
Balances at March 31, 2021 | 77,340,057 | 75,877 | 11,410,111 | 1 | 10,886 | — | (108,422) | (97,535) | ||||||||||||||||||||||||||||||||||||||||||
Issuance of warrant to purchase common stock | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock upon exercise of stock options | — | — | 1,993,936 | — | 206 | — | — | 206 | ||||||||||||||||||||||||||||||||||||||||||
Repurchase of common stock upon settlement of related party note | — | — | (43,665) | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation cost | — | — | — | — | 1,080 | — | — | 1,080 | ||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | (22,977) | (22,977) | ||||||||||||||||||||||||||||||||||||||||||
Balances at June 30, 2021 | 77,340,057 | 75,877 | 13,360,382 | 1 | 12,172 | — | (131,399) | (119,226) | ||||||||||||||||||||||||||||||||||||||||||
(1) | The shares of the Company’s convertible preferred stock and common stock, prior to the Merger (as defined in Note 1) have been retrospectively restated to reflect the exchange ratio of 0.378 established in the Merger as described in Note 3. |
The accompanying notes are an integral part of these condensed consolidated financial statements.
Six Months Ended June 30, | |||||||||||
2022 | 2021 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net loss | $ | (39,487) | $ | (36,483) | |||||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
Depreciation and amortization | 2,350 | 1,102 | |||||||||
Write-off of inventory | 425 | — | |||||||||
Adjustment to property and equipment for sales type leases | (625) | — | |||||||||
Loss from impairment of property and equipment | 412 | — | |||||||||
Stock-based compensation | 8,988 | 1,376 | |||||||||
Noncash interest expense | 10 | 5,455 | |||||||||
Noncash lease expense | 392 | — | |||||||||
Provision recorded for allowance for doubtful accounts | 80 | (63) | |||||||||
Loss on extinguishment of debt | — | 11,820 | |||||||||
Change in fair value of derivative liability | — | 2,220 | |||||||||
Change in fair value of common stock warrant liability | — | 921 | |||||||||
Change in fair value of earn-out liability | (2,509) | — | |||||||||
Change in fair value of contingently issuable common stock | (1,448) | — | |||||||||
Change in fair value of public warrant liability | (5,443) | — | |||||||||
Changes in operating assets and liabilities | |||||||||||
Accounts receivable | (5,786) | (1,335) | |||||||||
Inventory | (3,545) | (453) | |||||||||
Commission assets | (339) | (742) | |||||||||
Contract assets | (1,352) | (239) | |||||||||
Other assets | (756) | 13 | |||||||||
Prepaid expenses and other current assets | (9,707) | (7,287) | |||||||||
Accounts payable | 2,147 | 3,499 | |||||||||
Deferred revenue | 6,031 | 153 | |||||||||
Deferred rent | — | 152 | |||||||||
Accrued expenses and other current liabilities | (1,876) | 1,599 | |||||||||
Operating lease liability | (457) | — | |||||||||
Net cash used in operating activities | (52,495) | (18,292) | |||||||||
Cash flows from investing activities: | |||||||||||
Development of internal-use software | (1,301) | — | |||||||||
Purchases of property and equipment | (11,379) | (7,954) | |||||||||
Net cash used in investing activities | (12,680) | (7,954) | |||||||||
Cash flows from financing activities: | |||||||||||
Proceeds from exercise of stock options | 384 | 657 | |||||||||
Repayment of financing obligations | — | (359) | |||||||||
Proceeds from long-term debt, net of issuance costs | — | 31,882 | |||||||||
Net cash provided by financing activities | 384 | 32,180 | |||||||||
Effect of exchange rate changes on cash and cash equivalents | (10) | — | |||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | (64,801) | 5,934 | |||||||||
Cash, cash equivalents and restricted cash | |||||||||||
Cash, cash equivalents and restricted cash at beginning of period | 308,167 | 4,704 | |||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 243,366 | $ | 10,638 | |||||||
Supplemental disclosure of cash flow information | |||||||||||
Cash paid for interest | $ | 277 | $ | 247 | |||||||
Supplemental disclosure of non-cash activities | |||||||||||
Transfer of inventory to property and equipment | $ | — | $ | 46 |
| | | | | | | |
| | Nine Months Ended | | ||||
| | September 30, | | ||||
|
| 2021 |
| 2020 | | ||
Cash flows from operating activities: |
| |
| | |
| |
Net loss | | $ | (13,375) | | $ | (17,796) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |
| | |
| | |
Depreciation and amortization | |
| 1,948 | |
| 685 | |
Write-off of inventory | | | 400 | | | — | |
Loss from impairment of property and equipment | | | 1,656 | | | — | |
Loss on disposal of property and equipment | | | 659 | | | — | |
Stock-based compensation | |
| 4,013 | |
| 525 | |
Noncash interest expense | |
| 5,561 | |
| — | |
Provision recorded for allowance for doubtful accounts | | | (63) | | | (16) | |
Loss on extinguishment of debt | | | 12,685 | | | — | |
Change in fair value of derivative liability | | | 1,745 | | | — | |
Change in fair value of common stock warrant liability | | | 879 | | | — | |
Change in fair value of earn-out liability | | | (31,818) | | | — | |
Change in fair value of contingently issuable common stock | | | (5,718) | | | — | |
Change in fair value of public warrant liability | | | (3,152) | | | — | |
Changes in operating assets and liabilities | | | | | | | |
Accounts receivable | | | (5,866) | | | (1,956) | |
Inventory | | | (10,836) | | | (1,123) | |
Commission assets | | | (1,102) | | | (1,282) | |
Contract assets | | | (2,582) | | | — | |
Prepaid expenses and other current assets | | | (12,772) | |
| (393) | |
Accounts payable | |
| 2,264 | |
| 1,041 | |
Deferred revenue | |
| 2,459 | | | 1,889 | |
Deferred rent | |
| 397 | |
| (24) | |
Warranty Reserve | | | (42) | | | (56) | |
Accrued expenses and other current liabilities | |
| 2,183 | |
| 109 | |
Net cash used in operating activities | |
| (50,477) | |
| (18,397) | |
Cash flows from investing activities: | | | | | | | |
Purchases of property and equipment | |
| (3,082) | |
| (4,304) | |
Net cash used in investing activities | | | (3,082) | | | (4,304) | |
Cash flows from financing activities: | | | | | | | |
Proceeds from issuance of Series B-1 convertible preferred stock, net of issuance costs | |
| — | |
| 2,994 | |
Proceeds from exercise of stock options | |
| 777 | |
| 418 | |
Proceeds from issuance of common stock from the PIPE Investment | | | 300,000 | | | — | |
Proceeds from the closing of the Merger | |
| 84,945 | |
| — | |
Payment of offering costs from the closing of the Merger and PIPE Investment | | | (33,968) | | | — | |
Repayment of financing obligations | | | (359) | | | (225) | |
Proceeds from long-term debt, net of issuance costs | | | 31,882 | | | 5,605 | |
Repayment of principal on long-term debt | | | — | | | (321) | |
Net cash provided by financing activities | |
| 383,277 | |
| 8,471 | |
Net increase (decrease) in cash, cash equivalents and restricted cash | | | 329,718 | | | (14,230) | |
Cash, cash equivalents and restricted cash | |
| | |
| | |
Cash, cash equivalents and restricted cash at beginning of period | | | 4,704 | |
| 17,341 | |
Cash, cash equivalents and restricted cash at end of period | | $ | 334,422 | | $ | 3,111 | |
Supplemental disclosure of cash flow information | | | | | | | |
Cash paid for interest | | $ | 427 | | $ | 207 | |
Supplemental disclosure of non-cash activities | | | | | | | |
Issuance of equity classified warrants | | $ | — | | $ | 45 | |
Transfer of inventory to property and equipment | | | 9,648 | | | 86 | |
Deferred offering costs included in accounts payable | ��� | | 1,760 | | | — | |
Conversion of convertible preferred stock to common stock | | | 75,877 | | | — | |
Initial fair value of contingent earn-out liability recognized in connection with the closing of the Merger | | | 66,845 | | | — | |
Initial fair value of contingently issuable common stock liability recognized in connection with the closing of the Merger | | | 11,670 | |
| — | |
Conversion of common stock warrants to common stock in connection with the closing of the Merger | | | 880 | | | — | |
Initial fair value of public warrants in connection with the closing of the Merger | | | 23,636 | | | — | |
Capital expenditures incurred but not yet paid | 4,256 | 2,962 | |||||||||
Capitalization of stock compensation | 57 | 27 | |||||||||
Reconciliation of cash, cash equivalents and restricted cash: | |||||||||||
Cash and cash equivalents | $ | 242,691 | $ | 9,963 | |||||||
Restricted cash | 400 | 400 | |||||||||
Restricted cash, noncurrent | 275 | 275 | |||||||||
Total cash, cash equivalents and restricted cash shown in the statements of cash flows | $ | 243,366 | $ | 10,638 | |||||||
F-4
(Unaudited)
Legacy Evolv was incorporated under the laws of the State of Delaware on July 8, 2013. The Company is the global leader in AI-based touchless security screening. The Company’s mission is to make the world a safer and more enjoyable place to live, work, learn, and play. The Company is democratizing security by making it seamless for gathering spaces to address the chronic epidemic of mass shootings and terrorist attacks in a cost-effective manner while improving the visitor experience. The Company is headquartered in Waltham, Massachusetts.
Merger with NewHold Investment Corp.
On July 16, 2021 (the “Closing Date”), the predecessor company, consummated the previously announced Merger with Legacy Evolv, pursuant to the Agreement and Plan of Merger dated as of March 5, 2021, and amended by the First Amendment to Agreement and Plan of Merger (the “Merger Agreement”), dated as of June 5, 2021. Upon the closing of the Merger, NHIC changed its name to Evolv Technologies Holdings, Inc. and the officers of NHIC, the predecessor company resigned. The officers of Legacy Evolv became the officers of the Company, and the Company listed its shares of common stock, par value $0.0001 per share, on Nasdaq under the symbol “EVLV” (see Note 3).
Subscription Agreement
Prior to the completion of the Merger, the Company entered into subscription agreements (collectively, the “PIPE Investment”) with certain parties subscribing for shares of the Company’s common stock (the “Subscribers”) pursuant to which the Subscribers agreed to purchase. Pursuant to the PIPE Investment, the Company issued 30,000,000 shares of Class A common stock for a purchase price of $10.00 per share with gross proceeds of $300.0 million.
Risks and uncertainties
The Company is subject to risks and uncertainties common to early-stage companies in the human security industry including, but not limited to, the successful development, commercialization, marketing and sale of existing and new products, fluctuations in operating results and financial risks, protection of proprietary knowledge and patent risks, dependence on key personnel, competition, technological risks, cybersecurity risks, customer demand and management of growth. Potential risks and uncertainties also include, without limitation, uncertainties regarding the duration and magnitude of the impact of the COVID-19 pandemic, including variants, on the Company’s business and the economy in general.
In March 2020, the World Health Organization declared the global novel coronavirus disease 2019 (“COVID-19”) outbreak a pandemic. The impact of this pandemic has been and will likely continue to be extensive in many aspects of society, which has resulted in and will likely continue to result in significant disruptions to the global economy, as well as businesses and capital markets around the world. The Company cannot at this time predict the ultimate extent, duration, or full impact that the COVID-19 pandemic will have on its future financial condition and operations. The impact of the COVID-19 pandemic on the Company’s financial performance will depend on future developments, including the duration and spread of the pandemic, including variants, and related governmental advisories and restrictions, the progression and effectiveness of vaccination roll-outs, vaccine hesitancy, and the actions
F-5
EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
taken to contain or treat COVID-19, as well as the economic impact on local, regional, national and international customers and markets. The situation surrounding COVID-19 remains fluid and the potential for a material impact on the Company increases the longer the virus impacts the level of economic activity in the United States and globally. Given the ongoing evolution of the COVID-19 and the global responses to curb its spread, the Company is not able to estimate the effects of the COVID-19 on its results of operations, financial condition, or liquidity for the year ending December 31, 2021 and beyond. If the financial markets and/or the overall economy are impacted for an extended period, the Company’s results may be materially adversely affected.
Future impacts to the Company’s business as a result of COVID-19 could include disruptions to the Company’s revenue caused by closures of customer operations, manufacturing operations and supply chain caused by facility closures, reductions in operating hours, staggered shifts and other social distancing efforts; labor shortages; decreased productivity and unavailability of materials or components; limitations on its employees’ and customers’ ability to travel, and delays in shipments to and from affected countries and within the United States. While the Company maintains an inventory of finished products and raw materials used in its products, a prolonged pandemic could lead to shortages in the raw materials necessary to manufacture its products.
Basis of presentation
Revision of Prior Period Financial Statements
During the year ended December 31, 2020, an error was identified by the Company related
F-6
EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table (in thousands) reflects the impacts of the error on the consolidated financial statements and gives effect to the retrospective restatement to reflect the exchange ratio of 0.378 established in the Merger as described in Note 3.
| | | | | | | | | | | | | | | | | | |
|
| As of December 31, 2020 |
| As of December 31, 2019 | ||||||||||||||
| | As previously | | | | | | | | As previously | | | | | | | ||
| | reported |
| Adjustment |
| Revised |
| reported |
| Adjustment |
| Revised | ||||||
Convertible preferred stock | | $ | 75,393 | | $ | 484 | | $ | 75,877 | | $ | 72,399 | | $ | 484 | | $ | 72,883 |
Additional paid-in capital | | $ | 9,946 | | $ | (752) | | $ | 9,194 | | $ | 8,730 | | $ | (752) | | $ | 7,978 |
Accumulated deficit | | $ | (94,149) | | $ | 268 | | $ | (93,881) | | $ | (66,757) | | $ | 268 | | $ | (66,489) |
Stockholders’ deficit | | $ | (84,202) | | $ | (484) | | $ | (84,686) | | $ | (58,026) | | $ | (484) | | $ | (58,510) |
Unaudited Interim Financial Information
The accompanying unaudited consolidated financial statements as of SeptemberJune 30, 2021,2022, and for the three and ninesix months ended SeptemberJune 30, 20212022 and 20202021 have been prepared on the same basis as the audited annual consolidated financial statements as of December 31, 20202021 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 SeptemberJune 30, 20212022 and the results of its operations for the three and ninesix months ended SeptemberJune 30, 20212022 and 20202021 and cash flows for the ninesix months ended SeptemberJune 30, 20212022 and 2020.2021. The results for the three and ninesix months ended SeptemberJune 30, 20212022 are not necessarily indicative of results to be expected for the year ending December 31, 2021,2022, any other interim periods, or any future year or period.
Accordingly, these unaudited interim
2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods. Significant estimates and assumptions reflected in these consolidated financial statements include but are not limited to calculating the standalone selling price for revenue recognition, the valuation of inventory, the valuation of derivative liability, the valuation of common stock for the periods prior to the Company listing its shares on Nasdaq, stock-based awards, the valuation of the preferred stock warrant liability, the valuation of the contingent earn-out liability and the valuation of the contingently issuable common stock. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates when there are changes in circumstances, facts, and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates.
Due to the COVID-19 pandemic, there has been uncertainty and disruption in the global economy and financial markets. The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, results of operations and financial condition, including revenues and expenses, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain it or treat COVID-19. Management has made estimates of the impact of COVID-19 within the Company’s consolidated financial statements and there may be changes to those estimates in future periods. These
F-7
EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
estimates may change, as new events occur, and additional information is obtained. On an ongoing basis, management evaluates its estimates as there are changes in circumstances, facts, and experience. Changes in estimates are recorded in the period in which they become known. Actual results may differ from those estimates or assumptions.
Risk of Concentrations of Credit, Significant Customers and Significant Suppliers
Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, and accounts receivable, net. Periodically, the Company maintains deposits in accredited financial institutions in excess of federally insured limits. The Company maintains its cash, cash equivalents and restricted cash with financial institutions that management believes to be of high credit quality. The Company has not experienced any losses on such accounts and does not believe it is exposed to any unusual credit risk beyond the normal credit risk associated with commercial banking relationships.
Significant customers are those which represent more than 10% of the Company’s total revenue or accounts receivable, net balance at each respective balance sheet date. The following table presents customers that represent 10% or more of the Company’s total revenue:
| | | | | | | | | | | |
|
| Three Months Ended |
| | Nine Months Ended |
| | ||||
| | September 30, | | | September 30, | | | ||||
| | 2021 | | 2020 |
| | 2021 | | 2020 |
| |
Customer A |
| — | | 20.0 | % | | — | | 11.0 | % | |
Customer B |
| 21.2 | % | — | | | 10.0 | % | — | | |
|
| 21.2 | % | 20.0 | % | | 10.0 | % | 11.0 | % | |
Customer A revenue is from subscriptions and Customer B revenue is from product revenue.
The following table presents customers that represent 10% or more of the Company’s accounts receivable, net:
| | | | | | |
|
| September 30, | | December 31, |
| |
| | 2021 | | 2020 |
| |
Customer B |
| 16.0 | % | — | | |
Customer C |
| — | | 28.3 | % | |
Customer D |
| — | | 23.4 | % | |
|
| 16.0 | % | 51.7 | % | |
The Company relies on third parties for the supply and manufacture of its products as well as third-party logistics providers. In instances where these parties fail to perform their obligations, the Company may be unable to find alternative suppliers to satisfactorily deliver its products to its customers on time, if at all, which could have a material adverse effect on the Company’s operating results, financial condition and cash flows and damage its customer relationships.
Debt Issuance Costs
The Company capitalizes certain legal, accounting, and other third-party fees that are directly associated with the issuance of debt as debt issuance costs. Debt issuance costs are recorded as a direct reduction of the carrying amount of the associated debt on the consolidated balance sheet and amortized as interest expense on the consolidated statement of operations and comprehensive loss using the effective interest method. As of September 30, 2021, and December 31, 2020, debt issuance costs totaled $0.1 million and $0.1 million, respectively, and were recorded as a reduction in the carrying amount of long-term debt in the consolidated balance sheets. During the three months ended September 30, 2021 and 2020, and nine months ended September 30, 2021 and 2020, the Company recorded less than $0.1 million in
F-8
EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
amortization of the debt issuance costs recorded within interest expense in the consolidated statement of operations and comprehensive income (loss).
Cash, Cash Equivalents, and Restricted Cash
Cash, cash equivalents, and restricted cash as reported on the consolidated statement of cash flows consists of the following (in thousands):
| | | | | | |
|
| September 30, | | December 31, | ||
| | 2021 | | 2020 | ||
Cash and cash equivalents |
| $ | 333,747 | | $ | 4,704 |
Restricted cash |
| | 675 | | | — |
Total cash, cash equivalents, and restricted cash |
| $ | 334,422 | | $ | 4,704 |
The Company considers all short-term, highly liquid investments purchased with an original maturity of three months or less at the date of purchase to be cash equivalents. Restricted cash consists of a security deposit on the Company’s new office lease in Waltham, Massachusetts, with $0.4 million included in the current portion of restricted cash which will be returned during the first half of 2022, and $0.3 million included in restricted cash, noncurrent in the consolidated balance sheets.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization expense is recognized using the straight-line method over the estimated useful life of each asset, as follows:
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Estimated useful lives are periodically assessed to determine if changes are appropriate. Leasehold improvements are amortized using the straight-line method over the lesser of the lease term or its estimated economic useful life. Lease terms are used based upon the initial lease agreement and do not consider potential renewals or extensions until such time that the renewals or extensions are contracted. Maintenance and repairs are charged to expense as incurred. When assets are retired or otherwise disposed of, the cost of these assets and related accumulated depreciation or amortization are eliminated from the consolidated balance sheet and any resulting gains or losses are included in the consolidated statement of operations and comprehensive income (loss) in the period of disposal. Costs for capital assets not yet placed into service are capitalized as construction-in-progress and depreciated once placed into service.
The Company’s leases for leased equipment generally are 48 months. The Company’s subscription contracts are classified as operating leases because title does not transfer and they do not meet any of the other criteria per ASC 840. To date, the Company has not had any subscription arrangements come up for renewal and will reassess the classification of any such leases upon renewal.
The Company evaluates leased equipment for obsolescence and impairment whenever circumstances indicate that the carrying value of such equipment is not recoverable by considering any (1) reduced demand in the markets in
F-9
EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
which the Company operate, (2) technological obsolescence due to developments of new products and improvements, or (3) changes in economic or other events and conditions that impact the market price for the Company’s products. Based on the Company’s evaluations, an impairment loss on property and equipment of $1.7 million was recorded during the three and ninesix months ended SeptemberJune 30, 2021. This was related to Edge and Express prototype units2022, the Company identified errors in its previously issued financial statements whereby (a) certain expenses that were taken outcost of subscription revenue related and cost of service revenue related were inaccurately classified as sales and retired. The Company is transitioning domestic customers to Express which decreased the economic value of these assets and resulted in impairment.
Contingent Earn-out
In connection with the Merger and pursuant to the Merger Agreement, certain of the Legacy Evolv’s shareholders and Legacy Evolv service providers are entitled to receive additional shares of the Company’s Class A common stock (the “Earn-Out Shares”) upon the Company achieving certain milestones:
In accordance with ASC 815 – Derivatives and Hedging, 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 change in fair value of contingent earn-out liability in other income (expense), net inmarketing expenses on the consolidated statements of operations and comprehensive income (loss). Whenloss, (b) certain equipment under lease or held for lease was inaccurately classified as inventory on the Triggering Events have been achievedconsolidated balance sheets and a portion of the Earn-Out Shares arecash outflows related to the equipment under lease or held for lease were misclassified between operating and investing cash flows on the consolidated statements of cash flows, and (c) the vesting of warrants related to the Business Development Agreement disclosed in Note 16 were not accounted for accurately. The identified errors impacted the Company's previously issued 2020 annual financial statements, 2021 quarterly and annual financial statements, and quarterly financial statements for the three months ended March 31, 2022. The Company has made adjustments to the prior period amounts presented in these financial statements accordingly. Additionally, the Company will reclassifyhas made adjustments to correct for other previously identified immaterial errors. The Company evaluated the corresponding amount from a liability to additional paid-in-capitalerrors and common stock at par value of $0.0001 per share. Ofdetermined that the total 15,000,000 earn-out shares, 12,137,397 earn-out shares are with the Legacy Evolv shareholders.
The estimated fair value of the contingent earn-out shares was determined using a Monte Carlo simulation that simulated the future path of the Company’s stock price over the earn-out period. The significant assumptions utilized in the calculation are based on the achievement of certain stock price milestones including projected stock price, volatility, drift rate, percentage of change in control and expected term.
The contingent earn-out liability is categorized as a Level 3 fair value measurement (see Note 4) because the Company estimates projections during the earn-out period utilizing unobservable inputs, including various potential pay-out scenarios. Contingent earn-out payments involve certain assumptions requiring significant judgment and actual results may differ from assumed and estimated amounts.
The Earn-Out Shares issued to employees, officers, directors, and non-employees are based achievement of certain target share price contingencies and for the employees and officers, subject to continued employment, (the “Earn-Out Service Providers”) represents share-based compensation and is classified as equity on the Company’s balance
F-10
(Unaudited)
sheet. Corresponding stock-based compensation expense(Unaudited)
Contingently Issuable Common Stock
The remaining 517,500 Founder Shares were contributed to Give Evolv LLC.
If Vesting Provision II and/or Vesting Provision III are not satisfied, the corresponding number of shares specified shall be forfeited and no longer issued and outstanding. If there is a Change of Control event prior to Vesting Provision II and/or Vesting Provision III are satisfied, the Founder shares are no longer subject to forfeiture and shall vest immediately upon the occurrence of a Change of Control event.
InCompany accounted for leases in accordance with ASC 815 – Derivatives and Hedging, the contingently issuable common stock is accounted for as a liability and subsequently remeasured at each reporting date with changes in fair value recorded as change in fair value of contingently issuable common stock liability in other income (expense), net in the consolidated statements of operations and comprehensive loss. When the Vesting Provisions have been achieved and the contingently issuable common shares are issued,840,
The estimated fair value of the contingently issuable common shares was determined using a Monte Carlo simulation that simulated the future path of the Company’s stock pricestraight-line basis over the earn-out period. The assumptions utilized in the calculation are basedlease term.
The contingently issuable common shares are categorized as a Level 3 fair value measurement (see Note 4) becauseJanuary 1, 2022, the Company estimates projections during the earn-out period utilizing unobservable inputs, including various
F-11
EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
potential pay-out scenarios. Contingently issuable shares involve certain assumptions requiring significant judgment and actual results may differ from assumed and estimated amounts.
Impairment of Long-Lived Assets
Long-lived assets consist of property and equipment. Long-lived assets to be held and used are testedaccounts for recoverability whenever events or changesleases in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. Factors thataccordance with ASC 842, Leases. At contract inception, the Company considers in deciding whendetermines if an arrangement is or contains a lease. A lease conveys the right to perform an impairment review include significant underperformance of the business in relation to expectations, significant negative industry or economic trends and significant changes or planned changes in the use of the assets. If an impairment review is performed to evaluate a long-lived asset group for recoverability, the Company compares forecasts of undiscounted cash flows expected to result from the use and eventual disposition of the long-lived asset group to its carrying value. An impairment loss would be recognized in loss from operations when estimated undiscounted future cash flows expected to result fromcontrol the use of an identified asset group are less than its carrying amount. The impairment loss is based on the excess of the carrying value of the impaired asset group over its fair value, determined based on discounted cash flows. The Company recorded a $1.7 million impairment loss on long-lived assets during the three and nine months ended September 30, 2021. This was related to Edge and Express prototype units that were taken out of service and retired. The Company is transitioning domestic customers to Express which decreased the economic value of these assets and resulted in impairment. The Company did not record any impairment losses on long-lived assets during the three and nine months ended September 30, 2020.
Fair Value Measurements of Financial Instruments
Certain assets and liabilities of the Company are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:
The Company’s cash equivalents, derivative liability, contingent earn-out liability, contingently issuable common stock liability and its common stock warrant liability are carried at fair value, determined according to the fair value hierarchy described above (see Note 4). The carrying values of the Company’s accounts receivable, net, accounts payable and accrued expenses approximate their fair values due to the short-term nature of these assets and liabilities. The carrying value of the Company’s long-term debt approximates its fair value (a Level 2 measurement) at each balance sheet date due to its variable interest rate, which approximates a market interest rate.
F-12
EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Assets that are measured at fair value on a nonrecurring basis primarily relate to property and equipment. We do not periodically adjust carrying value to fair value for property and equipment. Rather, the carrying value of the asset is reduced to its fair value when we determine that impairment has occurred. During the three and nine months ended September 30, 2021, impairment of property and equipment was $1.7 million, respectively. This was related to Edge and Express prototype units that were taken out of service and retired. The Company is transitioning domestic customers to Express which decreased the economic value of these assets and resulted in impairment. There was no impairment for the three and nine months ended September 30, 2020.
Derivative Liability Related to Convertible Notes
In August through September 2019 and in September through December 2020, the Company issued Convertible Notes to several investors (see Note 9) that provided a conversion option whereby upon the closing of a specified financing event the notes would automatically convert into shares of the same class and series of capital stock of the Company issued to other investors in the financing at a conversion price equal to 85% and 80%, respectively, of the price per share of the securities paid by the other investors. This conversion option was determined to be an embedded derivative that was required to be bifurcated and accounted for separately from the notes. The derivative liability was initially recorded at fair value upon issuance of the notes and is subsequently remeasured to fair value at each reporting date. Changes in the fair value of the derivative liability are recognized in the consolidated statements of operations and comprehensive income (loss). In October 2019, the specified financing event was consummated, as such the Convertible Notes issued August through September 2019 were converted into shares of Series B-1 Preferred Stock (see Note 10), and the derivative liability was extinguished. The derivative liability related to the 2020 convertible note is outstanding as of December 31, 2020 and is included as a derivative liability in the consolidated balance sheets.
Between January 21, 2021 and February 4, 2021, the Company entered into a Convertible Note Purchase Agreement (the “2021 Convertible Notes,” and together with the 2020 Convertible Notes, the “Convertible Notes”) with various investors for gross proceeds of $30.0 million with a stated interest rate of 8.0% per annum. The 2021 Convertible Notes provided a conversion option whereby upon the closing of a Qualified Financing event, in which the aggregate gross proceeds totaled at least $100.0 million, the 2021 Convertible Notes would automatically convert into shares of the same class and series of capital stock of the Company issued to other investors in the financing at a conversion price equal to 80% of the price per share paid by the other investors. The conversion option met the definition of an embedded derivative and was required to be bifurcated and accounted for separately from the notes. The proceeds from the 2021 Convertible Notes were allocated between the derivative liability and current portion of long-term debt on the Company’s consolidated balance sheet. The difference between the initial carrying value of the notes and the stated value of the notes represented a discount that was accreted to interest expense over the term of the Convertible Notes using the effective interest method.
On June 21, 2021, the Company and the holders of the 2021 Convertible Notes agreed that, in connection with the Merger, such holders would receive an additional 1,000,000 shares of NHIC common stock as further consideration for the automatic conversion of such notes upon closing of the Merger. This modification of the 2021 Convertible Notes resulted in an extinguishment, and recognition of a derivative liability, which represents both the value of the 1,000,000 NHIC shares as of June 21, 2021 as well as a bifurcated embedded derivative for conversion into shares of the same class and series of capital stock of the Company issued to other investors in the financing at a conversion price equal to 80% of the price per share paid by the other investors.
Upon the closing of the Merger, the September through December 2020 Convertible Notes and the 2021 Convertible Notes automatically converted into 4,408,672 shares of the Company’s common stock and the holders of the 2021 Convertible Notes also received the right to receive 1,000,000 shares of the Company’s common stock, as noted above. Upon the conversion of the Convertible Notes, the carrying value of the debt of $32.8 million and the related derivative liability of $19.7 million and accrued interest of $0.2 million were derecognized resulting in a loss on
F-13
EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
extinguishment of debt of $0.9 million recorded in other income (expense) in the consolidated statements of operations and comprehensive income (loss).
Classification of Convertible Preferred Stock
Prior to the closing of the Merger, the holders of Legacy Evolv Series A, Series A-1, Series B and Series B-1 convertible preferred stock had certain liquidation rights in the event of a deemed liquidation event that, in certain situations, is not solely within the control of the Company and would call for the redemption of the then outstanding Series A, Series A-1, Series B and Series B-1 convertible preferred stock (see Note 10). Therefore, the Legacy Evolv Series A, Series A-1, Series B and Series B-1 convertible preferred stock were classified outside of stockholders’ equity (deficit) on the consolidated balance sheets.
In connection with the closing of the Merger, all shares of redeemable convertible Preferred Stock were converted into shares of the Company’s common stock. Accordingly, there was 0 redeemable convertible preferred stock outstanding as of September 30, 2021. As of December 31, 2020, the carrying value of the redeemable convertible Preferred Stock was $75.9 million (see Note 10).
Common Stock Warrant Liability and Public Warrant Liability
The Company classifies certain warrants for the purchase of shares of its common stock (see Note 11) as a liability on its consolidated balance sheets as these warrants are freestanding financial instruments that may require the Company to adjust the exercise price and number of shares that is not consistent with a fixed-for-fixed option pricing model. The warrant liability is initially recorded at fair value on the issuance date of each warrant and is subsequently remeasured to fair value at each reporting date. Changes in the fair value of the common stock warrant liability are recognized as a component of other income (expense), net in the consolidated statements of operations and comprehensive income (loss). Changes in the fair value of the common stock warrant liability are recognized until the warrants are exercised, expire or qualify for equity classification.
In connection with the closing of the Merger, the Company assumed warrants to purchase shares of common stock (the “Public Warrant”) and are classified as a liability pursuant to ASC 815 – Derivatives and Hedging as the equity derivative scope exception was not met. As of September 30, 2021, the Public Warrant is outstanding (see Note 11). All other warrants that were issued prior to the closing of the Merger were converted into shares of the Company’s common stock (the “common stock warrant”) upon the closing of the Merger. Accordingly, the Company remeasured the warrants to fair value upon the closing of Merger with the offset to additional paid-in capital (see Note 11).
Equity Classified Preferred Stock Warrants
The Company classifies warrants for the purchase of shares of its preferred stock (see Note 11) as temporary equity on its consolidated balance sheets. In connection with a customer development agreement, the Company issued preferred stock warrants to a customer to purchase shares of its Legacy Evolv Series A-1 Preferred Stock. Upon adoption of ASU No. 2018-07 and ASU No. 2019-08 on January 1, 2019, any liability classified warrants issued to non-employees for goods or services were reclassified to temporary equity.
In connection with the closing of the Merger, all preferred stock warrants to purchase shares of common stock were converted into shares of the Company’s common stock. Accordingly, there were 0 preferred stock warrants outstanding as of September 30, 2021. The Company assessed the features of these warrants and determined that they qualify for classification as permanent equity.
F-14
EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Equity Classified Common Stock Warrants
The Company classifies certain warrants for the purchase of shares of its common stock (see Note 11) as equity on its consolidated balance sheets as these warrants are considered to meet the derivative scope exception for freestanding equity contracts. For these warrants that are classified on the Company’s consolidated balance sheets as equity instruments, the Company uses the Black-Scholes model to measure the value of the warrants at issuance.
In connection with the closing of the Merger, all outstanding Legacy Evolv vested warrants to purchase shares of common stock were converted into shares of the Company’s common stock.
Revenue Recognition
The Company recognizes revenue in accordance with 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 accounted for as operating leases under ASC 840 and (2) from the sale of products, inclusive of maintenance and services. The Company’s arrangements are generally noncancelable and nonrefundable after ownership passes to the customer. Revenue is recognized net of sales tax.
Product Revenue
The Company derives revenue from the sale of its Express and Edge equipment and related add-on accessories to customers. Revenue is recognized when control of the product has transferred to the customer. Transfer of control occurs when the Company has transferred title and risk of loss and has a present right to payment for the equipment, which is generally upon delivery as the Company’s normal terms of sale are freight on board destination. Products are predominately sold with distinct services, which are described in the services section below.
Subscription Revenue
In addition to selling its products directly to customers, the Company also leases Express and Edge equipment. These arrangements convey the right to use the equipment for a period of time in exchange for considerationconsideration. If determined to be or contain a lease, the lease is assessed for classification as either an operating or finance lease at the lease commencement date, defined as the date on which the leased asset is made available for use by the Company (when the Company is the lessee). Where the Company is the lessee, for each lease with a term greater than twelve months, the Company records a right-of-use asset and therefore are accounted for under ASC 840 duelease liability.
842 and recognized ratably over the duration of the lease. There are no variable lease payments as a part of these arrangements.
F-15
EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
As leases with customers are classified as operating leases, lease revenue is recognized ratably over the duration of the lease. There are 0 contingent lease payments as a part of these arrangements.
Services Revenue
The Company provides installation, training and maintenance services for its products. Revenue for installation and training is recognized upon transfer of control of these services, which are normally rendered over a short duration. Maintenance consists of technical support, bug fixes, and when-and-if-available threat updates. Maintenance revenue is recognized ratably over the period of the arrangement. The Company sells separately priced extended or nonstandard warranty services and preventative maintenance plans, which are recognized ratably over the associated service period.
Revenue from Distributors
A portion of the Company’s revenue is also generated by sales in conjunction with its distributors. When the Company transacts with a distributor, its contractual arrangement is with the distributor and not with the end-use customer. In these transactions, the distributor is considered the customer; the Company has discretion over the pricing to the distributor and maintains overall control of the inventory and sales process to the distributor. Revenue is recognized upon delivery to the distributors. Right of return does not generally exist. Whether the Company transacts with a distributor and receives the order from a distributor or directly from an end-use customer, its revenue recognition policy and resulting pattern of revenue recognition is the same upon delivery.
Transaction Price
The transaction price is the amount of consideration that the Company expects to be entitled for providing goods and services under a contract. It includes not only fixed consideration, such as the stated amount in a contract, but also several other types of variable consideration or adjustments (generally discounts or incentives which are included as a part of the standalone selling price (“SSP”) estimation process). The Company provides discounts to customers which reduces the transaction price. From time-to-time, the Company may offer customers the option to purchase additional goods and services at a fixed price. In these limited circumstances, the Company assesses whether these offers constitute a material right, and if so, the Company would account for the material right as a separate performance obligation. Other types of variable consideration are not considered significant. The Company does not normally provide for rights of returns to customers on product sales and, therefore, does not record a provision for returns.
Performance Obligations
A performance obligation is a promise in a contract to transfer a distinct product or service to a customer that is both capable of being distinct, whereby the customer can benefit from the product or service either on its own or together with other resources that are readily available, and is distinct in the context of the contract, whereby the transfer of the product or service is separately identifiable from other promises in the contract.
For both Express and Edge units, equipment is sold or leased with embedded software, which is considered a single performance obligation. Maintenance, which includes future updates, security threat updates, and minor bug fixes on a when-and-if available basis, is considered a single performance obligation. As a part of reported subscription sales, certain non-lease components, such as maintenance, are included within the subscription revenue amount. The Company sells separately priced extended or nonstandard warranty services and preventative maintenance plans, which are accounted for as separate performance obligations. Installation and training are considered separate performance obligations and are included within services revenue. Any add-on accessories are also considered separate performance obligations.
F-16
EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Payment terms
Payment terms for customer orders are typically 30 days after the shipment or delivery of the product. For certain products, services and customer types, the Company requires payment before the products or services are delivered to, or performed for, the customer. Generally, the Company’s contracts do not contain a significant financing component.
Multiple Performance Obligations within an Arrangement
The Company’s contracts may include multiple performance obligations when customers purchase a combination of products and services. When the Company’s customer arrangements have multiple performance obligations that contain a lease for Express or Edge equipment for the customer’s use at its site as well as distinct services that are delivered simultaneously, the Company allocates the arrangement consideration between the lease deliverables and non-lease deliverables based on the relative estimated SSP of each distinct performance obligation. For multiple performance obligation arrangements that do not contain a lease, the Company allocates the contract’s transaction price to each performance obligation on a relative SSP basis. The Company determines SSP based on the price at which the performance obligation is sold separately. If the SSP is not observable through past transactions, the Company estimates the SSP taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligation.
Remaining Performance Obligations
ASC 606 requires that the Company disclose the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied as of September 30, 2021. 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 September 30, 2021. Note that with respect to ASC 840, Subscription revenue includes maintenance in addition to the operating lease components of these transactions (in thousands).
| | | | | | | | | |
|
| Less than 1 year |
| Greater than 1 year |
| Total | |||
Product revenue |
| $ | 111 |
| $ | 36 |
| $ | 147 |
Subscription revenue |
| | 9,304 |
| | 21,802 |
| | 31,106 |
Service revenue |
| | 24 |
| | — |
| | 24 |
Maintenance revenue |
| | 903 |
| | 1,972 |
| | 2,875 |
Total revenue | | $ | 10,342 | | $ | 23,810 | | $ | 34,152 |
The amount of minimum future leases is based on expected income recognition. As of September 30, 2021, future minimum payments on noncancelable leases are as follows (in thousands):
| | | |
Future operating lease component (in thousands): |
| |
|
Quarter Ending September 30, 2021: | | | |
2021 | | $ | 2,355 |
2022 | |
| 9,262 |
2023 | |
| 8,800 |
2024 | |
| 7,054 |
2025 | |
| 3,166 |
Thereafter | |
| 469 |
| | $ | 31,106 |
F-17
EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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 September 30, 2021 and December 31, 2020, the Company had $0.9 million and $0 of contract assets included within prepaid expenses and other current assets and $2.6 million and $0 in long-term contract assets on the 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 noncurrent deferred revenue. The Company recognized $0.5 million and $2.3 million during the three months and nine months ended September 30, 2021 of revenue that was previously included in the 2020 deferred revenue balance, respectively. The following table provides a rollforward of deferred revenue (in thousands):
| | | |
| | (in thousands) | |
Balance at December 31, 2020 | | $ | 4,197 |
Revenue recognized | |
| (6,356) |
Revenue deferred | |
| 8,815 |
Balance at September 30, 2021 | | $ | 6,656 |
Disaggregated Revenue
The following table presents the Company’s revenue by revenue stream (in thousands):
| | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended | | ||||||||
| | September 30, | | September 30, | | ||||||||
(in thousands) |
| 2021 |
| 2020 | | 2021 |
| 2020 | | ||||
Product revenue |
| $ | 5,345 |
| $ | 349 | | | 10,299 |
| $ | 422 | |
Subscription revenue(1) |
| | 2,305 |
| | 794 | | | 5,118 |
| | 1,743 | |
Service revenue |
| | 417 |
| | 165 | | | 773 |
| | 170 | |
Maintenance revenue |
| | 300 |
| | 153 | | | 656 |
| | 415 | |
Total revenue | | $ | 8,367 | | $ | 1,461 | | $ | 16,846 | | $ | 2,750 | |
Contract Acquisition Costs
The Company incurs and pays commissions on product sales. The Company applies the practical expedient for contracts less than one year to expense the costs in the period in which they were incurred. Commissions on product sales and services are expensed in the period in which the sale occurs and the services are provided. 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 $3.4 million at September 30, 2021 and $2.3 million at December 31, 2020. The increase in deferred assets is due to an increase of subscription revenue in 2020 and 2021 for which the related revenue and commissions are recognized over the contract term. The Company amortized commissions of $1.3 million during the three months ended September 30, 2021 which related to 2021 commissions, $0.1 million which related to 2020
F-18
EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
commissions and less than $0.1 million which related to 2019 commissions. The Company amortized commissions of $1.6 million during the nine months ended September 30, 2021 which related to 2021 commissions, $0.3 million which related to 2020 commissions and $0.1 million which related to 2019 commissions.
Stock-Based Compensation
The Company measures all stock-based awards granted to employees, officers, directors and non-employees based on their fair value on the date of the grant and recognizes compensation expense for those awards over the requisite service period, which is generally the vesting period of the respective award. The Company classifies stock-based compensation expense in itscondensed consolidated statements of operations and comprehensive income (loss) inloss. The installation and training services represent distinct services provided to customers. These activities are considered separate performance obligations to the same manner in whichcustomer and therefore are considered non-lease components. As installation and training services are performed prior to lease commencement, the award recipient’s payrolltiming and pattern of transfer for these services differ from that of the lease component (i.e., security hardware) and are not eligible to be combined.
The Company issues stock-based awards with service-based vesting conditions and records the expense for these awards using the straight-line method. Forfeitures are accounted for as they occur. The Company has issued stock-based awards with performance-based vesting conditions. In August 2020,a fulfillment cost and are included in the Company granted an officer 560,189 stock options with a performance-based milestone vesting condition which vested immediately upon achievementcost of a certain sales milestone. The milestone was achievedservices revenue in December 2020, and the Company recorded $0.1 million in stock compensation expense upon vesting during the year ended December 31, 2020.
In March 2021, the Company granted a warrant exercisable for 2,554,015 shares of common stock to a consulting group (“2021 Finback common stock warrants”) with performance based vesting conditions which vest upon certain sales being met under a Business Development agreement which has a term of three years.
Prior to the closing of the Merger, there was not a public market for the shares of the Company’s common stock. The Company’s determination of the fair value of stock options on the date of grant utilized the Black-Scholes option-pricing model and was impacted by its common stock price, as determined by the Board of Directors with input from the Company’s management, as well as changes in assumptions regarding a number of subjective variables. These variables included, but were not limited to, the expected term that options remained outstanding, the expected common stock price volatility over the term of the option awards, risk-free interest rates, and expected dividends. The Company values its common stock taking into consideration its most recently available valuation of common stock performed by third parties as well as additional factors since the date of the most recent contemporaneous valuation through the date of grant. After the closing of the Merger, the Company determined the fair value of each share of common stock underlying stock-based awards based on the closing price of the Company’s common stock as reported by Nasdaq on the date of grant.
Pursuant to the Merger Agreement, the Company will issue 15,000,000 earn-out shares of the Company’s common stock to Legacy Evolv shareholders and Legacy Evolv service providers including employees, officers, directors and non-employees based on the achievement of certain target share price contingencies and for the employees and officers subject to continued employment. The company classifies the share-based compensation arrangement with Legacy Evolv service providers as equity on its balance sheet and corresponding stock-based compensation expense in itscondensed consolidated statements of operations and comprehensive income (loss)loss.
F-19
(Unaudited)
Income Taxes
(Unaudited)
The Company assesses the likelihood that its deferred tax assets will be recovered from future sources of income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by analyzing past operating results, estimating the future taxable profits expected and considering prudent and feasible tax planning strategies.
The Company accounts for uncertainty in income taxes recognized in the consolidated financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed more-likely-than-not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the consolidated financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate as well as the related net interest and penalties.
The Company evaluates at the end of each reporting period whether some or all of the undistributed earnings of its foreign subsidiaries are permanently reinvested. The Company would recognize deferred income tax liabilities to the extent that management asserts that undistributed earnings of its foreign subsidiaries are not permanently reinvested and will not be permanently reinvested in the future. As of September 30, 2021 and December 31, 2020 the Company had 0 foreign earnings in any foreign jurisdictions.
Net Income (Loss) per Share Attributable to Common Stockholders
Basic net income (loss) per share attributable to common stockholders is computed by dividing the net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted net income (loss) attributable to common stockholders is computed by adjusting net income (loss) attributable to common stockholders for the profit or loss impact to the extent a denominator adjustment is required. Diluted net income (loss) per share attributable to common stockholders is computed by dividing the diluted net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding for the period, including potential dilutive common shares. For purposes of this calculation, outstanding stock options, convertible preferred stock, convertible notes, warrants to purchase common stock, and warrants to purchase preferred stock are considered potential dilutive common shares.
In periods in which the Company reported a net loss attributable to common stockholders, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. The Company reported net income and a net loss attributable to common stockholders for the three months ended September 30, 2021 and 2020, respectively. For the three months ended September 30, 2021, 0 undistributed earnings were attributed to the convertible preferred shares which converted into common stock upon closing of the merger and have no contractual right to participate in the gains resulting from the change in fair value of earnouts and warrants that occurred after
F-20
EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
conversion. The Company reported a net loss attributable to common stockholders for the nine months ended September 30, 2021 and 2020.
Recently Issued Accounting Pronouncements
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less may be accounted for similar to existing guidance for operating leases today. For nonpublic entities, this guidance is effective for annual periods beginning after December 15, 2021. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842), which added an optional transition method under which financial statements may be prepared under the revised guidance for the year of adoption, but not for prior years. Under the latter method, entities will recognize a cumulative catch-up adjustment to the opening balance of retained earnings in the period of adoption. The Company expects to adopt this guidance effective January 1, 2022, and it is currently evaluating the impact on its consolidated financial statements and related disclosures.
In December 2019, the FASB issued ASU 2019-12, Income Taxes (ASC 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various areas related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in ASC 740 and also clarifies and amends existing guidance to improve consistent application. For public entities the guidance is effective for annual reporting periods beginning after December 15, 2020 and for interim periods within those fiscal years. For non-public entities, the guidance is effective for annual reporting periods beginning after December 15, 2021 and for interim periods within years beginning after December 15, 2022, with early adoption permitted. The Company expects to adopt this guidance effective January 1, 2022, and it is currently evaluating the impact on its consolidated financial statements and related disclosures.
F-21
EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
In August 2020, the FASB issued ASU 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity,” which simplifies and clarifies certain calculation and presentation matters related to convertible and equity and debt instruments. Specifically, ASU 2020-06 removes requirements to separately account for conversion features as a derivative under ASC Topic 815 and removing the requirement to account for beneficial conversion features on such instruments. ASU 2020-06 also provides clearer guidance surrounding disclosure of such instruments and provides specific guidance for how such instruments are to be incorporated in the calculation of Diluted EPS. The guidance under ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. The Company expects to adopt this guidance effective January 1, 2022, and it is currently evaluating the impact on its consolidated financial statements and related disclosures.
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which amends ASC 805 to add contract assets and contract liabilities to the list of exceptions to the recognition and measurement principles that apply to business combinations and to require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. The amendments in ASU 2021-08 are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years and should be applied prospectively to business combinations occurring on or after the effective date of the amendments. Early adoption of the amendments is permitted, including adoption in an interim period. The Company expects to adopt this guidance effective January 1, 2023, and it is currently evaluating the impact on its condensed consolidated financial statements and related disclosures.
and Related Transactions
F-22
EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
with 0no goodwill or other intangible assets recorded. Operations prior to the Reverse Recapitalization are those of Legacy Evolv.
had previously indicated that it would list units (consisting of 1 share of common stock and one-half of one warrant) on Nasdaq under the ticker symbol EVLVU, in continuation of the listing of the units NHIC sold in its initial public offering on August 4, 2020 under the ticker symbol NHICU. In September 2021, our transfer agent separated the units into the component shares and warrants at the closing of the Merger, and as a result the Evolv units were not made eligible to settle through the facilities of The Depositary Trust Company. Accordingly, all trades in the units from July 19, 2021 (the first trading day after the completion of the Merger) until August 24, 2021 were settled between brokers in the shares and warrants underlying the units. Trading in ticker symbol EVLVU was halted on August 24, 2021, and no trades in the units were permitted or occurred since that date. The units were delisted from Nasdaq effective September 10, 2021.
The
During the nine months ended September 30, 2021, the Company recorded $35.7 million of offering costs related to third-party legal, accounting, and other professional services to consummate the Merger. These offering costs are recorded as a reduction of additional paid-in capital upon the close of the Merger in the Company’s consolidated
F-23
EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
balance sheets. The Company expensed $0.7 million of offering costs related to the issuance of the Company’s contingently issuable common stock.
4. Fair Value Measurements
| | | | | | | | | | | | |
| | Fair Value Measurements at September 30, 2021 | ||||||||||
|
| Level 1 |
| Level 2 |
| Level 3 |
| Total | ||||
Assets: | | | | | | | | | | | | |
Money market funds | | $ | 326,515 | | $ | — | | $ | — | | $ | 326,515 |
| | $ | 326,515 | | $ | — | | $ | — | | $ | 326,515 |
Liabilities: | | |
|
| |
|
| |
|
| |
|
Contingent earn-out liability | | $ | — | | $ | — | | $ | 35,027 | | $ | 35,027 |
Contingently issuable common stock liability | | | — | | | — | | | 5,952 | | | 5,952 |
Public Warrant liability | | | — | | | — | | | 20,484 | | | 20,484 |
| | $ | — | | $ | — | | $ | 61,463 | | $ | 61,463 |
| | | | | | | | | | | | |
| | Fair Value Measurements as of December 31, 2020 | ||||||||||
|
| Level 1 |
| Level 2 |
| Level 3 |
| Total | ||||
Liabilities: |
| |
|
| |
|
| |
|
| |
|
Warrant liability | | $ | — | | $ | — | | $ | 1 | | $ | 1 |
Derivative liability | |
| — | |
| — | |
| 1,000 | |
| 1,000 |
| | $ | — | | $ | — | | $ | 1,001 | | $ | 1,001 |
Fair Value Measurements at June 30, 2022 | |||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
Assets: | |||||||||||||||||||||||
Money market funds | $ | 232,785 | $ | — | $ | — | $ | 232,785 | |||||||||||||||
$ | 232,785 | $ | — | $ | — | $ | 232,785 | ||||||||||||||||
Liabilities: | |||||||||||||||||||||||
Contingent earn-out liability | $ | — | $ | — | $ | 18,697 | $ | 18,697 | |||||||||||||||
Contingently issuable common stock liability | — | — | 3,816 | 3,816 | |||||||||||||||||||
Public Warrant liability | — | — | 5,587 | 5,587 | |||||||||||||||||||
$ | — | $ | — | $ | 28,100 | $ | 28,100 |
Fair Value Measurements as of December 31, 2021 | |||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
Assets: | |||||||||||||||||||||||
Money market funds | $ | 297,536 | $ | — | $ | — | $ | 297,536 | |||||||||||||||
$ | 297,536 | $ | — | $ | — | $ | 297,536 | ||||||||||||||||
Liabilities: | |||||||||||||||||||||||
Contingent earn-out liability | $ | — | $ | — | 21,206 | $ | 21,206 | ||||||||||||||||
Contingently issuable common stock liability | — | — | 5,264 | 5,264 | |||||||||||||||||||
Public Warrant liability | — | — | 11,030 | 11,030 | |||||||||||||||||||
$ | — | $ | — | $ | 37,500 | $ | 37,500 |
Valuation of Common Stock Warrant
The warrant liability is related to the warrants (the “Warrants”) to purchase shares of Legacy Evolv’s common stock (see Note 11).
The Company used the Black-Scholes option-pricing model, which incorporates assumptions and estimates, to value the warrant liability. Key estimates and assumptions impacting the fair value measurement include (i) the fair value per share of the underlying shares of applicable series of stock issuable upon exercise of the Warrants, (ii) the remaining contractual term of the Warrants, (iii) the risk-free interest rate, (iv) the expected dividend yield and (v) expected volatility of the price of the underlying applicable common stock. The Company estimated the fair value per share of the underlying applicable series of stock based, in part, on the results of third-party valuations and additional factors deemed relevant. The risk-free interest rate was determined by reference to the U.S. Treasury yield curve for time periods approximately equal to the remaining contractual term of the Warrant. The Company estimated a zero expected dividend yield based on the fact that the Company has never paid or declared dividends and does not intend to do so in the foreseeable future. As the Company was a private company up until the closing of the Merger and lacked company-specific historical and implied volatility information of its stock, the expected stock volatility was based on the historical volatility of publicly traded peer companies for a term equal to the remaining contractual term of the Warrant.
F-24
EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table provides a rollforward of the common stock warrant liability (in thousands):
| | | |
Balance at December 31, 2020 | | $ | 1 |
Change in fair value | |
| 879 |
Conversion of common stock warrant to common stock upon the closing of the Merger | | | (880) |
Balance at September 30, 2021 | | $ | — |
Valuation of Derivative Liability Related to Convertible Notes
In September and December 2020, the Company entered into a Convertible Note Purchase Agreement (the “2020 Convertible Notes”) (see Note 9). The 2020 Convertible Notes provided a conversion option whereby upon the closing of a specified financing event the Convertible Notes would automatically convert into shares of the same class and series of capital stock of the Company issued to other investors in the financing at a conversion price equal to 80% of the price per share of the securities paid by the other investors. This conversion option was determined to be an embedded derivative and was required to be bifurcated and accounted for separately from the 2020 Convertible Notes. The fair value of the derivative liability was determined based on inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy.
Upon the closing of the 2020 Convertible Notes, management determined that the probability of completing the specified financing event was 100%; thus, the value of the automatic conversion option was deemed to be 20% of the fair value of the capital stock to be issued upon conversion of the 2020 Convertible Notes, or $1.0 million. This amount represented the fair value of the embedded derivative at issuance.
Between January 21, 2021 and February 4, 2021, the Company entered into a Convertible Note Purchase Agreement (the “2021 Convertible Notes”) (see Note 9). The 2021 Convertible Notes provided a conversion option whereby upon the closing of a specified financing event, the 2021 Convertible Notes would automatically convert into shares of the same class and series of capital stock of the Company issued to other investors in the financing at a conversion price equal to lower of 80% of the price per share of the securities paid by the other investors or price per share at which shares are issued and sold in connection with the conversion or cancellation of convertible notes (other than the 2021 Convertible Notes) or simple agreements for future equity ("SAFEs”) of the Company in such Qualified Financing. This conversion option was determined to be an embedded derivative and was required to be bifurcated and accounted for separately from the 2021 Convertible Notes. The fair value of the derivative liability was determined based on inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy.
Upon the closing of the 2021 Convertible Notes, management determined that the probability of completing the specified financing event was 80%; thus, the value of the automatic conversion option was deemed to be 20% of the fair value of the capital stock to be issued upon conversion of the 2021 Convertible Notes, or $7.0 million. This amount represented the fair value of the embedded derivative at issuance. At the closing of the Merger, the fair value of the derivative liability was $9.2 million. On June 21, 2021, the Company modified the 2021 Convertible Notes to grant the holders an additional 1,000,000 shares of NHIC common stock as further consideration upon the automatic conversion of the notes upon closing of the Merger. The modification of the 2021 Convertible Notes resulted in the recognition of an additional $9.8 million derivative liability for the fair value of the 1,000,000 NHIC shares as of June 21, 2021 (see Note 9). Prior to the closing of the Merger, the change in fair value of the derivative liability was $0.5 million.
F-25
EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table provides a rollforward of the derivative liability (in thousands):
| | | |
Balance at December 31, 2020 | | $ | 1,000 |
Initial fair value of the embedded derivative | | | 16,986 |
Change in fair value | |
| 1,745 |
Settlement of derivative liability upon the closing of the Merger | | | (19,731) |
Balance at September 30, 2021 | | $ | — |
Valuation of Contingent Earn-out
| | | |
Balance at December 31, 2020 | | $ | — |
Initial fair value of the instrument | | | 66,845 |
Change in fair value | |
| (31,818) |
Balance at September 30, 2021 | | $ | 35,027 |
December 31, 2021 | $ | 21,206 | |||
Change in fair value | (2,509) | ||||
June 30, 2022 | $ | 18,697 |
F-26
EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table provides a rollforward of the contingently issuable common shares (in thousands):
| | | |
Balance at December 31, 2020 | | $ | — |
Initial fair value of the instrument | | | 11,670 |
Change in fair value | |
| (5,718) |
Balance at September 30, 2021 | | $ | 5,952 |
December 31, 2021 | $ | 5,264 | |||
Change in fair value | (1,448) | ||||
June 30, 2022 | $ | 3,816 |
December 31, 2021 | $ | 11,030 | |||
Change in fair value | (5,443) | ||||
June 30, 2022 | $ | 5,587 |
| | | |
Balance at December 31, 2020 | | $ | — |
Initial fair value of the instrument | | | 23,636 |
Change in fair value | |
| (3,152) |
Balance at September 30, 2021 | | $ | 20,484 |
Less than 1 year | Greater than 1 year | Total | |||||||||||||||
Product revenue | $ | 220 | $ | 79 | $ | 299 | |||||||||||
Subscription revenue | 16,992 | 37,615 | 54,607 | ||||||||||||||
Service revenue | 3,423 | 7,909 | 11,332 | ||||||||||||||
Total revenue | $ | 20,635 | $ | 45,603 | $ | 66,238 |
Year Ending December 31: | |||||
2022 (six months remaining) | $ | 8,556 | |||
2023 | 16,649 | ||||
2024 | 15,380 | ||||
2025 | 11,424 | ||||
2026 | 2,505 | ||||
Thereafter | 93 | ||||
$ | 54,607 |
Balance at December 31, 2021 | $ | 9,074 | |||
Revenue recognized | (4,658) | ||||
Revenue deferred | 10,696 | ||||
Balance at June 30, 2022 | $ | 15,112 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Revenue from sales-type leases | $ | — | $ | — | $ | 1,312 | $ | — | |||||||||||||||
Interest income on lease receivables | 61 | — | 110 | — | |||||||||||||||||||
Lease income - operating leases | 4,006 | 1,521 | 7,010 | 2,748 | |||||||||||||||||||
Total lease revenue | $ | 4,067 | $ | 1,521 | $ | 8,432 | $ | 2,748 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Product revenue | $ | 4,146 | $ | 2,617 | $ | 9,340 | $ | 4,884 | |||||||||||||||
Leased equipment | 4,006 | 1,521 | 7,010 | 2,748 | |||||||||||||||||||
SaaS and Maintenance revenue | 729 | 230 | 1,097 | 362 | |||||||||||||||||||
Professional services revenue | 189 | 310 | 333 | 377 | |||||||||||||||||||
Total revenue | $ | 9,070 | $ | 4,678 | $ | 17,780 | $ | 8,371 |
Weighted average remaining lease term | 2.3 years | ||||
Weighted average discount rate | 6.95 | % |
Year Ended December 31: | |||||
2022 (remaining six months) | $ | 561 | |||
2023 | 1,149 | ||||
2024 | 982 | ||||
Total future lease payments | 2,692 | ||||
Less: imputed interest | (197) | ||||
Present value of operating lease liability | $ | 2,495 |
Year Ended December 31: | |||||
2022 | $ | 1,116 | |||
2023 | 1,150 | ||||
2024 | 981 | ||||
Total | $ | 3,247 |
Allowance for Doubtful Accounts | |||||
Balance at December 31, 2021 | $ | (50) | |||
Provisions | (80) | ||||
Write-offs, net of recoveries | — | ||||
Balance at June 30, 2022 | $ | (130) |
| | | | | | | |
| | September 30, | | December 31, | | ||
|
| 2021 |
| 2020 | | ||
Raw materials | | $ | 606 | | $ | 499 | |
Work in process | |
| — | |
| 188 | |
Finished goods | |
| 2,924 | |
| 2,055 | |
Total | | $ | 3,530 | | $ | 2,742 | |
6.
June 30, 2022 | December 31, 2021 | ||||||||||
Raw materials | $ | 2,126 | $ | 1,050 | |||||||
Finished goods | 3,884 | 1,840 | |||||||||
Total | $ | 6,010 | $ | 2,890 |
Other Current Assets
| | | | | | |
| | September 30, | | December 31, | ||
|
| 2021 |
| 2020 | ||
Prepaid deposits | | $ | 8,486 | | $ | — |
Prepaid insurance | | | 3,826 | | | 240 |
Short-term contract assets | | | 895 | | | — |
Prepaid subscriptions | | | 383 | | | 594 |
Other | |
| 82 | |
| 66 |
Total | | $ | 13,672 | | $ | 900 |
F-27
June 30, 2022 | December 31, 2021 | ||||||||||
Prepaid deposits | $ | 18,470 | $ | 7,273 | |||||||
Prepaid subscriptions | 557 | 411 | |||||||||
Current portion of net investment in sales-type leases | 452 | 206 | |||||||||
Prepaid insurance | 243 | 2,625 | |||||||||
Other | 1,198 | 242 | |||||||||
Total | $ | 20,920 | $ | 10,757 |
EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
June 30, 2022 | December 31, 2021 | ||||||||||
Computers and telecom equipment | $ | 441 | $ | 40 | |||||||
Lab equipment | 638 | 568 | |||||||||
Furniture and fixtures | 58 | 37 | |||||||||
Leasehold improvements | 538 | 491 | |||||||||
Leased equipment | 28,603 | 20,797 | |||||||||
Internal-use software | 2,773 | 1,146 | |||||||||
Sales demo equipment | 2,015 | 1,938 | |||||||||
Equipment held for lease1 | 4,748 | 2,250 | |||||||||
Construction in progress | 143 | — | |||||||||
39,957 | 27,267 | ||||||||||
Less: Accumulated depreciation and amortization | (5,578) | (3,484) | |||||||||
$ | 34,379 | $ | 23,783 |
| | | | | | | |
| | September 30, | | December 31, | | ||
|
| 2021 |
| 2020 | | ||
Computers and telecom equipment | | $ | 216 | | $ | 217 | |
Lab equipment | |
| 568 | |
| 487 | |
Software | |
| 58 | |
| 59 | |
Furniture and fixtures | |
| 37 | |
| 37 | |
Leasehold improvements | |
| 553 | |
| 95 | |
Leased equipment | |
| 19,484 | |
| 10,948 | |
| |
| 20,916 | |
| 11,843 | |
Less: Accumulated depreciation and amortization | |
| (3,133) | |
| (2,527) | |
| | $ | 17,783 | | $ | 9,316 | |
Represents equipment that has not yet been deployed to a customer and, accordingly, is not being depreciated.
| | | | | | | |
| | September 30, | | December 31, | | ||
|
| 2021 |
| 2020 | | ||
Leased equipment | | $ | 19,484 | | $ | 10,948 | |
Accumulated depreciation | |
| (2,180) | |
| (1,649) | |
Leased equipment, net | | $ | 17,304 | | $ | 9,299 | |
June 30, 2022 | December 31, 2021 | ||||||||||
Leased equipment | $ | 28,603 | $ | 20,797 | |||||||
Accumulated depreciation | (4,263) | (2,631) | |||||||||
Leased equipment, net | $ | 24,340 | $ | 18,166 |
8. There was no impairment for the three and six months ended June 30, 2021.
| | | | | | | |
| | September 30, | | December 31, | | ||
|
| 2021 |
| 2020 | | ||
Accrued employee compensation and benefits expense | | $ | 3,766 | | $ | 2,345 | |
Accrued professional services and consulting | |
| 1,487 | |
| 1,327 | |
Accrued interest | | | 131 | | | — | |
Other | |
| 785 | |
| 55 | |
| | $ | 6,169 | | $ | 3,727 | |
F-28
June 30, 2022 | December 31, 2021 | ||||||||||
Accrued employee compensation and benefits expense | $ | 3,665 | $ | 5,692 | |||||||
Accrued professional services and consulting | 1,012 | 1,114 | |||||||||
Accrued sales tax | 1,402 | 1,204 | |||||||||
Accrued property tax | 472 | 302 | |||||||||
Accrued interest | 54 | 64 | |||||||||
Other | 1,154 | 1,175 | |||||||||
$ | 7,759 | $ | 9,551 |
EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
| | | | | | | |
| | September 30, | | December 31, | | ||
|
| 2021 |
| 2020 | | ||
Term loans payable | | $ | 10,000 | | $ | 10,000 | |
Revolving line of credit outstanding | |
| 5,422 | |
| 3,550 | |
Convertible note | |
| — | |
| 3,000 | |
Less: Unamortized discount | |
| (63) | |
| (118) | |
| |
| 15,359 | |
| 16,432 | |
Less: Current portion of long-term debt | |
| 1,000 | |
| — | |
Long-term debt, net of discount | | $ | 14,359 | | $ | 16,432 | |
Term Loan Agreements
Silicon Valley Bank (“SVB”) Term Loan
On July 5, 2017, the Company entered into a $5.0 million Loan and Security Agreement with Silicon Valley Bank (“2017 SVB Term Loan”), which provided the Company with a first term loan advance of $4.0 million which was drawn down on July 5, 2017 (“Term Loan A Advance”) and a second term loan advance of $1.0 million that was available to be drawn down until May 31, 2018 (“Term Loan B Advance”; collectively, “Term Loan Advances”). The agreement also provided the Company with a revolving line of credit of up to $1.0 million. Interest payments were due monthly and commenced upon receipt of principal. Principal was payable in 36 monthly payments and commenced on June 1, 2018. The 2017 SVB Term Loan accrued interest at an annual rate calculated as the Wall Street Journal Prime Rate plus 1.25%.
On February 12, 2019, the Company amended the 2017 SVB Term Loan (“2019 Term Loan Advance”) to change the interest rate to the greater of the (A) Wall Street Journal Prime Rate or (B) 5.25%. Additionally, the maturity date was extended to August 2022. Upon closing, the Company issued warrants to purchase 28,350 shares of common stock to SVB with an exercise price of $0.24 per share (see Note 11).
As of December 31, 2019, the Company was not in compliance with certain reporting related covenants within the SVB Loan and Security Agreement. As a result, SVB had the right to call for prepayment of the debt and it was therefore considered current as of December 31, 2019.
In March 2020, the Company entered into a Loan Modification Agreement with SVB (“2020 SVB Term Loan”), which provided a $5.0 million term loan and a revolving line of credit of up to $7.0 million. The Company repaid the outstanding balance owed on the 2017 SVB Term Loan of $3.1 million of principal and accrued interest with the proceeds from the 2020 SVB Term Loan. The Loan Modification Agreement with SVB resulted in the Company being in compliance with certain reporting related covenants.
Additionally, upon closing, the Company issued warrants to purchase 280,095 shares of common stock to SVB with an exercise price of $0.40 per share with a fair value of less than $0.1 million on the date of issuance. The Company also paid debt issuance costs of less than $0.1 million and owed an end-of-term charge of $0.1 million to SVB. The debt issuance costs were recorded as debt discount and were being amortized to interest expense, using the effective interest method, over the term of the loan. The 2020 SVB Term Loan interest was payable monthly and the principal was payable in 36 monthly payments commencing on April 1, 2021. The 2020 SVB Term Loan accrued interest at an annual
F-29
June 30, 2022 | December 31, 2021 | ||||||||||
Term loans payable | $ | 10,000 | $ | 10,000 | |||||||
Less: Unamortized discount | (45) | (55) | |||||||||
9,955 | 9,945 | ||||||||||
Less: Current portion of long-term debt | 4,000 | 2,000 | |||||||||
Long-term debt, net of discount | $ | 5,955 | $ | 7,945 |
(Unaudited)
Loan Agreements
Upon the closing of the Merger, the warrants were converted into shares of the Company's common stock.
Agreement.
| | | |
Year Ending December 31, |
| | |
2021 (remaining three months) | | $ | — |
2022 | |
| 7,422 |
2023 | |
| 4,000 |
2024 | |
| 4,000 |
2025 | | | — |
| | $ | 15,422 |
December 31, | |||||
2022 (remaining six months) | $ | 2,000 | |||
2023 | 4,000 | ||||
2024 | 4,000 | ||||
$ | 10,000 |
F-30
EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
whereby the Company successfully created software utilizing the investor’s application programming interface. The 2020 Convertible Notes provided a conversion option whereby upon the closing of a Qualified Financing event, in which the aggregate gross proceeds of the issuance of preferred stock totaled at least $100.0$10.0 million, the notes would automatically convert into shares of the same class and series of capital stock of the Company issued to other investors in the financing at a conversion price equal to 80% of the price per share paid by the other investors. The conversion option met the definition of an embedded derivative and was required to be bifurcated and accounted for separately from the notes. The proceeds from the 2020 Convertible Notes were allocated between the derivative liability, with a fair value at issuance of $1.0 million, and the notes, with an initial carrying value of $3.0 million, and included in long-term liabilities on the Company’s condensed consolidated balance sheet. The difference between the initial carrying value of the notes and the stated value of the notes represented a discount that was accreted to interest expense over the term of the Convertible Notes using the
As of September 30, 2021 and December 31, 2020, the accrued interest on
Between2022.
OnMerger.
As of September 30, 2021 and December 31, 2020, the accrued interest on
F-31
In January 2021, in connection with a Business Development Agreement entered into with Finback Evolv II, LLC (“Finback BDA”), the Company issued a warrant to Finback for the purchase of 2,552,913 shares of common stock at an exercise price of $0.42 per share. The 2021 Finback common stock warrants vest upon meeting certain sales criteria as defined in the agreement and expire in January 2031. The warrants will be accounted for under ASC 718 Compensation – Stock Compensation as the warrants will vest upon certain performance conditions being met (see Note 16).
(Unaudited)
June 30, 2022 | ||||||||||||||||||||||||||||||||
Issuance Date | Contractual Term (in years) | Underlying Equity Instrument | Balance Sheet Classification | Shares Issuable Upon Exercise of Warrant | Weighted Average Exercise Price | |||||||||||||||||||||||||||
January 13, 2021 | 10 | Common stock | Equity | 2,552,913 | $ | 0.42 | ||||||||||||||||||||||||||
July 16, 2021 | 5 | Common stock | Liability | 14,324,994 | $ | 11.50 | ||||||||||||||||||||||||||
16,877,907 |
December 31, 2021 | ||||||||||||||||||||||||||||||||
Issuance Date | Contractual Term (in years) | Underlying Equity Instrument | Balance Sheet Classification | Shares Issuable Upon Exercise of Warrant | Weighted Average Exercise Price | |||||||||||||||||||||||||||
January 13, 2021 | 10 | Common stock | Equity | 2,552,913 | $ | 0.42 | ||||||||||||||||||||||||||
July 16, 2021 | 5 | Common stock | Liability | 14,324,994 | $ | 11.50 | ||||||||||||||||||||||||||
16,877,907 |
In February and March 2020, Legacy Evolv issued and sold an additional 3,207,773 shares of Series B-1 Preferred Stock at a price of $0.9664 per share for aggregate proceeds of $3.1 million, excluding issuance costs of $0.1 million.
| | | | | | | | | | | | |
| | December 31, 2020 | ||||||||||
|
| |
| Preferred Stock |
| | |
| | |
| Common Stock |
| | Preferred Stock | | Issued and | | Carrying | | Liquidation | | Issuable Upon | ||
| | Authorized | | Outstanding | | Value | | Preference | | Conversion | ||
Series A-1 Preferred Stock |
| 67,156,152 | | 24,369,613 | | $ | 18,394 | | $ | 18,000 |
| 24,369,613 |
Series A Preferred Stock |
| 9,233,677 | | 3,490,328 | |
| 11,321 | |
| 11,819 |
| 6,986,113 |
Series B-1 Preferred Stock |
| 90,328,396 | | 34,144,109 | |
| 31,953 | |
| 32,997 |
| 34,144,109 |
Series B Preferred Stock |
| 40,671,814 | | 15,373,937 | |
| 14,209 | |
| 14,284 |
| 15,373,937 |
|
| 207,390,039 |
| 77,377,987 | | $ | 75,877 | | $ | 77,100 |
| 80,873,772 |
11. Warrants
In February 2019, in connection with the 2019 Term Loan Advance, the Company issued a warrant to SVB for the purchase of 28,350 shares of common stock at an exercise price of $0.24 per share (the “2019 SVB common stock warrant”). The 2019 SVB common stock warrant was immediately exercisable and expires in February 2029. The warrant was classified as an equity instrument and recorded at its fair value of less than $0.1 million on the date of issuance through additional paid-in-capital. In connection with the closing of the Merger, all of the outstanding 2019 SVB common stock warrants were converted into shares of the Company’s common stock.
In March 2020, in connection with the 2020 Term Loan Advance, the Company issued a warrant to SVB for the purchase of 280,095 shares of common stock at an exercise price of $0.40 per share (the “2020 SVB common stock warrant”). The 2020 SVB common stock warrant was immediately exercisable and expires in March 2030. The warrant was classified as an equity instrument and recorded at its fair value of less than $0.1 million on the date of issuance through additional paid-in-capital. In connection with the closing of the Merger, all of the outstanding 2020 SVB common stock warrants were converted into shares of the Company’s common stock.
In December 2020, in connection with the JPM Term Loan, the Company issued a warrant to JPM for the purchase of 378,000 shares of common stock at an exercise price of $0.42 per share (the “2020 JPM common stock
F-32
EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
warrant”). The 2020 JPM common stock warrant was immediately exercisable and expires in December 2030. The warrant was classified as an equity instrument and recorded at its fair value of $0.1 million on the date of issuance through additional paid-in-capital. In connection with the closing of the Merger, all of the outstanding 2020 JPM common stock warrants were converted into shares of the Company’s common stock.
In connection with the closing of the Merger, the Company assumed the Public Warrant for the purchase of 14,325,000 shares of common stock at an exercise price of $11.50. The public warrant is immediately exercisable and expires in July 2026. The Public Warrant is classified as a liability and recorded at its fair value of $23.6 million on the date of issuance of the Merger with an offset to additional paid-in-capital and is subsequently remeasured to fair value at each reporting date based on the publicly available trading price. The change in fair value of the public warrant liability of $3.2 million was recognized as a component of other income (expense), net in the consolidated statements of operations and comprehensive income (loss) for the three and nine months ended SeptemberJune 30, 2021.
As of September 30, 20212022 and December 31, 2020, warrants to purchase the following classes of Preferred Stock and common stock outstanding consisted of the following in the table below.
| | | | | | | | | | | |
September 30, 2021 | |||||||||||
| | Contractual | | | | | | Shares Issuable | | Weighted | |
| | Term | | Underlying Equity | | Balance Sheet | | Upon Exercise | | Average | |
Issuance Date |
| (in years) |
| Instrument |
| Classification |
| of Warrant |
| Exercise Price | |
July 16, 2021 |
| 5 |
| Common stock |
| Liability |
| 14,325,000 | | $ | 11.50 |
| | |
|
|
|
|
| 14,325,000 | |
|
|
| | | | | | | | | | | |
December 31, 2020 | |||||||||||
| | | | | | | | Shares Issuable | | Weighted | |
| | Contractual | | Underlying Equity | | Balance Sheet | | Upon Exercise of | | Average | |
Issuance Date |
| Term |
| Instrument |
| Classification |
| Warrant |
| Exercise Price | |
| | (in years) | | | | | | | | | |
March 17, 2014 |
| 10 |
| Common stock |
| Liability |
| 94,500 | | $ | 0.24 |
September 28, 2016 |
| 10 |
| Preferred Stock |
| Temporary Equity |
| 1,015,401 | | $ | 0.003 |
July 5, 2017 |
| 10 |
| Common stock |
| Equity |
| 141,750 | | $ | 0.24 |
February 12, 2019 |
| 10 |
| Common stock |
| Equity |
| 28,350 | | $ | 0.24 |
March 30, 2020 |
| 10 |
| Common stock |
| Equity |
| 280,095 | | $ | 0.40 |
December 3, 2020 |
| 10 |
| Common stock |
| Equity |
| 378,000 | | $ | 0.42 |
| | |
|
|
|
|
| 1,938,096 | |
|
|
12. Common Stock
As of September 30, 2021, and December 31, 2020, the Company’s amended certificate of incorporation authorized the issuance of 1,100,000,000 and 305,491,899 shares of $0.0001 par value common stock, respectively.
Each share of common stock entitles the holder to 1 vote on all matters submitted to a vote of the Company’s stockholders. Common stockholders are entitled to receive dividends, as may be declared by the board of directors, subject to the preferential dividend rights of Preferred Stock. As of September 30, 2021 and December 31, 2020, 0 cash dividends had been declared or paid.
On the closing of the Merger, the total 10,391,513 of the NHIC ordinary shares held by the NHIC Initial Shareholders and public shareholders were converted into the same number of the Company’s common stock.
F-33
EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
On July 16, 2021 and prior to the closing of the Merger, various PIPE investors purchased 30,000,000 shares of the Company’s common stock at a price of $10.00 per share for gross proceeds of $300.0 million.
As of September 30, 2021 and December 31, 2020, the Company had reserved 109,632,43174,920,606 and 102,570,63976,008,377 shares, respectively, of common stock for the conversion of the outstanding Preferred Stock, exercise of outstanding stock options, granting of awards under the Company’s 2021 Equity Incentive Plan and 2013 Equity Incentive Plan (see Note 13)16) and the exercise of outstanding warrants (including warrants to purchase Preferred Stock as if converted to common stock). (see Note 11)
13.13).
2013 Equity Incentive Plan
The Company’s 2013 Equity Incentive Plan (the “2013 Plan”) provides for the Company to grant incentive stock options or nonqualified stock options, restricted stock awards and other stock-based awards to employees, officers, directors and non-employees of the Company. Per the initial terms of the 2013 Plan, up to 1,078,169 shares of common stock may be issued.
At September 30, 2021 and December 31, 2020, shares of common stock that may be issued under the 2013 Plan were 0 and 21,487,876, respectively. As of September 30, 2021 and December 31, 2020, 0 shares and 979,852 shares, respectively, remained available for future grant under the 2013 Plan. Shares that are expired, forfeited, canceled or otherwise terminated without having been fully exercised will be available for future grant under the 2013 Plan. In addition, shares of common stock that are tendered to the Company by a participant to exercise an award are added to the number of shares of common stock available for future grants.
The 2013 Plan is administered by the Board of Directors or, at the discretion of the Board of Directors, by a committee of the Board of Directors. The exercise prices, vesting and other restrictions are determined at the discretion of the Board of Directors, or its committee if so delegated, except that the exercise price per share of stock options may not be less than 100% of the fair market value of a share of common stock on the date of grant and the term of the stock option may not be greater than ten years. Stock options granted to employees, officers, members of the Board of Directors and non-employees typically vest over a four-year period. The Company’s Board of Directors values the Company’s common stock, taking into consideration its most recently available valuation of common stock performed by third parties as well as additional factors which may have changed since the date of the most recent contemporaneous valuation through the date of grant.
At September 30, 2021, shares of common stock that may be issued under the 2021 Plan were 21,177,295.Plan. As of SeptemberJune 30, 2022 and December 31, 2021, 19,795,38111,217,480 and 19,511,916 shares, respectively, remained available for future grant under the 2021 Plan. Shares that are expired, forfeited, canceled or otherwise terminated without having been fully exercised will be available for future grant under the 2021 Plan. In addition, shares of common
F-34
EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The 2021 Plan is administered by the Board of Directors or, at the discretion of the Board of Directors, by a committee of the Board of Directors. The exercise prices, vesting and other restrictions are determined at the discretion of the Board of Directors, or its committee if so delegated, except that the exercise price per share of stock options may not be less than 100% of the fair market value of a share of common stock on the date of grant and the term of the stock option may not be greater than ten years. Stock options granted to employees, officers, members of the Board of Directors and non-employees vesting terms are determined on an individual basis on the date of grant. The Company’s Board of Directors values the Company’s Common stock, taking into consideration its most recently available valuation of common stock performed by third parties as well as additional factors which may have changed since the date of the most recent contemporaneous valuation through the date of grant.
During the three and nine months ended September 30, 2021, there were 0 options granted by the Company under the 2021 Plan.
2021 Employee Stock Purchase Plan
In July 2021, the Company’s board of directors adopted the 2021 Employee Stock Purchase Plan (“2021 ESPP”), which was subsequently approved by the Company’s stockholders and became effective on July 16, 2021. The 2021 ESPP authorizes the initial issuance of up to 3,289,632 shares of the Company’s common stock to eligible employees of the Company or, as designated by the Company’s board of directors, employees of a related company. The 2021 ESPP provides that the number of shares reserved and available for issuance under the 2021 ESPP will automatically increase each January 1, beginning on January 1, 2022 and ending on (and including) January 1, 2032, by an amount equal to the lesser of (i) 1% of the outstanding number of shares of common stock on the immediately preceding December 31 and (ii) 3,289,632 or such lesser number of shares as determined by the Company’s board of directors. As of September 30, 2021, 3,289,632 shares of the Company’s common stock were available for future issuance. The Company’s board of directors may from time to time grant or provide for the grant to eligible employees of options to purchase common stock under the 2021 ESPP during a specific offering period. As of September 30, 2021, no offerings have been approved.
During the three months ended September 30, 2021, there were 0 options granted by the Company. During the nine months ended September 30, 2021, the Company granted 6,474,175 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:
| | | | | |
| | Nine Months Ended September 30, |
| ||
|
| 2021 |
| 2020 |
|
Risk-free interest rate |
| 0.7 | % | 0.4 | % |
Expected term (in years) |
| 6.0 | | 5.9 | |
Expected volatility |
| 31.4 | % | 32.4 | % |
Expected dividend yield |
| 0.0 | % | 0.0 | % |
F-35
Six Months Ended June 30, | |||||||||||
2022 | 2021 | ||||||||||
Risk-free interest rate | 1.6 | % | 0.7 | % | |||||||
Expected term (in years) | 6.1 | 6.0 | |||||||||
Expected volatility | 75.0 | % | 31.4 | % | |||||||
Expected dividend yield | 0.0 | % | 0.0 | % |
EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following tables summarizetable summarizes the Company’s stock option activity since December 31, 20202021 (in thousands, except for share and per share data):
| | | | | | | | | | |
|
| |
| | |
| Weighted |
| | |
| | | | Weighted | | Average | | | | |
| | Number of | | Average | | Remaining | | Aggregate | ||
| | Shares | | Exercise Price | | Contractual Term | | Intrinsic Value | ||
| | | | | | | (in years) | | | |
Outstanding as of December 31, 2020 | | 18,804,634 | | $ | 0.36 | | 7.57 | | $ | 1,054 |
Granted |
| 6,474,175 |
| | 0.43 |
| 9.28 |
| | 49,284 |
Exercised |
| (2,399,609) |
| | 0.33 | | 5.62 |
| | 18,508 |
Exercised upon settlement of related party note | | (1,469,999) | | | 0.24 | | 5.96 | | | 272 |
Forfeited | | (98,524) |
| | 0.41 |
| — |
| | 752 |
Outstanding as of September 30, 2021 |
| 21,310,677 | | | 0.40 |
| 8.19 | | $ | 162,662 |
|
|
| |
|
|
|
| |
|
|
Vested and expected to vest as of September 30, 2021 |
| 21,310,677 | | $ | 0.40 |
| 8.19 | | $ | 162,662 |
Options exercisable as of September 30, 2021 |
| 9,615,616 | | $ | 0.37 |
| 7.24 | | $ | 73,813 |
Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value | ||||||||||||||||||||
(in years) | |||||||||||||||||||||||
Outstanding as of December 31, 2021 | 20,769,130 | $ | 0.39 | ||||||||||||||||||||
Granted | 2,262,925 | 2.32 | |||||||||||||||||||||
Exercised | (849,859) | 0.43 | |||||||||||||||||||||
Forfeited | (614,619) | 0.42 | |||||||||||||||||||||
Outstanding as of June 30, 2022 | 21,567,577 | 0.59 | 7.6 | $ | 44,548 | ||||||||||||||||||
Vested and expected to vest as of June 30, 2022 | 21,567,577 | $ | 0.59 | 7.6 | $ | 44,548 | |||||||||||||||||
Options exercisable as of June 30, 2022 | 12,643,339 | $ | 0.38 | 6.8 | $ | 28,870 |
The intrinsic value
Number of Shares | Grant Date Fair Value | ||||||||||
Outstanding as of December 31, 2021 | 1,951,924 | $ | 6.76 | ||||||||
Granted | 6,897,234 | 3.32 | |||||||||
Vested | (237,911) | 6.96 | |||||||||
Cancelled | (1,165,104) | 5.37 | |||||||||
Outstanding as of June 30, 2022 | 7,446,143 | $ | 3.79 |
| | | | | |
| | Number of | | Grant Date Fair | |
| | Shares | | Value | |
| | | | | |
Outstanding as of December 31, 2020 | | — | | | — |
Granted |
| 1,670,961 |
| $ | 7.19 |
Vested |
| — |
| | — |
Cancelled |
| — |
| | — |
Outstanding as of September 30, 2021 |
| 1,670,961 | | $ | 7.19 |
In March 2021,six months ended June 30, 2022, the Company issued 289,047 shares of RSU’s at a grant dateaggregate grant-date fair value of $8.04 under the 2013 Plan. In September 2021, the Companyrestricted stock units issued 1,381,914 shares of RSU’s at a grant date fair value of $7.01 under the
F-36
EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
2021 Plan. The terms of the RSU’s under the 2021 Plan allow for the following vesting periods, which are determined on an individual basis on the date of grant.
(A) The RSUs willwas $7.4 million and $22.9 million, respectively. Restricted stock units generally vest ratably over four years from the Vesting Commencement Date, with 25% of the RSUs vesting on the first anniversary of the Vesting Commencement Date and the remaining RSUs vesting quarterly thereafter over the remaining a three years, year period subject to the individual remaining a Service Provider (as defined in the 2021 Plan)grantee's continued service through the applicable vesting date.
(B)
Number of Shares | Grant Date Fair Value | ||||||||||
Outstanding as of December 31, 2021 | — | $ | — | ||||||||
Granted | 939,000 | 2.65 | |||||||||
Vested | — | — | |||||||||
Canceled | (25,000) | 2.65 | |||||||||
Outstanding as of June 30, 2022 | 914,000 | $ | 2.65 |
|
|
|
| ||||
Warrants - Black Scholes |
|
| |||||
Risk-free interest rate | $ | 0.4 | % | ||||
Expected term (in years) | 3.0 |
| |||||
Expected volatility | 23.9 |
| % | ||||
Expected dividend yield | 0.0 |
| % |
F-37
EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
| | | | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, | ||||||||
|
| 2021 |
| 2020 |
| 2021 |
| 2020 | ||||
Cost of revenue | | $ | 29 | | $ | 3 | | $ | 39 | | $ | 7 |
Sales and marketing | |
| 990 | |
| 41 | |
| 2,298 | |
| 81 |
General and administrative | |
| 1,045 | |
| 260 | |
| 1,241 | |
| 298 |
Research and development | |
| 332 | |
| 99 | |
| 435 | |
| 139 |
Total stock-based compensation expense | | $ | 2,396 | | $ | 403 | | $ | 4,013 | | $ | 525 |
Stock-based compensation expense was classified by award type in thecondensed consolidated statements of operations and comprehensive loss as follows (in thousands):
| | | | | | | | | | | |
| | Three Months Ended September 30, | | | Nine Months Ended September 30, | ||||||
| | 2021 | | 2020 | | | 2021 | | 2020 | ||
Stock options | $ | 128 | | $ | 403 | | $ | 595 | | $ | 525 |
Earn-out shares | | 1,970 | | | — | | | 1,970 | | | — |
Warrants | | 39 | | | — | | | 1,043 | | | — |
RSU's | | 259 | | | — | | | 405 | | | — |
Total stock-based compensation expense | $ | 2,396 | | $ | 403 | | $ | 4,013 | | $ | 525 |
Total unrecognized
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Cost of revenue | $ | 52 | $ | 5 | $ | 112 | $ | 10 | |||||||||||||||
Research and development | 931 | 40 | 1,479 | 77 | |||||||||||||||||||
Sales and marketing | 2,572 | 920 | 4,104 | 1,093 | |||||||||||||||||||
General and administrative | 1,506 | 102 | 3,293 | 196 | |||||||||||||||||||
Total stock-based compensation expense | $ | 5,061 | $ | 1,067 | $ | 8,988 | $ | 1,376 |
14.follows (in thousands):
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Stock options | $ | 454 | $ | 248 | $ | 693 | $ | 442 | |||||||||||||||
Earn-out shares | 1,916 | — | 3,603 | — | |||||||||||||||||||
Warrants | 631 | 748 | 841 | 794 | |||||||||||||||||||
RSUs and PSUs | 2,060 | 71 | 3,851 | 140 | |||||||||||||||||||
Total stock-based compensation expense | $ | 5,061 | $ | 1,067 | $ | 8,988 | $ | 1,376 |
allowance against its net deferred tax assets, and the net loss before income taxes incurred for the year ended December 31, 2021.
The Company has evaluated the positive and negative evidence bearing upon its ability to realize its deferred tax assets, which primarily consist of net operating loss carryforwards. The Company has considered its history of cumulative net losses, estimated future taxable income and prudent and feasible tax planning strategies and has concluded that it is more likely than not that the Company will not realize the benefits of its deferred tax assets. As a result, as of September 30, 2021 and December 31, 2020 the Company has recorded a full valuation allowance against its net deferred tax assets.
F-38
EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The Company files U.S. income tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal and state jurisdictions, where applicable. There are currently no pending tax examinations in the U.S. The Company has not received notice of examination by any jurisdictions in the U.S.
15.18. Net Income (Loss)Loss per Share
| | | | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, | ||||||||
|
| 2021 |
| 2020 |
| 2021 |
| 2020 | ||||
Numerator: |
| |
|
| |
| | |
|
| |
|
Net income (loss) attributable to common stockholders – basic | | $ | 22,751 | | $ | (6,262) | | $ | (13,375) | | $ | (17,796) |
Change in fair value for warrant liability | | | (42) | | | — | | | — | | | — |
Interest to convertible notes | | | 123 | | | — | | | — | | | — |
Loss on extinguishment of debt | | | 865 | | | — | | | — | | | — |
Change in fair value of derivative liability | | | (475) | | | — | | | — | | | — |
Net income (loss) attributable to common stockholders – diluted | | $ | 23,222 | | $ | (6,262) | | $ | (13,375) | | $ | (17,796) |
| |
|
| |
|
| |
|
| |
|
|
Denominator: | |
|
| |
|
| |
|
| |
|
|
Weighted average common shares outstanding – basic | |
| 119,745,196 | |
| 8,917,855 | |
| 47,772,253 | |
| 8,892,564 |
Weighted average effect of potentially dilutive securities: | | | | | | | | | | | | |
Effect of potentially dilutive convertible preferred stock | | | 14,065,012 | | | — | | | — | | | — |
Effect of potentially dilutive warrants | | | 354,135 | | | — | | | — | | | — |
Effect of potentially dilutive stock options | | | 19,696,440 | | | — | | | — | | | — |
Effect of potentially dilutive restricted stock units | | | 6,517 | | | — | | | — | | | — |
Total potentially dilutive securities | | | 34,122,104 | | | — | | | — | | | — |
Weighted average common shares outstanding — diluted | | | 153,867,300 | | | 8,917,855 | | | 47,772,253 | | | 8,892,564 |
Net income (loss) per share attributable to common stockholders - basic | | $ | 0.19 | | $ | (0.70) | | $ | (0.28) | | $ | (2.00) |
Net income (loss) per share attributable to common stockholders - diluted | | $ | 0.15 | | $ | (0.70) | | $ | (0.28) | | $ | (2.00) |
F-39
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Numerator: | |||||||||||||||||||||||
Net loss - basic and diluted | $ | (25,686) | $ | (22,977) | $ | (39,487) | $ | (36,483) | |||||||||||||||
Denominator: | |||||||||||||||||||||||
Weighted average common shares outstanding - basic and diluted | 143,552,032 | 11,922,270 | 143,220,268 | 11,186,204 | |||||||||||||||||||
Net loss per share - basic and diluted | $ | (0.18) | $ | (1.93) | $ | (0.28) | $ | (3.26) |
EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following potentially dilutive outstanding securities were excluded from the computation of diluted net loss 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:
June 30, | |||||||||||
2022 | 2021 | ||||||||||
Options issued and outstanding | 21,567,577 | 21,600,629 | |||||||||
Public Warrants to purchase common stock | 14,324,994 | — | |||||||||
Convertible preferred stock (as converted to common stock) | — | 80,833,007 | |||||||||
Warrants to purchase preferred stock | — | 1,014,963 | |||||||||
Warrants to purchase common stock | — | 1,053,933 | |||||||||
Warrants to purchase common stock (Finback)*** | 2,552,913 | 2,552,913 | |||||||||
Unvested restricted stock units | 7,446,143 | 289,047 | |||||||||
Unvested performance stock units | 914,000 | — | |||||||||
Earn-out shares** | 15,000,000 | — | |||||||||
Contingently issuable common stock** | 1,897,500 | — | |||||||||
Convertible notes (as converted to common stock)* | — | 3,788,671 | |||||||||
63,703,127 | 111,133,163 |
| | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, | | ||||
|
| 2021 |
| 2020 |
| 2021 |
| 2020 |
|
Options issued and outstanding |
| 1,589,357 |
| 18,224,891 | | 21,285,797 |
| 18,224,891 | |
Public Warrants to purchase common stock |
| 14,325,000 |
| — | | 14,325,000 |
| — | |
Convertible preferred stock (as converted to common stock) |
| — |
| 80,873,820 | | — |
| 80,873,820 | |
Warrants to purchase preferred stock (as converted to warrants to purchase common stock) |
| — |
| 1,015,401 | | — |
| 1,015,401 | |
Warrants to purchase common stock | | — | | 544,695 | | | | 544,695 | |
Warrants to purchase common stock (Finback)** | | 2,417,138 | | — | | 2,421,976 | | | |
Unvested restricted stock units | | 1,664,567 | | — | | 1,671,084 | | — | |
Earn-out shares** | | 15,000,000 | | — | | 15,000,000 | | — | |
Contingently issuable common stock** | | 1,897,500 | | — | | 1,897,500 | | — | |
Convertible notes (as converted to common stock)* |
| 5,408,672 |
| 590,625 | | 5,408,672 |
| 590,625 | |
|
| 42,302,234 |
| 101,249,432 | | 62,010,029 |
| 101,249,432 | |
* Conversion feature is only triggered upon the closing of a Qualified Financing Event
Includes 532,038 vested warrants and 2,020,875 unvested warrants as of June 30, 2022
16.
F-40
EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
During the three and nine months ended SeptemberJune 30, 2022 and 2021, the Company recorded less than $0.1$0.6 million and $1.0$0.7 million, respectively, of stock-based compensation expense within sales and marketing expense for the 2021 Finback common stock warrants.
17. Commitments During the six months ended June 30, 2022 and Contingencies
Operating Leases
The Company entered into a new lease agreement for additional office space starting May 1, 2021 through October 31, 2024, with the option to extend through October 31, 2027 with written notice. In May 2021, the Company leasedrecorded $0.8 million and $0.8 million, respectively, of stock-based compensation expense within sales and marketing expense for the space. The Company2021 Finback common stock warrants.
Total future minimum lease payments under this noncancelable operating lease amount to $3.4 million. Rent expense forcertain milestones. During the three months ended SeptemberJune 30, 2022 and 2021, no stock-based compensation expense within sales and 2020 was approximately $0.3 million and $0.1 million, respectively. Rentmarketing expense for the nineearn-out shares allocated to Finback was recorded. During the six months ended SeptemberJune 30, 2022 and 2021, no stock-based compensation expense within sales and marketing expense for the earn-out shares allocated to Finback was recorded.
Future minimum rental commitments As of June 30, 2022 and December 31, 2021, accounts receivable related to be paid by the Company at September 30, 2021 for this lease is as follows (in thousands):
Motorola’s distributor services was $3.0 million and $1.2 million, respectively.
| | | |
Year Ending December 31: | |
| |
2021 (remaining three months) | | $ | 185 |
2022 | | | 1,116 |
2023 | |
| 1,150 |
2024 | |
| 981 |
Total future minimum lease payments | | $ | 3,432 |
2021.
F-41
As discussed in Note 1, in preparing the condensed consolidated financial statements as of and for the three and six months ended June 30, 2022, the Company identified errors in its previously issued financial statements whereby (a) certain expenses that were cost of subscription revenue related and cost of service revenue related were inaccurately classified as sales and marketing expenses on the consolidated statements of operations and comprehensive loss, (b) certain equipment under lease or held for lease was inaccurately classified as inventory on the consolidated balance sheets and a portion of the cash outflows related to the equipment under lease or held for lease were misclassified between operating and investing cash flows on the consolidated statements of cash flows, and (c) the vesting of warrants related to the Business Development Agreement disclosed in Note 16 were not accounted for accurately. The identified errors impacted the Company's previously issued 2020 annual financial statements, 2021 quarterly and annual financial statements, and quarterly financial statements for the three months ended March 31, 2022. The Company has made adjustments to the prior period amounts presented in these financial statements accordingly. Additionally, the Company has made adjustments to correct for other previously identified immaterial errors. The Company evaluated the errors and determined that the related impacts were not material to any previously issued annual or interim financial statements. The impact of the revisions is as follows (in thousands):
(Unaudited)
18. Benefit Plans
The Company established a defined contribution savings plan under Section 401(k) of the Code. This plan covers all employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. Matching contributions to the plan may be made at the discretion of the Company’s board of directors. The Company did not make contributions to the plan during the three months and nine months ended September 30, 2021 or 2020.
F-42
December 31, 2021 | |||||||||||
As Previously Reported | Adjustment | As Revised | |||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 307,492 | $ | — | $ | 307,492 | |||||
Restricted cash | 400 | — | 400 | ||||||||
Accounts receivable, net | 6,477 | — | 6,477 | ||||||||
Inventory | 5,140 | (2,250) | 2,890 | ||||||||
Current portion of contract assets | 1,459 | — | 1,459 | ||||||||
Current portion of commission asset | 1,645 | — | 1,645 | ||||||||
Prepaid expenses and other current assets | 11,047 | (290) | 10,757 | ||||||||
Total current assets | 333,660 | (2,540) | 331,120 | ||||||||
Restricted cash, noncurrent | 275 | — | 275 | ||||||||
Contract assets, noncurrent | 3,418 | — | 3,418 | ||||||||
Commission asset, noncurrent | 3,719 | — | 3,719 | ||||||||
Property and equipment, net | 21,592 | 2,191 | 23,783 | ||||||||
Other assets | 401 | 141 | 542 | ||||||||
Total assets | $ | 363,065 | $ | (208) | $ | 362,857 | |||||
Liabilities and Stockholders’ Equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 6,363 | $ | (318) | $ | 6,045 | |||||
Accrued expenses and other current liabilities | 9,183 | 368 | 9,551 | ||||||||
Current portion of deferred revenue | 6,690 | (91) | 6,599 | ||||||||
Current portion of deferred rent | 135 | — | 135 | ||||||||
Current portion of long-term debt | 2,000 | — | 2,000 | ||||||||
Total current liabilities | 24,371 | (41) | 24,330 | ||||||||
Deferred revenue, noncurrent | 2,475 | — | 2,475 | ||||||||
Deferred rent, noncurrent | 333 | — | 333 | ||||||||
Long-term debt, noncurrent | 7,945 | — | 7,945 | ||||||||
Contingent earn-out liability | 20,809 | 397 | 21,206 | ||||||||
Contingently issuable common stock liability | 5,264 | — | 5,264 | ||||||||
Public warrant liability | 11,030 | — | 11,030 | ||||||||
Total liabilities | 72,227 | 356 | 72,583 | ||||||||
Stockholders’ equity: | |||||||||||
Convertible preferred stock | — | — | — | ||||||||
Common stock | 14 | — | 14 | ||||||||
Additional paid-in capital | 395,563 | 501 | 396,064 | ||||||||
Accumulated deficit | (104,739) | (1,065) | (105,804) | ||||||||
Stockholders’ equity | 290,838 | (564) | 290,274 | ||||||||
Total liabilities and stockholders’ equity | $ | 363,065 | $ | (208) | $ | 362,857 |
December 31, 2020 | |||||||||||
As Previously Reported | Adjustment | As Revised | |||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 4,704 | $ | — | $ | 4,704 | |||||
Accounts receivable, net | 1,401 | — | 1,401 | ||||||||
Inventory | 2,742 | (1,156) | 1,586 | ||||||||
Current portion of commission asset | 562 | — | 562 | ||||||||
Prepaid expenses and other current assets | 900 | 641 | 1,541 | ||||||||
Total current assets | 10,309 | (515) | 9,794 | ||||||||
Commission asset, noncurrent | 1,730 | — | 1,730 | ||||||||
Property and equipment, net | 9,316 | 752 | 10,068 | ||||||||
Other assets | — | 173 | 173 | ||||||||
Total assets | $ | 21,355 | $ | 410 | $ | 21,765 | |||||
Liabilities and Stockholders’ Equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 4,437 | $ | — | $ | 4,437 | |||||
Accrued expenses and other current liabilities | 3,727 | 484 | 4,211 | ||||||||
Current portion of deferred revenue | 3,717 | 45 | 3,762 | ||||||||
Current portion of deferred rent | 11 | — | 11 | ||||||||
Current portion of financing obligations | 227 | — | 227 | ||||||||
Total current liabilities | 12,119 | 529 | 12,648 | ||||||||
Deferred revenue, noncurrent | 480 | — | 480 | ||||||||
Financing obligation, noncurrent | 132 | — | 132 | ||||||||
Long-term debt, noncurrent | 16,432 | — | 16,432 | ||||||||
Derivative Liability | 1,000 | — | 1,000 | ||||||||
Common stock warrant liability | 1 | — | 1 | ||||||||
Total liabilities | 30,164 | 529 | 30,693 | ||||||||
Stockholders’ equity: | |||||||||||
Convertible preferred stock | 75,877 | — | 75,877 | ||||||||
Common stock | 1 | — | 1 | ||||||||
Additional paid-in capital | 9,194 | 916 | 10,110 | ||||||||
Accumulated deficit | (93,881) | (1,035) | (94,916) | ||||||||
Stockholders’ equity | (84,686) | (119) | (84,805) | ||||||||
Total liabilities and stockholders’ equity | $ | 21,355 | $ | 410 | $ | 21,765 |
Three Months Ended March 31, 2022 | |||||||||||||||||
As Previously Reported | Adjustment | As Revised | |||||||||||||||
Revenue: | |||||||||||||||||
Product revenue | $ | 5,194 | $ | — | $ | 5,194 | |||||||||||
Subscription revenue | 3,020 | (16) | 3,004 | ||||||||||||||
Service revenue | 501 | 11 | 512 | ||||||||||||||
Total revenue | 8,715 | (5) | 8,710 | ||||||||||||||
Cost of revenue: | |||||||||||||||||
Cost of product revenue | 5,576 | (370) | 5,206 | ||||||||||||||
Cost of subscription revenue | 1,065 | 477 | 1,542 | ||||||||||||||
Cost of service revenue | 448 | 617 | 1,065 | ||||||||||||||
Total cost of revenue | 7,089 | 724 | 7,813 | ||||||||||||||
Gross profit | 1,626 | (729) | 897 | ||||||||||||||
Operating expenses: | |||||||||||||||||
Research and development | 4,286 | (111) | 4,175 | ||||||||||||||
Sales and marketing expense | 12,053 | (2,381) | 9,672 | ||||||||||||||
General and administrative | 11,093 | (276) | 10,817 | ||||||||||||||
Loss from impairment of property and equipment | 96 | — | 96 | ||||||||||||||
Total operating expenses | 27,528 | (2,768) | 24,760 | ||||||||||||||
Loss from operations | (25,902) | 2,039 | (23,863) | ||||||||||||||
Other income (expense), net: | |||||||||||||||||
Interest expense | (142) | — | (142) | ||||||||||||||
Interest income | 209 | (141) | 68 | ||||||||||||||
Change in fair value of contingent earn-out liability | 4,226 | (1,148) | 3,078 | ||||||||||||||
Change in fair value of contingently issuable common stock liability | 1,472 | — | 1,472 | ||||||||||||||
Change in fair value of public warrant liability | 5,586 | — | 5,586 | ||||||||||||||
Total other income (expense), net | 11,351 | (1,289) | 10,062 | ||||||||||||||
Net loss | $ | (14,551) | $ | 750 | $ | (13,801) | |||||||||||
Weighted average common shares outstanding - basic and diluted | 142,878,406 | — | 142,878,406 | ||||||||||||||
Net loss per share - basic and diluted | $ | (0.10) | $ | — | $ | (0.10) |
Year Ended December 31, 2021 | |||||||||||||||||
As Previously Reported | Adjustment | As Revised | |||||||||||||||
Revenue: | |||||||||||||||||
Product revenue | $ | 13,917 | $ | (286) | $ | 13,631 | |||||||||||
Subscription revenue | 7,855 | (52) | 7,803 | ||||||||||||||
Service revenue | 1,920 | 39 | 1,959 | ||||||||||||||
Total revenue | 23,692 | (299) | 23,393 | ||||||||||||||
Cost of revenue: | |||||||||||||||||
Cost of product revenue | 12,471 | (192) | 12,279 | ||||||||||||||
Cost of subscription revenue | 3,644 | 857 | 4,501 | ||||||||||||||
Cost of service revenue | 936 | 1,648 | 2,584 | ||||||||||||||
Total cost of revenue | 17,051 | 2,313 | 19,364 | ||||||||||||||
Gross profit | 6,641 | (2,612) | 4,029 | ||||||||||||||
Operating expenses: | |||||||||||||||||
Research and development | 11,416 | 42 | 11,458 | ||||||||||||||
Sales and marketing expense | 27,404 | (1,305) | 26,099 | ||||||||||||||
General and administrative | 20,013 | (144) | 19,869 | ||||||||||||||
Loss from impairment of property and equipment | 1,869 | — | 1,869 | ||||||||||||||
Total operating expenses | 60,702 | (1,407) | 59,295 | ||||||||||||||
Loss from operations | (54,061) | (1,205) | (55,266) | ||||||||||||||
Other income (expense), net: | |||||||||||||||||
Interest expense, net | (6,095) | 27 | (6,068) | ||||||||||||||
Interest income | — | — | — | ||||||||||||||
Loss on disposal of property and equipment | (617) | — | (617) | ||||||||||||||
Loss on extinguishment of debt | (12,685) | — | (12,685) | ||||||||||||||
Change in fair value of derivative liability | (1,745) | — | (1,745) | ||||||||||||||
Change in fair value of contingent earn-out liability | 46,212 | 1,148 | 47,360 | ||||||||||||||
Change in fair value of contingently issuable common stock liability | 6,406 | — | 6,406 | ||||||||||||||
Change in fair value of public warrant liability | 12,606 | — | 12,606 | ||||||||||||||
Change in fair value of common stock warrant liability | (879) | — | (879) | ||||||||||||||
Total other income (expense), net | 43,203 | 1,175 | 44,378 | ||||||||||||||
Net loss | $ | (10,858) | $ | (30) | $ | (10,888) | |||||||||||
Weighted average common shares outstanding - basic and diluted | 71,662,694 | — | 71,662,694 | ||||||||||||||
Net loss per share - basic and diluted | $ | (0.15) | $ | — | $ | (0.15) |
Three Months Ended September 30, 2021 | Nine Months Ended September 30, 2021 | ||||||||||||||||||||||||||||||||||
As Previously Reported | Adjustment | As Revised | As Previously Reported | Adjustment | As Revised | ||||||||||||||||||||||||||||||
Revenue: | |||||||||||||||||||||||||||||||||||
Product revenue | $ | 5,345 | $ | 50 | $ | 5,395 | $ | 10,299 | $ | (20) | $ | 10,279 | |||||||||||||||||||||||
Subscription revenue | 2,305 | 7 | 2,312 | 5,118 | (58) | 5,060 | |||||||||||||||||||||||||||||
Service revenue | 717 | — | 717 | 1,429 | 27 | 1,456 | |||||||||||||||||||||||||||||
Total revenue | 8,367 | 57 | 8,424 | 16,846 | (51) | 16,795 | |||||||||||||||||||||||||||||
Cost of revenue: | |||||||||||||||||||||||||||||||||||
Cost of product revenue | 2,933 | 34 | 2,967 | 7,237 | 149 | 7,386 | |||||||||||||||||||||||||||||
Cost of subscription revenue | 1,086 | 191 | 1,277 | 2,542 | 538 | 3,080 | |||||||||||||||||||||||||||||
Cost of service revenue | 192 | 521 | 713 | 732 | 953 | 1,685 | |||||||||||||||||||||||||||||
Total cost of revenue | 4,211 | 746 | 4,957 | 10,511 | 1,640 | 12,151 | |||||||||||||||||||||||||||||
Gross profit | 4,156 | (689) | 3,467 | 6,335 | (1,691) | 4,644 | |||||||||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||||||||
Research and development | 3,641 | (29) | 3,612 | 8,330 | 69 | 8,399 | |||||||||||||||||||||||||||||
Sales and marketing expense | 8,510 | 1,514 | 10,024 | 17,284 | 472 | 17,756 | |||||||||||||||||||||||||||||
General and administrative | 6,983 | 552 | 7,535 | 11,162 | 896 | 12,058 | |||||||||||||||||||||||||||||
Loss from impairment of property and equipment | 1,656 | — | 1,656 | 1,656 | — | 1,656 | |||||||||||||||||||||||||||||
Total operating expenses | 20,790 | 2,037 | 22,827 | 38,432 | 1,437 | 39,869 | |||||||||||||||||||||||||||||
Loss from operations | (16,634) | (2,726) | (19,360) | (32,097) | (3,128) | (35,225) | |||||||||||||||||||||||||||||
Other income (expense), net: | |||||||||||||||||||||||||||||||||||
Interest expense, net | (286) | (9) | (295) | (5,988) | 36 | (5,952) | |||||||||||||||||||||||||||||
Other expense, net | (669) | — | (669) | (669) | — | (669) | |||||||||||||||||||||||||||||
Loss on extinguishment of debt | (865) | — | (865) | (12,685) | — | (12,685) | |||||||||||||||||||||||||||||
Change in fair value of derivative liability | 475 | — | 475 | (1,745) | — | (1,745) | |||||||||||||||||||||||||||||
Change in fair value of contingent earn-out liability | 31,818 | 791 | 32,609 | 31,818 | 791 | 32,609 | |||||||||||||||||||||||||||||
Change in fair value of contingently issuable common stock liability | 5,718 | — | 5,718 | 5,718 | — | 5,718 | |||||||||||||||||||||||||||||
Change in fair value of public warrant liability | 3,152 | — | 3,152 | 3,152 | — | 3,152 | |||||||||||||||||||||||||||||
Change in fair value of common stock warrant liability | 42 | — | 42 | (879) | — | (879) | |||||||||||||||||||||||||||||
Total other income (expense), net | 39,385 | 782 | 40,167 | 18,722 | 827 | 19,549 | |||||||||||||||||||||||||||||
Net income (loss) attributable to common stockholders - basic | $ | 22,751 | $ | (1,944) | $ | 20,807 | $ | (13,375) | $ | (2,301) | $ | (15,676) | |||||||||||||||||||||||
Net income (loss) attributable to common stockholders - diluted | $ | 23,222 | $ | (1,944) | $ | 21,278 | $ | (13,375) | $ | (2,301) | $ | (15,676) | |||||||||||||||||||||||
Weighted average common shares outstanding | |||||||||||||||||||||||||||||||||||
Basic | 119,745,196 | — | 119,745,196 | 47,772,253 | — | 47,772,253 | |||||||||||||||||||||||||||||
Diluted | 153,867,300 | 69,136 | 153,936,436 | 47,772,253 | — | 47,772,253 | |||||||||||||||||||||||||||||
Net income (loss) per share | |||||||||||||||||||||||||||||||||||
Basic | $ | 0.19 | $ | (0.02) | $ | 0.17 | $ | (0.28) | $ | (0.05) | $ | (0.33) | |||||||||||||||||||||||
Diluted | $ | 0.15 | $ | (0.01) | $ | 0.14 | $ | (0.28) | $ | (0.05) | $ | (0.33) |
Three Months Ended June 30, 2021 | Six Months Ended June 30, 2021 | ||||||||||||||||||||||||||||||||||
As Previously Reported | Adjustment | As Revised | As Previously Reported | Adjustment | As Revised | ||||||||||||||||||||||||||||||
Revenue: | |||||||||||||||||||||||||||||||||||
Product revenue | $ | 2,452 | $ | 165 | $ | 2,617 | $ | 4,954 | $ | (70) | $ | 4,884 | |||||||||||||||||||||||
Subscription revenue | 1,513 | 8 | 1,521 | 2,813 | (65) | 2,748 | |||||||||||||||||||||||||||||
Service revenue | 515 | 25 | 540 | 712 | 27 | 739 | |||||||||||||||||||||||||||||
Total revenue | 4,480 | 198 | 4,678 | 8,479 | (108) | 8,371 | |||||||||||||||||||||||||||||
Cost of revenue: | |||||||||||||||||||||||||||||||||||
Cost of product revenue | 2,075 | 128 | 2,203 | 4,304 | 115 | 4,419 | |||||||||||||||||||||||||||||
Cost of subscription revenue | 861 | 199 | 1,060 | 1,456 | 347 | 1,803 | |||||||||||||||||||||||||||||
Cost of service revenue | 413 | 274 | 687 | 540 | 432 | 972 | |||||||||||||||||||||||||||||
Total cost of revenue | 3,349 | 601 | 3,950 | 6,300 | 894 | 7,194 | |||||||||||||||||||||||||||||
Gross profit | 1,131 | (403) | 728 | 2,179 | (1,002) | 1,177 | |||||||||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||||||||
Research and development | 1,077 | (30) | 1,047 | 4,689 | 98 | 4,787 | |||||||||||||||||||||||||||||
Sales and marketing expense | 5,090 | 34 | 5,124 | 8,774 | (1,042) | 7,732 | |||||||||||||||||||||||||||||
General and administrative | 1,280 | 191 | 1,471 | 4,179 | 344 | 4,523 | |||||||||||||||||||||||||||||
Total operating expenses | 7,447 | 195 | 7,642 | 17,642 | (600) | 17,042 | |||||||||||||||||||||||||||||
Loss from operations | (6,316) | (598) | (6,914) | (15,463) | (402) | (15,865) | |||||||||||||||||||||||||||||
Other income (expense), net: | |||||||||||||||||||||||||||||||||||
Interest expense, net | (3,255) | (8) | (3,263) | (5,702) | 45 | (5,657) | |||||||||||||||||||||||||||||
Interest income | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Loss on extinguishment of debt | (11,820) | — | (11,820) | (11,820) | — | (11,820) | |||||||||||||||||||||||||||||
Change in fair value of derivative liability | (795) | — | (795) | (2,220) | — | (2,220) | |||||||||||||||||||||||||||||
Change in fair value of common stock warrant liability | (185) | — | (185) | (921) | — | (921) | |||||||||||||||||||||||||||||
Total other income (expense), net | (16,055) | (8) | (16,063) | (20,663) | 45 | (20,618) | |||||||||||||||||||||||||||||
Net loss | $ | (22,371) | $ | (606) | $ | (22,977) | $ | (36,126) | $ | (357) | $ | (36,483) | |||||||||||||||||||||||
Weighted average common shares outstanding - basic and diluted | 11,922,270 | — | 11,922,270 | 11,186,204 | — | 11,186,204 | |||||||||||||||||||||||||||||
Net loss per share - basic and diluted | $ | (1.88) | $ | (0.05) | $ | (1.93) | $ | (3.23) | $ | (0.03) | $ | (3.26) |
Three Months Ended March 31, 2021 | |||||||||||||||||
As Previously Reported | Adjustment | As Revised | |||||||||||||||
Revenue: | |||||||||||||||||
Product revenue | $ | 2,502 | $ | (235) | $ | 2,267 | |||||||||||
Subscription revenue | 1,300 | (73) | 1,227 | ||||||||||||||
Service revenue | 197 | 2 | 199 | ||||||||||||||
Total revenue | 3,999 | (306) | 3,693 | ||||||||||||||
Cost of revenue: | |||||||||||||||||
Cost of product revenue | 2,229 | (13) | 2,216 | ||||||||||||||
Cost of subscription revenue | 595 | 148 | 743 | ||||||||||||||
Cost of service revenue | 127 | 158 | 285 | ||||||||||||||
Total cost of revenue | 2,951 | 293 | 3,244 | ||||||||||||||
Gross profit | 1,048 | (599) | 449 | ||||||||||||||
Operating expenses: | |||||||||||||||||
Research and development | 3,612 | 128 | 3,740 | ||||||||||||||
Sales and marketing expense | 3,684 | (1,076) | 2,608 | ||||||||||||||
General and administrative | 2,899 | 153 | 3,052 | ||||||||||||||
Total operating expenses | 10,195 | (795) | 9,400 | ||||||||||||||
Loss from operations | (9,147) | 196 | (8,951) | ||||||||||||||
Other income (expense), net: | |||||||||||||||||
Interest expense, net | (2,447) | 53 | (2,394) | ||||||||||||||
Change in fair value of derivative liability | (1,425) | — | (1,425) | ||||||||||||||
Change in fair value of common stock warrant liability | (736) | — | (736) | ||||||||||||||
Total other income (expense), net | (4,608) | 53 | (4,555) | ||||||||||||||
Net loss | $ | (13,755) | $ | 249 | $ | (13,506) | |||||||||||
Weighted average common shares outstanding - basic and diluted | 10,443,323 | — | 10,443,323 | ||||||||||||||
Net loss per share - basic and diluted | $ | (1.32) | $ | 0.03 | $ | (1.29) |
Year Ended December 31, 2020 | |||||||||||||||||
As Previously Reported | Adjustment | As Revised | |||||||||||||||
Revenue: | |||||||||||||||||
Product revenue | $ | 1,279 | $ | 503 | $ | 1,782 | |||||||||||
Subscription revenue | 2,637 | 93 | 2,730 | ||||||||||||||
Service revenue | 869 | — | 869 | ||||||||||||||
Total revenue | 4,785 | 596 | 5,381 | ||||||||||||||
Cost of revenue: | |||||||||||||||||
Cost of product revenue | 1,177 | 562 | 1,739 | ||||||||||||||
Cost of subscription revenue | 1,824 | — | 1,824 | ||||||||||||||
Cost of service revenue | 495 | 1 | 496 | ||||||||||||||
Total cost of revenue | 3,496 | 563 | 4,059 | ||||||||||||||
Gross profit | 1,289 | 33 | 1,322 | ||||||||||||||
Operating expenses: | |||||||||||||||||
Research and development | 15,710 | (157) | 15,553 | ||||||||||||||
Sales and marketing expense | 7,365 | 919 | 8,284 | ||||||||||||||
General and administrative | 5,110 | 420 | 5,530 | ||||||||||||||
Total operating expenses | 28,185 | 1,182 | 29,367 | ||||||||||||||
Loss from operations | (26,896) | (1,149) | (28,045) | ||||||||||||||
Other income (expense), net: | |||||||||||||||||
Interest expense, net | (430) | 114 | (316) | ||||||||||||||
Loss on extinguishment of debt | (66) | — | (66) | ||||||||||||||
Total other income (expense), net | (496) | 114 | (382) | ||||||||||||||
Net loss | $ | (27,392) | $ | (1,035) | $ | (28,427) | |||||||||||
Weighted average common shares outstanding - basic and diluted | 8,932,404 | — | 8,932,404 | ||||||||||||||
Net loss per share - basic and diluted | $ | (3.07) | $ | (0.11) | $ | (3.18) |
Three Months Ended March 31, 2022 | |||||||||||
As Previously Reported | Adjustment | As Revised | |||||||||
Cash flows from operating activities: | |||||||||||
Net loss | $ | (14,551) | $ | 750 | $ | (13,801) | |||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
Depreciation and amortization | 948 | 138 | 1,086 | ||||||||
Write-off of inventory | 324 | — | 324 | ||||||||
Adjustment to property and equipment for sales type leases | (321) | (304) | (625) | ||||||||
Loss from impairment of property and equipment | 96 | — | 96 | ||||||||
Stock-based compensation | 5,190 | (1,263) | 3,927 | ||||||||
Noncash interest expense | 5 | — | 5 | ||||||||
Noncash lease expense | 197 | — | 197 | ||||||||
Change in fair value of earn-out liability | (4,226) | 1,148 | (3,078) | ||||||||
Change in fair value of contingently issuable common stock | (1,472) | — | (1,472) | ||||||||
Change in fair value of public warrant liability | (5,586) | — | (5,586) | ||||||||
Changes in operating assets and liabilities | |||||||||||
Accounts receivable | (2,112) | — | (2,112) | ||||||||
Inventory | (6,985) | 5,675 | (1,310) | ||||||||
Commission assets | (351) | — | (351) | ||||||||
Contract assets | 108 | — | 108 | ||||||||
Other assets | — | 141 | 141 | ||||||||
Prepaid expenses and other current assets | (5,280) | (291) | (5,571) | ||||||||
Accounts payable | (1,867) | 1,012 | (855) | ||||||||
Deferred revenue | 2,778 | (201) | 2,577 | ||||||||
Deferred rent | (468) | 468 | — | ||||||||
Accrued expenses and other current liabilities | (2,065) | (368) | (2,433) | ||||||||
Operating lease liability | (229) | (468) | (697) | ||||||||
Net cash used in operating activities | (35,867) | 6,437 | (29,430) | ||||||||
Cash flows from investing activities: | |||||||||||
Development of internal-use software | (646) | (82) | (728) | ||||||||
Purchases of property and equipment | (323) | (6,366) | (6,689) | ||||||||
Net cash used in investing activities | (969) | (6,448) | (7,417) | ||||||||
Cash flows from financing activities: | |||||||||||
Proceeds from exercise of stock options | 216 | 11 | 227 | ||||||||
Net cash provided by financing activities | 216 | 11 | 227 | ||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | (36,620) | — | (36,620) | ||||||||
Cash, cash equivalents and restricted cash | |||||||||||
Cash, cash equivalents and restricted cash at beginning of period | 308,167 | — | 308,167 | ||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 271,547 | $ | — | $ | 271,547 | |||||
Supplemental disclosure of non-cash activities | |||||||||||
Transfer of inventory to property and equipment | $ | 4,620 | $ | (4,620) | $ | — | |||||
Capital expenditures incurred but not yet paid | 1,693 | 698 | 2,391 | ||||||||
Year Ended December 31, 2021 | |||||||||||
As Previously Reported | Adjustment | As Revised | |||||||||
Cash flows from operating activities: | |||||||||||
Net loss | $ | (10,858) | $ | (30) | $ | (10,888) | |||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
Depreciation and amortization | 2,895 | — | 2,895 | ||||||||
Write-off of inventory | 2,132 | — | 2,132 | ||||||||
Adjustment to property and equipment for sales type leases | (91) | — | (91) | ||||||||
Loss from impairment of property and equipment | 1,869 | — | 1,869 | ||||||||
Loss on disposal of property and equipment | 617 | — | 617 | ||||||||
Stock-based compensation | 8,511 | 1,085 | 9,596 | ||||||||
Noncash interest expense | 5,245 | — | 5,245 | ||||||||
Provision recorded for allowance for doubtful accounts | (13) | — | (13) | ||||||||
Loss on extinguishment of debt | 12,685 | — | 12,685 | ||||||||
Change in fair value of derivative liability | 1,745 | — | 1,745 | ||||||||
Change in fair value of common stock warrant liability | 879 | — | 879 | ||||||||
Change in fair value of earn-out liability | (46,212) | (1,148) | (47,360) | ||||||||
Change in fair value of contingently issuable common stock | (6,406) | — | (6,406) | ||||||||
Change in fair value of public warrant liability | (12,606) | — | (12,606) | ||||||||
Changes in operating assets and liabilities | |||||||||||
Accounts receivable | (5,063) | — | (5,063) | ||||||||
Inventory | (17,479) | 14,043 | (3,436) | ||||||||
Commission assets | (3,072) | — | (3,072) | ||||||||
Contract assets | (4,877) | — | (4,877) | ||||||||
Other assets | — | 32 | 32 | ||||||||
Prepaid expenses and other current assets | (10,079) | 931 | (9,148) | ||||||||
Accounts payable | (7) | 772 | 765 | ||||||||
Deferred revenue | 4,968 | (136) | 4,832 | ||||||||
Deferred rent | 457 | — | 457 | ||||||||
Warranty reserve | (42) | — | (42) | ||||||||
Accrued expenses and other current liabilities | 5,174 | (2,702) | 2,472 | ||||||||
Net cash used in operating activities | (69,628) | 12,847 | (56,781) | ||||||||
Cash flows from investing activities: | |||||||||||
Development of internal-use software | (1,028) | — | (1,028) | ||||||||
Purchases of property and equipment | (3,710) | (12,847) | (16,557) | ||||||||
Net cash used in investing activities | (4,738) | (12,847) | (17,585) | ||||||||
Cash flows from financing activities: | |||||||||||
Proceeds from exercise of stock options | 915 | — | 915 | ||||||||
Proceeds from issuance of common stock from the PIPE Investment | 300,000 | — | 300,000 | ||||||||
Proceeds from the closing of the Merger | 84,945 | — | 84,945 | ||||||||
Payment of offering costs from the closing of the Merger and PIPE Investment | (34,132) | — | (34,132) | ||||||||
Repayment of financing obligations | (359) | — | (359) | ||||||||
Proceeds from long-term debt, net of issuance costs | 31,882 | — | 31,882 | ||||||||
Repayment of principal on long-term debt | (5,422) | — | (5,422) | ||||||||
Net cash provided by financing activities | 377,829 | — | 377,829 | ||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 303,463 | — | 303,463 | ||||||||
Cash, cash equivalents and restricted cash | |||||||||||
Cash, cash equivalents and restricted cash at beginning of period | 4,704 | — | 4,704 | ||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 308,167 | $ | — | $ | 308,167 | |||||
Supplemental disclosure of non-cash activities | |||||||||||
Transfer of inventory to property and equipment | $ | 12,949 | $ | (12,949) | $ | — | |||||
Capital expenditures incurred but not yet paid | 347 | 2,589 | 2,936 | ||||||||
Issuance of equity classified warrants | 1 | (1) | — |
Deferred offering costs included in accounts payable | 1,932 | 11 | 1,943 | ||||||||
Conversion of convertible preferred stock to common stock | 75,877 | — | 75,877 | ||||||||
Initial fair value of contingent earn-out liability recognized in connection with the closing of the Merger | 67,021 | — | 67,021 | ||||||||
Initial fair value of contingently issuable common stock liability recognized in connection with the closing of the Merger | 11,670 | — | 11,670 | ||||||||
Conversion of common stock warrants to common stock in connection with the closing of the Merger | 880 | — | 880 | ||||||||
Initial fair value of public warrants in connection with the closing of the Merger | 23,636 | — | 23,636 | ||||||||
Nine Months Ended September 30, 2021 | |||||||||||
As Previously Reported | Adjustment | As Revised | |||||||||
Cash flows from operating activities: | |||||||||||
Net loss | $ | (13,375) | $ | (2,301) | $ | (15,676) | |||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
Depreciation and amortization | 1,948 | — | 1,948 | ||||||||
Write-off of inventory | 400 | — | 400 | ||||||||
Loss from impairment of property and equipment | 1,656 | — | 1,656 | ||||||||
Loss on disposal of property and equipment | 659 | — | 659 | ||||||||
Stock-based compensation | 4,013 | 2,019 | 6,032 | ||||||||
Noncash interest expense | 5,561 | — | 5,561 | ||||||||
Provision recorded for allowance for doubtful accounts | (63) | — | (63) | ||||||||
Loss on extinguishment of debt | 12,685 | — | 12,685 | ||||||||
Change in fair value of derivative liability | 1,745 | — | 1,745 | ||||||||
Change in fair value of common stock warrant liability | 879 | — | 879 | ||||||||
Change in fair value of earn-out liability | (31,818) | (791) | (32,609) | ||||||||
Change in fair value of contingently issuable common stock | (5,718) | — | (5,718) | ||||||||
Change in fair value of public warrant liability | (3,152) | — | (3,152) | ||||||||
Changes in operating assets and liabilities | |||||||||||
Accounts receivable | (5,866) | — | (5,866) | ||||||||
Inventory | (10,836) | 10,100 | (736) | ||||||||
Commission assets | (1,102) | — | (1,102) | ||||||||
Contract assets | (2,582) | (895) | (3,477) | ||||||||
Other assets | — | 23 | 23 | ||||||||
Prepaid expenses and other current assets | (12,772) | 1,237 | (11,535) | ||||||||
Accounts payable | 2,264 | (2,024) | 240 | ||||||||
Deferred revenue | 2,459 | (107) | 2,352 | ||||||||
Deferred rent | 397 | — | 397 | ||||||||
Warranty reserve | (42) | — | (42) | ||||||||
Accrued expenses and other current liabilities | 2,183 | 651 | 2,834 | ||||||||
Net cash used in operating activities | (50,477) | 7,912 | (42,565) | ||||||||
Cash flows from investing activities: | |||||||||||
Purchases of property and equipment | (3,082) | (7,912) | (10,994) | ||||||||
Net cash used in investing activities | (3,082) | (7,912) | (10,994) | ||||||||
Cash flows from financing activities: | |||||||||||
Proceeds from exercise of stock options | 777 | — | 777 | ||||||||
Proceeds from issuance of common stock from the PIPE Investment | 300,000 | — | 300,000 | ||||||||
Proceeds from the closing of the Merger | 84,945 | — | 84,945 | ||||||||
Payment of offering costs from the closing of the Merger and PIPE Investment | (33,968) | — | (33,968) | ||||||||
Repayment of financing obligations | (359) | — | (359) | ||||||||
Proceeds from long-term debt, net of issuance costs | 31,882 | — | 31,882 | ||||||||
Net cash provided by financing activities | 383,277 | — | 383,277 | ||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 329,718 | — | 329,718 | ||||||||
Cash, cash equivalents and restricted cash | |||||||||||
Cash, cash equivalents and restricted cash at beginning of period | 4,704 | — | 4,704 | ||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 334,422 | $ | — | $ | 334,422 | |||||
Supplemental disclosure of non-cash activities | |||||||||||
Transfer of inventory to property and equipment | $ | 9,648 | $ | (9,648) | $ | — | |||||
Capital expenditures incurred but not yet paid | — | 3,123 | 3,123 | ||||||||
Deferred offering costs included in accounts payable | 1,760 | 10 | 1,770 | ||||||||
Conversion of convertible preferred stock to common stock | 75,877 | — | 75,877 | ||||||||
Initial fair value of contingent earn-out liability recognized in connection with the closing of the Merger | 66,845 | 176 | 67,021 |
Initial fair value of contingently issuable common stock liability recognized in connection with the closing of the Merger | 11,670 | — | 11,670 | ||||||||
Conversion of common stock warrants to common stock in connection with the closing of the Merger | 880 | — | 880 | ||||||||
Initial fair value of public warrants in connection with the closing of the Merger | 23,636 | — | 23,636 | ||||||||
Six Months Ended June 30, 2021 | |||||||||||
As Previously Reported | Adjustment | As Revised | |||||||||
Cash flows from operating activities: | |||||||||||
Net loss | $ | (36,126) | $ | (357) | $ | (36,483) | |||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
Depreciation and amortization | 1,102 | — | 1,102 | ||||||||
Stock-based compensation | 1,617 | (241) | 1,376 | ||||||||
Noncash interest expense | 5,455 | — | 5,455 | ||||||||
Provision recorded for allowance for doubtful accounts | (63) | — | (63) | ||||||||
Loss on extinguishment of debt | 11,820 | — | 11,820 | ||||||||
Change in fair value of derivative liability | 2,220 | — | 2,220 | ||||||||
Change in fair value of common stock warrant liability | 921 | — | 921 | ||||||||
Changes in operating assets and liabilities | |||||||||||
Accounts receivable | (1,335) | — | (1,335) | ||||||||
Inventory | (1,173) | 720 | (453) | ||||||||
Commission assets | (742) | — | (742) | ||||||||
Contract assets | (239) | — | (239) | ||||||||
Other assets | — | 13 | 13 | ||||||||
Prepaid expenses and other current assets | (7,495) | 208 | (7,287) | ||||||||
Accounts payable | 5,361 | (1,862) | 3,499 | ||||||||
Deferred revenue | 253 | (100) | 153 | ||||||||
Deferred rent | 152 | — | 152 | ||||||||
Warranty reserve | (42) | — | (42) | ||||||||
Accrued expenses and other current liabilities | 1,360 | 281 | 1,641 | ||||||||
Net cash used in operating activities | (16,954) | (1,338) | (18,292) | ||||||||
Cash flows from investing activities: | |||||||||||
Purchases of property and equipment | (9,292) | 1,338 | (7,954) | ||||||||
Net cash used in investing activities | (9,292) | 1,338 | (7,954) | ||||||||
Cash flows from financing activities: | |||||||||||
Proceeds from exercise of stock options | 657 | — | 657 | ||||||||
Repayment of financing obligations | (359) | — | (359) | ||||||||
Proceeds from long-term debt, net of issuance costs | 31,882 | — | 31,882 | ||||||||
Net cash provided by financing activities | 32,180 | — | 32,180 | ||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 5,934 | — | 5,934 | ||||||||
Cash, cash equivalents and restricted cash | |||||||||||
Cash, cash equivalents and restricted cash at beginning of period | 4,704 | — | 4,704 | ||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 10,638 | $ | — | $ | 10,638 | |||||
Supplemental disclosure of non-cash activities | |||||||||||
Transfer of inventory to property and equipment | $ | 46 | $ | — | $ | 46 | |||||
Capital expenditures incurred but not yet paid | — | 2,962 | 2,962 | ||||||||
Capitalization of stock compensation | — | 27 | 27 | ||||||||
Three Months Ended March 31, 2021 | |||||||||||
As Previously Reported | Adjustment | As Revised | |||||||||
Cash flows from operating activities: | |||||||||||
Net loss | $ | (13,755) | $ | 249 | $ | (13,506) | |||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
Depreciation and amortization | 452 | — | 452 | ||||||||
Stock-based compensation | 1,082 | (773) | 309 | ||||||||
Noncash interest expense | 2,344 | — | 2,344 | ||||||||
Provision recorded for allowance for doubtful accounts | (63) | — | (63) | ||||||||
Change in fair value of derivative liability | 1,425 | — | 1,425 | ||||||||
Change in fair value of common stock warrant liability | 736 | — | 736 | ||||||||
Changes in operating assets and liabilities | |||||||||||
Accounts receivable | (874) | — | (874) | ||||||||
Inventory | (433) | (47) | (480) | ||||||||
Commission assets | (391) | — | (391) | ||||||||
Contract assets | (119) | — | (119) | ||||||||
Other assets | — | 7 | 7 | ||||||||
Prepaid expenses and other current assets | (4,104) | 377 | (3,727) | ||||||||
Accounts payable | 1,194 | (235) | 959 | ||||||||
Deferred revenue | (621) | (185) | (806) | ||||||||
Deferred rent | (11) | — | (11) | ||||||||
Accrued expenses and other current liabilities | 1,100 | 206 | 1,306 | ||||||||
Net cash used in operating activities | (12,038) | (401) | (12,439) | ||||||||
Cash flows from investing activities: | |||||||||||
Purchases of property and equipment | (2,522) | 401 | (2,121) | ||||||||
Net cash used in investing activities | (2,522) | 401 | (2,121) | ||||||||
Cash flows from financing activities: | |||||||||||
Proceeds from exercise of stock options | 455 | — | 455 | ||||||||
Repayment of financing obligations | (359) | — | (359) | ||||||||
Proceeds from long-term debt, net of issuance costs | 31,882 | — | 31,882 | ||||||||
Net cash provided by financing activities | 31,978 | — | 31,978 | ||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 17,418 | — | 17,418 | ||||||||
Cash, cash equivalents and restricted cash | |||||||||||
Cash, cash equivalents and restricted cash at beginning of period | 4,704 | — | 4,704 | ||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 22,122 | $ | — | $ | 22,122 | |||||
Supplemental disclosure of non-cash activities | |||||||||||
Capital expenditures incurred but not yet paid | — | 1,335 | 1,335 | ||||||||
Issuance of equity classified warrants | 1 | — | 1 | ||||||||
Year Ended December 31, 2020 | |||||||||||
As Previously Reported | Adjustment | As Revised | |||||||||
Cash flows from operating activities: | |||||||||||
Net loss | $ | (27,392) | $ | (1,035) | $ | (28,427) | |||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
Depreciation and amortization | 1,065 | — | 1,065 | ||||||||
Stock-based compensation | 662 | 917 | 1,579 | ||||||||
Noncash interest expense | 25 | — | 25 | ||||||||
Provision recorded for allowance for doubtful accounts | 47 | — | 47 | ||||||||
Loss on extinguishment of debt | 66 | — | 66 | ||||||||
Changes in operating assets and liabilities | |||||||||||
Accounts receivable | (464) | — | (464) | ||||||||
Inventory | (1,471) | 1,156 | (315) | ||||||||
Commission assets | (1,785) | — | (1,785) | ||||||||
Other assets | — | (173) | (173) | ||||||||
Prepaid expenses and other current assets | (375) | (641) | (1,016) | ||||||||
Accounts payable | 1,915 | (1,100) | 815 | ||||||||
Deferred revenue | 2,341 | 45 | 2,386 | ||||||||
Deferred rent | (34) | — | (34) | ||||||||
Warranty reserve | (14) | — | (14) | ||||||||
Accrued expenses and other current liabilities | 2,160 | 483 | 2,643 | ||||||||
Operating lease liability | — | — | — | ||||||||
Net cash used in operating activities | (23,254) | (348) | (23,602) | ||||||||
Cash flows from investing activities: | |||||||||||
Purchases of property and equipment | (6,609) | 348 | (6,261) | ||||||||
Net cash used in investing activities | (6,609) | 348 | (6,261) | ||||||||
Cash flows from financing activities: | |||||||||||
Proceeds from issuance of Series B-1 convertible preferred stock, net of issuance costs | 2,994 | — | 2,994 | ||||||||
Proceeds from exercise of stock options | 442 | — | 442�� | ||||||||
Repayment of financing obligations | (244) | — | (244) | ||||||||
Proceeds from long-term debt, net of issuance costs | 22,438 | — | 22,438 | ||||||||
Repayment of principal on long-term debt | (8,404) | — | (8,404) | ||||||||
Net cash provided by financing activities | 17,226 | — | 17,226 | ||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | (12,637) | — | (12,637) | ||||||||
Cash, cash equivalents and restricted cash | |||||||||||
Cash, cash equivalents and restricted cash at beginning of period | 17,341 | — | 17,341 | ||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 4,704 | $ | — | $ | 4,704 | |||||
Supplemental disclosure of non-cash activities | |||||||||||
Transfer of inventory to property and equipment | $ | 86 | $ | — | $ | 86 | |||||
Capital expenditures incurred but not yet paid | — | 1,100 | 1,100 | ||||||||
Issuance of equity classified warrants | 112 | — | 112 | ||||||||
Issuance of a nonrecourse promissory note with officer | 350 | — | 350 |
You should read the following discussion and analysis of our financial condition and results of operations together with the consolidated financial statements and related notes that are included elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and related notes for the year ended December 31, 2020 included in the Company’s final prospectus dated and filed with the Securities and Exchange Commission (the “SEC”) on September 3, 2021 (the “Prospectus”). This discussion contains forward-looking statements based upon current plans, expectations, and beliefs that involve 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” under Part II, Item 1A in this Quarterly Report on Form 10-Q and in our Prospectus. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.
The Company is
Touchless security screening represents a paradigm shift for the security screening market which, according to our estimates, is currently a $20 billion market opportunity. Touchless security screening is a radical change from conventional security screening processes that primarily rely on walk-through metal detectors based on core technology that was invented in the nineteenth century. This conventional approach presents numerous operational problems and hidden costs including a high number of nuisance alarms due to the inability to distinguish weapons from harmless items. These frequent nuisance alarms require resolution using manual bag checks and pat downs that are error-prone, labor cost-intensive, and unpleasant for visitors. This creates long wait times, dangerous crowding, and numerous opportunities for weapons to slip through. The result is reduced security, frustrated visitors, and acutely stressful working conditions for employees.
By allowing visitors to walk through at a normal pace with their bags in hand and without emptying their pockets, Evolv products significantly accelerate the security screening process while also reducing the number of nuisance alarms to a level that allows guards to focus their attention on real threats. We believe there is significant demand for touchless
1
security screening in venues and facilities that currently use slower, more invasive conventional metal detector screening. We also believe there is additional opportunity in venues and facilities that have not previously adopted weapon screening because of the limitations of conventional screening. Our technology is designed to allow these venues and facilities to successfully deploy security screening for the first time.
Our potential to develop this significant opportunity is rooted in our deep domain experience and commitment to research and development. Our engineering efforts are led by a team of seasoned experts in physics, electronics, and software development. Since our founding in July 2013, we have invested significant resources in developing an extensive portfolio of proprietary and differentiated technologies, with a focus on making security screening more precise, much faster, and far less labor intensive. Our products, which incorporate these technologies, offer several key advantages over conventional alternatives.
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 $8.4$9.1 million and $1.5$4.7 million for the three months ended September
Recent Developments
2
Upon the closing of the Merger, each share of NHIC Class B common stock issued and outstanding immediately prior to the effective time of the Merger, which totaled 10,391,513 shares held by the NHIC Initial Shareholders (“Initial Shareholders”), was automatically converted into one validly-issued share of our Class A common stock.
In addition, pursuant to
Upon the closing of the Merger:
On the closing date of the Merger, each share of Legacy Evolv common stock then issued and outstanding was cancelled and the holders thereof in exchange received 94,276,850 shares of the Company’s Class A common stock, which is equal to 0.378 newly-issued shares of the Company’s Class A common stock for each share of Legacy Evolv common stock (the “Exchange Ratio”).
All outstanding warrants exercisable for common stock in Legacy Evolv (other than warrants that expired, were exercised or were deemed automatically net exercised immediately prior to the Merger) were exchanged for warrants exercisableour condensed consolidated financial statements for the Company’s Class A common stock with the same termsthree and conditions except adjusted by the Exchange Ratio.
All outstanding stock options of Legacy Evolv common stock, totaling 58,828,853 stock options, were cancelled and the holders thereof in exchange received options to receive 0.378 newly issued stock options of the Company’s Class A common stock for a total of 22,227,710 shares. The modification of the stock options to reflect the Exchange Ratio did not result in a material incremental compensation expense upon closing of the Merger.
The gross proceeds received from the Merger were $84.9 million and gross proceeds received from the PIPE investment were $300.0 million. Based on the number of shares of common stock outstanding on July 16, 2021 (in each case, not giving effect to any shares issuable upon exercise of warrants, options, or earn-out shares), Legacy Evolv shareholders owned approximately 92.7% of the common stock of the Company and NHIC shareholders owned approximately 7.3%.
The transaction was accounted for as a “reverse recapitalization” and NHIC was treated as the “acquired” company for accounting purposes. Accordingly, for accounting purposes, the Merger was treated as the equivalent of Legacy Evolv issuing shares for the net assets of NHIC, accompanied by a recapitalization. The net assets of NHIC were recorded at historical costs, with no goodwill or other intangible assets recorded. Reported amounts from operations included herein prior to the Merger are those of Legacy Evolv.
Evolv had previously indicated that it would list units (consisting of one share of common stock and one-half of one warrant) on Nasdaq under the ticker symbol EVLVU, in continuation of the listing of the units NHIC sold in its initial public offering on August 4, 2020 under the ticker symbol NHICU. In September 2021, the Company was informed that its transfer agent separated the units into the component shares and warrants at the closing of the Merger, and as a result the Evolv units were not made eligible to settle through the facilities of The Depositary Trust Company. Accordingly, all
3
trades in the units from July 19, 2021 (the first trading day after the completion of the Merger) until August 24, 2021 were settled between brokers in the shares and warrants underlying the units. Trading in ticker symbol EVLVU was halted on August 24, 2021, and no trades in the units were permitted or occurred since that date. The units were delisted from Nasdaq effective September 10, 2021.
COVID-19
In March 2020, the World Health Organization declared the outbreak of COVID-19 pandemic. It is not possible to accurately predict the full impact of the ongoing COVID-19 pandemic on our business, financial condition and results of operations due to the evolving nature of the COVID-19 pandemic, including variants, and the extent of its impact across industries and geographies and numerous other uncertainties. For example, we face uncertainties about the duration and spread of the outbreak, related governmental advisories and restrictions, the progression and effectiveness of vaccination roll-outs, vaccine hesitancy, and the impact the foregoing may have on the ability of us, our customers, our suppliers, our manufacturers and our other business partners to conduct business. Governments in affected regions have implemented, and may continue to implement, safety precautions which include quarantines, travel restrictions, business closures, cancellations of public gatherings and other measures as they deem necessary. Many organizations and individuals, including our company and employees, are taking additional steps to avoid or reduce infections, including limiting travel and staying home from work. These measures are disrupting normal business operations and have had significant negative impacts on businesses and financial markets worldwide. We continue to monitor our operations and government recommendations and have made modifications to our normal operations because of the COVID-19 pandemic, including requiring most non-engineering or operations-related team members to work remotely, utilizing heightened cleaning and sanitization procedures, implementing new health and safety protocols and reducing non-essential travel.
The COVID-19 pandemic initially caused us to experience several adverse impacts, including extended sales cycles to close new orders for our products because many of our customers were required to completely or partially shut down facilities, delays in shipping and installing orders due to closed facilities and travel limitations and delays in collecting accounts receivable.
As the pandemic shutdown orders began to be relaxed and some segments of our prospective customer set began to formulate and execute their reopening plans, we began to see increased demand for touchless security screening processes of the kind enabled by our products. We also experienced new demand for rapid body temperature screening as part of the pandemic security screening process. In response to customer requests, we brought to market the Evolv Thermal Imaging Package™ for Evolv Express®™, a new add-on product developed in approximately 90 days during the pandemic lockdown. While ongoing demand for this product is uncertain, we believe our ability to integrate thermal screening into our product in a compressed time frame is an indicator of our innovation capabilities and of the potential for new future add-on products based on additional sensors and data types.
The rapid development and uncertainty of the impacts of the COVID-19 pandemic precludes any prediction as to the ultimate impact of the COVID-19 pandemic on our business. However, the COVID-19 pandemic, and the measures taken to contain it, continue to present material uncertainty and risk with respect to our performance and financial results. In particular, venues and facilities across an array of vertical markets are temporarily reducing capital expenditure budgets globally as they seek to preserve liquidity to ensure the longevity of their own operations, which in turn may lead to reductions in purchases of our security screening products. Further, office closures may prevent organizations from reaching typical utilizations of our security screening products, resulting in reductions in purchases of add-on products and expansion units. Additionally, the COVID-19 pandemic may contribute to facility closures at our third-party contract manufacturer and key suppliers, causing delays and disruptions in product manufacturing, which could affect our ability to ship products purchased by our customers in a timely manner. Disruptions in the capital markets as a result of the COVID-19 pandemic may also adversely affect our business if these impacts continue for a prolonged period and we need additional liquidity.
In the short-term, we have taken, and will continue to take, actions to mitigate the impact of the COVID-19 pandemic on our cash flow and results of operations and financial condition. While we are experiencinghave experienced supply chain challenges during the three and six months ended June 30, 2022, we do see this being overcome in the near future. In the long-term, we believe that the COVID-19 pandemic
4
will may encourage organizations to continue to reassess their security screening processes and may continue to accelerate their adoption of solutions such as touchless security screening, which could create additional demand for our products.
Annual Report on Form 10-K for the year ended December 31, 2021.
Contingent Earn-out Shares
In connection with the Merger and pursuant to the Merger Agreement, certain of the Legacy Evolv’s shareholders and Legacy Evolv service providers are entitled to receive additional shares of the Company’s Class A common stock (the “Earn-Out Shares”) upon the Company achieving certain milestones:
The Earn-Out Shares issued to Legacy Evolv (“Contingent Earn-out”) shareholders have been classified as liabilities in the consolidated balance sheets as of September 30, 2021 and will be initially measured at fair value and remeasured subsequently in each reporting period. The change in fair value of the contingent earn-out will be recorded in other income (expense), net in the consolidated statements of operations and comprehensive income (loss). When the Triggering Events have been achieved and the Earn-Out Shares are issued, the Company will reclassify the corresponding amount from a liability to additional paid-in-capital and common stock at par value of $0.0001 per share.
The Earn-Out Shares issued to employees, officers, directors, and non-employees subject to continued employment and achievement of certain target share price contingencies (the “Earn-Out Service Providers”) represents share-based compensation and is classified as equity on the Company’s balance sheet. Corresponding stock-based compensation expense is recorded in the consolidated statements of operations and comprehensive income (loss) in the same manner in which the award recipient’s payroll costs are classified or by the nature of the services provided by consultants are classified.
The estimated fair value of the contingent earn-out shares was determined using a Monte Carlo simulation that simulated the future path of the Company’s stock price over the earn-out period. The significant assumptions utilized in the calculation are based on the achievement of certain stock price milestones including projected stock price, volatility, drift rate, percentage of change in control and expected term.
Contingent earn-out payments involve certain assumptions requiring significant judgment and actual results may differ from assumed and estimated amounts.
5
Contingently Issuable Common Stock
Prior to the Merger, NewHold Industrial Technology Holdings, LLC, the sponsor of the NHIC special purpose acquisition company owned 4,312,500 shares of NHIC Class B common stock (the “Founder Shares”). Upon the closing of the Merger, NHIC Class A and Class B common stock became the company’s common stock. The Founder Shares outstanding were subject to certain share-performance-based vesting provisions as follows:
If Vesting Provision II and/or Vesting Provision III are not satisfied, the corresponding number of shares specified shall be forfeited and no longer issued and outstanding. If there is a Change of Control event prior to Vesting Provision II and/or Vesting Provision III are satisfied, the Founder shares are no longer subject to forfeiture and shall vest immediately upon the occurrence of a Change of Control event.
The contingently issuable common shares with the NHIC shareholders have been classified as liabilities in the consolidated balance sheets as of September 30, 2021 and will be initially measured at fair value and remeasured subsequently in each reporting period. The change in fair value of the contingently issuable common shares will be recorded in other income (expense), net in the consolidated statements of operations and comprehensive income (loss).
The estimated fair value of the contingently issuable common shares was determined using a Monte Carlo simulation that simulated the future path of the Company’s stock price over the earn-out period. The assumptions utilized in the calculation are based on the achievement of certain stock price milestones including projected stock price, volatility, and risk-free rate.
Contingently issuable common shares involve certain assumptions requiring significant judgment and actual results may differ from assumed and estimated amounts.
Adoption of our Security Screening Products
To date, most
6
our products. Going forward, we expect to sell our products to be adopted in a variety of vertical industry markets and geographic regions. We alsoSubscription revenue was $4.0 million and $1.5 million for the three months ended June 30, 2022 and 2021, respectively. With the further recent development, enhancement, and maintenance of Evolv Insights and its analytical platform, as well as our plan to lead increasingly with our subscription offering, we expect salessubscription revenue as a percentage of subscriptionstotal revenue to become a greater portion of our revenue. increase in future periods.
subscription becomes more valuable to our business.
842 and recognized ratably over the duration of the lease. There are no contingent lease payments as a part of these arrangements.
As our leases with customers are classified as operating leases, lease revenue is recognized ratably over the duration of the lease. There are no contingent lease payments as a part of these arrangements.
7
Services Revenue
Cost of Services Revenue
Cost of services revenue consists Maintenance costs consist primarily of labor spare parts, shipping costs, and field service repair costs. Cost of services revenue related to maintenance consists primarily of labor,(including stock-based compensation), spare parts, shipping costs, field service repair costs, equipment, and supplies.
8
Research and Development
such assets.
Other expense includes loss
Loss on Extinguishment of Debt
There was a modification of the 2021 Convertible Notes due to an agreement with noteholders to receive an additional 1,000,000 shares of NHIC common stock as further consideration for the conversion of such notes consistent with the terms thereof,money market funds and interest due to each investor would automatically convert into shares of the same class and series of capital stock of the Company issued to other investors in the financing at a conversion price equal to 80% of the price per share paid by the other investors. This modification of the 2021 Convertible Notes was accountedearned on our lease receivables for as an extinguishment.
Upon the closing of the Merger, the Convertible Notes automatically converted into 4,408,672 shares of the Company’s common stock and the holders of the Convertible Notes also received the right to receive 1,000,000 shares of
9
NHIC common stock. Upon the conversion of the Convertible Notes, the carrying value of the debt, including unamortized debt discount, and the related derivative liability and accrued interest were derecognized. The shares of common stock issued upon conversion of Convertible Notes were recorded at implied fair value of the Company’s common stock with the resulting difference being accounted for as a loss on extinguishment.
Change in Fair Value of Derivative Liability
Between
On
loss.
10
Change in Fair Value of Contingently Issuable Common Stock Liability
loss.
The Company classifies
In connection with the closing of the Merger, all common stock warrants that were issued prior to the closing of the Merger were converted into shares of the Company’s common stock.
11
Results of Operations
2021
| | | | | | | | | |
| | Three Months Ended September 30, | | | | ||||
| | 2021 |
| 2020 | | Change | |||
Revenue: | | | | | | | | |
|
Product revenue | | $ | 5,345 | | $ | 349 | | $ | 4,996 |
Subscription revenue | |
| 2,305 | |
| 794 | |
| 1,511 |
Service revenue | |
| 717 | |
| 318 | |
| 399 |
Total revenue | |
| 8,367 | |
| 1,461 | |
| 6,906 |
Cost of revenues: | |
|
| |
|
| |
| |
Cost of product revenue | |
| 2,933 | |
| 163 | |
| 2,770 |
Cost of subscription revenue | |
| 1,086 | |
| 490 | |
| 596 |
Cost of service revenue | |
| 192 | |
| 169 | |
| 23 |
Total cost of revenue | |
| 4,211 | |
| 822 | |
| 3,389 |
Gross profit | |
| 4,156 | |
| 639 | |
| 3,517 |
Operating expenses: | |
|
| |
|
| |
| |
Research and development | |
| 3,641 | |
| 4,088 | |
| (447) |
Sales and marketing | |
| 8,510 | |
| 1,552 | |
| 6,958 |
General and administrative | |
| 6,983 | |
| 1,177 | |
| 5,806 |
Loss from impairment of property and equipment | | | 1,656 | | | — | | | 1,656 |
Total operating expenses | |
| 20,790 | |
| 6,817 | |
| 13,973 |
Loss from operations | |
| (16,634) | |
| (6,178) | |
| (10,456) |
Other income (expense), net: | |
|
| |
|
| |
| |
Interest expense | |
| (286) | |
| (84) | |
| (202) |
Other expense, net | |
| (669) | |
| — | |
| (669) |
Loss on extinguishment of debt | |
| (865) | |
| — | |
| (865) |
Change in fair value of derivative liability | | | 475 | | | — | | | 475 |
Change in fair value of contingent earn-out liability | |
| 31,818 | |
| — | |
| 31,818 |
Change in fair value of contingently issuable common stock liability | |
| 5,718 | |
| — | |
| 5,718 |
Change in fair value of public warrant liability | | | 3,152 | | | — | | | 3,152 |
Change in fair value of common stock warrant liability | | | 42 | | | — | | | 42 |
Total other income (expense), net | |
| 39,385 | |
| (84) | |
| 39,469 |
Net income (loss) | | $ | 22,751 | | $ | (6,262) | | $ | 29,013 |
Three Months Ended June 30, | |||||||||||||||||||||||
2022 | 2021 | $ Change | % Change | ||||||||||||||||||||
Revenue: | |||||||||||||||||||||||
Product revenue | $ | 4,146 | $ | 2,617 | $ | 1,529 | 58 | % | |||||||||||||||
Subscription revenue | 4,006 | 1,521 | 2,485 | 163 | |||||||||||||||||||
Service revenue | 918 | 540 | 378 | 70 | |||||||||||||||||||
Total revenue | 9,070 | 4,678 | 4,392 | 94 | |||||||||||||||||||
Cost of revenue: | |||||||||||||||||||||||
Cost of product revenue | 5,347 | 2,203 | 3,144 | 143 | |||||||||||||||||||
Cost of subscription revenue | 1,981 | 1,060 | 921 | 87 | |||||||||||||||||||
Cost of service revenue | 1,189 | 687 | 502 | 73 | |||||||||||||||||||
Total cost of revenue | 8,517 | 3,950 | 4,567 | 116 | |||||||||||||||||||
Gross profit | 553 | 728 | (175) | (24) | |||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Research and development | 4,156 | 1,047 | 3,109 | 297 | |||||||||||||||||||
Sales and marketing | 11,751 | 5,124 | 6,627 | 129 | |||||||||||||||||||
General and administrative | 9,612 | 1,471 | 8,141 | 553 | |||||||||||||||||||
Loss from impairment of property and equipment | 316 | — | 316 | * | |||||||||||||||||||
Total operating expenses | 25,835 | 7,642 | 18,193 | 238 | |||||||||||||||||||
Loss from operations | (25,282) | (6,914) | (18,368) | 266 | |||||||||||||||||||
Other income (expense), net: | |||||||||||||||||||||||
Interest expense | (159) | (3,263) | 3,104 | (95) | |||||||||||||||||||
Interest income | 491 | — | 491 | * | |||||||||||||||||||
Loss on extinguishment of debt | — | (11,820) | 11,820 | * | |||||||||||||||||||
Change in fair value of derivative liability | — | (795) | 795 | * | |||||||||||||||||||
Change in fair value of contingent earn-out liability | (569) | — | (569) | * | |||||||||||||||||||
Change in fair value of contingently issuable common stock liability | (24) | — | (24) | * | |||||||||||||||||||
Change in fair value of public warrant liability | (143) | — | (143) | * | |||||||||||||||||||
Change in fair value of common stock warrant liability | — | (185) | 185 | * | |||||||||||||||||||
Total other income (expense), net | (404) | (16,063) | 15,659 | (97) | |||||||||||||||||||
Net loss | $ | (25,686) | $ | (22,977) | $ | (2,709) | 12 | % |
Product
Three Months Ended June 30, | |||||||||||||||||||||||
2022 | 2021 | $ Change | % Change | ||||||||||||||||||||
Product revenue | $ | 4,146 | $ | 2,617 | $ | 1,529 | 58 | % | |||||||||||||||
Cost of product revenue | $ | 5,347 | $ | 2,203 | $ | 3,144 | 143 | % | |||||||||||||||
Gross profit - Product revenue | $ | (1,201) | $ | 414 | $ | (1,615) | (390) | % | |||||||||||||||
Gross profit margin - Product revenue | (29) | % | 16 | % | N/A | (45) | % |
The increase in gross profit is primarily driven by our increased product revenue. The decrease in gross profit margin is primarily driven by an increase of $0.4 million of shippingpurchase price variances recorded on raw materials and the costs as well as aassociated with the write-off of unused Edge materials
12
of $0.4 million.scrap inventory incurred without corresponding revenue. We willexpect to see improvement in our gross margins as we continue to engineer our product with lower cost componentscomponents. We also expect to see improvements in gross margin to the extent shipping costs and as we continue to gain leveragehigh demand materials costs decline when global supply chain disruptions ease.
Three Months Ended June 30, | |||||||||||||||||||||||
2022 | 2021 | $ Change | % Change | ||||||||||||||||||||
Subscription revenue | $ | 4,006 | $ | 1,521 | $ | 2,485 | 163 | % | |||||||||||||||
Cost of subscription revenue | $ | 1,981 | $ | 1,060 | $ | 921 | 87 | % | |||||||||||||||
Gross profit - Subscription revenue | $ | 2,025 | $ | 461 | $ | 1,564 | 339 | % | |||||||||||||||
Gross profit margin - Subscription revenue | 51 | % | 30 | % | N/A | 20 | % |
Subscription
Subscriptionsubscription revenue was $2.3 million for the three months ended September 30, 2021, compared to $0.8 million for the three months ended September 30, 2020. Costand cost of subscription revenue was $1.1 million for the three months ended September 30, 2021, compared to $0.5 million for the three months ended September 30, 2020. The increase of $1.5 million in revenue and increase of $0.6 million in cost of revenue for the three months ended September 30, 2021 compared to 2020 wasare primarily due to growth in our customer base and a larger install basehigher number of active Evolv Express units duringdeployed in the period. Gross profit increased by $0.9 million, or 301%, and gross profit margin increased by 15%.
preceding twelve months. The increase in gross profit is primarily driven by our increased subscription revenue. The increase in gross profit margin was primarily driven by our continued effortsincreased recurring revenue from increased active subscriptions and customer growth, which we expect to streamline the manufacturing process and reduce costs by introducing standardized parts into our units.
Services
continue.
Three Months Ended June 30, | |||||||||||||||||||||||
2022 | 2021 | $ Change | % Change | ||||||||||||||||||||
Service revenue | $ | 918 | $ | 540 | $ | 378 | 70 | % | |||||||||||||||
Cost of service revenue | $ | 1,189 | $ | 687 | $ | 502 | 73 | % | |||||||||||||||
Gross profit - Service revenue | $ | (271) | $ | (147) | $ | (124) | 84 | % | |||||||||||||||
Gross profit margin - Service revenue | (30) | % | (27) | % | N/A | (2) | % |
Three Months Ended June 30, | |||||||||||||||||||||||
2022 | 2021 | $ Change | % Change | ||||||||||||||||||||
Personnel related (including stock-based compensation) | $ | 3,596 | $ | 1,457 | $ | 2,139 | 147 | % | |||||||||||||||
Materials and prototypes | (109) | (832) | 723 | (87) | % | ||||||||||||||||||
Professional fees | 423 | 321 | 102 | 32 | % | ||||||||||||||||||
Facilities related and other | 246 | 101 | 145 | 144 | % | ||||||||||||||||||
$ | 4,156 | $ | 1,047 | $ | 3,109 | 297 | % |
Three Months Ended June 30, | |||||||||||||||||||||||
2022 | 2021 | $ Change | % Change | ||||||||||||||||||||
Personnel related (including stock-based compensation) | $ | 7,583 | $ | 3,512 | $ | 4,071 | 116 | % | |||||||||||||||
Direct marketing | 1,045 | 671 | 374 | 56 | % | ||||||||||||||||||
Travel and entertainment | 852 | 341 | 511 | 150 | % | ||||||||||||||||||
Professional fees | 280 | 187 | 93 | 50 | % | ||||||||||||||||||
Facilities related and other | 1,991 | 413 | 1,578 | 382 | % | ||||||||||||||||||
$ | 11,751 | $ | 5,124 | $ | 6,627 | 129 | % |
Three Months Ended June 30, | |||||||||||||||||||||||
2022 | 2021 | $ Change | % Change | ||||||||||||||||||||
Personnel related (including stock-based compensation) | $ | 4,019 | $ | 805 | $ | 3,214 | 399 | % | |||||||||||||||
Professional fees | 2,042 | (294) | 2,336 | (795) | % | ||||||||||||||||||
Director and officer insurance | 1,380 | 96 | 1,284 | 1338 | % | ||||||||||||||||||
Non-income taxes | 13 | 30 | (17) | (57) | % | ||||||||||||||||||
Facilities related and other | 2,158 | 834 | 1,324 | 159 | % | ||||||||||||||||||
$ | 9,612 | $ | 1,471 | $ | 8,141 | 553 | % |
Six Months Ended June 30, | |||||||||||||||||||||||
2022 | 2021 | $ Change | % Change | ||||||||||||||||||||
Revenue: | |||||||||||||||||||||||
Product revenue | $ | 9,340 | $ | 4,884 | $ | 4,456 | 91 | % | |||||||||||||||
Subscription revenue | 7,010 | 2,748 | 4,262 | 155 | |||||||||||||||||||
Service revenue | 1,430 | 739 | 691 | 94 | |||||||||||||||||||
Total revenue | 17,780 | 8,371 | 9,409 | 112 | |||||||||||||||||||
Cost of revenue: | |||||||||||||||||||||||
Cost of product revenue | 10,553 | 4,419 | 6,134 | 139 | |||||||||||||||||||
Cost of subscription revenue | 3,523 | 1,803 | 1,720 | 95 | |||||||||||||||||||
Cost of service revenue | 2,254 | 972 | 1,282 | 132 | |||||||||||||||||||
Total cost of revenue | 16,330 | 7,194 | 9,136 | 127 | |||||||||||||||||||
Gross profit | 1,450 | 1,177 | 273 | 23 | |||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Research and development | 8,331 | 4,787 | 3,544 | 74 | |||||||||||||||||||
Sales and marketing | 21,423 | 7,732 | 13,691 | 177 | |||||||||||||||||||
General and administrative | 20,429 | 4,523 | 15,906 | 352 | |||||||||||||||||||
Loss from impairment of property and equipment | 412 | — | 412 | * | |||||||||||||||||||
Total operating expenses | 50,595 | 17,042 | 33,553 | 197 | |||||||||||||||||||
Loss from operations | (49,145) | (15,865) | (33,280) | 210 | |||||||||||||||||||
Other income (expense), net: | |||||||||||||||||||||||
Interest expense | (301) | (5,657) | 5,356 | (95) | |||||||||||||||||||
Interest income | 559 | — | 559 | * | |||||||||||||||||||
Loss on extinguishment of debt | — | (11,820) | 11,820 | * | |||||||||||||||||||
Change in fair value of derivative liability | — | (2,220) | 2,220 | * | |||||||||||||||||||
Change in fair value of contingent earn-out liability | 2,509 | — | 2,509 | * | |||||||||||||||||||
Change in fair value of contingently issuable common stock liability | 1,448 | — | 1,448 | * | |||||||||||||||||||
Change in fair value of public warrant liability | 5,443 | — | 5,443 | * | |||||||||||||||||||
Change in fair value of common stock warrant liability | — | (921) | 921 | * | |||||||||||||||||||
Total other income (expense), net | 9,658 | (20,618) | 30,276 | (147) | |||||||||||||||||||
Net loss | $ | (39,487) | $ | (36,483) | $ | (3,004) | 8 | % |
Six Months Ended June 30, | |||||||||||||||||||||||
2022 | 2021 | $ Change | % Change | ||||||||||||||||||||
Product revenue | $ | 9,340 | $ | 4,884 | $ | 4,456 | 91 | % | |||||||||||||||
Cost of product revenue | $ | 10,553 | $ | 4,419 | $ | 6,134 | 139 | % | |||||||||||||||
Gross profit - Product revenue | $ | (1,213) | $ | 465 | $ | (1,678) | (361) | % | |||||||||||||||
Gross profit margin - Product revenue | (13) | % | 10 | % | N/A | (23) | % |
Six Months Ended June 30, | |||||||||||||||||||||||
2022 | 2021 | $ Change | % Change | ||||||||||||||||||||
Subscription revenue | $ | 7,010 | $ | 2,748 | $ | 4,262 | 155 | % | |||||||||||||||
Cost of subscription revenue | $ | 3,523 | $ | 1,803 | $ | 1,720 | 95 | % | |||||||||||||||
Gross profit - Subscription revenue | $ | 3,487 | $ | 945 | $ | 2,542 | 269 | % | |||||||||||||||
Gross profit margin - Subscription revenue | 50 | % | 34 | % | N/A | 15 | % |
Six Months Ended June 30, | |||||||||||||||||||||||
2022 | 2021 | $ Change | % Change | ||||||||||||||||||||
Service revenue | $ | 1,430 | $ | 739 | $ | 691 | 94 | % | |||||||||||||||
Cost of service revenue | $ | 2,254 | $ | 972 | $ | 1,282 | 132 | % | |||||||||||||||
Gross profit - Service revenue | $ | (824) | $ | (233) | $ | (591) | 254 | % | |||||||||||||||
Gross profit margin - Service revenue | (58) | % | (32) | % | N/A | (26) | % |
each period are due primarily to field services costs associated with the Evolv Express units. We expect we would see leverage in these expense investments as we work to achieve further levels of scale.
Research and development
Six Months Ended June 30, | |||||||||||||||||||||||
2022 | 2021 | $ Change | % Change | ||||||||||||||||||||
Personnel related (including stock-based compensation) | $ | 6,962 | $ | 2,432 | $ | 4,530 | 186 | % | |||||||||||||||
Materials and prototypes | 236 | 1,444 | (1,208) | (84) | % | ||||||||||||||||||
Professional fees | 732 | 580 | 152 | 26 | % | ||||||||||||||||||
Facilities related and other | 401 | 331 | 70 | 21 | % | ||||||||||||||||||
$ | 8,331 | $ | 4,787 | $ | 3,544 | 74 | % |
Sales and marketing expenses were $8.5 million for the three months ended September 30, 2021, compared to $1.6 million for the three months ended September 30, 2020. The increase of $6.9 million was primarily due to an increase of $4.3 million in employee-related expenses, $1.4 million in direct marketing, $0.4 million of travel expenses, $0.2 million in customer field services, and $0.2 million in professional fees.
Six Months Ended June 30, | |||||||||||||||||||||||
2022 | 2021 | $ Change | % Change | ||||||||||||||||||||
Personnel related (including stock-based compensation) | $ | 13,613 | $ | 5,203 | $ | 8,410 | 162 | % | |||||||||||||||
Direct marketing | 2,889 | 1,071 | 1,818 | 170 | % | ||||||||||||||||||
Travel and entertainment | 1,538 | 492 | 1,046 | 213 | % | ||||||||||||||||||
Professional fees | 552 | 372 | 180 | 48 | % | ||||||||||||||||||
Facilities related and other | 2,831 | 594 | 2,237 | 377 | % | ||||||||||||||||||
$ | 21,423 | $ | 7,732 | $ | 13,691 | 177 | % |
13
General and Administrative Expenses
General and administrative expenses were $7.0 million for the three months ended September 30, 2021, compared to $1.2 million for the three months ended September 30, 2020. The increase of $5.8 million was primarily due to an increase in employee-related expenses of $2.7 million, $2.0 million in professional fees, and an increase in miscellaneous expense of $0.9 million. The increase in employee-related expenses is due to an increase in salariespayroll costs, commissions and related costs as a result of expanding our administrative team and stock compensation. The increase in professional fees is primarily due to an increase in audit, tax, and legal services to the Company. The increase in miscellaneous expense is primarily due to an increase in business insurance.
Loss From Impairment of Property and Equipment
Impairment of property and equipment was $1.7 million for the three months ended September 30, 2021. There was no impairment for the three months ended September 30, 2020. This is related to Edge and Express prototype units that were taken out of service and retired. The Company is transitioning domestic customers to Express which decreased the economic value of the Edge assets and resulted in impairment.
Interest Expense
Interest expense was $0.3 million for the three months ended September 30, 2021, compared to $0.1 million for the three months ended September 30, 2020. The increase of $0.2 million was primarily due to the interest on the Convertible Notes during the three months ended September 30, 2021 which did not exist in 2020. The Convertible Notes converted to the Company’s stock upon closing of the Merger.
Other Expense
Other expense was $0.7 million for the three months ended September 30, 2021, compared to $0 for the three months ended September 30, 2020. The increase of $0.7 million was primarily due to the loss on disposal of non-leased assets, primarily related to demo units, during the three months ended September 30, 2021.
Loss on Extinguishment of Debt
Loss on extinguishment of debt was $0.9 million for the three months ended September 30, 2021. This was due to the conversion of the 2021 Convertible Notes into shares of the Company’s stock upon closing of the Merger.
Change in Fair Value of Derivative Liability
Change in the fair value of the derivative liability was $0.5 million for the three months ended September 30, 2021. This was primarily due the settlement of the derivative liability upon the closing of the Merger.
Change in Fair Value of Contingent Earn-out Liability
Change in the fair value of the contingent earn-out liability was $31.8 million for the three months ended September 30, 2021. This was primarily due to the issuance of the contingent earn-out liability upon the closing of the Merger and mark to market fluctuations during the period driven by a decrease in stock price.
Change in Fair Value of Contingently Issuable Common Stock Liability
Change in the fair value of the contingently issuable common stock liability was $5.7 million for the three months ended September 30, 2021. This was primarily due to the issuance of the contingently issuable common stock liability upon the closing of the Merger and mark to market fluctuations during the period driven by a decrease in stock price.
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Change in Fair Value of Public Warrant Liability
Change in the fair value of the public warrant liability was $3.2 million for the three months ended September 30, 2021. This was primarily due to the issuance of the public warrant liability upon the closing of the Merger and mark to market fluctuations during the period driven by a decrease in the publicly traded warrant price.
Change in Fair Value of Common Stock Warrant Liability
Change in the fair value of the common stock warrant liability was less than $0.1 million for the three months ended September 30, 2021. This was primarily due to the conversion of the common stock warrant liability upon the closing of the Merger and mark to market fluctuations prior to the closing of the Merger.
Comparison of the Nine Months Ended September 30, 2021 and 2020
The following table summarizes our results of operations for the nine months ended September 30, 2021 and 2020 (in thousands):
| | | | | | | | | |
| | Nine Months Ended September 30, | | | | ||||
| | 2021 | | 2020 | | Change | |||
Revenue: | | | | | | | | |
|
Product revenue | | $ | 10,299 | | $ | 422 | | $ | 9,877 |
Subscription revenue | |
| 5,118 | |
| 1,743 | |
| 3,375 |
Service revenue | |
| 1,429 | |
| 585 | |
| 844 |
Total revenue | |
| 16,846 | |
| 2,750 | |
| 14,096 |
Cost of revenues: | |
|
| |
|
| |
| |
Cost of product revenue | |
| 7,237 | |
| 361 | |
| 6,876 |
Cost of subscription revenue | |
| 2,542 | |
| 1,192 | |
| 1,350 |
Cost of service revenue | |
| 732 | |
| 376 | |
| 356 |
Total cost of revenue | |
| 10,511 | |
| 1,929 | |
| 8,582 |
Gross profit | |
| 6,335 | |
| 821 | |
| 5,514 |
Operating expenses: | |
|
| |
|
| |
| |
Research and development | |
| 8,330 | |
| 10,629 | |
| (2,299) |
Sales and marketing | |
| 17,284 | |
| 5,105 | |
| 12,179 |
General and administrative | |
| 11,162 | |
| 2,676 | |
| 8,486 |
Loss from impairment of property and equipment | | | 1,656 | | | — | | | 1,656 |
Total operating expenses | |
| 38,432 | |
| 18,410 | |
| 20,022 |
Loss from operations | |
| (32,097) | |
| (17,589) | |
| (14,508) |
Other income (expense), net: | |
|
| |
|
| |
| |
Interest expense | |
| (5,988) | |
| (207) | |
| (5,781) |
Other expense, net | |
| (669) | |
| — | |
| (669) |
Loss on extinguishment of debt | |
| (12,685) | |
| — | |
| (12,685) |
Change in fair value of derivative liability | | | (1,745) | | | — | | | (1,745) |
Change in fair value of contingent earn-out liability | |
| 31,818 | |
| — | |
| 31,818 |
Change in fair value of contingently issuable common stock liability | |
| 5,718 | |
| — | |
| 5,718 |
Change in fair value of public warrant liability | | | 3,152 | | | — | | | 3,152 |
Change in fair value of common stock warrant liability | | | (879) | | | — | | | (879) |
Total other income (expense), net | |
| 18,722 | |
| (207) | |
| 18,929 |
Net loss | | $ | (13,375) | | $ | (17,796) | | $ | 4,421 |
15
Revenue, Cost of Revenue and Gross Profit
Product
Product revenue was $10.3 million for the nine months ended September 30, 2021, compared to $0.4 million for the nine months ended September 30, 2020. Cost of product revenue was $7.2 million for the nine months ended September 30, 2021, compared to $0.4 million for the nine months ended September 30, 2020. The increase of $9.9 million in revenue and increase of $6.8 million in cost of revenue for the nine months ended September 30, 2021 compared to 2020 was primarily due to increases in direct product sales of Evolv Edge and Express Units. Gross profit increased by $3.0 million for the nine months ended September 2021, compared to 2020, or 4,920%, and gross profit margin increased by 15%.
The increase in gross profit is primarily driven by our increased product sales and our continued efforts to streamline the manufacturing process and reduce costs by introducing standardized parts into our product, which was partially offset by an increase of $0.6 million in shipping costs. We expect to continue to see improvement in our gross margins as we continue to engineer our product with lower cost components. As we continue to gain leverage in the marketplace with increased sales, we expect higher discounts from suppliers.
Subscription
Subscription revenue was $5.1 million for the nine months ended September 30, 2021, compared to $1.7 million for the nine months ended September 30, 2020. Cost of subscription revenue was $2.5 million for the nine months ended September 30, 2021, compared to $1.2 million for the nine months ended September 30, 2020. The increase of $3.4 million in revenue and increase of $1.4 million in cost of revenue for the nine months ended September 30, 2021 compared to 2020 was primarily due to a larger install base of Evolv Express units during the period. Gross profit increased by $2.0 million, or 368%, and gross profit margin increased by 19% for the nine months ended September 30, 2021 compared to 2020.
The increase in gross profit is primarily driven by our increased subscription revenue. The increase in gross profit margin was primarily driven by our continued efforts to streamline the manufacturing process and reduce costs by introducing standardized parts into our units.
Service
Service revenue was $1.4 million for the nine months ended September 30, 2021, compared to $0.6 million for the nine months ended September 30, 2020. Cost of service revenue was $0.7 million for the nine months ended September 30, 2021, compared to $0.4 million for the nine months ended September 30, 2020. The increase of $0.8 million in service revenue and increase of $0.4 million in cost of revenue for the nine months ended September 30, 2021 compared to 2020 was primarily due to increased installation and training related to the Evolv Express product. Gross profit increased by $0.5 million, or 233%, and gross profit margin increased by 13% for the nine months ended September 30, 2021 compared to September 30, 2020. The increase in gross profit is primarily driven by standardization of the installation and training process, which results in overall lower costs.
Research and Development Expenses
Research and development expenses were $8.3 million for the nine months ended September 30, 2021, compared to $10.6 million for the nine months ended September 30, 2020. The decrease of $2.3 million was primarily due to a decrease in research and development and prototype cost of $3.8 million and a decrease in professional fees of $1.4 million, partially offset by an increase in employee-related expenses of $2.9 million during nine months ended September 30, 2021 compared to 2020. The decrease in research and development prototype cost is due to Evolv Express units being manufactured by a third-party manufacturer. The decrease in professional fees is due to a decrease in consulting fees related to research and development efforts for prototype units. The increase in employee-related expenses is due to increased wages and benefits expense due to additional headcount and stock compensation.
16
Sales and Marketing Expenses
Sales and marketing expenses were $17.3 million for the nine months ended September 30, 2021, compared to $5.1 million for the nine months ended September 30, 2020. The increase of $12.2 million was primarily due to an increase of $7.9 million in employee-related expenses, an increase of $2.2 million in direct marketing, an increase of $0.6 million of travel and entertainment, an increase of $0.7 million in other expenses, an increase in professional fees of $0.3 million, and an increase of $0.2 million in customer field services. The increase in employee-related expenses is due to additional personnel costsstock-based compensation resulting from new hires in our sales function and stock compensation.marketing functions, which includes functions such as partner development, customer success, and other business development, during the second half of 2021 and the first six months in 2022. The increase in direct marketing is due to an increase in trade shows and events.events, which have begun to return to pre-pandemic levels, and an increase in sales volume. The increase in travel and entertainment expense in 2021 is due to an increase in travel costs for in-person sales personnel meetings and events. The increase in facilities related and other miscellaneous expenses is primarily due to $1.0 million of certain one-time expenses as well as an increase in subscriptions. The increase in professional fees isshipping costs related to increased consulting on ways to maximize sales and business development. The increase in customer field services is due to increased sales volume.
demo units.
General and administrative expenses were $11.2 million for the nine months ended September 30, 2021, compared to $2.7 million for the nine months ended September 30, 2020.
Six Months Ended June 30, | |||||||||||||||||||||||
2022 | 2021 | $ Change | % Change | ||||||||||||||||||||
Personnel related (including stock-based compensation) | $ | 7,965 | $ | 1,381 | $ | 6,584 | 477 | % | |||||||||||||||
Professional fees | 5,339 | 1,674 | 3,665 | 219 | % | ||||||||||||||||||
Insurance costs | 2,630 | 188 | 2,442 | 1299 | % | ||||||||||||||||||
Non-income taxes | 487 | 39 | 448 | 1149 | % | ||||||||||||||||||
Facilities related and other | 4,008 | 1,241 | 2,767 | 223 | % | ||||||||||||||||||
$ | 20,429 | $ | 4,523 | $ | 15,906 | 352 | % |
facility-related costs.
six months ended June 30, 2021.
Other Expense
Other expense was $0.7Merger in July 2021.
17
Change in Fair Value of Derivative Liability
The derivative liability was derecognized in connection with the closing of the Merger.
July 2021.
July 2021.
July 2021.
in July 2021.
18
As of SeptemberJune 30, 2021,2022, we had $334.4$242.7 million in cash and cash equivalents. We incurred net income of $22.8 million and a net loss of $6.3$25.7 million and $23.0 million for the three months ended SeptemberJune 30, 2022 and 2021, respectively, and 2020, respectively. We incurred a net loss of $13.4$39.5 million and $17.8$36.5 million for the ninesix months ended SeptemberJune 30, 20212022 and 2020,2021, respectively. We incurred cash outflows from operating activities of $50.5$52.5 million and $18.4$18.3 million during the ninesix months ended SeptemberJune 30, 2022 and 2021, and 2020, respectively.
19
noncancelable operating lease amount to $2.7. See Note 6 to our condensed consolidated financial statements for the six months ended June 30, 2022.
| | | | | | |
|
| Nine Months Ended | ||||
| | September 30, | ||||
| | 2021 | | 2020 | ||
Net cash used in operating activities | | $ | (50,477) | | $ | (18,397) |
Net cash used in investing activities |
| | (3,082) |
| | (4,304) |
Net cash provided by financing activities |
| | 383,277 |
| | 8,471 |
Net increase (decrease) in cash, cash equivalents and restricted cash | | $ | 329,718 | | $ | (14,230) |
Six Months Ended June 30, | |||||||||||
2022 | 2021 | ||||||||||
Net cash used in operating activities | $ | (52,495) | $ | (18,292) | |||||||
Net cash used in investing activities | (12,680) | (7,954) | |||||||||
Net cash provided by financing activities | 384 | 32,180 | |||||||||
Effect of exchange rate changes on cash and cash equivalents | (10) | — | |||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | $ | (64,801) | $ | 5,934 |
During
Six Months Ended June 30, | |||||||||||
2022 | 2021 | ||||||||||
Net loss | $ | (39,487) | $ | (36,483) | |||||||
Noncash (income) expense | 2,632 | 22,831 | |||||||||
Changes in operating assets and liabilities | (15,640) | (4,640) | |||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | $ | (52,495) | $ | (18,292) |
The changes in commission assets and deferred revenue were primarily due to a shift towards a subscription-based model. The increase in accounts receivable is primarily due to higher sales and the timing of payments from customers. Thebillings to customers;
During the nine months ended September 30, 2020, cash used from operating activities was $18.4 million, primarily resulting from a net loss of $17.8 million and $1.8 million of cash used by changes in operating assets and liabilities, partially offset by non-cash adjustments of $1.2 million. The non-cash adjustments consisted primarily of $0.7 million of depreciation and amortization and $0.5 million in stock-based compensation. The changes in operating assets and liabilities consisted primarily of cash used by an increase of $2.0 million in accounts receivable, an increase of $1.3 million in commission assets, and an increase of $1.1 million in inventory, partially offset by an increase of $1.9 million in deferred revenue, an increase of $1.0 million in accounts payable, and an increase of $0.1 million in accrued expenses and other current liabilities.
The increase in accounts receivable is primarily due to the timing of payments from customers. The increase in accounts payable and accrued expenses is primarily due to increase in research and development and general and administrative expenses due to the growth in our business as well as the timing of vendor invoicing and payments. The increase in inventory is primarily due to lower shipments to customers in the first three quarters of 2020.
20
Investing Activities
equipment and $1.3 million for the development of internal-use software.
During the nine months ended September 30, 2020, cash provided by financing activities was $8.5 million primarily consisting of $3.0 million from the issuance of Series B-1 convertible preferred stock, net of issuance costs, $5.6 million from the issuance of long-term debt, net of issuance costs, and $0.4 million from the exercise of stock options, partially offset by $0.3 million in net cash outflows for the repayment of long-term debt and $0.2 million in net cash outflows for the repayment of financing obligations.
Refer to Note 2
Interest Rate Risk
We have exposure to interest rate risk from our variable rate debt. We do not hedge our exposure to changes in interest rates. At September 30, 2021, we had $15.4 million in variable rate debt outstanding. A hypothetical 10% change in interest rates would have an immaterial impact on annualized interest expense.
Critical Accounting Policies
Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States. The preparation of our consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, costs and expenses, and the disclosure of contingent assets and liabilities in our condensed consolidated financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, theposition, results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptionsoperations or conditions.
While our significant accounting policies are described in more detailcash flows is disclosed in Note 2 to our condensed consolidated financial statements we believe that the followingincluded elsewhere in this Quarterly Report on Form 10-Q.
Revenue Recognition
We recognize revenue in accordance with 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, we apply 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.
21
We derive revenue from (1) subscription arrangements accounted for as operating leases under ASC 840 and (2) from the sale of products, inclusive of maintenance and services. Our arrangements are generally noncancelable and nonrefundable after ownership passes to the customer. Revenue is recognized net of sales tax.
Product Revenue
We derive revenue from the sale of our Express and Edge equipment and related add-on accessories to customers. Revenue is recognized when control of the product has transferred to the customer. Transfer of control occurs when we have transferred title and risk of loss and have a present right to payment for the equipment, which is generally upon delivery as our normal terms of sale are freight on board destination. Products are predominately sold with distinct services, which are described in the services section below.
Subscription Revenue
In addition to selling products directly to customers, we also lease ExpressPart II, Item 7, “Management’s Discussion and Edge equipment. These arrangements convey the right to use the equipment for a periodAnalysis of time in exchange for consideration and therefore are accounted for under ASC 840 due to the scope exception of ASC 606-10-15-2. Lease terms are typically four years and customers pay quarterly or annual fixed paymentsFinancial Condition” for the year ended December 31, 2021 in our Annual Report on Form 10-K. There have been no material changes to our critical accounting policies and estimates during the three months ended June 30, 2022 outside of our critical accounting policies and estimates described below.
Generally, lease arrangements include both lease and non-lease components. The non-lease components relate to (i) distinct services, such as installation, training and maintenance, and (ii) any add-on accessories. Installation and training are included in service revenue as described below, and add-on accessories are included in product revenue as described above. Because the equipment and maintenance components of our arrangement determined to contain a subscription arrangementlease.
As our leasesline with customers are classified as operating leases, lease revenue is recognized ratably over the duration of the lease. Therelease payments.
Services Revenue
new equipment, changing consumer preferences, new technology and mandatory regulations. We provide installation, training,have disciplines related to the management and maintenance services forof our products. Revenue for installation and training are recognized upon transfer of control of these services, which are normally rendered over a short duration. Maintenance consists of technical support, bug fixes, and when-and-if-available threat updates. Maintenance revenue is recognized ratably overleased equipment designed to manage the period ofrisk associated with the arrangement. We sell separately priced extended or nonstandard warranty services and preventative maintenance plans, which are recognized ratably over the associated service period.
Revenue from Distributors
A portionresidual values of our revenue is generated by sales in conjunction with our distributors. When we transact with a distributor, our contractual arrangement is withgenerating equipment. We periodically review and adjust, as appropriate, the distributorestimated residual values and not with the end-use customer. In these transactions, the distributor is considered the customer; we have discretion over the pricing to the distributor and maintain overall controluseful lives of the inventory and sales process to the distributor. Revenue is recognized upon delivery to the distributors. Right of return does not generally exist. Whether we transact with a distributor and receive the order from a distributor or directly from an end-use customer, ourexisting revenue recognition policy and resulting pattern of revenue recognition is the same (upon delivery).
22
Transaction Price
The transaction price is the amount of consideration that we expect to be entitled for providing goods and services under a contract. It includes not only fixed consideration, such as the stated amount in a contract, but also several other types of variable consideration or adjustments (generally discounts or incentives which are included as a part of the standalone selling price (“SSP”) estimation process). We provide discounts to customers which reduces the transaction price. From time-to-time, we may offer customers the option to purchase additional goods and services at a fixed price. In these limited circumstances, we assess whether these offers constitute a material right, and if so, we would account for the material right as a separate performance obligation. Other types of variable consideration are not considered significant. We do not normally provide for rights of returns to customers on product sales and, therefore, does not record a provision for returns.
Performance Obligations
A performance obligation is a promise in a contract to transfer a distinct product or service to a customer that is both capable of being distinct, whereby the customer can benefit from the product or service either on its own or together with other resources that are readily available, and is distinct in the context of the contract, whereby the transfer of the product or service is separately identifiable from other promises in the contract.
For both Edge and Express units, equipment is sold or leased with embedded software which is considered a single performance obligation. Maintenance, which includes future updates, security threat updates, and minor bug fixes on a when-and-if available basis, is considered a single performance obligation. As a part of reported subscription sales, certain non-lease components, such as maintenance, are included within the subscription revenue amount. We sell separately priced extended or nonstandard warranty services and preventative maintenance plans, which are accounted for as separate performance obligations. Installation and training are considered separate performance obligations and are included within services revenue. Any add-on accessories are also considered separate performance obligations.
Multiple Performance Obligations within an Arrangement
Our contracts may include multiple performance obligations when customers purchase a combination of products and services. When our customer arrangements have multiple performance obligations that contain a lease for Express or Edgegenerating equipment for the customer’s use at its site as well as distinct services that are delivered simultaneously, we allocate the arrangement consideration between the lease deliverables and non-lease deliverables based on the relative estimated SSPpurposes of each distinct performance obligation. For multiple performance obligation arrangements that do not contain a lease, we allocate the contract’s transaction price to each performance obligation on a relative SSP basis. We determine SSP based on the price at which the performance obligation is sold separately. If the SSP is not observable through past transactions, we estimate the SSP taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligation.
Stock-Based Compensation
We measure stock-based option awards granted to employees, consultants and directors based on their fair value on the date of grant using the Black-Scholes option-pricing model. Compensation expense for those awards is recognized, net of estimated forfeitures, over the requisite service period, which is generally the vesting period of the respective award.
Prior to the closing of the Merger. the fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model, which uses the following inputs: (i) the fair value per share of the common stock issuable upon exercise of the option, (ii) the expected term of the option, (iii) expected volatility of the price of the common stock, (iv) the risk-free interest rate, and (v) the expected dividend yield.
After the closing of the Merger, our board of directors determined the fair value of each share of common stock underlying stock-based awards based on the closing price of our common stock as reported by Nasdaq on the date of grant.
23
We classify stock-based compensation expense in our consolidated statements of operations in the same manner in which the award recipient’s payroll costs are classified or in which the award recipient’s service payments are classified.
Valuation of Contingent Earn-out Liability
The estimated fair value of the contingent earn-out shares were determined using a Monte Carlo simulation that simulated the future path of the Company’s stock price over the earn-out period. The significant assumptions utilized in the calculation are based on the achievement of certain stock price milestones including projected stock price, volatility, drift rate, percentage of change in control and expected term. For potential payments related to a product development milestone, the fair value was determined based on the Company’s expectations of achieving such a milestone and the simulated estimated stock price on the expected date of achievement.
Valuation of Contingently Issuable Common Stock Liability
The estimated fair value of the contingently issuable common shares were determined using a Monte Carlo simulation that simulated the future path of the Company’s stock price over the vesting period. The assumptions utilized in the calculation are based on the achievement of certain stock price milestones including projected stock price, volatility, and risk-free rate.
Valuation of Common Stock Warrant Liability and Public Warrant Liability
We classify certain warrants to purchase shares of our common stock as liabilities on our balance sheets as these warrants are free-standing financial instruments that may require the Company to adjust the exercise price and number of shares that is not consistent with a fixed-for-fixed option pricing model. The warrant liability associated with each of these warrants was initially recorded at fair value on the issuance date of each warrant and is subsequently remeasured to fair value at each balance sheet date. Changes in fair value of the warrants are recognized as a component of other income (expense) in our statements of operations and comprehensive income (loss). We will continue to adjust the liability for changes in fair value until the warrants are exercised, expire or qualify for equity classification.
We utilize the Black-Scholes option-pricing model, which incorporates assumptions and estimates to value the warrant liability. Key estimates and assumptions impacting the fair value measurement include (i) the fair value per share of the underlying shares of applicable series of stock issuable upon exercise of the Warrants, (ii) the remaining contractual term of the Warrants, (iii) the risk-free interest rate, (iv) the expected dividend yield and (v) expected volatility of the price of the underlying applicable common stock. We assess these assumptions and estimates on a quarterly basis as additional information impacting the assumptions is obtained. We estimate the fair value per share of the underlying stock based in partrecording depreciation expense. Based on the results of third-party valuationsour analysis, we may adjust the estimated residual values and additional factors deemed relevant. We have historically been a private company and lack company-specific historical and implied volatility informationuseful lives of individual assets of our stock. Therefore, we estimate expected stock volatility based on the historical volatility of publicly traded peer companies for a term equal to the remaining contractual term of the warrants. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve for time periods approximately equal to the remaining contractual term of the warrants.
Valuation of Inventory
Inventory is valued at the lower of cost or net realizable value. Cost is computed using the first-in, first-out method. We regularly review inventory quantities on-hand for excess and obsolete inventory and, when circumstances indicate, record charges to write down inventories to their estimated net realizable value, after evaluating historical sales, future demand, market conditions and expected product life cycles. Such charges are classified as cost of product revenue in the statements of operations and comprehensive income (loss). Any write-down of inventory to net realizable value creates a new cost basis.
Leases
At the inception ofgenerating equipment each operating lease, we determine a residual value for the leased equipment based on our estimate of the future value of the equipment at the end of the lease term. All of our leases are currently in their initial
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lease term with our existing customers and we have not yet had any renewals of such leases with our current customers or leases of used equipment to new customers. We will continue to evaluate our estimates of the residual value of our leased equipment considering future lease extensions of such equipment with existing customers at the end of their lease terms as well as used equipment leased to new customers. The Company’s subscription contracts are classified as operating leases because title does not transfer, there are no bargain purchase options, the present value of the lease payments does not exceed 90% of the asset’s fair market value, and the lease term does not exceed 75% of the asset’s economic life. The Company has not had a contract renewal point and will reassess the classification of any such leases upon renewal. We evaluate leased equipment for obsolescence and impairment whenever circumstances indicate that the carrying value of such equipment is not recoverable by considering any (1) reduced demand in the markets in which we operate, (2) technological obsolescence due to developments of new products and improvements, or (3) changes in economic or other events and conditions that impact the market price for our products. Based on our evaluations, an impairment loss on property and equipment of $1.7 million during the three and nine months ended September 30, 2021 related to Edge units and prototype versions of Express removed from service and retired was recorded. The Company did not record any impairment losses on leased equipment during the three or nine months ended September 30, 2020.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.
Emerging Growth Company Status
Item
risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily the result of fluctuations in interest rates and foreign currency exchange rates.
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leveraged financial instruments. We utilize external investment managers who adhere to the guidelines of our investment policy. A hypothetical 10% change in interest rates would not have a material impact on the value of our cash, cash equivalents, net income (loss)loss or cash flows.
Item
Disclosuredisclosure controls and procedures as such
disclosures. In designing and evaluating our disclosure controls and procedures, management recognizes that disclosureany controls and procedures, no matter how
Under the supervision andtheir costs.
reporting as described below.
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These material weaknesses resulted in audit adjustments and certain immaterial misstatements in historicalthe Evolv financial statements to prepaid and other current assets, accounts payable and accrued liabilities, long-term and short-term debt, convertible notes, contingent earnout liabilities, change in fair value of contingent earn-out liability, equity, commission assets, contract asset, revenue, deferred revenue, accounts receivable, inventory, property plant and equipment, cost of sales and various expense line items and related financial statement disclosures which were recorded prior to the issuance of our consolidated financial statements as of and for the years ended December 31, 2019, 2020 and 2020.2021. The material weakness related to accounting for warrant instruments, the classification of various accounts in the consolidated financial statements and the presentation and disclosure of items in the consolidated statements of cash flows also resulted in the restatementrevision of the Company's previously issued 2020 annual financial statements, of2021 quarterly and annual financial statements, and quarterly financial statements for the entity acquired as part ofthree months ended March 31, 2022. See Note 1 to our condensed consolidated financial statements for the July 16, 2021 Merger Agreement related to warrant liabilitiesthree and equity.six months ended June 30, 2022. Additionally, these material weaknesses could result in a misstatement of substantially all of our accounts or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.
20 •In addition to the foregoing, we did not design and maintain effective controls over information technology (“IT”) general controls for information systems that are relevant to the preparation of our consolidated financial statements, specifically, with respect to: (i) program change management controls for financial systems to ensure that IT program and data changes affecting financial IT applications and underlying accounting records are identified, tested, authorized and implemented appropriately; (ii) user access controls to ensure appropriate segregation of duties and that adequately restrict user and privileged access to financial applications, programs, and data to appropriate company personnel; (iii) computer operations controls to ensure that critical batch jobs are monitored and data backups are authorized and monitored, and (iv) testing and approval controls for program development to ensure that new software development is aligned with business and IT requirements. These IT deficiencies did not result in a misstatement to the consolidated financial statements, however, the deficiencies, when aggregated, could impact maintaining effective segregation of duties, as well as the effectiveness of IT-dependent controls (such as automated controls that address the risk of material misstatement to one or more assertions, along with the IT controls and underlying data that support the effectiveness of system-generated data and reports) that could result in misstatements potentially impacting all financial statement accounts and disclosures that would not be prevented or detected. Accordingly, management has determined these deficiencies in the aggregate constitute a material weakness. Remediation Plan for the |
Remediation of Material Weaknesses
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is a continuous effort that requires management to anticipate and react to changes in our business, economic and regulatory environments and to expend significant resources. As we continue to evaluate our internal control over financial reporting, we may take additional actions to addressremediate the material weaknesses or modify the remediation actions described above.
As
for the three and six months ended June 30, 2022.
As a result of the closing of the Business Combination on July 16, 2021,
global economy, rising inflation and interest rates in the U.S. and around the world, widespread and prolonged closures of public and private sports, entertainment and other venues, continuing geopolitical uncertainties and other macroeconomic factors all affect the spending behavior of potential customers. During weak economic times, our available pool of potential customers may decline as potential customers reduce their security-related budget allocations and, in turn, our growth prospects may be negatively impacted. Prolonged economic slowdowns may result in diminished sales of our products and services. Further worsening, broadening or protracted extension of an economic downturn could have a material negative impact on our business, revenue, results of operations and cash flows.
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Other than with respect to the PIPE Investment and 2021 Convertible Notes as described in our Form 8-K filed with the SEC on July 22, 2021, we sold no securities duringDuring the three months ended SeptemberJune 30, 20212022, we did not sell any securities that were not registered under the Securities Act.
Use of Proceeds
On August 4, 2020, NHIC consummated an initial public offering (the “IPO”) of 17,250,000 units, each consisting of one share of common stock, $0.0001 par value, and one-half of one redeemable warrant (the “Units”). The Units sold in the IPO were sold at an offering price of $10.00 per unit, generating gross proceeds of $172,500,000. Stifel, Nicolaus & Company, Incorporated acted as sole book-running manager, of the IPO. The securities in the offering were registered under the Securities Act on a registration statement on Form S-1 (No. 333-239822). The Securities and Exchange Commission declared the registration statement effective on July 30, 2020. The funds from the IPO were used as consideration for the Merger.
Issuer
We did not purchase any of our equity securities that are registered under Section 12(b) of by the Exchange Act during the three months ended September 30, 2021.Issuer and Affiliated Purchasers
None.
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Incorporated by Reference | ||||||||||||||||||||||||||||||||||||||
Exhibit No. | Description | Form | File No. | Exhibit | Filing Date | Filed/Furnished Herewith | ||||||||||||||||||||||||||||||||
3.1 | 10-Q | 001-39417 | 3.1 | November 15, 2021 | ||||||||||||||||||||||||||||||||||
3.2 | 8-K | 001-39417 | 3.2 | July 22, 2021 | ||||||||||||||||||||||||||||||||||
10.1 | 8-K | 001-39417 | 10.1 | May 19, 2022 | ||||||||||||||||||||||||||||||||||
31.1 | * | |||||||||||||||||||||||||||||||||||||
31.2 | * | |||||||||||||||||||||||||||||||||||||
32.1 | ** | |||||||||||||||||||||||||||||||||||||
32.2 | ** | |||||||||||||||||||||||||||||||||||||
101.INS | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | * | ||||||||||||||||||||||||||||||||||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document | * | ||||||||||||||||||||||||||||||||||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | * | ||||||||||||||||||||||||||||||||||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | * | ||||||||||||||||||||||||||||||||||||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | * | ||||||||||||||||||||||||||||||||||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | * | ||||||||||||||||||||||||||||||||||||
104 | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) | * |
| | | | Incorporated by Reference | | | ||||||
Exhibit |
| Description |
| Form |
| File No. |
| Exhibit |
| Filing Date |
| Filed/Furnished |
2.1 | | | 8-K | | 001-39417 | | 2.1 | | March 8, 2021 | | | |
2.2 | | | 8-K | | 001-39417 | | 2.2 | | July 22, 2021 | | | |
3.1 | | | | | | | | | | | * | |
3.2 | | | 8-K | | 001-39417 | | 3.2 | | July 22, 2021 | | | |
10.1# | | Form of Restricted Stock Unit Award Agreement under the 2021 Incentive Award Plan | | | | | | | | | | * |
31.1 | | Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a) | | | | | | | | | | * |
31.2 | | Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a) | | | | | | | | | | * |
32.1 | | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 | | | | | | | | | | ** |
32.2 | | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 | | | | | | | | | | ** |
101.INS | | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | | | | | | | | | | * |
101.SCH | | Inline XBRL Taxonomy Extension Schema Document | | | | | | | | | | * |
101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase Document | | | | | | | | | | * |
101.DEF | | Inline XBRL Taxonomy Extension Definition Linkbase Document | | | | | | | | | | * |
101.LAB | | Inline XBRL Taxonomy Extension Label Linkbase Document | | | | | | | | | | * |
101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document | | | | | | | | | | * |
104 | | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) | | | | | | | | | | * |
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