Filed pursuant to Rule 424(b)(3) 
Registration Statement No. 333-258748
Prospectus Supplement No. 6
(To Prospectus dated April 27, 2022)
This prospectus supplement updates, amends and supplements the prospectus dated April 27, 2022 (the “Prospectus”), which forms a part of our Registration Statement on Form S-1 (Registration No. 333-258748). Capitalized terms used in this prospectus supplement and not otherwise defined herein have the meanings specified in the Prospectus.
This prospectus supplement is being filed to update, amend and supplement the information included in the Prospectus with the information contained in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, filed with the Securities and Exchange Commission (the “SEC”) on August 18, 2022, which is set forth below.
This prospectus supplement is not complete without the Prospectus. This prospectus supplement should be read in conjunction with the Prospectus, which is to be delivered with this prospectus supplement, and is qualified by reference thereto, except to the extent that the information in this prospectus supplement updates or supersedes the information contained in the Prospectus. Please keep this prospectus supplement with your Prospectus for future reference.
Our Class A common stock is quoted on The Nasdaq Stock Market, or NASDAQ, under the symbol “EVLV” and our warrants are quoted on the NASDAQ under the symbol “EVLVW.” On August 18, 2022, as reported on NASDAQ, the closing sale price of our Class A common stock was $3.13 and the closing sale price of our warrants was $0.64.
We are an “emerging growth company” under federal securities laws and are subject to reduced public company reporting requirements. Investing in our securities involves certain risks. See “Risk Factors” beginning on page 3 of the Prospectus.
Neither the SEC nor any state securities commission has approved or disapproved of these securities or determined if the Prospectus or this prospectus supplement is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus supplement is August 18, 2022.


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
OR
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to
Commission file number: 001-39417
___________________________________
Evolv Technologies Holdings, Inc.
(Exact Name of Registrant as Specified in Its Charter)
___________________________________
Delaware 84-4473840
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
500 Totten Pond Road, 4th Floor
Waltham, Massachusetts 02451
(Address of Principal Executive Offices)
(781) 374-8100
(Registrant’s Telephone Number, Including Area Code)

N/A
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Trading symbol Name of Exchange on which registered
Class A common stock, par value $0.0001 per share EVLV The Nasdaq Stock Market
Warrants to purchase one share of Class A common stock EVLVW The Nasdaq Stock Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer o Accelerated filer o
Non-accelerated filer x Smaller reporting company x Emerging growth company x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
As of August 17, 2022, there were 144,156,686 shares of Class A common stock, par value $0.0001 per share, outstanding.


TABLE OF CONTENTS
Page
F-1
F-2
F-3
F-4
F-6
i

FORWARD LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q may be forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “forecasts,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements regarding our results of operations and financial position, business strategy, plans and prospects, existing and prospective products, research and development costs, timing and likelihood of success, macroeconomic and market trends, and plans and objectives of management for future operations and results.

The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, without limitation expectations regarding the Company’s strategies and future financial performance, including its future business plans or objectives, market opportunities and competition, revenues, products and services, pricing, operating expenses, market trends, liquidity, cash flows and uses of cash, capital expenditures; the Company’s history of losses and lack of profitability; the Company’s reliance on third party contract manufacturing; the rate of innovation required to maintain competitiveness in the markets in which the Company competes; the competitiveness of the market in which the Company competes; the ability for the Company to obtain, maintain, protect and enforce the Company’s intellectual property rights; the concentration of the Company’s revenues on a single solution; the Company’s ability to timely design, produce and launch its solutions, the Company’s ability to invest in growth initiatives and pursue acquisition opportunities; the limited liquidity and trading of the Company’s securities; the impact of and the Company's ability to remediate any identified material weakness in financial reporting; geopolitical risk and changes in applicable laws or regulations; the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors; operational risk; risk that the COVID-19 pandemic, including variants, vaccine roll-out efforts, and local, state, and federal responses to addressing the pandemic may have an adverse effect on the Company’s business operations, as well as the Company’s financial condition and results of operations; the impact of fluctuating economic conditions; litigation and regulatory enforcement risks, including the diversion of management time and attention and the additional costs and demands on resources, and the important factors discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. The forward-looking statements in this Quarterly Report on Form 10-Q are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, it may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this Quarterly Report on Form 10-Q, whether as a result of any new information, future events or otherwise.
GENERAL
We may announce material business and financial information to our investors using our investor relations website at https://ir.evolvtechnology.com/. We therefore encourage investors and others interested in Evolv to review the information that we make available on our website, in addition to following our filings with the Securities and Exchange Commission (the "SEC"), webcasts, press releases and conference calls. Information contained on our website is not part of this Quarterly Report on Form 10-Q.
ii

EVOLV TECHNOLOGIES HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
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)
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 
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-1

EVOLV TECHNOLOGIES HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except share and per share amounts)
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
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)
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-2

EVOLV TECHNOLOGIES HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND
STOCKHOLDERS' EQUITY (DEFICIT)
(In thousands, except share amounts)
(Unaudited)
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 $ $ 10,110  —  $ (94,916) $ (84,805)
Issuance of warrant to purchase common stock —  —  —  — 
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 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 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.
F-3

EVOLV TECHNOLOGIES HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
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 
F-4

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 
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-5

EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


1. Nature of the Business and Basis of Presentation

Evolv Technologies Holdings, Inc. (the “Company”), a Delaware corporation, is a global leader in AI-based weapons detection for security screening. The Company’s mission is to make the world a safer and more enjoyable place to work, learn, and play. The Company is democratizing security by making it seamless for gathering spaces to address the chronic epidemic of escalating gun violence, mass shootings and terrorist attacks in a cost-effective manner while improving the visitor experience. The Company is headquartered in Waltham, Massachusetts.

As used in this Quarterly Report on Form 10-Q, unless otherwise indicated or the context otherwise requires, references to “we,” “us,” “our,” the “Company” and “Evolv” refer to the consolidated operations of Evolv Technologies Holdings, Inc. and its wholly owned subsidiaries, which include Evolv Technologies, Inc., Evolv Technologies UK Ltd. and Give Evolv LLC. References to “NHIC” refer to the company prior to the consummation of the Merger (as defined in Note 3) and references to “Legacy Evolv” refer to Evolv Technologies, Inc. dba Evolv Technology, Inc. prior to the consummation of the Merger.

Basis of presentation

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

All share and per share amounts contained herein for periods prior to the Merger have been retroactively adjusted to give effect to the Exchange Ratio (as defined in Note 3), unless otherwise indicated.

Unaudited Interim Financial Information

The accompanying unaudited condensed consolidated financial statements as of June 30, 2022, and for the three and six months ended June 30, 2022 and 2021 have been prepared on the same basis as the audited annual consolidated financial statements as of December 31, 2021 and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of June 30, 2022 and the results of its operations for the three and six months ended June 30, 2022 and 2021 and cash flows for the six months ended June 30, 2022 and 2021. The results for the three and six months ended June 30, 2022 are not necessarily indicative of results to be expected for the year ending December 31, 2022, any other interim periods, or any future year or period.

Revision of Prior Period Financial Statements

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
F-6

EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
to any previously issued annual or interim financial statements. A summary of the revisions to the previously reported financial information is included in Note 21.
2. Summary of Significant Accounting Policies

Significant Accounting Policies

The significant accounting policies and estimates used in preparation of the unaudited condensed consolidated financial statements are described in the Company’s audited consolidated financial statements as of and for the year ended December 31, 2021, and the notes thereto, which are included in our Annual Report on Form 10-K for the year ended December 31, 2021. There have been no material changes to the Company’s significant accounting policies during the three months ended June 30, 2022 outside of the items as described below.

Leases as a Lessee

Prior to January 1, 2022, the Company accounted for leases in accordance with ASC 840, Leases. At lease inception, the Company determined if an arrangement was an operating or capital lease. For operating leases, the Company recognized rent expense, inclusive of rent escalation, on a straight-line basis over the lease term.

Effective on January 1, 2022, the Company accounts for leases in accordance with ASC 842, Leases. At contract inception, the Company determines if an arrangement is or contains a lease. A lease conveys the right to control the use of an identified asset for a period of time in exchange for consideration. 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 lease liability.

A right-of-use asset represents the economic benefit conveyed to the Company by the right to use the underlying asset over the lease term. A lease liability represents the obligation to make lease payments arising from the use of the asset over the lease term. Lease liabilities are measured at lease commencement and calculated as the present value of the future lease payments in the contract using the rate implicit in the contract, when available. If an implicit rate is not readily determinable, the Company uses an incremental borrowing rate measured as the rate at which the Company could borrow, on a fully collateralized basis, a commensurate loan in the same currency over a period consistent with the lease term at the commencement date. Right-of-use assets are measured as the amount of the initial lease liability plus initial direct costs and prepaid lease payments, less lease incentives granted by the lessor. The lease term is measured as the noncancelable period in the contract, adjusted for any options to extend or terminate when it is reasonably certain the Company will extend the lease term via such options based on an assessment of economic factors present as of the lease commencement date. The Company elected the practical expedient to not recognize leases with a lease term of twelve months or less.

Components of a lease are split into three categories: lease components, non-lease components, and non-components. The fixed and in-substance fixed contract consideration (including any consideration related to non-components) are allocated, based on the respective relative fair values, to the lease components and non-lease components. The Company has elected the practical expedient to account for lease and non-lease components together as a single lease component for all underlying assets and allocate all of the contract consideration to the lease component only.

The Company’s operating leases are presented in the condensed consolidated balance sheet as operating lease right-of-use assets, classified as noncurrent assets, and operating lease liabilities, classified as current and noncurrent liabilities. Operating lease expense is recognized on a straight-line basis over the lease term. Variable costs associated with a lease, such as maintenance and utilities, are not included in the measurement of the lease liabilities and right-of-use assets but rather are expensed when the events determining the amount of variable consideration to be paid have occurred.

F-7

EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Subscription Revenue - Leases as Lessor

In addition to selling our products directly to customers, we also derive revenue from leasing our equipment, which we classify as subscription revenue. Lease terms are typically four years, generally do not include unilateral options by either the Company or our customer to extend, terminate or to purchase the underlying asset, and customers generally pay either a quarterly or annual fixed payment for the lease and maintenance elements over the contractual lease term. Equipment leases are generally classified as operating leases as they do not meet any of the sales-type lease criteria per ASC 842 and recognized ratably over the duration of the lease. There are no variable lease payments as a part of these arrangements.

The accounting provisions we use to classify transactions as sales-type are: (i) whether the lease transfers ownership of the equipment by the end of the lease term, (ii) whether the lease grants the customer an option to purchase the equipment and the customer is reasonably certain to do so, (iii) whether the lease term is for the major part of the economic life of the underlying equipment, (iv) whether the present value of the lease payments, and any residual value guaranteed by the customer that is not already reflected in the lease payments, is equal to or greater than substantially all of the fair market value of the equipment at the commencement of the lease, and (v) whether the equipment is specific to the customer and of such a specialized nature that it is expected to have no alternative use to the Company at the end of the lease term. Leasing arrangements meeting any of these conditions are accounted for as sales-type leases and revenue attributable to the lease component is recognized in a manner consistent with product revenue and the related equipment is derecognized with the associated expense presented as a cost of revenue. Leasing arrangements that do not meet the criteria for classification as a sales-type lease will be accounted for as a direct-financing lease if the following two conditions are met: (i) the present value of the lease payments, and any residual value guaranteed by the customer that is not already reflected in the lease payments and any other third party unrelated to the Company, is equal to or greater than substantially all of the fair market value of the equipment at the commencement of the lease, and (ii) it is probable that the Company will collect the lease payments and amounts necessary to satisfy a residual value guarantee. Leasing arrangements that do not meet any of the sales-type lease or direct-financing lease classification criteria are accounted for as operating leases and revenue is recognized straight-line over the term of the lease.

The Company considers the economic life of most of our products to be seven years. The Company believes seven years is representative of the period during which the equipment is expected to be economically usable by one or more users, with normal service, for the purpose for which it is intended. The unguaranteed residual value is estimated to be the value at the end of the lease term based on the anticipated fair market value of the units. The Company mitigates residual value risk of our leased equipment by performing regular management and maintenance, as necessary.

Generally, lease arrangements include both lease and non-lease components. The lease component relates to the customer’s right-to-use the equipment over the lease term. The non-lease components relate to (1) distinct services, such as SaaS and maintenance, (2) any add-on accessories, and (3) installation and training. Installation and training are included in service revenue as described below, and add-on accessories are included in product revenue. Because the equipment, SaaS, and maintenance components of a subscription arrangement are recognized as revenue over the same time period and in the same pattern, the Company elected the practical expedient to aggregate non-lease components with the associated lease component and account for the combined component as an operating lease for all underlying asset classes. In the evaluation of whether the lease component (equipment) or the non-lease components associated with the lease component (SaaS and maintenance) is the predominant component, the Company determined that the lease component is predominant as we believe the customer would ascribe more value to the use of the security equipment than that of the SaaS and maintenance services. Therefore, the Company will account for the combined lease component under ASC 842. The equipment lease and SaaS/maintenance performance obligations are classified as a single category of subscription revenue in the condensed consolidated statements of operations and comprehensive loss. The installation and training services represent distinct services provided to customers. These activities are considered separate performance obligations to the customer and therefore are considered non-lease components. As installation and training services are performed prior to lease commencement, the timing 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.

F-8

EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
We exclude from variable payments all lessor costs that are explicitly required to be paid directly by a lessee on behalf of the lessor to a third party. Revenue related to leases entered into with related parties were $0.2 million and $0.3 million during the three and six months ended June 30, 2022, respectively.

Installation and training are generally billed to the lessee as part of the lease contract billing, according to various contractual terms. The installation and training costs incurred by the Company are accounted for as a fulfillment cost and are included in the cost of services revenue in the condensed consolidated statements of operations and comprehensive loss.

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), as subsequently amended (collectively “ASC 842”). The guidance amends the existing accounting standards for lease accounting, including requirements for lessees to recognize assets and liabilities related to long-term leases on the balance sheet and expanding disclosure requirements regarding leasing arrangements. For lessees, leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. Lessors are required to classify leases as a sales-type, direct financing, or operating lease. A lease is a sales-type lease if it effectively transfers control of the underlying asset to the lessee as indicated by any one of five criteria being met. All leases that are not sales-type or direct financing leases will be classified as operating leases. In July 2018, the FASB issued additional guidance, which offers a transition option to entities adopting ASC 842 in which entities can elect to apply the new guidance using a modified retrospective approach at the beginning of the year in which the new lease standard is adopted. The Company utilized this transition option whereby financial information for prior periods presented before the ASC 842 effective date will not be updated. In November 2019, the FASB issued ASU 2019-10 deferring the effective date for private entities (also applicable for public companies that qualify as emerging growth companies) for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. In June 2020, the FASB issued ASU 2020-05 which further defers the effective date for private entities for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022.

The Company adopted this guidance effective January 1, 2022. ASC 842 provides several optional practical expedients in transition. The Company applied the ‘package of practical expedients’ which allow the Company to not reassess whether existing or expired arrangements contain a lease, the lease classification of existing or expired leases, or whether previous initial direct costs would qualify for capitalization under ASC 842.

The adoption of ASC 842 resulted in the recognition of operating lease liabilities of $3.0 million and operating right-of-use assets of $2.5 million, along with the write-off of certain deferred rent balances of $0.5 million within the Company’s condensed consolidated balance sheets as of January 1, 2022. The adoption did not have a significant impact on the Company’s condensed consolidated statements of operations and comprehensive loss and condensed consolidated statements of cash flows.

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 adopted this guidance effective January 1, 2022 and the adoption of this guidance did not have a material impact on its condensed consolidated financial statements and related disclosures.

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
F-9

EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. The Company adopted this guidance effective January 1, 2022 and the adoption of this guidance did not have a material impact on its condensed consolidated financial statements and related disclosures.

Recently Issued Accounting Pronouncements

The Company qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and has elected not to “opt out” to the extended transition related to complying with new or revised accounting standards, which means that when a standard is issued or revised and it has different application dates for public and nonpublic companies, the Company will adopt the new or revised standard at the time nonpublic companies adopt the new or revised standard and will do so until such time that the Company either (1) irrevocably elects to “opt out” of such extended transition period or (2) no longer qualifies as an emerging growth company. The Company may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for nonpublic companies.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326) (“ASU 2016-13”). The new standard adjusts the accounting for assets held at amortized cost basis, including marketable securities accounted for as available for sale, and trade receivables. The standard eliminates the probable initial recognition threshold and requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For public entities except smaller reporting companies, the guidance is effective for annual reporting periods beginning after December 15, 2019 and for interim periods within those fiscal years. In November 2019, the FASB issued ASU No. 2019-10, which deferred the effective date for non-public entities and smaller reporting companies to annual reporting periods beginning after December 15, 2022, including interim periods within those fiscal years. Early application is allowed. 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.

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.
3. Merger with NHIC and Related Transactions
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 legal 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”).
The transaction was accounted for as a “reverse recapitalization” in accordance with GAAP. Under this method of accounting, NHIC was treated as the “acquired” company for financial reporting purposes. This determination was primarily because subsequent to the Merger, Legacy Evolv’s shareholders have a majority of the voting power of the combined company, Legacy Evolv comprises all of the ongoing operations of the combined entity, Legacy Evolv comprises a majority of the governing body of the combined company, and Legacy Evolv’s senior management comprises
F-10

EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
all of the senior management of the combined company. Accordingly, for accounting purposes, this transaction was treated as the equivalent of Legacy Evolv issuing shares for the net assets of NHIC, accompanied by a recapitalization. The shares and net loss per common share, prior to the Merger, have been retroactively restated as shares reflecting the Exchange Ratio established in the Merger. The net assets of NHIC were recorded at historical costs, with no goodwill or other intangible assets recorded. Operations prior to the Reverse Recapitalization 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, 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.
Upon 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 the Merger Agreement, certain Legacy Evolv Shareholders became entitled to receive up to 15,000,000 shares of Class A common stock as earn-out shares.
Upon closing of the Merger:
all of 24,359,107 shares of Legacy Evolv’s Series A-1 convertible preferred stock were converted into an equivalent number of shares of Legacy Evolv common stock on a one-to-one basis;
all of 3,484,240 shares of Legacy Evolv’s Series A convertible preferred stock were converted into an equivalent number of shares of Legacy Evolv common stock on a two-to-one basis;
all of 34,129,398 shares of Legacy Evolv’s Series B-1 convertible preferred stock were converted into an equivalent number of shares of Legacy Evolv common stock on a one-to-one basis; and
all of 15,367,312 shares of Legacy Evolv’s Series B convertible preferred stock were converted into an equivalent number of shares of Legacy Evolv common stock on a one-to-one basis
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 94,192,534 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 exercisable for the Company’s Class A common stock with the same terms and conditions except adjusted by the Exchange Ratio.
All outstanding stock options of Legacy Evolv common stock, totaling 57,938,375 stock options, were cancelled and the holders thereof in exchange received options to receive 0.378 shares of the Company’s Class A common stock for a total of 21,891,254 stock options. The modification of the stock options to reflect the exchange ratio did not result in an incremental compensation expense upon closing of the Merger.
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
F-11

EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
which the Subscribers agreed to purchase. Pursuant to the PIPE Investment, the Company issued 30,000,000 shares of common stock for a purchase price of $10.00 per share with gross proceeds of $300.0 million.
The proceeds, net of redemptions, 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%.
4. Fair Value Measurements
The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis and indicate the level of the fair value hierarchy used to determine such fair values (in thousands):
Fair Value Measurements at June 30, 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 
As of June 30, 2022 and December 31, 2021, money market funds are included in cash and cash equivalents on the condensed consolidated balance sheets.
During each of the three and six months ended June 30, 2022 and 2021, there were no transfers between Level 1, Level 2 and Level 3.
Valuation of Contingent Earn-out
Pursuant to the Merger Agreement, the Legacy Evolv shareholders, immediately prior to the Merger, were entitled to receive additional shares of the Company’s common stock upon the Company achieving certain milestones as described in Note 2 of our consolidated financial statements of our Annual Report on Form 10-K for the year ended December 31,
F-12

EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
2021. The Company’s contingent earn-out shares were recorded at fair value as contingent earn-out liability upon the closing of the Merger and are remeasured each reporting period. As of June 30, 2022, no milestones have been achieved.
The fair value of the contingent earn-out is calculated using a Monte Carlo analysis in order to simulate the future path of the Company’s stock price over the earn-out period. The carrying amount of the liability may fluctuate significantly and actual amounts paid may be materially different from the liability’s estimated value. The significant assumptions used in the Monte Carlo model as of June 30, 2022 were as follows: 95% expected stock price volatility, a drift rate of 3%, a 25% likelihood of change in control and a remaining term of 3.7 years.
The following table provides a rollforward of the contingent earn-out liability (in thousands):
December 31, 2021 $ 21,206
Change in fair value (2,509)
June 30, 2022 $ 18,697
Valuation of Contingently Issuable Common Stock
Prior to the Merger, certain NHIC shareholders owned 4,312,500 Founder Shares. 1,897,500 shares vested at the closing of the Merger, 517,500 shares were transferred back to NHIC and then contributed to Give Evolv LLC, and the remaining 1,897,500 outstanding shares shall vest upon the Company achieving certain milestones as described in Note 2 of our consolidated financial statements of our Annual Report on Form 10-K for the year ended December 31, 2021. The Company’s contingently issuable common stock was recorded at fair value as contingent shares on the closing of the Merger and are remeasured each reporting period. As of June 30, 2022, no milestones have been achieved.
The fair value of the contingently issued common shares is determined using a Monte Carlo analysis in order to simulate the future path of the Company’s stock price over the vesting period. The carrying amount of the liability may fluctuate significantly and actual amounts paid may be materially different from the liability’s estimated value. The significant assumptions used in the Monte Carlo model as of June 30, 2022 were as follows: 95% expected stock price volatility, a drift rate of 3%, a 25% likelihood of change in control and a remaining term of 4.0 years.
The following table provides a rollforward of the contingently issuable common shares (in thousands):
December 31, 2021 $ 5,264 
Change in fair value (1,448)
June 30, 2022 $ 3,816 
Valuation of Public Warrant Liability
Upon the closing of the Merger, the Company assumed the Public Warrants to purchase shares of the Company’s common stock (see Note 13). The Public Warrants are publicly traded and the initial fair value of the public warrants were based on the closing price as reported by Nasdaq on the date of the Merger and remeasured at each reporting period.
The following table provides a rollforward of the public warrant liability (in thousands):
December 31, 2021 $ 11,030
Change in fair value (5,443)
June 30, 2022 $ 5,587
F-13

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

The Company derives revenue from (1) subscription arrangements generally accounted for as operating leases under ASC 842 and (2) from the sale of products, inclusive of SaaS and maintenance and (3) professional services. The Company’s arrangements are generally noncancelable and nonrefundable after ownership passes to the customer for product sales and upon installation for subscriptions. Revenue is recognized net of sales tax.

Remaining Performance Obligations

The following table includes estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially satisfied) as of June 30, 2022.
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 
The amount of minimum future leases is based on expected income recognition. As of June 30, 2022, future minimum payments on noncancelable leases are as follows (in thousands):
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 
Contract Balances from Contracts with Customers

Contract assets arise from unbilled amounts in customer arrangements when revenue recognized exceeds the amount billed to the customer and the Company’s right to payment is conditional and not only subject to the passage of time. As of June 30, 2022 and December 31, 2021, the Company had $3.1 million and $1.5 million in current portion of contract assets and $3.2 million and $3.4 million in contract assets, noncurrent on the condensed consolidated balance sheets, respectively.

Contract liabilities represent the Company’s obligation to transfer goods or services to a customer for which it has received consideration (or the amount is due) from the customer. The Company has a contract liability related to service revenue, which consists of amounts that have been invoiced but that have not been recognized as revenue. Amounts expected to be recognized as revenue within 12 months of the balance sheet date are classified as current deferred revenue
F-14

EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
and amounts expected to be recognized as revenue beyond 12 months of the balance sheet date are classified as deferred revenue, noncurrent. The Company recognized revenue of $2.2 million and $4.7 million during the three and six months ended June 30, 2022, respectively, that was included in the 2021 deferred revenue balance. The Company recognized revenue of $0.6 million and $1.8 million during the three and six months ended June 30, 2021, respectively, that was included in the 2020 deferred revenue balance.

The following table provides a rollforward of deferred revenue (in thousands):
Balance at December 31, 2021 $ 9,074 
Revenue recognized (4,658)
Revenue deferred 10,696 
Balance at June 30, 2022 $ 15,112 
The following table presents the Company’s components of lease revenue (in thousands):
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 
The revenue from sales-type leases is related to the Evolv Express units where the lease term is for the major part of the economic life of the underlying equipment and is classified as product revenue in the condensed consolidated statements of operations and comprehensive loss. The interest income on lease receivables is classified as other income (expense), net in the condensed consolidated statements of operations and comprehensive loss. The lease income from operating leases is related to the leased equipment under subscription arrangements and is classified as subscription revenue in the condensed consolidated statements of operations and comprehensive loss.

Disaggregated Revenue

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

Three Months Ended
June 30,
Six Months Ended
June 30,
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 

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 commission costs in the period in which they were incurred. Commissions on product sales and services are expensed in the period in which the related revenue is recognized. Commissions on subscription arrangements and maintenance are expensed ratably over the life of the contract. The Company had a deferred asset related to commissions of $5.7 million and $5.4 million as of June 30, 2022 and December 31, 2021, respectively.
F-15

EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
During the three months ended June 30, 2022 and 2021, the Company amortized commission expense of $0.9 million and $0.5 million, respectively. During the six months ended June 30, 2022 and 2021, the Company amortized commission expense of $1.2 million and $0.6 million, respectively.

Give Evolv LLC

Upon the closing of the Merger, the NHIC Founders transferred 517,500 shares of its common stock to Evolv NewHold Benefit LLC (“ENHB”), which represented the initial contribution to be used to pay for the donation of Evolv’s Express units to public venues and institutions, primarily schools in locations that might not otherwise be able to afford weapon detection security screening systems and related products and services. In September 2021, ENHB was renamed to Give Evolv LLC (“Give Evolv”). Give Evolv is deemed an entity under common control and a consolidating entity as it is under the same management as the Company. As such, the shares held by Give Evolv are not considered outstanding or issued.

For such arrangements, Give Evolv generally purchases the related products and services from Evolv Technologies, Inc. through an intercompany transaction using the available donated proceeds from the transfer of common stock upon the closing of the Merger. Evolv Technologies, Inc. will be responsible for the delivery of the units, in addition to providing related services, such as installation, training, and maintenance. Consideration transferred to Evolv Technologies, Inc. for the related products and services may be in the form of common stock or cash. Shares of common stock may be sold to generate funds for the purposes of paying for the donated goods and services. The sales transactions between Evolv Technologies, Inc. and Give Evolv eliminate in consolidation.

During the six months ended June 30, 2022, the Company donated three Evolv Express units to schools, resulting in $0.2 million in general and administrative expense, respectively, in the Company’s condensed consolidated statements of operations and comprehensive loss.
6. Leases
Company Headquarters (Waltham, MA)

In April 2021, the Company entered a sublease agreement for office and storage space for its corporate headquarters located at 500 Totten Pond Road in Waltham, MA. The sublease has an initial term of 42 months beginning on May 1, 2021 and expiring on October 31, 2024. The Company is required to maintain a minimum cash balance of $0.7 million as a security deposit on the space which is classified as restricted cash, current and restricted cash, non-current on the condensed consolidated balance sheets. The Company pays for its proportionate share of building operating expenses and taxes that are treated as variable costs and excluded from the measurement of the lease. The sublease grants the Company an option to extend the term for an additional three years at the then fair market rent by giving the landlord nine months’ written notice. The Company was not reasonably certain to exercise the option to extend the lease and therefore the extension term was excluded from the measurement of the lease.

Storage Facilities

The Company additionally leases three storage spaces on a month-to-month basis that are classified as short-term leases.

Operating lease cost recognized during the three and six months ended June 30, 2022 was $0.2 million and $0.5 million, respectively. Cash paid for amounts included in the measurement of lease liabilities for the six months ended June 30, 2022 was $0.6 million.

The weighted-average remaining lease term and discount rate as of June 30, 2022 were as follows:

Weighted average remaining lease term 2.3 years
Weighted average discount rate 6.95  %
F-16

EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Future annual lease payments under non-cancelable operating leases as of June 30, 2022 were as follows (in thousands):

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 
Rent expense recognized in accordance with ASC 840 for the three and six months ended June 30, 2021 was approximately $0.3 million and $0.4 million, respectively.
Future annual lease payments under non-cancelable operating leases as of December 31, 2021 under ASC 840 were as follows (in thousands):
Year Ended December 31:
2022 $ 1,116 
2023 1,150 
2024 981 
Total $ 3,247 
7. Accounts Receivable
Allowance for Doubtful Accounts

Changes in the allowance for doubtful accounts were as follows (in thousands):

Allowance for Doubtful Accounts
Balance at December 31, 2021 $ (50)
Provisions (80)
Write-offs, net of recoveries — 
Balance at June 30, 2022 $ (130)

F-17

EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
8. Inventory
Inventory consisted of the following (in thousands):
June 30,
2022
December 31,
2021
Raw materials $ 2,126  $ 1,050 
Finished goods 3,884  1,840 
Total $ 6,010  $ 2,890 
9. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following (in thousands):
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 
10. Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
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 
1Represents equipment that has not yet been deployed to a customer and, accordingly, is not being depreciated.
Depreciation and amortization expense related to property and equipment was $1.3 million and $0.6 million for the three months ended June 30, 2022 and 2021, and $2.4 million and $1.1 million for the six months ended June 30, 2022, and 2021, respectively.
F-18

EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Leased equipment and the related accumulated depreciation were as follows:
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 
Depreciation related to leased units was $1.0 million and $0.6 million during the three months ended June 30, 2022 and 2021, respectively. Depreciation expense related to leased units was $1.9 million and $1.0 million during the six months ended June 30, 2022 and 2021, respectively. Depreciable lives are generally 7 years, consistent with the Company’s planned and historical usage of the equipment subject to operating leases.
Impairment of property and equipment was $0.3 million and $0.4 million for the three and six months ended June 30, 2022, respectively. This impairment related to Edge units and prototype versions of Express that were removed from service and retired. The Company is transitioning domestic customers to Express units which decreased the economic value of Edge units and Express prototypes and resulted in impairment. There was no impairment for the three and six months ended June 30, 2021.
11. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following (in thousands):
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 
12. Long-term Debt
The components of the Company’s long-term debt consisted of the following (in thousands):
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 
F-19

EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Term Loan Agreements
JPMorgan Chase Bank, N.A.(“JPM”) Credit Agreement
In December 2020, the Company entered into a $10.0 million credit agreement with JPMorgan Chase Bank, N.A. (“JPM Credit Agreement”) with a maturity date of December 3, 2024 and a revolving line of credit of up to $10.0 million with a maturity date of December 3, 2022.
Principal and interest on the JPM Credit Agreement is payable monthly commencing on July 1, 2022. The JPM Credit Agreement accrues interest at an annual rate calculated as the greater of (A) the Wall Street Journal Prime Rate plus 2.25% or (B) 5.5%. The revolving line of credit accrues interest at an annual rate calculated as the greater of (A) the Wall Street Journal Prime Rate plus 1.25% or (B) 4.5%. Upon closing, the Company issued warrants to purchase 377,837 shares of common stock to the lender with an exercise price of $0.42 per share with a fair value of $0.1 million on the date of issuance. The Company incurred debt issuance costs of $0.1 million equal to the fair value of the warrants in connection with the JPM Credit Agreement. These costs were recorded as debt discount and are amortized to interest expense, using the effective interest method, over the term of the loan. Upon the closing of the Merger, the warrants were converted into shares of the Company's common stock.
As of June 30, 2022, the unamortized debt discount was less than $0.1 million. As of June 30, 2022, the accrued interest on the JPM Credit Agreement was $0.1 million, which is included in accrued expenses and other current liabilities in the condensed consolidated balance sheet. Interest expense related to the JPM Credit Agreement totaled $0.2 million and $0.2 million for the three months ended June 30, 2022 and June 30, 2021, respectively, which includes the amortization of the debt discount which totaled less than $0.1 million in each period. Interest expense related to the JPM Credit Agreement totaled $0.3 million and $0.3 million for the six months ended June 30, 2022 and June 30, 2021, respectively, which includes the amortization of the debt discount which totaled less than $0.1 million in each period. The interest rate in effect as of June 30, 2022 was 5.75% for the JPM Credit Agreement.
The Company’s obligations under the JPM Credit Agreement are secured by a first-priority security interest in all of its assets, including intellectual property.
As of June 30, 2022, future principal payments on long-term debt are as follows (in thousands):
December 31,
2022 (remaining six months) $ 2,000 
2023 4,000 
2024 4,000 
$ 10,000 
Convertible Note
In September 2020, the Company entered into a Convertible Note Purchase Agreement (the “2020 Convertible Notes”) with an investor for gross proceeds of $2.0 million with a stated interest rate of 6.0% per annum. An additional $2.0 million in gross proceeds were made available in December 31, 2020 upon achievement of the integration milestone, 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 $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
F-20

EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
effective interest method. This derivative liability was derecognized as of December 31, 2021 as the liability was settled pursuant to the closing of the merger.
Interest expense related to the 2020 Convertible Notes totaled $0.1 million and $0.3 million for the three and six months ended June 30, 2021, respectively. No interest expense was recognized related to the 2020 Convertible Notes for the three and six months ended June 30, 2022.
In January and February 2021, the Company entered into a Convertible Note Purchase Agreement (the “2021 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 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, with a fair value at issuance of $7.0 million, and the notes, with an initial carrying value of $23.0 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 effective interest method. This derivative liability was derecognized as of December 31, 2021 as the liability was settled pursuant to the closing of the Merger.
In June 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. This modification of the notes resulted in an extinguishment and the Company recognized a loss on extinguishment of the 2021 Convertible Notes of $11.8 million. The $26.7 million carrying value of the notes at June 21, 2021 was derecognized and replacement notes with an initial carrying value of $29.6 million were recorded. Additionally, in the extinguishment accounting, a derivative liability of $19.2 million was recognized, which represents the value of the 1,000,000 NHIC shares as well as a bifurcated embedded derivative for the conversion option.
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 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 extinguishment of debt of $0.9 recorded in other income (expense).
Interest expense related to the 2021 Convertible Notes totaled $2.8 million and $4.7 million for the three and six months ended June 30, 2021, respectively. No interest expense was recognized related to the 2021 Convertible Notes for the three and six months ended June 30, 2022.
13. Warrants
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).
In connection with the closing of the Merger, the Company assumed the Public Warrants for the purchase of 14,325,000 shares of common stock at an exercise price of $11.50. The Public Warrants are immediately exercisable and expire in July 2026. The Public Warrants are classified as a liability and recorded at their fair value of $23.6 million on the date of closing of the Merger with an offset to additional paid-in-capital and are 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 $(0.1) million and $5.4 million for the three and six months ended June 30, 2022, respectively, was recognized as a component of other income (expense), net in the condensed consolidated statements of operations and comprehensive loss.
F-21

EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
As of June 30, 2022 and December 31, 2021, warrants to purchase the following classes of Common Stock outstanding consisted of the following in the table below:
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
14. Convertible Preferred Stock
Prior to the Merger, Legacy Evolv had issued Series A convertible preferred stock (“Series A Preferred Stock”), Series A-1 convertible preferred stock (“Series A-1 Preferred Stock”), Series B convertible preferred stock (“Series B Preferred Stock”), and Series B-1 convertible preferred stock (“Series B-1 Preferred Stock”), collectively referred to as the “Preferred Stock”.

Pursuant to the Merger Agreement, immediately prior to the Merger, each share of Legacy Evolv’s Series A-1, Series B-1, and Series B preferred stock outstanding converted to Legacy Evolv common stock on a 1:1 conversion ratio. Pursuant to the Merger Agreement, immediately prior to the Merger, each share of Legacy Evolv’s Series A preferred stock outstanding converted to Legacy Evolv common stock on a 2:1 conversion ratio. On the closing date of the Merger, each share of Legacy Evolv common stock then issued and outstanding was canceled and the holders thereof in exchange received shares of Evolv Technologies Holdings, Inc. equal to 0.378 shares for each share of Legacy Evolv common stock. As of December 31, 2021, the Company has no preferred stock outstanding as all convertible preferred stock converted to common stock upon closing of the Merger.
15. Common Stock
As of June 30, 2022 and December 31, 2021, the Company had reserved 74,920,606 and 76,008,377 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 16) and the exercise of outstanding warrants (see Note 13).
16. Stock-Based Compensation
2021 Equity Incentive Plan
The Company’s 2021 Equity Incentive Plan (the “2021 Plan”) provides for the Company to grant incentive stock options or nonqualified stock options, restricted stock awards, performance stock units, and other stock-based awards to employees, officers, directors and non-employees of the Company. A total of 21,177,295 shares of common stock may be issued under the 2021 Plan. As of June 30, 2022 and December 31, 2021, 11,217,480 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-22

EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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.
Stock Options
The following table presents, on a weighted average basis, the assumptions used in the Black-Scholes option-pricing model to determine the grant-date fair value of stock options granted during the six months ended June 30, 2022 and 2021:
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  %
The following table summarizes the Company’s stock option activity since December 31, 2021 (in thousands, except for share and per share data):
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 aggregate intrinsic value of options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those options that had exercise prices lower than the fair value of the Company’s common stock.
F-23

EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Restricted Stock Units
The following table summarizes the Company's restricted stock units activity since December 31, 2021:
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 
During the three and six months ended June 30, 2022, the aggregate grant-date fair value of restricted stock units issued under the 2021 Plan was $7.4 million and $22.9 million, respectively. Restricted stock units generally vest ratably over a three year period subject to the grantee's continued service through the applicable vesting date.
Performance Stock Units
The following table summarizes the Company's performance stock units activity since December 31, 2021:
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 
During the three and six months ended June 30, 2022, the aggregate grant-date value of performance stock units issued under the 2021 Plan was less than $0.1 million and $2.5 million, respectively. Based upon the terms of the award agreements, 50% of the applicable units shall vest on January 1, 2023 and 50% on January 1, 2024, provided that the Company has achieved its annual bookings goal for fiscal year 2022 and subject to the grantee’s continued service through the applicable vesting date.
2021 Employee Stock Purchase Plan
As of June 30, 2022 and December 31, 2021, 3,435,748 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 Employee Stock Purchase Plan during a specific offering period. As of June 30, 2022, no offerings have been approved.
Warrants to Non-Employee Service Provider
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.
F-24

EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The Company utilized a Black-Scholes pricing model to determine the grant-date fair value of the 2021 Finback common stock warrants granted. The assumptions used are presented in the following table:
Warrants - Black Scholes
Risk-free interest rate $ 0.4  %
Expected term (in years) 3.0
Expected volatility 23.9  %
Expected dividend yield 0.0  %
On the date of issuance, the total value of the 2021 Finback common stock warrants was $19.5 million.
As of June 30, 2022, 532,038 shares of the 2021 Finback common stock warrants were exercisable at a total aggregate intrinsic value of $1.2 million. The remaining 2,020,875 shares of 2021 Finback common stock warrants are unvested and have a total unrecognized grant date fair value of $15.4 million. As of June 30, 2022, none of the 2021 Finback common stock warrants had been exercised. The Company recognizes compensation expense for the 2021 Finback common stock warrants when the warrants become vested based on meeting the certain sales criteria. During the three and six months ended June 30, 2022, the Company recorded $0.6 million and $0.8 million, respectively, of stock-based compensation expense within sales and marketing expense related to the 2021 Finback common stock warrants.
Stock-Based Compensation
Stock-based compensation expense was classified in the condensed consolidated statements of operations and comprehensive loss as follows (in thousands):
Three Months Ended June 30, Six Months Ended June 30,
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
Stock-based compensation expense by award type recognized in the condensed consolidated statements of operations and comprehensive loss was as 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
17. Income Taxes
During the three and six months ended June 30, 2022 and 2021, the Company did not record income tax provisions or income tax benefits due to the net loss before income taxes expected to be incurred for the year ending December 31, 2022, as well as the Company’s continued maintenance of a full valuation allowance against its net deferred tax assets, and the net loss before income taxes incurred for the year ended December 31, 2021.
F-25

EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The Company’s tax provision and the resulting effective tax rate for interim periods is determined based upon its estimated annual effective tax rate (“AETR”), adjusted for the effect of discrete items arising in that quarter. The impact of such inclusions could result in a higher or lower effective tax rate during a particular quarter, based upon the mix and timing of actual earnings or losses versus annual projections. In each quarter, the Company updates its estimate of the annual effective tax rate, and if the estimated annual tax rate changes, a cumulative adjustment is made in that quarter.
18. Net Loss per Share
Basic and diluted net loss per share attributable to common stockholders was calculated as follows (in thousands, except share and per share amounts):
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)
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 
*Conversion feature is only triggered upon the closing of a Qualified Financing Event
**Issuance of Earn-out shares and Contingently issuable common stock are contingent upon the satisfaction of certain conditions, which were not satisfied by the end of the period
***Includes 532,038 vested warrants and 2,020,875 unvested warrants as of June 30, 2022
F-26

EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
19. Related Party Transactions
Nonrecourse Promissory Note with Officer
In August 2020, the Company entered into a $0.4 million promissory note with an officer with the proceeds being used to exercise options for 1,469,366 shares of common stock at a price of $0.24 per share. The promissory note bore interest at the Wall Street Journal Prime Rate and was secured by the underlying shares of common stock that were issued upon the exercise of the stock options. The promissory note was treated as nonrecourse as the loan was only secured by the common stock issued from the exercise of the stock options. As such, (i) the underlying stock option grant was still considered to be outstanding and the shares of common stock were not considered issued and outstanding for accounting purposes until the loan was repaid in full or otherwise forgiven and (ii) no receivable was recorded for the promissory note on the Company’s condensed consolidated balance sheets. As such, the promissory note effectively extended the maturity date of the option grant for the life of the loan, this change is treated as a stock option modification. The incremental fair value from the stock option modification was deemed immaterial. The interest on this nonrecourse loan is also considered nonrecourse. As the Company has no intent to collect interest, no accrued interest was recorded.
In June 2021, the Company agreed to repurchase 43,665 shares of common stock valued at $8.05 per share of common stock held by the officer of the Company. In exchange for the repurchase of the common stock by the Company, the $0.4 million promissory note held by the officer was considered repaid in full.
Business Development Agreement with Finback
In January 2021, the Company granted a warrant exercisable for 2,552,913 shares of common stock to Finback, a consulting group who is an affiliate of one of the Company’s shareholders, with performance-based vesting conditions which vest upon certain sales being met under a Business Development agreement which has a term of three years. During the three months ended June 30, 2022 and 2021, the Company recorded $0.6 million and $0.7 million, respectively, of stock-based compensation expense within sales and marketing expense for the 2021 Finback common stock warrants. During the six months ended June 30, 2022 and 2021, the Company recorded $0.8 million and $0.8 million, respectively, of stock-based compensation expense within sales and marketing expense for the 2021 Finback common stock warrants.
In connection with the Merger and pursuant to the Merger Agreement, Finback is entitled to receive a proportional share of earn-out shares as an earn-out service provider, based upon the remaining unvested warrants as of the Merger Date. As of June 30, 2022, Finback can earn 283,926 earn-out shares subject to stock-based compensation, based on the achievement of certain milestones. During the three months ended June 30, 2022 and 2021, no stock-based compensation expense within sales and marketing expense for the earn-out shares allocated to Finback was recorded. During the six months ended June 30, 2022 and 2021, no stock-based compensation expense within sales and marketing expense for the earn-out shares allocated to Finback was recorded.

Original Equipment Manufacturer Partnership Agreement with Motorola

In December 2020, the Company entered into an original equipment manufacturer partnership agreement (the “Distribution Agreement”) with Motorola, an investor in the Company. In June 2021, the partnership agreement was amended by the Amended and Restated Distribution Agreement (the “Amended and Restated Distribution Agreement”). Motorola sells Motorola-branded premium products based on the Evolv Express platform through their worldwide network of over 2,000 resellers and integration partners, and has integrated the Evolv Express platform with Motorola products. During the three months ended June 30, 2022 and 2021, revenue from Motorola’s distributor services was $1.9 million and $0, respectively. During the six months ended June 30, 2022 and 2021, revenue from Motorola’s distributor services was $2.8 million and $0, respectively. As of June 30, 2022 and December 31, 2021, accounts receivable related to Motorola’s distributor services was $3.0 million and $1.2 million, respectively.
F-27

EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
20. Commitments and Contingencies
Indemnification Agreements
In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its Board of Directors and certain of its executive officers and employees that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their role, status or service as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date, the Company has not incurred any material costs as a result of such indemnifications. The Company is not currently aware of any indemnification claims and has not accrued any liabilities related to such obligations in its condensed consolidated financial statements as of June 30, 2022 or December 31, 2021.
Legal Proceedings

The Company is not a party to any litigation and does not have contingency reserves established for any litigation liabilities. At each reporting date, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. The Company expenses the costs related to such legal proceedings as incurred.
21. Revision of Prior Period Financial Statements
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):
F-28

EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Revised Condensed Consolidated Balance Sheets
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 

F-29

EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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 — 
Total liabilities 30,164  529  30,693 
Stockholders’ equity:
Convertible preferred stock 75,877  —  75,877 
Common stock — 
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 

F-30

EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Revised Condensed Consolidated Statements of Operations and Comprehensive Loss
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)
F-31

EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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)

F-32

EVOLV TECHNOLOGIES HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

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  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