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Evolv Misstates Years of Financials, Blames Lack of Accounting Knowledge
Security screening systems designer overstated Q1 2022 gross profit by more than eighty-percent.
April 5, 2023
Evolv Technologies Holdings (EVLV), maker of artificial intelligence (AI)-based touchless security screening systems, revealed it misstated its financials for the three and six month periods ended June 30, 2022. The company disclosed multiple accounting errors in its latest annual report including:
—Expenses that were cost of subscription revenue related and cost of service revenue related inaccurately classified as sales and marketing expenses
—Equipment under lease or held for lease inaccurately classified as inventory on the balance sheets and a portion of the cash outflows related to the equipment under lease or held for lease misclassified between operating and investing cash flows
The errors also impacted Evolv’s 2020 and 2021 financial statements.
Evolv corrected the errors and quantified the impact in the filing’s footnotes, including:
—In 2021, Evolv overstated gross profit $2.6 million, or 65%
—In 2021, Evolv understated its operating loss by $1.2 million, or 2.2%
—In the first quarter of 2022, Evolv overstated gross profit by $729,000, or 81.2%
The company blamed the errors, in part, on not having enough employees with accounting knowledge.
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