Company: EVLVW
Filing Date: 2025-04-28
Form Type: 10-K
Source: 0001628280-25-020355
Chunk: 177

Company: Evolv Technologies Holdings, Inc.
Filing Date: 2025-04-28
Form: 10-K
Item: Item 8
Chunk 177
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 accounting and finance departments; (v) designing and maintaining effective controls over the period-end financial reporting process; (vi) designing and maintaining effective controls to analyze, account for and disclose non-routine, unusual or complex transactions; (vii) designing and maintaining formal accounting policies, procedures, and controls to achieve complete, accurate, and timely financial accounting, reporting and disclosures, including controls over the preparation and review of account reconciliations and journal entries; and (viii) designing and maintaining effective controls over information technology general controls for information systems that are relevant to the preparation of the consolidated financial statements, including program change management, user access, computer operations, and program development.

The principal considerations for our determination that performing procedures relating to the consolidated financial statements – impact of controls related to financial reporting is a critical audit matter are a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to business processes that affect all of the Company’s significant accounts and disclosures. As disclosed by management, material weaknesses were identified related to this matter.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included, among others, evaluating and determining the nature and extent of audit procedures performed and evidence obtained that are responsive to the material weaknesses identified. These procedures also included (i) evaluating whether segregation of duties was maintained over the preparation and review of account reconciliations and recording of journal entries; (ii) testing the completeness and accuracy of period-end financial reporting, including the classification and presentation of accounts and disclosures; and (iii)  manually testing the completeness and accuracy of system reports or other information generated by the Company’s information systems.

Revenue Recognition – Impact of the Investigation

As described in Note 2 to the consolidated financial statements, in September 2024, an ad hoc committee of independent directors (the “Committee”) of the Company’s Board of Directors (the “Board”), under the direction of the Board, commenced an investigation (the “Investigation”) of the Company’s sales practices, including whether certain sales of products and subscriptions to channel partners and end users were subject to extra-contractual terms and conditions that impacted revenue recognition and other metrics, and if so, when senior Company personnel became aware of these issues. As a result of the Investigation, the Committee determined that certain sales, including sales to one of the Company’s largest channel partners, were subject to extra-contractual terms and conditions.  Accordingly, the Committee determined that the