Evolv Technology CFO, Others Depart as Probe Uncovers Accounting Discrepancies

By Denny Jacob

Evolv Technology said its finance chief and other personnel were leaving the company after an internal investigation uncovered past accounting discrepancies.

The maker of security-screening products Thursday said the investigation conducted by a board committee found accounting for certain transactions, including sales to one of the company's largest channel partners, was inaccurate. Among other things, revenue was prematurely or incorrectly recognized with financial statements prepared for the periods between the second quarter of 2022 and the second quarter of 2024.

Chief Financial officer Mark Donohue has resigned. The investigation has led to four other employees, including personnel from Evolv's sales, accounting and finance departments, either being terminated or resigning from the Waltham, Mass., company.

Evolv said the sales transactions at issue resulted in premature or incorrect revenue recognition of $4 million to $6 million through June 30. It added the vast majority of such revenue was prematurely rather than incorrectly recognized and is expected to be recognized in future periods.

The audit committee found certain accounting personnel were aware of the issue and that related allegations were raised internally and known to senior finance and accounting personnel, but weren't escalated to the audit committee or to accounting firm PricewaterhouseCoopers.

"With the investigation concluding, our attention has turned to addressing the issues that led to the misconduct, ensuring that future financial disclosures are timely and accurate, releasing our financial results for the third quarter of 2024 and preparing restated financials for the affected periods," the company said.

The board said it will take further remedial actions to enhance risk management, strengthen internal controls and ensure accurate financial reporting.

Shares of Evolv fell 5% to $2.49 in premarket trading.

Write to Denny Jacob at denny.jacob@wsj.com

(END) Dow Jones Newswires

November 21, 2024 08:45 ET (13:45 GMT)

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