01:18 PM EDT, 10/25/2024 (MT Newswires) -- (Updates with the recent stock movement in the headline and the first paragraph.)

Evolv Technologies ( EVLV ) shares sank nearly 41% in recent Friday trading after the company said it is delaying its Q3 earnings report and Form 10-Q filing because certain past financial statements should not be relied upon due to inaccuracies in revenue recognition.

The company said the board's ad hoc committee is conducting an internal investigation into its sales practices. Preliminary findings suggest that some sales involved extra-contractual terms, leading to premature or incorrect revenue recognition between Q2 2022 and Q2 2024, Evolv ( EVLV ) said.

The maker of AI-based weapons detection systems said the committee also found that "certain Company personnel engaged in misconduct in connection with those transactions."

The misstatements are estimated to have resulted in revenue discrepancies of $4 million to $6 million, Evolv ( EVLV ) added.

The company said it is working on amending the affected financial statements and has notified the US Securities and Exchange Commission, which is already investigating an "unrelated" matter.

Evolv ( EVLV ) said in February that the SEC had opened a confidential non-public, fact-finding inquiry into the company.

Price: 2.43, Change: -1.68, Percent Change: -40.85