Revenue Generation and Business Model - Knightscope has generated over $30 million in lifetime revenue during its large-scale proof-of-concept phase and is now scaling up across the country[10]. - The Machine-as-a-Service (MaaS) business model offers subscriptions at an effective price of approximately $0.75 to $9 per hour, providing a recurring revenue stream[25]. - Knightscope's ASRs can generate approximately $255,000 of revenue over a five-year period, with a margin of 67% based on internal targets[31]. - The recurring revenue business model is anticipated to continue growing, addressing societal issues related to crime and terrorism[43]. - The company has generated over $30 million in lifetime revenue and has shown consistent double-digit growth over the last 3 years[43]. Market Potential and Client Focus - The total potential market for annual recurring revenue in the U.S. is estimated at approximately $4.1 billion, with a near-term opportunity for around 36,000 robots[19]. - The company is focused on acquiring B2G clients, including law enforcement agencies and the U.S. Federal Government, in addition to its B2B client base[9]. - The estimated negative economic impact of crime in the U.S. exceeds $2 trillion annually, highlighting the need for advanced public safety technologies[7]. Technology and Product Development - Knightscope's Autonomous Security Robots (ASRs) generate over 90 terabytes of data annually, which is utilized through the Knightscope Security Operations Center (KSOC) user interface[13]. - Production ramp-up is planned for the all-new K1 Hemisphere and the 5th generation K5, alongside development of the K7 ASR and AI-driven Mission Control software[47]. - The strategy includes a wide portfolio of autonomous products that can operate in various environments to enhance safety[48]. Growth and Profitability Goals - The company aims to achieve profitability by Q4 2024 through improved revenue strategies and reduced variable costs[46]. - The number of machines-in-network is planned to exceed 10,000 during 2024, with a focus on improving manufacturing throughput[44]. - The company anticipates growth in near- and long-term revenue goals, although specific figures were not disclosed[68]. Financial Position and Strategic Plans - The cash position is expected to improve in 2024 by delivering on a multi-million dollar backlog of new orders and closing on the first bond offering[45]. - The company plans to reduce its facility footprint nationwide from 13 to 1 over time to lower fixed costs[46]. - Knightscope's financial results include forward-looking statements regarding revenue opportunities and profitability[68]. Regulatory and Compliance - The company has received an Authority to Operate (ATO) from the U.S. Federal Government after a three-year cybersecurity review, positioning it for federal contracts[11][33]. - Risks and uncertainties that could affect actual results are discussed in Knightscope's Annual Report on Form 10-K for the year ended December 31, 2022[68]. Commitment to Manufacturing and Social Impact - The company is committed to maintaining a "Made in the USA" focus in its manufacturing efforts[44]. - Knightscope's technology has been proven effective, with clients reporting significant reductions in crime rates after deploying ASRs[23]. - The company seeks to grow both organically and through acquisitions, targeting strategic partnerships to enhance its technological offerings[49].

[PART I — FINANCIAL INFORMATION](index=4&type=section&id=Part%20I%20Financial%20Information) This section presents Knightscope, Inc.'s unaudited condensed consolidated financial statements and management's discussion and analysis for the period ended September 30, 2023 [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Knightscope, Inc.'s unaudited condensed consolidated financial statements and related notes for the periods ended September 30, 2023, and December 31, 2022 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's assets, liabilities, and stockholders' deficit as of September 30, 2023, and December 31, 2022 | ASSETS (in thousands) | Sep 30, 2023 | Dec 31, 2022 | | :-------------------- | :----------- | :----------- | | Cash and cash equivalents | $4,611 | $4,810 | | Accounts receivable, net | $2,094 | $1,370 | | Inventory | $3,159 | $2,560 | | Total current assets | $11,182 | $10,089 | | Autonomous Security Robots, net | $7,776 | $5,850 | | Goodwill | $1,922 | $1,344 | | Intangible assets, net | $1,646 | $2,056 | | Total assets | $25,045 | $22,082 | | LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS' DEFICIT (in thousands) | Sep 30, 2023 | Dec 31, 2022 | | :-------------------------------------------------------------------- | :----------- | :----------- | | Accounts payable | $1,718 | $2,457 | | Accrued expenses | $1,559 | $2,403 | | Deferred revenue | $1,884 | $1,711 | | Debt obligations | $273 | $2,144 | | Total current liabilities | $7,696 | $10,509 | | Preferred stock warrant liability | $6,752 | $10,011 | | Derivative liability | $390 | $1,146 | | Total liabilities | $15,905 | $29,885 | | Total stockholders' deficit | $(25,171) | $(43,586) | | Total liabilities, preferred stock and stockholders' deficit | $25,045 | $22,082 | - Total assets increased by **$2.963 million (13.4%)** from **$22.082 million** at December 31, 2022, to **$25.045 million** at September 30, 2023, driven by ASRs and goodwill, offset by intangible assets[16](index=16&type=chunk) - Total liabilities decreased significantly by **$13.98 million (46.8%)** from **$29.885 million** to **$15.905 million**, primarily due to reduced debt obligations and preferred stock warrant liabilities[16](index=16&type=chunk) - Stockholders' deficit improved by **$18.415 million (42.2%)** from **$(43.586) million** to **$(25.171) million**[16](index=16&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This statement details the company's revenues, expenses, and net loss for the three and nine months ended September 30, 2023, and 2022 | (in thousands, except per share data) | Three-Months Ended Sep 30, 2023 | Three-Months Ended Sep 30, 2022 | Nine-Months Ended Sep 30, 2023 | Nine-Months Ended Sep 30, 2022 | | :------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Total revenues | $3,324 | $1,296 | $9,784 | $3,281 | | Total cost of revenues, net | $3,274 | $2,195 | $9,938 | $5,420 | | Gross profit (loss) | $50 | $(899) | $(154) | $(2,139) | | Total operating expenses | $6,533 | $6,876 | $18,795 | $21,073 | | Loss from operations | $(6,483) | $(7,775) | $(18,949) | $(23,212) | | Total other income (expense) | $(1,859) | $2,537 | $3,365 | $9,245 | | Net loss | $(8,342) | $(5,238) | $(15,584) | $(13,967) | | Basic and diluted net loss per common share | $(0.11) | $(0.14) | $(0.26) | $(0.40) | - Total revenues for Q3 2023 increased by **156.5%** to **$3.324 million** from **$1.296 million** in the prior year, primarily driven by product sales from the CASE Acquisition[20](index=20&type=chunk)[129](index=129&type=chunk) - Gross profit improved significantly, turning from a loss of **$(0.899) million** in Q3 2022 to a profit of **$0.050 million** in Q3 2023[20](index=20&type=chunk)[133](index=133&type=chunk) - Net loss increased to **$(8.342) million** in Q3 2023 from **$(5.238) million** in Q3 2022, largely due to a decrease in other income (expense) from warrant liability fair value changes[20](index=20&type=chunk)[139](index=139&type=chunk) [Condensed Consolidated Statements of Stockholders' Deficit](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Deficit) This statement outlines changes in equity, including net loss, equity sales, and debt conversions, for the periods presented - Total stockholders' deficit improved from **$(43.586) million** at December 31, 2022, to **$(25.171) million** at September 30, 2023, driven by equity sales and debt conversions despite net loss[16](index=16&type=chunk)[25](index=25&type=chunk) - Additional paid-in capital increased from **$95.716 million** at December 31, 2022, to **$129.671 million** at September 30, 2023, reflecting equity financing activities[16](index=16&type=chunk)[25](index=25&type=chunk) - Accumulated deficit increased from **$(139.340) million** at December 31, 2022, to **$(154.924) million** at September 30, 2023, due to ongoing net losses[16](index=16&type=chunk)[25](index=25&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement details the cash inflows and outflows from operating, investing, and financing activities for the nine months ended September 30, 2023, and 2022 | Cash Flow Activity (in thousands) | Nine-Months Ended Sep 30, 2023 | Nine-Months Ended Sep 30, 2022 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(18,158) | $(18,391) | | Net cash used in investing activities | $(3,583) | $(2,832) | | Net cash provided by financing activities | $21,642 | $21,443 | | Net change in cash and cash equivalents and restricted cash | $(99) | $220 | | Cash, cash equivalents and restricted cash at end of the period | $4,711 | $11,069 | - Net cash used in operating activities slightly decreased by **$0.2 million** to **$(18.158) million** for the nine months ended September 30, 2023, despite increased net loss, due to favorable non-cash items and working capital changes[28](index=28&type=chunk)[162](index=162&type=chunk) - Net cash provided by financing activities remained strong at **$21.642 million** for the nine months ended September 30, 2023, primarily from the at-the-market offering program, offsetting other cash uses[28](index=28&type=chunk)[164](index=164&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of significant accounting policies, financial instrument valuations, debt, equity, and other financial commitments [NOTE 1: The Company and Summary of Significant Accounting Policies](index=10&type=section&id=NOTE%201%3A%20The%20Company%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note describes Knightscope's business, its going concern status, and key accounting policies for assets like inventory and intangible assets - Knightscope, Inc. is an advanced public safety technology company focused on Autonomous Security Robots (ASRs), Blue Light emergency communication devices, and the Knightscope Emergency Management System (KEMS) platform[32](index=32&type=chunk)[33](index=33&type=chunk) - The Company has incurred significant operating losses and negative cash flows, with an accumulated deficit of approximately **$154.9 million** and stockholders' deficit of **$25.2 million** as of September 30, 2023, raising substantial doubt about its going concern ability without additional fundraising[35](index=35&type=chunk)[36](index=36&type=chunk)[155](index=155&type=chunk)[157](index=157&type=chunk) Inventory Breakdown (in thousands) | Category | Sep 30, 2023 | Dec 31, 2022 | | :-------------- | :----------- | :----------- | | Raw materials | $2,364 | $2,032 | | Work in process | $91 | $— | | Finished goods | $704 | $528 | | Total Inventory | $3,159 | $2,560 | ASRs, net Breakdown (in thousands) | Category | Sep 30, 2023 | Dec 31, 2022 | | :---------------------------- | :----------- | :----------- | | Raw materials | $3,158 | $2,732 | | ASRs in progress | $1,760 | $773 | | Finished ASRs | $11,797 | $10,198 | | Accumulated depreciation on Finished ASRs | $(8,939) | $(7,853) | | ASRs, net | $7,776 | $5,850 | Intangible Assets, net (in thousands) | Category | Sep 30, 2023 | Dec 31, 2022 | | :------------------- | :----------- | :----------- | | Developed technology | $800 | $949 | | Customer relationships | $836 | $925 | | Trademark | $10 | $182 | | Total | $1,646 | $2,056 | [NOTE 2: Revenue and Deferred Revenue](index=15&type=section&id=NOTE%202%3A%20Revenue%20and%20Deferred%20Revenue) This note details the company's revenue streams from ASR leases and Blue Light product sales, along with deferred revenue balances - Revenue primarily stems from Machine-as-a-Service (MaaS) leases of ASRs and KSOC software, recognized ratably, and from sales and services of Blue Light Towers, E-Phones, and Call Boxes[63](index=63&type=chunk)[64](index=64&type=chunk)[67](index=67&type=chunk)[69](index=69&type=chunk) Revenue Disaggregation by Product Line and Timing of Recognition (in thousands) | Product Line / Timing | Q3 2023 Point in time | Q3 2023 Over time | Q3 2023 Total | 9M 2023 Point in time | 9M 2023 Over time | 9M 2023 Total | | :-------------------- | :-------------------- | :---------------- | :------------ | :-------------------- | :---------------- | :------------ | | ASRs | $89 | $1,075 | $1,164 | $129 | $3,157 | $3,286 | | Blue Light Towers, E-Phones and Call Boxes | $2,119 | $41 | $2,160 | $6,299 | $199 | $6,498 | | Total | $2,208 | $1,116 | $3,324 | $6,428 | $3,356 | $9,784 | - Deferred revenue, mainly from annual advance MaaS billings, was **$1.884 million** as of September 30, 2023, with **$1.339 million** recognized as revenue during the nine months ended September 30, 2023[70](index=70&type=chunk) [NOTE 3: Fair Value Measurement](index=17&type=section&id=NOTE%203%3A%20Fair%20Value%20Measurement) This note explains the classification of financial instruments into a fair value hierarchy, focusing on Level 3 liabilities like warrant and derivative liabilities - The Company classifies financial instruments into a fair value hierarchy, with Level 3 liabilities, including convertible preferred stock warrant and derivative liabilities, requiring significant management judgment[76](index=76&type=chunk)[77](index=77&type=chunk) Level 3 Warrant and Derivative Liabilities (in thousands) | Liability Category | Sep 30, 2023 | Dec 31, 2022 | | :---------------------------------- | :----------- | :----------- | | Warrant liability – Series m-3 Preferred Stock | $412 | $1,282 | | Warrant liability – Series S Preferred Stock | $6,340 | $8,729 | | Derivative liability – Class A Common Stock warrants | $390 | $1,146 | | 2022 Convertible Notes | $— | $8,152 | - The fair value of Level 3 warrant liabilities decreased from **$11.157 million** to **$7.142 million** at September 30, 2023, primarily due to revaluation adjustments[79](index=79&type=chunk) [NOTE 4: Debt Obligations](index=19&type=section&id=NOTE%204%3A%20Debt%20Obligations) This note details the company's debt obligations, including convertible notes and promissory notes, and recent financing activities Debt Obligations (in thousands) | Debt Type | Sep 30, 2023 | Dec 31, 2022 | | :------------------------ | :----------- | :----------- | | Convertible notes, net of fees and discount | $— | $8,152 | | Promissory notes | $273 | $546 | | Total debt | $273 | $8,698 | | Less: current portion of debt obligations | $273 | $2,144 | | Non-current portion of debt obligations | $— | $6,554 | - The Company fully retired its 2022 Convertible Notes by September 30, 2023, through issuing **10,432,428 shares** of Class A Common Stock, totaling **$6.075 million** in principal amount[81](index=81&type=chunk)[170](index=170&type=chunk) - A Promissory Note related to the CASE Emergency Systems acquisition was paid in full on October 5, 2023[82](index=82&type=chunk) - The Company filed an Offering Circular for up to **$10.0 million** in Public Safety Infrastructure Bonds, issuing **$0.421 million** in principal by October 31, 2023, generating approximately **$0.394 million** in net proceeds[83](index=83&type=chunk)[107](index=107&type=chunk) [NOTE 5: Stock-Based Compensation](index=19&type=section&id=NOTE%205%3A%20Stock-Based%20Compensation) This note describes the company's equity incentive plan, stock option activity, and stock-based compensation expenses - The Company operates under the 2022 Equity Incentive Plan, allowing issuance of up to **5,000,000 shares** of Class A Common Stock with an annual increase provision[87](index=87&type=chunk) Stock Option Activity (Nine-Months Ended September 30, 2023) | Category | Shares Outstanding | | :------------------------------------- | :----------------- | | Available and outstanding as of Dec 31, 2022 | 10,081,915 | | 2022 Plan annual increase | 1,917,456 | | Granted | 2,170,299 | | Exercised | (451,020) | | Forfeited | (1,286,494) | | Available and outstanding as of Sep 30, 2023 | 10,514,700 | | Vested and exercisable as of Sep 30, 2023 | 5,819,297 | - Stock-based compensation expense for the nine months ended September 30, 2023, was **$2.020 million**, a decrease from **$2.571 million** in the prior year[92](index=92&type=chunk) [NOTE 6: Capital Stock and Warrants](index=21&type=section&id=NOTE%206%3A%20Capital%20Stock%20and%20Warrants) This note details the company's convertible preferred stock, outstanding warrants, and shares reserved for future issuance, including at-the-market offerings Convertible Preferred Stock Issued and Outstanding (September 30, 2023, in thousands) | Preferred Stock Type | Shares Issued and Outstanding | Proceeds Net of Issuance Costs | Aggregate Liquidation Preference | | :------------------- | :---------------------------- | :----------------------------- | :------------------------------- | | Series A | 1,418,381 | $614 | $1,267 | | Series B | 3,498,859 | $7,098 | $7,138 | | Series m | 1,790,653 | $4,650 | $5,372 | | Series m-2 | 160,000 | $480 | $480 | | Series S | 2,652,041 | $21,469 | $21,216 | | Total | 9,519,934 | $34,311 | $35,473 | Outstanding Warrants (September 30, 2023) | Class of Shares | Number of Warrants | Exercise Price | Expiration Date | | :----------------------- | :----------------- | :------------- | :-------------- | | Series m-3 Preferred Stock | 1,432,786 | $4.0000 | Dec 31, 2027 | | Series S Preferred Stock | 2,941,814 | $4.5000 | Dec 31, 2027 | | Class A Common Stock | 1,138,446 | $3.2500 | Oct 13, 2027 | - The Company extended certain Series m-3 and Series S Preferred Stock warrants to December 31, 2027, in exchange for cancelling **1,500,000** Series S Preferred Stock warrants[93](index=93&type=chunk) - As of September 30, 2023, **30,119,599 shares** of Class A Common Stock were reserved for future issuance, covering preferred stock conversions, warrants, and stock options[95](index=95&type=chunk) - Under its at-the-market offering program, the Company issued **30,769,751 shares** of Class A Common Stock for net proceeds of approximately **$20.3 million** during the nine months ended September 30, 2023[97](index=97&type=chunk)[166](index=166&type=chunk) [NOTE 7: Related parties and related-party transactions](index=22&type=section&id=NOTE%207%3A%20Related%20parties%20and%20related-party%20transactions) This note discloses transactions with related parties, including services from a stockholder and rent payments to an employee - Konica Minolta, a Company stockholder, provided **$0.297 million** in ASR repair services for the nine months ended September 30, 2023, compared to **$0.319 million** in the prior year[98](index=98&type=chunk) - The Company paid **$0.135 million** in rent for an employee-owned building for the nine months ended September 30, 2023[99](index=99&type=chunk) [NOTE 8: Commitments and contingencies](index=22&type=section&id=NOTE%208%3A%20Commitments%20and%20contingencies) This note outlines the company's operating lease liabilities, future minimum lease payments, and potential sales tax contingencies Operating Lease Liabilities (in thousands) | Category | Sep 30, 2023 | Dec 31, 2022 | | :---------------------------- | :----------- | :----------- | | Operating lease right-of-use assets | $1,504 | $2,012 | | Operating lease liabilities, current portion | $701 | $731 | | Operating lease liabilities, non-current portion | $783 | $1,309 | | Total operating lease liabilities | $1,484 | $2,040 | - The weighted average remaining lease term for operating leases is **2.0 years** as of September 30, 2023, with total future minimum lease payments of **$1.645 million**[101](index=101&type=chunk) - The Company is not currently party to any legal or regulatory actions expected to have a material adverse effect on its financial position, results, or cash flows[102](index=102&type=chunk)[180](index=180&type=chunk) - The Company recorded a use tax liability of **$0.4 million** as of September 30, 2023, related to potential sales tax contingencies on its MaaS product offering[105](index=105&type=chunk) [NOTE 9: Subsequent Events](index=24&type=section&id=NOTE%209%3A%20Subsequent%20Events) This note describes significant events occurring after the reporting period, including further equity sales and a Nasdaq non-compliance notice - From October 1 to November 10, 2023, the Company sold **2,053,111 shares** of Class A Common Stock, generating approximately **$1.4 million** in net proceeds, under its at-the-market offering program[106](index=106&type=chunk) - The Company received a Nasdaq notice on October 26, 2023, for non-compliance with the **$1.00 per share** minimum bid price rule, with a deadline of April 23, 2024, to regain compliance[108](index=108&type=chunk)[119](index=119&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of Knightscope's financial condition, operational results, liquidity, and capital resources for the periods ended September 30, 2023, and 2022 [Overview](index=25&type=section&id=Overview) This overview describes Knightscope's mission to enhance public safety through Autonomous Security Robots (ASRs) and related emergency communication systems - Knightscope is an advanced public safety technology company focused on making the U.S. the safest country through Autonomous Security Robots (ASRs), Blue Light emergency communication devices, and the Knightscope Emergency Management System (KEMS) platform[112](index=112&type=chunk)[113](index=113&type=chunk) - The Company operates a Machine-as-a-Service (MaaS) subscription model for ASRs and sells stationary Blue Light Towers, E-Phones, and Call Boxes as point-of-sale modular systems with self-diagnostic alarm monitoring[116](index=116&type=chunk)[117](index=117&type=chunk) - Current strategy focuses solely on United States sales and deployments, with global expansion considered for the future[118](index=118&type=chunk) [Nasdaq Listing Rules Compliance](index=26&type=section&id=Nasdaq%20Listing%20Rules%20Compliance) This section addresses the company's non-compliance with Nasdaq's minimum bid price rule and the deadline for regaining compliance - Knightscope received a Nasdaq notice on October 26, 2023, for non-compliance with the **$1.00 per share** minimum bid price rule, with a deadline of April 23, 2024, to regain compliance[119](index=119&type=chunk) [Known or Anticipated Trends](index=26&type=section&id=Known%20or%20Anticipated%20Trends) This section discusses key business trends, including client demand, sales cycles, supply chain improvements, and management's goals for profitability - The Company's primary goal is to meet client demand, attract new orders, and ensure consistent field performance, focusing on business scaling[120](index=120&type=chunk) - Sales pipeline is growing, but enterprise and government municipality sales cycles are lengthy, ranging from months to years[121](index=121&type=chunk) - Supply chain issues largely subsided by Q3 2023, with the CASE Emergency Systems acquisition significantly contributing to business growth[122](index=122&type=chunk) - Management expects historical gross loss to decrease, aiming for gross profit and net income by scaling, controlling overhead, and optimizing operations through automation and cost reduction[124](index=124&type=chunk) - As of October 29, 2023, the Company had a backlog of approximately **$4.1 million**, comprising **$2.4 million** for ASRs and **$1.7 million** for Blue Light emergency communication devices and Call Boxes[125](index=125&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) This section provides a detailed comparison of the company's financial performance for the three and nine months ended September 30, 2023, and 2022 [Comparison of the Three-Months Ended September 30, 2023 and 2022](index=27&type=section&id=Comparison%20of%20the%20Three-Months%20Ended%20September%2030%2C%202023%20and%202022) This comparison highlights changes in revenue, gross profit, operating expenses, and net loss for the third quarter of 2023 versus 2022 Key Financials (Three-Months Ended September 30, in thousands) | Metric | 2023 | 2022 | Change ($) | Change (%) | | :-------------------------- | :------ | :------ | :--------- | :--------- | | Total revenue, net | $3,324 | $1,296 | $2,028 | 156.5% | | Gross profit (loss) | $50 | $(899) | $949 | 105.6% | | Research and development | $1,903 | $2,070 | $(167) | (8)% | | Sales and marketing | $1,395 | $1,907 | $(512) | (27)% | | General and administrative | $3,235 | $2,899 | $336 | 12% | | Loss from operations | $(6,483)| $(7,775)| $1,292 | (16.6)% | | Total other income (expense)| $(1,859)| $2,537 | $(4,396) | (173)% | | Net loss | $(8,342)| $(5,238)| $(3,104) | 59.3% | - Service revenue increased by **$0.6 million**, primarily from Blue Light products, while **$1.4 million** in product revenue was new due to the CASE Acquisition[129](index=129&type=chunk) - Cost of service revenue increased by **$0.4 million** due to higher personnel costs and depreciation from the CASE Acquisition, partially offset by lower cellular fees[130](index=130&type=chunk) - Research and development expenses decreased by **8%** due to workforce reduction, while sales and marketing expenses decreased by **27%** due to reduced advertising[134](index=134&type=chunk)[135](index=135&type=chunk) - General and administrative expenses increased by **12%** due to higher investor relations, corporate, and state taxes, partially offset by savings in rent, insurance, and legal fees[136](index=136&type=chunk) - Total other income (expense) decreased by **$4.4 million**, primarily due to a **$4.3 million** decrease in the change in fair value of warrant liability[139](index=139&type=chunk) [Comparison of the Nine Months Ended September 30, 2023 and 2022](index=29&type=section&id=Comparison%20of%20the%20Nine%20Months%20Ended%20September%2030%2C%202023%20and%202022) This comparison details the financial performance changes, including revenue growth, expense shifts, and net loss, for the first nine months of 2023 versus 2022 Key Financials (Nine-Months Ended September 30, in thousands) | Metric | 2023 | 2022 | Change ($) | Change (%) | | :-------------------------- | :------ | :------ | :--------- | :--------- | | Total revenue, net | $9,784 | $3,281 | $6,503 | 198.2% | | Gross loss | $(154) | $(2,139)| $1,985 | (92.8)% | | Research and development | $4,782 | $5,983 | $(1,201) | (20)% | | Sales and marketing | $3,716 | $6,905 | $(3,189) | (46)% | | General and administrative | $10,148 | $8,185 | $1,963 | 24% | | Restructuring charges | $149 | $— | $149 | 100% | | Loss from operations | $(18,949)| $(23,212)| $4,263 | (18.4)% | | Total other income (expense)| $3,365 | $9,245 | $(5,880) | (64)% | | Net loss | $(15,584)| $(13,967)| $(1,617) | 11.6% | - Service revenue increased by **$2.2 million (67%)**, primarily from Blue Light products, and **$4.3 million** in product revenue was new due to the CASE Acquisition[142](index=142&type=chunk)[143](index=143&type=chunk) - Cost of service revenue increased by **$2.0 million** due to higher personnel costs, service vehicles, depreciation, warranty, and third-party service costs related to the CASE Acquisition[144](index=144&type=chunk) - Research and development expenses decreased by **20%** due to reduced personnel and consulting fees, while sales and marketing expenses decreased by **46%** due to lower advertising costs[149](index=149&type=chunk)[150](index=150&type=chunk) - General and administrative expenses increased by **24%** due to higher corporate, financial services, and investor relations expenses, partially offset by savings in legal fees, rent, and insurance[151](index=151&type=chunk) - Restructuring charges of **$0.149 million** were incurred due to a workforce reduction in January 2023[153](index=153&type=chunk) - Total other income (expense) decreased by **$5.9 million**, primarily due to a **$14.2 million** decrease in warrant liability fair value change, partially offset by an **$8.4 million** decrease in interest expense[154](index=154&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's cash position, funding needs, and financing activities, highlighting going concern risks and capital raising efforts - As of September 30, 2023, cash and cash equivalents were **$4.6 million**, down from **$4.8 million** at December 31, 2022, with an accumulated deficit of **$154.9 million** and stockholders' deficit of **$25.2 million**[155](index=155&type=chunk) - The Company projects operating losses and negative cash flows of approximately **$1.0 million per month**, raising substantial doubt about its going concern ability without additional funding[157](index=157&type=chunk) - Financing activities for the nine months ended September 30, 2023, provided **$21.6 million**, primarily from the at-the-market offering program, which has a remaining capacity of approximately **$20.5 million**[164](index=164&type=chunk)[166](index=166&type=chunk) - The Company also issued **$0.421 million** in Public Safety Infrastructure Bonds by October 31, 2023, generating **$0.394 million** in net proceeds[167](index=167&type=chunk) - All 2022 Convertible Notes, totaling **$6.075 million** in principal, were fully retired by June 26, 2023, through conversion into Class A Common Stock[170](index=170&type=chunk) [Critical Accounting Estimates](index=33&type=section&id=Critical%20Accounting%20Estimates) This section confirms no material changes to critical accounting estimates and notes the adoption of a new accounting standard - There have been no changes to critical accounting estimates from the 2022 Annual Report on Form 10-K[171](index=171&type=chunk) - The Company adopted Accounting Standards Update No. 2016-13, 'Financial Instruments – Credit Losses,' in Q1 2023, which did not have a material impact on the financial statements[172](index=172&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Knightscope, Inc. is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, Knightscope is exempt from providing quantitative and qualitative disclosures about market risk[174](index=174&type=chunk) [Item 4. Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the Company's disclosure controls and procedures were effective as of September 30, 2023, with no material changes in internal control over financial reporting - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of September 30, 2023[176](index=176&type=chunk) - No material changes in internal control over financial reporting occurred during the three months ended September 30, 2023[177](index=177&type=chunk) [PART II — OTHER INFORMATION](index=35&type=section&id=Part%20II%20Other%20Information) This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and exhibits [Item 1. Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) Knightscope, Inc. is not currently involved in any legal proceedings expected to have a material adverse impact on its business or financial results - The Company is not currently party to any legal proceedings believed to have a material adverse impact on its business, financial results, and cash flows[180](index=180&type=chunk) [Item 1A. Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2022 - No material changes have occurred in the risk factors included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022[181](index=181&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) This section indicates that there were no unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities to report for the period - There were no unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities to report[182](index=182&type=chunk) [Item 3. Defaults Upon Senior Securities](index=35&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable for the reporting period - This item is not applicable[183](index=183&type=chunk) [Item 4. Mine Safety Disclosures](index=35&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable for the reporting period - This item is not applicable[184](index=184&type=chunk) [Item 5. Other Information](index=35&type=section&id=Item%205.%20Other%20Information) This section indicates that there is no other information to report for the period - There is no other information to report[185](index=185&type=chunk) [Item 6. Exhibits](index=36&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including corporate documents, employment agreements, certifications, and XBRL interactive data files - The exhibits include corporate documents, employment agreements for key executives, CEO/CFO certifications, and XBRL interactive data files[187](index=187&type=chunk) [SIGNATURES](index=37&type=section&id=Signatures) This section confirms the official signing of the report by the company's Chairman, CEO, President, and CFO [Signatures](index=37&type=section&id=Signatures) The report is duly signed on behalf of Knightscope, Inc. by William Santana Li, Chairman and Chief Executive Officer, and Mallorie Burak, President and Chief Financial Officer, on November 13, 2023 - The Form 10-Q was signed by William Santana Li, Chairman and CEO, and Mallorie Burak, President and CFO, on November 13, 2023[190](index=190&type=chunk)[191](index=191&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 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: 001-41248 Knightscope, Inc. (Exact name of registrant as specified in its charter) Delaware 46-2482575 (State or o ...

Table of Contents EXCHANGE ACT OF 1934 For the transition period from to UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller repo ...

[PART I](index=4&type=section&id=PART%20I) [Item 1. Business](index=4&type=section&id=Item%201.%20Business) Knightscope provides Autonomous Security Robots (ASRs) and blue light emergency communication devices, utilizing a Machine-as-a-Service (MaaS) subscription model for ASRs - Knightscope designs, develops, manufactures, markets, deploys, and supports Autonomous Security Robots (ASRs), autonomous charging stations, proprietary Knightscope Security Operations Center (KSOC) software, and blue light emergency communication devices[18](index=18&type=chunk) - The acquisition of CASE Emergency Systems on October 14, 2022, significantly expanded Knightscope's infrastructure to over **7,000 devices deployed** and provided direct access to new client segments[20](index=20&type=chunk)[21](index=21&type=chunk) - The company operates a **Machine-as-a-Service (MaaS) subscription model** for ASRs, encompassing lease, maintenance, support, data transfer, and software upgrades, while blue light emergency communication devices are sold as point-of-sale modular systems with optional services[25](index=25&type=chunk)[26](index=26&type=chunk) - As of December 31, 2022, Knightscope had **111 full-time employees** and one part-time employee, which was reduced to **92 full-time employees** and one part-time employee by March 30, 2023, following a January 2023 cost-reduction plan[66](index=66&type=chunk)[67](index=67&type=chunk) [Overview](index=4&type=section&id=Overview) This section provides a general description of Knightscope's business and offerings [Strategy](index=4&type=section&id=Strategy) This section outlines Knightscope's strategic objectives and growth initiatives [Industry background](index=5&type=section&id=Industry%20background) This section describes the market context and trends relevant to Knightscope's security technology business [Products](index=5&type=section&id=Products) This section details Knightscope's current product portfolio, including ASRs and emergency communication devices [KSOC](index=7&type=section&id=KSOC) This section describes the proprietary Knightscope Security Operations Center (KSOC) software [Products in Development](index=7&type=section&id=Products%20in%20Development) This section highlights new products and technologies currently under development by Knightscope [KNOC](index=7&type=section&id=KNOC) This section provides information on the Knightscope Network Operations Center (KNOC) [Knightscope+](index=7&type=section&id=Knightscope%2B) This section describes the Knightscope+ service offerings [Clients](index=7&type=section&id=Clients) This section outlines the types of clients and market segments served by Knightscope [Sales and Marketing](index=7&type=section&id=Sales%20and%20Marketing) This section details Knightscope's strategies for selling and promoting its products and services [Research and Development](index=8&type=section&id=Research%20and%20Development) This section describes Knightscope's activities and investments in research and development [Intellectual Property](index=8&type=section&id=Intellectual%20Property) This section covers Knightscope's intellectual property portfolio and protection strategies [Manufacturing and Suppliers](index=8&type=section&id=Manufacturing%20and%20Suppliers) This section describes Knightscope's manufacturing processes and relationships with key suppliers [Competition](index=8&type=section&id=Competition) This section analyzes the competitive landscape within the autonomous security and emergency communication markets [Government Regulation](index=9&type=section&id=Government%20Regulation) This section discusses the governmental regulations pertinent to Knightscope's operations and products [Backlog and Seasonality](index=9&type=section&id=Backlog%20and%20Seasonality) This section provides information on Knightscope's order backlog and any seasonal variations in its business [Human Capital](index=9&type=section&id=Human%20Capital) This section details information regarding Knightscope's employees and human resource management [Available Information](index=10&type=section&id=Available%20Information) This section specifies where public information about Knightscope can be accessed [Item 1A. Risk Factors](index=11&type=section&id=Item%201A.%20Risk%20Factors) Knightscope faces significant risks including recurring net losses, limited revenue, market acceptance, intense competition, and stock price volatility, raising substantial doubt about its going concern ability - Knightscope has a history of **net losses** and **limited revenues** since inception, leading its independent registered public accounting firm to express substantial doubt about its ability to continue as a going concern[74](index=74&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk) - The company's financial success is highly sensitive to global economic conditions, including **inflation, interest rates, and supply chain disruptions**, which have negatively impacted its business and are expected to continue doing so[86](index=86&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk) - The market for advanced physical security technology is new and unproven, and limited market acceptance of Knightscope's products, coupled with public perception of robots, could significantly harm its business[82](index=82&type=chunk)[93](index=93&type=chunk) - Knightscope's debt arrangements, including Convertible Notes, impose significant operating and financial restrictions, such as maintaining a minimum cash balance of **$1.5 million**, with any breach potentially leading to default and asset foreclosure[96](index=96&type=chunk)[98](index=98&type=chunk) - As of February 24, 2023, holders of Class B Common Stock and Super Voting Preferred Stock collectively control approximately **79.32% of the company's total voting rights**, allowing them to exert significant influence over management and corporate affairs[109](index=109&type=chunk)[110](index=110&type=chunk) - Knightscope's Class A Common Stock is listed on The Nasdaq Global Market but received a notice on March 29, 2023, for non-compliance with the minimum Market Value of Listed Securities (MVLS) requirement of **$50 million**, with 180 days to regain compliance[114](index=114&type=chunk)[115](index=115&type=chunk) [Selected Risks Related to the Business and the Global Economy](index=11&type=section&id=Selected%20Risks%20Related%20to%20the%20Business%20and%20the%20Global%20Economy) This section details specific risks associated with Knightscope's business operations and the broader economic environment [Risks related to Ownership of our Class A Common Stock](index=18&type=section&id=Risks%20related%20to%20Ownership%20of%20our%20Class%20A%20Common%20Stock) This section outlines risks pertinent to holding Knightscope's Class A Common Stock [Item 1B. Unresolved Staff Comments](index=22&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments to report [Item 2. Properties](index=22&type=section&id=Item%202.%20Properties) Knightscope leases its headquarters and production facility in Mountain View, California (15,000 sq ft) for ASR design, engineering, testing, manufacturing, and support - Knightscope leases a **15,000 sq ft facility** in Mountain View, California, which serves as its headquarters and primary production site for ASRs[134](index=134&type=chunk) - Blue Light EPhone Towers and Emergency Call Boxes are designed and assembled in two additional leased facilities located in Irvine and Downey, California[134](index=134&type=chunk) - The company wholly owns its ASRs and typically builds them in batches based on client demand, thereby avoiding significant inventory stocking[134](index=134&type=chunk) [Item 3. Legal Proceedings](index=22&type=section&id=Item%203.%20Legal%20Proceedings) Knightscope is not currently a party to any material legal proceedings and is unaware of any pending or threatened litigation that could have a material adverse effect on its business, operating results, financial condition, or cash flows - The Company is not presently a party to any litigation it believes to be material and is unaware of any pending or threatened litigation that could materially adversely affect its business, operating results, financial condition, or cash flows[135](index=135&type=chunk) [Item 4. Mine Safety Disclosures](index=22&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Knightscope, Inc. [PART II](index=22&type=section&id=PART%20II) [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=22&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Knightscope's Class A Common Stock is listed on the Nasdaq Global Market under the symbol 'KSCP', with 14,499 holders of Class A and 12 holders of Class B as of February 24, 2023 - Knightscope's Class A Common Stock is listed and traded on the Nasdaq Global Market under the symbol 'KSCP'[137](index=137&type=chunk) Common Stock Holders (as of Feb 24, 2023) | Class of Stock | Holders of Record | | :------------------- | :---------------- | | Class A Common Stock | 14,499 | | Class B Common Stock | 12 | - The company has not paid any cash dividends on its Class A Common Stock to date and does not anticipate paying any in the foreseeable future, planning to retain future earnings for business expansion[138](index=138&type=chunk)[139](index=139&type=chunk) [Item 6. [Reserved]](index=23&type=section&id=Item%206.%20%5BReserved%5D)

Table of Contents | | UNITED STATES | | | --- | --- | --- | | | SECURITIES AND EXCHANGE COMMISSION | | | | Washington, D.C. 20549 | | | | FORM 10-Q | | | (Mark One) | | | | ☒ | 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 Nu ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 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: 001-41248 Knightscope, Inc. (Exact name of registrant as specified in its charter) Delaware 46-2482575 (State or ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 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: 001-41248 KNIGHTSCOPE, INC. (Exact name of registrant as specified in its charter) | Delaware | 46-2482575 | | --- | --- | | (Sta ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 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: 024-11680 Knightscope, Inc. (Exact name of registrant as specified in its charter) Delaware 46-2482575 (State or other jurisdic ...