Knightscope, Inc 10-Q for FY2021 Q3

Knightscope, Inc. (KSCP)

10-Q 2022-03-14 For: 2021-09-30

Added on April 07, 2026

About this 10-Q

Knightscope, Inc filed this 10-Q on March 14, 2022, covering the quarter ended September 30, 2021 (FY2021 Q3).

Headline figures

Quarter ended September 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $784K; up 8.9% from $720K a year earlier
Net loss: $4.9M; compared with a net loss of $4.6M a year earlier
Diluted EPS: -$0.48; compared with -$0.47 a year earlier

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Delaware	46-2482575
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)






Large accelerated filer	☐	Accelerated filer	◻

Non-accelerated filer	☒	Smaller reporting company	☒	Emerging growth company ☒



Title of Each Class	Trading symbol	Name of Exchange on which registered
Class A Common Stock, par value $0.001 per share	KSCP	Nasdaq Global Market


		Page
Part I	Financial Information	5

Item 1.	Financial Statements	5

	Condensed Balance Sheets as of September 30, 2021 (Unaudited) and Balance Sheets as of December 31, 2020	5

	Condensed Statements of Operations for the three and nine months ended September 30, 2021 and 2020 (Unaudited)	6

	Condensed Statements of Stockholders’ Deficit for the three and nine months ended September 30, 2021 and 2020 (Unaudited)	7

	Condensed Statements of Cash Flows for the nine months ended September 30, 2021 and 2020 (Unaudited)	9

	Notes to Condensed Financial Statements (Unaudited)	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	39

Item 4.	Controls and Procedures	39

Part II	Other Information	41

Item 1.	Legal Proceedings	41

Item 1A.	Risk Factors	41

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50

Item 3.	Defaults Upon Senior Securities	51

Item 4.	Mine Safety Disclosures	51

Item 5.	Other Information	51

Item 6.	Exhibits	52

Signatures		53


	September 30,		December 31,
	2021		2020
ASSETS	(Unaudited)		(1)
Current assets:
Cash and cash equivalents	$	9,670	$	7,057
Restricted cash		100		100
Accounts receivable (net of allowance for doubtful accounts $250 and $279 as of September 30 2021 and December 31, 2020, respectively)		971		874
Prepaid expenses and other current assets		1,109		757
Total current assets		11,850		8,788

Autonomous Security Robots, net		2,874		2,290
Property, equipment and software, net		111		22
Operating lease right-of-use-assets		1,220		1,624
Other assets		78		220

Total assets	$	16,133	$	12,944

LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	564	$	232
Accrued expenses		425		864
Deferred revenue		859		522
Debt obligations		5,598		—
Operating lease liabilities		625		560
Preferred stock warrant liability		1,319		—
Other current liabilities		642		460
Total current liabilities		10,032		2,638

Debt obligations		—		4,579
Preferred stock warrant liabilities		16,675		5,617
Operating lease liabilities		657		1,133
Total liabilities		27,364		13,967

Commitments and contingencies (Note 9)

Preferred Stock, $0.001 par value; 43,405,324 shares authorized as of September 30, 2021 and December 31, 2020; 27,626,264 and 25,770,360 shares issued and outstanding as of September 30 2021 and December 31, 2020, respectively; aggregate liquidation preference of $93,261 as of September 30, 2021		82,258		65,162

Stockholders' deficit:
Class A common stock, $0.001 par, 114,000,000 shares authorized as of September 30 2021 and December 31, 2020; 0 shares issued and outstanding as of September 30, 2021 and December 31, 2020		—		—
Class B common stock, $0.001 par, 30,000,000 shares authorized as of September 30, 2021 and December 31, 2020; 10,189,000 shares issued and outstanding as of September 30, 2021 and December 31, 2020		10		10
Additional paid-in capital		3,928		3,051
Accumulated deficit		(97,427)		(69,246)
Total stockholders' deficit		(93,489)		(66,185)
Total liabilities, preferred stock and stockholders’ deficit	$	16,133	$	12,944


	Three Months Ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Revenue, net	$	784	$	720	$	2,561	$	2,358
Cost of revenue, net		1,309		1,299		3,826		3,485
Gross loss		(525)		(579)		(1,265)		(1,127)

Operating expenses:
Research and development		1,238		986		3,894		2,284
Sales and marketing		697		1,718		7,327		4,557
General and administrative		1,534		628		3,199		1,608
Total operating expenses		3,469		3,332		14,420		8,449

Loss from operations		(3,994)		(3,911)		(15,685)		(9,576)

Other income (expense):
Interest expense, net		(858)		(699)		(1,992)		(1,782)
Change in fair value of warrant liabilities		—		—		(10,737)		(2,424)
Other income, net		(43)		15		778		47
Total other income (expense)		(901)		(684)		(11,951)		(4,159)

Net loss before income tax expense		(4,895)		(4,595)		(27,636)		(13,735)
Income tax benefit (expense)		—		(3)		—		(4)
Net loss		(4,895)		(4,598)		(27,636)		(13,739)
Preferred stock dividends		(186)		(165)		(545)		(485)
Net loss attributable to common stockholders	$	(5,081)	$	(4,763)	$	(28,181)	$	(14,224)
Basic and diluted net loss per common share	$	(0.50)	$	(0.47)	$	(2.77)	$	(1.40)
Weighted average shares used to compute basic and diluted net loss per share		10,189,000		10,189,000		10,189,000		10,186,802


ASRs on lease or available for lease	$	5,511
Demonstration ASRs		635
Research and development ASRs		567
Charge boxes		290
		7,003
Less: accumulated depreciation		(5,784)
Finished ASRs, net	$	1,219


	Three Months Ended		Three Months Ended
	September 30, 2021		September 30, 2020
Point in time	$	16	$	15
Transferred over time		768		705
	$	784	$	720


	Nine Months Ended		Nine Months Ended
	September 30, 2021		September 30, 2020
Point in time	$	2	$	—
Transferred over time		2,559		2,358
	$	2,561	$	2,358


	September 30, 2021
Deferred revenue - short term	$	859
Revenue recognized in the nine months ended related to amounts included in deferred revenue as of January 1, 2021	$	250


	Total		Level 1		Level 2		Level 3
September 30, 2021
Assets
Cash equivalents:
Money market funds	$	6,623	$	6,623	$	—	$	—
Liabilities
Warrant liability – Series B Preferred Stock	$	310	$	—	$	—	$	310
Warrant liability – Series m-1 Preferred Stock	$	1,319	$	—	$	—	$	1,319
Warrant liability – Series m-3 Preferred Stock	$	5,990	$	—	$	—	$	5,990
Warrant liability – Series S Preferred Stock	$	10,375	$	—	$	—	$	10,375


	September 30,		September 30,
Warrant liability	2021		2020
Beginning Balance	$	5,617	$	2,247
Initial fair value of Series s Preferred Stock warrants issued		1,654		455
Revaluation of Series B, m-1, m-3 and s Preferred Stock warrants		10,737		2,424

Expired warrants		(14)		—
Ending Balance	$	17,994	$	5,126


					Weighted
			Weighted		Average
	Shares	Number of	Average		Remaining	Aggregate
	Available for	Shares	Exercise		Contractual	Intrinsic
	Grant	Outstanding	Price		Life (Years)	Value
Available and outstanding at December 31, 2020	1,963,814	7,056,000	$	1.33	8.58	$	7,116
Granted	(1,170,000)	1,170,000		5.36
Forfeited	592,189	(592,189)		2.31
Expired	10,000	(10,000)		0.91
Available and outstanding as of September 30, 2021	1,396,003	7,623,811	$	1.94	8.08	$	49,035
Vested and exercisable as of September 30, 2021		3,017,202	$	1.01	6.88	$	22,213


		Shares	Proceeds Net		Aggregate
	Shares	Issued and	of Issuance		Liquidation
September 30, 2021	Authorized	Outstanding	Costs		Preference
Series A Preferred Stock	8,936,015	8,936,015	$	3,865	$	7,982
Series B Preferred Stock	4,707,501	4,653,583		9,442		9,494
Series m Preferred Stock	6,666,666	5,339,215		13,866		16,018
Series m-1 Preferred Stock	333,334	—		—		—
Series m-2 Preferred Stock	1,660,756	1,660,756		4,982		4,982
Series m-3 Preferred Stock	3,490,658	16,757		46		59
Series m-4 Preferred Stock	4,502,061	1,432,786		4,828		10,029
Series S Preferred Stock	13,108,333	5,587,152		43,686		44,697
	43,405,324	27,626,264	$	80,715	$	93,261


Class of shares	Number of Warrants		Exercise Price	Expiration Date
Common B Common Stock	44,500	$	0.2500	April 10, 2025
Common B Common Stock	77,413	$	1.2600	May 23, 2028
Series B Preferred Stock	53,918	$	2.0401	November 7, 2026
Series m-1 Preferred Stock	266,961	$	3.0000	December 23, 2021
Series m-3 Preferred Stock	1,432,786	$	4.0000	December 31, 2024
Series S Preferred Stock	1,325,714	$	4.5000	December 31, 2024
Series S Preferred Stock	1,500,000	$	8.0000	July 31, 2024


	Three months ended				Nine months ended
	September 30,				September 30,
	2021		2020		2021		2020
Risk-free interest rate	0.77	%	1.66	%	0.39	%	0.84	%
Expected dividend yield	—	%	—	%	—	%	—	%
Expected volatility	51.84	%	50.58	%	25.92	%	51.68	%
Expected term (in years)	10		5.99		5.05		6.07


	September 30, 2021		September 30, 2020
Operating leases
Operating lease right-of-use assets	$	1,220	$	1,834

Operating lease liabilities, current portion	$	625	$	527
Operating lease liabilities, non-current portion		657		1,378
Total operating lease liabilities	$	1,282	$	1,905


Years ending December 31,	Amount
2021 (remaining)	$	186
2022		749
2023		507
Total future minimum lease payments		1,442
Less - Interest		(160)
Present value of lease liabilities	$	1,282


	Three Months Ended
	September 30
	2021		2020
Revenue, net	$	784	$	720
Cost of revenue, net		1,309		1,299
Gross loss		(525)		(579)

Operating expenses:
Research and development		1,238		986
Sales and marketing		697		1,718
General and administrative		1,534		628
Total operating expenses		3,469		3,332

Loss from operations		(3,994)		(3,911)

Other income (expense):
Interest expense, net		(858)		(699)
Change in fair value of warrant liabilities		—		—
Other income, net		(43)		15
Total other income (expense)		(901)		(684)

Net loss before income tax expense		(4,741)		(4,595)
Income tax benefit (expense)		—		(3)
Net loss	$	(4,895)	$	(4,598)


Exhibit No.	Description

3.1	Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 2.1 to Knightscope, Inc.’s Regulation A Offering Statement on Form 1-A (File No. 024-11004)).

3.2	Bylaws (incorporated by reference to Exhibit 2.2 to Knightscope, Inc.’s Regulation A Offering Statement on Form 1-A (File No. 024-11004)).

31.1†	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2†	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1+	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2+	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS†	XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH†	XBRL Taxonomy Extension Schema Document

101.CAL†	XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF†	XBRL Taxonomy Extension Definition Linkbase Document

101.LAB†	XBRL Taxonomy Extension Label Linkbase Document

101.PRE†	XBRL Taxonomy Extension Presentation Linkbase Document

104†	Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)


	KNIGHTSCOPE, INC.

	By:	/s/ William Santana Li
	Name:	William Santana Li
	Title:	Chairman and Chief Executive Officer
		(Principal Executive Officer)

	By:	/s/ Mallorie Burak
	Name:	Mallorie Burak
	Title:	Executive Vice President, Chief Financial Officer
		(Principal Financial Officer)