Knightscope, Inc 10-Q for FY2022 Q3

Knightscope, Inc. (KSCP)

10-Q 2022-11-14 For: 2022-09-30

Added on April 07, 2026

About this 10-Q

Knightscope, Inc filed this 10-Q on November 14, 2022, covering the quarter ended September 30, 2022 (FY2022 Q3).

Headline figures

Quarter ended September 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.3M; up 65.3% from $784K a year earlier
Net loss: $5.24M; compared with a net loss of $4.9M a year earlier
Diluted EPS: -$0.14; compared with -$0.50 a year earlier

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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


Large accelerated filer	☐	Accelerated filer	☐

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


		Page
Part I	Financial Information	5

Item 1.	Financial Statements	5

	Condensed Balance Sheets as of September 30, 2022 (Unaudited) and December 31, 2021	5

	Condensed Statements of Operations for the three and nine months ended September 30, 2022 and 2021 (Unaudited)	6

	Condensed Statements of Preferred Stock and Stockholders’ Deficit for the three and nine months ended September 30, 2022 and 2021 (Unaudited)	7-8

	Condensed Statements of Cash Flows for the nine months ended September 30, 2022 and 2021 (Unaudited)	9

	Notes to Condensed Financial Statements (Unaudited)	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	35

Item 4.	Controls and Procedures	36

Part II	Other Information	37

Item 1.	Legal Proceedings	37

Item 1A.	Risk Factors	37

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38

Item 3.	Defaults Upon Senior Securities	38

Item 4.	Mine Safety Disclosures	38

Item 5.	Other Information	38

Item 6.	Exhibits	39

Signatures		41


	September 30,		December 31,
	2022		2021
ASSETS	(Unaudited)		(1)
Current assets:
Cash and cash equivalents	$	11,069	$	10,749
Restricted cash		—		100
Accounts receivable (net of allowance for doubtful accounts $229 as of September 30, 2022 and $250 as of December 31, 2021)		312		1,189
Prepaid expenses and other current assets		1,957		1,299
Total current assets		13,338		13,337

Autonomous security robots, net		4,605		2,971
Property, equipment and software, net		158		117
Operating lease right-of-use-assets		620		1,077
Other assets		78		78

Total assets	$	18,799	$	17,580

LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	1,702	$	1,514
Accrued expenses		1,156		1,191
Deferred revenue		1,359		889
Debt obligations		—		7,109
Operating lease liabilities		657		648
Other current liabilities		553		893
Total current liabilities		5,427		12,244

Preferred stock warrant liabilities		12,006		30,566
Operating lease liabilities		—		485
Total liabilities		17,433		43,295

Commitments and contingencies (Note 8)

Preferred stock, $0.001 par value; 43,405,324 shares authorized as of September 30, 2022 and December 31, 2021; 11,426,068 and 19,617,107 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively; aggregate liquidation preference of $38,041 as of September 30, 2022		36,072		57,218

Stockholders’ deficit:
Class A common stock, $0.001 par, 114,000,000 shares authorized as of September 30, 2022 and December 31, 2021; 27,152,912 and 5,936,929 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		27		6
Class B common stock, $0.001 par, 30,000,000 shares authorized as of September 30, 2022 and December 31, 2021, 10,319,884 and 13,131,197 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		10		13
Additional paid-in capital		92,921		30,745
Accumulated deficit		(127,664)		(113,697)
Total stockholders’ deficit		(34,706)		(82,933)
Total liabilities, preferred stock and stockholders’ deficit	$	18,799	$	17,580


	Three Months Ended September 30,				Nine months ended September 30,
	2022		2021		2022		2021
Revenue, net	$	1,296		784	$	3,281		2,561
Cost of revenue, net		2,195		1,309		5,420		3,826
Gross loss		(899)		(525)		(2,139)		(1,265)

Operating expenses:
Research and development		2,070		1,238		5,983		3,894
Sales and marketing		1,907		697		6,905		7,327
General and administrative		2,899		1,534		8,185		3,199
Total operating expenses		6,876		3,469		21,073		14,420

Loss from operations		(7,775)		(3,994)		(23,212)		(15,685)

Other income (expense):
Change in fair value of warrant liabilities		2,543		—		18,190		(10,737)
Interest income (expense), net		—		(858)		(8,910)		(1,992)
Other income (expense), net		(6)		(43)		(35)		778
Total other income (expense)		2,537		(901)		9,245		(11,951)

Net loss before income tax expense		(5,238)		(4,895)		(13,967)		(27,636)
Income tax expense		—		—		—		—
Net loss		(5,238)		(4,895)		(13,967)		(27,636)
Preferred stock dividends		—		(186)		—		(545)
Net loss attributable to common stockholders	$	(5,238)		(5,081)	$	(13,967)		(28,181)
Basic and diluted net loss per common share	$	(0.14)	$	(0.50)	$	(0.40)	$	(2.77)
Weighted average shares used to compute basic and diluted net loss per share		36,941,848		10,189,000		34,803,126		10,189,000


	Series m			Series m‑1			Series m‑2			Series m‑3			Series S			Series A			Series B			Class A			Class B
	Preferred			Preferred			Preferred			Preferred			Preferred			Preferred			Preferred			common			common				Additional				Total
	stock			stock			stock			stock			stock			stock			stock			stock			stock				Paid-in-		Accumulative		Stockholders’
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares		Amount		capital		Deficit		Deficit
June 30, 2022	1,932,021	$	5,017	—	$	—	160,000	$	480	—	$	—	2,783,404	$	22,532	3,249,104	$	1,406	3,541,767	$	7,185	26,085,487	$	26		10,362,170	$	10	$	89,314	$	(122,426)	$	(33,076)

Stock based compensation																														1,119				1,119

Stock options exercised																						221,686								330				330

Shares issued for consulting services																						236,567								653				653

Share conversion to Class A common stock	(52,075)		(135)										(42,063)		(341)	(139,944)		(61)	(6,146)		(11)	285,874				(42,286)				548				548

Proceeds from equity sale, net of issuance costs																						323,298		1						973				974

Share Conversion costs																														(16)				(16)

Net loss																																(5,238)		(5,238)

Balance as of September 30, 2022	1,879,946	$	4,882	—	$	—	160,000	$	480	—	$	—	2,741,341	$	22,191	3,109,160	$	1,345	3,535,621	$	7,174	27,152,912	$	27		10,319,884	$	10	$	92,921	$	(127,664)	$	(34,706)


ASRs on lease or available for lease	$	8,331	$	6,489
Demonstration ASRs		606		585
Research and development ASRs		380		320
Docking stations		361		301
		9,678		7,695
Less: accumulated depreciation		(7,613)		(6,192)
Finished ASRs, net	$	2,065	$	1,503


	Three Months Ended		Three Months Ended
	September 30, 2022		September 30, 2021
Point in time	$	23	$	16
Transferred over time		1,273		768
	$	1,296	$	784


	Nine Months Ended		Nine Months Ended
	September 30, 2022		September 30, 2021
Point in time	$	69	$	2
Transferred over time		3,212		2,559
	$	3,281	$	2,561


	September 30, 2022		December 31, 2021
Deferred revenue - short term	$	1,359	$	889
Revenue recognized in the nine months ended related to amounts included in deferred revenue as of the beginning of the year.	$	803


	Total		Level 1		Level 2		Level 3
September 30, 2022
Assets
Cash equivalents:
Money market funds	$	9,024	$	9,024	$	—	$	—
Liabilities
Warrant liability – Series m-3 Preferred Stock	$	1,756	$	—	$	—	$	1,756
Warrant liability – Series S Preferred Stock	$	10,250	$	—	$	—	$	10,250


	September 30,		September 30,
Warrant liability	2022		2021
Beginning Balance	$	30,566	$	5,617
Initial fair value of Series S Preferred stock warrants issued		—		1,654
Warrants exercised		(370)		—
Revaluation of Series m-3 and S Preferred Stock warrants		(18,190)		10,737
Warrants expired		—		(14)
Ending Balance	$	12,006	$	17,994


					Weighted
			Weighted		Average
	Shares	Number of	Average		Remaining	Aggregate
	Available for	Shares	Exercise		Contractual	Intrinsic
	Grant	Outstanding	Price		Life (Years)	Value(000's)
Available and outstanding as of December 31, 2021	216,003	8,799,415	$	3.07	8.12	$	60,924
2022 Equity incentive plan	5,000,000
Granted	(1,717,299)	1,717,299		3.48
Exercised		(374,432)		1.42
Expired	11,666	(11,666)		2.34
Forfeited	506,021	(506,021)		3.81
Available and outstanding as of September 30, 2022	4,016,391	9,624,595	$	3.17	7.74	$	6,689
Vested and exercisable as of September 30, 2022		4,505,212	$	1.49	6.51	$	5,181
Awards expected to vest as of September 30, 2022		5,119,383	$	4.66	8.83	$	1,508


Class of shares	Number of Warrants		Exercise Price	Expiration Date
Series m-3 Preferred Stock	1,432,786	$	4.0000	December 31, 2024
Series S Preferred Stock	2,941,814	$	4.5000	December 31, 2024
Series S Preferred Stock	1,500,000	$	8.0000	July 31, 2024


		September 30,
		2022
Series A Preferred Stock		3,109,160
Series B Preferred Stock		3,535,621
Series m Preferred Stock		1,879,946
Series m-2 Preferred Stock		160,000
Series S Preferred Stock		2,741,341
Stock options to purchase common stock		9,624,595
Warrants outstanding for future issuance of convertible preferred stock and common stock		5,874,600
Stock options available for future issuance		4,016,391
Total shares of common stock reserved		30,941,654


	Three months ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Risk-free interest rate	3.13	%	0.77	%	8.54	%	0.39	%
Expected dividend yield	—	%	—	%	—	%	—	%
Expected volatility	52.76	%	51.84	%	52.82	%	25.92	%
Expected term (in years)	5.99		6.03		6.00		5.05


Years ending December 31,	Amount
2022 (remaining)	$	190
2023		507
Total future minimum lease payments		697
Less — Interest		(40)
Present value of lease liabilities	$	657


	Three months ended September 30,
	2022		% of Revenue	2021		% of Revenue
Revenue, net	$	1,296	100	$	784	100
Cost of revenue, net		2,195	169		1,309	167
Gross loss		(899)	(69)		(525)	(67)
Research & development		2,070	160		1,238	158
Sales & marketing		1,907	147		697	89
General & administrative		2,899	224		1,534	196
Total operating expenses		6,876	531		3,469	442
Loss from operations		(7,775)	(600)		(3,994)	(509)
Interest income (expense), net		—	—		(858)	(109)
Change in fair value of warrant liabilities		2,543	196		—	—
Other income (expense), net		(6)	—		(43)	(5)
Total other income (expense)		2,537	196		(901)	(115)
Net income (loss) before income tax		(5,238)	404		(4,895)	(624)
Income tax expense		—	—		—	—
Net income (loss)		(5,238)	404	$	(4,895)	(624)


	Three Months Ended
	September 30
	2022		2021		$ Change		% Change
Change in fair value of warrant liability	$	2,543	$	—	$	2,543	100	%
Interest income (expense), net		—		(858)		858	100	%
Other income (expenses), net		(6)		(43)		37	86	%
Total other income (expense)	$	2,537	$	(901)	$	3,438	382	%

Exhibit No.		Description

2.1*		Asset Purchase Agreement, dated as of October 10, 2022, by and between Knightscope, Inc. and Case Emergency Systems (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed on October 11, 2022).

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)).

4.1		Form of Senior Secured Convertible Note (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed on October 11, 2022).

4.2		Form of Warrant to Purchase Common Stock (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed on October 11, 2022).

10.1**		Securities Purchase Agreement, dated as of October 10, 2022, by and between Knightscope, Inc. and each purchaser identified on the signature pages thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 11, 2022).

10.2*		Form of Registration Rights Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on October 11, 2022).

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)


Dated: November 14, 2022	By:	/s/ William Santana Li
		Name:	William Santana Li
		Title:	Chief Executive Officer
			(Principal Executive Officer)