XML 18 R7.htm IDEA: XBRL DOCUMENT
v3.24.1.1.u2

The Company and Summary of Significant Accounting Policies | 3 Months Ended
--- | ---
Mar. 31, 2024
The Company and Summary of Significant Accounting Policies |
The Company and Summary of Significant Accounting Policies | NOTE 1: The Company and Summary of Significant Accounting Policies Description of Business Knightscope, Inc. was incorporated on April 4, 2013 under the laws of the State of Delaware. Knightscope, Inc. (the “Company”) is an innovator in robotics and artificial intelligence (“AI”) technologies focused on public safety. Our technologies are designed to help our clients protect the people, places, and things where we live, work, study, and visit. Our technologies are made in the USA and allow public safety professionals to more effectively identify, deter, intervene, capture, and prosecute criminals. To support our mission to make the USA the safest country in the world, we design, develop, manufacture, market, deploy and support Autonomous Security Robots (“ASRs”), the proprietary Knightscope Security Operations Center (“KSOC”) software user interface, Blue Light emergency communication devices (“ECDs”), and the Knightscope Emergency Management System (“KEMS”) software platform. Basis of Presentation and Liquidity The unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures have been condensed or omitted pursuant to such rules and regulations. The unaudited condensed financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair presentation of the period presented. The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results to the expected for the year ending December 31, 2024 or for other future periods. These condensed financial statements should be read in conjunction with the Company’s audited financial statements and accompanying notes for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on April 1, 2024. The Company’s significant accounting policies are described in Note 1 to those audited financial statements. Since its inception, the Company has incurred significant operating losses and negative cash flows from operations which is principally the result of scaling the business and significant research and development activities related to the development, continued improvement, and deployment of the Company’s ASRs (hardware and software). Cash and cash equivalents on hand were $2.5 million as of March 31, 2024, compared to $2.3 million as of December 31, 2023. The Company has historically incurred losses and negative cashflows from operations. As of March 31, 2024, the Company also had an accumulated deficit of approximately $169.1 million and stockholders’ deficit of approximately $26.6 million. The Company is dependent on additional fundraising in order to sustain its ongoing operations. Based on current operating levels, the Company will need to raise additional funds in the next twelve months by selling additional equity or incurring debt. These factors raise substantial doubt about the Company’s ability to continue as a going concern for the twelve months from the date of this report. Basic and Diluted Net Loss per Share Net loss per share of common stock is computed using the two-class method required for participating securities based on their participation rights. All series of convertible preferred stock are participating securities as the holders are entitled to participate in common stock dividends with common stock on an as converted basis. The holders of the Company’s preferred stock are also entitled to noncumulative dividends prior and in preference, to the Company’s common stock and do not have a contractual obligation to share in the losses of the Company. In accordance with the two-class method, earnings allocated to these participating securities, which include participation rights in undistributed earnings with common stock, are subtracted from net loss to determine net loss attributable to common stockholders upon their occurrence. Basic net loss per share is computed by dividing net loss attributable to common stockholders (net adjusted for preferred stock dividends declared or accumulated) by the weighted average number of common shares outstanding during the period. All participating securities are excluded from basic weighted average shares outstanding. In computing diluted net loss attributable to common stockholders, undistributed earnings are re-allocated to reflect the potential impact of dilutive securities. Diluted net loss per share attributable to common stockholders is computed by dividing net loss attributable to common stockholders by diluted weighted average shares outstanding, including potentially dilutive securities, unless anti-dilutive. Potentially dilutive securities that were excluded from the computation of diluted net loss per share consist of the following: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | March 31, |  | March 31,
​ | ​ | 2024 | ​ | 2023
Series A Preferred Stock (convertible to Class B Common Stock) | ​ | ​ | 1,418,381 | ​ | ​ | 1,418,381
Series B Preferred Stock (convertible to Class B Common Stock) | ​ | ​ | 3,498,859 | ​ | ​ | 3,498,859
Series m Preferred Stock (convertible to Class A Common Stock) | ​ | ​ | 1,775,586 | ​ | ​ | 1,808,498
Series m-2 Preferred Stock (convertible to Class B Common Stock) | ​ | ​ | 160,000 | ​ | ​ | 160,000
Series S Preferred Stock (convertible to Class A Common Stock) | ​ | ​ | 2,620,258 | ​ | ​ | 2,693,500
Warrants to purchase Class A Common Stock | ​ | ​ | 1,138,446 | ​ | ​ | 1,138,446
Warrants to purchase Series m-3 Preferred Stock | ​ | ​ | 1,432,786 | ​ | ​ | 1,432,786
Warrants to purchase Series s Preferred Stock | ​ | ​ | 2,941,814 | ​ | ​ | 4,441,814
2022 Convertible Notes | ​ | ​ | — | ​ | ​ | 5,191,966
Stock options | ​ | ​ | 8,864,302 | ​ | ​ | 9,053,683
Total potentially dilutive shares | ​ | ​ | 23,850,432 | ​ | ​ | 30,837,933
​ As all potentially dilutive securities are anti-dilutive as of March 31, 2024 and 2023, diluted net loss per share is the same as basic net loss per share for each period. Segments The Company has one operating segment and one reportable segment as its chief operating decision maker, who is its Chief Executive Officer, reviews financial information on a regular basis for purposes of allocating resources and evaluating financial performance. All long-lived assets are located in the USA and substantially all revenue is attributed to sellers and buyers based in the USA. Comprehensive Loss Net loss was equal to comprehensive loss for the three-month periods ended March 31, 2024 and 2023. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make judgements, estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. Specific accounts that require management estimates include, but are not limited to, estimating the useful lives of the Company’s ASRs, property and equipment and intangible assets, certain estimates required within revenue recognition, warranty and allowance for credit losses, determination of deferred tax valuation allowances, estimating fair values of the Company’s share-based awards, warrant liability, and derivative liabilities, inclusive of any contingent assets and liabilities. Actual results could differ from those estimates and such differences may be material to the financial statements. Reclassifications Certain reclassifications have been made to the fiscal year 2023 condensed balance sheet to conform to the fiscal year 2024 presentation. The reclassifications had no impact on total assets, total liabilities, or stockholders’ equity. Accounting Pronouncements Adopted in 2024 None. Accounting Pronouncements Not Yet Adopted In November 2023, Financial Accounting Standards Board (“FASB”) released Accounting Standards Update No. 2023-07, Segment Reporting. The amendment improves financial reporting by requiring disclosure of incremental segment information on an annual and interim basis. It is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Management does not believe the implementation of this pronouncement will have a material impact on the Company’s financial statements. In December 2023, FASB released ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The ASU enhances income tax disclosures for the effective tax rate reconciliation and income taxes paid. This ASU is effective for fiscal periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating this ASU and the impact it may have on its financial statement disclosures. Inventory Inventory, principally purchased components, is stated at the lower of cost or net realizable value. Cost is determined using an average cost, which approximates actual cost on a first-in, first-out basis. Inventory in excess of salable amounts and inventory which is considered obsolete based upon changes in existing technology is written off. At the point of loss recognition, a new lower cost basis for that inventory is established and subsequent changes in facts and circumstances do not result in the restoration or increase in the new cost basis. ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | March 31, | ​ | December 31,
​ | ​ | 2024 |  | 2023
Raw materials | ​ | $ | 2,427 | ​ | $ | 2,112
Work in process | ​ | ​ | 181 | ​ | ​ | 82
Finished goods | ​ |  | 275 | ​ |  | 126
​ | ​ | $ | 2,883 | ​ | $ | 2,320
​ In the first quarter of 2024, the Company discontinued the version 3 K5s and wrote off corresponding obsolete inventory of approximately $0.4 million against service cost of revenue, net. ​ Autonomous Security Robots, net ASRs consist of materials, ASRs in progress and finished ASRs. ASRs in progress and finished ASRs include materials, labor and other direct and indirect costs used in their production. Finished ASRs are valued using a discrete bill of materials, which includes an allocation of labor and direct overhead based on assembly hours. Depreciation expense on ASRs is recorded using the straight-line method over their estimated expected lives, which currently ranges from 3 to 5 years. Depreciation expense of finished ASRs included in research and development expense amounted to $1 and $2, depreciation expense of finished ASRs included in sales and marketing expense amounted to $0 and $12, and depreciation expense included in cost of revenue, net amounted to $483 and $361 for the three months ended March 31, 2024 and 2023, respectively. ASRs, net, consisted of the following: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | March 31, |  | December 31,
​ | ​ | 2024 | ​ | 2023
Raw materials | ​ | $ | 2,552 | ​ | $ | 3,841
ASRs in progress | ​ | ​ | 2,349 | ​ | ​ | 1,575
Finished ASRs | ​ | ​ | 9,597 | ​ | ​ | 12,130
​ | ​ | ​ | 14,498 | ​ | ​ | 17,546
Accumulated depreciation on Finished ASRs | ​ | ​ | (6,011) | ​ | ​ | (8,701)
​ | ​ | ​ | ​ | ​ | ​ | ​
ASRs, net | ​ | $ | 8,487 | ​ | $ | 8,845
​ In the first quarter of 2024, the Company discontinued the version 3 K5s and wrote off approximately $0.4 million against service cost of revenue, net. ​ The components of the Finished ASRs, net are as follows:
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | March 31, | ​ | December 31,
​ | ​ | 2024 | ​ | 2023
ASRs on lease or available for lease |  | $ | 8,494 |  | $ | 10,804
Demonstration ASRs | ​ | ​ | 470 | ​ | ​ | 607
Research and development ASRs | ​ | ​ | 67 | ​ | ​ | 194
Charge boxes | ​ | ​ | 566 | ​ | ​ | 525
​ | ​ | ​ | 9,597 | ​ | ​ | 12,130
Less: accumulated depreciation | ​ | ​ | (6,011) | ​ | ​ | (8,701)
Finished ASRs, net | ​ | $ | 3,586 | ​ | $ | 3,429
​ Intangible Assets ​ The gross carrying amounts and accumulated amortization of the intangible assets with determinable lives are as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | ​ |  | March 31, 2024
​ | ​ | Amortization | ​ | Gross | ​ | ​ | ​ |  | ​ | ​
​ | ​ | Period | ​ | carrying | ​ | Accumulated | ​ | Carrying
Intangible assets with determinable lives |  | (years) |  | amount |  | amortization |  | amount, net
Developed technology | ​ | 5 | ​ | $ | 990 | ​ | $ | (289) | ​ | $ | 701
Customer relationships | ​ | 8 | ​ | ​ | 950 | ​ |  | (173) | ​ |  | 777
Trademark | ​ | 1 | ​ | ​ | 230 | ​ |  | (230) | ​ |  | —
Total | ​ | ​ | ​ | $ | 2,170 | ​ | $ | (692) | ​ | $ | 1,478
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | ​ |  | December 31, 2023
​ | ​ | Amortization | ​ | Gross | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Period | ​ | carrying | ​ | Accumulated | ​ | Carrying
Intangible assets with determinable lives | ​ | (years) | ​ | amount |  | amortization |  | amount, net
Developed technology |  | 5 | ​ | $ | 990 | ​ | $ | (239) | ​ | $ | 751
Customer relationships |  | 8 | ​ |  | 950 | ​ |  | (144) | ​ |  | 806
Trademark |  | 1 | ​ |  | 230 | ​ |  | (230) | ​ |  | —
Total | ​ | ​ | ​ | $ | 2,170 | ​ | $ | (613) | ​ | $ | 1,557
​ Intangible assets amortization expense totaled $79 and $137 for the three months ended March 31, 2024 and 2023 respectively. Intangible asset amortization was recorded in sales and marketing and cost of revenue, net - service in the amounts of $30 and $49, respectively for the three month period ended March 31, 2024 compared to amortization expense recorded in sales and marketing and cost of revenue, net - service in the amounts of $87 and $50, respectively for the three month period ended March 31, 2023. As of March 31, 2024, future intangible assets amortization expense for each of the next five years and thereafter is as follows: ​
​ | ​ | ​ | ​
Year ending December 31, |  | Amount
2024 (remaining) | ​ | $ | 238
2025 | ​ | ​ | 317
2026 | ​ | ​ | 317
2027 | ​ | ​ | 275
2028 | ​ | ​ | 118
Thereafter | ​ | ​ | 213
Total | ​ | $ | 1,478
​ Other Current Liabilities Other current liabilities consisted of the following: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | March 31, |  | December 31,
​ | ​ | 2024 | ​ | 2023
Sales tax | ​ | $ | 387 | ​ | $ | 364
Customer deposits | ​ |  | 297 | ​ |  | 239
Warranty liability | ​ |  | 341 | ​ |  | 406
Other | ​ | ​ | 332 | ​ | ​ | 450
​ | ​ | $ | 1,357 | ​ | $ | 1,459
​ Accrued Warranty The liability for estimated warranty claims is accrued at the time of sale and the expense is recorded in the condensed statements of operations in cost of revenue, net - product. The liability is established using historical warranty claim experience. The current provision may be adjusted to take into account unusual or non-recurring events in the past or anticipated changes in future warranty claims. Adjustments to the warranty accrual are recorded if actual claim experience indicates that adjustments are necessary. Warranty reserves are reviewed to ensure critical assumptions are updated for known events that may impact the potential warranty liability. Change in the warranty liability for the three months ended consisted of the following: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | March 31,
​ |  | 2024 |  | 2023
Balance January 1, | ​ | $ | 406 | ​ | $ | 145
Provision for warranties issued during the quarter | ​ |  | 41 | ​ |  | —
Warranty services provided | ​ | ​ | (106) | ​ | ​ | (36)
​ | ​ | $ | 341 | ​ | $ | 109
​ Accrued Expenses Accrued expenses consisted of the following: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | March 31, |  | December 31,
​ | ​ | 2024 | ​ | 2023
Legal, consulting, and financial services | ​ | $ | 382 | ​ | $ | 117
Payroll and payroll taxes | ​ |  | 314 | ​ |  | 604
Credit cards | ​ |  | 267 | ​ |  | 244
Accrued interest | ​ | ​ | 60 | ​ | ​ | 10
Other | ​ | ​ | 209 | ​ | ​ | 180
​ | ​ | $ | 1,232 | ​ | $ | 1,155
​ Convertible Preferred Warrant Liabilities and Common Stock Warrants Freestanding warrants to purchase shares of the Company’s preferred stock are classified as liabilities on the balance sheets at their estimated fair value because the underlying shares of preferred stock are contingently redeemable and, therefore, may obligate the Company to transfer assets at some point in the future. The preferred stock warrants are recorded at fair value upon issuance and are subject to remeasurement to their respective estimated fair values. At the end of each reporting period, changes in the estimated fair value of the preferred stock warrants are recorded in the condensed statements of operations. The Company will continue to adjust the liability associated with the preferred stock warrants for changes in the estimated fair value until the earlier of the exercise or expiration of the preferred stock warrants or the completion of a sale of the Company. Upon an initial public offering, the preferred stock warrants will convert into warrants to purchase common stock and any liabilities recorded for the preferred stock warrants will be reclassified to additional paid-in capital and will no longer be subject to remeasurement. Common stock warrants that are not considered derivative liabilities are accounted for at fair value at the date of issuance in additional paid-in capital. The fair value of these common stock warrants is determined using the Black-Scholes option-pricing model. Stock-Based Compensation The Company accounts for stock-based compensation in accordance with Accounting Standards Codification (“ASC”) 718, Compensation - Stock Compensation, which requires that the estimated fair value on the date of grant be determined using the Black-Scholes option pricing model with the fair value recognized over the requisite service period of the awards, which is generally the option vesting period. The Company’s determination of the fair value of the stock-based awards on the date of grant, using the Black-Scholes option pricing model, is affected by the fair value of the Company’s common stock as well as other assumptions regarding a number of highly complex and subjective variables. These variables include but are not limited to the Company’s expected stock price volatility over the term of the awards, and actual and projected employee option exercise behaviors. Because there is insufficient historical information available to estimate the expected term of the stock-based awards, the Company adopted the simplified method of estimating the expected term of options granted by taking the average of the vesting term and the contractual term of the option. The Company recognizes forfeitures as they occur when calculating stock-based compensation for its equity awards.

X
- References No definition available. + Details
Name: | us-gaap_OrganizationConsolidationAndPresentationOfFinancialStatementsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for the organization, consolidation and basis of presentation of financial statements disclosure, and significant accounting policies of the reporting entity. May be provided in more than one note to the financial statements, as long as users are provided with an understanding of (1) the significant judgments and assumptions made by an enterprise in determining whether it must consolidate a VIE and/or disclose information about its involvement with a VIE, (2) the nature of restrictions on a consolidated VIE's assets reported by an enterprise in its statement of financial position, including the carrying amounts of such assets, (3) the nature of, and changes in, the risks associated with an enterprise's involvement with the VIE, and (4) how an enterprise's involvement with the VIE affects the enterprise's financial position, financial performance, and cash flows. Describes procedure if disclosures are provided in more than one note to the financial statements. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 235 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//235/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 275 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//275/tableOfContent Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 810 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//810/tableOfContent Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//205/tableOfContent + Details
Name: | us-gaap_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureAndSignificantAccountingPoliciesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration