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The Company and Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2025

Organization, Consolidation and Presentation of Financial Statements [Abstract]

The Company and Summary of Significant Accounting Policies

NOTE 1: The Company and Summary of Significant Accounting Policies

Description of Business

Knightscope, Inc. (the “Company”), a Delaware corporation, is a public safety innovator that builds Autonomous Security Robots (“ASR”) and Emergency Communication Devices (“ECD”). The Company designs, manufactures, and deploys its technologies to improve public safety and to protect the places people live, work, study and visit. The Company provides its cutting-edge solutions, including remote monitoring capabilities, to both the private sector and to government clients including law enforcement.

The Company operates in a highly fragmented U.S. public safety market that is experiencing strong demand for automation and artificial intelligence-driven solutions due to rising labor costs, staffing shortages, inconsistent service quality, and challenging crime rates. The Company’s solutions combine proactive physical deterrence with critical emergency response tools and remote monitoring, offering an integrated approach to public safety.

The Company was founded in April 2013 and is headquartered in Mountain View, California, the heart of Silicon Valley.

Basis of Presentation and Liquidity

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Company’s fiscal year end is December 31.

The unaudited condensed financial statements have been prepared in accordance 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. Unaudited interim results are not necessarily indicative of the results for the full fiscal year or for any future interim 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, 2024 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 31, 2025. The Company’s significant accounting policies are described in Note 1 to those audited financial statements.

In accordance with Accounting Standards Codification (“ASC”) Topic 205-40, Presentation of Financial Statements - Going Concern, the Company evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the date that these condensed financial statements are issued.

The condensed financial statements of the Company have been prepared on a going concern basis, which contemplates the realization of assets and the discharge of liabilities in the normal course of business. Cash and cash equivalents on hand were $12.7 million as of March 31, 2025, compared to $11.1 million as of December 31, 2024. The Company has historically incurred losses and negative cashflows from operations. As of March 31, 2025, the Company also had an accumulated deficit of approximately $200.1 million and stockholders’ equity of approximately $18.2 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. New financings may not be available to the Company on commercially acceptable terms, or at all. If the Company is unable to obtain additional capital, the Company will assess its capital resources and may be required to delay, reduce the scope of, or eliminate some or all of its operations, including capital expenditures, or downsize its organization, any of which may have a material adverse effect on its business, financial condition, results of operations, and ability to operate as a going

concern. 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.

Reverse Stock Split

On August 16, 2024, stockholders approved a reverse stock split at a ratio between 1-for-5 and 1-for-50. On September 4, 2024, the Board of Directors set the final ratio at 1-for-50 for both Class A and Class B Common Stock. The split became effective on September 13, 2024, following the filing of an amendment to the Certificate of Incorporation in Delaware. No fractional shares were issued; instead, affected stockholders received a cash payment based on the September 13 closing price on The Nasdaq Capital Market (“Nasdaq”), totaling approximately $78. All outstanding stock options were adjusted accordingly, and all share and per-share amounts in financial statements were retroactively updated to reflect the split.

Segments

The Company has one operating segment and one reportable segment as its chief operating decision maker (“CODM”), 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 United States and substantially all revenue is attributed to sellers and buyers based in the United States.

Reclassifications

Certain reclassifications have been made to the fiscal year 2024 condensed financial statements to conform to the fiscal year 2025 presentation. The reclassifications had no impact on total assets, total liabilities, or stockholders’ equity.

Comprehensive Loss

Net loss was equal to comprehensive loss for the three month periods ended March 31, 2025 and 2024.

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 condensed financial statements.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company places its cash and cash equivalents in highly liquid instruments with, and in the custody of, financial institutions with high credit ratings.

Restricted Cash

The Company had restricted cash as collateral for the Company’s corporate credit card program which was discontinued during the first quarter of 2025. As of March 31, 2025 and December 31, 2024, the carrying value of restricted cash was $0 and $0.1 million, respectively.

Concentrations of Credit Risk

The Company extends credit to clients in the normal course of business and performs ongoing credit evaluations of its clients. Concentrations of credit risk with respect to accounts receivable exist to the full extent of amounts presented in the financial statements. The Company does not require collateral from its clients to secure accounts receivable.

Accounts receivable was derived from the leasing of proprietary ASRs along with access to browser-based interface Knightscope Security Operations Center (“KSOC”) as well as the sale of ECDs. The Company reviews its receivables for collectibility based on historical loss patterns, aging of the receivables, and assessments of specific identifiable client accounts considered at risk or uncollectible and provides allowances for potential credit losses, as needed. The Company also considers any changes to the financial condition of its clients and any other external market factors that could impact the collectibility of the receivables in the determination of the allowance for credit losses. Based on these assessments, the Company recorded a $138 allowance for credit losses on its accounts receivable as of March 31, 2025 compared to an allowance of $139 on its accounts receivable balance as of December 31, 2024.

As of March 31, 2025, the Company had one client whose accounts receivable balance totaled 10% or more of the Company’s total accounts receivable (26%) compared with one client as of December 31, 2024 (13%).

For the three months ended March 31, 2025, the Company had one client who individually accounted for 10% or more of the Company’s total revenue, net (20%) compared with no clients who individually accounted for 10% of total revenue, net for the three months ended March 31, 2024.

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,
		2025			2024
Raw materials		$	1,484		$	1,539
Work in process			11			123
Finished goods			112			135
		$	1,607		$	1,797

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 is included in research and development expense, sales and marketing expense, and cost of revenue, net on the Company’s condensed statements of operations. Depreciation expense on finished ASRs was $0.5 million and $0.5 million for the three months ended March 31, 2025 and 2024, respectively.

ASRs, net, consisted of the following:


		March 31,			December 31,
		2025			2024
Raw materials		$	2,764		$	2,465
ASRs in progress			242			322
Finished ASRs			11,933			11,790
			14,939			14,577
Less: accumulated depreciation on Finished ASRs			(6,243)			(5,812)
ASRs, net		$	8,696		$	8,765

The components of the Finished ASRs, net are as follows:


		March 31,			December 31,
		2025			2024
ASRs on lease or available for lease		$	10,589		$	10,553
Demonstration ASRs			692			587
Research and development ASRs			102			102
Charge boxes			550			548
			11,933			11,790
Less: accumulated depreciation			(6,243)			(5,812)
Finished ASRs, net		$	5,690		$	5,978

Intangible Assets

The gross carrying amounts and accumulated amortization of the intangible assets with determinable lives are as follows:


				March 31, 2025
		Amortization		Gross
		Period		carrying			Accumulated			Carrying
Intangible assets with determinable lives		(years)		amount			amortization			amount, net
Developed technology		5		$	990		$	(487)		$	503
Customer relationships		8			950			(292)			658
Total				$	1,940		$	(779)		$	1,161


				December 31, 2024
		Amortization		Gross
		Period		carrying			Accumulated			Carrying
Intangible assets with determinable lives		(years)		amount			amortization			amount, net
Developed technology		5		$	990		$	(437)		$	553
Customer relationships		8			950			(262)			688
Total				$	1,940		$	(699)		$	1,241

Intangible assets amortization expense totaled $80 and $79 for the three months ended March 31, 2025 and 2024 respectively. Intangible assets amortization was recorded in sales and marketing and cost of revenue, net - service in the amounts of $30 and $50, respectively for the three month period ended March 31, 2025 compared to amortization expense

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.

As of March 31, 2025, future intangible assets amortization expense for each of the next five years and thereafter is as follows:


Year ending December 31,		Amount
2025 (remaining 9 months)		$	237
2026			317
2027			275
2028			118
2029			119
2030 and thereafter			95
Total		$	1,161

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:


		March 31,			December 31,
		2025			2024
Legal, consulting and financial services		$	277		$	58
Sales tax			369			378
Warranty liability			389			364
Payroll and payroll taxes			292			364
Customer deposits			161			82
Credit cards			138			128
Accrued interest			105			—
Other			544			420
		$	2,275		$	1,794

Warranty Liability

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,
		2025			2024
Balance January 1,		$	364		$	406
Provision for warranties issued			67			41
Warranty services provided			(42)			(106)
		$	389		$	341

Convertible Preferred Warrant Liabilities and Common Stock Warrants

Freestanding warrants to purchase shares of the Company’s preferred stock were classified as liabilities on the balance sheets at their estimated fair value because the underlying shares of preferred stock were contingently redeemable and, therefore, may have obligated the Company to transfer assets at some point in the future. The preferred stock warrants were recorded at fair value upon issuance and were 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 were recorded in the condensed statements of operations. The Company adjusted the liability associated with the preferred stock warrants for changes in the estimated fair value until the earlier of the exercise or conversion. On May 15, 2024, the preferred stock warrants converted into warrants to purchase common stock and any liabilities recorded for the preferred stock warrants were reclassified to additional paid-in capital and are no longer 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.

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with 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.

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 voting, dividend, liquidation and other rights and powers of the common stock are subject to and qualified by the rights, powers and preferences of any series of preferred stock as may be designated by the Company’s Board of Directors and outstanding from time to time. 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 for the three months ended March 31, 2025 and 2024 consist of the following:


		March 31,		March 31,
		2025		2024
Series A Preferred Stock (convertible to Class B Common Stock)		—		28,368
Series B Preferred Stock (convertible to Class B Common Stock)		—		69,977
Series m Preferred Stock (convertible to Class A Common Stock)		—		35,512
Series m-2 Preferred Stock (convertible to Class B Common Stock)		—		3,200
Series S Preferred Stock (convertible to Class A Common Stock)		—		52,405
Warrants to purchase common stock (convertible to Class A Common Stock)		186,411		22,769
Warrants to purchase Series m-3 Preferred Stock (convertible to Class A Common Stock)		—		28,656
Warrants to purchase Series S Preferred Stock (convertible to Class A Common Stock)		—		58,836
Stock options		299,860		177,286
Total potentially dilutive shares		486,271		477,009

The weighted average number of shares of common stock outstanding as of March 31, 2025 includes the weighted average effect of the 2,929 vendor warrants (as defined in Note 5 - Capital Stock and Warrants) because the exercise of such warrants requires nominal consideration ($0.001 per share exercise price for each pre-funded warrant). As of March 31, 2025, none of the vendor warrants have been exercised and are not included in the table above.

As all potentially dilutive securities are anti-dilutive as of March 31, 2025 and 2024, diluted net loss per common share is the same as basic net loss per common share for each period.

On May 15, 2024 (the “Preferred Stock Conversion Date”), pursuant to the terms of the Company’s Amended and Restated Certificate of Incorporation, as amended to date (the “Certificate of Incorporation”) each share of the Company’s Super Voting Preferred Stock (as defined in the Certificate of Incorporation) was automatically converted into fully-paid, non-assessable shares of Class B Common Stock and each share of the Company’s Ordinary Preferred Stock (together with the Super Voting Preferred Stock, the “Preferred Stock”) was automatically converted into fully-paid, non-assessable shares of Class A Common Stock, in each case at the then effective applicable Conversion Rate, (as defined in the Certificate of Incorporation), as a result of the receipt by the Company of a written request for such conversion from the holders of a majority of the voting power of the Preferred Stock then outstanding. As a result, no shares of previously authorized Preferred Stock remain outstanding.

Accounting Pronouncements Adopted in 2025

None.

Accounting Pronouncements Not Yet Adopted

On December 14, 2023, the Financial Standards Accounting Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements. Under the new guidance, entities must consistently categorize and provide greater disaggregation of information in the rate reconciliation. The amendment is effective for fiscal years beginning after December 15, 2024. The Company is currently evaluating the impact of the new standards on the financial statements and related disclosures.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The standard requires entities to disclose specified information about certain expenses in the notes to the financial statements, including employee compensation. It is effective on a prospective basis for annual periods beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027 with early adoption permitted. Management does not believe the implementation of this standard will have a material impact on the Company’s financial statements.

Management has reviewed other recently issued accounting pronouncements issued or proposed by the FASB and does not believe any of these accounting pronouncements has had or will have a material impact on the condensed financial statements.