UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
EXCHANGE ACT OF 1934
For the quarterly period ended
or
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
(Address of Principal Executive Offices)
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class |
| Trading symbol |
| Name of Exchange on which registered |
Global Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ | ||
☒ | Smaller reporting company | Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of August 10, 2022, there were shares of the registrant’s Class A common stock outstanding.
TABLE OF CONTENTS
2
Cautionary Note on Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including but not limited to, statements regarding our future operating results and financial position, including projections of our future financial performance, our business strategy and plans, market growth, our objectives for future operations, industry trends, anticipated trends in our business and other characterizations of future events or circumstances are forward-looking statements. Words such as “believe,” “may,” “will,” “estimate,” “potential,” “continue,” “anticipate,” “intend,” “expect,” “could,” “would,” “project,” “plan,” “target,” and similar expressions are intended to identify forward-looking statements.
Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
● | The success of our products and product candidates will require significant capital resources and years of development efforts; |
● | Our limited number of deployments and the risk of limited market acceptance of our products; |
● | Our ability to protect our intellectual property and to develop, maintain and enhance a strong brand; |
● | Our limited operating history by which performance can be gauged; |
● | Our ability to operate and collect digital information on behalf of our clients, which is dependent on the privacy laws of jurisdictions in which our Autonomous Security Robots (“ASR”) operate, as well as the corporate policies of our clients, which may limit our ability to fully deploy our technologies in various markets; |
● | Our ability to raise capital and the availability of future financing; and |
● | Unpredictable events, such as the COVID-19 pandemic and resulting supply chain constraints, and associated business disruptions could seriously harm our future revenues and financial condition, delay our operations, increase our costs and expenses, and impact our ability to raise capital. |
We have based these forward-looking statements on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward- looking statements are subject to a number of risks, uncertainties, and assumptions and other factors that could cause actual results to differ materially from those stated, including those described in “Risk Factors” in Part I, Item 1A of our most recent Annual Report on Form 10-K, in Part II, Item 1A of this Quarterly Report on Form 10-Q, as such factors may be updated in our filings with the Securities and Exchange Commission, (“the SEC”). Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. In particular, disruptions and delays with certain vendors in our supply chain, as a result of the COVID-19 pandemic, may adversely impact component manufacturers’ ability to meet our client demand timely. Additionally, the prioritization of shipments of certain products, as a result of the pandemic, could cause delays in our ability to deploy our ASRs. Such disruptions could result in a delay in our ability to recognize revenue on sales. The physical security industry in general and our financial position and operating results, in particular, have been material, are changing rapidly, and cannot be predicted.
3
You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, performance, or achievements. Our forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q, and we undertake no obligation to update any of these forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q or to conform these statements to actual results or revised expectations, except as required by applicable law.
In this Quarterly Report on Form 10-Q, the words “we,” “us,” “our,” and “Knightscope” refer to Knightscope, Inc., unless the context requires otherwise.
4
PART I —FINANCIAL INFORMATION
Item 1. Financial Statements
KNIGHTSCOPE, INC.
Condensed Balance Sheets
(In thousands, except share and per share data)
| June 30, |
| December 31, | |||
2022 | 2021 | |||||
ASSETS | (Unaudited) | (1) | ||||
Current assets: |
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Cash and cash equivalents | $ | | $ | | ||
Restricted cash |
| — |
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Accounts receivable (net of allowance for doubtful accounts $ |
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Prepaid expenses and other current assets |
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Total current assets |
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Autonomous Security Robots, net |
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Property, equipment and software, net |
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Operating lease right-of-use-assets |
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Other assets |
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Total assets | $ | | $ | |||
LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT |
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Current liabilities: |
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Accounts payable | $ | | $ | | ||
Accrued expenses |
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Deferred revenue |
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Debt obligations |
| — |
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Operating lease liabilities |
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Other current liabilities |
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Total current liabilities |
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Preferred stock warrant liabilities |
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Operating lease liabilities |
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Total liabilities |
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Commitments and contingencies (Note 8) |
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Preferred stock, $ |
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Stockholders’ deficit: |
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Class A common stock, $ |
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Class B common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
| ( |
| ( | ||
Total stockholders’ deficit |
| ( |
| ( | ||
Total liabilities, preferred stock and stockholders’ deficit | $ | | $ | |
(1) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
KNIGHTSCOPE, INC.
Condensed Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
Three Months Ended June 30, | Six months ended June 30, | |||||||||||
| 2022 |
| 2021 |
| 2022 |
| 2021 | |||||
Revenue, net | $ | | | $ | | | ||||||
Cost of revenue, net | | |
| |
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Gross loss | ( | ( |
| ( |
| ( | ||||||
Operating expenses: |
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Research and development | | |
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Sales and marketing | | |
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General and administrative | | |
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Total operating expenses | | |
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Loss from operations | ( | ( |
| ( |
| ( | ||||||
Other income (expense): |
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Change in fair value of warrant liabilities | | ( |
| |
| ( | ||||||
Interest income (expense), net | | ( |
| ( |
| ( | ||||||
Other income (expense), net | ( | |
| ( |
| | ||||||
Total other income (expense) | | ( |
| |
| ( | ||||||
Net income (loss) before income tax expense | | ( |
| ( |
| ( | ||||||
Income tax (expense) | — | — |
| — |
| — | ||||||
Net income (loss) | | ( |
| ( |
| ( | ||||||
Preferred stock dividends | — | ( |
| — |
| ( | ||||||
Net income (loss) attributable to common stockholders | $ | | ( | $ | ( | ( | ||||||
Basic net income (loss) per common share | $ | | ( | $ | ( | ( | ||||||
Diluted net income (loss) per common share | $ | | ( | $ | ( | ( | ||||||
Weighted average shares used to compute basic net income (loss) per share | | |
| |
| | ||||||
Weighted average shares used to compute diluted net income | | | | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
KNIGHTSCOPE, INC.
Condensed Statements of Stockholders’ Deficit
(In thousands, except share and per share data)
(Unaudited)
Series m | Series m‑2 |
| Series m‑3 |
| Series m‑4 |
| Series S |
| Series A |
| Series B |
| Class B |
| |||||||||||||||||||||||||||||||||||
Preferred | Preferred | Preferred | Preferred | Preferred | Preferred | Preferred | common | Additional | Total | ||||||||||||||||||||||||||||||||||||||||
| 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 |
| capital |
| Deficit |
| Deficit | ||||||||||||
Balance as of March 31, 2021 |
| | $ | | | $ | |
| | $ | |
| | $ | |
| | $ | |
| | $ | |
| | $ | |
| | $ | |
| $ | | $ | ( | $ | ( | |||||||||||
Stock based compensation |
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Warrants expired | | ||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of Series s Preferred stock, net of issuance costs | | |
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Series m‑4 accrued dividend | |
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| ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Net income (loss) |
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| ( | ( | |||||||||||||||||||||||||||||||||||||||||||
Balance as of June 30, 2021 | | $ | | | $ | | | $ | |
| | $ | |
| | $ | |
| | $ | |
| | $ | |
| | $ | |
| $ | | $ | ( | $ | ( |
Series m | Series m‑2 |
| Series m‑3 |
| Series m‑4 |
| Series S |
| Series A |
| Series B |
| Class B |
|
| ||||||||||||||||||||||||||||||||||
Preferred | Preferred | Preferred | Preferred | Preferred | Preferred | Preferred | common | Additional | Total | ||||||||||||||||||||||||||||||||||||||||
| 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 |
| capital |
| Deficit |
| Deficit | ||||||||||||
Balance as of December 31, 2020 |
| | $ | | | $ | |
| | $ | |
| | $ | |
| | $ | |
| | $ | |
| | $ | |
| | $ | |
| $ | | $ | ( |
| $ | ( | ||||||||||
Stock based compensation |
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Warrants expired |
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Issuance of Series s Preferred stock, net of issuance costs | | |
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Series m‑4 accrued dividend | |
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| ( |
| ( | |||||||||||||||||||||||||||||||||||||||
Net income (loss) |
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|
| ( |
| ( | ||||||||||||||||||||||||||||||||||||||||
Balance as of June 30, 2021 | | $ | | | $ | | | $ | |
| | $ | |
| | $ | |
| | $ | |
| | $ | |
| | $ | |
| $ | | $ | ( |
| $ | ( |
7
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 | ||||||||||||||
March 31, 2022 |
| | $ | | — | $ | — |
| | $ | |
| — | $ | — |
| | $ | |
| | $ | |
| | $ | |
| | $ | |
| | $ | |
| $ | | $ | ( | $ | ( | |||||||||||||