10-K: Knightscope Reports 5% Revenue Growth, Deepening Losses Amid Strategic Acquisition

Knightscope, a security technology firm, reported a 5% revenue increase to $11.3 million in 2025, alongside a widened net loss of $33.8 million, while completing a significant acquisition to bolster its integrated security platform.

Summary

• Total revenue increased by 5% to $11.3 million for the year ended December 31, 2025, up from $10.8 million in 2024, driven by growth in service-related revenue and Emergency Communication Device (ECD) product sales.
• Net loss widened to $33.8 million in 2025, compared to $31.7 million in 2024, primarily due to increased research and development expenses and higher cost of revenue.
• Cash and cash equivalents on hand increased to $20.6 million as of December 31, 2025, from $11.1 million in 2024, largely due to financing activities.
• The company's accumulated deficit reached $227.0 million as of December 31, 2025, and its independent auditor expressed substantial doubt about its ability to continue as a going concern.
• Knightscope completed the acquisition of Event Risk LLC on February 27, 2026, for $5.0 million cash, $1.1 million debt repayment, 1,724,418 shares of Class A Common Stock, and $4.0 million in deferred cash payments, aiming to integrate licensed response services.
• Research and development expenses surged by 77% to $12.5 million in 2025, reflecting continued investment in next-generation hardware platforms (K7 ASR, K1 Capsule, K1 Super Tower) and core software capabilities.
• The company experienced significant supply chain constraints in 2025, including extended lead times, limited electronic component availability, and increased costs due to tariffs, impacting production and margins, particularly for ECDs.
• As of December 31, 2025, the total backlog was approximately $2.8 million, comprising $0.7 million for ASR orders and $2.1 million for ECD orders, which increased to $3.1 million by March 24, 2026.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing with a negative sentiment due to persistent and increasing net losses, a widening gross loss, and the auditor's going concern warning, despite some revenue growth and strategic acquisition activity. The significant cash burn from operations and reliance on future capital raises are major concerns.

Positives

• Total revenue increased by 5% year-over-year, reaching $11.3 million in 2025.
• Service revenue, including Machine-as-a-Service (MaaS) for ASRs and maintenance for ECDs, grew by 7% to $8.0 million.
• Cash and cash equivalents significantly increased to $20.6 million at year-end 2025 from $11.1 million in 2024.
• The strategic acquisition of Event Risk LLC is expected to strengthen the company's liquidity profile by adding a free cash flow generating business and enhancing overall capital efficiency.
• Sales, general and administrative expenses decreased by 10% to $16.6 million, primarily due to lower investor relations and professional services fees.
• The company successfully raised $42.8 million in net proceeds through its at-the-market (ATM) offering program in 2025, demonstrating continued access to capital markets.
• Knightscope holds 12 patents related to its ASRs and security data analysis, protecting its intellectual property.

Negatives

• Net loss increased to $33.8 million in 2025 from $31.7 million in 2024, indicating continued unprofitability.
• The company has an accumulated deficit of $227.0 million as of December 31, 2025.
• The independent registered public accounting firm expressed substantial doubt about the company's ability to continue as a going concern.
• Gross loss widened to $4.8 million in 2025 from $3.7 million in 2024, primarily due to higher material, consulting, and headcount-related costs.
• Research and development expenses increased significantly by 77% to $12.5 million, contributing to higher operating losses.
• Cash used in operating activities increased by $7.9 million to $30.3 million in 2025.
• Supply chain constraints, including extended lead times, limited component availability, and increased costs, negatively impacted production schedules, revenue timing, and gross margin performance, particularly for ECDs.
• The company relies on single or limited suppliers for certain specialized components, posing a risk to production and delivery timelines.

Risks

• The company has not yet generated any profits and anticipates continued losses for the foreseeable future, potentially never achieving profitability.
• The report of the independent registered public accounting firm expresses substantial doubt about the company's ability to continue as a going concern, dependent on securing additional funding.
• Investment in new products and services (e.g., K7 ASR, K1 Capsule, Super Tower) may not achieve expected returns and could disrupt ongoing business or present unforeseen risks.
• Operating results are subject to potential fluctuations due to long and unpredictable sales cycles, making sales difficult to predict.
• The company faces the risk of losing contracts due to terminations, non-renewals, or competitive re-bids, which could adversely affect operations and liquidity.
• Failure to identify, consummate, effectively integrate, or realize expected benefits from acquisitions (like Event Risk LLC) could adversely affect growth and financial condition.
• Future operating results are difficult to predict and may be affected by factors outside of the company's control, including market acceptance of advanced physical security technology and public perception of robots.
• Changes in global economic conditions, including inflation, international trade restrictions, and interest rates, may adversely affect customer spending and the financial health of customers and partners.
• The business could be adversely affected by trade tariffs or other trade barriers, increasing costs for imported components.
• Adverse developments affecting the financial services industry, including liquidity concerns or non-performance by financial institutions, could impact the company's liquidity and access to capital.
• The company may not effectively manage its growth, leading to inadequate information technology systems, internal controls, and manufacturing processes.
• Costs may grow more quickly than revenues, harming business and profitability, especially with expansion and increased competition.
• Any debt arrangements may impose significant operating and financial restrictions, and a breach of covenants could lead to default and foreclosure on assets.
• The loss of key personnel or failure to attract and retain highly qualified personnel could harm the business.
• Inability to protect intellectual property could diminish brand value and allow competitors to mimic services.
• The company may be subject to claims, disputes, or legal proceedings in the ordinary course of business, with unfavorable outcomes adversely affecting financial condition.
• Increased competition from traditional security guard providers, system integrators, hardware manufacturers, remote monitoring providers, and other robotics companies.
• Ability to operate and collect digital information is dependent on evolving privacy laws and client corporate policies, with actual or perceived failures to comply leading to adverse effects.
• Information technology system failures, cyberattacks, or deficiencies in cybersecurity could disrupt operations, lead to data loss, and harm reputation.
• Limited experience operating ASRs in various environments may lead to collisions, liability, and negative publicity.
• Brand, reputation, and customer attraction/retention are dependent on reliable product performance, infrastructure, and employees, with disruptions potentially causing harm.
• Failure to implement and maintain effective internal control over financial reporting may result in material misstatements and loss of investor confidence.
• The private security industry is undergoing structural changes in technology and services, requiring continuous adaptation.
• Having government customers subjects the company to risks like early termination, audits, investigations, sanctions, or penalties.
• Inability to comply with Nasdaq listing requirements could lead to delisting of Class A Common Stock.
• Substantial future sales or issuances of securities, or the perception thereof, may depress the stock price.
• Increasing attention to, and evolving expectations for, environmental, social, and governance (ESG) initiatives could increase costs or harm reputation.
• Short sellers of the stock may be manipulative and drive down the market price.
• The Event Risk Acquisition may not achieve its intended results, facing integration challenges, unexpected costs, and potential failure to realize anticipated benefits.

Future Outlook

Knightscope anticipates continued losses for the foreseeable future and will require significant additional financing to meet its planned capital and operational needs. The company is investing heavily in next-generation hardware platforms (K7 ASR, K1 Capsule, K1 Super Tower), with commercial production for the K7 ASR not expected until late 2026 or early 2027. Management's strategy focuses on scaling an integrated autonomous security force through expansion of licensed guarding capabilities (including acquisitions), deployment of autonomous systems within guarding contracts, expansion of software-driven orchestration, and integrating enforcement services. The recent Event Risk Acquisition is expected to strengthen liquidity and contribute to operating cash flow, improving the path toward stronger cash generation and capital efficiency over time.

Management Comments

• Our mission is to make the United States of America the safest country in the world.
• We are in the process of evolving our service model to Deter, Detect, Respond including response capabilities, where appropriate and legally permissible.
• Integrating humans as a delivery and operational mechanism for our autonomous systems enables our product suites to operate in a more multi-modal manner, consistent with how many clients structure security procurement with a multi-layer approach.
• The Event Risk Acquisition materially strengthens the Company’s liquidity profile by adding a business that is expected to be free cash flow generating and contributive to operating cash flow.
• Management believes the Event Risk acquisition improves the Company’s path toward stronger cash generation, enhances overall capital efficiency, and supports the Company’s broader strategy to improve liquidity and capital resources over time.
• During 2025, the named executive officers delivered a number of operational and strategic accomplishments that strengthened the Company’s foundation for future growth, including revenue growth, improved working-capital management, disciplined operating expense controls, continued investment in next-generation technologies, strengthening of capital markets access and liquidity, improvements to manufacturing and inventory management processes, and implementation of enhanced financial and operational systems.

Industry Context

StockSavvy.ai notes that Knightscope operates in a large and fragmented U.S. security services and public safety market, estimated at over $230 billion in 2026. The industry faces significant structural challenges, including rising labor costs, workforce shortages, and increasing demand for real-time monitoring and data, driving a shift towards technology-enabled solutions. Knightscope's strategy of integrating autonomous systems with human personnel aligns with the industry's need for multi-modal, comprehensive security programs. The acquisition of Event Risk LLC positions Knightscope to offer a more unified 'Deter, Detect, Respond' model, potentially gaining a competitive edge against traditional guarding companies and pure-play tech providers by addressing the demand for end-to-end accountability.

Comparison to Industry Standards

• The company's continued net losses and expressed 'substantial doubt about its ability to continue as a going concern' are significantly below industry standards for established public companies, indicating a high-risk profile compared to profitable security solution providers like ADT Inc. or Johnson Controls International plc.
• Knightscope's revenue growth of 5% in 2025 is modest, especially for a company in a rapidly evolving technology sector, and may lag behind faster-growing competitors in the AI/robotics security space or specialized segments.
• The substantial increase in R&D expenses (77%) is typical for a technology company investing in next-generation products, but the widening gross loss and net loss suggest that these investments have not yet translated into improved profitability or operational efficiency, unlike more mature tech companies that balance R&D with positive margins.
• Reliance on single-source suppliers and significant supply chain constraints, particularly for electronic components, indicates a vulnerability that many larger, more diversified industry players (e.g., Bosch Security Systems, Honeywell) have better mitigated through robust supply chain management and scale.

Corporate Governance

Legal Proceedings

• The company is not presently a party to any litigation that it believes to be material and is not aware of any pending or threatened litigation that could have a material adverse effect on its business, operating results, financial condition, or cash flows as of December 31, 2025.

Related Party Transactions

• William Santana Li, Chairman, Chief Executive Officer, and President, is married to Mercedes Soria, Executive Vice President and Chief Intelligence Officer / CISO. Their compensation is detailed in the executive compensation table.
• The company has entered into indemnification agreements with certain directors and officers and purchased directors and officers liability insurance.

Stakeholder Impact

• **Shareholders**: Face significant dilution risk from ongoing equity issuances (ATM program, shelf registration) to fund operations and acquisitions. The auditor's going concern warning and increasing net losses pose a high risk to investment value. The Event Risk Acquisition aims to improve long-term value by enhancing liquidity and cash generation.
• **Employees**: The workforce significantly increased to over 400 employees following the Event Risk Acquisition, indicating growth opportunities. However, the company's financial instability and need for additional funding could create job insecurity if capital is not secured.
• **Customers**: Benefit from continued investment in next-generation products (K7 ASR, K1 Capsule, Super Tower) and the expansion of integrated security solutions, including human-in-the-loop monitoring and response capabilities from the Event Risk acquisition. Supply chain constraints, however, have led to production delays and inconsistent shipment timing for ECDs.
• **Suppliers**: The company's dependence on a complex global supply chain and single/limited suppliers for certain components creates mutual risk. Supply chain constraints and increased costs could strain relationships, while the company's efforts to diversify sourcing offer potential new business for other suppliers.
• **Creditors**: Holders of Public Safety Infrastructure Bonds and other debt face risks due to the company's recurring losses and going concern warning, although the Event Risk Acquisition is intended to strengthen the liquidity profile.

Next Steps

• Continue development of next-generation hardware platforms, including the K7 ASR, K1 Capsule, and K1 Super Tower, with K7 commercial production targeted for late 2026 or early 2027.
• Scale an integrated Knightscope Autonomous Security Force through organic growth and potential acquisitions to expand licensed guarding capabilities.
• Deploy autonomous systems within guarding contracts and expand software-driven orchestration.
• Integrate enforcement services into deterrence, detection, and reporting capabilities.
• Evaluate supply chain resilience initiatives, including supplier diversification, inventory management strategies, and longer-term procurement agreements.
• Seek additional financing through equity and/or debt alternatives to sustain ongoing operations and meet capital needs.
• Complete the preliminary allocation of the Event Risk Acquisition purchase consideration in the first quarter of fiscal 2026.

Key Dates

Recommendation

Knightscope's financial position is highly precarious, marked by persistent and increasing net losses, a widening gross loss, and a significant cash burn from operations. The auditor's 'substantial doubt about the company's ability to continue as a going concern' is a critical red flag, indicating severe financial instability and a high risk of bankruptcy or significant operational restructuring. While the Event Risk Acquisition and ongoing capital raises provide temporary relief, they do not fundamentally address the underlying unprofitability. The company's reliance on continuous equity financing will likely lead to further significant shareholder dilution. Given the high operational risks, unproven path to profitability, and explicit going concern warning, a seasoned investor would likely recommend a strong sell to mitigate further capital loss.

Keywords

Autonomous Security Robots, ASR, Emergency Communication Devices, ECD, Security Technology, Robotics, AI Security, Physical Security, Managed Security Services, Corporate Governance, SEC Filing, 10-K, Financial Performance, Going Concern, Supply Chain, Event Risk Acquisition, Nasdaq, KSCP