NOTE 1: The Company and Summary of Significant Accounting Policies

Description of Business

Knightscope, Inc. (the "Company," "we," "us" or "our"), a Delaware corporation, is a security technology and managed services company focused on delivering an Autonomous Security Force ("ASF") platform that combines autonomous machines, software, real-time monitoring, and licensed security personnel to support the protection of people, property, and places.

The Company provides its ASF platform as a single, integrated managed services offering, combining Autonomous Security Robots ("ASRs"), comprising of stationary and autonomous, mobile platforms; Emergency Communication Devices ("ECDs"); and licensed security personnel, including armed and unarmed security agents and executive protection services, added through the Company's acquisition of Event Risk, LLC on February 27, 2026 and operating under the Knightscope Security Force brand.

These components are supported by real-time monitoring services delivered through the Company's cloud-based Knightscope Security Operations Center ("KSOC") for ASRs, Knightscope Emergency Management System ("KEMS") for ECDs, and Risk & Threat Exposure ("RTX") remote monitoring team.

Headquartered in Sunnyvale, California and founded in April 2013, the Company offers its integrated solutions to commercial and government clients in the United States.

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 consolidated financial statements have been prepared in accordance with 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 consolidated 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 periods presented. Unaudited interim results are not necessarily indicative of the results for the full fiscal year or for any future interim periods. These condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and accompanying notes for the year ended December 31, 2025 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 27, 2026. 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 consolidated financial statements are issued.

The condensed consolidated 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 $8.2 million as of June 30, 2026, compared to $20.6 million as of December 31, 2025. The Company has historically incurred losses and negative cash flows from operations. As of June 30, 2026, the Company also had an accumulated deficit of approximately $251.4 million and stockholders’ equity of approximately $29.6 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. 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.

The Company’s condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary.  All intercompany accounts have been eliminated.

Segments

On February 27, 2026 (the “Closing Date”), the Company entered into a Securities Purchase Agreement with Event Risk LLC, an Indiana limited liability company (“Event Risk”) and a provider of security guarding, executive protection, investigations, and risk mitigation services operating throughout the United States, and Eric Rose (together with Event Risk, the “Seller”), pursuant to which the Company acquired all of the issued and outstanding membership interests of Event Risk (the “Acquired Interests”) for total purchase consideration of approximately $18.0 million (the “KSF Acquisition”).  Event Risk operates as a wholly owned subsidiary of the Company doing business as Knightscope Security Force (“KSF” or “Security Force”).

Subsequent to March 31, 2026 and in connection with the integration of Security Force operations into the Company's broader Autonomous Security Force strategy, management, including the Company’s Chief Executive Officer who is its chief operating decision maker (“CODM,”) reassessed the Company's operating and reportable segments. As the Company has continued to combine its autonomous machines, orchestration software, and licensed armed and unarmed security agents into a single, integrated managed services offering, the CODM began reviewing consolidated operating results, including consolidated revenue and profitability measures, as one operating unit rather than two operating segments, which were previously identified as Core Technology Development and Operations and Acquired Security Force. Accordingly, effective for the quarter ended June 30, 2026, the Company determined that it operates as a single reportable segment, consistent with how the CODM allocates resources to, and assesses the performance of, the combined platform.

This change in reportable segments did not result from a divestiture, discontinuation, or other change in the underlying business, but rather reflects the evolution of the Company's internal reporting structure as KSF operations became increasingly integrated with the Company's core technology offerings, as contemplated at the time of the KSF Acquisition. The change did not affect the Company's previously reported consolidated financial results. The Company operates as a single reportable segment for the three months ended June 30, 2026 and thereafter. Prior period segment information has been recast to conform to the current presentation, where applicable.

All of the Company’s long-lived assets are located in the United States, and all of the Company’s revenue is derived from customers located in the United States.

Reclassifications

Certain reclassifications have been made to the fiscal year 2025 condensed financial statements to conform to the fiscal year 2026 presentation. The Company combined sales, general and administrative expenses on the Condensed Consolidated Statements of Operations. The reclassifications had no impact on total assets, total liabilities, stockholders’ equity or net loss.

Comprehensive Loss

Net loss was equal to comprehensive loss for the three and six months ended June 30, 2026 and 2025.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make judgments, 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, determining the fair value of assets acquired and liabilities assumed, impairment of goodwill and long-lived assets, warranty and allowance for credit losses,

determination of deferred tax valuation allowances and estimating fair values of the Company’s share-based awards, inclusive of any contingent assets and liabilities. Actual results could differ from those estimates, and such differences may be material to the condensed consolidated 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.

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”), the sale of ECDs, the performance of the full-service maintenance (“FSM”) contracts with certain clients and services contracted for human guarding-related services. 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 $0.4 million and $0.2 million allowance for credit losses on its accounts receivable as of June 30, 2026 and December 31, 2025, respectively.

The following table represents the Company’s customers that accounted for more than 10% of total revenue, net for the periods:

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The following table represents the Company’s customers that accounted for more than 10% of total accounts receivable, net as of:

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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. The following table presents the components of inventory (in thousands):

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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, general and administrative expense, and cost of revenue on the Company’s Condensed Consolidated Statements of Operations. Depreciation expense on finished ASRs was $0.5 million for the three months ended June 30, 2026 and 2025. Depreciation expense on finished ASRs was $0.9 million and $1.0 million for the six months ended June 30, 2026 and 2025, respectively.

ASRs, net, consisted of the following (in thousands):

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The components of the Finished ASRs, net are as follows (in thousands):

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Goodwill and Intangible Assets, net

The Company recorded goodwill of $1.9 million related to the Case Emergency Systems (“CASE”) acquisition completed in 2022. On February 27, 2026, the Company recorded goodwill of $7.7 million related to the KSF Acquisition. Goodwill is not amortized to earnings, but instead is reviewed for impairment at least annually, absent any interim indicators of impairment. There was no impairment of goodwill during the six months ended June 30, 2026 and 2025.

The gross carrying amounts and accumulated amortization of the intangible assets with determinable lives are as follows (in thousands, except years):

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Intangible assets amortization expense totaled $0.7 million and $0.1 million for the three months ended June 30, 2026 and 2025, respectively. Intangible assets amortization was recorded in sales, general and administrative and cost of revenue - service on the Company’s Condensed Consolidated Statements of Operations.

Intangible assets amortization expense totaled $1.0 million and $0.2 million for the six months ended June 30, 2026 and 2025, respectively. Intangible assets amortization was recorded in sales, general and administrative and cost of revenue - service on the Company’s Condensed Consolidated Statements of Operations.

As of June 30, 2026, future intangible assets amortization expense for each of the next five years and thereafter is as follows (in thousands):

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Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

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Warranty Liability

The liability for estimated warranty claims is accrued at the time of sale, and the expense is recorded in the Condensed Consolidated Statements of Operations in cost of revenue - 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 six months ended June 30, 2026 consisted of the following (in thousands):

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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 and six months ended June 30, 2026 and 2025 consist of the following:

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As all potentially dilutive securities are anti-dilutive as of June 30, 2026 and 2025, diluted net loss per common share is the same as basic net loss per common share for each period.

Accounting Pronouncements Adopted in 2026

In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient to measure credit losses on accounts receivable and contract assets. The Company adopted this standard on January 1, 2026. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements.

Accounting Pronouncements Not Yet Adopted

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. This ASU requires the disaggregation of certain expenses in the notes to the financial statements, to provide enhanced transparency into the

expense captions presented on the face of the income statement. 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 consolidated financial statements but will require additional disclosures when adopted.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which intends to improve the navigability of the guidance in ASC 270, Interim Reporting, and clarify when it applies. The amendments also provide additional guidance on what disclosures should be provided in interim reporting periods. The guidance is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years, and permits prospective or full retrospective adoption. Early adoption is permitted. The Company is evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-12, Codification Improvements, which addresses suggestions received from stakeholders regarding the Accounting Standards Codification and makes other incremental improvements to U.S. GAAP. The update represents changes to the Codification that clarify, correct errors in or make other improvements to a variety of topics that are intended to make it easier to understand and apply. ASU 2025-12 is effective for fiscal years beginning after December 15, 2026 and interim periods within those fiscal years. Entities are required to apply the amendments to ASC 260 retrospectively. All other amendments may be applied prospectively or retrospectively. Early adoption is permitted. The Company is evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

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 consolidated financial statements.