KSCP 10-K & 10-Q changes, risk factors and insider trading

We have not yet generated any profits or significant revenues,and anticipate that we will incur continued losses for the foreseeable future,future and may never achieve profitability.

As noted above, the Company has a history of losses and has projected operating losses and negative cash flows for the foreseeable future, and we are currently dependent on additional fundraising in order to sustain our ongoing operations. Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”), contemplating that we will continue to operate as a going concern. However, weWe cannot assure you that the Company will be successful in acquiring additional funding at levels sufficient to fund future operations. If the Company is unable to raise additional capital in sufficient amounts or on terms acceptable to it, the Company may have to significantly reduce its operations or delay, scale back or discontinue the development of additional products and services, seek alternative financing arrangements, declare bankruptcy or otherwise terminate its operations entirely.

TheWe Company expectsexpect to experience future losses as itwe implementsimplement itsour business strategy and will need to generate significant revenues to achieve profitability, which may not occur.

Investment in new businessproducts strategiesand services may not achieve expected returns and could disrupt our ongoing business, present risks not originally contemplated and materially adversely affect our business, reputation, results of operations and financial condition.

We have invested, and in the future may invest, in the research, development and marketing of new businessproducts strategies.and services, including the K7 ASR and the K1 Capsule and Super Tower. We intend for these initiatives to drive efficiencies and improve margins. Such endeavors may involve significant risks and uncertainties, including distraction of management from current operations, greater-than-expected liabilities and expenses, new claims or litigation, economic, political, legal and regulatory challenges, inadequate return on capital, unrealized benefits or unanticipated delays in realized benefits, potential impairment of tangible and intangible assets, and significant write-offs. Additionally, if customers do not perceive our new products and software as providing significant value, they may not readily adopt them and we may not achieve returns on our investment. Developing new technologies is complex and can require long development and testing periods. We could experience significant delays in new releases or significant problems in creating new products or services, which could adversely affect our business, financial condition and results of operations. In addition, the capital required for our investment in any new business strategiesproducts or new investmentsservices may require us to raise additional capital, including debt or equity securities. These transactions may impose additional restrictions on our ability to operate and/or may be dilutive to you. In the event that additional liquidity is required from outside sources, we may not be able to raise the capital on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, financial condition, and results of operations could be adversely affected.

TheWe Company isare subject to potential fluctuations in operating results due to itsour sales cycle.

Our success depends on our ability to acquire new customers in new and existing markets, and inincluding new and existing geographic markets. If we are unable to attract a sufficient number of new customers, we may be unable to generate revenue growth at desired rates. Our industry is competitive and our competitors may have substantial financial, personnel and other resources that they can utilize to develop solutions and attract customers. As a result, it may be difficult for us to add new customers to our customer base. Competition in the marketplace may also lead us to win fewer new customers or result in us providing discounts and other commercial incentives.

While ourOur immediate focus is on the U.S. market, and our long-term success will in part depend on our ability to acquire new customers outside the USA.U.S. If customers in other countries do not perceive the threat of security, or of firearms and weaponssecurity to be significant enough to justify the purchase of our products, we will be unable to establish a meaningful business outside the USA.U.S. If we are unable to attract a sufficient number of new customers outside the USA,U.S., we may be unable to generate future revenue growth at desired rates in the long term.

The Company’sOur future operating results are difficult to predict and may be affected by a number of factors, many of which are outside of the Company’sour control.

Our financial results have fluctuated in the past and will fluctuate in the future. Additionally, we have a limited operating history with the current scale of our business, which makes it difficult to forecast future results. As a result, you should not rely upon the Company’sour past financial results as indicators of future performance. You should take into account the risks and uncertainties frequently encountered by rapidly growing companies in evolving markets. Our financial results in any given quarter can be influenced by numerous factors, many of which we are unable to predict or are outside of our control, including:

Additionally, we currently have one U.S. government customer and expect to have additional U.S. government customers in the future. If the U.S. government does not complete its budget process before its fiscal year-end, government operations may be funded by means of a continuing resolution. Under a continuing resolution, the government essentially authorizes agencies of the U.S. government to continue to operate and fund programs at the prior year end but does not authorize new spending initiatives. When the U.S. government operates under a continuing resolution, or should appropriations legislation not be enacted prior to the expiration of such continuing resolution resulting in a partial shut-down of federal government operations, government agencies may delay the procurement of services, which could reduce our future revenue. For other risks associated with our U.S. government customers, see “We have a government customer and are seeking additional government customers, which subject us to risks including early termination, audits, investigations, sanctions, or penalties.”

Uncertainty about current and future global economic conditions may cause our customers and partners to cancel agreements with us, or potential customers and partners to hesitate to enter into agreements with us. Our financial success is sensitive to changes in general economic and financial conditions, including tariffs or other trade restrictions, interest rates, energy costs, labor costs, inflation, commodity prices, unemployment levels, consumer debt levels, tax rates and other changes in tax laws, public health issues like the COVID-19 pandemic, or other economic factors, certain of which effects, including cost inflation, we experienced inthe 2022,last 2023four and 2024years and expect to continue to experience in 2025.2026.

Similarly, global conflicts including the ongoing wars between Russia and UkraineUkraine, Iran and U.S. and Israel and Hamas have created volatility in the global capital markets and are expected to continue to have further global economic consequences, such as disruptions of the global supply chain and energy markets. Any such continued volatility and disruptions may adversely affect our business or the third parties on whom we rely. If the equity and credit markets deteriorate, including as a result of political unrest or war, it may make any necessary debt or equity financing more difficult to obtain in a timely manner or on favorable terms, more costly or more dilutive. Increased inflation rates have already, and may continue to, adversely affect us by increasing our costs, including labor and employee benefit costs. In addition, higher inflation and macro turmoil and uncertainty could also adversely affect our customers, which could reduce demand for our products.

Our employee headcount and the scope and complexity of our business have increased significantly since we were first formed, and we expect it will continue as we grow over the long term. The growth and expansion of our business and products create significant challenges for our management, operational, and financial resources, including managing multiple relationships and interactions with users, distributors, vendors, and other third parties. As the Company grows, our information technology systems, internal management processes, internal controls and procedures and productionmanufacturing processes may not be adequate to support our operations. To ensure success, we must continue to improve our operational, financial, and management processes and systems and to effectively expand, train, and manage our employee base. As we grow, and implement more complex organizational and management structures, we may find it increasingly difficult to maintain the benefits of our corporate culture, including our current team’s efficiency and expertise, which could negatively affect our business performance.

Providing our products is costly because of our research and development expenses, productionmanufacturing costs, operating costs and need for employees with specialized skills. We expect our expenses to continue to increase in the future as we expand our product offerings, expand productionmanufacturing capabilities and hire additional employees. Historically, our costs have increased each year due to these factors and thewe Company expectsexpect to continue to incur increasing costs, in particular for working capital to purchase inventory, marketing and product deployments as well as costs of client support in the field. Our expenses may be greater than we anticipate, which would have a negative impact on our financial position, assets and ability to invest further in the growth and expansion of the business. In addition, expansion across the country will require increased marketing, sales, promotion and other operating expenses. Further, as additional competitors enter our market, we expect an increased pressure on productionmanufacturing costs and margins.

WeIn the fourth quarter of 2023, we issued unsecured Public Safety Infrastructure Bonds (the “Bonds”) bearing interest at 10% per annum, payable annually on December 31 each year, starting on December 31, 2024, in the fourth quarter of 2023 with a principal amount totaling approximately $1.4 million. We issued additional Bonds from January of 2024 through March 14, 2024, with a principal amount of approximately $2.8 million. In total, we issued Bonds with a principal amount of approximately $4.3 million through the life of the Bond offering.

The loss of one or more key executives, the lack of a succession plan, or our inability to attract and retain qualified professionals in critical areas such as finance, legal, engineering, and productionmanufacturing could negatively impact our operations and growth. Inflationary pressures and fluctuations in the perceived value of our equity compensation may further affect employee retention. Additionally, recent and future changes in our boardBoard of directorsDirectors and senior management may disrupt our business, create uncertainty among investors, employees, and customers, and adversely impact our financial condition and stock price.

TheWe Company reliesrely and expectsexpect to continue to rely on a combination of confidentiality agreements with itsour employees, consultants, and third parties with whom itwe hashave relationships, as well as trademark, copyright, patent, trade secret, and domain name protection laws, to protect its proprietary rights. TheWe Company hashave filed in the USAU.S. various applications for protection of certain aspects of itsour intellectual property, and we currently holdshold twelve patents. However, third parties may knowingly or unknowingly infringe our proprietary rights, third parties may challenge proprietary rights held by us, and pending and future trademark and patent applications may not be approved. In addition, effective intellectual property protection may not be available in every country in which we intend to operate in the future. In any or all of these cases, we may be required to expend significant time and expense in order to prevent infringement or to enforce our rights. Although we have taken measures to protect our proprietary rights, we cannot assure you that others will not offer products or concepts that are substantially similar to our products and compete with our business. In addition, we may not have the financial or human resources to devote to adequately defending our intellectual property rights. If the protection of our proprietary rights is inadequate to prevent unauthorized use or appropriation by third parties, the value of our brand and other intangible assets may be diminished and competitors may be able to more effectively mimic our service and methods of operations. Any of these events could have an adverse effect on our business and financial results.

We are aware of a number of other companies that are developing physical security technology in the USAU.S. and abroad that may potentially compete with our technology and services. These or new competitors may have more resources than us or may be better capitalized, which may give them a significant advantage, for example, in offering better pricing than the Company, surviving an economic downturn or in reaching profitability. We cannot assure you that we will be able to compete successfully against existing or emerging competitors. Additionally, existing private security firms may also compete on price by lowering their operating costs, developing new business models or providing other incentives.

Our products, especiallyincluding the ASRs, may collect, store and may analyze certain types of personal or identifying information regarding individuals that interact with the ASRs. The regulatory framework for privacy and security issues is rapidly evolving worldwide and is likely to remain uncertain for the foreseeable future. Federal and state government bodies and agencies have in the past adopted, and may in the future adopt, laws and regulations affecting data privacy, which in turn affect the breadth and type of features that we can offer to our clients. In addition, our clients have separate internal policies, procedures and controls regarding privacy and data security with which we may be required to comply. In many deployments, our customers determine the manner and purposes for which our technologies are configured and used, which may affect the applicability of certain legal requirements. Because the interpretation and application of many privacy and data protection laws are uncertain, it is possible that these laws may be interpreted or applied in a manner that is inconsistent with our current data management practices or the features of our products. If so, in addition to the possibility of fines, lawsuits and other claims and penalties, we could be required to fundamentally change our business activities and practices or modify our products, which could have an adverse effect on our business. Additionally, we may become a target of information-focused or data collection attacks and any inability to adequately address privacy and security concerns, even if unfounded, or comply with applicable privacy and data security laws, regulations, and policies, could result in additional cost and liability to us, damage our reputation, inhibit sales, and adversely affect our business. Furthermore, the costs of compliance with, and other burdens imposed by, the laws, regulations, and policies that are applicable to the businesses of our clients may limit the use and adoption of, and reduce the overall demand for, our products. Privacy and data security concerns, whether valid or not valid, may inhibit market adoption of our products, particularly in certain industries and foreign countries. If we are not able to adjust to changing laws, regulations, our business may be harmed.

As our operations and business grow, we may become subject to or affected by new or additional data protection laws and regulations and face increased scrutiny or attention from regulatory authorities. In the USA, certain states have also adopted privacy and security laws and regulations, which govern the privacy, processing and protection of health-related and other personal information. For example, the California Consumer Privacy Act, as amended by the California Privacy Rights Act (collectively, the “CCPA”), requires covered businesses that process the personal information of California residents to, among other things: provide certain disclosures to California residents regarding the business’s collection, use, and disclosure of their personal information; receive and respond to requests from California residents to access, delete, and correct their personal information, or to opt out of certain disclosures of their personal information, and enter into specific contractual provisions with service providers that process California resident personal information on the business’s behalf.behalf SimilarAdditional comprehensive state privacy laws have beenbecome passedeffective in otherrecent years, and more states and are continuingcontinue to beenact proposedor atconsider similar legislation, increasing the statecomplexity andof federalcompliance level,for reflectingcompanies aoperating trend toward more stringent privacy legislation in the USA.nationwide. Additional compliance investment and potential business process changes may also be required. The enactment of such laws could have potentially conflicting requirements that would make compliance challenging.

Already, certain existing legal regimes (e.g., relating to data privacy) regulate certain aspects of AI, and new laws regulating AI either entered or are expected to enter into force in the United States and the EU in 2025. InFederal and state policymakers in the United States,States thecontinue Trumpto administrationevaluate hasregulatory rescinded an executive order relatingapproaches to AI Technologiestechnologies, thatincluding wasthrough previouslyexecutive implementedactions, byagency therulemaking, Bidenand administration.legislation. TheRegulatory Trumppriorities administrationand enforcement approaches may continue to rescindshift otheracross existing federal orders and/or administrative policies relating to AI Technologies, or may implement new executive orders and/or other rule making relating to AI Technologies in the future.administrations. Any such changes at the federal level could require us to expend significant resources to modify our products, services, or operations to ensure compliance or remain competitive..competitive. Already, agencies such as the Department of Commerce and the FTC have issued proposed rules governing the use and development of AI. U.S. legislation related to AI has also been introduced at the federal level and is advancing at the state level. For example, the California Privacy Protection Agency is currently in the process of finalizing regulations under the CCPA regarding the use of automated decision-making. California also enacted seventeen new laws in 2024 that further regulate use of AI Technologies and provide consumers with additional protections around companies’ use of AI Technologies, such as requiring companies to disclose certain uses of generative AI. Other states have also passed AI-focused legislation, such as Colorado’s Artificial Intelligence Act, which will require developers and deployers of “high-risk” AI systems to implement certain safeguards against algorithmic discrimination, and Utah’s Artificial Intelligence Policy Act, which establishes disclosure requirements and accountability measures for the use of generative AI in certain consumer interactions. Such additional regulations may impact our ability to develop, use and commercialize AI technologies in the future.

The risk of a security breach or disruption, particularly through cyberattacks or cyber intrusion, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. Furthermore, because the techniques used to obtain unauthorized access to, or to sabotage, systems change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or implement adequate preventative measures. We may also experience security breaches that may remain undetected for an extended period. Even if identified, we may be unable to adequately investigate or remediate incidents or breaches due to attackers increasingly using tools and techniques that are designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic evidence. There can be no assurance that our and our third-party service providers’, strategic partners’, contractors’ and consultants’ cybersecurity risk management program and processes, including policies, controls or procedures, will be fully implemented, complied with or effective in protecting our systems, networks and Confidential Information. We and certain of our service providers are from time to time subject to cyberattacks and security incidents. WhileTo date, we dohave not believeidentified any cybersecurity incidents that we believe have experiencedmaterially anyaffected significantour systembusiness, failure, accident or security breach to date,However, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs and our business operations, whether due to a loss, corruption or unauthorized disclosure of our trade secrets, personal information or other proprietary or sensitive information or other similar disruptions. It could also expose us to risks, including an inability to provide our services and fulfill contractual demands, and could cause management distraction and the obligation to devote significant financial and other resources to mitigate such problems, which would increase our future information security costs, including through organizational changes, deploying additional personnel, reinforcing administrative, physical and technical safeguards, further training of employees, changing third-party vendor control practices and engaging third-party subject matter experts and consultants and reduce the demand for our technology and services.

Our ASRs operate autonomously in environments, such as shopping malls, parking lots and stadiums, that are surrounded by various moving and stationary physical obstacles and by humans and vehicles. Such environments are prone to collisions, unintended interactions and various other incidents, regardless of our technology. Therefore, our ASRs have been in the past and may in the future be involved in a collision with any number of such obstacles. Our ASRs contain a number of advanced sensors that are designed to prevent any such incidents and are intended to stop any motion at the detection of intervening objects. Nonetheless, real-life environments, especially those in crowded areas, are unpredictable and situations have in the past arisen and may in the future arise in which the ASRs may not perform as intended. Infrequent,Incidents but highly publicized incidents ofinvolving autonomous vehicle and human interactions,systems, including those involving ourthird ASRs,parties, have focusedreceived consumerpublic attention on the safety of our and other systems.attention. We cannot assure you that a collision, including with property or with humans, will not occur. Any such collision or other incident could damage the ASR, lead to personal injury or property damage, and may subject us to lawsuits. Moreover, any actual or perceived incident, even without any resulting damage, may lead to adverse publicity for us. Such lawsuits or adverse publicity would negatively affect our brand and harm our business, prospects, financial condition and operating results.

TheWe Company isare actively seeking to secure a material amount of business from the U.S. federal government. TheWe Company hashave entered into itsour first government contract with the VAU.S. Department of Veterans Affairs as well as a Phase 1 contract fromwith the U.S. Air Force. These types of agreements may subject the Companyus to statutes, regulations and contract obligations applicable to companies doing business with the government. Government contracts customarily contain provisions that give the government substantial rights and remedies, many of which are not typically found in commercial contracts and which are unfavorable to contractors, including provisions that allow the government to unilaterally terminate or modify federal government contracts, in whole or in part, at the government’s convenience or in the government’s best interest, including if funds become unavailable to the applicable government agency. Under general principles of government contracting law, if the government terminates a contract for convenience, the terminated company may generally recover only its incurred or committed costs and settlement expenses and profit on work completed prior to the termination. If the government terminates a contract for default, the defaulting company may be liable for any extra costs incurred by the government in procuring undelivered items from another source.

Additionally, although the Company has receivedobtained itsan Authority to Operate fromunder the FedRAMP,Federal Risk And Authorization Management Program (“FedRAMP”) program, any change to our moderate cloud solution FedRAMP status could impede our ability to enter into contracts with government entities. If we do not successfully manage our FedRAMP status, our sales to government entities could be delayed or limited, and as a result, our business, financial condition, and results of operations would be adversely affected.

Changes of administration in the U.S. federal government may affect our business in a manner that currently cannot be reliably predicted. For example, an advisory commission, the “Department of Government Efficiency” was announced in 2025 to reform federal government processes and reduce expenditures. Pressures on and uncertainty surrounding the U.S. federal government’s budget, and potential change in budgetary priorities could adversely affect individual programs and delay purchasing or payment decisions by certain of our existing or targeted customers. All of these uncertainties may individually or in the aggregate materially and adversely affect our business, results of operations or financial condition.

Our Class A Common Stock is listed on The Nasdaq Capital Market under the symbol “KSCP.” In order to maintain that listing, we must satisfy minimum financial and other continued listing requirements, including maintaining a minimum bid price and a minimum market value. The inability to comply with applicable listing requirements or standards of The Nasdaq Stock Market LLC (“Nasdaq”) could result in the delisting of our Class A Common Stock, which could have a material adverse effect on our financial condition and could cause the value of our Class A Common Stock to decline.

The CompanyWe will need to seek additional funds in the future.

TheWe Company projectsproject operating losses and negative cash flows for the foreseeable future. These factors raise substantial doubt about our ability to continue as a going concern. See Liquidity and Capital Resources. We will require additional funds to maintain our operations and respond to business challenges and opportunities, including the need to develop new products or enhance our existing products, enhance our operating infrastructure or acquire complementary businesses and technologies. Accordingly, we will need to engage in equity or debt financings to secure additional funds, such as our current at-the-market offering program.

We are subject to complex and changing laws and regulations, which exposesexpose us to potential liabilities, increased costs and other adverse effects on our business.

Increasing attention to, and evolving expectations for, environmental, social, and governance (“ESG”) initiatives could increase our costs, harm our reputation, or otherwise adversely impact our business.

Companies across industries are facing increasing scrutiny from a variety of stakeholders related to their ESG practices. Expectations regarding ESG initiatives and disclosures may result in increased costs (including but not limited to increased costs related to compliance, stakeholder engagement, contracting and insurance), changes in demand for certain offerings, enhanced compliance or disclosure obligations, or other adverse impacts to our business, financial condition, or results of operations. While weWe may at times engage in voluntary initiatives (such as voluntary disclosures, certifications, or goals, among others) to address the ESG profile of our company and/or offerings or to respond to stakeholder demands,demands. suchSuch initiatives may be costly and may not have the desired effect.

Our MD&AManagement’s Discussion and Analysis discusses our results of operations for the year ended December 31, 2025 as compared to the year ended December 31, 2024. For a discussion and analysis of the year ended December 31, 2024 as compared to the year ended December 31, 2023. For a discussion and analysis of the year ended December 31, 2023 as compared to the year ended December 31, 2022,2023, please refer to Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2023,2024, filed with the SEC on AprilMarch 1,31, 2024.2025.

Knightscope Security Operations Center (KSOC)

Emergency●Integration Communicationwith Devicesemergency (ECDs)communication and Solutionssystems.

Operational changesConsiderations

You should carefully consider the factors discussed in Part I, Item 1A. “Risk Factors” in our 2025 Annual Report on Form 10-K for the fiscal year ended December 31, 2025 which could materially affect our business, financial condition, cash flows or future results. There have been no material changes in our risk factors included in our Annual Report on Form 10-K. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.

The historical results presented below are not necessarily indicative of the results that may be expected for any future period. Forward-lookingThis discussion may contain forward-looking statements about our business, results of operations, cash flows, financial condition and prospects based on current expectations that involve risks, uncertainties, and assumptions, and other important factors. Our actual results could differ materially from such forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those identified below and those discussed in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K, as updated by our other filings with the SEC, and the section titled “Cautionary Note on Forward-Looking Statements” included elsewhere herein.

The componentsCompany ofdelivers the ASF includeas a single, integrated managed services offering, combining Autonomous Security Robots ("ASRs"), comprising stationary and autonomous, mobile platforms; Emergency Communication Devices ("ECDs"); and licensed security servicespersonnel, delivered byincluding armed and unarmed licensed security agents,agents includingand executive protection,protection services, added through the Company's acquisition of Event Risk, LLC on February 27, 2026 and operating as Knightscope Security Force ("KSF" or "Security Force"), which was added through the acquisition of Event Risk, LLC in the three months ended March 31, 2026.. 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.

The Company expects to increasingly go to market throughprovides a managed services model that combines autonomous systems, software, monitoring capabilities, and licensed security personnel into a more unified customer offering.

OurThough our revenues for the three months ended MarchJune 31,30, 2026 were $6.0$9.0 million, an increase of $3.1$6.3 million or 106%228% from the comparable period in the prior year.year, Wewe have incurred net losses since inception. Our net loss was $10.3$14.1 million and $6.3 million for the quarterthree months ended MarchJune 31,30, 2026 and $6.92025, million for the quarter ended March 31, 2025.respectively. As of MarchJune 31,30, 2026, we had an accumulated deficit of $237.3$251.4 million. Cash and cash equivalents on hand were $11.4$8.2 million as of MarchJune 31,30, 2026, compared to $20.6 million as of December 31, 2025. These factors raise substantial doubt about our ability to continue as a going concern.

Comparison of the Three Months Ended MarchJune 31,30, 2026 and 2025

Total revenue, net for the three months ended MarchJune 31,30, 2026 increased by 106%,228%, or $3.1$6.3 million, to $6.0$9.0 million compared to $2.9$2.7 million for the same period in the prior year. The increase was driven by a $2.1$6.6 million increase in service revenuerevenue, andpartially offset by a $1.0$0.3 million increasedecrease in product revenue.

Service revenue increased by $2.1 million, or 98%,315%, to $4.2$8.6 million for the three months ended MarchJune 31,30, 2026, from $2.1 million in the prior year period. The increase was primarily driven by $2.4$6.8 million of Security Forceservice revenue recognized following the KSF Acquisition. This increase was partially offset by lower ASR subscription revenue and a reduction in maintenance and service contracts associated with ECD deployments.

Total cost of revenue was $5.6$8.4 million for the three months ended MarchJune 31,30, 2026, an increase of $2.0$4.7 million compared to the same period in the prior year. This increase was the result of $4.9 million in higher cost of revenue, service partially offset by lower cost of revenue, product of $0.2 million. The increase in cost of revenue, service was driven by higher servicepayroll related costs of $1.5$4.5 million andprimarily highera product costsresult of $0.5the million.addition of security guard workforce due to the acquisition of KSF.

Gross margin was $0.5$0.7 million, or 8%7% of revenue, for the three months ended MarchJune 31,30, 2026, compared to a gross loss of $0.7$0.9 million, or (23%33%) of revenue, for the same period in the prior year. The improvement in gross margin was primarily driven by the contribution of Securityservice Forcerevenues revenues,following whichthe haveKSF a different cost structure.Acquisition.

Research and development expenses increased by approximately $2.6$3.9 million, or approximately 120%188%, for the three months ended MarchJune 31,30, 2026, as compared to the same period in the prior year. The increase is primarily due to third-party engineering services as the Company continues to invest in the development of new products.

Sales, general and administrative expenseexpenses increased by approximately $4.5 million, or approximately 137%, for the three months ended MarchJune 31,30, 20262026, wasas $6.1compared million, an increase of $2.1 million fromto the threesame monthsperiod endedin Marchthe 31,prior 2025.year. The increase was primarily drivendue byto $0.6$1.6 million in general corporate expenses, $0.4 million in higher investorpayroll-related relationscosts largely attributed to the KSF Acquisition and advertisingincentive expenses,compensation, $0.4$0.7 million in higher professional services fees,fees $0.3and legal expenses, $0.6 million generalhigher andinvestor administrativerelations fees, $0.6 million higher intangible asset amortization costs associateddue withto KSF,the andKSF Acquisition, $0.2 million inhigher software subscription expense, $0.1 million higher rent-relatedrent costsand associatedfacilities withexpenses, ourand new$0.1 largermillion headquarters.higher credit loss expense.

Other Income (expenseExpense), Net

Total othercost incomeof (expense)revenue was $13.9 million for the threesix months ended MarchJune 31,30, 20262026, increasedan slightlyincrease asof $6.7 million compared to the same period in the prior year. The increase was driven by higher service costs of $6.4 million and higher product costs of $0.3 million.

As of MarchJune 31,30, 2026, wethe Company had $11.4$8.2 million of cash and cash equivalents. As of MarchJune 31,30, 2026, the Company also had an accumulated deficit of $237.3$251.4 million, working capital of $7.0$2.4 million, and stockholders’ equity of $34.0$29.6 million. For the quartersix months ended MarchJune 31,30, 2026, the Company had a net loss of $10.3$24.4 million and cash used in operating activities of $11.6$23.1 million. These factors raise substantial doubt about our ability to continue as a going concern. The Company will require significant additional financing to meet its planned capital and operational needs and is pursuing opportunities to obtain additional financing through equity and/or debt alternatives. There can be no assurance that the Company will be successful in acquiring additional funding at levels sufficient to fund its future operations. Management’s plans include seeking additional financing, such as issuances of equity and issuances of debt and/or convertible debt instruments. Sales of additional equity securities, convertible debt and/or warrants by the Company could result in the dilution of the interests of existing stockholders. However, there can be no assurance that financing will be available when required in sufficient amounts, on acceptable terms or at all. If the Company is unable to raise additional capital in sufficient amounts or on terms acceptable to it, the Company may have to significantly reduce its operations, delay, scale back or discontinue the development of one or more of its platforms or discontinue operations completely.

On April 4, 2025, we filed a new shelf registration statement on Form S-3, pursuant to which we may, from time to time in one or more offerings, offer and sell up to $100.0 million in the aggregate of Class A Common Stock, preferred stock, debt securities, warrants and/or units, in any combination. The new shelf registration statement was declared effective on April 11, 2025. On July 18, 2025, we filed a new prospectus supplement for additional sales under the ATM Facility of up to $50.0 million of shares of Class A Common Stock. As of MayAugust 8,7, 2026, we have approximately $18.3$5.6 million remaining to be sold pursuant to the newfiled prospectus supplement and the accompanying prospectus related to the ATM Facility.

During the threesix months ended MarchJune 31,30, 2026, the Company issued 2,027,9935,530,922 shares of Class A Common Stock under the ATM Facility for net proceeds of approximately $9.0$18.3 million, net ofafter brokerage and placement fees of approximately $0.2$0.5 million.

Net cash used in operating activities was approximately $11.6$23.1 million for the threesix months ended MarchJune 31,30, 2026. Net cash used in operating activities resulted from a net loss of approximately $10.3$24.4 million and changes in working capital and non-cash charges.

Net cash used in operating activities for the threesix months ended MarchJune 31,30, 2026 increased by approximately $5.2$11.2 million as compared to the same period of the prior year. This was primarily a result of an increase in the net loss of approximately $3.4 million and changes in assets and liabilities of approximately $1.9$11.2 million.

Net cash used in investing activities for the threesix months ended MarchJune 31,30, 2026 and 2025 was approximately $6.3$7.2 million and $0.4$1.2 million, respectively. Our primary investing activities have consisted of capital expenditures and investment in ASRs. As our business grows, we expect our capital expenditures to continue to increase. As discussed in Note 2, the Company paid $6.1 million (that was netted against $0.6 million of cash acquired) for the KSF Acquisition duringon theFebruary three months ended March 31,27, 2026.

Net cash provided by financing activities was approximately $8.8$17.9 million for the threesix months ended MarchJune 31,30, 2026, an increase of approximately $0.5$7.9 million as compared to the same period of the prior year. Our financing activities for the threesix months ended MarchJune 31,30, 2026,2026 consisted primarily of net proceeds from the issuance of Class A Common Stock under our ATMat-the-market Facilityoffering program with Wainwright of approximately $9.0$18.3 million, partially offset by repayments of debt obligations of $0.2$0.4 million. In the same prior year period, our financing activities consisted primarily of net proceeds resulting from our ATMat-the-market Facilityagreement with Wainwright of approximately $7.4$10.3 millionmillion, andnet proceeds from the issuance of common stock andunder pre-fundeda warrantsdirect registration offering of approximately $1.4 million, partially offset by repayments of debt obligationobligations of $0.6$1.7 million.