Knightscope, Inc.

Notes to Condensed Consolidated Financial Statements

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, asone operating unit rather thantwo 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:

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

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):

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):

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

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 wasno 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):

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):

Accrued Expenses and Other Current Liabilities

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

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):

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:

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 theimplementation 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.

NOTE 2: Business Combination

Acquisition of Event Risk LLC (d.b.a. Knightscope Security Force)

On the Closing Date, the Company closed the KSF Acquisition. Since the Closing Date, and as of the quarter ended June 30, 2026, the KSF operations have become increasingly integrated with the Company’s core technology offerings.

The KSF Acquisition has been accounted for as a business combination in accordance with ASC 805,Business Combinations, using the acquisition method of accounting. Accordingly, the assets acquired and liabilities assumed were recorded at their estimated fair values as of the Closing Date.

As a result of the KSF Acquisition, the Company recorded goodwill of $7.7 million and an intangible asset related to customer relationships of $15.5 million. The customer relationships intangible asset is being amortized over its estimated useful life of 6.7 years. Goodwill represents the value of the assembled workforce and expected synergies from integrating the acquired business with the Company’s existing operations. Goodwill isnot deductible for tax purposes.

The assets and liabilities of the KSF Acquisition, both tangible and intangible, were recorded at their estimated fair values as of the Closing Date. Acquisition-related costs, including legal, accounting, valuation, and other professional fees, were expensed as incurred and totaled $1.0 million in the six months ended June 30, 2026. These costs are included in sales, general and administrative expenses in the unaudited Condensed Consolidated Statements of Operations.

The following table summarizes the preliminary purchase price allocation as of the Closing Date (in thousands):

The KSF Acquisition includes the potential for future payment of consideration to the Seller upon achieving revenue or gross margin milestones. The deferred cash payments, earn-out payments, and revenue share payments, together with the final working capital adjustment and non-compete agreement above, are collectively reported as contingent consideration and acquisition-related liabilities on the Company’s Condensed Consolidated Balance Sheets. These liabilities represent the estimated fair value of future amounts payable to the Seller and is determined using unobservable inputs (Level 3). The fair values of the contingent consideration and acquisition-related liabilities are estimated using Monte Carlo simulations, discounted cash flows, management’s estimates and entity-specific assumptions, and are evaluated on an ongoing basis with changes in the fair value recorded in the Condensed Consolidated Statement of Operations. Key assumptions include the discount rate and expected volatility rate, which were 10.0% and 12%, respectively, as of the Closing Date, and probability-weighted projections of revenue, net and gross margin. The ultimate payment amounts will be determined based on the actual results achieved by KSF.

The purchase consideration was preliminarily allocated as follows (in thousands):

The following is a summary of identifiable intangible asset acquired and the related expected life for the finite-lived intangible asset (in thousands, except years):

Valuation Assumptions for Purchase Price Allocation

Our valuation assumptions used to value the acquired assets and assumed liabilities require significant estimates, especially with respect to intangible assets. In determining the fair value of intangible assets acquired, the Company must make assumptions about the future performance of the acquired businesses, including among other things, the forecasted revenue growth attributable to the asset groups and projected operating expenses and other benefits expected to be achieved by combining the business acquired with the Company. The intangible assets acquired are primarily comprised of customer relationships. The Company utilized widely accepted income-based, market-based, and cost-based valuation approaches to perform the preliminary purchase price allocation. The estimated fair value of the customer relationships was determined using the multi-period excess earnings method. This method requires forward-looking estimates that are discounted to determine the fair value of the intangible asset using a risk-adjusted discount rate that is reflective of the level of risk associated with future estimates associated with the asset group that could be affected by future economic and market conditions.

From the Closing Date, KSF contributed revenues of $9.2 million, gross margin of $2.0 million and net income of $0.2 million, which are included in the Condensed Consolidated Statement of Operations for the six months ended June 30, 2026.

Separate Transactions

Contemporaneously with the execution of the Securities Purchase Agreement, the Company entered into a Confidentiality, Non-competition, Non-solicitation, and Assignment of Rights Agreement and an Employment Agreement with Eric Rose. These transactions were accounted for separately from the business combination. The Company recognized a Non-compete asset of $0.6 million related to the Confidentiality, Non-competition, Non-solicitation, and Assignment of Rights Agreement and allocated consideration transferred from the KSF Acquisition to the non-compete asset based on the Closing Date fair value of the non-compete asset. The estimated fair value of the non-compete asset was determined using the with and without method. This method requires forward-looking estimates that are discounted to determine the fair value of the intangible asset using a risk-adjusted discount rate that is reflective of the level of risk associated with future estimates associated with the asset group that could be affected by future economic and market conditions. The non-compete asset is recorded within intangible assets, net on the Company’s Condensed Consolidated Balance Sheets and will be amortized over 5 years based on its economic life. The Employment Agreement relates to the provision of services subsequent to the Closing Date and compensation expense related to this agreement is considered compensation in the post combination period.

Supplemental Unaudited Pro Forma Information

Following are the supplemental consolidated financial results of Knightscope and KSF on an unaudited pro forma basis, as if the acquisition had been consummated, and the Company’s accounting policies had been applied, as of the beginning of the fiscal year 2025 (i.e. January 1, 2025). The pro forma financial information is not necessarily indicative of the results of operations that would have been achieved if the acquisition had been effective as of that date, or of future results of combined company.

The pro forma results include certain transaction accounting adjustments related to purchase accounting, primarily of acquisition-related intangible asset of $0.6 million and $1.2 million for the three months and six months ended June 30, 2025, respectively, and other adjustments related to interest expense on acquisition debt and state income tax expenses for both periods. The unaudited pro forma information which combines the historical results of Knightscope and KSF for the three and six months ended June 30, 2026 and 2025 is as follows (in thousands):

NOTE 3: Revenue and Deferred Revenue

Revenue Recognition

ASR related revenues

The Company derives its revenues from lease of proprietary ASRs along with access to the browser-based interface KSOC through contracts under the lease accounting that typically have a twelve (12)-month term. In addition, the Company derives non-lease revenue items such as professional services related to ASRs’ deployments, special decals, shipping costs and training if any, recognized when control of these services is transferred to the clients, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services.

The Company recognizes ASR subscription revenue as follows: ASR subscription revenue is generated from the lease of proprietary ASRs along with access to the browser-based interface KSOC through contracts that typically have 12-month terms. These revenue arrangements adhere to lease accounting guidance and are classified as leases for revenue recognition purposes. Currently, all revenue arrangements qualify as operating leases where consideration allocated to the lease deliverables is recognized ratably over the lease term.

ECD related revenues

The Company also derives revenues from sales of its ECDs and related services, such as installation, maintenance, and upgrades. Revenue is recognized upon shipment of the product, at which point the Company generates an invoice for its products and services. Clients also have the option to sign up for ongoing preventative and maintenance agreements. The maintenance revenue is recognized in the period the service is performed, and the Company has determined that the term of the contracts has been fulfilled. Installation or upgrades revenue are recognized upon completion of the project/contracts. In certain cases, deferred revenue is recognized to account for unfinished contracts.

Security Force related revenues

The Company also derives revenues from security guarding services, including armed and unarmed personnel, executive protection, and other ancillary services. Security Force revenue is recognized in the period the service is performed, and the Company has determined that the term of the contracts has been fulfilled. In certain cases, deferred revenues are recognized to account for unfinished contracts.

The Company determines revenue recognition through the following steps:

Deferred revenue

In connection with the Company’s Machine-as-a-Service (“MaaS”) subscription for the Company’s ASRs, the Company’s standard billing terms are 1) annual in advance; 2) quarterly; or 3) monthly. In these situations, the Company records the invoices as deferred revenue and amortizes the subscription amount when the services are delivered, which generally is a 12-month period.

The Company derives its revenue from the lease subscription of its proprietary ASRs along with access to its browser and mobile based software interface, KSOC. MaaS subscription agreements typically have a 12-month term.

The Company also records deferred revenue from unfinished contracts for certain ECD and Security Force-related services.

Deferred revenue includes billings in excess of revenue recognized. Revenue recognized at a point in time generally does not result in significant increases in deferred revenue. Revenue recognized over a period generally results in a majority of the increases in deferred revenue as the performance obligations are fulfilled after the billing event. Deferred revenue was as follows (in thousands):

The Company expects the balance of deferred revenue to be recognized in the next 12 months.

Deferred revenue represents amounts invoiced to customers for contracts for which revenue has yet to be recognized based on subscription services to be delivered to the Company’s clients. Typically, the timing of invoicing is based on the terms of the contract.

Customer Deposits

Customer deposits consist of advance payments received from customers for ECD sales, which are required based on credit evaluation, and deposits received for Security Force service contracts for which services have not yet been performed. The customer deposits are recorded as current liabilities and reclassed as a contra accounts receivable account at the time that the final invoice for the sale is generated following the completion of the revenue recognition criteria. As a result of the KSF Acquisition, the Company added$4.7 million of customer deposits for one client; the balance for this client is$3.0 million as of June 30, 2026.

Disaggregation of revenue

The Company disaggregates revenue from contracts with customers into the timing of the transfers of goods and services by product line.

The following table summarizes revenue by product line and timing of recognition (in thousands):

Product Revenue, net

Product revenue, net includes point of sale transactions related to the ECDs, including product, shipping, and installation.

Other revenue, net

Other non-ASR service-related revenues such as deployment services, decals and training revenue are recognized when services are delivered. Revenue from these transactions has been immaterial for all periods presented and is included in service revenue, net.

NOTE 4: Fair Value Measurement

The Company determines the fair market values of its financial instruments based on the fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The following are three levels of inputs that may be used to measure fair value:

In certain cases where there is limited activity or less transparency around inputs to valuation, securities are classified as Level 3. Level 3 liabilities that are measured at fair value on a recurring basis consist of the contingent consideration and acquisition-related liabilities resulting from the KSF Acquisition. The inputs used in estimating the fair value of these liabilities at the Closing Date are described in Note 2 –Business Combination. As of June 30, 2026, key assumptions include the discount rate and expected volatility rate, which were 10.0% and 12%, respectively, and probability-weighted projections of revenue, net and gross margin.

The following tables summarize, for each category of assets or liabilities carried at fair value, the respective fair value as of June 30, 2026 and December 31, 2025, and the classification by level of input within the fair value hierarchy (in thousands):

There wereno transfers between Level 1, Level 2, or Level 3 assets or liabilities reported at fair value on a recurring basis during the periods presented, and the valuation techniques used did not change compared to the Company’s established practice.

The following table sets forth a summary of the changes in the fair value of Company’s Level 3 contingent consideration and acquisition-related liabilities during the six-month period ended June 30, 2026, which were measured at fair value on a recurring basis (in thousands):

NOTE 5: Debt Obligations

Public Safety Infrastructure Bonds

On September 29, 2023, the Company filed an Offering Circular on Form 1-A/A (File No. 024-12314) (the “Offering Circular”) for the issuance of up to $10.0 million in Public Safety Infrastructure Bonds (the “Bonds”) pursuant to Regulation A of the Securities Act. The Offering Circular was qualified with the SEC on October 2, 2023. The price per Bond is $1,000. The Bonds are unsecured, bearing interest at 10% per annum, payable annually on December 31 each year, starting on December 31, 2024, with the Bonds maturing on thefifth anniversary of the initial issuance.

August 2024 Note

On October 10, 2022, the Company entered into a Securities Purchase Agreement (the “2022 Purchase Agreement”) with Alto Opportunity Master Fund, SPC - Segregated Master Portfolio B (the “Holder”), pursuant to which the Company issued and sold to the Holder in a private placement (i) senior secured convertible notes (the “2022 Notes”), and (ii) warrants (the “2022 Warrants”) to purchase up to 1,138,446 shares of the Company’s Class A Common Stock. The 2022 Warrants included an adjustment mechanism, whereby the exercise price and number of shares issuable upon the exercise of the 2022 Warrants (the “Warrant Exercise Price”) were subject to adjustment from time to time, such that immediately after an issuance of shares of Class A Common Stock (a “Stock Issuance”), excluding an At The Market (“ATM”) offering, at any price per share of Class A Common Stock that was lower than the then in effect Warrant Exercise Price (the “Reset Price”),

the Warrant Exercise Price would be reduced to equal the Reset Price, and the number of shares issuable upon the exercise of the 2022 Warrants would be increased to the number necessary to maintain the value of the 2022 Warrants immediately prior to such Stock Issuance. In connection with the entry into the 2022 Purchase Agreement, the Company and the Holder also entered into a registration rights agreement (the “2022 Registration Rights Agreement”), pursuant to which the Company agreed to provide the Holder with certain registration rights under the Securities Act.

On August 1, 2024 (the “Issuance Date”), the Company and the Holder entered into an Agreement and Waiver (the “Waiver”), pursuant to which, on the Issuance Date, the Company issued to the Holder a Senior Secured Promissory Note due on July 1, 2025, in an aggregate amount equal to $3.0 million (the “Principal”) in exchange for the cancellation of the Holder’s 2022 Warrants (the “August 2024 Note”). The Company agreed to pay the Principal intwo separate installments: the first installment in an amount equal to $2.5 million was payable in 11 equal consecutive monthly installments beginning on September 1, 2024, and the second installment in an amount equal to $0.5 million was payable on the earlier of (x) October 15, 2024, and (y) upon any issuance by the Company or any of its subsidiaries of common stock or common stock equivalents for cash consideration, indebtedness or a combination of units thereof (other than pursuant to a customary at the-market offering program and equity line of credits). Upon the occurrence of a Change of Control (as defined in the August 2024 Note), the Holder could, at its option, exercisable at any time commencing on the public announcement of such Change of Control until the 30 th day after the consummation thereof, require the Company to repay the August 2024 Note in full. The August 2024 Note did not bear interest; provided, however, upon the occurrence and during the continuance of an Event of Default (as defined in the August 2024 Note), the outstanding principal amount of the Principal would, automatically upon the occurrence and during the continuance of such Event of Default, bear interest at a rate equal toten percent of the amount payable per annum until such date that the Event of Default was cured or the August 2024 Note was paid in full.

Additionally, pursuant to the Waiver, the Holder agreed that the Company’s obligations under the 2022 Notes, the 2022 Purchase Agreement, the 2022 Registration Rights Agreement, the 2022 Warrants, and the other Transaction Documents (as defined in the 2022 Purchase Agreement) were satisfied in full and such documents were terminated, except that the Company shall continue to comply with and perform Section 4.10 of the 2022 Purchase Agreement and Section 6 of the 2022 Registration Rights Agreement, in each case which provide for indemnification, and which in each case survive and shall remain in full force and effect.

The Waiver and August 2024 Note contained various representations and warranties, affirmative and negative covenants, financial covenants, events of default and other provisions and obligations.

In connection with the entry into the Waiver and the August 2024 Note, on the Issuance Date, the Company and the Holder entered into a security agreement, pursuant to which the Company granted to the Holder a security interest in substantially all current and future properties, assets, and rights of the Company.

The August 2024 Note was paid in full on June 30, 2025.

Insurance Notes

On February 4, 2025, the Company financed $0.3 million in business insurance premiums to be repaid ineleven installments of $24 thousand with a borrowing rate of 7.39% per year. On October 24, 2025, the Company financed additional business insurance premiums of $0.5 million to be repaid ineleven installments of $46 thousand with a borrowing rate of 6.65% per year. On January 27, 2026, the Company financed additional business insurance premiums of $0.4 million to be repaid ineleven installments of $34 thousand with a borrowing rate of 6.65% per year. As of June 30, 2026, the outstanding balance on the financing for the insurance premiums was $0.3 million.

The amortized carrying amount of the Company’s debt obligations consists of the following (in thousands):

NOTE 6: Capital Stock and Warrants

On August 16, 2024, the Company held an annual meeting of stockholders at which the Company’s stockholders approved, among other items, amendments to the Certificate of Incorporation, to authorize 40,000,000 shares of “blank check” preferred stock, issuable in one or more series, and implement ancillary and conforming changes in connection with the authorization of “blank check” preferred stock and to remove provisions related to the Company’s former Super Voting Preferred Stock and Ordinary Preferred Stock, which areno longer outstanding. The term “blank check” preferred stock refers to preferred stock, the creation and issuance of which is authorized in advance by a company’s stockholders and the terms, rights and features of which are determined by the board of directors of a company without seeking further actions or vote of the stockholders.

The Company previously entered into an agreement that contemplated the potential issuance of up to 15,238 warrants (“Vendor Warrants”) to a vendor upon the completion of certain services and satisfaction of certain contractual conditions. In the Company’s determination, such agreement was breached by the vendor, services were not performed, conditions were not satisfied and accordingly no Vendor Warrants were issued.

A summary of the Company’s outstanding warrants as of June 30, 2026 is as follows:

Common Stock Reserved for Future Issuance

Shares of common stock reserved for future issuance relate to outstanding preferred stock, warrants and stock options as follows:

At-the-Market Offering Program

On February 1, 2023, the Company entered into an ATM Agreement with H.C. Wainwright & Co., LLC (“Wainwright”), pursuant to which the Company may offer and sell from time-to-time shares of Class A Common Stock through or to Wainwright acting as sales agent or principal (the “ATM Facility”). The Company initially filed a prospectus supplement on February 9, 2023, for sales under the ATM Facility up to $20.0 million, which was further supplemented on April 8, 2024, June 7, 2024, October 11, 2024, and November 14, 2024.

On April 4, 2025, the Company filed a new shelf registration statement on Form S-3, pursuant to which the Company 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, the Company filed a new prospectus supplement for additional sales under the ATM Facility up to $50.0 million of shares of Class A Common Stock. As of August 7, 2026, we have approximately $5.6 million remaining to be sold pursuant to the new prospectus supplement and the accompanying prospectus related to the ATM Facility.

During the six months ended June 30, 2026, the Company issued 5,530,922 shares of Class A Common Stock under the ATM offering program for net proceeds of approximately $18.3 million, after brokerage and placement fees of approximately $0.5 million.

NOTE 7: Stock-Based Compensation

Equity Incentive Plans

In April 2014, the Board of Directors adopted the 2014 Equity Incentive Plan (the “2014 Plan”) allowing for the issuance of up to 40,000 shares of common stock through grants of options, stock appreciation rights, restricted stock or restricted stock units. In December 2016, the 2014 Plan was terminated, and the Company’s Board of Directors adopted a new equity incentive plan defined as the 2016 Equity Incentive Plan (the “2016 Plan”) in which the remaining 38,720 shares available for issuance under the 2014 Plan at that time were transferred to the Company’s 2016 Plan. Awards outstanding under the 2014 Plan at the time of the 2014 Plan’s termination will continue to be governed by their existing terms. The shares underlying any awards that are forfeited, canceled, repurchased or are otherwise terminated by the Company under the 2014 Plan will be added back to the shares of common stock available for issuance under the Company’s 2016 Plan. The 2016 Plan provides for the granting of stock awards such as incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock or restricted stock units to employees, directors and outside consultants as determined by the Board of Directors.

On June 23, 2022, following approval by the Board of Directors, the Company’s stockholders adopted the 2022 Equity Incentive Plan (the “2022 Plan”) allowing for the issuance of up to 100,000 shares of Class A Common Stock through grants of options, stock appreciation rights, restricted stock awards, restricted stock units, performance awards, and other stock or cash-based awards. In connection with the adoption of the 2022 Plan, shares previously available for issuance under the 2016 Plan became available for issuance under the 2022 Plan. The number of shares authorized under the 2022 Plan will be increased each January 1 st, beginning January 1, 2023 and ending on (and including) January 1, 2032, by an amount equal to the lesser of (a)5% of our Class A Common Stock and Class B Common Stock outstanding on December 31st of the immediately preceding calendar year (rounded up to the nearest whole share) and (b) a number of shares determined by the plan administrator. Shares subject to awards (including under the 2016 Plan and the 2014 Plan) that lapse, expire, terminate, or are canceled prior to the issuance of the underlying shares or that are subsequently forfeited to or otherwise reacquired by us will be added back to the shares of common stock available for issuance under the 2022 Plan.

The Board of Directors may grant stock options under the 2022 Plan at an exercise price of not less than 100% of the fair market value of the Company’s common stock on the date the option is granted. Options generally have a term often years from the date of grant. Incentive stock options granted to employees who, on the date of grant, own stock representing more than 10% of the voting power of all of the Company’s classes of stock, are granted at an exercise price of not less than 110% of the fair market value of the Company’s common stock. The maximum term of incentive stock options granted to employees who, on the date of grant, own stock having more than 10% of the voting power of all of the Company’s classes of stock, may not exceed five years. The Board of Directors also determines the terms and conditions of awards, including

the vesting schedule and any forfeiture provisions. Options granted under the 2022 Plan may vest upon the passage of time, generally four years, or upon the attainment of certain performance criteria established by the Board of Directors. The Company may from time-to-time grant options to purchase common stock to non-employees for advisory and consulting services. At each measurement date, the Company will remeasure the fair value of these stock options using the Black-Scholes option pricing model and recognize the expense ratably over the vesting period of each stock option award. Stock options comprise all of the awards granted since the 2022 Plan’s inception.

On December 1, 2025, the Board of Directors approved the 2025 Inducement Plan (the “Inducement Plan”) pursuant to which 5,000,000 shares of Class A Common Stock became issuable under the Inducement Plan. The Inducement Plan is generally subject to the same terms and conditions as the 2022 Plan and provides for the grant of awards to individuals who satisfy the standards for inducement grants under the relevant Nasdaq listing rules. As of June 30, 2026, the Company has issued 329,526 option awards under the Inducement Plan.

Stock option activity under all of the Company’s equity incentive plans for the six months ended June 30, 2026 is as follows:

The aggregate intrinsic value in the table above represents the total intrinsic value based on the Company’s closing stock price of$2.11 as of June 30, 2026, which would have been received by the option holders had all option holders exercised their options as of that date. The weighted average grant date fair value of options granted during the six-month period ended June 30, 2026 was$1.48 per share. There wereno options exercised during the six-month periods ended June 30, 2026 or 2025. The fair value of stock options that vested during the six months ended June 30, 2026, and 2025 was$1.0 million and $1.3 million, respectively.

The determination of the fair value of options granted during the three and six months ended June 30, 2026 and 2025 is computed using the Black-Scholes option pricing model with the following weighted average assumptions:

A summary of stock-based compensation expense recognized in the Company’s Condensed Consolidated Statements of Operations is as follows (in thousands):

As of June 30, 2026, the Company had unamortized stock-based compensation expense of $4.5 million that will be recognized over the weighted average remaining vesting term of options of 3.8 years. Option pricing models require the input of various subjective assumptions, including the option’s expected life and the price volatility of the underlying stock. The expected stock price volatility is based on the analysis of volatilities of the Company’s selected public peer group over a period commensurate with the expected term of the options. The expected term of the employee stock options represents the weighted average period the stock options are expected to remain outstanding and is based on the contractual terms, the vesting period and the expected remaining term of the outstanding options. The risk-free interest rate is based on the U.S. Treasury interest rates whose term is consistent with the expected life of the stock options. No dividend yield is included as the Company has not issued any dividends and does not anticipate issuing any dividends in the future.

NOTE 8: Commitments and Contingencies

Leases

The Company leases facilities for office space under non-cancelable operating lease agreements. The Company leases space for its corporate headquarters in Sunnyvale, California through June 30, 2030.

As of June 30, 2026 and December 31, 2025, the components of the Company’s leases and lease costs were as follows (in thousands):

Operating lease costs were approximately $0.4 million and $0.5 million for the three-month periods ended June 30, 2026 and 2025, respectively, and approximately $0.8 million and $0.7 million for six-month periods ended June 30, 2026 and 2025, respectively.

As of June 30, 2026, future minimum operating lease payments were as follows (in thousands):

As of June 30, 2026, the weighted average remaining lease term is 3.8 years and the weighted average discount rate is 14.1%.

Legal Matters

The Company may be subject to pending legal proceedings and regulatory actions in the ordinary course of business; however, no such claims have been identified as of June 30, 2026 that would have a material adverse effect on the Company’s financial position, results of operations or cash flows.

The Company from time to time enters into contracts that contingently require the Company to indemnify parties against third party claims. These contracts primarily relate to: (i) arrangements with clients which generally include certain provisions for indemnifying clients against liabilities if the services infringe a third party’s intellectual property rights, (ii) the Regulation A Issuer Agreement where the Company may be required to indemnify the placement agent for any loss, damage, expense or liability incurred by the other party in any claim arising out of a material breach (or alleged breach) as a result of any potential violation of any law or regulation, or any third party claim arising out of any investment or potential investment in the offering, and (iii) agreements with the Company’s officers and directors, under which the Company may be required to indemnify such persons from certain liabilities arising out of such persons’ relationships with the Company. The Company has not incurred any material costs as a result of such obligations and has not accrued any liabilities related to such obligations in the condensed consolidated financial statements as of June 30, 2026 and December 31, 2025.

Sales Tax Contingencies

The Company has historically not collected state sales tax on the sale of its MaaS product offering but has paid use tax on all purchases of raw materials. The Company’s MaaS product offering may be subject to sales tax in certain jurisdictions. If a taxing authority were to successfully assert that the Company has not properly collected sales or other transaction taxes, or if sales or other transaction tax laws or the interpretation thereof were to change, and the Company was unable to enforce the terms of their contracts with clients that give the right to reimbursement for the assessed sales taxes, tax liabilities in amounts that could be material may be incurred. The Company continues to analyze possible sales tax exposure but does not currently believe that any individual claim or aggregate claims that might arise will ultimately have a material effect on its results of operations, financial position or cash flows.

NOTE 9:Segment Information

In connection with the integration of Security Force operations into the Company’s broader Autonomous Security Force strategy, management, including the 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, asone operating unit. Accordingly, effective for the quarter ended June 30, 2026, the Company determined that it operates as a single operating and reportable segment. The accounting policies of the Company’s single segment are the same as those described in Note 1.

The Company operates as a single segment consisting of its integrated Autonomous Security Force managed services platform, which includes the Company’s historical ASR, ECD, KSOC and RTX operations together with the acquired human guarding and executive protection operations associated with the KSF Acquisition.

The CODM evaluates performance and allocates resources based on consolidated operating results, including consolidated revenue, profitability measures, total assets and liquidity considerations. The measure of segment assets is reported on the Condensed Consolidated Balance Sheets as total assets. The measure of significant segment expenses is reported on the Condensed Consolidated Statements of Operations.

NOTE 10: Subsequent Events

At-the-market offering program

From July 1, 2026 through August 7, 2026 the Company issued 3,832,515 shares of Class A Common Stock under the ATM Facility for net proceeds of approximately $6.1 million, after brokerage and placement fees of approximately $0.2 million.