Knightscope Inc
For the period ended Sep 30, 2024. Filed Nov 14, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 14, 2024
KSCP$0.47+14.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-14.
0001558370-24-012268
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-14.
0001558370-24-015747
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 117 previous paragraphs and 112 current paragraphs.
42 unchanged; 44 reworded; 20 added; 29 removed; 2 previous and 6 current paragraphs rearranged.
Tables are not compared: 18 previous and 18 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (20)
Current report
We offer our ASR and stationary security solutions under an annual subscription, Machine-as-a-Service (“MaaS”) model. This model includes the provision of the ASR unit, maintenance, support, data transfer, access to the KSOC, charging stations, and software, firmware, and hardware updates. Our ECD devices are sold to our clients either directly or through partners who also install and manage them. The ECDs also provide a recurring revenue opportunity through the Emergency Monitoring System platform.
Current report
In the third quarter of 2024, the management team focused on regaining compliance with the listing standards of The Nasdaq Stock Market LLC (Nasdaq) while we continued to implement changes to deliver on the Company’s path to profitability.
Current report
On June 4, 2024, the Panel granted the Company an exception until October 4, 2024, to regain compliance with the Minimum Bid Price Requirement, subject to certain milestones which included obtaining shareholder approval for a reverse stock split (“RSS”), effecting the RSS, and maintaining the Minimum Bid Price Requirement for a minimum of ten consecutive business days by October 4, 2024.
Current report
On August 16, 2024, the Company held its annual meeting of stockholders (the “Annual Meeting”). At the Annual Meeting, the stockholders of the Company approved the RSS of the Company’s Class A and its Common B Common Stock at a ratio ranging from any whole number between 1-for-5 and 1-for-50.
Current report
Subsequently, on September 4, 2024, the Company’s Board of Directors (the “Board”) approved a RSS of both the Class A Common Stock and the Class B Common Stock at a final ratio of 1-for-50. On September 13, 2024, the Company filed a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) with the Secretary of State of the State of Delaware to effect the RSS, which became effective at 5:00 p.m. Eastern Time. The Class A Common Stock began trading on an as-adjusted basis on September 16, 2024.
Current report
On October 1, 2024, Knightscope received written notice from the Nasdaq Office of General Counsel informing the Company that, from September 16, 2024 to September 30, 2024, the Company’s minimum bid price had been $1.00 per share or higher and, accordingly, it had regained compliance with the bid price requirement and that the matter was now closed.
Current report
Reverse Stock Split
Current report
On August 16, 2024, the Company held an annual meeting of stockholders (the “Annual Meeting”) at which the Company’s stockholders approved, among other items, amendments to the Certificate of Incorporation, to effect a reverse stock split of the Company’s Class A Common Stock at a ratio ranging from any whole number between 1-for-5 and 1-for-50, as determined by the Company’s Board in its discretion, subject to the Board’s authority to abandon such amendments (the “Class A Reverse Stock Split Amendment”), and effect a reverse stock split of the Company’s Class B Common Stock at a ratio ranging from any whole number between 1-for-5 and 1-for-50 (which ratio shall be the same ratio as the reverse stock split determined by the Board with respect to the Class A Common Stock), as determined by the Board in its discretion, subject to the Board’s authority to abandon such amendments (the “Class B Reverse Stock Split Amendment” and, together with the Class A Reverse Stock Split Amendment, the “Reverse Stock Split Amendment”). On September 4, 2024, the Board selected a reverse stock split of the Class A Common Stock at a final ratio of 1-for-50 and a reverse stock split of the Class B Common Stock at a final ratio of 1-for-50 and abandoned all other reverse stock split amendments at different ratios. On September 13, 2024, the Company filed a Certificate of Amendment to the Certificate of Incorporation (the “Certificate of Amendment”) with the Secretary of State of the State of Delaware to effect the Amendments. The Reverse Stock Split Amendment became effective at 5:00 p.m. Eastern Time on the date of filing of the related Certificate of Amendment.
Current report
Capital Structure
Current report
The Company has prioritized restructuring Knightscope’s capital structure to better align with its public company peers. Below is a summary of actions taken, which we believe, set up the Company for long term success.
Current report
**Increase in Authorized Shares -**On April 5, 2024, we held a special meeting of stockholders (the “Special Meeting”) at which the Company’s stockholders approved an amendment (the “Share Increase Amendment”) to the Certificate of Incorporation to increase the number of authorized shares of the Company’s Class A Common Stock, parvalue $0.001 per share from 114,000,000 to 228,000,000 shares. Our Board believes it is in the best interests of the Company and our stockholdersto have additional shares available for use as our Board deems appropriate or necessary. As such, the primary purpose of the Share Increase Amendment was to provide the Company with greater flexibility with respect to managing its Class A Common Stock in connection with such corporate purposes as may, from time to time, be considered advisable by our Board. These corporate purposes could include, without limitation, (i) financing activities, including the at-the-market offering program that we commenced in February 2023, as amended in August 2023, with H.C. Wainwright & Co., LLC as sales agent; (iii) stock dividends or splits; (iv) conversions of convertible securities; (v) issuance of stock options and other equity awards pursuant to our incentive plans; and (vi) establishing strategic relationships. Having an increased number of authorized but unissued shares of Class A Common Stock allows the Company to take prompt action with respect to corporate
Current report
opportunities that develop, without the delay and expense of convening a special meeting of stockholders for the purpose of approving an increase in our capitalization. Our Board will determine whether, when and on what terms the issuance of shares of Class A Common Stock may be warranted in connection with any of the foregoing purposes.
Current report
On August 16, 2024, at its Annual Meeting, the Company received stockholder approval to authorize 40,000,000 shares of “blank check” preferred stock, issuable in one or more series, and (ii) 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 are no 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.
Current report
In the third quarter of 2024, Knightscope continued to streamline operations of the ECD product line which was acquired when the Company purchased the assets of CASE Emergency Management. Although the disruptions from restructuring changes we made in the first half of this year continue to impact operations, we are beginning to see benefits, primarily as we work closely with our third-party partners to streamline field services for our ECD clients.
Current report
Additionally, we believe our efforts to improve the ASR K5 v5 are showing promise as we see increased customer retention and a resulting increase in install base. The Company plans to invest in what management believes will be revenue-generating activities such as expansion of the sales team, developing channel partnerships and updating its website to attract new leads.
Current report
Total cost of revenue, net of $3.2 million for the three months ended September 30, 2024 remained relatively flat compared to the same period in the prior year primarily due to $0.2 million in reduced headcount and $0.1 million of reduced cellular costs, partially offset by $0.4 million higher costs related to third party field services.
Current report
Research and development expenses decreased by approximately $0.1 million, or approximately 7% for the three months ended September 30, 2024, as compared to the same period in the prior year. The decrease is primarily due to $0.3 million lower compensation and material expenses partially offset by $0.2 million in higher consulting fees.
Current report
Comparison of the Nine Months Ended September 30, 2024 and 2023
Current report
Total revenue, net for the nine months ended September 30, 2024 of approximately $8.0 million was a decrease of approximately $1.8 million or 18% as compared to the same period in the prior year. The decrease was due to lower production and installation of the ECD products as the Company has been restructuring the formerly CASE Emergency Management business it acquired in 2022.
Current report
As of November 13, 2024, approximately $1.8 million of the August 2024 Note is outstanding.
Removed paragraphs (29)
Previous report
We sell our ASR and stationary multi-purpose security solutions under an annual subscription, machine-as-a service (MaaS) business model, which includes the ASR machine as well as maintenance, service, support, data transfer, KSOC access, charging stations, and unlimited software, firmware and select hardware upgrades.
Previous report
During the second quarter of 2024, the management team has continued to implement operational changes in furtherance of its goal of achieving the Company’s path to profitability, updated its capital structure to better align with its public company peers, and continued its discussions with The Nasdaq Stock Market (“Nasdaq”) to align on the Company’s plans for its path to compliance with Nasdaq listing standards.
Previous report
In the second quarter of 2024, Knightscope continued implementing its previously announced roadmap to profitable growth by streamlining costs and operations across the Company. Our actions focused primarily on the K1B product line which was acquired when the Company purchased the assets of CASE Emergency Management.
Previous report
Organizational Structure – the Company has streamlined management size, eliminated positions not aligned with Company goals, leveraged automation and strategically outsourced business functions that are not aligned with the Company’s core technology focused mission. Our strategic outsourcing initiative primarily addressed our services team that provided onsite support to K1B and ASR products in the field. The Company opted to align with key service and maintenance organizations with thousands of technicians better able to effectively support our clients.
Previous report
Manufacturing – the Company continues to consolidate its manufacturing operations from 3 facilities across northern and southern California down to one primary facility in Mountain View, California to improve process flow, quality, purchasing efficiencies and labor flexibility.
Previous report
Facilities – Knightscope also continues to evaluate footprint reduction opportunities, especially the K1B satellite locations with the expectation to further improve efficiencies and inventory management while reducing real estate costs and operating expenses.
Previous report
Upgrades - in the ASR product line, management prioritized enhancing client experience by addressing quality issues and upgrading existing client machines to the latest generation K5 in lieu of shipping machines to new clients reflected in the backlog. In the six months ended June 30, 2024, we wrote off approximately $1.1 million in assets related to K5 v3 retirements.
Previous report
Increase in Authorized Shares
Previous report
On April 5, 2024, we held a special meeting of stockholders (the “Special Meeting”) at which the Company’s stockholders approved an amendment (the “Amendment”) to the Company’s Amended and Restated Certificate of Incorporation to increase the number of authorized shares of the Company’s Class A Common Stock, par value $0.001 per share from 114,000,000 to 228,000,000 shares. The Company’s board of directors previously approved the Amendment and, on April 5, 2024, the Company filed a Certificate of Amendment (the “Certificate of Amendment”) to the Amended and Restated Certificate of Incorporation (as amended, the “Certificate of Incorporation”) with the Secretary of State of the State of Delaware to effect the Amendment, which became effective upon filing with the Secretary of State.
Previous report
Prospectus Supplement Filings
Previous report
On April 8, 2024, we filed a prospectus supplement (the “April Prospectus Supplement”) to the prospectus included in the Company’s Registration Statement on Form S-3 (File No. 333-269493), which was declared effective by the SEC on February 8, 2023 under the Securities Act, relating to the issuance and sale from time to time of up to $6.4 million of shares in Class A Common Stock, subject to, and in accordance with, SEC rules, pursuant to the At The Market Offering Agreement (the “ATM Agreement”), dated February 1, 2023, between the Company and H.C. Wainwright & Co., LLC (“Wainwright”).
Previous report
Preferred Stock Conversion to Common
Previous report
As a result of these changes, we expect 2024 to be a year of transition with fluctuations in our results of operations throughout the year. The Company believes that although the streamlining of costs and operations may negatively impact near-term results of operations, the changes will better prepare the Company for long-term financial health.
Previous report
As the Company did not regain compliance with the Minimum Bid Price Requirement by April 23, 2024, and it was determined that the Company was not eligible for another 180 calendar-day extension because it did not meet the minimum stockholders’ equity initial listing requirements for The Nasdaq Capital Market, as set forth under listing Rule 5505(b), the Company received the Delisting Determination Letter.
Previous report
The Delisting Determination Letter stated that unless the Company requests a hearing before a Nasdaq Hearing Panel (“Panel”) to appeal Nasdaq’s delisting determination by May 1, 2024, trading of the Company’s Class A Common Stock will be suspended at the opening of business on May 3, 2024, and the Company’s Class A Common Stock will be delisted from The Nasdaq Capital Market.
Previous report
As described above, on May 15, 2024, the Automatic Conversion resulted in the Company reflecting a positive stockholders’ equity on its Condensed Balance Sheet. Prior to the Automatic Conversion, the Company did not meet the minimum stockholders’ equity requirement under the Equity Standard for continued listing pursuant to Nasdaq Listing Rule 5550(b)(1) on The Nasdaq Capital Market, because the Company’s stockholders’ equity was below the required minimum of $2.5 million as of March 31, 2024 (the “Minimum Stockholders’ Equity Requirement”). Due to the Automatic Conversion, the Company satisfied the Minimum Stockholders’ Equity Requirement under the Equity Standard as of June 30, 2024.
Previous report
There can be no assurance that the Company will be able to regain compliance with the Minimum Bid Price Requirement remain in compliance with the Minimum Stockholders’ Equity Requirement, or otherwise be in compliance with other applicable Nasdaq listing rules, that stockholders will approve a reverse stock split, the Company will be able to successfully implement a reverse stock, or that the Company’s appeal of the delisting determination will be successful.
Previous report
Known or Anticipated Trends
Previous report
Knightscope provides monitoring services to various sectors, including corporate and college campuses, shopping centers, casinos, resorts and other public spaces where people live, work and play. We believe that as businesses and municipalities seek to enhance
Previous report
security, the demand for automated and efficient security solutions like those offered by Knightscope is likely to grow, driven in part by the increasing need for surveillance to combat crime and security breaches.
Previous report
In 2024, pursuant to the previously announced roadmap to profitability, the Company is focused on implementing initiatives focused on optimizing operations in order to achieve profitable growth in the future. Simultaneously, the Company continues to scale its business to meet incoming demand.
Previous report
Our primary goals remain meeting client demand for our technology, attracting new client orders, and working to ensure consistent performance of our products and services. Moreover, the company is investing in relationships that it believes will augment its technology with innovative solutions to enhance its offerings.
Previous report
On March 13, 2024, as part of its Innovation Week, the Company announced the signing of a Memorandum of Understanding (“MoU”) to fully integrate Draganfly’s drone technology with Knightscope’s ASR technologies to provide expanded solutions to the Company’s clients. Draganfly drones are intended to equip Knightscope’s ecosystem with the ability to provide security both on the ground and from the air.
Previous report
On June 3, 2024, the Company announced that it entered into a partnership with EnGoPlanet, a Houston-based innovative solar street lighting company, to jointly develop the Knightscope K1 Super Tower (“K1ST”). EnGoPlanet creates infrastructure solutions designed to collect and store energy while building sustainable and energy-independent products. The K1ST is intended to be a 20 ft. tall, solar-powered street light that incorporates a blue-light strobe, emergency communications, 360-degree ultra-HD video, Automated Gunshot Detection (“AGD”), Automated License Plate Recognition (“ALPR”), a mass-notification speaker and an interactive display designed to make sustainable infrastructure and public safety accessible to everyone.
Previous report
Due to geopolitical events and various high-profile incidents of violence across the United States, we believe that safety requirements and the market for our technologies will continue to grow.
Previous report
We also expect that competing products may be introduced in the near future, creating pressure on us to improve on our production methods, cost, quality, and product features.
Previous report
Research and development expenses increased by approximately $0.2 million, or approximately 10% for the three months ended June 30, 2024, as compared to the same period in the prior year. The increase is primarily due to $0.1 million in higher consulting expenses than during the same period in the prior year in addition to a $0.1 million increase in spending related to new product development.
Previous report
Comparison of the Six Months Ended June 30, 2024 and 2023
Previous report
Senior Secured Promissory Note
Reworded paragraphs (44)
Previous wording
The historical results presented below are not necessarily indicative of the results that may be expected for any future period. 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, as by our other filings with the SEC, and the section titled “Cautionary Note on Forward-Looking Statements” included elsewhere herein.
Current wording
The historical results presented below are not necessarily indicative of the results that may be expected for any future period. 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, as updated by our other filings with the SEC, and the section titled “Cautionary Note on Forward-Looking Statements” included elsewhere herein.
Previous wording
Knightscope is an innovator in robotics and artificial intelligence (“AI”) technologies focused on public safety. Our products, made in the United States, are designed to help our clients protect the people, places, and things where we live, work, study, and visit.
Current wording
Knightscope builds robotics and artificial intelligence (“AI”) technologies focused on public safety. Our products are manufactured in the United States and are designed to protect people and assets across various environments, including workplaces, schools, and public areas.
Previous wording
Our ASR technologies promote effective perimeter security and are designed to be force multiplier for security teams seeking improved situational awareness. ASRs conduct real-time, on-site data collection and analysis in various spaces and deliver incident alerts to security professionals through the KSOC. The KSOC, with real time dashboard linked to every K5 robot and stationary K1 Hemisphere unit, enables clients to access the data for investigative and evidence collection purposes.
Current wording
Our Autonomous Security Robots (“ASRs”) are designed to enhance perimeter security by acting as a force multiplier for security teams, providing improved situational awareness. The ASRs perform real-time, on-site video-audio data collection and provide incident alerts for security personnel via the Knightscope Security Operations Center (“KSOC”). The KSOC is a real-time dashboard connected to each K5 robot and K1 Hemisphere unit, allowing clients to access data for instant action or for investigative and evidence collection purposes.
Previous wording
Our ECDs include the K1B products consisting of the K1 Blue Light Tower, K1 E-Phone, and the K1 Call Box. Tower devices are tall, highly visible and recognizable structures that are fully powered by the sun to provide emergency communication services using cellular and satellite communications. E-Phones and Call Boxes, which can be solar based or plugged in, offer a smaller footprint than the towers, but with the same reliable communication capabilities.
Current wording
Our Emergency Communication Devices (“ECDs”) include the K1 Blue Light Tower, K1 E-Phone, and K1 Call Box. These devices provide emergency communication services using cellular and satellite networks. The towers, powered by solar energy, are highly visible, while the smaller E-Phones and Call Boxes offer the same communication capabilities with a more compact footprint, with options for solar or plug-in power.
Previous wording
Our KEMS platform consists of self-diagnostic, alarm monitoring software solution that provides ECD system owners daily email reports on the operational status of their system, a one-year parts warranty, and optional installation services. The cloud-based application monitors the system wide state-of-health, alerts users concerning operational issues, provides technicians real-time error detection/diagnostics, and collects/reports system performance statistics.
Current wording
The Knightscope Emergency Monitoring System (“KEMS”), integrated into our ECDs, includes a self-diagnostic, alarm monitoring software solution that provides system owners with daily reports on the operational status of their emergency devices. The cloud-based application monitors the overall system's health, alerts users to operational issues, provides real-time error detection and diagnostics, and generates system performance reports.
Previous wording
On April 24, 2024, the Company received a delisting determination letter (the “Delisting Determination Letter”) from the Nasdaq Listing Qualifications staff (the “Staff”) of Nasdaq indicating that the Company has not regained compliance with the requirement that the bid price for the Class A Common Stock close above $1.00 per share (the “Minimum Bid Price Requirement”). As previously disclosed, on October 26, 2023, the Company was listed on The Nasdaq Global Market and received written notice (the “Notice”) from Nasdaq indicating that the Company was no longer in compliance with the Minimum Bid Price Requirement set forth in Nasdaq Listing Rule 5450(a)(1) and had 180 calendar days, or until April 23, 2024, to regain compliance with the Minimum Bid Price Requirement. The Company transferred to The Nasdaq Capital Market effective as of March 4, 2024 and was afforded the remainder of the compliance period to regain compliance with the Minimum Bid Price Requirement.
Current wording
On October 26, 2023, the Company was listed on The Nasdaq Global Market and received written notice (the “Notice”) from Nasdaq indicating that the Company was no longer in compliance with Nasdaq Listing Rule 5450(a)(1) which requires that a company must maintain a minimum bid price of $1.00 per share (the “Minimum Bid Price Requirement”)and had 180 calendar days, or until April 23, 2024, to regain compliance. Effective on March 4, 2024, the Company transferred to The Nasdaq Capital Market and was afforded the remainder of the compliance period to regain compliance.
Previous wording
On April 30, 2024, the Company requested a hearing before the Panel. Pursuant to Nasdaq Listing Rule 5815(a)(1)(B), the hearing request stayed the suspension of trading and delisting of the Company’s Class A Common Stock pending the conclusion of the hearing process. On May 1, 2024, the Company received a letter (the “Hearing Letter”) from the Nasdaq Listing Qualifications Hearings Staff (the “Hearings Staff”), indicating that the Hearings Staff had received the Company’s request to appeal the delisting action and that, to the extent permitted by Nasdaq Listing Rules, the delisting action referenced in the Delisting Determination Letter has been stayed, pending a final written decision by a Panel. The Hearing Letter noted that the Company was scheduled for a hearing with the Panel on June 11, 2024. On May 8, 2024, the Company submitted a questionnaire to the Staff requesting an expedited review process in lieu of the scheduled hearing. On June 4, 2024, the Panel informed the Company that it had provided the Company with a temporary exception until October 4, 2024 to regain compliance with the Minimum Bid Price Requirement, provided, among other things, that on or before August 16, 2024, the Company obtain shareholder approval for a reverse stock split at a ratio that satisfies the Minimum Bid Price Requirement. The Panel reserved the right to reconsider the terms of this exception based on any event, condition or circumstance that exists or develops that would, in the opinion of the Panel, make continued listing of the Company’s securities inadvisable or unwarranted. On July 5, 2024, the Company filed a definitive proxy statement in connection with its annual meeting of stockholders, at which, among other matters, stockholders will vote on the approval of amendments to the Company’s Certificate of Incorporation to effect a reverse stock split of each of the Company’s Class A Common Stock and Class B Common Stock, in each case at a ratio ranging from any whole number between 1-for-5 and 1-for-50 (which ratio shall be the same ratio for each class of Common Stock), as determined by the Board of Directors in its discretion, subject to the Board of Directors’ authority to abandon such amendments.
Current wording
Requirement. On April 30, 2024, the Company appealed and requested a hearing before the Nasdaq Hearings Panel (“Panel”). Pursuant to Nasdaq Listing Rule 5815(a)(1)(B), the hearing request stayed the suspension of trading and delisting of the Company’s Class A Common Stock pending the conclusion of the hearing process.
Previous wording
On May 15, 2024 (the “Preferred Stock Conversion Date”), pursuant to the terms of the Certificate of Incorporation, each share of the Company’s Super Voting Preferred Stock (as defined in the Certificate of Incorporation) was automatically converted into fully-paid, non-assessable shares of Class B common stock and each share of the Company’s Ordinary Preferred Stock (as defined in the Certificate of Incorporation and, together with the Super Voting Preferred Stock, the “Preferred Stock”) was automatically converted into fully-paid, non-assessable shares of Class A Common Stock, in each case at the then effective applicable Conversion Rate (as defined in the Certificate of Incorporation), as a result of the receipt by the Company of a written request for such conversion from the holders of a majority of the voting power of the Preferred Stock then outstanding (the “Automatic Conversion”). As a result of the Automatic Conversion, there were no shares of Preferred Stock outstanding after the Preferred Stock Conversion Date. Management believes that this better aligns the Company’s capital structure with its public company peers. In addition, this change allows the Company to reflect a stockholders’ equity on its balance sheet, which positively impacts our ability to stay in compliance with Nasdaq’s continued listing requirements.
Current wording
**Preferred Stock Conversion to Common -**On May 15, 2024 (the “Preferred Stock Conversion Date”), pursuant to the terms of the Certificate of Incorporation, each share of the Company’s Super Voting Preferred Stock was automatically converted into fully-paid, non-assessable shares of Class B common stock and each share of the Company’s Ordinary Preferred Stock (together with the Super Voting Preferred Stock, the “Preferred Stock”) was automatically converted into fully-paid, non-assessable shares of Class A common stock, in each case at the then effective applicable Conversion Rate, as a result of the receipt by the Company of a written request for such conversion from the holders of a majority of the voting power of the Preferred Stock then outstanding (the “Automatic Conversion”). As a result of the Automatic Conversion, no shares of previously authorized preferred stock remain outstanding. Management believes this change helps the Company maintain compliance with Nasdaq listing rules by helping the Company meet the minimum stockholders’ equity requirement under the Equity Standard for continued listing pursuant to Nasdaq Listing Rule 5550(b)(1) on The Nasdaq Capital Market.
Previous wording
As of July 31, 2024, the Company had a total backlog of approximately $2.8 million, comprised of $1.3 million related to ASR orders and $1.5 million related to orders for ECDs.
Current wording
As of October 31, 2024, the Company had a total backlog of approximately $2.9 million, comprised of $2.4 million related to orders for ECDs and $0.5 million related to ASR orders.
Previous wording
The following table sets forth selected Condensed Statements of Operations data (in thousands, other than share data) and such data as a percentage of total revenue.
Current wording
The following table sets forth selected Condensed Statements of Operations data (in thousands) and such data as a percentage of total revenue.
Previous wording
Total revenue, net for the three months ended June 30, 2024 decreased by approximately $0.4 million compared to the same period in the prior year due to a $0.5 million decrease in Product revenue offset by a $0.1 million increase in Service revenue. Service revenue, net for the three months ended June 30, 2024 increased approximately 7% compared to the same period in the prior year due to an increase in Service revenue related to the K1B installed base. Product revenue decreased by approximately $0.5 million or approximately 28% in the three months ended June 30, 2024 compared to the same period in the prior year, primarily due to a large one-time K1B sale in the prior-year.
Current wording
Total revenue, net for the three months ended September 30, 2024 decreased by approximately $0.8 million compared to the same period in the prior year due to a $0.7 million decrease in product revenue and $0.1 million decrease in Service revenue. Product revenue decreased by approximately $0.7 million or approximately 52% in the three months ended September 30, 2024 compared to the same period in the prior year, primarily due to lower sales of ECD products which were impacted by the Company’s decision to move production from Irvine, CA to its headquarters location in Mountain View, CA. As a result, there were significant disruptions in our ability to build and deliver units to customers. The Company expects some disruptions to continue in the near future as it evaluates opportunities to optimize production and operations, which may include seeking a new, larger facility. Service revenue, net for the three months ended September 30, 2024 remained relatively flat compared to the same period in the prior year.
Previous wording
In the first quarter of 2024, the Company made a strategic decision to outsource its ECD field services function to third-party service and maintenance organizations with thousands of technicians better able to efficiently support our clients. We expect that this outsourcing will allow the Company to better focus on its technology and innovation while reducing costs related to non-core business functions.
Current wording
In the first quarter of 2024, the Company made a strategic decision to outsource its ECD field services function to third-party service and maintenance organizations with technicians better able to efficiently support our clients. We expect that this outsourcing will allow the Company to better focus on its technology and innovation while reducing costs related to non-core business functions. However, we also expect that the short-term impact of these significant changes will result in higher costs and a decline in gross margin yield.
Previous wording
partially offset by a $0.4 million decline in headcount related expenses due to outsourcing of field services. In addition, as highlighted earlier, a high percentage of K5 v3 ASRs did not meet expected quality standards resulting in high service, maintenance and repair costs and low customer satisfaction. We discontinued the K5 v3 machines and replaced them with the improved, better performing K5 v5 machines. K5 v3 machines, totaling approximately $0.3 million were written off and recorded in service cost of revenue, net in the current year quarter and we expect this trend to continue throughout the year as we replace existing client machines. The write-down impact was offset by a $0.4 million decrease in services warranty costs and cellular fees as the Company continues to innovate around data usage and associated costs. The service cost of revenue, net includes the average service cost per unit, depreciation of the ASRs, and third-party fees. Additional costs relate to the ongoing maintenance and support of our installed base of ECDs which consists primarily of service personnel, vehicle expense, and warranty repair costs.
Current wording
Service cost of revenue, net for the three months ended September 30, 2024 decreased by approximately $0.1 million to approximately $2.4 million, compared to the three months ended September 30, 2023. This was primarily due to a $0.2 million decline in headcount related expenses due to outsourcing of field services partially offset by a $0.4 million increase in third-party costs. Additionally, there was a $0.1 million decrease in cellular fees as the Company continues to innovate around data usage and associated costs. The service cost of revenue, net includes the average service cost per unit, depreciation of the ASRs, and third-party fees. Additional costs relate to the ongoing maintenance and support of our installed base of ECDs which consists primarily of service personnel, vehicle expense, and warranty repair costs.
Previous wording
Product cost of revenue, net was approximately $1.0 million for the three months ended June 30, 2024 compared to approximately $0.9 million for the prior year period. The approximate $0.1 million period over period increase is primarily attributable to lower sales of ECD products.
Current wording
Product cost of revenue, net was approximately $0.9 million for the three months ended September 30, 2024 compared to approximately $0.8 million for the prior year period.
Previous wording
The revenue and cost of revenue described above resulted in a gross loss for the three months ended June 30, 2024 of approximately $0.6 million, net, compared to a gross profit of $9 thousand for the three months ended June 30, 2023. The gross loss for three months ended June 30, 2024 included a non-recurring expense of approximately $0.3 million attributed to the retirement of the K5 v3 machines.
Current wording
The revenue and cost of revenue described above resulted in a gross loss for the three months ended September 30, 2024 of approximately $0.7 million, net, compared to a gross profit of $0.1 million for the three months ended September 30, 2023.
Previous wording
Sales and marketing expenses increased by approximately $0.3 million, or approximately 29%, for the three months ended June 30, 2024, as compared to the same period in the prior year. The increase was primarily due to $0.4 million in increased advertising costs partially offset by a $0.1 million lower allocation of amortization expense as compared to the prior year period.
Current wording
Sales and marketing expenses decreased by approximately $0.4 million, or approximately 28%, for the three months ended September 30, 2024, as compared to the same period in the prior year. The decrease was primarily due to $0.3 million in lower advertising and promotional costs and $0.1 million lower expenses related to compensation and allocation of amortization expense compared to the same period in the prior year.
Previous wording
General and administrative expenses decreased by approximately $0.5 million or approximately 16% for the three months ended June 30, 2024, as compared to the same period in the prior year. The decrease was primarily related to a $0.6 million decline in payroll
Current wording
General and administrative expenses increased by approximately $1.0 million or approximately 31% for the three months ended September 30, 2024, as compared to the same period in the prior year. The increase was primarily related to a $0.9 million increase in
Previous wording
expenses driven by a headcount reduction in the first quarter of 2024, and a $0.3 million decrease in investor relations costs, partially offset by a $0.4 million increase in third-party professional fees, primarily in legal and finance services.
Current wording
investor relations costs and $0.7 million increase in third-party professional fees, primarily legal and finance services. These increases were partially offset by a decline in payroll expenses of $0.5 million and decline of $0.1 in stock compensation expense driven by a headcount reduction in the first quarter of 2024.
Previous wording
Restructuring charges were approximately $0.3 million for the three-month period ended June 30, 2024 compared to approximately $5 thousand for the same period in the prior year. The increase was primarily driven by $0.2 million in severance charges from a restructuring in the second quarter of 2024 and $0.1 million in fees incurred to move production of K1B towers from Irvine, California to our headquarters facility in Mountain View, California.
Current wording
Restructuring charges were approximately $33 thousand for the three month period ended September 30, 2024 compared to none for the same period in the prior year.
Previous wording
Total other income decreased by approximately $4.0 million, or 77% for the six months ended June 30, 2024 as compared to the same period in the prior year, resulting in other income, net of approximately $1.2 million for the six months ended June 30, 2024 compared to total other income, net of approximately $5.2 million for the same period in the prior year. Interest expense decreased by $0.3 million due to a lower debt balance in the current year period as compared to the same period in the prior year. The decrease in the fair value of warrant and derivative liabilities for the six months ended June 30, 2024 was approximately $4.4 million less than in the same period in the prior year.
Current wording
Total other income (expense) decreased by approximately $1.3 million, or 70% for the three months ended September 30, 2024 as compared to the same period in the prior year, resulting in other income (expense), net of approximately $3.2 million for the three months ended September 30, 2024 compared to total other income (expense), net of approximately $1.9 million for the same period in the prior year. Interest expense increased by $0.1 million due to a higher interest-bearing debt balance in the current year period as compared to the same period in the prior year. The increase in the fair value of warrant and derivative liabilities for the three months ended September 30, 2024 was approximately $1.2 million more than in the same period in the prior year. We recorded $22 thousand in lease termination costs in the third quarter of fiscal 2024, resulting from the early termination of two long-term lease arrangements.
Previous wording
The following table sets forth selected Condensed Statements of Operations data (in thousands, other than share data) and such data as a percentage of total revenue.
Current wording
The following table sets forth selected Condensed Statements of Operations data (in thousands) and such data as a percentage of total revenue.
Previous wording
Service revenue, net, comprised of ASR MaaS agreements and ECD maintenance agreements increased for the six months ended June 30, 2024 by approximately $0.1 million or approximately 2% compared to the same period in the prior year due to a $0.2 million increase in ECD related services partially offset by a $0.1 million decline in the ASR services. ASR services were impacted by the Company’s decision to replace ASR K5 v3 machines with K5 v5 machines due to quality and reliability of the older version.
Current wording
Service revenue, net, comprised of ASR MaaS agreements and ECD maintenance agreements remained relatively flat for the nine months ended September 30, 2024 compared to the same period in the prior year. ASR services were impacted by the Company’s decision to replace ASR K5 v3 machines with K5 v5 machines due to quality and reliability of the older version.
Previous wording
Product revenue, primarily composed of the ECD line of products, decreased by approximately $1.1 million or approximately 37% in the six months ended June 30, 2024 compared to the same period in the prior year, primarily due to a decline in product installations. In addition, the structural changes implemented during the first quarter of 2024 and the resulting disruption also led to a period-over-period decline in installations across the ECD products.
Current wording
Product revenue, primarily composed of the ECD line of products, decreased by approximately $1.8 million or approximately 42% in the nine months ended September 30, 2024 compared to the same period in the prior year, primarily due to a decline in product production and installations. In addition, the structural changes implemented during the first quarter of 2024 and the resulting disruption also led to a period-over-period decline in installations across the ECD products.
Previous wording
Service cost of revenue, net for the six months ended June 30, 2024 increased by approximately $1.0 million to approximately $5.9 million, compared to the six months ended June 30, 2023, primarily due to write-offs related to K5 v3 machines. A high percentage of K5 v3 ASRs did not meet expected quality standards resulting in high service, maintenance and repair costs and low customer satisfaction. During the first quarter of 2024, we decided to discontinue the K5 v3 machines and replace them with the improved, better performing K5 v5 machines. K5 v3 machines, totaling approximately $1.1 million were written off and recorded in service cost of revenue, net in the current year period and we expect this trend to continue throughout the year as we replace existing client machines. In addition, the Company made the decision to outsource its ECD field services function to third-party service and maintenance
Current wording
Service cost of revenue, net for the nine months ended September 30, 2024 increased by approximately $1.2 million to approximately $8.3 million, compared to the nine months ended September 30, 2023, primarily due to write-offs related to K5 v3 machines. A high percentage of K5 v3 ASRs did not meet expected quality standards resulting in high service, maintenance and repair costs and low customer satisfaction. During the first quarter of 2024, we decided to discontinue the K5 v3 machines and replace them with the
Previous wording
organizations with thousands of technicians better able to efficiently support our clients. As a result of this change, we saw a $0.8 million increase in third-party fees year-over-year. We expect that this outsourcing will allow the Company to better focus on its technology and innovation while reducing costs related to non-core business functions. Higher costs were partially offset by $0.4 million reduction in headcount costs, a $0.2 million decline in cellular fees, a $0.1 million decline in cost of materials due to lower Service revenue and a $0.1 million decline in software related expenses. The service cost of revenue, net is primarily related to the average service cost per unit, depreciation of the ASRs, and third-party fees. Additional costs relate to the ongoing maintenance and support of our installed base of ECDs which consists primarily of service personnel, vehicle expense, and warranty repair costs.
Current wording
improved, better performing K5 v5 machines. K5 v3 machines, totaling approximately $1.1 million, were written off and recorded in service cost of revenue, net in the current year period and we expect this trend to continue throughout the year as we replace existing client machines. In addition, the Company made the decision to outsource its ECD field services function to third-party service and maintenance organizations with technicians better able to efficiently support our clients. As a result of this change, we saw a $1.2 million increase in third-party fees year-over-year. We expect that this outsourcing will allow the Company to better focus on its technology and innovation while reducing costs related to non-core business functions. Higher costs were partially offset by a $0.4 million reduction in headcount costs, a $0.2 million decline in cellular fees and a $0.1 million decline in software related expenses. The service cost of revenue, net is primarily related to the average service cost per unit, depreciation of the ASRs, and third-party fees. Additional costs relate to the ongoing maintenance and support of our installed base of ECDs which consists primarily of service personnel, vehicle expense, and warranty repair costs.
Previous wording
Product cost of revenue, net was approximately $1.6 million for the six months ended June 30, 2024 compared to approximately $1.8 million for the same period in the prior year. The approximate $0.2 million period over period decrease is primarily attributable to lower sales of ECD products.
Current wording
Product cost of revenue, net was approximately $2.4 million for the nine months ended September 30, 2024 compared to approximately $2.9 million for the same period in the prior year. The approximate $0.5 million period over period decrease is primarily attributable to lower sales of ECD products.
Previous wording
The revenue and cost of revenue described above resulted in a gross loss for the six months ended June 30, 2024 of approximately $2.0 million, net, compared to a gross loss of approximately $0.2 million, net, for the six months ended June 30, 2023. The gross loss for six months ended June 30, 2024 included a non-recurring expense of approximately $1.1 million attributed to the retirement of the K5 v3 machines.
Current wording
The revenue and cost of revenue described above resulted in a gross loss for the nine months ended September 30, 2024 of approximately $2.7 million, net, compared to a gross loss of approximately $0.2 million, net, for the nine months ended September 30, 2023. The gross loss for the nine months ended September 30, 2024 included a non-recurring expense of approximately $1.1 million attributed to the retirement of the K5 v3 machines.
Previous wording
Research and development expenses increased by approximately $0.3 million, or 11% for the six months ended June 30, 2024, as compared to the same period in the prior year. The increase is primarily due to higher headcount than in the same period in the prior year which were lower following a workforce reduction in January 2023.
Current wording
Research and development expenses increased by approximately $0.2 million, or 4% for the nine months ended September 30, 2024, as compared to the same period in the prior year. The increase is primarily due to higher headcount than in the same period in the prior year which were lower following a workforce reduction in January 2023.
Previous wording
Sales and marketing expenses increased by approximately $0.7 million, or approximately 31%, for the six months ended June 30, 2024, as compared to the same period in the prior year. The increase was primarily due to increased advertising costs related to the marketing of our Public Safety Infrastructure Bond Offering that closed in March 2024.
Current wording
Sales and marketing expenses increased by approximately $0.3 million, or approximately 9%, for the nine months ended September 30, 2024, as compared to the same period in the prior year. The increase was primarily due to increased advertising costs related to the marketing of our Public Safety Infrastructure Bond Offering that closed in March 2024.
Previous wording
General and administrative expenses decreased by approximately $0.5 million or approximately 8% in the six months ended June 30, 2024, as compared to the same period in the prior year. This was primarily driven by a $1.0 million reduction in compensation expense and a $0.2 million reduction in corporate insurance fees, partially offset by an increase in investor relations expenses of approximately $0.4 million, a $0.2 million increase in third-party professional fees, and higher miscellaneous costs of approximately $0.1 million.
Current wording
General and administrative expenses increased by approximately $0.5 million or approximately 5% in the nine months ended September 30, 2024, as compared to the same period in the prior year. This was primarily driven by a $1.2 million increase in investor relations costs, partially offset by a reduction in payroll expense of $0.9 million, reduction in stock compensation expense of $0.6 million, and a $0.2 million reduction in corporate insurance fees. Third-party professional fees, primarily legal and finance, increased nearly $1.1 million, partially offset by a reduction in consulting fees of $0.2 million.
Previous wording
Restructuring charges were approximately $0.4 million for the six month period ended June 30, 2024 compared to approximately $0.1 million for the same period in the prior year. These charges are related to the Company’s strategic decision to outsource its field services team and to consolidate product production in one location.
Current wording
Restructuring charges were approximately $0.4 million for the nine month period ended September 30, 2024 compared to approximately $0.1 million for the same period in the prior year. These charges are related to the Company’s strategic decision to outsource its field services team and to consolidate product production in one location.
Previous wording
Total other income decreased by approximately $0.7 million, or 57% for the three months ended June 30, 2024 as compared to the same period in the prior year, resulting in other income, net of approximately $0.5 million for the three months ended June 30, 2024 compared to total other income, net of approximately $1.1 million for the same period in the prior year. Interest expense decreased by $0.2 million due to a lower debt balance in the current year period as compared to the same period in the prior year. The decrease in the fair value of warrant and derivative liabilities for the three-months ended June 30, 2024 was approximately $0.5 million less than in the same period in the prior year.
Current wording
Total other income (expense) decreased by approximately $5.4 million, or 159% for the nine months ended September 30, 2024 as compared to the same period in the prior year, resulting in other income (expense), net of approximately ($2.0) million for the nine months ended September 30, 2024 compared to total other income, net of approximately $3.4 million for the same period in the prior year. Interest expense decreased by $0.1 million due to a lower debt balance in the current year period as compared to the same period in the prior year. The increase in the fair value of warrant and derivative liabilities for the nine months ended September 30, 2024 was approximately $5.5 million more than in the same period in the prior year.
Previous wording
As of June 30, 2024, and December 31, 2023, we had $2.6 million and $2.3 million, respectively, of cash and cash equivalents. As of June 30, 2024, the Company had paid-in capital of $186.4 million, partially offset by an accumulated deficit of approximately $175.3 million, working capital of approximately $1.8 million and total stockholders’ equity of approximately $11.2 million. These factors raise substantial doubt about our ability to continue as a going concern. 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. 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. 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.
Current wording
As of September 30, 2024, and December 31, 2023, we had $5.2 million and $2.3 million, respectively, of cash and cash equivalents. As of September 30, 2024, the Company had paid-in capital of $195.5 million, partially offset by an accumulated deficit of approximately $186.2 million, working capital of approximately $0.0 million and total stockholders’ equity of approximately $9.3 million. These factors raise substantial doubt about our ability to continue as a going concern. 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. 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. 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.
Previous wording
In February 2023, we commenced an at-the-market offering program with H.C. Wainwright & Co., LLC (“Wainwright”), as sales agent, in connection with which we filed a prospectus supplement filed on February 9, 2023 (the “February Prospectus Supplement”), allowing us to offer and sell from time to time of up to $20.0 million in shares of Class A Common Stock, subject to, and in accordance with, SEC rules. Pursuant to General Instruction I.B.6 of Form S-3, the February Prospectus Supplement provided that in no event would we sell any securities in a public primary offering with a value exceeding one-third of our non-affiliated public float in any 12-month period unless our non-affiliated public float subsequently rose to $75.0 million or more.
Current wording
In February 2023, we commenced an at-the-market offering program with H.C. Wainwright & Co., LLC (“Wainwright”), as sales agent, in connection with which we filed a prospectus supplement filed on February 9, 2023 (the “February Prospectus Supplement”), allowing us to offer and sell from time to time of up to $20.0 million in shares of Class A Common Stock, subject to, and in accordance with,
Previous wording
On June 7, 2024, we filed a prospectus supplement (the “June Prospectus Supplement”) to amend the April Prospectus Supplement to increase the issuance and sale from time to time to up to $11.7 million in shares of Class A Common Stock, subject to, and in accordance with, SEC rules.
Current wording
On October 11, 2024, the Company filed a prospectus supplement (the “October Prospectus Supplement”) to amend the June Prospectus Supplement to increase the issuance and sale from time to time to up to $1.347 million in shares of Class A Common Stock subject to, and in accordance with, SEC rules.
Previous wording
During the six months ended June 30, 2024, we issued 28,202,234 shares of Class A Common Stock under the at-the-market offering program for net proceeds of approximately $12.1 million, net of brokerage and placement fees of approximately $0.5 million. From July 1, 2024 to August 9, 2024, we sold 19,240,793 shares of Class A Common Stock, generating approximately $4.7 million of proceeds, net of commissions and other issuance costs. As of August 10, 2024, we had remaining capacity to issue up to approximately $4.8 million of Class A Common Stock under the at-the-market offering program.
Current wording
During the nine months ended September 30, 2024, we issued 1,470,537 shares of Class A Common Stock under the at-the-market offering program for net proceeds of approximately $20.4 million, net of brokerage and placement fees of approximately $0.8 million. From October 1, 2024 to November 13, 2024, we sold 245,882 shares of Class A Common Stock, generating approximately $2.3 million of proceeds, net of commissions and other issuance costs.
Previous wording
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, par value $0.001 (the “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”) 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 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 (the “Explosion”). 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.
Current wording
As noted above, 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, par value $0.001 (the “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”) 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 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.
Previous wording
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 Holder’s 2022 Warrants (the “August 2024 Note”). The Company has agreed to pay the Principal in two separate installments: the first installment in an amount equal to $2,500,000 payable in 11 equal consecutive monthly installments beginning on September 1, 2024, and the second installment in an amount equal to $500,000 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 may, at its option, exercisable at any time commencing on the public announcement of such Change of Control until the 30th day after the consummation thereof, require the Company to repay the August 2024 Note in full. The August 2024 Note shall 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 shall, automatically upon the occurrence and during the continuance of such Event of Default, bear interest at a rate equal to ten percent of the amount payable per annum until such date that the Event of Default is cured or the August 2024 Note is paid in full.
Current wording
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 has agreed to pay the Principal in two separate installments: the first installment in an amount equal to $2,500,000 payable in 11 equal consecutive monthly installments beginning on September 1, 2024, and the second installment in an amount equal to $500,000 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 may, at its option, exercisable at any time commencing on the public announcement of such Change of Control until the 30th day after the consummation thereof, require the Company to repay the August 2024 Note in full. The August 2024 Note shall 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 shall, automatically upon the occurrence and during the
Previous wording
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) have been satisfied in full and such documents are terminated, except that the Company shall continue to comply
Current wording
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) have been satisfied in full and such documents are 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.
Previous wording
On September 29, 2023, we 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 the fifth anniversary of the initial issuance. We issued Bonds with a total principal amount of approximately $4.3 million, in aggregate, generating net proceeds us of approximately $3.9 million, net of issuance costs of approximately $0.4 million, during the six months ended June 30, 2024.
Current wording
On September 29, 2023, we 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 the fifth anniversary of the initial issuance. We issued Bonds with a total principal amount of approximately $2.8 million, in aggregate, generating net proceeds us of approximately $2.6 million, net of issuance costs of approximately $0.2 million, during the nine months ended September 30, 2024.
Showing the first 40 of 44 pairs. Open the source sections for the rest.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
On April 24, 2024, the Company received a delisting determination letter (the “Delisting Determination Letter”) from the Nasdaq Listing Qualifications staff (the “Staff”) of Nasdaq indicating that the Company had not regained compliance with the Minimum Bid Price
Current report — wording carried from elsewhere
**Extinguishment of Warrants with Anti-Dilution Features -**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 22,768 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 Common Stock (a “Stock Issuance”) at any price per share of 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 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 of 1933, as amended, and the rules and regulations thereunder. Capitalized terms not defined herein have the meaning assigned to them in the 2022 Purchase Agreement.
Current report — wording carried from elsewhere
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 has agreed to pay the Principal in two separate installments: the first installment in an amount equal to $2,500,000 payable in 11 equal consecutive monthly installments beginning on September 1, 2024, and the second installment in an amount equal to $500,000, 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 lines of credit). Upon the occurrence of a Change of Control (as defined in the August 2024 Note), the Holder may, at its option, require the Company to repay the Note in full, starting from the public announcement of such a Change of Control until 30 days after its completion. The August 2024 Note does not bear interest under normal circumstances; however, if an Event of Default occurs (as defined in the August 2024 Note), the outstanding principal will automatically bear interest at a rate of 10% per annum until the default is resolved or the Note is paid in full. As of November 13, 2024, approximately $1.8 million of the note is remaining.
Current report — wording carried from elsewhere
SEC rules. Pursuant to General Instruction I.B.6 of Form S-3, the February Prospectus Supplement provided that in no event would we sell any securities in a public primary offering with a value exceeding one-third of our non-affiliated public float in any 12 month period unless our non-affiliated public float subsequently rose to $75.0 million or more.
Current report — wording carried from elsewhere
continuance of such Event of Default, bear interest at a rate equal to ten percent of the amount payable per annum until such date that the Event of Default is cured or the August 2024 Note is paid in full.
Current report — wording carried from elsewhere
$0.7 million partially offset by a decrease in the change in fair value of warrant and derivative liabilities of approximately $5.5 million, a decrease in depreciation and amortization of $0.1 million and a loss on disposal of ASRs and related inventory of approximately $1.1 million.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Service cost of revenue, net for the three months ended June 30, 2024 increased by approximately $0.1 million to approximately $2.8 million, compared to the three months ended June 30, 2023. This was primarily due to a $0.6 million increase in third-party costs
Previous report — wording carried elsewhere
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.