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Item 1A. Risk Factors

2026-03-27 compared with 2025-03-31 · 104 added, 81 removed, 394 unchanged (32% of the section changed)

Risks Related to the Business and the Global Economy

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

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

The Company was formed in 2013 and made its first pilot sales in 2015.

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GAAP”), contemplating that we will continue to operate as a going concern.

However, we cannot assure you that the Company will be successful in acquiring additional funding at levels sufficient to fund future operations.

We cannot assure you that the Company will be successful in acquiring additional funding at levels sufficient to fund future operations.

If the Company is unable to raise additional capital in sufficient amounts or on terms acceptable to it, the Company may have to significantly reduce its operations or delay, scale back or discontinue the development of additional products and services, seek alternative financing arrangements, declare bankruptcy or otherwise terminate its operations entirely.

The Company expects to experience future losses as it implements its business strategy and will need to generate significant revenues to achieve profitability, which may not occur.

We expect to experience future losses as we implement our business strategy and will need to generate significant revenues to achieve profitability, which may not occur.

We have incurred net losses since our inception, and we expect to continue to incur net losses for the foreseeable future.

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If our revenues grow more slowly than we anticipate or if our operating expenses exceed our expectations or cannot be adjusted accordingly, our business, operating results and financial condition will be materially and adversely affected.

Investment in new business strategies could disrupt our ongoing business, present risks not originally contemplated and materially adversely affect our business, reputation, results of operations and financial condition.

We have invested, and in the future may invest, in new business strategies.

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

We have invested, and in the future may invest, in the research, development and marketing of new products and services, including the K7 ASR and the K1 Capsule and Super Tower.

We intend for these initiatives to drive efficiencies and improve margins.

Such endeavors may involve significant risks and uncertainties, including distraction of management from current operations, greater-than-expected liabilities and expenses, new claims or litigation, economic, political, legal and regulatory challenges, inadequate return on capital, unrealized benefits or unanticipated delays in realized benefits, potential impairment of tangible and intangible assets, and significant write-offs.

In addition, any new business strategies or new investments may require us to raise additional capital, including debt or equity securities.

Additionally, if customers do not perceive our new products and software as providing significant value, they may not readily adopt them and we may not achieve returns on our investment.

Developing new technologies is complex and can require long development and testing periods.

We could experience significant delays in new releases or significant problems in creating new products or services, which could adversely affect our business, financial condition and results of operations.

In addition, the capital required for our investment in any new products or services may require us to raise additional capital, including debt or equity securities.

These transactions may impose additional restrictions on our ability to operate and/or may be dilutive to you.

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If we are unable to raise additional capital when desired, our business, financial condition, and results of operations could be adversely affected.

The Company is subject to potential fluctuations in operating results due to its sales cycle.

We are subject to potential fluctuations in operating results due to our sales cycle.

Our sales cycles can be long and unpredictable, and our sales efforts require considerable time and expense.

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Likewise, potential customer turnover in the future, or costs we incur to retain our existing customers, could materially and adversely affect our financial performance.

Our success depends on our ability to acquire new customers in new and existing markets, and in new and existing geographic markets.

Our success depends on our ability to acquire new customers in new and existing markets, including new and existing geographic markets.

If we are unable to attract a sufficient number of new customers, we may be unable to generate revenue growth at desired rates.

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Competition in the marketplace may also lead us to win fewer new customers or result in us providing discounts and other commercial incentives.

While our immediate focus is on the U.S.

market, our long-term success will in part depend on our ability to acquire new customers outside the USA.

If customers in other countries do not perceive the threat of security, or of firearms and weapons to be significant enough to justify the purchase of our products, we will be unable to establish a meaningful business outside the USA.

If we are unable to attract a sufficient number of new customers outside the USA, we may be unable to generate future revenue growth at desired rates in the long term.

Our immediate focus is on the U.S.

market, and our long-term success will in part depend on our ability to acquire new customers outside the U.S.

If customers in other countries do not perceive the threat of security to be significant enough to justify the purchase of our products, we will be unable to establish a meaningful business outside the U.S.

If we are unable to attract a sufficient number of new customers outside the U.S., we may be unable to generate future revenue growth at desired rates in the long term.

We are subject to the loss of contracts, due to terminations, non-renewals or competitive re-bids, which could adversely affect our results of operations and liquidity, including our ability to secure new contracts from other customers.

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The loss by us of contracts due to terminations, non-renewals or competitive re-bids could materially adversely affect our financial condition, results of operations and/or liquidity, including our ability to secure new contracts from other customers.

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

The failure to identify, consummate, effectively integrate or realize the expected benefits from acquisitions could adversely affect our growth and our business, financial condition, and results of operations.

We periodically evaluate selective acquisitions in connection with our growth strategy.

The success of our growth strategy is dependent, in part, on our ability to identify suitable acquisitions, prevail against competing potential acquirers and negotiate and consummate acquisitions on terms attractive to us.

It is also dependent on our ability to effectively integrate and realize the expected benefits from acquisitions.

The combination of independent businesses is a complex, costly, and time-consuming process that requires significant management attention and resources.

The potential difficulties we may face in integrating the operations of our acquisitions include, among others:

● Failure to implement our business plan for the combined businesses;

● Unexpected losses of key employees, customers or suppliers of acquired companies and businesses;

● Unanticipated issues in conforming our acquired companies’ and businesses’ standards, processes, procedures and internal controls with our operations;

● Coordinating new product and process development;

● Increasing the scope, geographic diversity and complexity of our operations;

● Diversion of management’s attention from other business concerns;

● Adverse effects on our or acquired companies’ and businesses’ existing business relationships;

● Unanticipated changes in applicable laws and regulations;

● Unanticipated expenses and liabilities;

● Other difficulties in the assimilation of acquired companies and businesses operations, technologies, products and systems.

We may maintain, achieve or increase revenue, from companies that we acquire.

If we experience difficulties with the integration process or if the business of any acquired company or business deteriorates, the anticipated cost savings, growth opportunities and other synergies of any acquired company and business may not be realized fully or at all, or may take longer to realize than expected.

Any or all of these factors could adversely affect our ability to maintain relationships with customers, suppliers, and employees, or achieve the anticipated benefits of the acquisition.

In addition, many of these factors are outside of our control, and any one of these factors could result in additional or unforeseen costs, decreases in the amount of expected revenues and additional diversion of management’s time and energy, which could adversely impact our business, financial condition, and results of operations and cash flows may be materially and adversely impacted.

Our future operating results are difficult to predict and may be affected by a number of factors, many of which are outside of our control.

The market for advanced physical security technology is relatively new and unproven and is subject to a number of risks and uncertainties.

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Additionally, we have a limited operating history with the current scale of our business, which makes it difficult to forecast future results.

As a result, you should not rely upon the Company’s past financial results as indicators of future performance.

As a result, you should not rely upon our past financial results as indicators of future performance.

You should take into account the risks and uncertainties frequently encountered by rapidly growing companies in evolving markets.

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● Changes in global geopolitical, business or macroeconomic conditions including regulatory changes.

Additionally, we expect to have U.S.

Additionally, we currently have one U.S.

government customer and expect to have additional U.S.

government customers in the future.

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Under a continuing resolution, the government essentially authorizes agencies of the U.S.

government to continue to operate and fund programs at the prior year end but does not authorize new spending initiatives.

government to continue to operate and fund programs at the prior year end but does not authorize new

spending initiatives.

When the U.S.

government operates under a continuing resolution, or should appropriations legislation not be enacted prior to the expiration of such continuing resolution resulting in a partial shut-down of federal government operations, government agencies may delay the procurement of services, which could reduce our future revenue.

risks associated with our U.S.

For other risks associated with our U.S.

government customers, see “ We have a government customer and are seeking additional government customers, which subject us to risks including early termination, audits, investigations, sanctions, or penalties.

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Uncertainty about current and future global economic conditions may cause our customers and partners to cancel agreements with us, or potential customers and partners to hesitate to enter into agreements with us.

Our financial success is sensitive to changes in general economic and financial conditions, including tariffs or other trade restrictions, interest rates, energy costs, labor costs, inflation, commodity prices, unemployment levels, consumer debt levels, tax rates and other changes in tax laws, public health issues like the COVID-19 pandemic, or other economic factors, certain of which effects, including cost inflation, we experienced in 2022, 2023 and 2024 and expect to continue to experience in 2025.

Our financial success is sensitive to changes in general economic and financial conditions, including tariffs or other trade restrictions, interest rates, energy costs, labor costs, inflation, commodity prices, unemployment levels, consumer debt levels, tax rates and other changes in tax laws, public health issues like the COVID-19 pandemic, or other economic factors, certain of which effects, including cost inflation, we experienced the last four years and expect to continue to experience in 2026.

Global inflation, elevated interest rates, and global industry-wide logistics challenges have impacted, and we expect will continue to impact, our business.

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If we are unable to mitigate the impact of supply chain constraints and inflationary pressure through price increases or other measures, our results of operations and financial condition could be negatively impacted.

Similarly, global conflicts including the ongoing wars between Russia and Ukraine and Israel and Hamas have created volatility in the global capital markets and are expected to continue to have further global economic consequences, such as disruptions of the global supply chain and energy markets.

Similarly, global conflicts including the ongoing wars between Russia and Ukraine, Iran and U.S.

and Israel and Hamas have created volatility in the global capital markets and are expected to continue to have further global economic consequences, such as disruptions of the global supply chain and energy markets.

Any such continued volatility and disruptions may adversely affect our business or the third parties on whom we rely.

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In addition, some countries has imposed or threatened to impose retaliatory tariffs on the United States.

The resulting environment of retaliatory trade or other practices or additional trade restrictions or barriers, if implemented on a broader range of products or raw materials, could harm our ability to obtain necessary raw materials and product components or sell our products and services at prices customers are willing to pay, which could have a material adverse effect on our business, prospects, results of operations, and cash flows.

effect on our business, prospects, results of operations, and cash flows.

Relatedly, trade policies could lead to an increasing number of competitors entering the United States, thereby creating more competition.

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The growth and expansion of our business and products create significant challenges for our management, operational, and financial resources, including managing multiple relationships and interactions with users, distributors, vendors, and other third parties.

As the Company grows, our information technology systems, internal management processes, internal controls and procedures and production processes may not be adequate to support our operations.

As the Company grows, our

information technology systems, internal management processes, internal controls and procedures and manufacturing processes may not be adequate to support our operations.

To ensure success, we must continue to improve our operational, financial, and management processes and systems and to effectively expand, train, and manage our employee base.

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Our costs may grow more quickly than our revenues, harming our business and profitability.

Providing our products is costly because of our research and development expenses, production costs, operating costs and need for employees with specialized skills.

We expect our expenses to continue to increase in the future as we expand our product offerings, expand production capabilities and hire additional employees.

Historically, our costs have increased each year due to these factors and the Company expects to continue to incur increasing costs, in particular for working capital to purchase inventory, marketing and product deployments as well as costs of client support in the field.

Providing our products is costly because of our research and development expenses, manufacturing costs, operating costs and need for employees with specialized skills.

We expect our expenses to continue to increase in the future as we expand our product offerings, expand manufacturing capabilities and hire additional employees.

Historically, our costs have increased each year due to these factors and we expect to continue to incur increasing costs, in particular for working capital to purchase inventory, marketing and product deployments as well as costs of client support in the field.

Our expenses may be greater than we anticipate, which would have a negative impact on our financial position, assets and ability to invest further in the growth and expansion of the business.

In addition, expansion across the country will require increased marketing, sales, promotion and other operating expenses.

Further, as additional competitors enter our market, we expect an increased pressure on production costs and margins.

Further, as additional competitors enter our market, we expect an increased pressure on manufacturing costs and margins.

Any debt arrangements that we enter into may impose significant operating and financial restrictions on us, which may prevent us from capitalizing on business opportunities.

A breach of any of the restrictive covenants under such debt arrangements may cause us to be in default under our debt arrangements, and our lenders could foreclose on our assets.

We issued unsecured Public Safety Infrastructure Bonds (the “Bonds”) bearing interest at 10% per annum, payable annually on December 31 each year, starting on December 31, 2024, in the fourth quarter of 2023 with a principal amount totaling approximately $1.4 million.

In the fourth quarter of 2023, we issued unsecured Public Safety Infrastructure Bonds (the “Bonds”) bearing interest at 10% per annum, payable annually on December 31 each year, starting on December 31, 2024, with a principal amount totaling approximately $1.4 million.

We issued additional Bonds from January of 2024 through March 14, 2024, with a principal amount of approximately $2.8 million.

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The loss of one or more of our key personnel, or our failure to attract and retain other highly qualified personnel in the future, could harm our business.

The loss of one or more key executives, the lack of a succession plan, or our inability to attract and retain qualified professionals in critical areas such as finance, legal, engineering, and production could negatively impact our operations and growth.

The loss of one or more key executives, the lack of a succession plan, or our inability to attract and retain qualified professionals in critical areas such as finance, legal, engineering, and manufacturing could negatively impact our operations and growth.

Inflationary pressures and fluctuations in the perceived value of our equity compensation may further affect employee retention.

Additionally, recent and future changes in our board of directors and senior management may disrupt our business, create uncertainty among investors, employees, and customers, and adversely impact our financial condition and stock price.

Additionally, future changes in our Board of Directors and senior management may disrupt our business, create uncertainty among investors, employees, and customers, and adversely impact our financial condition and stock price.

If we are unable to protect our intellectual property, the value of our brand and other intangible assets may be diminished and our business may be adversely affected.

The Company relies and expects to continue to rely on a combination of confidentiality agreements with its employees, consultants, and third parties with whom it has relationships, as well as trademark, copyright, patent, trade secret, and domain name protection laws, to protect its proprietary rights.

The Company has filed in the USA various applications for protection of certain aspects of its intellectual property, and currently holds twelve patents.

We rely and expect to continue to rely on a combination of confidentiality agreements with our employees, consultants, and third parties with whom we have relationships, as well as trademark, copyright, patent, trade secret, and domain name protection laws, to protect its proprietary rights.

We have filed in the U.S.

various applications for protection of certain aspects of our intellectual property, and we currently hold twelve patents.

However, third parties may knowingly or unknowingly infringe our proprietary rights, third parties may challenge proprietary rights held by us, and pending and future trademark and patent applications may not be approved.

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We may face additional competition.

We are aware of a number of other companies that are developing physical security technology in the USA and abroad that may potentially compete with our technology and services.

We are aware of a number of other companies that are developing physical security technology in the U.S.

and abroad that may potentially compete with our technology and services.

These or new competitors may have more resources than us or may be better capitalized, which may give them a significant advantage, for example, in offering better pricing than the Company, surviving an economic downturn or in reaching profitability.

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Actual or perceived failures to comply with applicable data protection, privacy and security laws, regulations, standards and other requirements could adversely affect our business, results of operations, and financial condition.

Our products, especially the ASRs, collect, store and may analyze certain types of personal or identifying information regarding individuals that interact with the ASRs.

Our products, including the ASRs, may collect, store and analyze certain types of personal or identifying information regarding individuals that interact with the ASRs.

The regulatory framework for privacy and security issues is rapidly evolving worldwide and is likely to remain uncertain for the foreseeable future.

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In addition, our clients have separate internal policies, procedures and controls regarding privacy and data security with which we may be required to comply.

In many deployments, our customers determine the manner and purposes for which our technologies are configured and used, which may affect the applicability of certain legal requirements.

Because the interpretation and application of many privacy and data protection laws are uncertain, it is possible that these laws may be interpreted or applied in a manner that is inconsistent with our current data management practices or the features of our products.

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provide certain disclosures to California residents regarding the business’s collection, use, and disclosure of their personal information;

Similar laws have been passed in other states and are continuing to be proposed at the state and federal level, reflecting a trend toward more stringent privacy legislation in the USA.

receive and respond to requests from California residents to access, delete, and correct their personal information, or to opt out of certain disclosures of their personal information, and enter into specific contractual provisions with service providers that process California resident personal information on the business’s behalf Additional comprehensive state privacy laws have become effective in recent years, and more states continue to enact or consider similar legislation, increasing the complexity of compliance for companies operating nationwide.

Additional compliance investment and potential business process changes may also be required.

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Already, certain existing legal regimes (e.g., relating to data privacy) regulate certain aspects of AI, and new laws regulating AI either entered or are expected to enter into force in the United States and the EU in 2025.

In the United States, the Trump administration has rescinded an executive order relating to AI Technologies that was previously implemented by the Biden administration.

The Trump administration may continue to rescind other existing federal orders and/or administrative policies relating to AI Technologies, or may implement new executive orders and/or other rule making relating to AI Technologies in the future.

Federal and state policymakers in the United States continue to evaluate regulatory approaches to AI technologies, including through executive actions, agency rulemaking, and legislation.

Regulatory priorities and enforcement approaches may continue to shift across administrations.

Any such changes at the federal level could require us to expend significant resources to modify our products, services, or operations to ensure compliance or remain competitive.

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The risk of a security breach or disruption, particularly through cyberattacks or cyber intrusion, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased.

Furthermore, because the

techniques used to obtain unauthorized access to, or to sabotage, systems change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or implement adequate preventative measures.

Furthermore, because the techniques used to obtain unauthorized access to, or to sabotage, systems change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or implement adequate preventative measures.

We may also experience security breaches that may remain undetected for an extended period.

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We and certain of our service providers are from time to time subject to cyberattacks and security incidents.

While we do not believe that we have experienced any significant system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs and our business operations, whether due to a loss, corruption or unauthorized disclosure of our trade secrets, personal information or other proprietary or sensitive information or other similar disruptions.

To date, we have not identified any cybersecurity incidents that we believe have materially affected our business, However, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs and our business operations, whether due to a loss, corruption or unauthorized disclosure of our trade secrets, personal information or other proprietary or sensitive information or other similar disruptions.

It could also expose us to risks, including an inability to provide our services and fulfill contractual demands, and could cause management distraction and the obligation to devote significant financial and other resources to mitigate such problems, which would increase our future information security costs, including through organizational changes, deploying additional personnel, reinforcing administrative, physical and technical safeguards, further training of employees, changing third-party vendor control practices and engaging third-party subject matter experts and consultants and reduce the demand for our technology and services.

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Nonetheless, real-life environments, especially those in crowded areas, are unpredictable and situations have in the past arisen and may in the future arise in which the ASRs may not perform as intended.

Infrequent, but highly publicized incidents of autonomous vehicle and human interactions, including involving our ASRs, have focused consumer attention on the safety of our and other systems.

involving autonomous systems, including those involving third parties, have received public attention.

We cannot assure you that a collision, including with property or with humans, will not occur.

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We have a government customer and are seeking additional government customers, which would subject us to risks including early termination, audits, investigations, sanctions, or penalties.

The Company is actively seeking to secure a material amount of business from the U.S.

We are actively seeking to secure a material amount of business from the U.S.

federal government.

The Company has entered into its first government contract with the VA as well as a Phase 1 contract from the U.S.

These types of agreements may subject the Company to statutes, regulations and contract obligations applicable to companies doing business with the government.

We have entered into our first government contract with the U.S.

Department of Veterans Affairs as well as a Phase 1 contract with the U.S.

These types of agreements subject us to statutes, regulations and contract obligations applicable to companies doing

business with the government.

Government contracts customarily contain provisions that give the government substantial rights and remedies, many of which are not typically found in commercial contracts and which are unfavorable to contractors, including provisions that allow the government to unilaterally terminate or modify federal government contracts, in whole or in part, at the government’s convenience or in the government’s best interest, including if funds become unavailable to the applicable government agency.

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Any penalties, damages, fines, suspension, or damages could adversely affect our ability to operate our business and our financial results.

Additionally, although the Company has received its Authority to Operate from the FedRAMP, any change to our moderate cloud solution FedRAMP status could impede our ability to enter into contracts with government entities.

Additionally, although the Company has obtained an Authority to Operate under the Federal Risk And Authorization Management Program (“FedRAMP”) program, any change to our moderate cloud solution FedRAMP status could impede our ability to enter into contracts with government entities.

If we do not successfully manage our FedRAMP status, our sales to government entities could be delayed or limited, and as a result, our business, financial condition, and results of operations would be adversely affected.

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federal government may affect our business in a manner that currently cannot be reliably predicted.

For example, an advisory commission, the “Department of Government Efficiency” was announced to reform federal government processes and reduce expenditures.

For example, an advisory commission, the “Department of Government Efficiency” was announced in 2025 to reform federal government processes and reduce expenditures.

Pressures on and uncertainty surrounding the U.S.

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Our Class A Common Stock is listed on The Nasdaq Capital Market under the symbol “KSCP.” In order to maintain that listing, we must satisfy minimum financial and other continued listing requirements, including maintaining a minimum bid price and a minimum market value.

The inability to comply with applicable listing requirements or standards of The Nasdaq Stock Market LLC (“Nasdaq”) could result in the delisting of our Class A Common Stock, which could have a material adverse effect on our financial condition and could cause the value of our Class A Common Stock to decline.

The inability to comply with applicable listing requirements or standards of Nasdaq could result in the delisting of our Class A Common Stock, which could have a material adverse effect on our financial condition and could cause the value of our Class A Common Stock to decline.

In the event that our Class A Common Stock is delisted and not eligible for quotation on another market or exchange, trading of our Class A Common Stock could be conducted in the over-the-counter market or on an electronic bulletin board established for unlisted securities such as the Pink Sheets or the OTC Bulletin Board.

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In addition, it may be difficult for us to raise additional capital if we are not listed on a major exchange.

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

The Company projects operating losses and negative cash flows for the foreseeable future.

We will need to seek additional funds in the future.

We project operating losses and negative cash flows for the foreseeable future.

These factors raise substantial doubt about our ability to continue as a going concern.

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● Economic and other external factors;

● The threat of terrorism, geopolitical tensions, and general disruptions in the global economy, including the impacts of military action, financial and economic sanctions, and increasing geopolitical tensions related to the ongoing conflicts between Russia and Ukraine and Israel and its surrounding areas.

and Israel and its surrounding areas.

In addition, the public safety markets have from time-to-time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies.

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Moreover, if we issue additional preferred stock, the holders of such preferred stock, together with current holders of Preferred Stock who choose not to convert their shares to common equity, could be entitled to preferences over holders of Class A Common Stock in respect of the payment of dividends and the payment of liquidating distributions.

Because our decision to issue debt or preferred securities in any future offering, or to borrow money from lenders, will depend in part on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of any such future offerings or borrowings.

Because our decision to issue debt or preferred

securities in any future offering, or to borrow money from lenders, will depend in part on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of any such future offerings or borrowings.

We are an emerging growth company, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our Class A Common Stock less attractive to investors.

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Investors may find our Class A Common Stock less attractive because we will rely on these exemptions, which could result in a less active trading market for our Class A Common Stock, increased price fluctuation, and a decrease in the trading price of our Class A Common Stock.

We will continue to incur significant costs as a result of operating as a listed public company and our management will be required to devote substantial time to new compliance initiatives and corporate governance practices.

As a listed public company, and particularly in the future when we are no longer an “emerging growth company,” we will incur significant legal, accounting and other expenses that we have not incurred in the past.

The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of Nasdaq and other applicable securities rules and regulations impose various requirements on public companies.

Our management and other personnel will need to devote a substantial amount of time to comply with these requirements.

Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly.

For example, we expect that these rules and regulations may make it more difficult and more expensive for us to obtain directors’ and officers’ liability insurance, which could make it more difficult for us to attract and retain qualified members of our board of directors.

We cannot predict or estimate the amount of additional costs we will incur as a listed public company or the timing of such costs.

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

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

We are subject to complex and changing laws, regulations, and executive orders, and compliance with these laws and regulations and executive orders, as well as changing interpretations, policies, and enforcement priorities related to such laws, regulations, and executive orders, is onerous and expensive.

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In addition, the applicable conversion rates for certain of our preferred stock and/or warrants, may be adjusted based on future issuances of our Class A Common Stock, which may lead to the issuance of additional shares of Class A Common Stock.

The issuance and sale of substantial amounts of shares of our Class A Common Stock, or announcement that such issuances and sales may occur, could adversely affect the market price of our Class A Common Stock.

The issuance and sale

of substantial amounts of shares of our Class A Common Stock, or announcement that such issuances and sales may occur, could adversely affect the market price of our Class A Common Stock.

If there are more shares of Class A Common Stock offered for sale than buyers are willing to purchase, then the market price of our Class A Common Stock may decline to a market price at which buyers are willing to purchase the offered shares of Class A Common Stock and sellers remain willing to sell the shares.

In the future, we may also issue additional securities given our need to raise capital, which could constitute a material portion of our then-outstanding shares of common stock.

We may be unable to successfully integrate the businesses and personnel of acquired companies and businesses, and may not realize the anticipated synergies and benefits of such acquisitions.

From time to time, we may complete acquisitions of companies and certain businesses of companies, and we may not realize the expected benefits from such acquisitions because of integration difficulties or other challenges.

The success of any acquisition will depend, in part, on our ability to realize all or some of the anticipated synergies and other benefits from integrating the acquired businesses with our existing business.

The integration process may be complex, costly and time-consuming.

The potential difficulties we may face in integrating the operations of our acquisitions include, among others:

● Failure to implement our business plan for the combined businesses;

● Unexpected losses of key employees, customers or suppliers of acquired companies and businesses;

● Unanticipated issues in conforming our acquired companies’ and businesses’ standards, processes, procedures and internal controls with our operations;

● Coordinating new product and process development;

● Increasing the scope, geographic diversity and complexity of our operations;

● Diversion of management’s attention from other business concerns;

● Adverse effects on our or acquired companies’ and businesses’ existing business relationships;

● Unanticipated changes in applicable laws and regulations;

● Unanticipated expenses and liabilities;

● Other difficulties in the assimilation of acquired companies and businesses operations, technologies, products and systems.

We may not be able to maintain or increase the levels of revenue, earnings or operating efficiency that any acquired company and business and us had historically achieved or might achieve separately.

In addition, we may not accomplish the integration of any acquired company and business smoothly, successfully or within the anticipated costs or timeframe.

If any of the above risks occur, our business, financial condition, results of operations and cash flows may be materially and adversely impacted, we may fail to meet the expectations of investors or analysts, and our stock price may decline as a result.

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

Increasing attention to, and evolving expectations for, ESG initiatives could increase our costs, harm our reputation, or otherwise adversely impact our business.

Companies across industries are facing increasing scrutiny from a variety of stakeholders related to their ESG practices.

Expectations regarding ESG initiatives and disclosures may result in increased costs (including but not limited to increased costs related to compliance, stakeholder engagement, contracting and insurance), changes in demand for certain offerings, enhanced compliance or disclosure obligations, or other adverse impacts to our business, financial condition, or results of operations.

While we may at times engage in voluntary initiatives (such as voluntary disclosures, certifications, or goals, among others) to address the ESG profile of our company and/or offerings or to respond to stakeholder demands, such initiatives may be costly and may not have the desired effect.

We may at times engage in voluntary initiatives (such as voluntary disclosures, certifications, or goals, among others) to address the ESG profile of our company and/or offerings or to respond to stakeholder demands.

Such initiatives may be costly and may not have the desired effect.

Expectations around companies’ management of ESG matters continues to evolve rapidly, in many instances due to factors that are out of our control.

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As a public entity, we may be the subject of additional concerted efforts by short sellers to spread negative information in order to gain a market advantage.

In addition, the publication of misinformation may also result in lawsuits, the uncertainty and expense of which could adversely impact our business, financial condition, and reputation.

In addition, the publication of misinformation may also result in lawsuits, the uncertainty

and expense of which could adversely impact our business, financial condition, and reputation.

There are no assurances that we will not face short sellers’ efforts or similar tactics in the future, and the market price of our Class A Common Stock may decline as a result of their actions.

Risks Related to the Event Risk Acquisition

The Event Risk Acquisition may not achieve its intended results .

Although we currently anticipate that the Event Risk Acquisition will accelerate our long-term strategy to operate a fully integrated autonomous security platform, we may fail to realize the anticipated benefits of the Event Risk Acquisition, encounter additional transaction and integration-related costs, or be affected by other factors that impact our ability to successfully combine Event Risk’s security guarding services into the Knightscope platform, any of which could decrease or delay the expected accretion and contribute to a decrease in the price of our common stock.

We completed the Event Risk Acquisition anticipating various benefits to the Company, including integrating Event Risk’s licensed response services with Knightscope’s autonomous machines and AI-driven orchestration software to build a unified operating model designed to deliver deterrence, detection and response as one coordinated system.

Achievement of the anticipated benefits is subject to a number of uncertainties, including our ability to effectively integrate the acquired business, which may be complex, costly, and time-consuming.

Additional challenges could include (i) issues or costs in integrating our key systems;

(ii) retaining industry, vendor, and other business relationships;

(iii) possible inconsistencies between our standards, controls, policies, and procedures and those of Event Risk and the resources required to implement or improve them to meet public company standards;

and (iv) potential unknown liabilities and unforeseen expenses or delays.

There could be potential unknown liabilities or unforeseen expenses not discovered during due diligence and not adequately covered by any indemnification.

Any such conditions could cause the value of the acquired business to decline or reduce the benefits of the Event Risk Acquisition to the Company and its stockholders.

Any of the foregoing risks could result in failure to achieve the anticipated benefits of the Event Risk Acquisition, and the expectations of our future financial condition and results of operations following the Event Risk Acquisition might not be met.

See also “Risks Related to the Business and the Global Economy—The failure to identify, consummate, effectively integrate or realize the expected benefits from acquisitions could adversely affect our growth and our business, financial condition, and results of operations.”

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors