Knightscope Financials Reveal Huge Increase In Expenses And Incorrect Accounting

By: John Honovich, Published on Oct 02, 2017

Knightscope's H1 2017 financials are out, in the midst of their ongoing crowd funding approaching $17 million.

In this note, we analyze Knightscope's H1 2017 financials, include revenue and unit growth, expenses increases, accounting issues and an exit of a key executive. Moreover, we compare Knightscope's recurring revenue growth to SaaS benchmarks, showing how their relative growth rate is challenged and presents a warning.

***********'* ** **** ********** are ***, ** *** midst ** ***** ******* crowd ******* *********** $** million.

** **** ****, ** analyze ***********'* ** **** financials, ******* ******* *** unit ******, ******** *********, accounting ****** *** ** exit ** * *** executive. ********, ** ******* Knightscope's ********* ******* ****** to **** **********, ******* how ***** ******** ****** rate ** ********** *** ******** a *******.

[***************]

Revenue **

***********'**** ****** ** ***, ******* ******* ** up *************:

  • **** ** ******* ***,***
  • **** ** ******* ***,***
  • **** ** ******* ***,***

** ********** *****, ******* is ** ~***% **** over **** *** **% over *** ******** **** year.

*** *********** *********, **** growth ***** ** **********. However, ***** *********** ** starting **** **** **** revenue *** ******** **** heavily ** ***** *** marketing, ************ **** ** be *** ***********.

Below **** ****** ****** *****

*** ******* *** *********** is **** ******** ** early ***** **** *********, their ******* ****** ** challenged. ***********'* ********* ***** over ***** ********* ******* growth ** ~*% ***** accepted ***** *** ** ******* is **-**%. **** ** a ****** **** ******, **** * frequently ***** **** ********** ****** "*** **** Must * **** ******* Grow ** ***** * Series *?", ********** **.

***** ** *** ******** and estimates ** ***********'* ******* revenue ******:

***** **** ****** **** is ************* *** *** an ***** ***** **** startup, *********** **** *** not ******* ***** **** institutional *** *** ******* from ********* ** ***** individual ***********, **** ** unlikely ** ** * concern. ** *** ***** hand, ************ ********* **** for ***** ******* ****** rates ******* **** **** shown **** **** ** be * ****** ********* of ********* ******* *** strong ******* ********.

1.3 ****** *** ******

*********** **** ********* *** increase ** ****** ******** but **** ** ******* of *.* ****** *** client:

** **** **, ****, we *** ********** **** a ***** ** ** clients *** ** ********-**-*******, with ****** *** ** additional ** ******** ***** contract ******** **** * clients, *** * ********-**-*******, with ****** *** ** additional ** ******** ***** contract ** **** **, 2016. ** ** ********* 18, ****, *** ******* has *******34 ******* **** ** ******** under contract across 8 states and 3 time zones, as it scales nationwide. [emphasis added]

Important - ****** ********** ** ****** *** ******

*** *** ****** ** watch ** *** ****** of ****** *** ******. At *.* *** ****** and **** ** ****** out ****** ** *******, this ******* ***. *******, if *********** *** ******** clients ** ****** ****** or ******** ** ****, which ** ************* ******** since many ** ***** ******* are ***** ************* **** large ***** ******, **** would ** * **** bullish ****.

***** ** ** ***** that *** *********** ****** are ************ (*** ****** or *****) *** **** certainly *** ******* ******* one ** * *******. But *********** ***** ***** to ***** **** ********* will *** $**,*** *** year *** ***** *** more **** **** ************* / ******* ********.

Expenses ******* - ***** *** ********* ** ***

*********** ***** *** ********* expenses *** ** ** more **** ******* *** 17x **** **** **** expenses **** **** ** $2.2 *******:

***** ***** *** ********* costs ****** *** *** months ***** **** **, 2017 **** $*,***,***, ** compared ** $***,*** **** was ******** *** *** six ****** ***** **** 30, ****.

*********** **** ** ****** **** higher ********* ************:

** ****** *** ***** of ***********, ********* *** promotions ** ******** ** increase ** **** ** we **** ** ****** sales ********** *** ** we ******* *** ********** A ********.

*** *** ****, ** that ****, ***** *** marketing ************ ***** *** $5 *******. **** ** not ******* ***** ** is ***** ***** *** one ******* **** *** been *** **** ********** campaign (*.*.,****** ** *** ********** ****) ** ******** ** the**** ****** *********.

Million **** ** **********

** ******** ** ******** millions ** *********** *** their **** *******, **** will *** ********** **** than * ******* ** cash *** **** ********** ~1% ** ******, ********* to **********'* ******** *****:

***** *** ****** ** risky, **** ** * substantial ****** ** ****.

*******, *********** *** *** 25% ** ***** *********** for ***** ** ***** the ***** (********* *** SeedInvest ****). ** *** other ****, *** ********* is ***** ****, ********** considering ***** ****** *****.

Incorrect ******** **********

*********** *********** **** * number ** ***** ******* were *********** ******** **********, as *** ********* ***** shows:

***** ***** ** ****** raise ******* ***** *** much *** *** ***** the ******* ********.

Comments (16)

I believe Spending 1/3 of the money raised to raise more money is border line ponzi scheme, no?

No, a ponzi scheme is "where the operator generates returns for older investors through revenue paid by new investors, rather than from legitimate business activities or profit of financial trading." In Knightscope's case they plan to generate revenue through selling / renting robots to large organizations via their sales force and partners, not via the people investing.

Spending a lot of money to raise money might be inefficient or debatable but there's nothing ponzi-esque to it.

...there's nothing ponzi-esque to it.

Well, maybe it's just a little ponzi-esque or could evolve that way, from the skeptics point of view:

First, although Ponzis don't actually pay from legitimate earnings, they often claim they are doing exactly that.

In Knightscope's case, their ability to earn the needed revenue to generate significant, if any, returns for investors has been called into question by yourself and others.

Yet they have also had several rounds of investment, each at a higher price than the one before.  

If Knightscope were to successfully IPO and stay above water for a few months/years before failing, but never having a viable business model, all the while floating new shares, its got an element of Ponzi there.

Consider that the early investors who cashed out would essentially be being paid by later investors...

 

 

 

This style robot is bad. fail. retarded.

Knightscope...STOP. If I ever see your robot I'm going to place my chewing gum on it.

Now that is a purpose.

Gumtray.

 

 

 

...they will pay SeedInvest more than a million in cash and give SeedInvest ~1% of equity...While the equity is risky, that is a substantial amount of cash.

The risk is mitigated as quickly as possible through the use of their sister firm, SeedDivest ;)

I am in line with Undisclosed #3. While I don't think that Knightscope CEO intentions are to rip off people, I question their spending like john mentioned. I don't think their pitch would have went bad if they said " I would like to raise money to spend 1/3 of it raising more money, trust me, we know what we are doing". Anyways, I do admire what they are doing and if they make it not, I do respect their vision.

The first time it happens (Carbon Motors) maybe you get a pass but when it happens twice... "if it looks like a duck and quacks like a duck it's a duck".   Also the amount of money paid to CEO and wife while business is losing massive amounts of money is insane.  Who gets a bonus when their robots are running into fountains and breaking down all the time and the company is losing massive amounts of cash.   I think there is a lot of information that doesn't get disclosed about the company that investors should have the right to know before putting their hard earned money into the company.   No board members or oversight is also a huge red flag.   Who would invest in a company at this stage - 4 years into the game with these results and not demand a board to govern.  This whole thing is astounding.   

Does anyone know if the SEC has actually accepted the S1A report from Knightscope?  How can they not conduct a pretty extensive review of the filing with all financial audits from the start of the company being false. Can investors that are not happy with being mislead with false financial information ask for their investments back.   Basically they are saying (just an example) the robot cost 60K when in fact it costs 100K to build and support...  not a very good financial model.    The have raised a considerable amount of money on false financial, poor audits practices and extremely poor accounting.   How can the SEC let a company get away with this?  Aren't they supposed to govern these things on a public offering.  

 

Can anyone answer these questions?  or have additional comments?

What happened to officer compensation?  Why wasn't that included in the filing.  

keep peeling the onion UD#4

haven't we cried enough UD#5

when lambs are being lead to the slaughter, uninterested parties such as UD4 can help us focus on the what is - not on the what investors hope it is.

http://www.nationaldefensemagazine.org/articles/2017/9/22/homeland-security-struggling-to-fund-chem-bio-defense

 

Don't worry DHS Knightscope K1 will save the day on chemical and biological warfare with early threat detection.  

being old fashion the real concern with Knightscope and all these other Drone companies is that the cost to deliver the product, maintain the product and monitor the product is too high and the margin is too low. In every SaaS company I see that is successful they have a much better margin. For real growth they need to deliver the product to many markets simultaneously but the big obstacle is that they have no dealer program they are the developer/manufacturer/distributor/retailer/service - with each step costing money. The winner in this space will develop a cost effective product that can be licensed or sold to dealers is every market. Just my 2 cents

I think you're spot on!!

It looks like someone in China has engineered their own version of the Security Robot: http://www.dailymail.co.uk/sciencetech/article-4966604/Robotic-POLICE-hit-streets-Beijing.html

There's also a video here: http://video.dailymail.co.uk/preview/mol/2017/10/10/6287900012545527079/636x382_MP4_6287900012545527079.mp4  

The example they highlight has cameras with Facial Recognition and an "extendable electroshock arm..."  There's even a version with an on-board Taser!

What's next?   Sharks with Lasers?

Login to read this IPVM report.

Related Reports

PSIM CNL Acquired By Everbridge on Mar 09, 2020
The end has finally come for CNL. Despite for years saying they would...
Hikvision Fever Screening Thermal Solutions Examined on Apr 13, 2020
Hikvision is marketing "safer, faster, smarter" with their Fever Screening...
The Booming Multi-Billion Coronavirus Fever Camera Market on Apr 21, 2020
The market for elevated body temperature detection cameras, aka 'coronavirus...
Brivo Presents ACS100 Single-Door Combo Controller & Reader on Apr 27, 2020
Brivo presented its first integrated reader and controller, the ACS100 at the...
Openpath Presents Two Door PoE Controller on May 21, 2020
Openpath presented its new PoE controller at the May 2020 IPVM Startups...
65+ Security Industry Companies Take $50 Million PPP Funding on Jul 15, 2020
65+ security industry companies have taken more than $40 million in PPP...
LSP Presents 2nd Generation FP Power Supplies on Apr 29, 2020
Life Safety Power (LSP) presented its FP2 power supply in the April 2020 IPVM...
Verkada Raises $80 Million, Triples Valuation To $1.6 Billion on Jan 30, 2020
Verkada's rocketing valuation continues. 9 months ago, they got a...
Anyvision Layoffs on Mar 19, 2020
Anyvision has conducted a layoff, citing the impact of coronavirus, joining a...
VergeSense Presents People Tracking Sensor on Jun 04, 2020
VergeSense presented its people tracking sensor and social distancing...
Startup Solink $17 Million USD Fund Raise Expands To Mass Market on Jun 24, 2020
Solink has raised ~$17 million USD, a sizeable round for the company that...
HID Releases Lower-Cost Signo Readers on Mar 06, 2020
HID Global is releasing a new line of readers called Signo they claim read...
Cancel or Not? Industry Split Over ISC West on Feb 26, 2020
The industry is split, polarized, over whether ISC West 2020 should run or be...
HID Presents Signo on Apr 23, 2020
HID Global presented their new Signo readers they claim read farther and...
JCI / Tyco Security Products Layoffs on Jun 05, 2020
Johnson Controls / Tyco Security Products has confirmed COVID-19 related...

Recent Reports

Indian Government Restricts PRC Manufacturers From Public Projects on Aug 04, 2020
In a move that mirrors the U.S. government’s ban on Dahua and Hikvision...
Directory of 199 "Fever" Camera Suppliers on Aug 04, 2020
This directory provides a list of "Fever" scanning thermal camera providers...
Face Masks Increase Face Recognition Errors Says NIST on Aug 04, 2020
COVID-19 has led to widespread facemask use, which as IPVM testing has shown...
Dahua Loses Australian Medical Device Approval on Aug 04, 2020
Dahua has cancelled its medical device registration after "discussions" with...
Google Invests in ADT, ADT Stock Soars on Aug 03, 2020
Google has announced a $450 million investment in the Florida-based security...
US Startup Fever Inspect Examined on Aug 03, 2020
Undoubtedly late to fever cameras, this US company, Fever Inspect, led by a...
Motorola Solutions Acquires Pelco on Aug 03, 2020
Motorola Solutions has acquired Pelco, pledging to bring blue back and make...
False: Verkada: "If You Want To Remote View Your Cameras You Need To Punch Holes In Your Firewall" on Jul 31, 2020
Verkada falsely declared to “3,000+ customers”, “300 school districts”, and...
US GSA Explains NDAA 889 Part B Blacklisting on Jul 31, 2020
With the 'Blacklist Clause' going into effect August 13 that bans the US...
Access Control Online Show July 2020 - On-Demand Recording of 45+ Manufacturers Presentations on Jul 30, 2020
The show featured 48 Access Control presentations, all now recorded and...
Face Detection Shootout - Dahua, Hanwha, Hikvision, Uniview, Vivotek on Jul 30, 2020
Face detection analytics are available from a number of manufactures...
Sunell is The First China Manufacturer to Market NDAA Compliance on Jul 30, 2020
Most China manufacturers are going to be impacted by the NDAA 'Blacklist...
Ink Labs Relabels China YCX Fever Camera And Steals Dahua's Marketing on Jul 30, 2020
A US company marketed a 'thermal temperature scanner' as its own, selling...
Genetec and Dahua-Backed Intelbras Split Examined on Jul 29, 2020
China is the cause of the breakup between Canada's and Brazil's largest video...
This YouTuber is Now Selling ThermoHealth Temperature Screening on Jul 29, 2020
An enterprising 20-year old is mass marketing medical devices on Facebook and...