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.

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?

Read this IPVM report for free.

This article is part of IPVM's 6,599 reports, 889 tests and is only available to members. To get a one-time preview of our work, enter your work email to access the full article.

Already a member? Login here | Join now

Related Reports

RapidSOS Company Profile on Oct 12, 2020
RapidSOS has raised $100+ million providing dispatchers free software and...
Anyvision Raises $43 Million, Focusing on Access Control And Remote Authentication on Sep 04, 2020
While Anyvision has had a tumultuous 2020 with significant layoffs, the...
Hikvision Returns To Growth Driven By Overseas Fever Cameras on Jul 29, 2020
While Hikvision's revenue fell in Q1 2020, it rebounded in Q2 attributed to...
Avigilon Announces 10K / 61MP H5 Pro Camera on Oct 05, 2020
Avigilon announced its 10K / 61MP H5 Pro camera at the 2020 IPVM Fall New...
Nokia Fever Screening Claims To "Advance Fight Against COVID-19" on Oct 22, 2020
First IBM, then briefly Clorox, and now Nokia becomes the latest Fortune 500...
Uniview H1 2020 Financials Examined on Sep 08, 2020
While Dahua and Hikvision, helped by fever camera sales, are recovering from...
Verkada Access Control Tested on Sep 09, 2020
Verkada raised $80 million earlier in 2020, expanding from video into access...
70+ Security Industry Companies Take $50 Million PPP Funding on Jul 15, 2020
70+ security industry companies have taken more than $40 million in PPP...
Costar Technologies / Arecont H1 2020 Financials Examined on Sep 16, 2020
Costar's financial results have been hit by the coronavirus with the company...
Favorite Access Control Credentials 2020 on Sep 15, 2020
Credential choice is more debated than ever, with hacking risk for 125kHz and...
Ava / Vaion Releases Cloud Connected IP Cameras, Verkada Competitor on Oct 01, 2020
Ava (formerly Vaion) announced its new direct-to-cloud AVA Aware IP cameras...
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...
Startup Vaion Presents End-to-End Cloud Managed Video Surveillance on Aug 20, 2020
Vaion presented its end-to-end cloud managed video surveillance offering at...
Startup Calipsa Presents AI False Alarm Filtering on Jul 21, 2020
Calipsa presented its AI false alarm filtering platform at the 2020 IPVM...
Avigilon Aggressive Trade-In Program Takes Aim At Competitors on Oct 20, 2020
Avigilon has launched one of the most aggressive trade-in programs the video...

Recent Reports

Bedside Cough and Sneeze Detector (Sound Intelligence and CLB) on Oct 28, 2020
Coronavirus has increased interest in detecting symptoms such as fever and...
Fever Tablet Thermal Sensors Examined (Melexis) on Oct 28, 2020
Fever tablet suppliers heavily rely on the accuracy and specs of...
Verkada Fires 3 on Oct 28, 2020
Verkada has fired three employees over an incident where female colleagues...
Recruiters Online Show LIVE Thursday! on Oct 27, 2020
IPVM's 7th online show resumes Thursday with 12 recruiters presenting...
Eagle Eye Networks Raises $40 Million on Oct 27, 2020
Eagle Eye has raised $40 million aiming to "reinvent video...
Hikvision Q3 2020 Global Revenue Rises, US Revenue Falls on Oct 27, 2020
While Hikvision's global revenue rises driven by domestic recovery, its US...
VICE Investigates Verkada's Harassing "RawVerkadawgz" on Oct 26, 2020
This month, IPVM investigated Verkada's sexism, discrimination, and cultural...
Six Flags' FDA Violating Outdoor Dahua Fever Cameras on Oct 26, 2020
As Six Flags scrambled to reopen parks amid plummeting revenues caused by the...
ISC Brasil Digital Experience 2020 Report on Oct 23, 2020
ISC Brasil 2020 rebranded itself to ISC Digital Experience and, like its...
Top Video Surveillance Service Call Problems 2020 on Oct 23, 2020
3 primary and 4 secondary issues stood out as causing the most problems when...
GDPR Impact On Temperature / Fever Screening Explained on Oct 22, 2020
What impact does GDPR have on temperature screening? Do you risk a GDPR fine...
Security And Safety Things (S&ST) Tested on Oct 22, 2020
S&ST, a Bosch spinout, is spending tens of millions of dollars aiming to...
Nokia Fever Screening Claims To "Advance Fight Against COVID-19" on Oct 22, 2020
First IBM, then briefly Clorox, and now Nokia becomes the latest Fortune 500...
Deceptive Meridian Temperature Tablets Endanger Public Safety on Oct 21, 2020
IPVM's testing of and investigation into Meridian Kiosk's temperature...
Honeywell 30 Series and Vivotek NVRs Tested on Oct 21, 2020
The NDAA ban has driven many users to look for low-cost NVRs not made by...