Knightscope - Q2 2023

Transcript

Bill Li (Chairman and CEO)

Hello, everyone. We've received a good amount of positive feedback from the first quarter town hall. We plan to continue down this path of having a clear, easy to understand quarterly presentation, followed by a frank and direct discussion. As a reminder, this town hall format is intended to provide an informal forum for our nationwide audience to ask questions from Wall Street to Main Street, from Silicon Valley to Washington, D.C. If we're going to achieve our long-term mission of making the U.S. the safest country in the world, we're going to need the entire country engaged, and part of that is communicating directly with you consistently.

Of course, any at all figures presented today in this presentation or the financial highlights from our recently filed quarterly report on Form 10-Q, should be read in full context of the company's recent regulatory filings and risk factors, all available for you at ir.Knightscope.com. All right, before we get to the financial results, I wanted to cover two specific items. First, we did it! We successfully cleared both compliance deficiencies from Nasdaq, Knightscope is now back in good standing with the exchange. I wanted to take a moment to thank all of our supporters, as all of you are an integral part of the Knightscope extended team in helping make the long-term mission a reality. Without our investors, we can't move forward, with our investors, hey, the sky's the limit.

We are following through on our commitment to our investors that we stated on the 18th of July. Market manipulation, disclosure violations, and tortious interference are serious crimes. Knightscope is conducting an investigation and is considering legal action in support of our stockholders. To that end, we have begun the process of filing a formal complaint with the U.S. Securities and Exchange Commission in response to what we believe to be unethical and potentially illegal conduct against Knightscope and its investors. Ugh! It's unfortunate that we're working hard to make communities in our country safer, now we have to also deal with bad actors in the financial markets. With that said, let's get to the numbers. Last year, in 2022, we recorded $5.6 million in aggregate revenue for the year, reflecting an over 60% growth rate from the prior year in 2021.

For the six months ended June 2023, we booked approximately $6.5 million in revenue, putting us on an over $12 million annual revenue run rate, well over double last year. That's right. Not only double-digit growth over 2022, but literally potentially doubling the company's revenue by the end of 2023. As I often say, the rise of the robots is happening, and it's happening now. As of 30th of July, 2023, the company had a total backlog of approximately $4.9 million, comprised of $2.1 million in new orders for related autonomous security robots or ASRs, and $2.8 million related to new orders for our portfolio of K1B products, which include the K1 Blue Light Towers, E-Phones, and Call Boxes.

During the first quarter of 2023, we recorded $2.9 million in revenue for the first 3 months of the year, I'm pleased to report that during the second quarter, we increased our quarterly performance and booked $3.6 million in revenue and over 20% quarter-over-quarter increase. Our ongoing efforts to reduce costs and improve our gross margins has also begun to take effect. We reflected a gross loss during the first quarter of 2023 of about $0.2 million or a negative 7%, to now a gross profit for the second quarter of $9,000 or approximately 0.3%. Reaching slightly better than breakeven at the gross profit level marks a significant milestone for the company as we continue to pave our path to profitability.

On a six-month percentage basis from 2022 to 2023, gross margins moved dramatically from a negative 62% to a negative 3%. A significant driver of this improvement is due to healthy margins attributed to K1B product sales and continued maintenance services across our installed base of over 7,000 units nationwide. As we communicated last year, we believe that the acquisition of CASE Emergency Systems will be accretive, and we are pleased with the financial results posted for the first six months of this year. Our continued focus on decreasing our costs contributed to producing and servicing ASRs has begun to yield results. As we often stated, the Machine as a Service or MaaS business model creates a unique set of circumstances.

While the subscription model provides Knightscope with a predictable revenue stream, the technology we produce is not only highly complex, it also requires a certain fixed cost basis to operate. As we scale, those fixed costs can be spread out over more and more units and eventually provide strong leverage for our recurring revenue business model. As the company continues to scale, we believe additional significant margin improvements will continue as part of our plan to reach profitability by end of 2024. To reiterate, Knightscope delivers a recurring revenue business model for a recurring societal problem. Comparing the first half of 2022 to the first half of 2023 on a per-share basis, we improved significantly from a $0.26 loss per common share to a $0.14 loss per common share.

As we prior noted, we plan to continue growing the company, and we believe our sales pipeline is healthy, and increasing sales will allow us to grow, drive economies of scale, and better leverage our fixed cost base. Although not yet completely addressed, some of the supply chain issues have begun to subside, which we also believe will aid in reducing lead times, enabling us to improve cash flow and recognize revenue in a much more timely manner. Our cash on hand at the end of 2022 was $4.8 million, and our cash and cash equivalents at the end of the second quarter of 2023 was approximately $5.8 million. Also, as previously disclosed, the approximately $6 million of convertible notes secured in connection with the acquisition of CASE were fully extinguished by the end of the second quarter of 2023.

We'll now transition to the live portion of the town hall for questions from our longtime investors, new retail investors, institutions, and analysts. Thank you. All right. Welcome, everyone, to the second quarter town hall. If you haven't been on one of these before, let me go over some rules, so we're not tripping all over each other. First and foremost, thank you everyone for taking time out of your busy schedules. We've got almost 200 people on the call here, I wanna make sure we get to everyone's questions. We'll be sure to do that, I'll stay here as long as you need me. Second, obviously, we're a publicly traded company. I'm an officer of the company, I won't be providing you any material non-public information.

In compliance with all our good forward-looking statement disclaimers that were included in the video as well. Then to try to get the questions going, very simply, at the bottom of your Zoom screen, there's a reactions button. Just click on that, and there's a Raise Hand. If you click on that and you raise your hand, then I know to call on you, and we can get the questions going. Lastly, in some cases, I may not be able to answer literally the question that you're asking me for whatever legal reasons or what have you, so I might switch out the question a little bit or try to adjust it so I can answer it.

Likely, I'm gonna give you little longer form answers for the benefit of the group as opposed to a Twitter answer. Hopefully, that all works for everyone. The video you just saw, we will put on our YouTube channel here after we're done, and then we'll post it on our social media channels as well. With that, we see we've got a couple of folks. I'm gonna call on Barry. If you have a camera and turn on and say hello, make sure to unmute yourself. Barry, you want to ask the first question?

Speaker 6

Sure. Thanks so much. Would love to get any insight you can in terms of cash burn for the balance of the year and next year, or, you know, maybe in terms of monthly rate or whatever you can do to kind of give us a feel for, you know, relative to the $5.8 that you've got in hand right now, you know, what the burn rate looks like? Thank you.

Bill Li (Chairman and CEO)

Sure. Obviously, if we're gonna get to profitability by the end of fourth quarter of next year, that number needs to go down, down, down, down, right? How do you get it to go down? The sources of cash, obviously, equity, debt, or revenue, coming in, so we're working on all those angles. If you missed the annual shareholder meeting, the video is available at www.knightscope.com/rise. Go all the way to the bottom. I think it's episode nine, if I'm not mistaken, and we actually go through, like, how you're gonna handle cash going forward. I would direct you to the SEC filings. I believe our CFO included there a rough burn rate for the coming months, of about $1 million a month.

We also have a bond offering that we're working on to... That's non-dilutive. You can learn a little bit more about that at bond.Knightscope.com. We're going through the regulatory process to kind of move that forward. Things are looking up. We were in a little bit of a difficult position earlier in the year, and I'm really excited that we, you know, cleared the Nasdaq notices, but there's still a lot more work to be done. Hopefully, that answers your question. Also, I will prioritize people asking questions face-to-face. The chat sometimes gets a little bit difficult, so I would ask you to please ask me the question directly.

Otherwise, trying to go through the chat and let people in and try to answer your questions gets a little bit much. It's just me. There's no moderator. It's just you, me, and the, and the telephone pole. All right.

Speaker 6

Thanks. And by the way, congrats on, on all the orders, and just to clarify, it's very helpful that you press release those, so we can kind of follow things and, you know, get a feel for how things are going. Appreciate it. Thanks.

Bill Li (Chairman and CEO)

Yep. Absolutely. Then, the next person will accuse us of sending out too many press releases, so you can't win, but we will obviously do that. Mr. Edward Wu got a hand up.

Edward Wu (Retail Investor/Caller)

Thank you, Bill, for doing this format for us. It's very useful. I find it myself very informative, so thank you very much. I know it takes a lot of time. Congratulations on the quarter. Mine is a general question. Obviously, the news coming out of Maui, the wildfires, emergencies, is a major, major disaster. What opportunities are there for Knightscope to be able to have some type of in, in involvement with emergency preparedness for government organizations or other business organizations for events like this? Is there opportunity for Knightscope?

Thank you.

Bill Li (Chairman and CEO)

Well, thanks, Edward, I'm glad you like this format as opposed to the boring dial-in, the phone answer, like, two questions and hang up kind of stuff. I like to be a little bit more direct with folks. I- I'm glad to hear that. We had, you know, one person from FEMA reach out. I, I think the way I think about it is, how could we have been part of the prevention? A lot of our technology actually has thermal cameras on it, and we should be able to send out alerts a little bit earlier than others. The way Knightscope's set up today, we're much more suitable, lucrative for us to go to a location that's 24/7 and deploy it and leave it.

We're not yet in the business of event-driven type of things, either be it someone- something horrific like is going on in Hawaii or a convention or stadium or, you know, these kind of things where you just want to drop in folks. I think over time, we'll probably build some technology I have in mind that will be a little bit more portable. And I think for our newer investors, it'd probably be good for me to just spend 60 seconds on long-term strategy. If our long-term strategy is to make the U.S. the safest country in the world, criminals and terrorists can be anywhere.

If we're serious about the mission, we have to be everywhere, and that means the example I use, often use is, securing the underpass of a bridge is very, very different than securing the inside of a U.S. federal courthouse. Both still need to be done. I think on along the x-axis, we're gonna have an increasing number of form factors of small, medium, large, and extra large robots and machines that can provide that physical presence or cover that indoor, outdoor location properly. Along the y-axis, over time, wanna do a huge upgrade to be able to have all the machines be able to see, feel, hear, smell, and speak.

I think as part of that, over the long term, we would have something that's more event-driven, or more responsive to some of the things that FEMA's looking for. In the shorter term, there are FEMA resources in our view, that could be better, deployed. Don't quote me here, but I, I think FEMA has something like 9 major warehouses. Are we using the right taxpayer dollars for the right security measures at those locations to do the monotonous work, that likely those humans and those resources could better, be better, deployed in emergencies? Gabriel.

Edward Wu (Retail Investor/Caller)

Thank you. Thank you very much, Bill.

Bill Li (Chairman and CEO)

Of course.

Edward Wu (Retail Investor/Caller)

Thank you.

Speaker 6

Can you hear me? Hello?

Bill Li (Chairman and CEO)

Yep. All good.

Speaker 6

Perfect. Well, I just wanted to say nice to meet you, William Li. This is my very first quarter to, kind of like, what would you call this?

A Town Hall or a monster meeting that everyone told me not to do.

Exactly. The Town hall. Exactly. slipped my mind. Maybe I'm nervous. I'm starstruck. Anyways, I-

Bill Li (Chairman and CEO)

Oh, dear.

Speaker 6

found a few notes just so that I read.

Brian, stop laughing.

I saw that.

All right. Okay. Here we go. I'm a new retail investor. I just recently put a little bit of money in.

Bill Li (Chairman and CEO)

Thank you.

Speaker 6

I'm glad, guys. You're welcome, and I'm hoping to be on the team soon. I've been inquiring on LinkedIn on several of your posts. You're probably gonna think I'm a spammer weirdo, but I am looking for a technician job that I've worked with ADT, and I've also, I can help get accounts. I can help with the tech side. That's pretty much where I'm at. That said, I'm not looking for a response right now. I'm just throwing that out there. Also, I've been seeing on the job site, I'm here on Knightscope.com. Let me just double-check. The only three openings say Development Operations Engineer, Production Assembler, and QA Engineer. Am I missing something?

Is one of those, one of the positions that I'm looking for, say, like a technician training, you know, open to entry-level training, or do I have to have some sort of degree to, say, work on your products? That's just some questions that I kind of have.

Bill Li (Chairman and CEO)

Sure. Knightscope.com/careers, we try to only post the ones that we immediately need.

Speaker 6

Okay.

Bill Li (Chairman and CEO)

I think a lot of recruiters end up posting stuff and go fishing, basically, for lack of a better way of saying it.

Speaker 6

Okay.

Bill Li (Chairman and CEO)

We don't do that too often. We're the ones that are there, we have to fill, like, now. We're, you know, one of the key ones that we really need to... Now we're kind of scaling up. We're really looking for a QA engineer is, is kinda holding up the, the process.

Speaker 6

Q.A. is troubleshooting, right? That's troubleshooting.

Bill Li (Chairman and CEO)

We just, Yeah, we just filled, we just filled a position I think that might have been suitable for you.

Speaker 6

Okay.

Bill Li (Chairman and CEO)

I wanna caution you on the positive and negative side. On the positive side, those job postings change often. You know, be sure to everyone listening in who has a friend, relative or someone that, things change over time. You know, we, like any other company, we have turnover, or we're growing, or we're setting up a new department, so it changes often. On the flip side, 'cause we've got majority investors here, in order for this to scale and get to profitability quicker, we have to be highly sensitive to headcount, 'cause adding more and more heads is just more cost that we have to cover. Over time, we want to make sure that the resources that we have in place, we're getting as efficient as possible.

Speaker 6

... I just wanted to add that in experience of being at ADT as an account manager, territory manager for six months, I believe, right in the pandemic, 2020. That was right when I left, because of the new robotic stuff that's coming out, DIY cameras, everyone's basically now trying to do things themselves. Having a security background where I've worked physical security, your robots, maybe not yours exactly, but robots are already displacing our jobs. What I told myself was, "I'm not going to be displaced. I'm just going to maintain these robotic, you know, security apparatuses, whether they be a badging station or a camera system, whatever it is." My thoughts is, get into it now early.

What would you say your

Bill Li (Chairman and CEO)

Yeah, I, I have a, I have a different view, Gabriel.

Speaker 6

Okay.

Bill Li (Chairman and CEO)

I. Again, we have a lot of new investors, which we're grateful for. Some quick math. You know, the, the country has maybe 1.5 million security guards, about 1 million law enforcement professionals, so that's 2.5 million humans running 24/7. You can't triple shift the humans, so, you know, maybe you have 600,000 humans at any given time trying to secure 332 million Americans across 50 states. The math doesn't work. I have a huge pushback on the media, society in general, saying that all these security robots are going to displace all these humans. I'm sorry, but, you know, crime and terrorism has a $2 trillion negative economic impact on the U.S. every single year.

As I often say, it's a hidden tax we all pay in blood, tears, and treasure. We are on our 46 presidents, the country's well over 200 years old, and no one's fixed the problem. Part of it, no one wants to say it, we don't have enough officers and guards to do the job, which is, it's that simple. What we need to do is give the officers and guards more eyes and ears and tools for them to actually do their job. I, I'm not in the club of, you know, we're going to displace officers and guards. There just aren't enough. There are other parts of the kind of robotic world that, that actually would be truthful. I, I'm, I'm in disagreement on, on this one.

Speaker 6

Couldn't it be that there's not enough guards because they don't want to-- Like, at my most recent post at Adobe in San Francisco, which I have the schematics of, right? Don, I can bring them over to you, show you proof that I was there. They have guards getting paid $25 an hour to just simply stand and entry check people with their badges. I'm sitting there, a guard getting paid $25 an hour, thinking, "I just want to die. I hate this job." There are guards out there, they just don't want to do this robotic work.

Bill Li (Chairman and CEO)

That, that, that one's a fair point, Gabriel-

Speaker 6

Thank you.

Bill Li (Chairman and CEO)

'cause if you look at the employee turnover rates on the guarding companies-

Speaker 6

It's huge!

Bill Li (Chairman and CEO)

100 to 400%. Every 90 days or every 12 months, you got a new team because everyone gave up. Why? Because you didn't give them the tools for them to do their jobs properly, right?

Speaker 6

or their job was a job for a tool.

Bill Li (Chairman and CEO)

Yeah.

Speaker 6

not for a human. That's all I'm saying is, I have the experience in the industry to know which jobs or which, which uses these-

Bill Li (Chairman and CEO)

Gabriel, I'm gonna, we're gonna move on. We've got a lot of investors that have investor questions. Thank you for spending the time, and thank you for the kind interest. Brian!

Speaker 6

Hey, Bill. How's it going?

Bill Li (Chairman and CEO)

Long time no see. How are you, sir?

Speaker 6

Excellent. Doing excellent. First, I want to congratulate you on a very nice quarter, first half of the year. You know, what people need to realize is Knightscope, while you've had a long history, you're a startup, and during that, you're going to hit your, your bumps and bruises, but it's nice to see a ramp-up trajectory in revenue and obviously lowering the losses as you rise.

Bill Li (Chairman and CEO)

You know what's funny, Brian?

Speaker 6

Yeah.

Bill Li (Chairman and CEO)

Tesla and SpaceX are still called startups. It's mind-blowing to me. I don't know what year or what decade or what $1 billion we're going to have in the future of top-line revenue that we still will be called a startup. Point taken. Thank you.

Speaker 6

I thought the Zuckerberg, Musk, cage match that got called off was going to decide that. Anyway, we'll, we'll move on. I'm just going to kind of rapid fire a couple things-

Bill Li (Chairman and CEO)

Okay.

Speaker 6

because there are two, two sides of the, of the Knightscope business. There's the, the AI, autonomous, EV, intelligent-driven robot side, and then obviously the case, cell tower,

Bill Li (Chairman and CEO)

No, no. Gotta stop using the word Case.

Speaker 6

Okay.

Bill Li (Chairman and CEO)

We call it K1B.

Speaker 6

K1B. We'll go with K1B, but, I mean, it's all security.

Bill Li (Chairman and CEO)

Yep.

Speaker 6

It's all different layers. Any update on FedRAMP, on government security, clearance approval?

Bill Li (Chairman and CEO)

Yeah, yeah. Hurry up and wait.

Speaker 6

All right.

Bill Li (Chairman and CEO)

For the rest of the group, Brian, 'cause I, I think some people don't know what FedRAMP is. We're 2.5 years now into a nightmare cybersecurity review with the U.S. federal government. This is, you know, frankly, not just a cyber review, it's loosely how you conduct business. Do you have the right controls, et cetera? The process itself is somewhat complex. The multitude of parties involved makes it more, even more difficult. I think I can say that all parties involved are actively working on it, and I'm, I'm personally still hopeful we'll get the ATO or authority to operate before the year's out. You know, we've, we've gotten indications before and, you know, until it's done, I don't believe anybody or anything. You know, the, the, the need is there.

Our sponsor, the U.S. Department of Veterans Affairs, is, is still, there. We're working through it. I think for our medium and long-term investors, this is a huge opportunity because the U.S. federal government is certainly a lot more than just the Department of Veterans Affairs.

Speaker 6

Right. I, and I think it's significant 'cause, you're already approved on the General Services Administration, GSA Schedule, I believe, which streamlines the procurement process for government to enter into contracts with Knightscope. Obviously, getting the, the, the cybersecurity or security clearances is paramount. Real quickly, 'cause I know other shareholders want to ask questions, anything on New York? Any preliminary thing on New York? I mean, it was phenomenal seeing the, the entrance coming into the city, as a, as a, as a former New Yorker, that, you know, that, that's the city that doesn't sleep, and that's the city that needs, needs some crime prevention.

Bill Li (Chairman and CEO)

Yeah. I've, my team and I have killed ourselves building this company from scratch over the last 10 years, and we've had a lot of ups and downs, but I gotta tell you that that police escort into, into Manhattan with the NYPD having us bring in all the robots into Times Square a few months ago was certainly a, a highlight for me. I mean, it's like. It, it was literally surreal. I still can't believe it happened. I don't wanna say similarly, but in, in, in a lot of ways, you know, the city, NYPD and other government agencies are involved. We're all actively working on it.

The machine that's due out to ship hopefully yet this summer to our client in New York City, is patrolling and, you know, going through all its testing, and we're just waiting for the go ahead. Again, similar to the federal government, we are, are wa- hurry up and wait. You know, they- everyone there in- at City Hall, NYPD and the affiliated agencies, are certainly all working on it. Hey, folks, if you're not speaking, if you need to go on mute, please. I'm gonna mute everybody, and Brian, you need to come off the mute.

Speaker 6

Are you still there?

Bill Li (Chairman and CEO)

Yeah.

Speaker 6

All right. Then real quickly, two last things is on the Hemisphere. I saw that a pilot was launched on that. Do you expect those to be shipping and deployed in third quarter or Q4? I also signed up for the bond offering, from the last meeting, but I've not received anything on that. What can you update us on the status of that? Thank you.

Bill Li (Chairman and CEO)

Thank you. We've, we've built a lot of K1 Hemispheres. We've got a major global hotel, hotel chain, take the first couple. It's a brand new product, so we wanted to kind of go put it out in the wild and see what happens before we start shipping some other ones. We're, we're kind of in the last bits and, hopefully here we'll get the green light soon to start shipping the, the balance of the orders that we have from multiple clients across multiple verticals. Then we'll start kind of pushing hard on, on, on scaling that part of the business out. For those of you not familiar, the, the K1 Hemisphere is our lowest price point machine coming in at $0.75 an hour.

It's gonna be, you know, very difficult for a community leader, an administrator, a school principal, or what have you, to answer the question: Hey, you know, if, if your people are your most important asset, why aren't you using the latest technology to help secure them? So, we're working on it. We're excited. On the bond, for those of you who haven't gone through this process of using a Reg A+ Tier 2, there is a feature called Testing the Waters, or a TTW, and that allows an issuer to kind of say, "Hey, we're thinking of doing this. Here are roughly the terms or what the facet of what we're trying to do.

Is there anybody interested?" At the same time, there's a bunch of regulatory nightmare paperwork that needs to get filed, and there's a whole SEC, FINRA type of review, besides all our internal stuff. We've gotten a good amount of interest. We're in the process of getting through all that regulatory work. Then once the offering's qualified, we'll, we will be reaching out with all the details to all the people that have expressed an interest thus far. Think of it as a wait list for those that would want to participate. And we'll certainly try to fill those orders first before, you know, sharing it with, with others. Literally, the work is in, in process.

Speaker 6

Okay, well, I appreciate it. It's good to see that you guys are gonna go after companies that set up a website and spread potentially false and misleading information. I know that takes away from the team's focus, but, you know, you have a fiduciary duty to protect the shareholders...

Bill Li (Chairman and CEO)

Yep.

Speaker 6

to go after very misleading, very old information, that, you know, you know, is meant to knock down the stock price. Again, you know, you gotta focus on, you know, being long Knightscope, shorting the criminals, and staying on mission. Thank you very much.

Bill Li (Chairman and CEO)

Thanks, Brian. Thanks for the questions. Good to see you. Marco, next up.

Speaker 6

Bill, how have you been doing?

Bill Li (Chairman and CEO)

I'm, I'm vertical, so all is good.

Speaker 6

Upward and onward, I guess.

Bill Li (Chairman and CEO)

Yep.

Speaker 6

Actually, a couple of my questions have already been answered. I do have two additional ones. First question I have is, have we had any other significant interest in other analysts covering the stock? Obviously, we had the one from Ascendiant. We know what the rating was and what their price target was. Has there been any progress there with additional analysts covering the company?

Bill Li (Chairman and CEO)

I got to be careful how I answer that. I think I can say that I've been keeping numerous analysts up to speed since the public listing. Small shops, big shops, some funny conversations that I think I- that one I probably can share. Yes, there are people that I'm keeping up to speed, and hopefully, and I don't control these, and we have no financial entanglements or arrangements or anything with anybody else, so it's up to them when they decide if, if they're going to write something. You know, a couple of little anecdotes that I can share. You know, one particular analyst I'm excited about, he spent a lot of time in, in public safety and security, and I don't have to spend too much time explaining.

I'm hopeful that he ends up, his firm ends up writing something. I, I think the, the funny one for me was, a different analyst was having a hard time where to place Knightscope, and I always find it really humorous. You know, highly, highly sophisticated investors sometimes do the dumbest things. Like, "We want outsized returns that doesn't look like anything else, but you need to fit in one of these seven buckets." It's like, if you want outsized returns, like, it shouldn't look like anything else. It shouldn't fit in any bucket in the first place. Like, you have a logic problem. They were trying to figure out, like, "Do we put you in autonomy? No, no, no. We should put you in security. No, it should be public safety. No, actually, it should go into robotics.

Actually, it should be in drones." Like, they can't figure out, like, where to place us, which I, I think is hilarious. Hopefully, that firm ends up picking up a spot for us and, and ends up writing something. Marco, I, I don't control these folks. All I can do is, you know, continue to improve the financial performance of the company with the team and keep telling our story till we're blue in the face.

Speaker 6

Oh, that makes sense. It's just, staying on point for long term as well, too, and whatever you can't control it is what it is at this point.

Bill Li (Chairman and CEO)

Yep.

Speaker 6

I guess part of my question, prior to the IPO, I know we've had commercials on CNBC, and we've had guest spots on CNBC. Are there any plans, anything to do that? I know we have to be mindful of spending and cash burn rate, but has there been any interest from there to try to continue to tell the story on a more of a platform like that?

Bill Li (Chairman and CEO)

Ooh, hot button. Internally, that's been extremely controversial. I, I try, not, not always successful, but I try to be a kind of consensus builder, internally as, as much as I, as much as I can. Sometimes you got to kind of overrule people and just go do stuff. The first time we ever did that was, I think, in 2017 or something like that. Man, everyone that could yell at me, yelled at me, for doing that, and I still would do it again. I, I would love to, to have the, the marketing's budget to, to go do that, but I also need to be careful with the dollars going out because we really need to get to profitability.

The one thing that a lot of folks fail to understand on advertising, in our case, you you can get a 2, 3, or 4-fold ROI. You know, maybe you get a client, a new client, maybe you get a recruit, maybe you get an investor, maybe you get a chance to build the brand, right? It's not just, "Oh, well, let's just spend, and did we get X or Y or not?" I think one of the more successful things that has, has worked, Marco, is the Robot Roadshow. I think we're getting close to probably 100 stops across the country or somewhere near that, certainly over 80. That's gone really well because, you know, there's only so many Zoom calls you can do. There's only so many videos you can do.

There's like, how many PowerPoints are you going to go through? You know, people want to come, touch, see, feel, get their questions answered. That was another controversial one. Like, the team's like: You want to do what? I'm like: Yeah, we're going to get this huge aquarium, and we're going to stick a bunch of robots on it, and we're going to truck it around the country. They was like: Bill's lost his mind. Thankfully, the team went along, and it's, and it's worked out really well. We want to, we want to continue that, and that's, that's certainly much more, in, in some cases, effective, but always have the right to, to go do some, some fun stuff in the future.

Speaker 6

No, that makes sense. You could probably combine the two potentially with a larger platform, such as CNBC or a larger national global platform with a Robot Roadshow. I don't see why you can't combine the two.

Bill Li (Chairman and CEO)

See, now you're now you're trying to get me in trouble.

Speaker 6

I'm just throwing that out there. I mean, this is a comment that's technically not a question, but. My last question I had was, with additional devices being added to our network and with, now with K1B devices being added. I guess, what do you see as there's always risk to either hacking or compromising security in the robots, too? I guess, what are the chances on, and this is hypothetical, robots could either be disabled or shut down or not work the way as intended, and what security, I guess, strategies in place for the company to prevent that as the network grows along with the infrastructure?

Bill Li (Chairman and CEO)

Three or four comments, Marco. One is we typically don't spend too much talking about cybersecurity stuff in public because that in and of itself can be a breach. Just think about it. Second, one of the reasons we have a Machine as a Service kind of approach is we're in con- those assets are ours, they're on our balance sheet, we control them, as opposed to someone has a robot that they didn't want, that they bought, and then they stick it on eBay, and now what's the likelihood that, you know, someone's going to take it apart and start messing with it, right? If we've got, you know, control over the asset, you can minimize the risk. You know, remember, everything is hackable. Every major corporation, big, small, governments, everybody's been hacked.

You know, to say that will never, ever happen is just, is not, you know, reasonable. I, I think the third thing is, if we didn't have the basics, there's no way we could have law enforcement agencies as clients, hospitals as clients, financial institutions as clients. You got to assume we've kind of got the basics, right? The last bit is the back to the FedRAMP question. I'm hopeful that once we do get the ATO, when and if that happens, the authority to operate, with the U.S. federal government, that is going to help with that question and also help with the incoming clients who are like, "Well, you know, you need to fill out our..." This literally happened, 2,500 questionnaire, cybersecurity survey.

You know, almost every client that we come across has some sort of survey, for us to go fill out, and we're hopeful it's not always going to work, but: Hey, listen, the U.S. federal government's using it. Exactly what other question are you think you're going to ask us after we've been through, probably by that time, more than three years working on it and, you know, a pretty penny spent. I, I think those probably are what I can say publicly.

Speaker 6

No, that makes sense. I just wanted just some clarification, if you can. Of course, if you can't say anything, that obviously makes more sense to not say anything.

Bill Li (Chairman and CEO)

Yeah.

Speaker 6

No, I appreciate it, Bill. Yeah, thank you again for all your hard work and the team is doing, and, looking forward to the rest of the year and going forward.

Bill Li (Chairman and CEO)

Thanks, Marco. Thanks for hanging out with us.

Speaker 6

Yeah, sure.

Bill Li (Chairman and CEO)

Oh, now we got trouble. Andrew. You're gonna have to come off mute, though.

Speaker 6

Yes, sir.

Bill Li (Chairman and CEO)

There you are.

Speaker 6

How are you?

Bill Li (Chairman and CEO)

I'm, I'm good. I'm good. I'm happy to meet with everyone because I, I think some people don't realize this job is being a CEO or founder of any company is brutal.

Speaker 6

Absolutely.

Bill Li (Chairman and CEO)

Sometimes it's good to just, you know, talk to some normal humans and talk about things.

Speaker 6

Oh, well, you have me. I don't know if you know this, but I'm a huge fan of Knightscope.

Bill Li (Chairman and CEO)

I've heard you're the great Brian Andrew. I don't-

Speaker 6

Yeah. Yeah. Just about every single question that I had was already answered. I'm going to expand on one. When, when the ATO goes through, I am not saying if, I'm saying when, the implications behind that, I would think, are huge. The government is no small outfit, so the potential for every single aspect of that from the Army, Navy, and all the ports and the warehouses. How would you be able to cope with a really large order? Would you be able to get the government to invest in the manufacturing of that order, so you don't have to front all of the cash?

Bill Li (Chairman and CEO)

Certainly agree with the premise of the question. As a number of senior folks have told me, you know, getting your foot in the door with the federal government is nightmarish, but once you're in, it's kind of hard to get kicked out.

Speaker 6

I like that.

Bill Li (Chairman and CEO)

I think, you know, we can genuinely help. I've spent a lot of time with a lot of agencies and a lot of senior officials. I know we can help. I also want to caution that, as we've seen, the federal government moves on a different time clock.

Speaker 6

Yep.

Bill Li (Chairman and CEO)

So just need to be, you know, a little caution there. Manufacturing and financing, I, I don't worry about. First thing is we have financing facilities to get orders, you know, funded and the like, so I, I don't worry about that too much. I, I even I'll go as far as to say that because we're publicly traded now, we have a lot more different access to different parts of the capital markets to finance that kind of stuff. I'm, that doesn't worry me. It's just, it's just work. Second, today we do mostly light industrial assembly of the machines.

It's not like we have a bunch of heavy equipment and conveyor belts and all this other crazy stuff that we need to go, you know, back in Detroit, when I was, you know, helping build cars or whatever, it would take forever to scale up something, right? Because you got to go order whatever tool is, you know, nine, 12, 15, 18 months. You know, we don't really have that. what we need is warehouse space and, and labor. so I, I, I don't worry about, you know, that aspect of it, especially with the new, 5th generation K5. That one, you know, today, the current production machine, you probably heard me say, you know, takes us 100, 120 hours to build one.

The new one takes us less than 20 hours, and we're laying out a, you know, smaller assembly line to actually do this at, at volume.

Speaker 6

Yeah, have a good night, everybody.

Bill Li (Chairman and CEO)

Sorry if you're not.

Speaker 6

Hey, this is my call. Get off.

Bill Li (Chairman and CEO)

Yeah, I'm gonna mute everybody again, Andrew, you've got to come off of mute. I, I don't have a, I, I don't have a big worry. Not to be funny about it, it, the federal government acts very differently than the private sector, so we likely would have time to ramp up as opposed to, you know, you need to drop ship me, you know, 1,000 robots tomorrow. I, I think, I think we'll be, we'll be fine. I, I don't, I don't worry about that too much.

Speaker 6

Okay. Well, if you're not worried, I'm not worried. So...

Bill Li (Chairman and CEO)

It's only because, you know, there was a point in time in the company's growth where we didn't know how to get from A to B. Like, I don't know how to do that. I don't know what innovation is required to do that. I don't know how to build that. I don't-

Speaker 6

Right.

Bill Li (Chairman and CEO)

All the stuff, all the problems that we have, including new problems that can come up, it's people, passion, time. It's not like I, it's not solvable. We've never done this before. I've never, you know, in Detroit, you know, building a plant less than 100,000 units a year is an anomaly. That's the weird thing to do, right?

Speaker 6

Yeah.

Bill Li (Chairman and CEO)

Most plants, 300,000, 500,000 is the normal thing to do. If, you know, if and when we get to that part, you know, that's, well-blazed travel, you know, well-blazed path, I'll say.

You can solve anything. All it is, is a matter of time and effort. As a matter of fact, the license plate on my, you know, plate on my other car says, "I solve." And I have had that since about 1989.

what's the other plate say, Andrew?

Speaker 6

Knightscope. K-N-G-H-T-S-C-O-P, Knightscope.

Bill Li (Chairman and CEO)

For those of you on the call that saw the social media post who texted me, their crazy license plate from New York, this is Mr. Andrew here, did that.

Speaker 6

Hi, everybody.

Bill Li (Chairman and CEO)

I don't know, who else is in Jersey, Connecticut, Maryland, California, Texas. Like, everybody's got to get their own plate. Otherwise, it doesn't work.

Speaker 6

Yeah. Now, now I'm saying: Well, stock price has to either just go up or just not go under, because I am gonna have people, using me, but in time.

Bill Li (Chairman and CEO)

I have no idea what that feels like, Andrew.

Speaker 6

I'm sure you don't. Okay. All right. Well, that's it. Upward and onward.

Bill Li (Chairman and CEO)

Thank you, Andrew. Good to see you.

Speaker 6

You too. Take care.

Bill Li (Chairman and CEO)

Thanks. All right, Andrea or Andrea?

Speaker 6

Andrea.

Bill Li (Chairman and CEO)

Andrea, nice to see you.

Speaker 6

Nice to see you, Bill. It occurs to me, in looking at what you showed us in the beginning, it sounds like the K1B opportunity is the stalwart, right? It's the one that can be enormous, like every freeway, every, every government, every courtroom, everything that needs a stationary security issue, posting, would be able to be in that realm. The robotics that actually move and you take around the company, or the country, those are the little sexy ones, right? Those are the ones everybody wants to see, how they work, all those things. These things that could be stationed in courtrooms, universities, K through 12s, on the freeways, that sounds like it's the much larger opportunity for the company.

If I'm understanding what you showed us, just in the last quarter, that's a new product line, and it exceeded the gross revenue for the mobile units. Did I read that correctly? By about $300,000, right?

Bill Li (Chairman and CEO)

Yeah. The way I look at it is kind of what I said earlier. You know, criminals and terrorists can be anywhere. I think when we're all said and done, I don't know if it ends up being 12, 24, or 36 different kinds of devices of all shapes and sizes. That need to be able to operate both indoors and outdoors. I think you're right, in the short term, you know, one of the attractiveness of the acquisition was a very strong install base. You know, there's 7,000 of these already in the network for us. Second, the continued growth and the associated margins. We said that, you know, the acquisition was accretive, and it's, you know, certainly proving out.

I think there's a bigger step, that where I'm focused, is those 7,000, inclusive of the mobile robots, that will continue to grow over time. We need to do a major overhaul and upgrade of those, and that's where, to me, gets really exciting. The short term, yes, you're, you're correct. You know, it's gonna probably kind of outpace the ASR side of things in the short term, but I think in the long-- medium to long term, doing a massive upgrade of the existing ones that are out there is gonna be a very exciting business for us to think about. It's kind of combining the AI capabilities that are in the autonomous security robots and then some other things that we have planned.

Imagine if those 7,000 devices could, tomorrow, I'm not saying tomorrow, but, you know, in the future, if all the 7,000 of those devices, and growing, are able to see, feel, hear, smell, and speak, and not just make the a phone call or alert someone. The acquisition, in a, in an odd way to look at it, was a little bit of a land grab. Imagine, I were to pitch you today, like, "Hey, we wanna go put 7,000 of these devices across the country." There's a bunch of Department of Transportation, city council, municipalities, permits, and licensing that we need to go do to go stick that thing on the side of the road or at that location. Like, you would say, "Bill, you're out of your mind.

you a decade to do that." Well, it literally took the acquisition that we made a decade or more to go build all that stuff out. But what if we could upgrade it and have it have that much more capability? That's where, to me, that gets really exciting. So I want you, I want you to think about both growing, and yeah, there are gonna be, you know, changes here and there. And also, just to note, on the Robot Roadshow, the K1B, a majority of those devices are also included in the Robot Roadshow. So we're not just running around with the mobile ones. But I think overall, just..

I, I just want you to think about being able to cover every aspect, and then there's probably, not probably, there are numerous things that we could be doing that we don't do today if we had additional form factors and additional types of products. That's why some folks get animated, and some folk get really annoyed with me when I say that I've got, you know, 2 or 3 decades worth of workload in my head. There is a ton of stuff for us to be able to do and why I think long term, we can, if we work together, build a $30 billion company that, you know, in the end, looks like a, I don't know, looks like a defense contractor, and, and less of a, you know, just a, a, a security, type of, device company.

Speaker 6

Actually, I had one more question on that front, 'cause that was exactly what I was thinking about, is, does the FedRAMP approval, that whole process, once that is approved, does that then lead you to be able to have more military application and connection, and even allow training to be done with military people on how to become employees in your workforce to help deploy these things? I'm, I'm just trying to understand how you can-- You clearly need something that can help you mushroom out your ability to service, install, maintain, if you're trying to go that, you know, 7,000 goes to 15,000, goes to 100,000. That's, that's a mushroom, right?

Bill Li (Chairman and CEO)

Yeah. I think I need to parse your question into 2, 2 different answers. On the recruiting side of things, we do have a lot of veterans on our team and likely will continue to do so as we grow. In a lot of cases, it's a really good fit, so, you know, we'll we're continuing to be honored by having those that served continue to serve the country in a very different way. I think that's complete and separate than the scale and sales side of things. To parse what you said, let's say we get the FedRAMP ATO tomorrow. Obviously, our sponsor is where we're gonna be focused first, the U.S. Department of Veterans Affairs.

Each federal agency, and all the alphabet soup folks, each have the authority to either accept what the VA did with us or ask us to do something completely different. I'll go out on a limb and say, I don't know, the U.S. Postal Service, the Social Security Administration, maybe the Department of Interior, maybe NASA, maybe Customs and Border Protection, maybe the GSA, and maybe the Federal Protective Services, likely, I won't say 100%, likely would consider at least accepting what the VA did with us. I think if we go spend some time with the Pentagon, FBI, NSA, CIA, they're likely to put us through a completely different process or have us amend what we did. But I think the, the first step is just to get your foot in the door.

Because remember, a lot of government officials are, you know, they're not risk-taking entrepreneurs. The, you know, for those of you that are a little bit older generation, like, it was always the safe bet to, to hire IBM, right? Because you're not going to get fired because of that. Well, it sounds funny, but it's kind of a little similar. I know that there are folks sitting there going, "Well, let's see how it goes over at the VA. Oh, look, they got a couple dozen out in the VA. Yeah, maybe we'll go and try them over in our department." That's likely what's gonna happen, especially having spent a lot of time with these folks. Hopefully, that more full answer gives you a better perspective.

Speaker 6

Yeah. I think, Honestly, I see you as a nascent Lockheed Martin, just in a different way.

Bill Li (Chairman and CEO)

Yep.

Speaker 6

In the security world.

Bill Li (Chairman and CEO)

Yep.

Speaker 6

Lockheed doesn't exist without government contract.

Bill Li (Chairman and CEO)

Yep.

Speaker 6

Right? I heard a great one, right?

Bill Li (Chairman and CEO)

What's really weird is we give the soldiers, the 2.5 million soldiers out there, every level of capability you might ever imagine, and there's a Lockheed, a Northrop, a General Dynamics, to build them whatever they, a, a soldier needs in a theater of war. On our own soil, we don't do that, and it's infuriating to me. Like, you would never dare take a soldier out of combat, put him on some city street here and go, "Here's a 2 pens on a notepad. Good luck." Like, you would never tolerate that. That's literally what happens today. That's what we do to officers, and that's what we do to guards. We don't give them the capability.

What's really messed up is the Department of Homeland Security and the Department of Justice don't have processes and don't have, you know, federal jurisdiction over all these law enforcement agencies. There's 19,000 of them and 8,000 private security firms, and there's no equivalent of Lockheed going to build a bunch of crazy new stuff for these officers and guards. That's the company that I believe, personally, is likely to be worth, you know, $10 billion, $20 billion, $30 billion. We need, you know... It was a, it was a nightmare to get this company built over the last 10 years just to get it to this point, but it's literally the first inning. Okay, now, you've proven that this kind of stuff works. Now you've got to start scaling up and growing and with all the growing pains that go with it.

long term, I, I think, you know, the, the analogy is correct.

Speaker 6

Thank you very much. I really appreciate your answers.

Bill Li (Chairman and CEO)

Of course. Warren?

Speaker 6

Hello. You've indirectly addressed the FedRAMP ATO.

Bill Li (Chairman and CEO)

Okay.

Speaker 6

I just add another layer onto it. The implication has been that we are framing it in terms of months, not years. Is that correct?

Bill Li (Chairman and CEO)

From what I know right now and what we've told the public markets, and we put in all our regulatory filings, we are still hopeful that we get the ATO during 2023. I don't have any other information that I could or would dissuade me from thinking that. However, I will put my own personal footnote on there. Because we've been through up and down, left and right, and everything else, like, a deal is not a deal until it's done, so I'll believe it when it's done. Right now, that's our best planning assumption, is the, the legally the best way to, to answer your question.

Speaker 6

Thank you.

Bill Li (Chairman and CEO)

Okay. All righty. FJ?

Speaker 6

Hey, view. Hi, everyone.

Bill Li (Chairman and CEO)

Hi.

Speaker 6

Hi. Hey, I know when you're talking about, I mean, Knightscope, for many, the first thoughts that are around, is kind of Robocop, right? This kind of a magic Hollywood thing. For me, man, you are the real deal for the maniacs too, right? Just want to acknowledge that if you come to Hollywood, you are the real deal. You mentioned about the Robot Roadshow, that the people want to come, see, and feel. This is one of the notes that I took from your statement. Talking about feeling, okay? When it comes to public safety, apart of all the fairly heavy cybersecurity process FedRAMP requires, my question is more how our upper-level federal government feels about the Knightscope product? My question is like, do they have seen it? Do they, did they touch it? How they react?

The last question is like, it's I'm not talking about the numbers itself, the process, but how they feel, because at the end of the public, everybody will bleed with a bullet in her, in her heart, right? Question, to be more clear, when I come about, for example, upper-level federal government. Does, for example, President Biden, he knows about Knightscope mission, he knows about the products, the robot. I mean, how about this feeling with the upper level federal government? Do you have anything to share with us?

Bill Li (Chairman and CEO)

I can tell you a story, but I'd like to caution with cabinet members or people in the White House don't make these decisions. You need not kind of be focused there. You need to focus on the person with the pen or at the keyboard that can actually stroke a contract, right?

Speaker 6

Yeah.

Bill Li (Chairman and CEO)

Like, this, having us go a lot, you know. I've, in my prior life, I've had more than enough people, like, cabinet-level positions, advise me and, and help, and I've spent way too much time in D.C., so I, I kind of know how it works to an extent. Probably the best way to answer your question is with a little story. We spent more than two years talking to Alphabet Soup of federal government agencies, chief procurement officers, chief security officers, people in facilities, TSA, FBI, The Pentagon, Customs and Border Protection, U.S. Postal Service, Social Security Administration, Federal Protective Service. Federal Protective Service, they have 15,000 officers and guards that try to help secure the 10,000 federal buildings that the GSA manages.

You know, and this is not like one conversation, like, we spent a lot of time. To me, the most humorous part that happened, but also answers your question, was after spending a couple years with all these folks on Zoom calls and talking and emails and this, that, and the other thing, we literally sent the Robot Roadshow to Washington, D.C., put it at the Ronald Reagan Building and had a bunch of, you know, folks from Congress and several agencies come and touch and feel. I actually think we might have done this twice.

Speaker 6

Twice. Yes.

Bill Li (Chairman and CEO)

Thanks, Stacy. Though I can't, How do I express this? It was hilarious for me to see a bunch of very professional, conservative, in the, kind of, normal normal use of the term, you know, buttoned up, ties, everything, all very serious, come into the pod, see the robots. You know, we're on the screen so we can, "Hey, nice to see you again." You know, "What do you think?" Not, you know, 3, 5 minutes later, they all turn into a bunch of little kids. It's like, "Oh, time for a robot selfie! I can't wait to show my family. I can't wait to show my kid," you know?

That happens all across the country, and that's why we keep doing this, is because, you might have heard me say before, you know, Hollywood has done us a service and a disservice over the last 30 years. People's expectations of what the robots can do or what they will do to us is up here somewhere. Reality is, like, down here somewhere. The easiest way for this to go well is to just simply introduce yourself properly. "Hi, this is what we do. This is why they're here. Do you have any questions?" When I had the, you know, discussion with the folks in New York City, you know, this is probably the strongest counsel we could give them, was you can't just, you know, drop a bunch of robots in the city and think it's gonna go well.

You're gonna need to introduce the concept to the media, to the community leaders, to the folks in government and other agencies, and to the officers on the ground. Then once people get a chance to meet the robot, like, "Okay, it's not gonna bite me, it's not gonna attack me. Oh, I understand what it actually does. Oh, that makes sense. All in favor? Aye." Right? If you don't do that step, you're gonna cause all kinds of problems. So we get criticized for having this Robot Roadshow going around the country, and people don't understand this because they've never... No one in the history of mankind has ever done this before, at scale, ever. We're in uncharted territory. You're asking an entire country to change the way the entire public safety, law enforcement, and security apparatus works.

Like, you're not gonna undo that with, like, a PowerPoint and a Zoom call. So, long-winded way of saying, you know, you gotta have a personal touch to this, in order to affect change, and that's literally what we're doing on this call today, right? Most publicly traded companies, you know, micro-cap, nano-cap companies, you know, you do an investor call like this, you get 10 people show up, 15, 20. You know, when we started this call, we had 200, 300 people sign in. Like, you have to be able to communicate and answer people's questions so they can better understand and change how they feel, exactly what you said, about the technology.

Speaker 6

Well, well, thanks very much. I mean, I would have a few other questions, but in respect to the other colleagues here and also the time, so I will cut myself here. Thank you very much.

Bill Li (Chairman and CEO)

Absolutely. I've done dozens of these, so there's never a, a last question. I will stay here as long as it takes. Francis can go next. Thank you, Jeffrey.

Speaker 6

Bye.

Yeah. Hi, Bill. First of all, may I explain the difference between human guards and robot guards to the audience? I used to run 200 guards in Chicago, in the Chicago suburbs. It was my first year in the business, so I got a pretty good, you know, standing post education. Human guards are basically, if you have a good human factor, management, rest 20 minutes of every hour. They need that time to recover enough strength to get through an 8-hour shift, or if need be, a 12-hour shift, or sometimes a 16 or even 24-hour shift, if the relief doesn't show up. One third of the time, they are not patrolling. If they got a standing guard post, this is not a problem. What the K5 does is it patrols.

The K5 has an inherent advantage over a human guard in that respect, it cannot make a decision. It's not smart like we are.

Bill Li (Chairman and CEO)

Sorry, Francis, we've got a lot of folks with their hands up. You want to get to your question?

Speaker 6

You want a question? Okay.

Bill Li (Chairman and CEO)

Yeah. If you can get to your question, would be, would be great.

Speaker 6

All right, fine. What's happening with the Scout Program?

Bill Li (Chairman and CEO)

What's happening with the Scout Program? Actually, Stacy?

Stacy Dean Stephens (EVP and Chief Client Officer)

I am here.

Bill Li (Chairman and CEO)

Stacy, if folks haven't met, is the Executive Vice President Chief Client Officer, and has joined the call unexpectedly, but I'm gonna pick on him to answer the question.

Stacy Dean Stephens (EVP and Chief Client Officer)

Perfect. Thanks for the question, Francis. You and I converse quite a bit, actually, on a regular basis. For the rest of you who are unaware, the Scout Program is essentially a referral program. It gives anybody who has contacts in places where they may be of influence to an end user, it gives you the opportunity to capitalize on that to the tune of $1,000, if the connection with that person leads to an actual contract. So we have had in excess of 100 people sign up for the Scout Program. I'd say probably a couple, 2 dozen of them have provided leads that we can actually follow up on.

To date, to my knowledge, unless I think Mallory is also on, unless she knows of one that I don't, we've not yet closed one of those sales. What happens is, it's not a sales program. We're not looking for people to go out and cold call people and communicate what the Knightscope mission or goal is or what our products do. It's, "Hey, I've got a friend, he's the chief security officer over at X shopping mall or business. I was telling him about you. I'd like to make the introduction." Then you sit there and continue to poke your friend and say, "Hey, did you get those robots yet? Did you get those robots yet?" Until they decide: Okay, fine, I'll give it a try, and we'll, we'll sign a contract.

That's kind of where we are with the Scout Program. It has actually yielded some leads and some contacts that we can follow up on. It has not, it has not converted into a sale yet, to my knowledge.

Bill Li (Chairman and CEO)

I think, and a lot of, to be, to be fair, to those that are trying to help, you know, the sales process is kind of normal B2B enterprise processes. You know, I don't want to say on average, but you're probably in the 3, 6, 9, 15 month, type of timeframe to, to get a, a deal done. There's a lot of things that go into that. For those of you that have signed up, you know, those additional warm leads, you know, you know, helps us continue to grow. We're, we're thankful for that.

Stacy Dean Stephens (EVP and Chief Client Officer)

Actually, Bill, if I could, real quickly.

Bill Li (Chairman and CEO)

Yeah.

Stacy Dean Stephens (EVP and Chief Client Officer)

Just to put it, put an exclamation point behind what you said, a lot, Francis and you in particular, have given us some of the bigger institutions to follow up on. We just had our second big major meeting with a large city, and that, that relationship actually originated in 2014. We have gone through now literally 2 generations with that city because the person who brought us originally, his son, is now leading the effort now in that, in that potential client. Those bigger opportunities take vastly longer, especially if you get into governments or city governments, local governments and the like. They will take some time, but again, those leads are incredibly valuable.

Bill Li (Chairman and CEO)

I, I think, to finish that up, one, one thing that hopefully the numbers reflect, we're gotten more into a rinse and repeat mode in terms of the overall marketing and sales process, where, you know, years ago, that was not the case. We're fine-tuning and, and things are, are starting to pick up, as you've seen through the numbers. All right, Daryl?

Speaker 6

Question. Second question.

Bill Li (Chairman and CEO)

Oh, sorry. Go ahead.

Speaker 6

What's your next acquisition?

Bill Li (Chairman and CEO)

not something that we would. I have nothing to announce at this time.

Speaker 6

Do you have one?

Bill Li (Chairman and CEO)

No, we have nothing to announce at this time. The strategy remains the same as when we went public. We think over the long term, the, the company, in order for us to reach our goals, is going to need to grow organically, but also through acquisition. I've now bought probably 2 dozen companies in my life. The first one that we did last year has proven to be a good solid one, and we're always shopping. I think a different way to answer the, the question would, would be: you know, what are we looking for? Certainly, top-line revenue, that's, you know, gonna be exciting for us to accelerate our client development.

It could be a technology, in, in some cases, rarely, but possibility it could be, you know, an acqui-hire type of, situation. But we have nothing announced at, at this time.

Speaker 6

Thank you.

Bill Li (Chairman and CEO)

Thank you. Daryl?

Speaker 6

Yeah, good afternoon.

Bill Li (Chairman and CEO)

Howdy.

Speaker 6

In early July, we saw a very significant increase in the value of the stock, hitting a high of almost or a little over $2, I think, at 1 point. As an investor, I, of course, was very pleased with that. In your opinion, what do you think drove that big spike?

Bill Li (Chairman and CEO)

Hi. I think if you missed it, I would encourage you to watch, the annual shareholder meeting. I think I spent maybe a little bit too much time explaining what goes into a stock and, what may or may not contribute, to things. If you haven't seen that, I'd encourage you to go-

Speaker 6

I'll check it out.

Bill Li (Chairman and CEO)

Knightscope.com/rise. At the bottom, I believe it's episode nine, whichever one it says, the annual shareholder meeting that we had last month. I literally go through in detail, because a lot of investors of ours don't know how this works or what could provide pressure and what can provide, you know, upward support. So I'd encourage you to, to, to go watch that. Probably not a good idea for me to, to comment on what I think, specifically, made some changes for that particular time period. In general, I think it would be okay for me to say that, you know, kind of what positive things happened. Well, in roughly during the summer, what, what happened?

Well, we paid off, extinguished, you know, $6 million worth of convertible notes that were somewhat controversial for, for a lot of folks. In our view, those conversions were putting significant downward pressure on the stock. I think having our first analyst cover the stock also helped. I think us continuing like clockwork every week, I think almost every week, you know, one or two material announcements. I think we probably made well over 50, you know, major announcements in 2023 alone. Probably, you know, did some good. Announcing, you know, new deals or technology. We announced the Automated Gunshot Detection capability that we're hoping to release during the fourth quarter, certainly contributed.

You know, I think me spending, frankly, a lot of time through these Town Halls, communicating what's going on and having support from our investors, you know, the simple math is more people buy shares, less people sell, the price goes up. I mean, it's, it's not that complicated, but it also can be very complicated. Not commenting on that particular period, but in general, I would encourage you to, to watch that video, it'll give you a little bit more detail.

Speaker 6

Great. Thank you. I was also really excited to see a K5 deployed in a local home improvement store I shop at.

Bill Li (Chairman and CEO)

Ah!

Speaker 6

Yeah, I was patrolling the parking lot, and I saw that guy, I was like, "I know what that is." Great, I appreciate your time.

Bill Li (Chairman and CEO)

That happens, that happens a lot more these days, which is, I, I think, exciting for all of us. Because, you know, in a lot of cases, you know, we haven't met personally or you haven't seen a robot in real life, and then, to make an investment and then, see that in the real world, like, holy cow! I, I, I love getting those emails and texts and messages and, and what have you, people doing their, the robot selfies and, and what have you, is, is invigorating. I mean, it's, it's very cool.

Speaker 6

Yeah. Great. Thank you. I appreciate your time.

Bill Li (Chairman and CEO)

Of course, sir. Tash C?

Tash C (Retail Investor/Caller)

Hi, good afternoon. I have a question about competition. I'm not super familiar with, you know, the securities tours industry, but I know that there are several larger technology companies that are also working on, you know, robotic solutions for different purposes, some including some very well-known companies. I wonder how you think about your- think about your competition, both current and future, because would... Could that be- could there be a scenario where other companies with, you know, larger resources, have a robotic product that can be, even though they are not currently deployed in the, you know, securities industry, that can be also, you know, multi-purposed into providing the similar product that you are providing? How do you think about that?

Bill Li (Chairman and CEO)

It's already happened. They failed. Is the easy answer. Back in... I'll give you a story just to make the point. Back in 2013, when we started the company, we pitched our hearts out to have Sharp Electronics, the TV maker, actually, be a strategic investor of ours. After the meeting, they didn't return any phone calls, no emails, nothing, went completely dark on us. A few years later, I think it was in 2016-ish, you know, I show up at a security conference. There is a Sharp-branded outdoor security robot. Sharp had invested over $35 million to build a product to literally compete against us. I think after all that, they sold one to the Indianapolis Motor Speedway.

In 2018, they fired everyone, shut the division down, weren't able to get it done, and then my inbox at the time was full of Sharp resumes. There's been one or two more other corporations that have attempted and have failed. I, I think, there are 2 complexities to think about. 1 is the technology. Like, I often say this, and, you know, maybe what I just said makes the point. What we do is technologically extremely difficult. Go look up the Bloomberg article from earlier this year about self-driving technology and autonomy. You know, $100 billion have gone into the sector, 200+ companies working on it, and no one shipped anything. Like, literally, 200 teams working on something, and nothing came out... Maybe it's hard.

We've now operated more than 2.3 million hours out in the field, and across an entire nation, probably seven winters and seven summers or something like that. We, we've got a, a lot of experience, and we can tell you from firsthand experience that this is not easy to do. Could it happen, and someone successful? Sure. Hasn't happened yet. There are a few smaller, you know, partial competitors that are trying, some scale, but have been unable to. I, I think, a different way to answer your question is, you know, what, what primary competition do we see today as opposed to something, you know, in the future?

In a weird way, depending on the location, sometimes it's manned guarding is probably the, the one we're up against most of the time, which is: do you want to pay the guard $15 to $35 an hour, or an unarmed, or an armed guard, $85 an hour, to patrol the area? Would you rather have a, a remote monitoring setup with a robot to do that for $7 or $9 an hour? In a small number of cases, sometimes people think that, you know, fixed cameras will, will fix the problem, and then they realize that, you know, that doesn't actually work. Right now, those are the primary, kind of, immediate competitors. Could others come and try to do it? Sure. Be my guest.

I think the last comment, and I, I say this in, in all seriousness, we want to make the U.S. the safest country in the world. I think every American should have the right to live in a safe community, in a safe country. We, as Knightscope, with that mission, should applaud, support, and certainly not speak ill of anyone else trying to work on security, public safety or law enforcement.

Tash C (Retail Investor/Caller)

Thank you.

Bill Li (Chairman and CEO)

Of course.

Murray Wiggins, you're up.

Murray Wiggins (Retail Investor/Caller)

Hi, Bill. Pleased to meet you. I've missed on some previous Town Halls. This is my first one with my wife and I. We both invested, I believe it was with StartEngine a few years ago, and I'm glad that we did. We had the good opportunity to see actually one of the robots in action at a parking lot in New Jersey about 1 year ago.

Bill Li (Chairman and CEO)

We saw you, too.

Murray Wiggins (Retail Investor/Caller)

Yeah. My question to you is, is aerial surveillance in the cards at some point?

You know, are you gonna add drones?

Bill Li (Chairman and CEO)

Yeah. I, I think if you take the... I'm gonna annoy some people, the multi-decade approach, the answer has to be yes. Like, you're gonna have to do air, land, sea. In the short term, I'm pretty pessimistic about that. I'm gonna spit out a bunch of issues, and there are folks working on this, so don't, don't think that they're not working on it. Until these following issues are addressed, it's unlikely that we'll have, you know, that kind of approach. One, drones, you know, have a flight time problem. Most of our clients want 24/7. Depending on how much you want to pay, you're gonna pay, you know, it can stay up in the air 5 minutes or 50 minutes, but, you know, that's a problem.

Autonomous recharging, consistently with a low cost profile, folks have worked on, still needs some work. Data transfer issues can be problematic. You know, a lot of our devices are stationary and still have telecom issues. You know, how many times are you on the phone like: "Can you hear me now? Can you hear me now?" Imagine running a robot 24/7, needing access to consistent telecommunications. Sensor payload is a problem. Like, maybe you can put a camera at best. There's not enough energy on the device to be able to handle anything more than that. Then you want to make it worse, you want to do some AI or edge on compute at the edge. Again, you don't have enough juice to, to keep the thing up in the air.

You're not going to process much there. Then lastly, in most cases, it's illegal to fly. Other than that, it's all good to go. I think once all those get addressed, it is likely a drone would fly out of one of our machines when needed, as opposed to... To me, I might be wrong here, but to me, it's not a product or a company. That, to me, is a feature.

Murray Wiggins (Retail Investor/Caller)

Yes, that's what I was thinking, is not, say, flying full time, but getting scrambled if there's, an indication from the ground robot saying, "Okay-

Bill Li (Chairman and CEO)

I need aerial reconnaissance right now.

Murray Wiggins (Retail Investor/Caller)

Yeah, exactly. Okay. Thank you for the insights. I appreciate it.

Bill Li (Chairman and CEO)

Of course.

Murray Wiggins (Retail Investor/Caller)

Continued success.

Bill Li (Chairman and CEO)

Thank you, sir.

Brian is back for seconds.

Speaker 6

Hey, Bill, I, I, I just thought of a couple things. Let's go. In the presentation, you, you talked about having a, backlog of orders, which is actually a positive thing since basically unearned in-income. Are you, are you guys kind of, you know, cutting through that as supply chain issues ease up? Basically, that, that's all be booked revenue once they're deployed. Where, where are you at on, on the, backlog?

Bill Li (Chairman and CEO)

Yeah. 2 or 3 points. 1, yes, we're making progress on the backlog of getting stuff out. Some of the supply, not all. Some of the supply chain stuff has gotten a little bit better, but the sales team keeps putting more in. We're like the, what is it, the Lucille Ball.

Speaker 6

Chocolates.

Bill Li (Chairman and CEO)

the chocolates or whatever? Like, it doesn't stop. It just keeps coming. In theory, right, one...... unless we do the following, you know, the backlog could end up increasing, right? If you want the revenue to keep growing, you know, over time, having, having a significant backlog could be great. I think one strategic move we'd like to do, and why the balance sheet is important is I really would love to-- I hate inventory for lots of reasons. There's quality issues, accounting issues, whatever. In this particular case, it would be so much better to have the financial wherewithal to build 1 month ahead, 2 months ahead, because then we would have the ability to recognize revenue that much faster, right? Why have a client waiting, you know, months for their machine?

you know, I spoke during the annual shareholder meeting, about, you know, the, the negative impacts of not raising enough capital during the, the public listing, and that was one thing that, that took a hit, which is, you know, we're, we're having this backlog situation. Which in a lot of ways is, you know, a great thing. Like, there's... Anyone have a question about demand for what we're doing, like, we got $ millions of orders waiting. but from a, you know, cash, you know, from a term standpoint, from a Rev rec standpoint, it would be, I wanna get us to, eventually, an ability to get an order shipped, you know, in a 2 weeks instead of a 2 months.

Speaker 6

Let me just follow up. You know, as kids have gone back to school, are going back to school and will be going back to school, you know, K through 12, colleges and universities, I can't think of a parent that wouldn't, wouldn't, would not want to protect their children at, at, at all costs when they're at one of these institutions. How do we get more installs in schools and higher education?

Overall, what are some of the barriers to entry? Because you're, you're not selling a $100,000, $200,000 machine. It's a, it's really a service. How do we get more schools, installs, and what are some of the barriers in getting the product deployed?

Bill Li (Chairman and CEO)

This is definitely a hot button for me. Similar to the Department of Justice and Homeland Security, of knowing federal jurisdiction over the law enforcement agencies and the security companies, the Department of Education, you know, they all have actually, obviously some relationship and, and what have you. As a country, I, I don't think anyone on this call would ever dare raise their hand and say, "Yes, we pay our teachers properly, and every school has all the supplies that they need." Like, it, it breaks my heart to see, like, fundraisers, like, we need to go buy books. I mean, are you freaking kidding me? Right? You can't pay the teachers properly. Some of the schools are falling apart. You don't have enough supplies, but you should buy, like, this six-figure or seven-figure, you know, security solution. Like, it...

The, the system is kind of broken. We can sit here as Knightscope and whine about the situation and complain and go lobby Congress and the Department of Education. Maybe we take it into our own hands and see if we can show some leadership and, and drive the tens of thousands of supporters that we have to go make a big difference. To answer your question, Brian, to me, my personal view, the fundamental problem is cash. How, you know, how, if a school can't meet their budget, are you gonna show up there and go, "Yeah, we should put, like, 10 K1 towers and, you know, three K5s in the parking lot, and every floor should have a K3, and there should be a Hemisphere at every single entrance?" Like, where are they gonna get the money to go do that?

I've given the team an assignment. I have a particular view on how to fix the problem, and if I can get the, the lawyers and accountants to, to play ball, we'll. If I get my way, we'll make an announcement and see if, you know, what we think could work to help the situation does work. To answer your specific question, it, it's a money problem.

Speaker 6

Well, just keep plugging away. Thank you, Bill.

Bill Li (Chairman and CEO)

Of course. All right, we're at the 95 minute mark. I'll keep going if you want to keep going. Anyone else have any other questions? I'm scared to look at the chat. Stacy, let me know if I need to answer something from there.

Stacy Dean Stephens (EVP and Chief Client Officer)

We're good to go.

Bill Li (Chairman and CEO)

We're good to go. You handled all of them?

Stacy Dean Stephens (EVP and Chief Client Officer)

Well, I told them to raise their hand or where I could, I answered questions.

Bill Li (Chairman and CEO)

Okay. Okay. Oh, FJ's back for seconds.

Speaker 6

Yeah. Yeah, I am. I actually have room for more questions, so here I am. you mentioned about,

Bill Li (Chairman and CEO)

Where are you from?

Speaker 6

Well, I'm here in Houston, Texas. Yeah, but originally, I'm from Brazil. Yeah.

Bill Li (Chairman and CEO)

Aonde?

Speaker 6

Oh, you speak, you speak Portuguese. São Paulo.

Bill Li (Chairman and CEO)

São Paulo, Paulista.

Speaker 6

Yeah. Yeah, yeah.

Bill Li (Chairman and CEO)

Tudo bem.

Speaker 6

Last 10 years. I mean, I love the country. Okay? Fortunate that I have it here. Also, I have a newborn coming next week. You know, I mean, the mission, the company mission is very tight to my heart. I mean, I have a bunch of money. I'm, I don't have $7 million stock with you, but I would say I'm almost-... closely to $500,000, right? I stock. It's a, I mean, I truly believe, and I want to support. My point here, you mentioned about, I mean, maybe what the issue is really the money, right? The cash. I mean, you are in Silicon Valley, which is, I mean, California is U.S. really rich state. There is a lot of tech, big companies.

What about partnership with with maybe philanthropist companies that is-- I'm talking about more in the education what Brian mentioned, right? I mean, get the, the kids safe. Is some, some kind of association that could be maybe funding the products that Knightscope, Knightscope can do? Is there any kind of a partnership going on that maybe you guys are trying with people in Silicon Valley, other companies, or even tax, relief, relief for, for other companies? Anything that you can share about this?

Bill Li (Chairman and CEO)

Not just yet, but if what I have in mind works, then maybe, what you're considering or suggesting, what I get set up could facilitate that.

Speaker 6

Yeah. Yeah.

Bill Li (Chairman and CEO)

Nothing I, nothing we can announce yet until the study's done, and we actually do a test or two. You know, I, I, I think it's incumbent upon us to not just show technological leadership. If you're, again, serious about the mission, you're gonna have to do sometimes the irrational, illogical, dumb-looking or stupid things to do...

Speaker 6

Yeah.

Bill Li (Chairman and CEO)

just to force the outcome that you want. You know, that's the difference between the Knightscope team and, and everyone else. Like, we're serious about this. We've put 10 years of our life into this. Like, if you wanna doubt our intentions, like, it's not a good place to go. So it may not work, or I might not be able to get it through the lawyers and the accountants, and, you know, we'll figure it out. I hope that what we have planned works, and then if it does, we're gonna need everybody on this call, and all our supporters to help us scale it and make it work. We'll, we'll do a... I'll promise you this. How about this?

If I get it through the regulatory, legal, financial process, and have a plan, we'll do a specific town hall on just that subject.

Speaker 6

Will be very appreciated, too. Yeah, I'll looking forward for that. Anything, of course, I can help, I put myself on the way to support the mission as well. God bless, man.

Bill Li (Chairman and CEO)

Thank you. Kevin Hines. Go ahead, Kevin.

Kevin Hines (Retail Investor/Caller)

Can you hear me?

Bill Li (Chairman and CEO)

Oh, there you are. Go for it.

Kevin Hines (Retail Investor/Caller)

Okay. Sorry. Hey, guys. How are y'all doing? I saw somebody ask the question, and I remember hearing this mentioned or read it mentioned somewhere about a potential investigation on short activity. I just wanted to pass that along or see if you could touch base on that, if that makes sense.

Bill Li (Chairman and CEO)

I, I give you the professional answer and then the personal one.

Kevin Hines (Retail Investor/Caller)

Okay.

Bill Li (Chairman and CEO)

Professional answer is, as we stated in the presentation earlier, we have filed a complaint with the United States Securities and Exchange Commission. We hope that the SEC takes action. We believe some party or parties have conducted themselves certainly unethically, possibly illegal, and if it is the person that we believe it is, they're in serious trouble. That's what an investigation is for, to kinda get to all the facts. We have tens of thousands of investors. I work for you, I need to protect you, and I'm not going to have on my watch that kind of nonsense going on. To delve to the personal side of things, I, today, it is legal to short a company.

It is illegal to naked short a company. If you're-

Kevin Hines (Retail Investor/Caller)

Yeah.

Bill Li (Chairman and CEO)

shorting, knock it off.

Kevin Hines (Retail Investor/Caller)

Naked shorting. I, That's part of what I was wondering, if that's what it was, just out of curiosity. I don't even know if there's a way that you can tell whether it's naked or not, but.

Bill Li (Chairman and CEO)

Yeah, that, that also is a problem with shorting in, in, in, in total. The personal problem I have, Kevin, is. Listen, I hope everyone takes us at face value, that we're trying really hard to fix a really difficult problem for all the communities across the country, for all Americans, red, white and blue, left, right, middle, upside down. It doesn't matter. You're, not you, but that person or parties or fund, or anyone out there shorting the stock, naked or not, for a company that's building products in America, for Americans, and is in the national security interest of the United States of America, you're literally placing a financial bet against the company. Like, you need to make better life choices. Like, is that really what you should be doing, to help the effort? That, to me, is...

I, I, I'm gonna censor myself because if I, I go off on a tangent here, it will be not good. You know, that, that to me is not appropriate. Is it legal to short a company? Sure. I don't necessarily agree that's a great thing to do. Like, if you don't like the price of something at Target, do you just not buy it and walk out the door, or do you try to burn the place down? I mean, this is, like, ridiculous type of financial instrument, but okay, fine, it's, it's legal today. To make it short, and you don't, you, you don't have the shares borrowed properly, and then you go do this kind of nonsense, like you're gonna get, you're gonna get caught.

So we may or may not be successful in our investigation, but I owe every single one of you at least the decency to attempt to act, in, in your interest. If it's more than one party, you know, we'll, we'll continue at it, but I'm not gonna sit here and take a punch and not punch back.

Kevin Hines (Retail Investor/Caller)

Yeah, I, I, I appreciate you commenting on that. I know there's probably, you know, not a whole lot you can do. I agree. I think it's a pretty dirty and unethical way to make money. I know people have always, you know, you've always had bulls and bears and whatnot. Yeah, thanks for, thanks for addressing that.

Bill Li (Chairman and CEO)

Of course, of course.

Kevin Hines (Retail Investor/Caller)

That's, yeah, that's it for me.

Bill Li (Chairman and CEO)

Thank you, sir. Francis?

Speaker 6

Yeah, Bill, I am a sort of a professional investor. It's illegal to sell stock, stock you don't own. That's what naked shorting is. You can tell in the morning volume, when you get, like, somebody dumping, like, 15 million shares. I don't think there's that much out there in the float, you know, that isn't being held long term, like mine. Yeah, I now own 10 times the amount of shares I originally bought at Knightscope, and I haven't sold any yet. The last time I bought, I was buying at $0.38 a share, and I think I'm feeling pretty good about that buy. You know, it's called dollar cost averaging.

Bill Li (Chairman and CEO)

Oh, yeah.

Speaker 6

It goes down, buy more.

Bill Li (Chairman and CEO)

DCA, DCA all day long.

Speaker 6

Okay. Thank you.

Bill Li (Chairman and CEO)

Yes, sir. Spencer? Mute, mute button is your friend, or not your friend, actually.

Speaker 6

There, how's that?

Bill Li (Chairman and CEO)

That's much better. Thank you, Spencer.

Speaker 6

been with you guys a long time. Very excited about what you do. My question, is the complaint filed with the SEC publicly available? Can we look at it?

Bill Li (Chairman and CEO)

I'm gonna mute everybody, Spencer, and then if you can come off of mute. The complaint has been filed. It is not publicly available, and I don't believe counsel will let us share that.

Speaker 6

Okay.

Bill Li (Chairman and CEO)

It, it's a-

Speaker 6

Thank you.

Bill Li (Chairman and CEO)

To be fair, it is an. It sounds too official. It's an ongoing investigation.

Speaker 6

No, but a lot of court records are a public record, so I didn't know if the complaint with the SEC was a public record or it's as an ongoing investigation, it's not yet available.

Bill Li (Chairman and CEO)

Not at, let me qualify that statement. Not at this time.

Speaker 6

Right. Thank you.

Bill Li (Chairman and CEO)

Yes, sir. Murray Wiggins.

Murray Wiggins (Retail Investor/Caller)

Boy, second time today. Bill, my question is, maybe a little bit off the wall, but what can the shareholders do to help you and the team out? Kind of the reverse. I know there's an expectation of the shareholders for the company, but what can the shareholders do for you? I know there's a Scout Program, but what additional could be done to help you out?

Bill Li (Chairman and CEO)

One of the things, Murray, I'm going to share something personal with you, that drives me absolutely freaking crazy now, being the CEO of a publicly traded company for almost two years, is I'm sitting here having to censor myself of what I actually want to say with friends, families, investors, partners, clients. Like, this is so freaking annoying. I can't actually say what I want to say. I got to be careful how to answer your question. The two things that Knightscope, that we can do to improve the, the share price, I think are limited, primarily twofold. One, improve the financial performance of the company, whichever way we get there. Organic growth, acquisitions, cost reduction, revenue, you know, balance sheet stuff. The more we improve and grow the company, the financial markets should, over time, recognize that.

That's kind of on, on us. The second thing that we can do that maybe we can share is continue to tell the story to anyone and everyone that will listen. I can't anymore go out and say whatever I want to say. I can say, you know, we're listed on Nasdaq, you know, feel free to take a look at the tickers, KSCP, and, you know, you can make your own decision. If you might wanna consider investing in the stock, and you and all tens of thousands of investors can do the same with, you know, your friends and family, and spread the word about the good that Knightscope's trying to do. People can go make their own decisions as what they want.

The reason I, I kind of go down that path is because as weird as it might sound to some of you who have been with us for a very long time, we think we spent, you know, millions of dollars, grown the company, with clients all over the country, and we think everybody knows who Knightscope is. I don't know how many investors I've met, I don't know how many public safety folks, law enforcement, security, are like: "What do you do? Never heard of you. Can you tell us what you do? Can you show me? Oh, cool prototype. When is it launching?" Right? Just trying to get the word out is probably the, the most important thing you can do. If you're on social media, on X, you know, repost, reshare, comment, share with your friends.

If we put out a cool video, send it around to your family. Like, we need to get the word out, is probably the most regulatory compliant thing I can tell you. Hopefully that attempts to satisfy your answer.

Murray Wiggins (Retail Investor/Caller)

Okay. Thank you, Bill.

Bill Li (Chairman and CEO)

Yes, sir. Was that Spencer's old hand or new hand up? I've lost track now.

Speaker 6

No, I'm off, Bill.

Bill Li (Chairman and CEO)

You're off.

Speaker 6

You answered my question. Thank you.

Bill Li (Chairman and CEO)

All right. Well, we're gonna lower your hand. There we go. All right. We're coming up on almost two hours. Anybody else got a question? Two hours and over 100 people still on. Okay. Going once, going twice. Ah, FJ! You wanna come off from mute?

Speaker 6

Oh, yeah. Here, here I am. With this, I say goodbye to you and everyone. Of course, thank you for your time, and it was really, I enjoyed your time here with you all.

Bill Li (Chairman and CEO)

All right.

Speaker 6

One thing that I captured from your statement was, oh, sometimes it's good to talk with the human to human, right? I mean, as long as I feel-

Bill Li (Chairman and CEO)

You don't want to talk to a robot?

Speaker 6

Yeah.

Bill Li (Chairman and CEO)

I'm, like, offended.

Speaker 6

As much as Man of Steel, so, man, with all the pressure, what do you do, I mean, with the family, I mean, to enjoy life? What are your, what are your free times, if you ever can call this name, looks like? I mean, your maybe 2 minutes, 3 minutes, that are kind of a, kind of a, how to say, motivation for us, that we are all fight some, some fights, in life. I mean, how you enjoy, your free time, if I can say this way?

Bill Li (Chairman and CEO)

I'll tell you what my wife says. She says I'm, I'm possessed. You know, I try to play a little guitar once in a while behind me, but, you know, if I'm watching a movie, I'm thinking it... I've got Knightscope glasses on, going, "Oh, that, that looks like an interesting font. Oh, that's an interesting piece of architecture. I wonder how we could use that. That's an interesting storyline. Oh, I wonder if we can use that for social media." Like, I'm not watching the movie. I'm-

Speaker 6

I understand.

Bill Li (Chairman and CEO)

I'm working. I, I love what, I love what Knightscope stands for. I love what we do. It's really freaking hard. I used to joke, and I still do, I guess, you know, when we started the company, I was seven feet tall, and now I'm four foot nine. This job is brutal. I get punched in the face kind of almost every hour on the hour. You know, the team's working hard, but if they can't solve a problem, like, the toughest decisions come to me, and sometimes, you know, you have to make tough decisions that are unpopular, and everyone's mad at you. That's the job. You know, part, you know, it's two hours of my day that I spent with all of you, and part of this is fuel for me.

To have the support, to, to understand what you guys see and what I don't see, and that sort of thing, is important, and we can't do this by ourselves. A lot of bankers and a lot of investors are like: "Bill, you're out of your mind. How are you dealing with all these people?" I'm like: "Do you have any idea who these people are?" You're like: "Oh, well, I don't, I don't see that, you know, XYZ huge institutional investor took a position." I'm like: "Yeah, but there are former NYPD detectives, FBI, CIA, DHS, investors of ours. There are judges that are investors of ours. There are mayors. There are, you know, executives, CEOs, large family offices." Like, there's a... You know, our team of investors are a bunch of hitters.

If you think that, like, we're gonna change the country with, like, 4 institutional investors sitting in some ivory tower, like, you're delusional. It's not gonna happen. It's gonna be because somebody on this call decides, like, "I'm gonna go bug the city council member. I'm gonna go bug the chief of police. I'm gonna go annoy the hospital administrator. I'm gonna go talk to the principal." Like, we can't do all this by ourselves, right? So what motivates me and keeps me going is you guys.

Speaker 6

Wow! Wow. What I can say concerning us, I'll do my due diligence. I hope my colleagues here, it's for the love of family, for the new ones, that we are leaving as a legacy. I mean, we, we are with you.

Bill Li (Chairman and CEO)

Thank you.

Speaker 6

Thanks, Bill, for sure. Heart by heart.

Bill Li (Chairman and CEO)

I appreciate it. Muito obrigado. Boa tarde. All right, everybody, I'm gonna, I'm gonna call it 'cause, my butt's asleep. Anyway.

Thanks, everyone, for the support. We'll get the video posted. Make sure to share with everyone, and thank you for sticking with us all this time. As I will always continue to say: Long Knightscope, short the criminals, and we'll see you on the other side. Thanks, everybody.

Speaker 6

Bye, everyone. Bye, bye.