How do I prevent my shares from being loaned for a short interest position?

Brokerage firms may facilitate short selling in KSCP shares by lending KSCP shareholders’ shares held in margin accounts.  Through this practice, brokerage firms earn an alternative source of revenue by “lending” shares to sophisticated and institutional investors who are betting that the price of the stock will fall.  If the price of the stock in fact falls, then the brokerage firm and the sophisticated and institutional investors will make a profit, while the ultimate retail investor will not.

For long-term shareholders who believe in Knightscope’s future, the Company is highlighting the following actions you can take with your brokerage firm to prevent the lending of your shares for short selling:

1. Hold your KSCP shares in a cash account at your brokerage firm instead of a margin account (a model instruction letter is set forth under the heading “Example Form of Letter to Broker” below).
2. Opt out of any securities lending programs, which should stop your broker from lending your shares.
3. Move your shares to a Direct Registration (“DRS”) account at the Company’s transfer agent, Computershare.

NOTE:  If shares are currently on loan by brokerage firms to facilitate short selling, shareholders have the option of asking their broker to recall their shares.
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Example Form of Letter to Broker

If you decide to instruct your broker not to make your shares available for lending to short sellers, the following is sample language you can use in your email or letter to the Branch Manager of your brokerage account:

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[Broker Name]
[Broker Address]

Attn: Branch Manager
My Account [Account Number]

Dear Sir or Madam:

Please accept this written instruction to make sure that the following securities are held in my cash account only and accordingly are not available for any stock loan activities. I hereby expressly opt out of any securities lending programs and instruct you not to loan out any of my shares.  Additionally, as applicable, please recall any shares that are currently on loan.

Securities:
[Number] shares of Knightscope, Inc. (KSCP) and any KSCP shares subsequently acquired.

Please confirm receipt and compliance with this request.

Sincerely,

[Signature]

[Full Name]‍

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Information Only
This blog entry is for informational purposes only. Neither Knightscope nor any of its directors or officers are making any recommendation or providing guidance regarding your equity holdings or the advisability of the steps listed herein. You are advised to consult your professional advisors before making the decision to undertake any of these steps.