SoundThinking (SSTI) 2020年年度報告「NASDAQ」.pdf

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1、ccUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON,DC 20549 FORM 10-K(Mark One)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31,2020ORTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 19

2、34FOR THE TRANSITION PERIOD FROM TOCommission File Number 001-38107 ShotSpotter,Inc.(Exact Name of Registrant as Specified in its Charter)Delaware47-0949915(State or other jurisdiction ofincorporation or organization)(I.R.S.EmployerIdentification No.)7979 Gateway Blvd.,Suite 210Newark,California9456

3、0(Address of principal executive offices)(Zip Code)Registrants telephone number,including area code:(510)794-3100 Securities registered pursuant to Section 12(b)of the Act:Title of each classTrading Symbol(s)Name of each exchange on which registeredCommon Stock,$0.005 par value per shareSSTINasdaq C

4、apital Market Securities registered pursuant to Section 12(g)of the Act:NoneIndicate by check mark if the Registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.YES NO Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or

5、15(d)of the Act.YES NO Indicate by check mark whether the Registrant:(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding 12 months(or for such shorter period thatthe Registrant was required to file such reports),and(2)has be

6、en subject to such filing requirements for the past 90 days.YES NO Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during the preceding12 months(or for such

7、shorter period that the Registrant was required to submit such files).YES NO Indicate by check mark whether the Registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,smaller reporting company,or an emerging growth company.See the definitions of“largeaccelerated filer,”

8、“accelerated filer,”“smaller reporting company,”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filer Accelerated filerNon-accelerated filer Smaller reporting company Emerging growth company If an emerging growth company,indicate by check mark if the Registrant has el

9、ected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant toSection 13(a)of the Exchange Act.Indicate by check mark whether the Registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).YES NO Indicate by

10、check mark whether the Registrant has filed a report on and attestation to its managements assessment of the effectiveness of its internal control over financial reporting under Section 404(b)of theSarbanes-Oxley Act(15 U.S.C.7262(b)by the registered independent public accounting firm that prepared

11、or issued its audit report The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant,based on a closing price of$25.20 per share of the Registrants common stock as reported on theNasdaq Capital Market on June 30,2020 was$201,482,820.The number of

12、shares of Registrants common stock outstanding as of March 23,2021 was 11,648,028.Portions of the Registrants Definitive Proxy Statement relating to the Annual Meeting of Stockholders,scheduled to be held on June 16,2021,are incorporated by reference into Part III of this Report.Such ProxyStatement

13、will be filed with the Securities and Exchange Commission no later than 120 days following the end of the Registrants fiscal year ended December 31,2020.Table of Contents Page Special Note Regarding Forward-Looking Statements 1 Risk Factor Summary 2PART I Item 1.Business 4Item 1A.Risk Factors 23Item

14、 1B.Unresolved Staff Comments 51Item 2.Properties 51Item 3.Legal Proceedings 51Item 4.Mine Safety Disclosures 52PART II Item 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of Equity Securities 53Item 6.Selected Consolidated Financial and Other Data 54Item 7.M

15、anagements Discussion and Analysis of Financial Condition and Results of Operations 55Item 7A.Qualitative and Quantitative Disclosures About Market Risk 71Item 8.Financial Statements and Supplementary Data 72Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

16、104Item 9A.Controls and Procedures 104Item 9B.Other Information 104PART III Item 10.Directors,Executive Officers,and Corporate Governance 105Item 11.Executive Compensation 105Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 105Item 13.Certain Rel

17、ationships and Related Transactions,and Directors Independence 105Item 14.Principal Accountant Fees and Services 105PART IV Item 15.Exhibits and Financial Statement Schedules 106Item 16.Form 10-K Summary 106 Exhibit Index 107 Signatures 110 SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTSThis Annua

18、l Report on Form 10-K contains forward-looking statements that involve substantial risks and uncertainties.The forward-looking statements are containedprincipally in the sections of this Annual Report on Form 10-K entitled“Risk Factors,”“Managements Discussion and Analysis of Financial Condition and

19、 Results ofOperations”and“Business,”but are also contained elsewhere in this Annual Report on Form 10-K.Often,you can identify forward-looking statements by the words“anticipate,”“believe,”“continue,”“could,”“estimate,”“expect,”“intend,”“may,”“might,”“objective,”“ongoing,”“plan,”“predict,”“project,”

20、“potential,”“should,”“will,”or“would,”or the negative of these terms,or other comparable terminology intended to identify statements about the future.Forward-looking statements include statementsabout:our ability to continue to increase revenues,secure customer renewals and expand coverage areas of

21、existing public safety customers;our ability to continue to add new customers for our public safety and security solutions;our ability to grow both domestically and internationally;our ability to effectively manage or sustain our growth;our ability to maintain,increase or strengthen awareness of our

22、 solutions;our ability to achieve and maintain service level agreement standards in our customer contracts;future revenues,hiring plans,expenses,capital expenditures,capital requirements and stock performance;our ability to service outstanding debt,if any,and satisfy covenants associated with outsta

23、nding debt facilities;our ability to attract and retain qualified employees and key personnel and further expand our overall headcount;our ability to comply with new or modified laws and regulations that currently apply or become applicable to our business both in the United States andinternationall

24、y;and our ability to maintain,protect and enhance our intellectual property.We caution you that the foregoing list may not contain all of the forward-looking statements made in this Annual Report on Form 10-K.These forward-looking statements involve known and unknown risks,uncertainties and other fa

25、ctors that may cause our actual results,levels of activity,performanceor achievements to be materially different from the information expressed or implied by these forward-looking statements.Although we believe that we have a reasonable basisfor each forward-looking statement contained in this Annua

26、l Report on Form 10-K,we caution you that these statements are based on a combination of facts and factorscurrently known by us and our expectations of the future,about which we cannot be certain.You should refer to the“Risk Factors”section of this Annual Report on Form 10-Kfor a discussion of impor

27、tant factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements.As a result ofthese factors,we cannot assure you that the forward-looking statements in this Annual Report on Form 10-K will prove to be accurate.We undertake no obli

28、gation to publiclyupdate any forward-looking statements,whether as a result of new information,future events or otherwise,except as required by law.You should read this Annual Report onForm 10-K and the documents that we reference in this Annual Report on Form 10-K completely and with the understand

29、ing that our actual future results may be materiallydifferent from what we expect.We qualify all of our forward-looking statements by these cautionary statements.1SUMMARY OF RISK FACTORS Investing in our common stock involves risks,including those discussed in the section titled“Risk Factors.”These

30、risks include,among others:The COVID-19pandemic has resulted in a material adverse effect on our business,the future magnitude or duration of which we cannot predict with accuracy.If our business does not grow as we expect,or if we fail to manage our growth effectively,our operating results and busi

31、ness prospects would suffer.Our quarterly results of operations may fluctuate significantly due to a wide range of factors,which makes our future results difficult to predict.Because we generally recognize our subscription revenues ratably over the term of our contract with a customer,fluctuations i

32、n sales will not be fully reflected inour operating results until future periods.We have not been profitable historically and may not achieve or maintain profitability in the future.We may require additional capital to fund our business and support our growth,and our inability to generate and obtain

33、 such capital on acceptable terms,or atall,could harm our business,operating results,financial condition and prospects.Interruptions or delays in service from our third-party providers could impair our ability to make our solutions available to our customers,resulting in customerdissatisfaction,dama

34、ge to our reputation,loss of customers,limited growth and reduction in revenues.If we are unable to sell our solutions into new markets,our revenues may not grow.Ongoing social unrest may result in a material adverse effect on our business,the future magnitude or duration of which we cannot predict

35、with accuracy.Our success depends on maintaining and increasing our sales,which depends on factors we cannot control,including the availability of funding to our customers.Contracting with government entities can be complex,expensive,and time-consuming.If we are unable to further penetrate the publi

36、c safety market,our revenues may not grow.Our sales cycle can be lengthy,time-consuming and costly,and our inability to successfully complete sales could harm our business.Changes in the availability of federal funding to support local law enforcement efforts could impact our business.The failure of

37、 our solutions to meet our customers expectations could harm our reputation,which may have a material adverse effect on our business,operatingresults and financial condition.Real or perceived false positive gunshot alerts or failure or perceived failure to generate alerts for actual gunfire could ad

38、versely affect our customers and theiroperations,damage our brand and reputation and adversely affect our growth prospects and results of operations.Economic uncertainties or downturns,or political changes,could limit the availability of funds available to our customers and potential customers,which

39、 couldmaterially adversely affect our business.2 The nature of our business exposes us to inherent liability risks.As a result of our use of outdoor acoustic sensors,we are subject to governmental regulation and other legal obligations,particularly related to privacy,dataprotection and information s

40、ecurity,and our actual or perceived failure to comply with such obligations could harm our business.Compliance with such lawscould impair our efforts to maintain and expand our customer base,and thereby decrease our revenues.Failure to protect our intellectual property rights could adversely affect

41、our business.3PART I.Item 1.BUSINESSOverviewWe provide precision-policing and security solutions for law enforcement and security personnel to help prevent and reduce gun violence and make cities,campusesand facilities safer.Our flagship public safety solution,ShotSpotter Respond(formerly ShotSpotte

42、r Flex),is the leading outdoor gunshot detection,location and alerting system.Our gunshot detection solutions are trusted by law enforcement agencies in over 110 cities as of December 31,2020.Our patrol management software,ShotSpotter Connect(formerly ShotSpotter Missions),uses artificial intelligen

43、ce-driven analysis to help strategically plan directed patrols and have consistent use of tactics to deter a broad set ofcrime types.Our security solutions,ShotSpotter SecureCampus,and ShotSpotter SiteSecure,are designed to help law enforcement and security personnel serving universities,corporate c

44、ampuses,big-box retail,malls and key infrastructure or transportation centers mitigate risk and enhance security by notifying authorities of a potential outdoorgunfire incident,saving critical minutes for first responders to arrive.ShotSpotter CrimeCenter(which will be renamed ShotSpotter Investigat

45、e),adds case management to ourexpanding suite of precision policing technology solutions and provides agencies with a cloud-based investigative digital case folder and analytical and collaboration tools toimprove case closure rates.In 2019,we created a new technology innovation unit,ShotSpotter Labs

46、,to expand our efforts supporting innovative uses of our technology to helpprotect wildlife and the environment.We generate annual subscription revenues from the deployment of ShotSpotter Respond on a per-square-mile basis.Our security solutions,ShotSpotter SecureCampusand ShotSpotter SiteSecure,are

47、 typically sold on a subscription basis,each with a customized deployment plan.Our ShotSpotter Connect solution is also sold on a subscriptionbasis.As of December 31,2020,we had ShotSpotter Respond,ShotSpotter SecureCampus and ShotSpotter SiteSecure coverage areas under contract for over 810 square

48、miles,of which 779 square miles had gone live.Coverage areas under contract included over 110 cities and 12 campuses/sites across the United States,South Africa and the Bahamas,including three of the ten largest cities in the United States.Most of our revenues are attributable to customers based in

49、the United States.Since our founding 25 years ago,ShotSpotter has been and continues to be a purpose-led company.We are a mission-driven organization that is focused on improvingpublic safety outcomes.We accomplish this by earning the trust of law enforcement and providing them solutions to help the

50、m better engage and strengthen the police-community relationships in fulfilling their sworn obligation equally to serve and protect all.Our inspiration comes from our principal founder,Dr.Bob Showen,who believesthat the highest and best use of technology is to promote social good.We are committed to

51、 developing comprehensive,respectful and engaged partnerships with lawenforcement agencies,elected officials and communities focused on making a positive difference in the world.Industry Background:The Public Safety GapLocal police departments are challenged to serve and protect in an increasingly t

52、ransparent fashion without unintentionally over-policing and under serving theircommunities.This mandate must be met while facing municipal budget pressures and community activist calls to defund the police while violent crime is on a measurableuptick and case closure rates are at all-time lows.Ther

53、e are three distinct problems associated with the public safety gap,which are discussed below.The Violent Crime ProblemThe majority of urban gunfire goes unreported.A 2016 report published by The Brookings Institute analyzing data collected from ShotSpotter Respond and ourcustomers suggests that app

54、roximately 80%of the gunshots detected by our public safety solution are not reported to 911 by residents.Even in the instances when 911 calls aremade,the information reported by the caller is often incomplete or inaccurate as to the time and location of the gunshot.Furthermore,in many cases it is o

55、ften difficult for thecaller to authenticate the incident as gunfire.In addition,we believe that in communities plagued by gun violence,there is often a lack of trust between the communitysresidents and its police force,which can exacerbate the underreporting of gunfire and create a vicious cycle of

56、 underreporting,lack of response and increased mistrust due tocontinued unaddressed gun violence in the4community.When gunfire is not reported or is reported inaccurately,law enforcement and medical personnel cannot address injuries nor effectively investigate and solverelated crimes or prevent futu

57、re incidents.The communities in which gun violence occurs suffer significant economic loss.A 2016 report by the Urban Institute,which studied the effect of gun violence inMinneapolis,Minnesota,Oakland,California and Washington,D.C.,noted that the perceived risk of gun violence imposed heavy social,p

58、sychological and monetary damagesin communities,including fewer jobs and lower economic vitality.The study concluded:In Minneapolis,one fewer gun homicide in a given year was statistically associated with the creation of 80 jobs and an additional$9.4 million in sales acrossall business establishment

59、s in the next year.In Oakland,every additional gun homicide in a given year was statistically associated with five fewer job opportunities in contracting businesses in the nextyear.In Washington,D.C.,every additional gun homicide in a given year was statistically associated with two fewer retail and

60、 service establishments the next year.In addition,several studies have suggested that property values are inversely correlated with violent crime.For example,the Center for American Progress conducted astudy of changes in homicide incidents and housing prices in Boston,Seattle,Chicago,Philadelphia,a

61、nd Milwaukee,and found that a reduction in a given year of one homicidein a ZIP code caused a 1.5%increase in housing values in that same ZIP code the following year.Gut-based Patrolling ProblemAgencies face a resource deficit and need more efficient ways to patrol and prevent crime.Most departments

62、 use old patrolling methods that are non data-driven,havelimited visibility to officer activity and no controls to reduce over-policing.We believe the category is ripe for AI-based automation for more efficient and effective patrollingdone in a way that better engages the community and reduces crime

63、.Low Case Closure/Victim Resolution ProblemAccording to a report published by Statista Research Group in 2019,homicide clearance rates in the United States averaged 61%in 2019.Too many suspects do notface the consequences and are free to commit additional crimes while victims and their families suff

64、er without closure.Police use a mix of manual,homegrown and limitedfunction RMS modules for case management.To solve cases,detectives must access multiple,siloed sources of data with limited automation tools for analytical support orcollaboration.We believe investigative case management can signific

65、antly benefit from greater automation to improve clearance rates and solves cases faster.5Our VisionWe see a world where data is converted into actionable intelligence thereby enabling police departments to implement modern 21st century policing practices.Thesepractices can help police be more effic

66、ient directing law enforcement interventions toward the few that commit crimes and more effective in building community trust andengagement while co-producing public safety outcomes.We believe the ShotSpotter Precision Policing Suite of Solutions in can be a valuable set of tools in implementing 21s

67、tcentury policing practices.Two of our components ShotSpotter Respond and ShotSpotter Connect are marketed currently and the third,ShotSpotter Investigate is expected tobe ready to bring to market near the end of 2021.ShotSpotter RespondShotSpotter Respond,our acoustic gunshot detection technology t

68、hat is offer a public safety solution,serves cities and municipalities seeking to identify,locate anddeter persistent,localized gun violence by incorporating a real-time gunshot detection system into their policing systems.ShotSpotter Respond is used by local policedepartments and a version of ShotS

69、potter Respond,branded as SiteSecure and Secure Campus is used by security personnel it the protection of critical assets college,universityand commercial campuses.Our gunshot detection solutions consist of highly-specialized,cloud-based software integrated with proprietary,internet-enabled sensors

70、designed to detect outdoorgunfire.The speed and accuracy of our gunfire alerts enable law enforcement and security personnel to consistently and quickly respond to shooting events including thoseunreported through 911,which can increase the chances of apprehending the shooter,providing timely aid to

71、 victims,and identifying witnesses before they scatter,as well asaid in evidentiary collection and serve as an overall deterrent.When a potential gunfire incident is detected by our sensors,our system precisely locates where the incidentoccurred and applies machine classification combined with human

72、 review to analyze and validate the incident.An alert containing a location on a map and critical informationabout the incident is sent directly to subscribing law enforcement or security personnel through any internet-connected computer and to iPhone or Android mobile devices.Our software sends val

73、idated gunfire data along with the audio of the triggering sound to our Incident Review Center(“IRC”),where our trained incident reviewspecialists are on duty 24 hours a day,seven days a week,365 days a year to screen and confirm actual gunfire incidents.Our trained incident review specialists can s

74、upplementalerts with additional tactical information,such as the potential presence of multiple shooters or the use of high-capacity weapons.Gunshot incidents reviewed by our IRCresult in alerts typically sent within approximately 45 seconds of the report of the gunfire incident.6Specialized Gunshot

75、 Detection SoftwareThe heart of our gunshot detection solutions is our sophisticated and specialized software.Our software analyzes audio signals for potential gunshots detected by ourintelligent sensors.Our sensor filters out ambient background noise,such as traffic or wind,and looks for impulsive

76、sounds characteristic of gunfire.If the sensor detects suchan impulse,it extracts pulse features of the soundwave,such as sharpness,strength,duration,rise time and decay time.Then,the sensor sends these features to our cloud serversas part of a data packet that includes the location coordinates of t

77、he reporting sensor and the precise time of arrival and angle of arrival of the sound.When the data reaches our cloud servers,our software assesses whether three or more of our outdoor sensors detected the same sound impulse and,if so,finds thelocation coordinates of the sound source based on the ti

78、me of arrival and the angle of arrival of the sound using the technique of multilateration.The accuracy of the coordinatesderived from our proprietary software is significantly improved when more than three sensors participate,as is typically the case.We deploy our sensor arrays such that,onaverage,

79、six to eight sensors participate in the detection of a gunshot.After the software determines the location of the sound source,our machine classifier algorithms analyze the pulse features to determine if the sound is likely to begunfire.Our algorithms consider pulse features,the distance from the sou

80、nd source,pattern matching and other heuristic methods to evaluate and classify the sound.Themachine classifier algorithm is periodically trained and validated against our large database of known gunfire and other community sounds that are impulsive in nature.Wecontinue to add new data to our machin

81、e learning database from the incidents reviewed by our incident review specialists in our IRC process.Classification continuouslyimproves as the machine classifiers are re-trained using the expanded data set.Once an incident is classified as likely gunfire,it is sent to the incident review specialis

82、ts in our IRCfor additional analysis and confirmation.Along with confirmingan incident is gunfire,our incident review specialists also annotate the alerts with additional information that may be helpful to first responders,such as whether there aremultiple shooters or if a high-capacity or fully aut

83、omatic weapon is being used.Incident notifications are sent when the incident is confirmed as gunfire by one of our incidentreview specialists.Alerts are delivered using push notifications to our mobile,desktop or browser applications,email,or SMS text messages.The time from a report of anoutdoor tr

84、igger-pull to a notification being sent to our customers is typically 45seconds or less.7Intelligent and Ruggedized Sensors Our rugged gunshot detection sensor is an intelligent,internet-enabled device that is specially built to ignore ambient noise and respond to impulsive sounds,accuratelytime-sta

85、mping their arrival times.Advanced digital signal processing algorithms filter out background sounds such as traffic,and extract pulse features from the audio signalthat,along with the time and angle of arrival of the sound,are sent to our servers where algorithms compute the location of the sound s

86、ource.The sensors do not have the ability to live stream audio.Sounds captured by the secure sensors are cached and permanently deleted within 30 hours.When a sensor istriggered by an impulsive sound,the“incident”that is created includes a recording including no more than one second before the incid

87、ent and one second after theincident.This audio snippet is preserved indefinitely for potential evidentiary use.Our sensors are designed and tested against international standards for installation in unprotected outdoor environments.Special consideration is given to minimize thesound of wind,rain an

88、d hail,which could otherwise limit the range of detection and produce false results.Environmental condition tests performed on the sensors includetemperature cycling,temperature soak,shock,vibration,salt fog and moisture ingress protection.We typically design and deploy arrays of 20 to 25 sensors pe

89、r square mile taking into consideration the unique acoustic environment in which we are deploying.Thecumulative experience of deploying in various cities with different acoustic properties has provided a distinct advantage in tailoring our sensor arrays to perform at high levels.We have full telemet

90、ry to each sensor that provides detailed data to our system to monitor each sensors health and availability.Sensor firmware is maintained with over-the-airupdates.Because we design our networks with a certain amount of redundancy to ensure durability,our sensor arrays,multiple sensors can be offline

91、 at any given time withoutaffecting the overall performance of the system.Incident Review Center-Classification Our IRC operates 24hours a day,seven days a week,365days a year.When a loud impulsive sound triggers enough of our outdoor sensors that an incident is detectedand located,audio from the in

92、cident is sent to our IRC via secure,high-speed network connections for real-time confirmation.Within seconds of an incident,one of our incidentreview specialists analyzes audio data and recordings of the potential gunfire.When gunfire is confirmed,our IRC team sends an alert directly to emergency d

93、ispatch centersand field personnel through any computer or mobile device with access to the Internet.This process typically takes less than 45 seconds from the report of the gunfire incident.Alerts include:the precise location of gunfire,including both latitude/longitude and nearest street address;t

94、he number and exact time of shots fired;if detectable,the involvement of multiple shooters;and if detectable,the use of fully automatic or high-capacity weapons.Our IRC operates primarily out of our principal facilities in Newark,California and Washington,DC and receives audio from incidents detecte

95、d by our outdoorsensors regardless of where such incidents occur.Although our IRC normally operates from our offices,our trained personnel can perform IRC functions from any location thathas a high-speed internet connection.In response to the 2020 COVID-19 pandemic,IRC personnel have performed their

96、 job function entirely from home.8Gunshot Detection Alerts Our alerts are delivered in the following forms:Real-Time AlertsOur IRC sends real-time notifications of outdoor gunfire incidents to the ShotSpotter Dispatch application,which is specifically designed for emergencycommunications centers,dis

97、patch centers,and other public safety answering points.The ShotSpotter Respond alert received by the ShotSpotter Dispatch application includes a unique identification number(Respond ID number),a precise time and dateof the gunfire(trigger time),nearest street address of the gunfire,number of shots a

98、nd police district and beat identification.One of our incident review specialists may addother contextual information related to the incident such as the possibility of multiple shooters,high-capacity or fully automatic weapons.The 911 dispatcher may add their own notes relating to the incident in w

99、hich case the notes are time-and date-stamped and indicate the operators identification.Acomprehensive audit trail of all changes to the incident is maintained that includes the time the alert was received and acknowledged by the dispatcher.These data may be usedto measure KPIs by dispatch personnel

100、.ShotSpotter RespondWe also offer a robust Respond application for use by patrol officers and security personnel that is available on iPhone or Android mobile devices and computersinstalled in patrol vehicles.This application allows field personnel to directly receive alerts of outdoor gunshots and

101、related critical information.The alert includes a uniqueidentification number(Respond ID number),a precise time and date of the gunfire(trigger time),nearest street address to the location of the gunfire,number of shots and policedistrict and beat identification.One of our incident review specialist

102、s may add other contextual information related to the incident such as the possibility of multiple shooters,high-capacity or fully automatic weapons.In addition,the dispatcher may add their own notes.The alert also includes an audio snippet of the incident.Mobile Device Support-Apple iOS and Android

103、-phones/tablets and watches 9Related Applications and ServicesShotSpotter InsightAll historical incident data in our database can be viewed,searched,sorted,and filtered using our ShotSpotter Insight application newly developed and introduced tocustomers during 2020.The Insight application can create

104、 an investigative lead summary report that focuses the specifics of a single incident or a multiple incident report thatlists groups of incidents.Complex filters may be defined using multiple search criteria and the filters named and saved for recurring use.Incident data may be exported for usein th

105、ird-party applications such as Excel,currently the tool of choice for police department crime analysts.Integration ServicesWe believe that integrating our solutions with other tools and technologies enhances the value of our solutions to our customers.For example,our solutions can beused in connecti

106、on with computer-aided dispatch systems,video surveillance cameras,National Integrated Ballistic Information Network(“NIBIN”),and automated licenseplate readers used by law enforcement to improve the effectiveness of police response and investigation efforts.We continue to evaluate new technologies

107、that may integratewith our solutions to generate additional value for our customers.Detailed Forensic Reports and Certified Expert Witness Services As part of our solution,we offer Detailed Forensic Reports(“DFRs”).These provide law enforcement personnel and prosecutors with comprehensive,court-admi

108、ssibleanalysis of a shooting incident,including the gunfire audio.We also offer expert witness testimony to introduce the forensic analysis of the DFRs at trial and to providetechnical expertise regarding our technology.Our forensic evidence has been admitted in over 100 criminal prosecutions throug

109、hout the United States.Our technology and theforensic results achieved from it have been found to be admissible in numerous states,adhering to either the Frye or Daubert expert testimony standard,including Minnesota,Nebraska,Pennsylvania,California,Missouri,New York,Colorado,Indiana,and New Jersey.1

110、0ShotSpotter Respond Results and Benefits Expedited Response to Gunfire.In 2020,we issued over 230,000 gunshot alerts to our customers.In areas where gun violence is persistent,we believe mostgunshots are not otherwise reported.Even when calls are made,many callers are unable to provide a location o

111、f the gunshot or other relevant details.Humanresponse time to unfolding violence often delays calls for several minutes in circumstances where response time can be critical.By contrast,our solutionstypically alert emergency dispatch centers and field personnel within 45 seconds of the report of the

112、gunfire incident and provide an exact location,enablingthem to respond faster and to a specific location.The ability to respond more quickly increases the chances of apprehending the shooter and assisting victimsof violence,in addition to aiding in evidence collection.Prevention and Deterrence of Gu

113、n Violence.We believe increasing the speed and accuracy of law enforcement responses to gunfire can act as a long-termdeterrent that can decrease the overall prevalence of gunfire.We also believe that knowledge of the existence of our solutions may have a deterrent effect onlocalized gun violence.Wh

114、en elected officials and law enforcement have an enhanced awareness of gun violence activity and patterns,they have tools tofacilitate a rapid and accurate response to gunfire incidents and improve relations between law enforcement and these communities,potentially increasingcrime reporting and comm

115、unity cooperation with investigations,which can result in improved public safety.Improved Community Relations and Collaboration.We believe that persistent gun violence limits the ability of police and other community leaders to servetheir constituents and improve their communities.Many cities strugg

116、le to establish and foster a cooperative and trusting relationship between their policedepartment and the communities they serve.Our public safety solution provides cities with the ability to react quickly to gun violence,thus providing theability to improve their responses and residents perception

117、of their responses.This provides our customers with the opportunity to foster improved communityrelations and collaboration with their residents.Improved Police Officer Safety.We believe that our solutions provide additional and valuable information regarding gunshot incidents as the alerts we provi

118、degive additional insight and situational awareness,including round count,potential multiple shooters and potential use of an automatic weapon,that allow theresponders to be better prepared to respond appropriately.The below graphic demonstrates positive impact results observed at a few of our custo

119、mers.1Omaha PD statistics from NE district where ShotSpotter is deployed(2011-2019)2Pittsburgh.org City Crime Rates Drop Again.January 30,20203NBC WITN.January 22,20204ShotSpotter found to reduce gun violence in 2020.Fox 4.February 26,202111ShotSpotter ConnectThe defund the police movement and assoc

120、iated social unrest issues have contributed to a decline in the perception of the policing profession.This has challengedagencies more than ever with maintaining a functional level of staffing due to early retirements and a more limited ability to recruit new officers.ShotSpotter Connect helpsaddres

121、s this new reality by helping agencies make their largest cost center patrol more efficient and effective in reducing crime and better engaging with the community.There are several formal methods by which police have traditionally directed their resources:Predictive Policing.A police strategy that u

122、ses historical data of crime events and/or offenders to predict where future crimes may occur.Hot Spot Analysis.Using clusters of past crimes to determine what areas police should patrol.“Gut-Based”Patrols.A scenario where officers rely on personal intuition and prior experience to decide which area

123、s to patrol to reduce crime occurrence.While well intended,these options are often cited as having flaws that do not take into account the potential harm to the community.The limitations of thesetraditional methods include:risk assessments being subject to enforcement bias,lack of controls to limit

124、over-policing,no guidance on tactics when officers arrive in patrolareas,limited reporting on officer activity,and limited ability to provide community transparency.The end result may leave citizens feeling over-policed and discriminatedagainst,and not actually maximize the crime deterrent effect.Sh

125、otSpotter Connect is a patrol management solution designed to put the community first,and the first to be built with civil liberty protections in mind to address theseissues.It uses information that is less susceptible to most current crime data sources that might introduce enforcement bias.ShotSpot

126、ter Connect also gives police a new,lower-touch approach to patrolling.ShotSpotter Connect allocates patrol resources in a more efficient manner to prevent crime while using a unique approach that is designed toreduce bias,reduce over-policing,focus on identifying and addressing community issues,and

127、 promote community engagement.ShotSpotter Connect-directed patrol areas and initiation of patrol sessions with tactics and timer ShotSpotter Connect uses AI-driven analysis to direct officers to patrol a location within their beat that is predictive to have the highest risk for crime during their sh

128、ift.A timer guides officers to patrol this area for a short period of time,often 15 minutes,to create a deterrent effect that can last for hours.ShotSpotter Connect collects time,place,and tactic data from all directed patrol sessions which can be analyzed to determine the impact on crime as well as

129、 provide a level of oversight that can be used to optimizefuture assignments,policies,and strategies.12The system combines carefully selected historical crime data that is less susceptible to enforcement bias ingested through agency computer-aided dispatch(“CAD”)and record management system(“RMS”)fe

130、eds along with objective temporal,location and event-based inputs including ShotSpotter data for cities that use our ShotSpotterRespond solution,to create crime risk assessments.The system ingests multiple years worth of agency data and is“trained”using machine learning to determine correlationsacro

131、ss variables.The models are then tested against recent crime data to calibrate forecast accuracy.We believe these light-touch,non-enforcement tactics help agencies interactwith the community in a more standardized,positive and respectful manner.Results and Benefits:Directed patrol planning to maximi

132、ze crime prevention Non-enforcement tactics guidance by crime type Reports on officer activity for impact and accountability Better community engagement.Impact of ShotSpotter Connect on CrimeSource:early version of ShotSpotter Connect in side-by-side test-Greensboro,NC 201513 ShotSpotter Investigate

133、We acquired the CrimeCenter investigative case management solution in November 2020.We are rebranding the interface and creating the ability to use gunfireincident data from ShotSpotter Respond to populate cases automatically and plan to launch the solution as ShotSpotter Investigate in the second h

134、alf of 2021.The average homicide clearance rate for last five years is 61%nationally.This means that in 39%of cases the suspect is not held accountable and is free to commitanother crime while victims families dont get closure.A low clearance rate is a self-perpetuating problem for a law enforcement

135、 agency.The problem starts when Detectivescant quickly close cases and clear up their case load,while they continue to catch new ones.Soon they are overloaded with cases and as they attempt to juggle a high caseloadthey get spread too thin and then leads start to slip through the cracks and the oppo

136、rtunity to solve the case diminishes.Longer term this can create a moral problem within theinvestigative arm of the agency and they are exposed to losing experienced detectives.This exacerbates the low clearance rates meaning victims are denied justice and themistrust of law enforcement increases.Th

137、e most common tools that departments use to manage,track and solve cases range from purely manual to homegrown to limited function RMS modules or a mix ofthese.These approaches lack robust collaboration features,have poor data security features and the inability for supervisors to track case progres

138、s.We believe there is anopportunity bring a complete digital case management solution to the market to help improve clearance rates of all crime types and accelerate solvability under the ShotSpotterbrand and sell to both our installed base and new customers.ShotSpotter Investigate provides a comple

139、te case management solution for detectives and supervisors in local,state and federal law enforcement agencies.It has beenused by the New York Police Department for years at scale by thousands of officers.The solution provides:Complete Digital Case Management.ShotSpotter Investigate addresses the ch

140、allenges investigators and supervisors face in conducting and documentinginvestigations.It enables police to have all case-related data in one place in a digital and structured format so that it is quickly searchable and able to be used todrive analysis and reporting.We believe law enforcement agenc

141、ies can use this tool to be more efficient and effective at solving crimes and close more casesto provide resolution for victims and keep offenders from committing additional crimes.Analytical and Collaboration Tools.The ability to have the system automatically show linkages between people,property,

142、and places can identifyconnections more quickly and help solve case faster.Collaboration tools make investigators aware when new relevant evidence is submitted for the same orunrelated cases,and able to more easily communicate on a case across a police department or other city agency such as the dis

143、trict attorneys office.14 Supervisor Reporting.Supervisor dashboards and reports ensure they have visibility into the status of every case and are aware of roadblocks so they knowwhen to get involved and can more easily provide updates to command staff.How ShotSpotter Investigate Works Our MarketsWe

144、 believe there is significant demand for advanced gunfire detection and location notification solutions that accurately and quickly report instances of gunfire,basedon two primary use cases:law enforcement for domestic and international law enforcement serving communities plagued by persistent,local

145、ized gun violence,in order to identify,locate and deter gun violence;and security for security personnel(which may include law enforcement personnel)serving universities,corporate campuses,key infrastructure,transportationcenters and other areas in which authorities desire to prepare for and mitigat

146、e risks related to an active-shooter event,and desire to provide a zone of detectioncoverage surrounding the respective campus or secured area.Based on data from the 2018 FBI Uniform Crime Report,we estimate that the domestic market for our public safety solution consists of the approximately 1,400

147、citiesthat had four or more homicides per 100,000 residents in 2015.The Uniform Crime Report includes information reported directly to the FBI on a voluntary basis by 18,000 city,university and college,county,state,tribal and federal law enforcement agencies.We believe that four or more homicides pe

148、r 100,000 residents represents a significant gunviolence problem.We estimate that a customer in this market could invest an average of approximately$400,000 per year for ShotSpotter Respond.In 2020,we also startedfocusing on smaller cities that may not be included in the 1,400 cities list and expect

149、s this could add another several hundred potential customers.These customers,beingsmaller cities,could invest on average of approximately$50,000 to$100,000 per year for ShotSpotter Respond.Outside of the United States,we estimate that the market for ShotSpotter Respond includes approximately 200 cit

150、ies in the European Union,Central America,theCaribbean,South America and southern Africa that have at least 500,000 residents.We estimate that a customer in this market could invest an average of approximately$1.0million per year for our public safety solution.We estimate the average investment amou

151、nts for prospective customers based on our experience with existing customers,ouranticipated demand for our solutions and the corresponding coverage areas that we expect prospective customers would elect to cover with our solutions.Based on data madeavailable by15the National Center for Education St

152、atistics and the Federal Aviation Administration,we believe that the domestic market for our security solutions includes approximately5,000 college campuses and airports.We estimate that,on average,a customer in this market could invest approximately$50,000-$75,000 per year for one of our securityso

153、lutions.In addition,we believe that there exists a broader market for our security solutions that include,primarily the outdoor areas of college campuses and airports outsideof the United States as well as large corporate campuses,train stations and other highly-trafficked areas worldwide.Starting i

154、n 2021,we expect to focus more on commercialopportunities,initially targeting certain major companies and their associated locations,such as their corporate offices and potentially even parking areas for major“big-box”retailers.Investments by customer in this market for our security solutions are st

155、ill being evaluated but could be similar or even greater than those made by our larger citycustomers.We believe there is demand for ShotSpotter Connect both within our existing ShotSpotter Respond customer base and within a broader set of police departments thatare not ShotSpotter customers today.We

156、 estimate that the market for our ShotSpotter Connect solution includes approximately 2,500 cities,based on cities that have apopulation above 25,000 people.We expect that,on average,a customer could invest approximately$50,000-$100,000 per year for our ShotSpotter Connect solution.Weexpect that Sho

157、tSpotter Connect may also be needed by thousands of potential international customers as well,who could invest over$100,000 per year for the solution.We also believe there is demand for a robust tool that would empower law enforcement agencies to solve more crime and close more cases.Every law enfor

158、cementagency has the duty and mandate to document and investigate alleged crimes in order to hold perpetrators accountable and provide resolution for victims.Unfortunately,theoptions to do this in a digitized and automated way are generally lacking.We believe ShotSpotter Investigate will offer the m

159、ost complete investigative case managementsolution on the market that has been proven to be effective with one of the leading law enforcement agencies in the country.We estimate the market for our solution consists ofover nearly 3,000 local,state and federal agencies in the United States and potenti

160、ally thousands internationally.We expect that,on average,United States customers couldinvest approximately$100,000 per year for our ShotSpotter Investigate solution and international customers could invest approximately$500,000 per year.Our Growth Strategy We intend to drive growth in our business b

161、y continuing to build on our position and brand as the leading provider of outdoor gunshot detection,location and alertingsolutions.We also plan to leverage our large and growing installed base of customers with high net promoter attributes that consider ShotSpotter a trusted partner,to growadoption

162、 of our newer products ShotSpotter Connect and ShotSpotter Investigate not only within the installed base,but outside of it.Key elements of our strategy include:Accelerate Our Acquisition of Public Safety Customers.We believe that we continue to be in the early stages of penetrating the markets for

163、our public safetysolutions.We serve law enforcement agencies in three of the ten largest U.S.cities as ShotSpotter Respond customers.Over the last few years we expanded ourdirect sales force and customer success teams and added marketing lead-generation capabilities to accelerate growth in this mark

164、et.Moreover,as we add newpublic safety customers,publicity and the number of potential references for our solutions increase,which results in our brand and our solutions becoming morewell known.We intend to capitalize on this momentum to grow sales.Expand ShotSpotter Respond Revenue within Our Exist

165、ing Customer Base.As customers realize the benefits of our solutions,we believe that we have asignificant opportunity to increase the lifetime value of our customer relationships by expanding coverage within their communities through a“land and expand”strategy.For example,of our ShotSpotter Respond

166、customers,approximately 36%have expanded their coverage areas from their original deployment areas byan average of ten square miles as of December 31,2020.Our overall revenue retention rate has been over 100%for each of 2020,2019 and 2018.Expand Our International Footprint.With only two currently de

167、ployed ShotSpotter Respond customers outside of the United States in South Africa and theBahamas,we believe that we have a significant opportunity to expand internationally.We estimate that the market outside the United States for our public safetysolutions includes approximately 200 cities in the E

168、uropean Union,Central America,the Caribbean,16 South America and southern Africa that have at least 500,000 residents.In addition,we believe that there is a market for our security,ShotSpotter Connect andShotSpotter Investigate outside the United States.We intend to increase our investment in our in

169、ternational product,sales and marketing efforts to penetrate newgeographies over the coming years.Drive Additional Revenue per Customer with the Development or Acquisition of New Products and Services.We are transforming the company from adomestic acoustic gunshot detection company to a global preci

170、sion policing technology solutions company.We evaluate opportunities to develop or acquirecomplementary products and services.For example,our acquisition of HunchLab,renamed ShotSpotter Connect,in 2018 provides an opportunity to increaseour revenue per customer with a related and value-added technol

171、ogy that helps deter crime through strategically planned patrols.Our 2020 acquisition ofLEEDS provides entry into a comprehensive investigative case management solution.Our current approach is to leverage trusted relationships with currentcustomers to drive initial adoption and increase revenue and

172、lifetime value per customer.Maintain Passionate Focus on Customer Success.Given the specialized nature of our market,a key component of our strategy is to maintain our passionatefocus on customer success and satisfaction.We pride ourselves on our execution of customer on-boarding as well as ongoing

173、consulting and customer support,all of which are critical to ensure not only high customer retention rates,but new customer acquisitions.We implement our customer success initiative early inthe sales process in order to ensure that we are aligned with the customers objectives and can positively impa

174、ct their defined outcomes.We apply consultativebest practices and policy development at the command staff level as well as tactical training for field patrol officers.We also consistently measure ourperformance with customers through an annual Net Promoter Survey.We have extremely high agency partic

175、ipation rates and our scores the last two yearshave ranked between“excellent”and“world class”according to our Survey partner benchmarks.All of our efforts are focused on driving positive measurableoutcomes on gun violence reduction and prevention,which we know leads to positive word of mouth referra

176、ls that can attract new customers and drive anincrease in sales.Grow Our Security Business.We have developed our ShotSpotter SecureCampus solution for universities and other educational institutions.We have alsodeveloped ShotSpotter SiteSecure for customers such as corporations trying to safeguard t

177、heir employees,customers,brand and profits,and public agenciesfocused on protecting citizens in venues such as train stations,airports and highways.As of December 31,2020,we had 12 ShotSpotter SecureCampus andShotSpotter SiteSecure customers.With more than 5,000 target customers in the United States

178、,we believe that these markets represent an opportunity forgrowth and we are increasing our investment and focus in this area.ShotSpotter LabsShotSpotter Labs houses our advanced technology efforts to adapt and extend our commercial technology to address significant wildlife and environmental issues

179、.Ourcurrent focus is on combating rhino poaching in Kruger National Park,South Africa and blast fishing that threatens coral reefs and food security in Southeast Asia.Thecompany has been able to collect revenues from philanthropic entities to cover direct and indirect costs.Innovations have made the

180、ir way back into our commercial businesssuch as the development of solar-powered sensor from the Kruger deployment,presenting that technologies similar to those now being used for our freeway deployment.The use of guns to poach rhinos is a significant environmental concern in Africa where the horn o

181、f a single rhino can be worth hundreds of thousands of dollars.In thevast expanse of Kruger National Park,most poaching incidents go undetected with carcasses found days or weeks after the fact.The problem is particularly acute in that due tocumulative impact of years of poaching the Rhino populatio

182、n is on the tipping point of becoming extinct as a species.ShotSpotter Labs is deployed in 100 square kilometers ofinside the Intensified Protection Zone(IPZ)where 60%if the worlds remaining Rhino live.Since the introduction of ShotSpotter to detect,locate and alert park rangers to gunfire incidents

183、 in less than 60 seconds with precise location accuracy there have beenmultiple poacher apprehensions of some of the more17prolific and notorious poaching syndicates within the coverage area.The ShotSpotter impact has been measurable with a 58%reduction in the rhino killed due to an estimated50%+int

184、erception rate within the ShotSpotter coverage area.“ShotSpotter has allowed us to take back the night,”said Ken Maggs,Head Ranger of the Kruger National Park.“We now have an interception rate well above 50%within the coverage area,which means the poachers are literally flipping a coin when they com

185、e in.”Fish blasting results in the destruction the coral reef habitat that may not recover for many decades if at all.Coral reefs are not only home to a myriad of marineorganisms including fish but also provide significant livelihood support and form an invaluable protective barrier offshore(protect

186、ing the land from heavy storms,tsunamis,andwave action).The potential decline in fish catch which is the protein source for approximately 1 billion coastal residents is a strategic food security issue.In addition,Coral reefsform the basis of coastal and marine tourism,a valuable national income sect

187、or.It is estimated that,Coral reefs around the globe provide services valued between US$172-375billion annually.Reefs must be protected for economic sustainability and food security.Our work in the Coral Triangle also known as the Amazon Forest of the Ocean hasshown some promising results.The precis

188、e detection and alerting of incidents of fish blasting provides a real time awareness to the extent of fish blasting and helps targetenforcement interventions designed to deter and prevent fish blasting activities.Customers-Revenue ModelWe generate annual subscription revenues from the deployment of

189、 our public safety and security solutions on a per-square-mile basis.As of December 31,2020,wehad coverage areas under contract of over 800 square miles in the aggregate,of which 779 miles have gone live,which included 117 cities and 12 campuses and other sitesacross the United States,South Africa a

190、nd the Bahamas,including three of the ten largest cities in the United States.Since transitioning our public safety business to theShotSpotter Respond subscription model in 2011,we have added over 80 new ShotSpotter Respond customers,but only thirteen such customers have terminated service,two ofwhi

191、ch were terminated due to hurricane damage in 2017,and both Puerto Rico and US Virgin Islands have returned as customers before the end of 2020.For the year endedDecember 31,2020,our two largest customers,City of Chicago and City of New York accounted for 18%and 15%of our revenues,respectively.For t

192、he year ended December31,2019,our two largest customers,City of Chicago and City of New York accounted for 20%and 14%of our revenues,respectively.For the year ended December 31,2018,our two largest customers,City of Chicago and City of New York accounted for 22%and 15%of our revenues,respectively.Go

193、-To-MarketWe sell our solutions through our direct sales teams.Our sales teams focus on both new customer acquisition,customer renewal,add-on sales,and coverageexpansion.Our sales team identifies communities with the opportunity to benefit from our solutions,communicates with key stakeholders,naviga

194、tes the challenges associatedwith our customers complex funding and procurement cycles,and establishes a foundation for a successful customer relationship.In addition,our sales team works withcustomers to identify and procure funds from alternate sources,including state and federal government grants

195、.Our security solutions sales team focuses primarily on college anduniversity campuses,typically with the head of campus security,but also by engaging with boards of regents,budget office personnel and other campus stakeholders,and morerecently corporate campuses,national retailers,stadiums,arenas a

196、nd venues supporting large groups of employees and/or patrons.We intend to continue to invest in building aglobal sales organization as we further penetrate the market for ShotSpotter Respond and expand the customer base for our security solutions.MarketingThe company continues to expand the scope a

197、nd capability of the marketing function.The top marketing initiatives include:targeted lead-generation campaigns tobuild sales pipeline;creation of compelling content to18educate prospects and build credibility as police agencies go through the buyers journey;and an active public relations program t

198、o increase the overall awareness of ourproducts.In 2019,we launched a lead-generation initiative to drive additional pipeline for the sales team consisting of a marketing automation technology platform,a series ofonline campaigns and an outbound calling team of sales development representatives(SDRs

199、).The campaigns educate prospects and generate initial interest based on compellingcontent.The SDR team supports the campaigns with outbound calls to drive further interest and qualify leads.Conversions from marketing leads to sales qualified opportunitieshas increased significantly as the team has

200、gained more experienced and tested various approaches.The team adapted and found greater efficiencies using direct online andoffline approaches including customized content,A/B testing and company-created virtual events.In 2020,the marketing team leveraged our extremely satisfied and loyal customer

201、base to create a significant set of new“success stories”that show proof of value toprospects.We expanded the number and type of videos and online assets and consolidated their presence in a Resource Center to make the information easier to find and share.We continue to expand the breadth and depth o

202、f our content library for the economic buyer and influencers.In the area of public relations,we work closely with many of our customers to help them communicate the success of ShotSpotter to their local media andcommunities.We have an expanding set of media contacts and social media presence and con

203、tinue to put out a significant number of press releases each year.We areincreasingly asked to give interviews and participate in podcasts and events as a thought leader in the industry.Due to the high visibility of shootings,the medias interest incovering them,and ShotSpotters key role in alerting p

204、olice for a quick response to these events,we benefit from significant television,print and online press that is generated atlittle to no cost.In 2020,we were mentioned in over 12,000 articles,broadcast TV and radio segments-the majority of which were organically generated.Members of themedia have a

205、ccess to a self-serve,comprehensive media kit to easily capture video and photos that depict the service and its benefits in a compelling fashion to enhancebroadcast TV segments and print/online articles.This exposure creates awareness for our solutions and lends credibility to our market leadership

206、 position.Research and DevelopmentWe focus our research and development efforts on enhancing our advanced signal processing and classification algorithms,updating our sensor hardware technology,reducing manufacturing costs,developing mobile,web and desktop applications,evolving our cloud-deployed ba

207、ck-end infrastructure and integration with“smart cities”initiatives.ShotSpotter Connect crime forecasting uses machine learning and has led to additional investment in data science resources.As of December 31,2020,we had 20employees in our research and development organization.In addition,we engage

208、in research and development activities with manufacturing partners and outsource certainactivities to engineering firms to further supplement our internal team.Our research and development team is increasingly focused on exploring the use of our data sets toconduct cognitive analysis and AI integrat

209、ion.CompetitionThe markets for public safety and security solutions are highly fragmented and evolving.Whether installed in local communities,on critical infrastructure or on acampus,for a gunfire detection system to be effective,the protection zone must be comprehensive.We believe our gunshot detec

210、tion solutions represent the most effectivepublic safety and security solutions on the market.We compete on the basis of a number of factors,including:product functionality,including the ability to cover broad outdoor geographic spaces;solution performance,including the rapid capture of multiple aco

211、ustic incidents and accuracy;ease of implementation,use and maintenance;19 total cost of ownership;and customer support and customer success initiatives.ShotSpotter SiteSecure and ShotSpotter Secure Campus CompetitorsShotSpotter Respond is unique because it provides scalable wide area gunshot detect

212、ion over large and geographically diverse areas,provides immediate and precisedata on gunfire,helps communities define the scope of illegal gunfire,and provides cities with detailed forensic data for investigation,prosecution and analysis.While we arenot aware of any direct competitors offering wide

213、-area solutions comparable to ShotSpotter Respond,we believe the primary competitors in the broader gunfire detection spaceare V5 Systems,Safety Dynamics,Inc.,Wi-Fiber,Inc.,Databouy,EAGL Technology and A.Most of these other outdoor solutions on the market offer limited scope point protection,proximi

214、ty sensors,or“counter-sniper systems.”These systems are designedprimarily for covering small areas,or for defined military or SWAT team applications,where the target is known in advance and it is possible to put a sensor directionallytoward the target.However,urban areas and critical infrastructure

215、require a wider system of protection that can cover a large area.We also compete with other possible uses of the limited funding available to our ShotSpotter Respond customers.Because law enforcement agencies or governmententities have limited funds,they may have to choose among resources or solutio

216、ns that help them to meet their overall mission such as video management systems,and othersecurity solutions.Accordingly,we compete not only with our customers internal budget decisions,but with other companies vying for these limited funds.We believe that inareas with significant levels of gun acti

217、vity,ShotSpotter Respond is uniquely positioned to assist customers in interrupting,detecting and preventing gun violence.ShotSpotter SiteSecure and ShotSpotter Secure Campus CompetitorsOur security solutions operate in a highly competitive environment.In addition to other gunfire detection companie

218、s,we may face competition from companiesoffering alternative security technologies,such as video surveillance,access control,alarm and lighting systems.The direct competitors for security solutions include theA,Safety Dynamics Inc.,V5 Systems,EAGL,Wi-fiber,and AmberBox,Inc.We believe none of our sec

219、urity solutions competitors is able to offer the comprehensiveoutdoor coverage we offer.ShotSpotter Connect CompetitorsShotSpotter Connect operates in a developing and potentially competitive environment.The direct competitors to our Connect solution include Geolitica,Inc.and mayinclude CAD/RMS prov

220、iders and other third-party solutions providers,such as CentralSquare Technologies,Mark 43,Genetec,Inc.,and Motorola Solutions,Inc.In addition,we may face competition from companies offering alternative solutions as well as solutions developed internally by our customers.Case Management Solution Com

221、petitorsThere are many competitors in the market for investigative case management.The direct competitors include companies offering a case management module as part oftheir RMS such as Mark43,Tyler,and Soma Global.There are several purpose-built case management solutions such as Kaseware and CaseCl

222、osed.Also,many agencies usemanual or homegrown methods.We believe that our solution will be superior in terms of comprehensiveness of functionality,analytical and collaboration tools,workflowprocess and proven effectiveness at scale.We also believe the market suffers from a lack of awareness and und

223、erstanding of what is available from vendors for this type ofsolution and that our brand and feature-rich application has the potential to capture a sizeable piece of the market over time.20Intellectual PropertyOur future success and competitive position depend in part on our ability to protect our

224、intellectual property and proprietary technologies.To safeguard these rights,werely on a combination of patent,trademark,copyright and trade secret laws,and contractual protections in the United States and other jurisdictions.As of December 31,2020,we had 34 issued patents,32 in the United States,on

225、e in Israel and one in Mexico,as well as patent applications pending for examination inthe United States,Europe and Brazil.The issued patents expire on various dates from 2022 to 2034.We also license one patent from a third party,which expires in 2023.We also license software from third parties for

226、integration into our offerings,including open source software and other software available on commercially reasonableterms.We cannot assure you that such third parties will maintain such software or continue to make it available.FacilitiesOur principal facilities consist of office space for our corp

227、orate headquarters in Newark,California.We also have offices in Washington DC and Newark,NewJersey.We lease our facilities and do not own any real property.We may procure additional space as we add employees and expand geographically.We believe that ourfacilities are adequate to meet our needs for t

228、he immediate future and that should it be needed,suitable additional space will be available to accommodate expansion of ouroperations.Although most of our employees operate from our offices,normally they can perform their functions from any location.In response to the 2020 COVID-19pandemic,most of

229、our personnel have performed their job function entirely from home Human CapitalOur values encourage us to be genuine,innovative,engaged and exceptional.They are built on the foundation that our people and the way we treat one anotherpromote creativity,innovation and productivity,which spur the Comp

230、anys success.We are continually investing in our global workforce to further drive diversity andinclusion,provide fair and competitive pay and benefits to support our employees well-being,and to foster the growth and development of all employees.As of December 31,2020,we employed 157 people,all of w

231、hom were based in the United States.Our total attrition rate in 2020 was less than 11%.We have not experienced work stoppages andbelieve our employee relations are good.Diversity,Equity and InclusionOur vision is to advance diversity,equity and inclusion across the company.We recognize that everyone

232、 deserves respect and equal treatment,regardless of gender,race,ethnicity,age,disability,sexual orientation,gender identity,cultural background or religious belief.As of December 31,2020,women represent 27%of our employees,and underrepresented minorities,defined as those who identify as Black/Africa

233、n American,Hispanic/Latinx,Native American,Pacific Islander and/or two or more races,represent 50%of our employees.In order to create products that solve challenging problems for people all over the world,we need employees who can bring diverse perspectives and life experiences.We have a three-prong

234、ed strategy to grow our diversity over time by(1)attracting diverse talent and ensuring fair hiring through inclusive and strategic recruitment practices,(2)creating an inclusive workplace environment for employees,and(3)joining forces with our customers,partners and peers to drive industry progress

235、.Therefore,we are committed to bringing more women and underrepresented and underserved groups into technology careers.We employ inclusive recruitmentpractices to source diverse candidates and mitigate potential bias.21We have invested in analysis and transparency to demonstrate our commitment to eq

236、uity and inclusion through fair compensation and opportunity for professionaladvancement.We define pay parity as ensuring that employees in the same job and location are paid fairly regardless of their gender or ethnicity.We make efforts to ensure ouremployees receive access to advanced opportunitie

237、s within the company.Board Composition and RefreshmentAs stated in our Corporate Governance Guidelines,our Board of Directors values diversity and recognizes the importance of having unique and complementarybackgrounds and perspectives in the board room.The Board endeavors to bring together diverse

238、skills,professional experience,perspectives,age,race,ethnicity,gender,andcultural backgrounds that reflect our customer base and the citizens served by our customers,and to guide us in a way that reflects the best interests of all of ourstockholders.There are seven members on our Board.As of Decembe

239、r 31,2020,women represented 14%of our Board members and underrepresented minorities represented43%of our Board.Compensation,Benefits and Well-beingWe strive to offer fair,competitive compensation and benefits that support our employees overall well-being.To ensure alignment with our short-and long-t

240、ermobjectives,our compensation programs for all employees include base pay,short-term incentives,and opportunities for long-term incentives,including equity incentives offeredunder our employee equity incentive plans and employee stock purchase program.Our well-being and benefit programs focus on fo

241、ur key pillars:physical,emotional,financialand community health.We offer a wide array of benefits including comprehensive health and welfare insurance,paid time-off and leave,and we sponsor a 401(k)plan toprovide defined contribution retirement benefits.In response to the COVID-19 pandemic,we implem

242、ented significant changes that we determined were in the best interest of our employees as well as the communitiesin which we operate.This includes having the vast majority of our employees work from home,while implementing additional safety measures for employees continuingcritical on-site work.We

243、also provide flexible work hours and up to 20 additional working days per calendar year of paid time off for employees who cannot work due tocircumstances related to COVID-19.We have also provided a work-from-home fund to assist employees in that transition and added several company-wide paid days t

244、o helpemployees balance their work and life responsibilities.Finally,we obtained and provided personal protective equipment to our employees to help protect them during thisuncertain time,while continuing our business activities.Growth and DevelopmentCareer development is a primary reason new hires

245、decide to join ShotSpotter.We actively foster a learning culture where employees are empowered to drive theircareer progression,supporting professional development and providing on-demand learning platforms.Our development programs play a critical role in engaging and retainingour employees as these

246、 programs offer opportunities to continually enhance their skills for a variety of career opportunities across the Company.Segment and Geographic InformationWe operate as a single operating and reportable segment.Information about segment reporting and long-lived assets is set forth in Note 2 of our

247、 Notes to ConsolidatedFinancial Statements included in“Financial Statements and Supplementary Data”of this Annual Report on Form 10-K.Total revenues generated outside the United States werederived from our customers located in South Africa and the Bahamas and were$0.7 million in the year ended Decem

248、ber 31,2020,and$1.0 million and$0.9 million,in theyears ended December 31,2019 and 2018,respectively.Substantially all of our non-monetary long-lived assets are located in the United States.For a discussion of risks relatedto our international operations,see the risk factors set forth in Part I,Item

249、 1A of this Annual Report on Form 10-K.22Corporate InformationWe were formed as ShotSpotter,Inc.,a California corporation,in 2001 and reincorporated as ShotSpotter,Inc.,a Delaware corporation,in 2004.We also do businessas“SST”pursuant to a registered trade name.Our principal executive offices are lo

250、cated at 7979 Gateway Boulevard,Suite 210,Newark,California 94560 and our telephone number is(510)794-3100.Ourwebsite address is .The information contained on,or that can be accessed through,our website is not incorporated by reference into this Annual Reporton Form 10-K,and you should not consider

251、any information contained on,or that can be accessed through,our website as part of this Annual Report on Form 10-K.ShotSpotter,the ShotSpotter logo,ShotSpotter Connect,ShotSpotter Respond,ShotSpotter SecureCampus,ShotSpotter SiteSecure,and other trade names,trademarksor service marks of ShotSpotter

252、 appearing in this Annual Report on Form 10-K are the property of ShotSpotter,Inc.Trade names,trademarks and service marks of othercompanies appearing in this Annual Report on Form 10-K are the property of their respective holders.Where You Can Find More InformationYou can read our SEC filings,inclu

253、ding this Annual Report on Form 10-K,over the internet at the SECs website at www.sec.gov.You may also read and copy anydocument we file with the SEC at its public reference facilities at 100 F Street,N.E.,Washington,D.C.20549.You may also obtain copies of these documents at prescribedrates by writi

254、ng to the Public Reference Section of the SEC at 100 F Street,N.E.,Washington,D.C.20549.Please call the SEC at 1-800-SEC-0330 for further information onthe operation of the public reference facilities.We are subject to the information reporting requirements of the Exchange Act,and we are required to

255、 file reports,proxy statements and other information with theSEC.These reports,proxy statements and other information are available for inspection and copying at the public reference room and website of the SEC referred to above.Wealso maintain a website at ,at which you may access these materials,f

256、ree of charge,as reasonably practicable after they are electronically filed with,orfurnished to,the SEC.We are not,however,including the information contained on our website,or information that may be accessed through links on our website,as part of,orincorporating such information by reference into

257、,this Annual Report on Form 10-K.Item 1A.RISK FACTORSInvesting in our common stock involves a high degree of risk.You should consider carefully the risks and uncertainties described below,together with all of the otherinformation in this report,including our consolidated financial statements and rel

258、ated notes,before deciding whether to purchase shares of our common stock.If any of thefollowing risks is realized,our business,operating results,financial condition and prospects could be materially and adversely affected.In that event,the price of our commonstock could decline,and you could lose p

259、art or all of your investment.Moreover,the risks described below are not the only ones that we face.Additional risks not presentlyknown to us or that we currently deem immaterial may also affect our business,operating results,prospects or financial condition.You should carefully consider these riskf

260、actors,together with all of the other information included in this Annual Report on Form 10-K as well as our other publicly available filings with the SEC.Risks Related to the COVID-19 Pandemic The COVID-19 pandemic has resulted in a material adverse effect on our business,the future magnitude or du

261、ration of which we cannot predict with accuracy.The COVID-19 pandemic has resulted in a substantial curtailment of business activities worldwide and is causing weakened economic conditions,both in the UnitedStates and many countries abroad.As part of intensifying efforts to contain the spread of COV

262、ID-19,many companies and state,local and foreign governments have imposedrestrictions,including shelter-in-place orders and travel bans.While some of these companies and23jurisdictions have started to relax such restrictions,in some cases,the restrictions were put back in place shortly after having

263、been lifted.These factors have negatively impactedour operations and results of operations for the year ended 2020.We expect that the evolving COVID-19 pandemic,associated travel restrictions and social distancingrequirements will continue to have an adverse impact on our results of operations.While

264、 the ultimate economic impact of the COVID-19 pandemic is highly uncertain,weexpect that our business and results of operations,including our revenues,earnings and cash flows from operations,will be adversely impacted for at least the first half of 2021,including as a result of:Delays in our ability

265、 to deploy new“go-live”miles attributable to company policies or customer policies designed to protect employee health and comply withgovernment restrictions;Greater funding challenges for our customer base,which may adversely affect customer contract renewals,expansion of existing customer deployme

266、nts ornew customer sales;Possible disruption to our supply chain caused by distribution and other logistical issues,which may further delay our ability to deploy new go-live miles;and Potential decrease in productivity of our employees or that of our customers or suppliers due to travel bans or rest

267、rictions,work-from-home or shelter-in-placepolicies and orders.It is currently not possible to predict the magnitude or duration of the COVID-19 pandemics impact on our business.The extent to which the COVID-19 pandemicimpacts our business will depend on numerous evolving factors that we may not be

268、able to control or accurately predict,including without limitation:the duration and scope of the pandemic;governmental,business and individuals actions that have been and continue to be taken in response to the pandemic;the impact of the pandemic on economic activity and actions taken in response;th

269、e effect on our customers and demand for our products and services;our ability to continue to sell our products and services,including as a result of travel restrictions and people working from home,or restrictions on access toour potential customers;the ability of our customers to pay for its produ

270、cts and services;any closures of our facilities and the facilities of our customers and suppliers;and the degree to which our employees or those of our customers or suppliers become ill with COVID-19.Risks Related to Our GrowthIf our business does not grow as we expect,or if we fail to manage our gr

271、owth effectively,our operating results and business prospects would suffer.Our ability to successfully grow our business depends on a number of factors including our ability to:accelerate our acquisition of new customers;further sell expansions of coverage areas to our existing customers;expand our

272、international footprint;24 expand into new vertical markets,such as precision policing,and security solutions;increase awareness of the benefits that our solutions offer;maintain our competitive and technology leadership position;and manage our business successfully through the COVID-19 pandemic and

273、 any resulting impact on economic conditions,including conditions impacting theavailability of funding for our public safety solution.As usage of our solutions grows,we will need to continue to make investments to develop and implement new or updated solutions,technologies,security features andcloud

274、-based infrastructure operations.In addition,we will need to appropriately scale our internal business systems and our services organization,including the suppliers of ourdetection equipment and customer support services,to serve our growing customer base.Any failure of,or delay in,these efforts cou

275、ld impair the performance of our solutionsand reduce customer satisfaction.Further,our growth could increase quickly and place a strain on our managerial,operational,financial and other resources,and our future operating results depend to alarge extent on our ability to successfully manage our antic

276、ipated expansion and growth.To manage our growth successfully,we will need to continue to invest in sales andmarketing,research and development,and general and administrative functions and other areas.We are likely to recognize the costs associated with these investments earlierthan receiving some o

277、f the anticipated benefits,and the return on these investments may be lower,or may develop more slowly,than we expect,which could adversely affectour operating results.If we are unable to manage our growth effectively,we may not be able to take advantage of market opportunities or develop new soluti

278、ons or upgrades to our existingsolutions,satisfy customer requirements,maintain the quality and security of our solutions or execute on our business plan,any of which could have a material adverse effect onour business,operating results and financial condition.Our quarterly results of operations may

279、 fluctuate significantly due to a wide range of factors,which makes our future results difficult to predict.Our revenues and results of operations could vary significantly from quarter to quarter as a result of various factors,many of which are outside of our control,including:the expansion or contr

280、action of our customer base;the renewal or nonrenewal of subscription agreements with,and expansion of coverage areas by,existing customers;the size,timing,terms and deployment schedules of our sales to both existing and new customers;the introduction of products or services that may compete with us

281、 for the limited funds available to our customers,and changes in the cost of such products orservices;changes in our customers and potential customers budgets;our ability to control costs,including our operating expenses;our ability to hire,train and maintain our direct sales force;the timing of sat

282、isfying revenues recognition criteria in connection with initial deployment and renewals;fluctuations in our effective tax rate;25 the impact of the COVID-19 pandemic on business operations and economic conditions;and general economic and political conditions,both domestically and internationally.An

283、y one of these or other factors discussed elsewhere in this report may result in fluctuations in our revenues and operating results,meaning that quarter-to-quartercomparisons of our revenues,results of operations and cash flows may not necessarily be indicative of our future performance.Because of t

284、he fluctuations described above,our ability to forecast revenues is limited and we may not be able to accurately predict our future revenues or results ofoperations.In addition,we base our current and future expense levels on our operating plans and sales forecasts,and our operating expenses are exp

285、ected to increase in the shortterm.Accordingly,we may not be able to reduce our costs sufficiently to compensate for an unexpected shortfall in revenues,and even a small shortfall in revenues coulddisproportionately and adversely affect our financial results for that quarter.The variability and unpr

286、edictability of these and other factors could result in our failing to meet orexceed financial expectations for a given period.Because we generally recognize our subscription revenues ratably over the term of our contract with a customer,fluctuations in sales will not be fully reflected in ouroperat

287、ing results until future periods.Our revenues are primarily generated from subscriptions to our solutions.With the exception of a small number of legacy customers,our customers do not have theright to take possession of our equipment or software platform.Revenues from subscriptions to our software p

288、latform is recognized ratably over the subscription periodbeginning on the date that the subscription is made available to the customer,which we refer to as the“go-live”date.Our agreements with our customers typically range fromone to five years.As a result,much of the revenues that we report in eac

289、h quarter are attributable to agreements entered into during previous quarters.Consequently,a decline insales,customer renewals or market acceptance of our solutions in any one quarter would not necessarily be fully reflected in the revenues in that quarter and would negativelyaffect our revenues an

290、d profitability in future quarters.This ratable revenues recognition also makes it difficult for us to rapidly increase our revenues through additional sales inany period,as revenues from new customers generally are recognized over the applicable agreement term.Our subscription-based approach may re

291、sult in uneven recognition ofrevenues.We recognize subscription revenues over the term of a subscription agreement.Once we enter into a contract with a customer,there is a delay until we beginrecognizing revenues while we survey the coverage areas,obtain any required consents for installation,and in

292、stall our sensors,which together can take up to several months ormore.We begin recognizing revenues from a sale only when all of these steps are complete and the solution is live.While most of our customers elect to renew their subscription agreements following the expiration of a term,in some cases

293、,they may not be able to obtain the properapprovals or funding to complete the renewal prior to such expiration.For these customers,we stop recognizing subscription revenues at the end of the current term,eventhough we may continue to provide services for a period of time while the renewal process i

294、s completed.Once the renewal is complete,we then recognize subscription revenuesfor the period between the expiration of the term of the agreement and the completion of the renewal process.The variation in the timeline for deploying our solutions and completing renewals may result in fluctuations in

295、 our revenues,which could cause our results to differfrom projections.Additionally,while we generally invoice for 50%of the contract cost upon a customers go-live date,our cash flows may be volatile and will not match ourrevenues recognition.We have not been profitable historically and may not achie

296、ve or maintain profitability in the future.We only reached our first full year of net income in 2019;prior to that,we posted a net loss in each year since inception.As of December 31,2020,we had anaccumulated deficit of$94.4 million.We are not certain whether we will be able to maintain enough reven

297、ues from sales of our solutions to sustain or increase our growth ormaintain profitability in the future.We also expect our costs to increase in future periods,which could negatively affect our26future operating results if our revenues do not increase.In particular,we expect to continue to expend su

298、bstantial financial and other resources on:sales and marketing,including a significant expansion of our sales organization,both domestically and internationally;research and development related to our solutions,including investments in our engineering and technical teams;acquisition of complementary

299、 technologies or businesses,such as our acquisition of HunchLab technology in October 2018 and our acquisition of LEEDS,LLC in November 2020;continued international expansion of our business;and general and administrative expenses.These investments may not result in increased revenues or growth in o

300、ur business.If we are unable to increase our revenues at a rate sufficient to offset the expectedincrease in our costs,our business,operating results and financial position may be harmed,and we may not be able to maintain profitability over the long term.In particular,theCOVID-19 pandemic and its im

301、pact on economic conditions will make it more difficult for us to increase revenues sufficient to maintain profitability.Additionally,we mayencounter unforeseen operating expenses,difficulties,complications,delays and other unknown factors that may result in losses in future periods.If our revenue g

302、rowth doesnot meet our expectations in future periods,our financial performance may be harmed,and we may not maintain profitability in the future.We may require additional capital to fund our business and support our growth,and our inability to generate and obtain such capital on acceptable terms,or

303、 at all,couldharm our business,operating results,financial condition and prospects.We intend to continue to make substantial investments to fund our business and support our growth.In addition,we may require additional funds to respond to businesschallenges,including the need to develop new features

304、 or enhance our solutions,improve our operating infrastructure or acquire or develop complementary businesses andtechnologies.As a result,in addition to the revenues we generate from our business and our existing cash balances,we may need to engage in additional equity or debtfinancings to provide t

305、he funds required for these and other business endeavors.If we raise additional funds through future issuances of equity or convertible debt securities,ourexisting stockholders could suffer significant dilution,and any new equity securities we issue could have rights,preferences and privileges super

306、ior to those of holders of ourcommon stock.Any debt financing that we may secure in the future could involve restrictive covenants relating to our capital raising activities and other financial andoperational matters,which may make it more difficult for us to obtain additional capital and to pursue

307、business opportunities,including potential acquisitions.We may not beable to obtain such additional financing on terms favorable to us,if at all.If we are unable to obtain adequate financing or financing on terms satisfactory to us when we requireit,our ability to continue to support our business gr

308、owth and to respond to business challenges could be significantly impaired,and our business may be adversely affected.Inaddition,our inability to generate or obtain the financial resources needed may require us to delay,scale back,or eliminate some or all of our operations,which may have amaterial a

309、dverse effect on our business,operating results,financial condition and prospects.Risks Related to Our Public Safety BusinessOngoing social unrest may result in a material adverse effect on our business,the future magnitude or duration of which we cannot predict with accuracy.We may be adversely aff

310、ected by ongoing social unrest,protests against racial inequality,protests against police brutality and movements such as“Defund the Police”or increases in such unrest that may occur in the future.These events may directly or indirectly affect police agency budgets and funding available to current a

311、nd potentialcustomers.Participants in these events may also attempt to create the perception that our solutions are contributing27to the“problem”,which may adversely affect the Company,its business and results of operations,including its revenues,earnings and cash flows from operations.Our success d

312、epends on maintaining and increasing our sales,which depends on factors we cannot control,including the availability of funding to our customers.To date,substantially all of our revenues have been derived from contracts with local governments and their agencies,in particular the police departments o

313、f majorcities in the United States.To a lesser extent,we also generate revenues from federal agencies,foreign governments and higher education institutions.We believe that thesuccess and growth of our business will continue to depend on our ability to add new police departments and other government

314、agencies,domestically and internationally,ascustomers of our public safety solution and new universities,corporate campuses and key infrastructure and transportation centers as customers of our security solutions.Manyof our target customers have restricted budgets,such that we are forced to compete

315、with programs or solutions that offer an alternative use of the same funds.A number offactors could cause current and/or potential customers to:delay or refrain from purchasing our solutions,prevent expansion of,or reduce coverage areas and/or terminate use ofour solutions,including:decreases or cha

316、nges in available funding,including tax revenues,budgetary allocations,government grants and other government funding programs;potential delays or changes in appropriations or other funding authorization processes;changes in fiscal or contracting policies;macro-and/or local economic changes that may

317、 affect customer funding;changes in elected or appointed officials;and changes in laws or public sentiment regarding privacy or surveillance.The COVID-19 pandemic and any associated impact on economic conditions could also cause or exacerbate any of the foregoing.The occurrence of any of theforegoin

318、g would impede or delay our ability to maintain or increase the amount of revenues derived from these customers,which could have a material adverse effect on ourbusiness,operating results and financial condition.Contracting with government entities can be complex,expensive,and time-consuming.The pro

319、curement process for government entities is in many ways more challenging than contracting in the private sector.We must comply with laws and regulationsrelating to the formation,administration,performance and pricing of contracts with government entities,including U.S.federal,state and local govern

320、mental bodies.These lawsand regulations may impose added costs on our business or prolong or complicate our sales efforts,and failure to comply with these laws and regulations or other applicablerequirements could lead to claims for damages from our customers,penalties,termination of contracts and o

321、ther adverse consequences.Any such damages,penalties,disruptions or limitations in our ability to do business with government entities could have a material adverse effect on our business,operating results and financial condition.Government entities often require highly specialized contract terms th

322、at may differ from our standard arrangements.For example,if the federal government providesgrants to certain state and local governments for our solutions,and such governments do not continue to receive these grants,then these customers have the ability to terminatetheir contracts with us without pe

323、nalty.Government entities often impose compliance requirements that are complicated,require preferential pricing or“most favored nation”terms and conditions,or are otherwise time-consuming and expensive to satisfy.Compliance with these special standards or satisfaction of such requirements could com

324、plicateour efforts to obtain business or increase the cost of doing so.Even if we do meet these special standards or requirements,the increased costs associated with providing oursolutions to government customers could harm our margins.Additionally,even once we have secured a government contract,the

325、 renewal process can28be lengthy and as time-consuming as the initial sale,and we may be providing our service for months past the contract expiration date without certainty if the renewalagreement will be signed or not.During the COVID-19 pandemic and any associated impact on economic conditions,th

326、ese risks are more pronounced than usual,asgovernment entities struggle with reduced levels of resources related to implications of the pandemic.Changes in the underlying regulatory conditions,political landscape or required procurement procedures that affect these types of customers could be introd

327、uced priorto the completion of our sales cycle,making it more difficult or costly to finalize a contract with a new customer or expand or renew an existing customer relationship.Forexample,customers may require a competitive bidding process with extended response deadlines,review or appeal periods,o

328、r customer attention may be diverted to othergovernment matters,postponing the consideration of the purchase of our products.Such delays could harm our ability to provide our solutions efficiently and to grow ormaintain our customer base.If we are unable to further penetrate the public safety market

329、,our revenues may not grow.Our ability to increase revenues will depend in large part on our ability to sell our current and future public safety solutions.For example,our ability to have ourShotSpotter Respond customers renew their annual subscriptions and expand their mileage coverage or purchasin

330、g and implementing our new products such as ShotSpotterConnect and ultimately ShotSpotter Investigate drives our ability to increase our revenues.Most of our ShotSpotter Respond customers begin using our solution in a limitedcoverage area.Our experience has been,and we expect will continue to be,tha

331、t after the initial implementation of our solutions,our new customers typically renew their annualsubscriptions,and many also choose to expand their coverage area.If our existing customers do not renew their subscriptions,our revenues may decrease.However,somecustomers may choose to not renew or red

332、uce their coverage.If existing customers do not choose to renew or expand their coverage areas,our revenues will not grow as weanticipate,or may even decline.During the COVID-19 pandemic and any associated impact on economic conditions,this risk is more pronounced than usual,as our customersprioriti

333、es may change or they may have greater uncertainty regarding the availability of funding for our solutions as a result.Our ability to further penetrate the market for our public safety solutions depends on several factors,including:maintaining a high level of customer satisfaction and astrong reputation among law enforcement;increasing the awareness of our ShotSpotter solutions and their benefits;