Serve Robotics Inc. /DE/ SEC 10-K Report
Serve Robotics Inc., a company focused on developing sustainable, self-driving delivery robots, has released its annual 10-K report. The report provides a comprehensive overview of the company's financial performance, business operations, strategic initiatives, and the challenges it faces in the rapidly evolving robotics delivery industry.
Financial Highlights
Revenues: Serve Robotics reported revenues of $1.81 million, a significant increase of $1.60 million from the previous year, primarily driven by $1.19 million in software services revenue.
Gross Profit (Loss): The company improved its gross profit (loss) to $(75,156), a notable improvement of $1.45 million from the previous year's gross loss of $(1.52 million).
Loss from Operations: Serve Robotics experienced a loss from operations of $(38.29 million), an increase of $17.56 million compared to the previous year, mainly due to higher research and development expenses.
Net Loss: The net loss for the year was $(39.19 million), an increase of $14.38 million from the previous year, reflecting higher operating expenses.
Net Loss Per Common Share - Basic and Diluted: The net loss per common share improved to $(1.07) from $(1.75) in the previous year, attributed to an increase in weighted average common shares outstanding.
Business Highlights
Company Overview: Serve Robotics Inc. specializes in developing sustainable, self-driving delivery robots designed for last-mile delivery, primarily in the food delivery sector. The company focuses on creating low-emission robots to enhance delivery efficiency.
Corporate History: Initially incorporated as Patricia Acquisition Corp. in 2020, Serve Robotics transitioned from a shell company to an operational entity in the robotics delivery space following a merger with Serve Operating Co. in 2023.
Technology Development: The company has developed AI-powered robots capable of Level 4 autonomy, allowing them to operate without human supervision in certain environments. These robots are equipped with advanced safety features, including fail-safe mechanical braking and autonomous collision avoidance.
Operational Strategy: Serve Robotics aims to deploy 2,000 robots by the end of 2025, with platform-level integrations with Uber Eats to enhance delivery operations. The robots are designed to reduce delivery costs and improve efficiency compared to human couriers.
Partnerships and Agreements: The company has entered into strategic partnerships, including a commercial agreement with Uber and a License and Services Agreement with Magna, to expand its delivery operations and enhance its technological capabilities.
Future Outlook: Serve Robotics plans to continue growing its delivery operations and establish itself as a global leader in automated last-mile delivery. The company anticipates that technological advancements and regulatory support will drive the adoption of robotic delivery solutions.
Impact of Robotic Delivery: The company expects its robots to reduce greenhouse gas emissions, lower delivery costs, and increase the adoption of on-demand services. Serve also anticipates that its operations will contribute to safer roads and more local commerce.
Safety and Security: Serve's robots are equipped with multiple layers of safety and security features to ensure safe operation and protect against unauthorized access to cargo and data.
Manufacturing and Supply Chain: The robots are manufactured by Magna International, with components sourced from multiple suppliers. The company actively manages supply chain risks to ensure production scalability.
Employee and Human Capital Resources: Serve values its employees as key assets, offering competitive pay and benefits to attract and retain talent. The company emphasizes diversity, equity, and inclusion in its workforce.
Strategic Initiatives
Strategic Partnerships and Agreements: Serve Robotics has entered into several strategic partnerships and agreements to enhance its business operations and financial standing. Notably, the company entered into a License and Services Agreement with Magna, granting a non-exclusive royalty-free license to its AMR Technology and providing engineering and technical support to Magna. Additionally, Serve entered into a Master Services Agreement with Magna to provide specific services, including a production agreement for the assembly of robotic delivery vehicles.
Capital Management: The company has been active in capital management through various financing activities. It completed a public offering of 10,000,000 shares, raising approximately $35.8 million, and its common stock was listed on Nasdaq under the ticker 'SERV'. Serve also entered into a securities purchase agreement for a registered direct offering, raising approximately $80 million. Additionally, the company issued convertible promissory notes, raising $5 million, and entered into private placement offerings of pre-funded warrants, generating significant proceeds. The company has also been managing its debt, including the repayment of a term loan with Silicon Valley Bank and a promissory note with its CEO.
Future Outlook: Serve Robotics plans to continue its growth strategy by leveraging its partnerships and capital resources. The company anticipates that its existing cash and cash equivalents will be sufficient to meet its working capital and capital expenditure needs for at least the next 12 months. Serve is focused on expanding its market presence and increasing the utilization of its robotic delivery services. The company is also exploring additional equity or debt financing opportunities to support its strategic initiatives and sustain its operations.
Challenges and Risks
Early-Stage Business Risks: Serve Robotics faces significant challenges as an early-stage business with minimal revenue and a history of losses. The company expects to continue incurring substantial losses for the foreseeable future, which could impact its ability to operate profitably. The limited operating history makes it difficult to evaluate business prospects, and the company faces risks associated with unforeseen expenses and competition from established players with better access to capital.
Customer Concentration: The company is heavily reliant on two major customers, Magna and Uber, which accounted for 91% and 71% of total revenue in 2024 and 2023, respectively. This concentration poses a risk if either customer were to breach, cancel, or amend agreements, potentially affecting revenue and profitability.
Supply Chain Disruptions: Supply chain disruptions, particularly in the semiconductor industry, pose a significant risk. The company relies on single or limited sources for key components, and any failure in the supply chain could delay production and increase costs.
Regulatory Environment: The evolving regulatory environment for personal delivery devices (PDDs) could impact the company's growth prospects. While current regulations are industry-friendly, changes could impose new restrictions, affecting operations in new markets.
Cybersecurity Risks: The company is exposed to cybersecurity risks, including potential breaches that could compromise proprietary information and expose it to liability. The increasing complexity of cyber threats necessitates ongoing investment in security measures.
Management Strategies: Management acknowledges the challenges of scaling operations and the need to effectively manage growth. The company plans to expand its management, engineering, and product teams, and enter into strategic partnerships to support larger-scale commercial activities. The company is also focused on mitigating supply chain risks by securing agreements with suppliers and investing in supply chain resiliency. However, the ongoing semiconductor shortage remains a concern.
Market Risks: The company is subject to market risks, including fluctuations in interest rates and foreign currency exchange rates, which could adversely affect financial results. Rising labor costs and inflation are additional concerns that could impact operational expenses and profitability.
SEC Filing: Serve Robotics Inc. /DE/ [ SERV ] - 10-K - Mar. 06, 2025