Serve Robotics Inc DE
For the period ended Sep 30, 2024. Filed Nov 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 7, 2024
SERV$3.22+38.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-13.
0001832483-24-000016
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0001832483-24-000029
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 104 previous paragraphs and 106 current paragraphs.
70 unchanged; 28 reworded; 8 added; 6 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 4 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (8)
Current report
Recent Developments
Current report
General and administrative expenses increased $0.55 million to $1.98 million for the three months ended September 30, 2024, from $1.43 million for the same period in 2023, due primarily to an increase in headcount and public company fees.
Current report
Operations expenses increased $0.36 million to $0.92 million for the three months ended September 30, 2024, from $0.56 million for the same period in 2023, due primarily to an increase in headcount and stock-based compensation expense.
Current report
Interest income (expense), net increased $1.93 million to income of $0.45 million for the three months ended September 30, 2024, from expense of $1.48 million for the same period in 2023, due primarily to interest earned on bank deposits and decreasing interest on outstanding debt balances.
Current report
General and administrative expenses increased $1.45 million to $4.86 million for the nine months ended September 30, 2024, from $3.41 million for the same period in 2023, due primarily to an increase in headcount and public company fees.
Current report
Operations expenses increased $0.66 million to $2.33 million for the nine months ended September 30, 2024, from $1.67 million for the same period in 2023, due primarily to an increase in headcount and additional facility costs.
Current report
Interest income (expense), net increased $2.48 million to income of $1.14 million for the nine months ended September 30, 2024, from expense of $2.02 million for the same period in 2023, due primarily to interest earned on bank deposits and decreasing interest on outstanding debt balances.
Current report
On August 27, 2024, the Company entered into a Securities Purchase Agreement (the “August Purchase Agreement”) with a certain accredited and institutional investor for a private placement offering of pre-funded warrants (the "August Pre-Funded Warrants") to purchase shares of the Company’s common stock and warrants exercisable for shares of common stock (the “August Investor Warrants”). Pursuant to the August Purchase Agreement, the Company sold 555,555 August Pre-Funded Warrants, with each August Pre-Funded Warrant exercisable for one share of common stock, together with the August Investor Warrants to purchase up to 555,555 shares of common stock. Each August Pre-Funded Warrant and accompanying August Investor Warrant were sold together at a combined offering price of $8.9999. The July Investor Warrants were exercised in full for 2,500,000 shares of common stock. In consideration for the immediate exercise in full of the existing warrants, the exercise holder received new warrants (the "Exchange Warrants") to purchase 2,200,000 shares of common stock with and exercise price of $10.00 per share. The Exchange Warrants are exercisable immediately and will expire five and a half years from the date of issuance. The Company received net proceeds of $18.65 million pursuant to the August Purchase Agreement.
Removed paragraphs (6)
Previous report
General and administrative expenses increased $0.90 million to $1.87 million for the three months ended June 30, 20244, from $0.97 million for the same period in 2023, due primarily to additional public company costs including audit, legal, SEC filing fees and outside director compensation which were partially offset by a decrease in payroll costs due to a headcount reduction.
Previous report
Operations expenses increased $0.28 million to $0.87 million for the three months ended June 30, 2024, from $0.59 million for the same period in 2023, due primarily to an increase in facility costs and stock based compensation.
Previous report
Interest expense of $0.26 million for the three months ended June 30, 2024, was related to the debt from Silicon Valley Bank and the amortization of debt discount pertaining to the January Notes.
Previous report
General and administrative expenses increased $0.89 million to $2.88 million for the six months ended June 30, 2024, from $1.99 million for the same period in 2023, due primarily to additional public company costs such as audit, legal, SEC filing fees and outside director compensation.
Previous report
Operations expenses increased $0.30 million to $1.41 million for the six months ended June 30, 2024, from $1.11 million for the same period in 2023, due primarily to an increase in facility costs.
Previous report
Interest expense of $1.59 million for the six months ended June 30, 2024, was related to the debt from Silicon Valley Bank and the amortization of debt discount pertaining to the January Notes.
Reworded paragraphs (28)
Previous wording
On July 31, 2023, Patricia Acquisition Corp., Serve Acquisition Corp., a corporation formed in the State of Delaware on July 10, 2023 (“Acquisition Sub”), and Serve entered into a Merger Agreement. Pursuant to the terms of the Merger Agreement, Acquisition Sub merged with and into Serve, with Serve continuing as the surviving corporation and our wholly owned subsidiary. As a result of the Merger, we acquired the business of Serve and will continue the existing business operations of Serve as a public reporting company under the name Serve Robotics Inc. Concurrently therewith, Serve was renamed Serve Operating Co. The Merger was treated as a recapitalization and reverse acquisition for us for financial reporting purposes and Serve is considered the acquirer for accounting purposes. As a result of the Merger and the change in our business and operations, a discussion of the past financial results of Patricia Acquisition Corp. is not pertinent, and under applicable accounting principles, the historical financial results of Serve, the accounting acquirer, prior to the Merger are considered our historical financial results.
Current wording
On July 31, 2023, Patricia Acquisition Corp., Serve Acquisition Corp., a corporation formed in the State of Delaware on July 10, 2023 (“Acquisition Sub”), and Serve entered into a merger agreement (the "Merger Agreement"). Pursuant to the terms of the Merger Agreement, Acquisition Sub merged with and into Serve, with Serve continuing as the surviving corporation and our wholly owned subsidiary. As a result of the Merger, we acquired the business of Serve and will continue the existing business operations of Serve as a public reporting company under the name Serve Robotics Inc. Concurrently therewith, Serve was renamed Serve Operating Co. The Merger was treated as a recapitalization and reverse acquisition for us for financial reporting purposes and Serve is considered the acquirer for accounting purposes. As a result of the Merger and the change in our business and operations, a discussion of the past financial results of Patricia Acquisition Corp. is not pertinent, and under applicable accounting principles, the historical financial results of Serve, the accounting acquirer, prior to the Merger are considered our historical financial results.
Previous wording
Pursuant to the Underwriting Agreement, at the closing of the Offering on April 22, 2024, the Company issued to Aegis a warrant to purchase 500,000 shares of Common Stock (the “Representative’s Warrant”). The Representative’s Warrant is exercisable at a per share exercise price equal to $5.00 and is exercisable at any time and from time to time, in whole or in part, commencing October 14, 2024. The Representative’s Warrant expires on April 17, 2029.
Current wording
Pursuant to the Underwriting Agreement, at the closing of the Offering on April 22, 2024, the Company issued to Aegis a warrant to purchase 500,000 shares of common stock (the “Representative’s Warrant”). The Representative’s Warrant is exercisable at a per share exercise price equal to $5.00 and became exercisable at any time and from time to time, in whole or in part, on October 14, 2024. The Representative’s Warrant expires on April 17, 2029.
Previous wording
One customer accounted for 63% and 59% of the Company's revenue during the three months ended June 30, 2024, and 2023, respectively. One customer accounted for for 81% and 60% of the Company’s revenue during the six months ended June 30, 2024 and 2023, respectively. As of June 30, 2024, one customer accounted for 74% of the accounts receivable. We currently have a limited number of customers. If either of our significant customers were to breach, cancel or amend our agreements with them, it may have an outsized effect on our revenue, cash on hand and profitability. Our business development team is actively pursuing new delivery and branding customers to diversify our customer base.
Current wording
One customer accounted for 78% and 86% of the Company's revenue during the three months ended September 30, 2024, and 2023, respectively. During the nine months ended September 30, 2024, one customer accounted for 72% of the Company's revenue. In the same period in 2023, a different customer accounted for 68% of the Company’s revenue. As of September 30, 2024, one customer accounted for 88% of the accounts receivable. We currently have a limited number of customers. If either of our significant customers were to breach, cancel or amend our agreements with them, it may have an outsized effect on our revenue, cash on hand and profitability. Our business development team is actively pursuing new delivery and branding customers to diversify our customer base.
Previous wording
We anticipate that we will continue to experience operating losses in 2024 and 2025 as we seek to implement our long-term strategic plan, using the net proceeds from the Offering to accelerate our development through increased research and development spending, scale our robotic fleet, expanding our sales and business development efforts, and increasing our overall headcount in order to achieve efficiencies through scaled growth. Our goal over the next two years is to scale our operating fleet and expand our geographic coverage to new markets beyond our current operating area in Los Angeles. With such an increase, we anticipate proportional increases in capital costs, overhead and operating expenses. Our ability to initially achieve profitability is dependent upon numerous factors, including the development of revenues, general business and economic conditions, and other risks and uncertainties, including those listed under the caption “Risk Factors” elsewhere in this Quarterly Report.
Current wording
We anticipate that we will continue to experience operating losses in 2024 and 2025 as we seek to implement our long-term strategic plan, including research and development spending, scaling our robotic fleet, expanding our sales and business development efforts, and increasing our overall headcount in order to achieve efficiencies through scaled growth. Our goal over the next two years is to scale our operating fleet and expand our geographic coverage to new markets beyond our current operating area in Los Angeles. With such an increase, we anticipate proportional increases in capital costs, overhead and operating expenses. Our ability to initially achieve profitability is dependent upon numerous factors, including the development of revenues, general business and economic conditions, and other risks and uncertainties, including those listed under the caption “Risk Factors” elsewhere in this Quarterly Report.
Previous wording
Our revenue currently consists of (1) delivery revenues, (2) revenues from branding and 3) revenues from software services.
Current wording
Our revenue currently consists of (1) delivery revenues, (2) branding revenues and (3) software services revenues.
Previous wording
For the three months ended June 30, 2024 and 2023, we generated revenues of $468,375 and $62,009, respectively, and reported net loss of $9,037,367 and $4,966,256, respectively.
Current wording
For the three months ended September 30, 2024 and 2023, we generated revenues of $221,555 and $62,565, respectively, and reported a net loss of $7,996,219 and $7,645,972, respectively.
Previous wording
As of June 30, 2024, we had an accumulated deficit of 86,409,719.
Current wording
As of September 30, 2024, we had an accumulated deficit of $94,405,938.
Previous wording
Revenues increased $0.41 million to $0.47 million for the three months ended June 30, 2024, compared to $0.06 million for the same period in 2023. The increase is primarily due to $0.30 million in revenues generated from the Company’s software services contract with Magna. The Company also recognized increases in delivery and branding revenues of $0.11 million to $0.17 million for the three months ended June 30, 2024, compared to $0.06 million for the same period in 2023. Software service revenue stream may be inconsistent in the future.
Current wording
Revenues increased $0.16 million to $0.22 million for the three months ended September 30, 2024, compared to $0.06 million for the same period in 2023. The increase is primarily due to an increase in delivery and branding revenue. The Company recognized increases in delivery and branding revenues of $0.12 million to $0.18 million for the three months ended September 30, 2024, compared to $0.06 million for the same period in 2023.
Previous wording
Cost of revenues decreased $0.07 million to $0.33 million for the three months ended June 30, 2024, compared with $0.39 million for the same period in 2023 due primarily from a decrease in depreciation expense offset by incremental costs related to software service.
Current wording
Cost of revenues decreased $0.20 million to $0.38 million for the three months ended September 30, 2024, compared with $0.57 million for the same period in 2023 due primarily to a decrease in depreciation expense.
Previous wording
Research and development expenses, which represent 67% and 56% of our total operating expenses for the three months ended June 30, 2024, and 2023, respectively, increased $3.66 million for the three months ended June 30, 2024 to $5.79 million, compared to $2.13 million for the same period in 2023. This increase was due primarily to stock compensation attributable to the Magna Warrant for $2.10 million recognized during the three months ended June 30, 2024, as well as increased operating expenses for headcount, software, and other stock compensation.
Current wording
Research and development expenses increased $2.05 million for the three months ended September 30, 2024 to $5.01 million, compared to $2.96 million for the same period in 2023. This increase was due primarily to stock compensation attributable to the Magna Warrant for $1.12 million recognized during the three months ended September 30, 2024, as well as increased expenses for headcount and related stock-based compensation.
Previous wording
Sales and marketing expenses increased $0.08 million to $0.17 million for the three months ended June 30, 2024, from $0.08 million for the same period in 2023, due primarily to increase in public and investor relations expense, and stock-based compensation expense.
Current wording
Sales and marketing expenses increased $0.27 million to $0.38 million for the three months ended September 30, 2024, from $0.12 million for the same period in 2023, due primarily to an increase in investor relations expense and stock-based compensation expense.
Previous wording
The change in the fair value of derivative was $0.22 million for the three months ended June 30, 2024, compared to no expense for the three months ended June 30, 2023. The increase in expense was due to the January Notes which were converted into shares of common stock upon offering.
Current wording
There was no change in the fair value of derivative for the three months ended September 30, 2024, compared to $0.15 million expense for the three months ended September 30, 2023. The decrease in expense was due to the April 2023 convertible notes which were converted into shares of common stock upon the Merger.
Previous wording
There was no change in fair value of the simple agreements for future equity (“SAFEs”) for the six months ended June 30, 2024, compared with $1.24 million for the six months ended June 30, 2023. The decrease in expense is related to no longer having SAFE agreements.
Current wording
There was no change in fair value of the simple agreements for future equity (“SAFEs”) for the three months ended September 30, 2024, compared with $0.44 million for the three months ended September 30, 2023. The decrease in expense is related to no longer having SAFE agreements.
Previous wording
Comparison of Results of Operations for the Six Months Ended June 30, 2024 and 2023
Current wording
Comparison of Results of Operations for the Nine Months Ended September 30, 2024 and 2023
Previous wording
The following table summarizes our operating results as reflected in our unaudited statements of operations during the six months ended June 30, 2024 and 2023, respectively, and provides information regarding the dollar and percentage increase (or decrease) during such periods.
Current wording
The following table summarizes our operating results as reflected in our unaudited statements of operations during the nine months ended September 30, 2024 and 2023, respectively, and provides information regarding the dollar and percentage increase (or decrease) during such periods.
Previous wording
Revenues increased $1.31 million to $1.42 million for the six months ended June 30, 2024 from $0.10 million for the same period in 2023. The increase is due primarily to the $1.15 million in revenues generated from software services contract with Magna. The Company also recognizes increases in delivery and branding revenues of $0.17 million to $0.27 million for the six months ended June 30, 2024, compared to $0.10 million for the same period in 2023. Software Services revenue streams may be inconsistent in the future.
Current wording
Revenues increased $1.47 million to $1.64 million for the nine months ended September 30, 2024 from $0.16 million for the same period in 2023. The increase is due primarily to the $1.15 million in revenues generated from software services. The Company also recognizes increases in delivery and branding revenues of $0.29 million to $0.45 million for the nine months ended September 30, 2024, compared to $0.16 million for the same period in 2023.
Previous wording
Cost of revenues decreased $0.08 million to $0.68 million for the six months ended June 30, 2024, compared with $0.76 million for the same period in 2023 due primarily from a decrease in depreciation expense offset by incremental costs related to software service.
Current wording
Cost of revenues decreased $0.28 million to $1.06 million for the nine months ended September 30, 2024, compared with $1.33 million for the same period in 2023 due primarily from a decrease in depreciation expense.
Previous wording
Research and development expenses, which represent 73% and 55% of our total operating expenses for the six months ended June 30, 2024, and 2023, respectively, increased $8.22 million for the six months ended June 30, 2024 to $12.43 million, compared to $4.21 million for the same period in 2023. This increase was due primarily to stock compensation attributable to the Magna Warrant for $6.32 million, as well as increased operating expenses for headcount, software, and stock compensation expense.
Current wording
Research and development expenses increased $10.26 million for the nine months ended September 30, 2024 to $17.43 million, compared to $7.17 million for the same period in 2023. This increase was due primarily to stock compensation attributable to the Magna Warrant for $7.44 million, as well as increased expenses for headcount, software and stock-based compensation expense.
Previous wording
Sales and marketing expenses increased $0.08 million to $0.28 million for the six months ended June 30, 2024, from $0.36 million for the same period in 2023, due primarily to increase in payroll costs and stock-based compensation expense.
Current wording
Sales and marketing expenses increased $0.19 million to $0.67 million for the nine months ended September 30, 2024, from $0.48 million for the same period in 2023, due primarily to increase in headcount and stock-based compensation expense.
Previous wording
The change in the fair value of derivative was $0.22 million for the six months ended June 30, 2024, compared with $0.00 million for the three months ended June 30, 2023. The increase in expense was due to the January 2024 Notes which were converted into shares of common stock upon Offering.
Current wording
The change in the fair value of derivative was $0.22 million for the nine months ended September 30, 2024, compared with $0.15 million for the same period in 2023. The increase in expense was due to the January 2024 Notes which were converted into shares of common stock upon the Offering.
Previous wording
The change in fair value of the simple agreements for future equity (“SAFEs”) was $0.00 million for the three months ended June 30, 2024, compared with $0.37 million for the three months ended June 30, 2023. The decrease in expense is related to no longer having SAFE agreements.
Current wording
There was no change in fair value of the simple agreements for future equity (“SAFEs”) for the nine months ended September 30, 2024, compared with $1.67 million for the same period in 2023. The decrease in expense is related to no longer having SAFE agreements.
Previous wording
Our cash and cash equivalents generated by financing activities are our primary source of liquidity. As of June 30, 2024, we had $28.78 million in cash and cash equivalents. Cash and cash equivalents consist of highly liquid investments with original maturities of 90 days or less at the time of purchase.
Current wording
Our cash and cash equivalents generated by financing activities are our primary source of liquidity. As of September 30, 2024, we had $50.91 million in cash and cash equivalents. Cash and cash equivalents consist of highly liquid investments with original maturities of 90 days or less at the time of purchase.
Previous wording
On July 23, 2024, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with a certain accredited and institutional investor for a private placement offering (the “Private Placement”) of pre-funded warrants (the “Pre-Funded Warrants”) to purchase shares of the Company’s common stock and warrants exercisable for common stock (the “Investor Warrants”). Pursuant to the Purchase Agreement, the Company sold 2,500,000 Pre-Funded Warrants with each Pre-Funded Warrant exercisable for one share of common stock, together with Investor Warrants to purchase up to 2,500,000 shares of common stock. Each Pre-Funded Warrant and accompanying Investor Warrant were sold together at a combined offering price of $5.9999. The Company received net proceeds of $13.70 million pursuant to the Purchase Agreement.
Current wording
On July 23, 2024, the Company entered into a Securities Purchase Agreement (the “July Purchase Agreement”) with a certain accredited and institutional investor for a private placement offering of pre-funded warrants (the “July Pre-Funded Warrants”) to purchase shares of the Company’s common stock and warrants exercisable for common stock (the “July Investor Warrants”). Pursuant to the July Purchase Agreement, the Company sold 2,500,000 July Pre-Funded Warrants with each July Pre-Funded Warrant exercisable for one share of common stock, together with the July Investor Warrants to purchase up to 2,500,000 shares of common stock. Each July Pre-Funded Warrant and accompanying July Investor Warrant were sold together at a combined offering price of $5.9999. The Company received net proceeds of $13.7 million pursuant to the July Purchase Agreement.
Previous wording
As of June 30, 2024, our cash and cash equivalents were $28.78 million. The following table shows a summary of our cash flows for the periods presented in millions:
Current wording
As of September 30, 2024, our cash and cash equivalents were $50.91 million. The following table shows a summary of our cash flows for the periods presented in millions:
Previous wording
Net cash used in operating activities was $9.82 million and $6.59 million for the six months ended June 30, 2024, and 2023, respectively. The increase of $3.23 million was primarily due to changes in working capital.
Current wording
Net cash used in operating activities was $15.28 million and $12.29 million for the nine months ended September 30, 2024, and 2023, respectively. The increase of $2.98 million was primarily due to a larger net loss of $8.00 million, offset by $9.63 million increase in stock-based compensation.
Previous wording
Net cash used in investing activities was $0.8 million and $0.0 million for six months ended June 30, 2024 and 2023, respectively. $0.80 million was mainly due to robot build construction in-process.
Current wording
Net cash used in investing activities was $5.39 million and $0.0 million for the nine months ended September 30, 2024 and 2023, respectively. The increase of $5.39 million was mainly due to robot build construction in-process.
Previous wording
Net cash provided by financing activities was $39.39 million and $3.89 million for the six months ended June 30, 2024, and 2023, respectively. In 2024, the Company received net proceeds of $4.84 million from the January Notes and net $35.8 million from proceeds of issuance of common stock pursuant to offering, partially offset by repayments of lease liability for Silicon Valley Bank (as more fully described below).
Current wording
Net cash provided by financing activities was $71.58 million and $13.08 million for the nine months ended September 30, 2024, and 2023, respectively. The increase of $58.50 million was due to $35.8 million from proceeds of issuance of common stock pursuant to offering, net of issuance costs, $17.12 million from proceeds from issuance of prefunded warrants to purchase common stock in connection with private placement, net of issuance costs, $16.32 million from proceeds from the exercise of warrants, partially offset by repayments of lease liability for Silicon Valley Bank (as more fully described below).
Previous wording
In March 2022, we entered into a term loan with Silicon Valley Bank for gross proceeds of $2.50 million with a maturity date of March 1, 2025. The loan accrues interest at the greater of 3.25% per annum or prime rate. Principal payments commenced on October 1, 2022, and the loan is repayable in 30 equal installments of principal and accrued interest.
Current wording
In March 2022, we entered into a term loan with Silicon Valley Bank for gross proceeds of $2.50 million with a maturity date of March 1, 2025. The loan accrues interest at the greater of 3.25% per annum or prime rate. Principal payments commenced on October 1, 2022, and the loan was repaid in full as of September 30, 2024.