Serve Robotics Inc. /DE/

Except as set forth below, there have been no material changes to the risk factors as disclosed in“Part I, Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2025, as supplemented by those risks and uncertainties described in the section entitled“Part II, Item 1A. Risk Factors” of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2026.

Regulatory restrictions on foreign-produced advanced robotic devices could materially adversely affect our business, results of operations and growth prospects.

On July 28, 2026, the FCC added foreign-produced “advanced robotic devices” to its “covered list” under the Secure and Trusted Communications Networks Act of 2019, following determinations by U.S. national security agencies that such products may pose national security, supply-chain and cybersecurity risks. Under the FCC’s action, new device models that fall within the scope of the determination may be unable to obtain the FCC equipment authorizations necessary for importation, marketing or sale in the United States unless an applicable exemption, waiver or conditional approval is obtained. Existing FCC-authorized models generally are not affected by the new restrictions.

We currently import robotics parts from non-U.S. countries for our current model of sidewalk delivery robots that have received FCC approvals and authorizations. Although our existing sidewalk delivery robots may continue to be imported, marketed and sold to the extent permitted under applicable law and regulatory guidance, there can be no assurance that future product models, product enhancements, software-enabled upgrades, successor products or additional robotics platforms sourced from foreign jurisdictions will remain eligible for FCC authorization or otherwise be permitted for importation or sale in the United States.

In addition, Diligent has not yet sought FCC equipment authorization for its Moxi robots because the current Moxi 1.0 version remains in research and development while Diligent scales its operations. The FCC could determine that the importation, marketing or operation of Moxi robots without authorization does not comply with its rules. In that case, we could become subject to inquiries, enforcement actions, monetary forfeitures, consent decrees or other sanctions. We could also be required to suspend, modify or withdraw deployed units until authorization is obtained. To obtain authorization, Moxi robots must complete the full FCC equipment authorization process.

For our future product models, including for our sidewalk delivery robots, and for Diligent’s current and future Moxi robots, the full FCC equipment authorization process includes obtaining a conditional approval from the U.S. Department of War before the FCC will grant authorization. We have limited experience with this process, which is new and still evolving, and we cannot predict its duration, cost or outcome. The Department of War or the FCC may decline to grant the required approvals. They may also condition approval on changes to our robots’ design, components, software, data handling or supply chain, or on ongoing compliance, reporting or audit obligations. Any such conditions could be costly or impracticable to satisfy. If we are unable to obtain the required approvals on a timely basis, on acceptable terms or at all, we may be required to discontinue existing deployments and may be unable to import, market, sell or expand deployments of our robots in the United States. Any of these outcomes could result in customer claims, refunds or contract terminations, harm our relationships with our customers, or impair the value of our acquisition of Diligent.

The FCC’s action reflects heightened governmental scrutiny of products manufactured in foreign jurisdictions that incorporate advanced sensing, communications, artificial intelligence and remote-connectivity capabilities. Additional legislation, executive actions, regulations, trade restrictions, import controls, tariffs, sanctions or agency determinations could further restrict or prohibit the importation, authorization, sale, servicing or use of our products or components, including products that are currently authorized. Any such developments could materially disrupt our operations, supply chain and growth strategy.

If we are unable to obtain required regulatory approvals for future products, including for Diligent’s Moxi robots, diversify our supply chain, transition manufacturing to alternative jurisdictions, obtain available exemptions or conditional approvals, or otherwise mitigate the effects of these regulatory developments, our business, financial condition, results of operations and prospects could be materially and adversely affected.

A significant portion of our revenue is concentrated with a small number of customers.

A significant portion of our revenue is concentrated with a limited number of customers. For the years ended December 31, 2025 and 2024, sales to the customers individually representing more than 10% of total revenues accounted for 55% and 91% of our total revenue, respectively. There are inherent risks whenever a large percentage of total revenues are concentrated with a limited number of customers. If any of these customers were to breach, cancel or amend our agreement, it may have an outsized effect on our revenue, cash on hand, and profitability. For example, during the nine months ended September 30, 2026, we experienced lower than expected delivery volume through our Uber Eats partnership, which contributed to downward pressure on our revenue during this period. In addition, we may have an increased interest in accepting less favorable terms of any amendment as a result.

Failure to retain existing or attract future partnerships with merchants and consumers could have an effect on our revenue, revenue growth and margins, and our business, financial condition and results of operations could be adversely affected.

Our projected revenue relies on our ability to maximize utilization of our robot fleet and our ability to cost-effectively grow our partnerships, including in new markets. Our sidewalk delivery robots may be unable to maximize utilization due to a variety of reasons, including insufficient merchant participation, platform partner matching algorithms, failure to deliver a commercial grade product and a lack of product acceptance by merchants and/or delivery recipients. Historically, we have been able to continually increase our robot utilization through our existing strategic partnerships driven by the continued improvement in our integration, high merchant participation and widespread product acceptance by users of the partnered food delivery platforms. However, we are in varying stages of integration with our strategic partners and therefore have not yet achieved desired levels of utilization with our partners. For example, during the nine months ended September 30, 2026, we experienced lower than expected delivery volume through our Uber Eats partnership, which contributed to downward pressure on our revenue during this period. To achieve profitability, we will need to continue to improve our utilization targets with all strategic partners above current levels and maintain those levels with other partners as well. As this requires cooperation by third parties, there is no guarantee that it will be achieved within a specific timeframe.

Our financial projections also anticipate generating revenues from brand sponsors who would pay to place their branding on our robots as a form of OOH branding. OOH branding on robots is a new phenomenon and as such, an unproven model. To date, for our limited number of robots, we have been able to run periodic OOH advertising campaigns with several brands in varying sectors including real estate, fashion and entertainment. OOH advertising represented 15% and 16% of our revenues for the years ended December 31, 2025 and 2024, respectively. In the future, if we are unable to realize these sales, our business model and go-to-market strategy will be jeopardized.

Our revenue and other financial projections also include revenue generated through software services. These partnerships are typically short-term for the duration of the project or subscription. Partners have no obligation to renew their contracts or subscriptions after they expire, and these contracts and subscriptions may not be renewed on the same or more profitable terms. We may not be able to accurately predict future trends of our partnerships, and our project rates may decline or fluctuate because of several factors, including their satisfaction or dissatisfaction with our products and services, the prices of our services, the prices of the products and services offered by our competitors or reductions in partner spending levels.

Misuse of our delivery robots and related technology could harm our reputation and result in litigation, regulatory enforcement actions or reduced demand for our products and services.

Our robots and services, including delivery services, robots, cameras, sensors, related software, training, and operational support services, may be misused by partners, customers or third parties. For example, our delivery robots and related imaging technologies may be used in ways that violate privacy, surveillance, trespass, data protection, export control, or other laws, or in ways that are perceived as unethical or harmful, even where such use is outside of our control and not authorized by us. In addition, the data generated by delivery robots, cameras, sensors, and other connected technologies may be combined with other information in ways that could increase privacy or security risks. Misuse or perceived misuse of these products or data could result in negative press coverage, reputational harm, reduced customer demand, increased scrutiny by regulators, and the loss of business relationships.

Certain of our partners and customers may use our products and services in regulated environments, including healthcare, which may be subject to heightened legal requirements and public scrutiny. In some cases, we may rely on partners and customers to implement required policies, permissions, notices, and safeguards, including those related to privacy and data protection. If we or our partners or customers fail to comply or are perceived to fail to comply with applicable laws, contractual requirements, or regulatory standards, we could be subject to litigation, regulatory investigations, enforcement actions, fines, penalties, or other liabilities, and our business, financial condition and results of operations could be materially adversely affected. For example, we are subject to a class action lawsuit in the state of Illinois alleging that the cameras and LiDAR used in our robots violated state privacy law. We intend to vigorously defend against the claims brought by the plaintiffs in this matter.

Additionally, partners, customers, operators, or service providers could use our products in a manner that is inconsistent with the products’ intended use. Misuse of our products may cause an increased risk of injury to customers, which could harm our reputation in the marketplace, as well as lead to potential product liability lawsuits.