Financial Performance - For the years ended December 31, 2024 and 2023, the company generated revenue of 0.21 million, respectively, while incurring net losses of 24.81 million[76]. - Total revenues for 2024 were 207,545 in 2023, representing a growth of approximately 770%[318]. - The gross loss for 2024 was (1,522,717) in 2023, indicating an improvement in gross margin[318]. - The net loss for 2024 was (24,813,736) in 2023, resulting in a net loss per share of (1.75) in the previous year[318]. - Cash and cash equivalents surged to 6,756 in 2023, indicating a substantial increase in liquidity[316]. - Total assets grew to 2,804,549 in 2023, marking a significant expansion of the company's asset base[316]. - Total liabilities increased to 6,837,955 in 2023, reflecting a rise of approximately 15.8%[316]. - The additional paid-in capital rose dramatically to 64,468,141 in 2023, showing strong investor confidence[316]. - The company reported a weighted average of 36,658,834 common shares outstanding in 2024, compared to 14,204,078 in 2023, indicating a dilution effect due to increased share issuance[318]. - The company has not reported any income tax provision for both years, indicating ongoing net losses[318]. Revenue Sources - A significant portion of the company's revenue is concentrated with two customers, Magna and Uber, accounting for 91% and 71% of total revenue for the years ended December 31, 2024 and 2023, respectively[82]. - The company anticipates that 16% and 22% of its revenues for the years ended December 31, 2024 and 2023, respectively, came from out-of-home (OOH) advertising campaigns[94]. - Revenue from software services amounted to 332,180 in 2024 from 294,400 in 2024, compared to $45,250 in 2023, indicating a growth of approximately 552%[370]. Operational Challenges - The company has faced challenges due to a global semiconductor shortage, impacting its ability to manufacture robots and meet production timelines[88]. - Global supply chain issues have delayed the increase in the number of robots in the fleet, impacting production capabilities[103]. - The company relies on third-party delivery platforms and brand sponsors for revenue, with current utilization levels needing improvement to achieve profitability[93]. - The company may face difficulties in attracting and retaining qualified personnel, which is critical for its growth and operational success[89]. - The company has limited experience in large-scale commercialization of robotic systems, which may hinder efficient market penetration and sales growth[101]. Regulatory and Compliance Risks - Regulatory changes regarding personal delivery devices (PDDs) could impact market expansion and operational capabilities in new jurisdictions[107]. - The company is subject to tariffs and changing trade relations, which could increase operational costs and adversely affect financial performance[106]. - The company is subject to evolving global privacy legislation, such as the GDPR, which could result in penalties of up to 4% of worldwide revenue for non-compliance[128]. - Compliance with evolving data privacy laws, such as the CCPA and GDPR, may increase operational costs and potential liabilities[170]. - The company faces substantial penalties for noncompliance with data protection laws, which could reach up to €20 million or 4% of worldwide turnover for serious violations under GDPR[170]. Cybersecurity and Data Management - Security breaches and cyber-attacks pose significant risks to the company's proprietary information, potentially harming its competitive position and incurring substantial costs[125]. - Cybersecurity risks pose a threat to operational systems and sensitive data, with potential disruptions from unauthorized access or attacks[161]. - The company is implementing systems to protect data and prevent security breaches, but these measures cannot guarantee complete security[164]. - Any security breach could harm the company's reputation, reduce product demand, and lead to significant legal and financial exposure[166]. Growth and Future Outlook - The company plans to expand its operations significantly, including hiring additional personnel and enhancing its engineering and product teams[78]. - Future capital needs may require the company to raise additional equity or debt financing, which could dilute existing shareholders or impose unfavorable terms[129]. - The company may need to curtail or abandon growth plans if it cannot raise additional funds, adversely impacting its business and financial condition[133]. - The company expects to fund operations for at least the next twelve months through a combination of cash flows from operating activities and available cash balances[333]. - The company may seek additional working capital through equity sales or debt financing if current cash and cash flows are insufficient for future needs[335]. Internal Controls and Governance - The company completed a merger on July 31, 2023, which required significant time and resources for the design and implementation of internal controls over financial reporting[186]. - As of December 31, 2024, the company identified material weaknesses in its internal controls over financial reporting, indicating a risk of material misstatements in financial statements[186][187]. - The company is required to disclose any material weaknesses in internal control over financial reporting in its annual report, which could affect investor confidence[184][188]. - The management team has limited experience operating as a publicly traded company, which may hinder effective compliance with regulatory obligations[179]. - The company has not established a comprehensive accounting and financial reporting policies manual, which contributes to the identified material weaknesses[187]. Market and Competitive Landscape - Competitors may have greater resources and market recognition, potentially impacting the company's ability to attract customers and maintain competitiveness[116]. - The company faces risks associated with product defects and recalls, which could lead to significant costs and damage to reputation[111]. - The core products' benefits and projected return on investment have not been substantiated through long-term trials or use, raising concerns about their performance and market competitiveness[142]. - The adoption and use of robotic systems may be negatively impacted if customers resist or delay their use due to lack of confidence in autonomous delivery vehicles[143]. - The ability to manufacture products of sufficient quality on schedule is uncertain, and outsourcing manufacturing may affect operational flexibility[154].
Serve Robotics Inc.(SERV) - 2024 Q4 - Annual Report