Serve Robotics Inc.(SERV) - 2024 Q2 - Quarterly Report

Financial Performance - For the three months ended June 30, 2024, the company generated revenues of $468,375, a significant increase from $62,009 in the same period of 2023, representing a growth of 654%[144] - The net loss for the three months ended June 30, 2024, was $9,037,367, compared to a net loss of $4,966,256 for the same period in 2023, indicating a worsening of 82%[144] - Revenues increased to $468.38 million for the three months ended June 30, 2024, compared to $62.01 million for the same period in 2023, representing a 655% increase[147] - Net loss for the three months ended June 30, 2024, was $9.04 million, compared to a net loss of $4.97 million for the same period in 2023, an increase of 82%[147] - Total operating expenses for the three months ended June 30, 2024, were $8.70 million, up from $3.77 million in the same period in 2023, a 131% increase[147] Customer Concentration and Risks - One customer accounted for 63% of the company's revenue during the three months ended June 30, 2024, highlighting significant customer concentration risk[130] - The company plans to diversify its customer base to mitigate risks associated with high customer concentration, as it currently relies heavily on a limited number of clients[130] Capital and Financing - The company raised approximately $35.8 million from a public offering of 10,000,000 shares at a price of $4.00 per share, which commenced trading on The Nasdaq Capital Market under the ticker symbol "SERV"[118] - The company issued convertible promissory notes totaling $5,014,500, resulting in net proceeds of $4,844,625, with a conversion price of $2.42 per share upon a qualified offering[120][123] - The Company sold 2,500,000 Pre-Funded Warrants at a combined offering price of $5.9999, resulting in net proceeds of $13.70 million from the Private Placement[171] - Net cash provided by financing activities rose significantly to $39.39 million for the six months ended June 30, 2024, compared to $3.89 million in 2023, with $35.8 million from common stock issuance[177] - The Company is dependent on raising additional capital to fund operations, including research and development and general administrative expenses[172] Operational Challenges - The company is facing supply chain constraints due to global shortages of electrical components, which have increased lead times and costs for manufacturing robots[134] - The company anticipates continued operating losses in 2024 and 2025 as it implements its long-term strategic plan, focusing on scaling its robotic fleet and expanding geographic coverage[136] Financial Position - The company has an accumulated deficit of $86,409,719 as of June 30, 2024, indicating ongoing financial challenges[144] - The company had $28.78 million in cash and cash equivalents as of June 30, 2024[169] - As of June 30, 2024, the Company had cash and cash equivalents totaling $28.78 million[175] Internal Controls and Compliance - The Company identified material weaknesses in internal control over financial reporting, which will be addressed by increasing qualified financial personnel and implementing formal accounting policies[189][190] - The Company is classified as an "emerging growth company" and a "smaller reporting company," allowing it to take advantage of certain regulatory exemptions[182][183] - The Company has no pending or threatened material legal proceedings[193] Research and Development - Research and development expenses rose to $5.79 million for the three months ended June 30, 2024, from $2.13 million in the same period in 2023, marking a 172% increase[152] Operational Metrics - Daily Active Robots increased to 48 for the three months ended June 30, 2024, compared to 23 for the same period in 2023[166] - Daily Supply Hours increased to 385 for the three months ended June 30, 2024, from 152 for the same period in 2023[167] Debt Obligations - The Company entered into a term loan with Silicon Valley Bank for gross proceeds of $2.50 million, maturing on March 1, 2025, with interest accruing at a minimum of 3.25% per annum[178]