NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS AND BUSINESS
Serve Operating Co. (formerly known as Serve Robotics Inc.) was incorporated in Delaware in January 2021 and is a direct wholly-owned subsidiary of Serve Robotics Inc. Serve Operating Co. holds all material assets and conducts all material business activities and operations of Serve Robotics Inc. All references to “Serve,” the “Company,” “we,” “our,” “us” or similar terms refer to Serve Robotics Inc. together with its wholly-owned subsidiaries.
The Company is headquartered in Redwood City, California.
Serve designs, develops, and operates low-emissions robotics systems that navigate and perform work in complex, human-centered environments. Serve has developed an advanced platform that combines proprietary hardware, artificial intelligence, computer vision, and cloud-based fleet management software to enable safe, reliable, and scalable autonomous operations across multiple outdoor and indoor physical domains.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the SEC applicable to interim period financial statements and do not include all of the information and disclosures required by accounting principles generally accepted in the United States (“GAAP”) for complete financial statements. In the opinion of management, the unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the financial position and the results of operations for the periods presented.
These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto for the year ended December 31, 2025 included in our Annual Report on Form 10-K. Interim results are not necessarily indicative of the results that may be expected for a full year.
Liquidity and Going Concern
As of March 31, 2026, our principal sources of liquidity were cash and cash equivalents and short-term marketable securities of $187.5 million, which consisted of unrestricted cash and cash equivalents on hand of $47.1 million and $140.4 million in short-term marketable securities. The Company has incurred recurring losses each year since its inception and continues to forecast operating and investing cash outflows.
Our projections of future cash needs and cash flows may differ from historical results. If current cash on hand, cash equivalents, and cash that may be used or generated from our business operations are insufficient to continue to operate our business, we will implement a plan to reduce operating and investing cash flows through reducing planned capital expenditures and planned operating expenses. Future business acquisitions will be evaluated based on whether resulting cash outflows will enable us to operate our business to be able to continue as a going concern.
Based on these plans, the Company expects it will be able to fund its operations for at least the next twelve months from the issuance of these unaudited condensed consolidated financial statements. The Company’s unaudited condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business.
We have and may continue to seek to obtain working capital during our fiscal year 2026 or thereafter through sales of our equity securities or convertible debt or through public or private debt facilities from various financial institutions where possible, though the availability of such funding, and applicable terms, will be dependent on prevailing market conditions.
If we identify sources for additional funding, such as the sale of additional equity securities or convertible debt, this will result in dilution to our stockholders. We can give no assurance that we will generate sufficient cash flows in the future to satisfy our liquidity requirements or sustain future operations in the longer-term, or that other sources of funding, such as sales of equity or debt, would be available or would be approved by our securityholders, if needed, on favorable terms or at
all. If we fail to obtain additional working capital as and when needed, such failure could have a material adverse impact on our business, results of operations and financial condition. Furthermore, such lack of funds may inhibit our ability to respond to competitive pressures or unanticipated capital needs, or may force us to reduce operating expenses, which would significantly harm the business and development of operations.
Use of Estimates
The preparation of the Company’s unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions reflected in these financial statements include, but are not limited to, (i) valuation of acquired intangible assets and goodwill, (ii) impairment of long-lived assets and goodwill, (iii) estimated useful lives of amortizable long-lived assets, (iv) fair values of investments and other financial instruments, (v) the incremental borrowing rate applied in lease accounting, (vi) allocation of depreciation, amortization, and wireless network connectivity expenses to cost of revenue, (vii) valuation of stock-based compensation, and (viii) fair value of contingent consideration. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates when there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates.
Significant Accounting Policies
Other than the accounting policies as disclosed in this Quarterly Report on Form 10-Q, there have been no material changes to our significant accounting policies disclosed in Note 2 - Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Concentrations of Credit Risk
Financial instruments, consisting principally of cash and cash equivalents, are potentially subject to credit risk concentration. The Company generally maintains balances in various operating accounts at financial institutions that management believes to be credit worthy, in amounts that may exceed federally insured limits. The Company has not experienced any losses related to its cash and cash equivalents and does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.
A significant portion of our revenue is concentrated with a limited number of customers. The following table represents the concentration of revenue for all customers that accounted for more than 10% of our revenues for the three months ended March 31, 2026 and 2025:
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2026 | | 2025 |
| Customer A sales as a percentage of total revenues | 17 | % | | N/A |
| Customer B sales as a percentage of total revenues | 14 | % | | 26 | % |
| Customer C sales as a percentage of total revenues | 11 | % | | N/A |
| Customer D sales as a percentage of total revenues | N/A | | 57 | % |
A significant portion of our accounts receivable is concentrated with a limited number of customers. The following table represents the concentration of accounts receivable for all customers that account for more than 10% of our total accounts receivable as of March 31, 2026 and December 31, 2025:
| | | | | | | | | | | |
| March 31, 2026 | | December 31, 2025 |
| Customer A receivables as a percentage of total accounts receivable | 32 | % | | 30 | % |
| Customer B receivables as a percentage of total accounts receivable | N/A | | 11 | % |
| Customer C receivables as a percentage of total accounts receivable | N/A | | N/A |
| Customer D receivables as a percentage of total accounts receivable | N/A | | N/A |
| Customer E receivables as a percentage of total accounts receivable | N/A | | 18 | % |
Business Combinations
The Company accounts for business combinations using the acquisition method of accounting, which requires, among other things, allocation of the fair value of purchase consideration to the tangible and intangible assets acquired and liabilities assumed at their estimated fair values on the acquisition date. The excess of the fair value of purchase consideration over the values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair value of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to the valuation of intangible assets. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, not to exceed one year from the date of acquisition, the Company may record adjustments to the assets acquired and liabilities assumed, with a corresponding offset to goodwill if new information is obtained related to facts and circumstances that existed as of the acquisition date. Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are reflected in the unaudited condensed consolidated statements of operations.
Acquisition-related costs are costs that the Company incurs to effect a business combination, such as advisory, legal, accounting, valuation, and consulting fees. These costs are expensed as incurred. The Company recognized $1.8 million of acquisition costs during the three months ended March 31, 2026. There was an insignificant amount of acquisition costs recognized in the three months ended March 31, 2025.
Contingent consideration is classified as a liability or as equity on the basis of the definitions of a financial liability and an equity instrument. The Company recognizes the fair value of any contingent consideration that is transferred to the seller in a business combination on the date at which control of the acquiree is obtained. Equity-classified contingent consideration related to acquisitions is measured at fair value upon acquisition of the acquiree and is recorded in permanent equity. Equity-classified contingent consideration is not revalued at each reporting period. Liability-classified contingent consideration related to acquisitions is measured at fair value upon acquisition of the acquiree and is recorded as a liability based on the expected dates of payment. Liability-classified contingent consideration is revalued each reporting period.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. Depreciation expense is recognized using the straight-line method over the following estimated useful lives:
| | | | | |
| Estimated Useful Life |
| Robot Assets | 4-6 years |
| Office Equipment | 3 years |
| Leasehold Improvements | Shorter of remaining lease term or estimated useful life for leasehold improvements |
The range of useful lives of leasehold improvements will depend on the specific circumstances for each improvement and the associated lease agreement. As of March 31, 2026, leasehold improvements are being depreciated over 1 to 6 years. Estimated useful lives are routinely assessed by management for reasonableness. Maintenance and repairs are expensed as incurred. When assets are retired or otherwise disposed of, the cost of these assets and related accumulated depreciation or
amortization are eliminated from the unaudited condensed consolidated balance sheets and any resulting gains or losses are included in the unaudited condensed consolidated statements of operations in the period of disposal.
Intangible Assets, Net
Intangible assets result from acquisitions. The accounting for acquisitions requires significant estimates and judgments based on assumptions that are believed to be reasonable. Intangible assets consist of developed technology, customer relationships, and trade names. Intangible assets are recorded at fair value as of the date of acquisition and amortized using a method consistent with the pattern of benefit, which is typically on a straight-line basis over their estimated useful lives, generally 4 to 25 years. The Company reviews identifiable definite-lived intangible assets for impairment under the long-lived asset model described under “Impairment of Long-Lived Assets” as disclosed in Note 2 - Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation (“ASC 718”). The Company measures all stock-based awards granted to employees, directors and non-employee consultants based on the fair value on the date of the grant and recognizes compensation expense for those awards over the requisite service period, which is generally the vesting period of the respective award. For awards with service-based vesting conditions, the Company records the expense using the straight-line method. For awards with performance-based vesting conditions, the Company records the expense if and when the Company concludes that it is probable that the performance condition will be achieved.
The Company classifies stock-based compensation expense in its unaudited condensed consolidated statements of operations in the same manner in which the award recipient’s payroll costs are classified or in which the award recipient’s service payments are classified.
The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. We estimate the volatility of common stock on the date of grant based on the weighted-average historical stock price volatility of our own shares or comparable publicly traded companies in our industry group. The expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield reflects the Company’s history of not paying cash dividends on common stock and its expectation that it will not pay cash dividends in the foreseeable future. Forfeitures are recognized as incurred. Determining the appropriate fair value of stock-based awards requires the input of subjective assumptions. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and management uses different assumptions, stock-based compensation expense could be materially different for future awards.
For awards with performance-based vesting conditions, compensation expense is recognized on a straight-line basis over the requisite service period. The fair value of each performance-based award granted is estimated on the date of grant. For performance-based awards with vesting conditions that impact the determination of fair value, the Company uses a Monte Carlo simulation option pricing model. This model requires the input of subjective assumptions, including expected stock price volatility, expected term, risk-free interest rate, dividend yield and the probability and timing of achieving the applicable performance conditions, as applicable. The Company estimates expected volatility based on the historical volatility of its common stock. The risk-free interest rate is based on U.S. Treasury yields with maturities consistent with the expected term of the awards. The Company assumes no expected dividend yield because it has not historically paid, and does not currently expect to pay, dividends on its common stock.
Revenue Recognition
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). The Company derives its revenue from fleet services and software services. Revenue is measured based on the consideration the Company expects to be entitled to receive in exchange for transferring promised goods or services to customers, as determined by the terms of the applicable contract. The Company recognizes revenue when it satisfies its performance obligations by transferring control of the promised goods or services to the customer. When a contract contains multiple distinct performance obligations, the Company allocates the transaction price to each performance
obligation based on its relative standalone selling price. As a practical expedient, the Company does not adjust the transaction price for the effects of a significant financing component when, at contract inception, the period between payment by the customer and the transfer of the related goods or services is expected to be one year or less.
Fleet services revenue is generated from the Company’s robot fleet completing delivery services and branding services. For delivery services, the determination that a performance obligation has been satisfied depends on the environment in which the service is provided. For outdoor delivery services, each delivery order is considered a new contract with the delivery of the specified good representing the single performance obligation. Accordingly, the Company satisfies its performance obligation when the delivery is complete, which is the point in time control of the delivered product transfers to the customer. For indoor delivery services, autonomous robot solutions are provided to customers as a stand ready obligation. Under this model, the Company retains ownership and control of its robots, which are available for the customer’s continuous use within their facilities over the contracted period of time. Under this model, the customer is provided with a bundle of integrated goods and services, including deployment of the autonomous robot, access to the proprietary software necessary for the robot functionality, implementation services, ongoing support and maintenance throughout the contracted term and autonomous robot deliveries. The bundle of integrated service offerings is considered a single performance obligation and recognized over time. As the customer is receiving and benefiting from these services simultaneously, revenue is recognized over time. The Company’s performance obligation on branding services is to continually promote a brand over the duration of the contractual term, which is typically less than one year. The Company primarily recognizes branding revenue in the amount that it has the right to invoice as branding services are rendered.
Software services revenue is generated from licensing software to customers, and delivering engineering and development projects. The Company recognizes revenue on its software services over time based on the contract term. The Company determines measurable performance obligations, which are assessed on a contract by contract basis. The Company develops certain measures to estimate the progress of the performance obligation at each reporting period end.
Fees that have been invoiced or paid but performance obligations have not been met are recorded as deferred revenue. As of March 31, 2026 and December 31, 2025, the Company had $2.5 million and an immaterial amount, respectively, in deferred revenue pertaining to fleet and software services.
Cost of Revenue
Cost of revenue consists of direct labor, depreciation of robot assets, amortization of developed technology, network and other direct costs related to data, software, and services required for the robots to operate as intended.
For the outdoor delivery fleet, the Company allocates a portion of depreciation expense and network costs recognized during each period based on the percentage of the fleet available for delivery to cost of revenue. Fully depreciated assets are excluded from the calculation of utilization. For the indoor delivery fleet, the Company records robot depreciation expense, amortization expense related to the developed technology, and network and software licensing costs recognized during each period for all billable robots in each period. A billable robot is defined as a robot that is deployed at the customer location and available for customer use at any time.
Direct labor costs are allocated to cost of revenue based on departments or resources with direct contract involvement. Each contract is assessed to determine which personnel will be directly involved in delivery of performance obligations. Direct labor typically includes roles in fleet management, hardware operations, and software engineering.
Net Loss per Share
Net earnings or loss per share is computed by dividing net income or loss by the weighted-average number of common shares outstanding during the period, excluding shares subject to redemption or forfeiture. The Company presents basic and diluted net earnings or loss per share. Diluted net earnings or loss per share reflect the weighted average number of shares issued and outstanding during the period, adjusted for potentially dilutive securities outstanding. Potentially dilutive securities are excluded from the computation of diluted net loss per share if their inclusion would be anti-dilutive. As all potentially dilutive securities were anti-dilutive as of March 31, 2026 and 2025, diluted net loss per share is the same as basic net loss per share for each three month period.
Potentially dilutive items outstanding as of March 31, 2026 and 2025 are as follows:
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2026 | | 2025 |
| Common stock warrants | 5,079,294 | | | 2,170,789 | |
| Contingently issuable shares | 1,827,624 | | | — | |
| Stock options | 743,872 | | | 938,131 | |
Unvested restricted stock awards subject to recourse and nonrecourse loans | 46,833 | | | 107,526 | |
Unvested restricted stock units | 9,461,039 | | | 5,480,113 | |
| Total potentially dilutive shares | 17,158,662 | | | 8,696,559 | |
Recent Accounting Pronouncements
Changes to GAAP are established by the Financial Accounting Standards Board (“FASB”), in the form of Accounting Standards Updates (“ASUs”), to the FASB’s Accounting Standards Codification (“ASC”). The Company will adopt these changes according to the various timetables the FASB specifies. There were no recently adopted accounting standards which had a material impact on the Company’s consolidated financial position, results of operations, changes in stockholders’ equity and cash flows.
Recent Accounting Pronouncements Adopted
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740) - Improvements to Income Tax Disclosures,” which requires greater disaggregation of income tax disclosures related to the income tax reconciliation and income taxes paid. The amendments improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. The new standard is effective for annual periods beginning after December 15, 2024. We prospectively adopted ASU 2023-09 as of December 31, 2025. The additional required disclosures did not have a material impact on our consolidated financial statements.
Recent Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,” which requires the disaggregation of certain expenses in the notes of the financial statements to provide enhanced transparency into the expense captions presented on the face of the statements of operations. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, and may be applied either prospectively or retrospectively. Early adoption is permitted. The adoption will require certain additional disclosure in the notes to the Company’s consolidated financial statements.
In May 2025, the FASB issued ASU 2025-03, “Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity,” which provides updates to the guidance for identifying the “accounting acquirer” in business combinations involving Variable Interest Entities. ASU 2025-03 is effective for annual periods beginning after December 15, 2026. The Company is evaluating the impact of this standard, but it does not expect the standard to have an impact on its financial statements and related disclosures.
In July 2025, the FASB issued ASU 2025-05, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets,” which provides a practical expedient for entities to estimate expected credit losses on current accounts receivable and current contract assets arising from revenue transactions accounted for under ASC 606. ASU 2025-05 is effective for the Company for annual periods beginning after December 15, 2025, and interim periods within those annual periods. The Company is currently evaluating the impact of the adoption of this guidance on its consolidated financial statements and disclosures.
In September 2025, the FASB issued ASU 2025-06, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software,” which removes all references to prescriptive and sequential software development stages and establishes new criteria for the capitalization of internal-use software costs. ASU 2025-06 is effective for annual periods beginning after December 15, 2027, and interim periods within
annual periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of this guidance on its consolidated financial statements and disclosures.
3. REVENUE
Disaggregated Revenue Information
All revenue recognized during the periods presented was attributable to the Company’s core business operations, which are conducted through its single operating segment. Revenue is generated from the Company’s operations in the United States.
The following table presents our revenues disaggregated by service type. This level of disaggregation takes into consideration how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors (in thousands):
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2026 | | 2025 |
| Fleet services | $ | 1,958 | | | $ | 211 | |
| Software services | 1,026 | | | 229 | |
| Total revenue | $ | 2,984 | | | $ | 440 | |
Fleet Services
The Company derives revenue from its fleet of autonomous robots by offering delivery services and branding services. Delivery services revenue is derived from outdoor delivery services through partnerships with platforms to fulfill orders and indoor delivery services through partnerships with healthcare organizations to assist healthcare workers with transporting items through healthcare facilities. Branding services revenue is derived from fees paid by customers for the display of their company’s branding on Serve robots and/or by reserving robots for appearances at marketing opportunities.
Software Services
Software services revenue is derived from licensing software to customers, and engineering and development projects. Software licensing generates revenue from fees paid by customers for access to the Company’s proprietary software platforms and/or hosting services. Engineering and development project revenue is derived from partnerships for the development of software solutions utilizing the internally developed technology platform.
Deferred Revenue
The Company records deferred revenues when cash payments are received or due in advance of the Company satisfying its performance obligations. The changes in the balances of deferred revenue were as follows (in thousands):
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2026 | | 2025 |
| Balance as of beginning of period | $ | 2 | | | $ | 20 | |
| Additions | 1,894 | | | — | |
| Increases due to acquisitions | 1,925 | | | — | |
| Revenue recognized | (1,297) | | | (20) | |
| Balance as of end of period | $ | 2,524 | | | $ | — | |
As of March 31, 2026, all of the deferred revenue is classified as current on the unaudited condensed consolidated balance sheet and expected to be recognized within the next twelve months.
Remaining Performance Obligation
Remaining performance obligation represents contracted revenue that has not yet been recognized, including unearned revenue and unbilled amounts that will be recognized as revenue in future periods. Remaining performance obligation is influenced by several factors, including seasonality, the timing of renewals, average contract terms and acquisitions. Remaining performance obligation is subject to future economic risks, including bankruptcies, regulatory changes and other market factors.
We have applied the practical expedients not to present unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, (ii) contracts with variable consideration that is allocated entirely to unsatisfied performance obligations or to a wholly unsatisfied promise accounted for under the series guidance, and (iii) contracts for which we recognize revenue at the amount which it has the right to invoice for services performed.
Remaining performance obligation consisted of the following (in thousands):
| | | | | | | | | | | | | | | | | |
| Current | | Noncurrent | | Total |
| As of December 31, 2025 | $ | — | | | $ | — | | | $ | — | |
| As of March 31, 2026 | $ | 2,917 | | | $ | 4,185 | | | $ | 7,102 | |
The majority of the Company’s noncurrent remaining performance obligation is expected to be recognized in the next 13 to 44 months.
4. ACQUISITIONS
Fiscal 2026 Acquisitions
Diligent Robotics, Inc. Acquisition
On January 27, 2026 (the “Diligent Closing Date”), the Company completed its acquisition of Diligent Robotics, Inc. (“Diligent”), a provider of AI-powered robot assistants for the healthcare industry. Pursuant to the Agreement and Plan of Merger (the “Diligent Merger Agreement”), dated as of January 19, 2026, by and among the Company, Delight Merger Sub, Inc., a Delaware corporation and direct wholly-owned subsidiary of the Company, Diligent, and Andrea Thomaz, an individual, solely in her capacity as the representative of the indemnifying securityholders, the Company acquired all of the issued and outstanding equity of Diligent (the “Diligent Acquisition”).
Pursuant to the terms of the Diligent Merger Agreement, the aggregate consideration paid by the Company to the Diligent stockholders at the closing of the Diligent Acquisition had an aggregated fair value of $25.7 million of cash, common stock, and earnout contingent consideration. After giving effect to the adjustments as set forth in the Diligent Merger Agreement, the Company issued 197,472 shares of the Company’s common stock to the Diligent stockholders with a fair value of $2.5 million based on the Company’s closing stock price as of the date of acquisition. In addition, up to 366,332 shares of the Company’s common stock may be issued in the future upon achievement of certain milestones set forth in the Diligent Merger Agreement, of which 274,749 shares relate to the contingent consideration included in the consideration transferred. The remaining 91,583 shares of the Company’s common stock to be issued upon achievement of certain future milestones as set forth in the Diligent Merger Agreement are attributed to certain employees and subject to a continuous service-condition. Refer to Note 10 for additional information regarding the earnout consideration arrangements.
The total preliminary fair value of consideration paid in connection with the acquisition of Diligent consisted of the following:
| | | | | | | | | | | | | | | | | |
| Shares | | Per Share | | Total Consideration
(in thousands) |
| Cash consideration paid | | | | | $ | 20,095 | |
Fair value of Serve’s common shares issuable to Diligent stockholders (including escrow amounts) | 197,472 | | | $ | 12.77 | | | 2,522 | |
| Fair value of contingent earnout consideration | 274,749 | | | $ | 11.25 | | | 3,090 | |
| Total purchase price consideration | | | | | $ | 25,707 | |
At the closing, each outstanding share of Diligent common stock, all Diligent options, and all Diligent warrants were automatically cancelled for no consideration and each outstanding share of Diligent preferred stock was automatically cancelled and converted into the right to receive shares of the Company’s common stock, including any escrow releases and earnout consideration, as set forth in the Diligent Merger Agreement. Each Diligent restricted stock unit held by a continuing employee immediately prior to the closing was assumed and converted into a restricted stock unit on a 1:1 basis and on substantially identical terms and conditions. The Company assumed 1,319,151 restricted stock units held by continuing employees of Diligent.
The Company allocated the fair value of the purchase price consideration to the tangible and intangible assets acquired and liabilities assumed, based on estimated fair values. The excess purchase price over those fair values is recorded as goodwill. The Company’s valuation assumptions of acquired assets and assumed liabilities require significant estimates with respect to intangible assets. The acquired company’s intangible assets are comprised of developed technology and trade name. The estimated fair values of the developed technology and trade name were determined using the relief from royalty method under the income-based approach. This method estimates the fair value of the intangible asset based on the present value of royalty payments that would be paid if the subject intangible asset was not owned but paid to a third-party for the use of the asset..
The preliminary goodwill of $10.4 million arising from the acquisition is attributed to the expected synergies, including innovation synergies, synergies related to the assembled workforce, and other benefits expected to be generated. Substantially all of the goodwill recognized is not expected to be deductible for tax purposes.
Certain data necessary to complete the purchase price allocation remains preliminary. The Company expects to complete the purchase price allocation within 12 months of the Diligent Closing Date, at which time the purchase price allocation set forth herein may be revised. Any such revisions or changes may be material. The Company utilized widely accepted income-based, market-based, and cost-based valuation approaches to perform the preliminary purchase price allocation.
The Company’s preliminary allocation of the purchase price, based on the estimated fair value of the assets acquired and liabilities assumed as of the Diligent Closing Date, is as follows (in thousands):
| | | | | |
| January 27, 2026 |
| Total purchase price consideration | $ | 25,707 | |
| |
| Assets acquired: | |
| Cash and cash equivalents | 557 | |
| Accounts receivable | 564 | |
| Prepaid expenses | 388 | |
| Property and equipment | 12,474 | |
| Intangible assets | 6,000 | |
| Capitalized software | 2,238 | |
| Other assets | 128 | |
| Total identified assets acquired | 22,349 | |
| |
| Liabilities assumed: | |
| Accounts payable | (2,010) | |
| Accrued liabilities | (2,327) | |
| Deferred revenue | (1,925) | |
| Deferred tax liability | (740) | |
| Other liabilities | (88) | |
| Total identified liabilities | (7,090) | |
| |
| Fair value of identifiable assets, net of identifiable liabilities assumed | $ | 15,259 | |
| Goodwill | $ | 10,448 | |
The following table sets forth the preliminary components of intangible assets acquired (in thousands) and their estimated useful life as of the date of acquisition (in years):
| | | | | | | | | | | | | | |
| Intangible Assets | | Weighted Average Useful Life | | January 27, 2026 |
| Developed technology | | 6 | | $ | 5,300 | |
| Trade names | | 4 | | 700 | |
| Total fair value of intangible assets | | | | $ | 6,000 | |
The Company recorded $1.2 million of acquisition related costs in the three months ended March 31, 2026, representing professional fees and other direct acquisition costs. These costs are recorded within general and administrative expense in our unaudited condensed consolidated statements of operations.
The amounts of revenue and loss from Diligent included in the Company’s unaudited condensed consolidated statements of operations from January 27, 2026 to the period ending March 31, 2026 was $1.2 million and $5.9 million, respectively.
Pro forma results (unaudited)
The following pro forma information for the three months ended March 31, 2026 assumes the Diligent Acquisition occurred as of the beginning of the year immediately preceding the transaction. The pro forma information contains the actual operating results of the Company combined with the results of Diligent prior to acquisition dates, adjusted to reflect
the pro forma impact of the acquisitions occurring as of January 1, 2025. The pro forma adjustments primarily consist of $2.0 million to remove interest expense recorded on debt paid off at close and the addition of $1.7 million in transaction costs. This pro forma presentation does not include any impact of transaction synergies.
The following table presents the unaudited pro forma consolidated revenue and net loss for the combined company as a result of the Diligent Acquisition (in thousands):
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2026 | | 2025 |
| Revenues | $ | 3,483 | | | $ | 2,803 | |
| Net Loss | $ | (50,630) | | | $ | (20,102) | |
The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the Diligent Acquisition been consummated as of January 1, 2025.
Vebu, Inc. Acquisition
On February 17, 2026 (the “Vebu Closing Date”), the Company completed its acquisition of Vebu, Inc. (“Vebu”), which specializes in developing advanced automation solutions and robotic systems that streamline food preparation and kitchen workflows across the food supply chain. Pursuant to the agreement and plan of merger (the “Vebu Merger Agreement”) dated February 5, 2026 entered into by and among Serve, Vebu and Serve Kitchen Robotics Inc., a Delaware corporation and direct wholly owned subsidiary of the Company, and James Buckly Jordan, an individual, solely in his capacity as the representative of the indemnifying securityholders (the “Vebu Acquisition”).
Pursuant to the terms of the Vebu Merger Agreement, the aggregate consideration paid by the Company to the Vebu stockholders at the closing of the Vebu Acquisition had an aggregate value of $3.7 million of cash, common stock, and earnout contingent consideration. The consideration includes $2.3 million paid in cash to satisfy the net debt adjustment and a potential earnout which may be earned upon the achievement of certain milestones set forth in the Vebu Merger Agreement. After giving effect to such adjustments as set forth in the Vebu Merger Agreement, the Company issued 147,445 shares of the Company’s common stock to the Vebu stockholders.
In addition, as set forth in the Vebu Merger Agreement, Vebu stockholders may be entitled to receive additional earnout consideration consisting of a number of shares of the Company’s common stock equal to 33% of the net proceeds generated during the earnout period, divided by the volume-weighted average price of the Company’s common stock over the earnout period (the “Earnout Consideration”). The Earnout Consideration is classified as a liability in accordance with ASC 480 because the Company is obligated to issue a variable number of shares. As of March 31, 2026, the fair value of the contingent consideration was deemed to be $5.0 thousand. The contingent consideration liability will be recognized at the point that the earnout is deemed probable. At the time it is recorded, it will be classified in the consolidated balance sheets based on the expected timing of settlement. Refer to Note 6 for information regarding the subsequent measurement of the contingent consideration liability at fair value.
The total preliminary fair value of consideration paid in connection with the acquisition of Vebu consisted of the following:
| | | | | | | | | | | | | | | | | |
| Shares | | Per Share | | Total Consideration
(in thousands) |
| Cash consideration paid for outstanding shares of Vebu common and preferred stock | | | | | $ | 2,305 | |
| Company common shares issuable to Vebu preferred stockholders | 147,445 | | | $ | 9.27 | | | 1,367 | |
| Fair value of contingent consideration issuable to Vebu preferred stockholders | | | | | 5 | |
| Total purchase price consideration | | | | | $ | 3,677 | |
At the closing, each outstanding share of Vebu common stock and preferred stock was automatically cancelled and converted into the right to receive shares of the Company’s common stock, (including any escrow releases and earnout
consideration), as set forth in the Vebu Merger Agreement. Each restricted stock unit held by a continuing employee immediately prior to the closing was assumed and converted by the Company into a Company RSU on a 1:1 basis and on substantially identical terms and conditions. The Company assumed 500,000 restricted stock units held by continuing employees of Vebu.
The Company allocated the fair value of the purchase price consideration to the tangible assets acquired and liabilities assumed, based on estimated fair values. The excess purchase price over those fair values is recorded as goodwill. The Company’s valuation assumptions of acquired assets and assumed liabilities require significant estimates with respect to intangible assets. The acquired company’s intangible asset is comprised of developed technology. The estimated fair value of the developed technology was determined using the relief from royalty method under the income-based approach. This method estimates the fair value of the subject intangible asset based on the present value of royalty payments that would be paid if the subject intangible asset was not owned but accessed through a license agreement.
The preliminary goodwill of $2.0 million arising from the acquisition is attributed to the expected synergies, including innovation synergies, and other benefits expected to be generated. Substantially all of the goodwill recognized is not expected to be deductible for tax purposes.
Certain data necessary to complete the purchase price allocation remains preliminary. The Company expects to complete the purchase price allocation within 12 months of the Vebu Closing Date, at which time the purchase price allocation set forth herein may be revised. Any such revisions or changes may be material. The Company utilized widely accepted income-based, market-based, and cost-based valuation approaches to perform the preliminary purchase price allocation.
The Company’s preliminary allocation of the purchase price, based on the estimated fair value of the assets acquired and liabilities assumed as of the Vebu Closing Date, is as follows (in thousands):
| | | | | |
| February 17, 2026 |
| Total purchase price consideration | $ | 3,677 | |
| |
| Assets acquired: | |
| Cash and cash equivalents | 396 | |
| Accounts receivable | 140 | |
| Prepaid expenses | 133 | |
| Property and equipment | 42 | |
| Intangible assets | 1,030 | |
| Operating lease right-of-use assets | 62 | |
| Other assets | 226 | |
| Total identified assets acquired | 2,029 | |
| |
| Liabilities assumed: | |
| Accounts payable | (240) | |
| Accrued liabilities | (69) | |
| Operating lease liabilities | (64) | |
| Total identified liabilities | (373) | |
| |
| Fair value of identifiable assets, net of identifiable liabilities assumed | $ | 1,656 | |
| Goodwill | $ | 2,021 | |
The following table sets forth the preliminary components of intangible assets acquired (in thousands) and their estimated useful life as of the date of acquisition (in years):
| | | | | | | | | | | |
| Weighted Average Useful Life | | February 17, 2026 |
| Developed technology | 6 | | $ | 1,030 | |
The Company recorded $0.4 million of acquisition related costs in the three months ended March 31, 2026, representing professional fees and other direct acquisition costs. These costs are recorded within general and administrative expense in our unaudited condensed consolidated statements of operations.
Fiscal 2025 Acquisitions
Voysys AB Acquisition
On April 1, 2025, (the “Voysys Closing Date”), the Company acquired from Phantom Auto Inc., a Delaware corporation (“Phantom”) (i) all of the issued and outstanding equity of Voysys AB, a limited liability company duly incorporated and organized under the laws of Sweden (“Voysys”) and (ii) certain intellectual property, including registered patents, of Phantom. The acquisition was accounted for under the acquisition method of accounting. Voysys is a Swedish pioneer in ultra-low latency video streaming, connectivity, and teleoperation technology. The Company’s acquisition of Voysys enhances Serve’s technology stack to support its rapidly growing fleet of autonomous delivery robots.
The Company allocated the fair value of the purchase price consideration to the tangible assets, liabilities, and intangible assets acquired, based on their estimated fair values. The excess of the purchase price over those fair values is recorded as goodwill. The Company’s valuation assumptions of acquired assets and assumed liabilities require significant estimates,
particularly for intangible assets. The acquired company’s intangible assets consist of customer relationships, trade name, and developed technology. The estimated fair value of customer relationships, trade name, and developed technology were determined using the multi-period excess earnings method and the relief from royalty method. Both methods require forward-looking estimates that are discounted to determine the fair value of the intangible asset using a risk-adjusted discount rate that is reflective of the level of risk associated with future estimates associated with the asset group, which could be affected by future economic and market conditions. The estimated fair value of the developed technology is also dependent on the selection of the royalty rate used in the valuation method.
The total purchase consideration was approximately $5.7 million in cash consideration. The goodwill of $4.3 million arising from the acquisition is attributed to the expected synergies, including future cost savings, and other benefits expected to be generated. Substantially all of the goodwill recognized is not expected to be deductible for tax purposes.
The Company’s allocation of the purchase price, based on the estimated fair value of the assets acquired and liabilities assumed as of the Voysys Closing Date, is as follows (in thousands):
| | | | | |
| April 1, 2025 |
| Cash consideration paid | $ | 5,170 | |
| Escrow amount | 575 | |
| Purchase price | 5,745 | |
| |
| Assets acquired: | |
| Cash and cash equivalents | 111 | |
| Other current assets | 73 | |
| Other assets | 17 | |
| Intangible assets, net | 1,370 | |
Total identifiable assets acquired | 1,571 | |
| |
| Liabilities assumed: | |
| Current liabilities | (153) | |
| Total identifiable liabilities assumed | (153) | |
| |
| Fair value of identifiable assets, net of identifiable liabilities assumed | $ | 1,418 | |
| Goodwill | $ | 4,327 | |
The following table sets forth the components of intangible assets acquired (in thousands) and their estimated useful life as of the date of acquisition (in years):
| | | | | | | | | | | | | | |
| Intangible Assets | | Weighted Average Useful Life | | April 1, 2025 |
| Developed technology | | 15 | | $ | 980 | |
| Customer relationships | | 25 | | 255 | |
| Trade names | | 10 | | 135 | |
| Total fair value of intangible assets | | | | $ | 1,370 | |
Acquisition related costs represent costs incurred for professional fees and other direct acquisition costs. These costs are recorded within general and administrative expense in our unaudited condensed consolidated statements of operations. In connection with the acquisition of Voysys, the Company recorded zero acquisition-related costs in the three months ended March 31, 2026.
Vayu Acquisition
On August 14, 2025 (the “Vayu Closing Date”), the Company entered into an Agreement and Plan of Merger by and among the Company, Valencia Merger Sub I Inc., a Delaware corporation and the Company’s direct wholly-owned subsidiary (“Valencia Merger Sub I”), Valencia Merger Sub II LLC, a Delaware limited liability company and the Company’s direct wholly-owned subsidiary (“Valencia Merger Sub II”), Vayu and certain of Vayu’s securityholders (the “Vayu Merger Agreement”).
Pursuant to the Vayu Merger Agreement, on August 15, 2025, (i) Valencia Merger Sub I merged with and into Vayu, with Vayu surviving as a direct wholly-owned subsidiary of the Company and (ii) Vayu subsequently merged with and into Valencia Merger Sub II, with Valencia Merger Sub II surviving the merger. In connection with the closing of the transactions contemplated by the Vayu Merger Agreement, the Company acquired all of the issued and outstanding equity of Vayu, which was accounted for under the acquisition method of accounting. Vayu is a pioneer in urban robot navigation using large-scale AI models, and the Company’s acquisition of Vayu supports the adoption of advanced AI-driven autonomy by integrating Vayu’s foundation model technology and simulation capabilities.
The total fair value of consideration paid in connection with the acquisition of Vayu consisted of the following:
| | | | | | | | | | | | | | | | | |
| Shares | | Per Share | | Total Consideration
(in thousands) |
| Cash paid for outstanding shares of Vayu common and preferred stock | | | | | $ | 1,875 | |
| Net working capital adjustment | | | | | 310 | |
| Company common shares issuable to Vayu common and preferred stockholders | 1,539,906 | | $ | 9.71 | | | 14,952 | |
| Company warrants issued to Vayu SAFE holder, Khosla Ventures | 4,000,000 | | $ | 5.41 | | | 21,640 | |
| Replacement equity awards attributable to pre-combination service | — | | | — | | | 734 | |
| Total purchase price consideration | | | | | $ | 39,511 | |
The Company allocated the fair value of the purchase price consideration to the tangible assets acquired and liabilities assumed, based on estimated fair values. The excess purchase price over those fair values is recorded as goodwill. The Company’s valuation assumptions of acquired assets and assumed liabilities require significant estimates with respect to intangible assets. The acquired company’s intangible assets are comprised of developed technology. The estimated fair value of the developed technology was determined using the cost method, which estimates the value of an asset based on the current cost to replace or reproduce it, adjusted for physical deterioration, functional obsolescence, and economic factors. This method reflects the amount a market participant would need to invest to create an asset of comparable utility, considering current technology and development costs.
The total purchase consideration was approximately $39.5 million of cash, common stock, warrant, and replacement equity awards. The goodwill of $11.2 million arising from the acquisition is attributed to the expected synergies, including innovation synergies, and other benefits expected to be generated. Substantially all of the goodwill recognized is not expected to be deductible for tax purposes. The estimated fair value of the warrants was determined using the Black-Scholes model. The estimated fair value of the replacement equity awards attributable to pre-combination service was determined using the binomial lattice model.
In connection with the Vayu Merger Agreement, the Company granted performance-based RSUs (“PRSUs”). 880,001 PRSUs were granted to certain employees and 560,000 PRSUs were granted to certain shareholders. All PRSUs will vest or commence vesting upon achievement of a specified operational target (the “Milestone”) by December 31, 2026 (the “Milestone Date”). In addition, the PRSUs may be subject to a continuous service condition.
Certain data necessary to complete the purchase price allocation remains preliminary. The Company expects to complete the purchase price allocation within 12 months of the Vayu Closing Date, at which time the purchase price allocation set forth herein may be revised. The Company does not expect these revisions to be material. The Company utilized widely accepted income-based, market-based, and cost-based valuation approaches to perform the preliminary purchase price allocation.
The Company’s preliminary allocation of the purchase price, based on the estimated fair value of the assets acquired and liabilities assumed as of the Vayu Closing Date, is as follows (in thousands):
| | | | | |
| August 15, 2025 |
| Total purchase price consideration | $ | 39,511 | |
| |
| Assets acquired: | |
| Cash and cash equivalents | 6 | |
| Other current assets | 57 | |
| Intangible assets | 32,439 | |
| Total identifiable assets acquired | 32,502 | |
| |
| Liabilities assumed: | |
| Accounts payable | (366) | |
| Other current liabilities | (44) | |
| Deferred tax liability | (3,784) | |
| Total identifiable liabilities assumed | (4,194) | |
| |
| Fair value of identifiable assets, net of identifiable liabilities assumed | $ | 28,308 | |
| Goodwill | $ | 11,203 | |
The following table sets forth the preliminary components of intangible assets acquired (in thousands) and their estimated useful life as of the date of acquisition (in years):
| | | | | | | | | | | |
| Weighted Average Useful Life | | August 15, 2025 |
| Developed technology | 5 | | $ | 32,439 | |
The Company recorded $245.0 thousand of acquisition related costs in the three months ended March 31, 2026, representing professional fees and other direct acquisition costs. These costs are recorded within general and administrative expense in our unaudited condensed consolidated statements of operations.
5. GOODWILL AND INTANGIBLE ASSETS, NET
Goodwill represents the excess of the cost over the net tangible and identifiable intangible assets of acquired businesses.
The changes in the carrying amount of goodwill during the three months ended March 31, 2026 were as follows (in thousands):
| | | | | |
| Total |
| Balance as of December 31, 2025 | $ | 15,530 | |
Acquisitions | 12,468 | |
| Balance as of March 31, 2026 | $ | 27,998 | |
Identifiable intangible assets acquired in business combinations are recorded based upon fair value at the date of acquisition. Carrying values are adjusted to reflect the impacts of foreign currency.
Intangible assets, net consisted of the following as of March 31, 2026 (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Weighted-Average Remaining Useful Life (in years) | | Gross Carrying Value | | Accumulated Amortization | | Net Carrying Value |
Developed technology | 4.8 | | $ | 39,749 | | | $ | 4,279 | | | $ | 35,470 | |
Customer relationships | 24.0 | | 255 | | 10 | | 245 |
Trade names | 4.7 | | 835 | | 42 | | 793 |
| Balance as of March 31, 2026 | | | $ | 40,839 | | | $ | 4,331 | | | $ | 36,508 | |
Developed technology intangible assets are being amortized over 5 to 15 years. Customer relationships are being amortized over 25 years. Trade name intangible assets are being amortized over 4 to 10 years.
Amortization expense associated with intangible assets was $1.8 million for the three months ended March 31, 2026. No amortization expense associated with intangible assets was recognized during the three months ended March 31, 2025.
The estimated future amortization expense of intangible assets as of March 31, 2026 is as follows (in thousands):
| | | | | |
Year Ending December 31, | Amortization Expense |
| Remainder of 2026 | $ | 5,855 | |
| 2027 | 7,807 |
| 2028 | 7,807 |
| 2029 | 7,807 |
| 2030 | 5,754 |
Thereafter | 1,478 |
Total estimated future amortization expense | $ | 36,508 | |
6. FAIR VALUE MEASUREMENTS
Assets Measured at Fair Value on a Recurring Basis
The following tables set forth the Company’s cash equivalents and marketable securities that were measured at fair value on a recurring basis by level within the fair value hierarchy as of December 31, 2025 and March 31, 2026 (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Fair Value Measurements
as of December 31, 2025: |
| Level 1 | | Level 2 | | Level 3 | | Total |
| Assets: | | | | | | | |
Cash equivalents | | | | | | | |
Money market funds | $ | 86,714 | | | $ | — | | | $ | — | | | $ | 86,714 | |
| Commercial paper | — | | | 3,995 | | — | | | 3,995 |
| Corporate bonds | — | | | — | | | — | | | — | |
| Short-term marketable securities | | | | | | | |
| Certificates of deposit | — | | | 40,182 | | — | | | 40,182 |
Commercial paper | — | | | 35,814 | | — | | | 35,814 |
| Corporate notes/bonds | — | | | 47,928 | | — | | | 47,928 |
| U.S. Government agencies | — | | | 1,251 | | — | | | 1,251 |
U.S. Treasury securities | — | | | 1,995 | | — | | | 1,995 |
| Long-term marketable securities | | | | | | | |
| Corporate notes/bonds | — | | | 20,341 | | — | | | 20,341 |
| U.S. Government agencies | — | | | 6,003 | | — | | | 6,003 |
| Total fair value of assets | $ | 86,714 | | $ | 157,509 | | | $ | — | | | $ | 244,223 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Fair Value Measurements
as of March 31, 2026: |
| Level 1 | | Level 2 | | Level 3 | | Total |
| Assets: | | | | | | | |
Cash equivalents | | | | | | | |
Money market funds | $ | 25,606 | | | $ | — | | | $ | — | | | $ | 25,606 | |
| Commercial paper | — | | | — | | | — | | | — | |
| Corporate bonds | — | | | 1,454 | | | — | | | 1,454 | |
| Short-term marketable securities | | | | | | | |
| Certificates of deposit | — | | | 25,000 | | | — | | | 25,000 | |
Commercial paper | — | | | 28,540 | | | — | | | 28,540 | |
| Corporate notes/bonds | — | | | 83,571 | | | — | | | 83,571 | |
| U.S. Government agencies | — | | | 3,253 | | | — | | | 3,253 | |
U.S. Treasury securities | — | | | — | | | — | | | — | |
| Long-term marketable securities | | | | | | | |
| Corporate notes/bonds | — | | | 8,930 | | | — | | | 8,930 | |
| U.S. Government agencies | — | | | 1,000 | | | — | | | 1,000 | |
| Total fair value of assets | $ | 25,606 | | | $ | 151,748 | | | $ | — | | | $ | 177,354 | |
The fair value of the Company’s Level 1 financial instruments is based on quoted market prices for identical instruments in active markets. The fair value of the Company’s Level 2 fixed income securities is obtained from independent pricing services, which may use quoted market prices for identical or comparable instruments in less active markets or model driven valuations using observable market data or inputs corroborated by observable market data.
Liabilities Measured at Fair Value on a Recurring Basis
As discussed in Note 4, the Company entered into a contingent consideration arrangement in connection with its acquisition of Vebu, in which the Company will make additional payments to the Vebu stockholders based on achievement of certain milestones. In addition, the Company awarded a certain employee with a compensation arrangement in which the employee is eligible to receive a variable number of shares based on specified performance metrics. Both arrangements are liability-classified arrangements and are accounted for in accordance with ASC 480.
The fair value of the liability classified arrangements are determined using a Monte Carlo simulation which uses Level 3 unobservable inputs. These liability-classified arrangements are carried at fair value which is estimated by applying a probability-based model utilizing inputs based on timing of achievement that were unobservable in the market. Actual results may differ from the projected results and could have a significant impact on the estimated fair value of the contingent consideration. Changes in fair value are recorded in other income in the unaudited condensed consolidated statements of operations and comprehensive loss.
The most significant unobservable inputs used to determine the fair value of the liability-classified contingent considerations relate to the revenue growth rate (3.0%), discount rate (28.0%) and the market price of risk adjustment (4.0%). As of March 31, 2026, the fair value of the Company’s Level 3 liabilities was immaterial.
7. MARKETABLE SECURITIES
The following tables summarize the cost or amortized cost, gross unrealized gain, gross unrealized loss, and fair value of the Company’s cash equivalents and marketable securities as of December 31, 2025 and March 31, 2026 (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2025 |
| Cost or Amortized Cost | | Unrealized | | Estimated Fair Value |
| | Gains | | Losses | |
Cash equivalents | | | | | | | |
Money market funds | $ | 86,714 | | | $ | — | | | $ | — | | | $ | 86,714 | |
| Commercial paper | 3,995 | | | — | | | — | | | 3,995 | |
| Corporate bonds | — | | | — | | | — | | | — | |
| Short-term marketable securities | | | | | | | |
| Certificates of deposit | 40,001 | | | 181 | | | — | | | 40,182 | |
Commercial paper | 35,814 | | | — | | | — | | | 35,814 | |
| Corporate notes/bonds | 47,912 | | | 16 | | | — | | | 47,928 | |
| U.S. Government agencies | 1,251 | | | — | | | — | | | 1,251 | |
U.S. Treasury securities | 1,994 | | | 1 | | | — | | | 1,995 | |
| Long-term marketable securities | | | | | | | |
| Corporate notes/bonds | 20,348 | | | — | | | (7) | | | 20,341 | |
| U.S. Government agencies | 6,005 | | | — | | | (2) | | | 6,003 | |
Total | $ | 244,034 | | | $ | 198 | | | $ | (9) | | | $ | 244,223 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| March 31, 2026 |
| Cost or Amortized Cost | | Unrealized | | Estimated Fair Value |
| | Gains | | Losses | |
Cash equivalents | | | | | | | |
Money market funds | $ | 25,606 | | | $ | — | | | $ | — | | | $ | 25,606 | |
| Commercial paper | — | | | — | | | — | | | — | |
| Corporate bonds | 1,454 | | | — | | | — | | | 1,454 | |
| Short-term marketable securities | | | | | | | |
| Certificates of deposit | 25,000 | | | — | | | — | | | 25,000 | |
Commercial paper | 28,563 | | | — | | | (23) | | | 28,540 | |
| Corporate notes/bonds | 83,705 | | | — | | | (134) | | | 83,571 | |
| U.S. Government agencies | 3,252 | | | 1 | | | — | | | 3,253 | |
U.S. Treasury securities | — | | | — | | | — | | | — | |
| Long-term marketable securities | | | | | | | |
| Corporate notes/bonds | 8,945 | | | — | | | (15) | | | 8,930 | |
| U.S. Government agencies | 1,001 | | | — | | | (1) | | | 1,000 | |
Total | $ | 177,526 | | | $ | 1 | | | $ | (173) | | | $ | 177,354 | |
For marketable securities with unrealized loss positions, the Company does not intend to sell these securities, and it is more likely than not that the Company will hold these securities until maturity or a recovery of the cost basis. No allowance for credit losses was recorded for these securities as of March 31, 2026 or December 31, 2025.
8. PROPERTY AND EQUIPMENT, NET
The following is a summary of property and equipment, net (in thousands):
| | | | | | | | | | | |
| | March 31,
2026 | | December 31,
2025 |
| Robot assets | $ | 55,013 | | | $ | 47,221 | |
| Construction in progress | 8,928 | | | 3,357 | |
| Tooling | 2,130 | | | 2,111 | |
| Leasehold improvement | 441 | | | 414 | |
| Office equipment | 500 | | | 375 | |
| Total | 67,012 | | | 53,478 | |
| Less: Accumulated depreciation | (9,917) | | | (6,465) | |
| Property and equipment, net | $ | 57,095 | | | $ | 47,013 | |
Depreciation expense was $3.4 million and $0.5 million for the three months ended March 31, 2026 and 2025, respectively.
9. LEASES
Operating Leases – Right of Use Asset and Liability
The Company leases its facilities, which include office and warehouse space, under non-cancelable lease agreements with terms expiring between May 2026 and November 2030. The Company also has leases for cargo vans with terms expiring between November 2026 and March 2028. Certain of these arrangements have free rent, escalating rent payment provisions, lease renewal options, and tenant allowances. Under such arrangements, the Company recognizes an ROU asset and lease liability on the unaudited condensed consolidated balance sheets. Lease costs are recognized on a straight-line basis over the non-cancelable lease term.
The components of lease costs related to the Company’s operating leases are classified in the unaudited condensed consolidated statements of operations as follows (in thousands):
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2026 | | 2025 |
| Operations | $ | 895 | | | $ | 191 | |
| Research and development | 6 | | | 68 | |
| General and administrative | 168 | | | 23 | |
| Sales and marketing | — | | | — | |
| Total lease costs | $ | 1,069 | | | $ | 282 | |
The components of lease costs were as follows (in thousands):
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2026 | | 2025 |
| Operating lease costs | $ | 799 | | | $ | 238 | |
| Variable lease costs | 226 | | | 44 | |
| Short-term lease costs | 44 | | | — | |
| Total lease costs | $ | 1,069 | | | $ | 282 | |
Supplemental cash flow information related to leases is as follows (in thousands):
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2026 | | 2025 |
| Operating cash flows paid for operating leases | $ | 622 | | | $ | 278 | |
| Right-of-use assets obtained in exchange for operating lease obligations | $ | 57 | | | $ | 325 | |
Supplemental balance sheet information related to leases is as follows:
| | | | | | | | | | | |
| March 31,
2026 | | December 31,
2025 |
| Weighted-average remaining lease term (in years) | 3.05 | | 3.42 |
| Weighted-average discount rate | 7.35 | % | | 7.39 | % |
The maturities of lease liabilities as of March 31, 2026, are as follows (in thousands):
| | | | | |
| Remainder of 2026 | $ | 1,657 | |
| 2027 | 1,842 | |
| 2028 | 838 | |
| 2029 | 576 | |
| 2030 | 423 | |
Thereafter | — | |
| Total undiscounted future cash flows | 5,336 | |
| Less: imputed interest | (518) | |
| Total operating lease liabilities | $ | 4,818 | |
As of March 31, 2026, the Company had additional operating lease commitments of $4.2 million for non-cancelable leases that have not yet commenced. The nature of such lease commitments is consistent with the nature of the leases that the Company has executed thus far.
Finance Lease – Failed Sales-Leaseback
In November 2022, the Company entered into a lease agreement with Farnam Capital for its robot assets. As per ASC 842-40-25-1, the transaction was considered a failed sales-leaseback and therefore the lease was accounted for as a financing agreement. In April 2025, the Company exercised the option to purchase the assets at the end of the lease for $2.2 million. There was no outstanding liability at March 31, 2026.
10. STOCKHOLDERS’ EQUITY (DEFICIT) AND STOCK-BASED COMPENSATION
Common Stock
Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Common stockholders are not entitled to receive dividends, unless declared by the Company’s board of directors.
As of March 31, 2026, the Company is authorized to issue 10,000,000 shares of preferred stock, par value $0.0001 per share, and 300,000,000 shares of common stock, par value $0.0001 per share.
Dividend Rights
Subject to applicable law and the rights and preferences, if any, of any holders of any outstanding series of preferred stock, the holders of our common stock are entitled to receive dividends if our Board, in its discretion, determines to issue dividends and then only at the times and in the amounts that our Board may determine, payable either in cash, in property or in shares of capital stock.
Common Stock Transactions
On January 7, 2025, the Company entered into a securities purchase agreement with a certain institutional investor pursuant to which the Company agreed to issue and sell, in a registered direct offering an aggregate of 4,210,525 shares of the Company’s common stock at a price of $19.00 per share (the “January Registered Direct Offering”). The gross proceeds to the Company from the January Registered Direct Offering were approximately $80 million, before deducting the placement agents’ fees and other offering expenses payable by the Company.
On August 15, 2025, the Company entered into the Vayu Merger Agreement, pursuant to which the Company issued 1,494,906 shares of its common stock in initial upfront consideration. Additionally, the Company granted future earnout consideration consisting of up to 560,000 shares of common stock, contingent on the achievement of certain performance milestones. The Company also issued warrants to purchase 4,000,000 shares of common stock, with an exercise price of $10.36 per share (which amount is equal to the 10-day volume-weighted average price of the Company’s common stock prior to the closing of the transaction), to a certain Vayu securityholder. As of March 31, 2026, 1,494,906 of the 7,558,314 shares of deal consideration have been issued and are outstanding.
On October 10, 2025, the Company entered into a securities purchase agreement with certain institutional investors pursuant to which the Company agreed to issue and sell, in a registered direct offering an aggregate of 6,250,000 shares of the Company’s common stock, $0.0001 par value per share at a price of $16.00 per share (the “October Registered Direct Offering”). The gross proceeds to the Company from the October Registered Direct Offering were approximately $100 million, before deducting the placement agents’ fees and other offering expenses payable by the Company.
On January 27, 2026, the Company entered into the Diligent Merger Agreement, pursuant to which the Company issued 197,472 shares of its common stock in initial upfront consideration. Additionally, the Company granted future earnout of up to 366,332 shares of common stock subject to the achievement of certain performance milestones. The Company also issued 1,319,151 shares of common stock to certain employees. As of March 31, 2026, 1,516,623 of the total 1,882,955 shares of common stock contemplated in the Diligent Merger Agreement have been issued and are outstanding.
On February 17, 2026, the Company entered into the Vebu Merger Agreement, pursuant to which the Company issued 147,445 shares of its common stock in initial upfront consideration. The Company also issued 500,000 shares of common
stock to certain employees. As of March 31, 2026, 647,445 of the total 647,445 shares of common stock contemplated in the Vebu Merger Agreement have been issued and are outstanding.
Equity Compensation Plans
Vayu 2022 Equity Incentive Plan
In connection with the Company’s acquisition of Vayu, the Company assumed the Vayu 2022 Equity Incentive Plan (the “2022 Vayu Plan”) including the options outstanding immediately prior to the acquisition and the number of shares that remain available for issuance pursuant to the 2022 Vayu Plan, as adjusted by the exchange ratio for which such shares are exchangeable pursuant to the Vayu Merger Agreement. The 2022 Vayu Plan permits the grant of incentive stock options, nonstatutory stock options, SARs, restricted stock, RSUs, and stock bonus awards.
Subject to adjustments as set forth in the 2022 Vayu Plan, the maximum aggregate number of shares of the Company’s common stock that may be issued under the 2022 Vayu Plan may not exceed 5,344,275 shares. Subject to adjustments as set forth in the 2022 Vayu Plan, the maximum aggregate number of shares that may be issued under the 2022 Vayu Plan pursuant to incentive stock options may not exceed the number set forth above plus, to the extent allowable under Section 422 of the Internal Revenue Code and the regulations promulgated thereunder, any shares that again become available for issuance pursuant to the 2022 Vayu Plan. As of March 31, 2026, there were approximately 94,566 shares available to be issued under the 2022 Vayu Plan.
To the extent a stock award under the 2022 Vayu Plan should expire or be forfeited or become unexercisable for any reason without having been exercised in full, or is surrendered pursuant to an exchange program, the unissued shares that were subject thereto will continue to be available under the 2022 Vayu Plan for issuance pursuant to future stock awards. In addition, any shares that are retained by the Company upon exercise of a stock award in order to satisfy the exercise or purchase price for such stock award or any withholding taxes due with respect to such stock award will be treated as not issued and will continue to be available under the 2022 Vayu Plan for issuance pursuant to future stock awards. Shares issued under the 2022 Vayu Plan and later forfeited to the Company due to the failure to vest or repurchased by the Company at the original purchase price paid to the Company for the shares (including, without limitation, upon forfeiture to or repurchase by the Company in connection with a participant ceasing to be a service provider) will be available for future grant under the 2022 Vayu Plan. To the extent a stock award under the 2022 Vayu Plan is paid out in cash rather than shares, such cash payment will not result in reducing the number of shares available for issuance under the 2022 Vayu Plan.
The 2022 Vayu Plan is administered by the Company’s board of directors or a committee thereof (the “2022 Vayu Plan Administrator”). The 2022 Vayu Plan Administrator has the authority to determine the terms and conditions of stock awards granted under the 2022 Vayu Plan, including the recipients, type of award, number of shares subject to each award, exercise or purchase price, vesting schedule, and other terms and conditions. Stock awards may be granted to employees, directors, and independent contractors of the Company and its affiliates. The 2022 Vayu Plan also provides for adjustments in the event of certain corporate transactions, such as stock splits, mergers, or other changes in capitalization, and includes customary provisions regarding the administration, amendment, and termination of the plan.
2023 Equity Incentive Plan
The Company’s 2023 Equity Incentive Plan (the “2023 Plan”) permits the grant of incentive stock options, nonstatutory stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”) and stock bonus awards (all such types of awards, collectively, “stock awards”).
The shares may be authorized, but unissued, or reacquired common stock. Furthermore, subject to adjustments as set forth in the 2023 Plan, in no event shall the maximum aggregate number of shares that may be issued under the 2023 Plan pursuant to Incentive Stock Options exceed the number set forth above plus, to the extent allowable under Section 422 of the Code and the regulations promulgated thereunder, any shares that again become available for issuance pursuant to the 2023 Plan.
The number of shares available for issuance under the 2023 Plan may, at the discretion of our Board or a committee thereof, which committee will be constituted to satisfy applicable laws (“Plan Administrator”), be increased on October 1st of each fiscal year beginning with the 2023 fiscal year until the 2023 Plan terminates, in each case, in an amount equal to the lesser of (i) 4% of the shares of the Company’s common stock issued and outstanding on the last day of the
immediately preceding month on a fully-diluted and as-converted basis and (ii) such other number of shares as determined by our Board.
Subject to adjustments as set forth in the 2023 Plan, the maximum aggregate number of shares of common stock that may be issued under the 2023 Plan will not exceed 7,487,029 shares. In June 2025, the 2023 Plan was amended, and the number of shares authorized under the 2023 Plan was increased by 2,280,000 additional shares. In October 2025, the number of shares authorized under the 2023 Plan was increased by 3,289,146 additional shares, pursuant to the evergreen provisions under the 2023 Plan. As of March 31, 2026, there were a total of 2,068,772 shares available to be issued under the 2023 Plan.
To the extent stock awards or shares issued under Serve’s 2021 Equity Incentive Plan (“2021 Plan”) that were assumed by the Company (“Existing Plan Awards”) are exercised in full or are surrendered pursuant to an exchange program (as defined in the 2023 Plan), the unissued shares that were subject thereto will continue to be available under the 2023 Plan for issuance pursuant to future stock awards. In addition, any shares that are retained by us upon exercise of a stock award or Existing Plan Award in order to satisfy the exercise or purchase price for such stock award or Existing Plan Award or any withholding taxes due with respect to such stock award or Existing Plan Award will be treated as not issued and will continue to be available under the 2023 Plan for issuance pursuant to future stock awards. Shares issued under the 2023 Plan or an Existing Plan Award and later forfeited to us due to the failure to vest or repurchased by us at the original purchase price paid to us for the shares (including without limitation upon forfeiture to or repurchase by us in connection with a participant ceasing to be a service provider) will again be available for future grant under the 2023 Plan. To the extent a stock award under the 2023 Plan or Existing Plan Award is paid out in cash rather than shares, such cash payment will not result in reducing the number of shares available for issuance under the 2023 Plan.
Vayu 2025 Equity Incentive Plan
In connection with the Company’s acquisition of Vayu, the Company assumed certain equity awards that had been issued pursuant to the Vayu 2025 Equity Incentive Plan (the “2025 Vayu Plan”). In accordance with the Vayu Merger Agreement, the 2025 Vayu Plan was adopted and approved, and stockholder approval was obtained, prior to the closing of the acquisition. Prior to the closing, Vayu granted restricted stock units (“Vayu RSUs”) covering an equivalent of an aggregate of 1,373,971 shares of the Company’s common stock to certain individuals who were expected to become continuing employees of the Company, pursuant to forms of award agreement reasonably approved by the Company. The Vayu RSUs were only effective for those individuals who accepted their awards by timely executing and returning the applicable award agreement prior to the closing date and who became continuing employees.
Immediately following the issuance of the Vayu RSUs and the closing of the acquisition, the 2025 Vayu Plan was terminated in accordance with the Vayu Merger Agreement, and no further awards will be granted under the 2025 Vayu Plan. The 2025 Vayu Plan permitted the grant of incentive stock options, nonstatutory stock options, restricted stock, restricted stock units, stock appreciation rights, and stock bonus awards. Subject to adjustments as set forth in the 2025 Vayu Plan, the maximum aggregate number of shares of the Company’s common stock that could have been issued under the 2025 Vayu Plan did not exceed 1,400,000 shares. Any shares subject to awards under the 2025 Vayu Plan that expired, were forfeited, or became unexercisable without having been exercised in full, or were surrendered pursuant to an exchange program, would have continued to be available for issuance under the plan prior to its termination. After the termination of the 2025 Vayu Plan, no further awards may be granted under the plan, and any shares underlying awards that are forfeited or canceled will not become available for future issuance.
Diligent 2026 Equity Incentive Plan
In connection with the Company’s acquisition of Diligent, the Company assumed certain equity awards that had been issued pursuant to the Diligent 2026 Equity Incentive Plan (the “2026 Diligent Plan”). In accordance with the Diligent Merger Agreement, the 2026 Diligent Plan was adopted and approved, and stockholder approval was obtained, prior to the closing of the acquisition. Prior to the closing, Diligent granted restricted stock units (“Diligent RSUs”) covering an equivalent of an aggregate of 1,319,151 shares of the Company’s common stock to certain individuals who were expected to become continuing employees of the Company, pursuant to forms of award agreement reasonably approved by the Company. The Diligent RSUs were only effective for those individuals who accepted their awards by timely executing and returning the applicable award agreement prior to the closing date and who became continuing employees.
Immediately following the issuance of the Diligent RSUs and the closing of the acquisition, the 2026 Diligent Plan was terminated in accordance with the Diligent Merger Agreement, and no further awards will be granted under the 2026
Diligent Plan. The 2026 Diligent Plan permitted the grant of incentive stock options, nonstatutory stock options, restricted stock, restricted stock units, stock appreciation rights, and stock bonus awards. Subject to adjustments as set forth in the 2026 Diligent Plan, the maximum aggregate number of shares of the Company’s common stock that could have been issued under the 2026 Diligent Plan did not exceed 1,319,179 shares. Any shares subject to awards under the 2026 Diligent Plan that expired, were forfeited, or became unexercisable without having been exercised in full, or were surrendered pursuant to an exchange program, would have continued to be available for issuance under the plan prior to its termination. After the termination of the 2026 Diligent Plan, no further awards may be granted under the plan, and any shares underlying awards that are forfeited or canceled will not become available for future issuance.
Vebu 2026 Equity Incentive Plan
In connection with the Company’s acquisition of Vebu, the Company assumed certain equity awards that had been issued pursuant to the Vebu 2026 Equity Incentive Plan (the “2026 Vebu Plan”). In accordance with the Vebu Merger Agreement, the 2026 Vebu Plan was adopted and approved, and stockholder approval was obtained, prior to the closing of the acquisition. Prior to the closing, Vebu granted restricted stock units (“Vebu RSUs”) covering an equivalent of an aggregate of 500,000 shares of the Company’s common stock to certain individuals who were expected to become continuing employees of the Company, pursuant to forms of award agreement reasonably approved by the Company. The Vebu RSUs were only effective for those individuals who accepted their awards by timely executing and returning the applicable award agreement prior to the closing date and who became continuing employees.
Immediately following the issuance of the Vebu RSUs and the closing of the acquisition, the 2026 Vebu Plan was terminated in accordance with the Vebu Merger Agreement, and no further awards will be granted under the 2026 Vebu Plan. The 2026 Vebu Plan permitted the grant of incentive stock options, nonstatutory stock options, restricted stock, restricted stock units, stock appreciation rights, and stock bonus awards. Subject to adjustments as set forth in the 2026 Vebu Plan, the maximum aggregate number of shares of the Company’s common stock that could have been issued under the 2026 Vebu Plan did not exceed 500,000 shares. Any shares subject to awards under the 2026 Vebu Plan that expired, were forfeited, or became unexercisable without having been exercised in full, or were surrendered pursuant to an exchange program, would have continued to be available for issuance under the plan prior to its termination. After the termination of the 2026 Vebu Plan, no further awards may be granted under the plan, and any shares underlying awards that are forfeited or canceled will not become available for future issuance.
Restricted Stock Awards (RSAs)
The following table summarizes activity related to our restricted stock awards for the three months ended March 31, 2026:
| | | | | | | | | | | |
| Restricted Stock Awards |
| Number of Shares | | Weighted Average Grant Date Fair Value |
| Nonvested as of December 31, 2025 | 285,053 | | $ | 0.08 | |
| Granted | — | | | — | |
Vested | (120,178) | | 0.01 | |
| Forfeited | (2,132) | | — | |
| Nonvested as of March 31, 2026 | 162,743 | | $ | 0.13 | |
During 2023, the Company issued shares of restricted common stock for recourse notes. The shares were issued with a corresponding note receivable, a recourse loan that was collateralized by the underlying shares. As of March 31, 2026 and December 31, 2025, there were 46,833 and 46,833 shares of common stock issued, respectively, that are subject to the non-recourse notes and deemed not outstanding.
Restricted Stock Units (RSUs)
The following table summarizes activity related to our RSUs for the three months ended March 31, 2026:
| | | | | | | | | | | |
| Restricted Stock Units |
| Number of Shares | | Weighted Average Grant Date Fair Value |
| Nonvested as of December 31, 2025 | 7,217,790 | | $ | 9.14 | |
| Granted | 3,117,525 | | 12.36 | |
Vested | (666,307) | | 8.68 | |
| Forfeited | (207,969) | | 12.96 | |
| Nonvested as of March 31, 2026 | 9,461,039 | | $ | 10.32 | |
During the three months ended March 31, 2026, the Company granted 3,117,525 RSUs with vesting periods ranging 1 month to 4 years.
In connection with the transactions contemplated by the Vayu Merger Agreement (the “Vayu Acquisition”), in August 2025, the Company granted 493,970 RSUs to certain employees as a retention equity award (the “Vayu Retention RSUs”). The Vayu Retention RSUs vest over 4 years from the date of the consummation of the Vayu Acquisition with 25% of the Vayu Retention RSUs vesting on the first anniversary of the grant date.
In connection with the transactions contemplated by the Diligent Merger Agreement (the “Diligent Acquisition”), in January 2026, the Company granted 1,319,151 RSUs to certain employees as a retention equity award (the “Diligent Retention RSUs”). The Diligent Retention RSUs vest over 4 years from the date of the consummation of the Diligent Acquisition with 25% of the Diligent Retention RSUs vesting on the first anniversary of the grant date.
In connection with the transactions contemplated by the Vebu Merger Agreement (the “Vebu Acquisition”), in February 2026, the Company granted 500,000 RSUs to certain employees as a retention equity award (the “Vebu Retention RSUs”). The Vebu Retention RSUs vest over 4 years from the date of the consummation of the Vebu Acquisition with 25% of the Vebu Retention RSUs vesting on the first anniversary of the grant date.
During the three months ended March 31, 2026, the Company repurchased no shares of common stock.
Performance-Based Restricted Stock Units
A summary of the Company’s performance-based restricted stock unit (“PRSU”) activity for the three months ended March 31, 2026 is as follows:
| | | | | | | | | | | |
| Number of Shares | | Weighted Average Grant Date Fair Value |
| Nonvested as of December 31, 2025 | 801,292 | | | $ | 9.71 | |
| Granted | 100,000 | | | 9.43 | |
| Vested | — | | | — | |
| Forfeited | — | | | — | |
| Nonvested as of March 31, 2026 | 901,292 | | | $ | 8.90 | |
Vayu PRSUs
On August 15, 2025, the Company granted 1,440,001 shares contemplated by the Vayu Acquisition, of which the Company granted 880,001 PRSUs to employees (“Vayu PRSUs”). The remaining 560,000 shares were granted to nonemployees. The Vayu PRSUs will vest or commence vesting upon achievement of certain milestones as defined per the Vayu Merger Agreement. In addition, the Vayu PRSUs may also be subject to a continuous service condition. At the point
the milestones have been deemed to be achieved (the “Milestone Date”), approximately 66% of the Vayu PRSUs will vest immediately, and the remaining 34% will vest over 2.5 years following the Milestone Date. The total grant date fair value of the Vayu PRSUs was $8.5 million, which was determined based on the Company’s stock price on date of grant. This expense is expected to be recognized at a point in time when achievement of the milestone is considered probable, using management’s best estimates, which consider the inherent risk and uncertainty regarding the future outcomes of the performance conditions.
As of March 31, 2026, the Company does not consider the achievement of the milestone to be probable. Accordingly, as of March 31, 2026, the Company did not recognize stock-based compensation expense, as defined by ASC 718. As of March 31, 2026, all shares of the Vayu PRSUs were unvested and outstanding.
March PRSUs (March 2026)
On March 23, 2026, the Company granted 100,000 PRSUs to an employee of the Company (“March PRSUs”) from the 2023 Plan. The March PRSUs shall vest upon satisfaction of both (i) a service-based vesting condition and (ii) a performance-based vesting condition. The service-based vesting condition shall be satisfied based on the employee’s continued employment. The performance-based vesting condition shall be satisfied upon the achievement of certain milestones. At the point the conditions of the March PRSUs are deemed to have been achieved, 25% of the total March PRSUs will vest immediately, and 1/30th of the remaining shares will vest on the same day of each month thereafter for 30 months, subject to the employee’s continued employment. The total grant date fair value of the March PRSUs was $0.9 million, which was determined based on the Company’s stock price on date of grant. This expense is expected to be recognized at a point in time when achievement of the milestone is considered probable, using management’s best estimates, which consider the inherent risk and uncertainty regarding the future outcomes of the performance conditions.
As of March 31, 2026, the Company does not consider the achievement of the milestone to be probable. Accordingly, as of March 31, 2026, the Company did not recognize stock-based compensation expense, as defined by ASC 718. As of March 31, 2026, all shares of the March PRSUs were unvested and outstanding.
Stock Options
A summary of information related to stock options for the three months ended March 31, 2026 is as follows:
| | | | | | | | | | | | | | | | | |
| Options | | Weighted Average Exercise Price | | Intrinsic Value (in thousands) |
| Outstanding as of December 31, 2025 | 826,539 | | $ | 1.01 | | | $ | 8,573 | |
| Granted | - | | $ | - | | | $ | - | |
| Exercised | (78,529) | | $ | 4.20 | | | $ | 663 | |
| Forfeited | (4,138) | | $ | 6.93 | | | $ | 35 | |
| Outstanding as of March 31, 2026 | 743,872 | | $ | 0.91 | | | $ | 6,273 | |
| | | | | |
| Exercisable as of March 31, 2026 | 641,531 | | $ | 0.91 | | | $ | 5,415 | |
| Exercisable and expected to vest at March 31, 2026 | 743,872 | | $ | 0.91 | | | $ | 6,273 | |
Refer to Note 4 for information regarding the valuation of options granted during the year ended December 31, 2025 as part of the Vayu acquisition.
Nonemployee Share-based Awards
On August 15, 2025, the Company granted 560,000 shares contemplated by the Vayu Acquisition to nonemployee shareholders. The vesting terms of these shares are consistent with the Vayu PRSUs. The total grant date fair value was $5.4 million, which was determined based on the Company’s stock price on date of grant. This expense is expected to be recognized at a point in time when achievement of the milestone is considered probable, using management’s best estimates, which consider the inherent risk and uncertainty regarding the future outcomes of the performance conditions. As of March 31, 2026, the Company does not consider the achievement of the milestone to be probable. Accordingly, as of
March 31, 2026, the Company did not recognize stock-based compensation expense, as defined by ASC 718. As of March 31, 2026, all shares were unvested and outstanding.
On January 27, 2026, the Company granted 366,332 awards contemplated by the Diligent Acquisition to nonemployee shareholders (“Diligent Nonemployee Awards”). Of this total, 274,749 awards will vest or commence vesting upon achievement of certain performance-based milestones as defined per the Diligent Merger Agreement (“Diligent Nonemployee Performance-based Awards”). At the point the milestones have been deemed to be achieved (the “Milestone Date”), approximately all of the Diligent Nonemployee Performance-based Awards will vest immediately. The total grant date fair value of the Diligent Nonemployee Performance-based Awards was $3.1 million, which was determined using the Monte Carlo simulation option pricing model. The Diligent Nonemployee Performance-based Awards were included in the consideration transferred as part of the Diligent Acquisition. As such, settlement of the equity-classified contingent consideration will be accounted for within equity. As of March 31, 2026, the Company considers the achievement of the Diligent Nonemployee Performance-based Awards milestone to be probable. The remaining 91,583 awards granted to nonemployee shareholders of the Company will be earned upon satisfaction of a service-based condition achieved eighteen months following the closing of the Diligent Acquisition (“Diligent Nonemployee Service-based Awards”). The fair value of the Diligent Nonemployee Service-based Awards at date of grant was determined to be $1.2 million and will be recognized as stock-based compensation expense over the requisite service period. All Diligent Nonemployee Service-based Award shares will vest immediately upon satisfaction of the service-based condition. As of March 31, 2026, all Diligent Nonemployee Awards were unvested and outstanding.
Stock-based Compensation Expense
Stock-based compensation expense for both employees and nonemployees was $7.4 million and $3.9 million for the three months ended March 31, 2026 and 2025, respectively. Stock-based compensation expense for employees is classified based on the cost center to which the award holder belongs. Stock-based compensation expense for nonemployees is classified as general and administrative expense. The Company recorded stock-based compensation expense in the unaudited condensed consolidated statements of operations as follows (in thousands):
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2026 | | 2025 |
| General and administrative | $ | 3,447 | | | $ | 1,824 | |
| Research and development | 3,522 | | | 1,928 | |
| Operations | 250 | | | 80 | |
| Sales and marketing | 134 | | | 46 | |
| Total stock-based compensation expense | $ | 7,353 | | | $ | 3,878 | |
During the three months ended March 31, 2026 and 2025, the Company recorded stock-based compensation expense related to vesting of RSUs and RSAs of $7.2 million and $3.8 million, respectively. As of March 31, 2026, there was $91.1 million of unamortized compensation costs related to unvested RSUs, which is expected to be recognized over a weighted-average period of approximately 3.1 years. As of March 31, 2026, there was an immaterial amount of unamortized compensation costs related to unvested RSAs, which is expected to be recognized over a weighted-average period of approximately 0.2 years.
During the three months ended March 31, 2026 and 2025, the Company recorded an immaterial amount of stock-based compensation expense for stock options. As of March 31, 2026, there was an immaterial amount of total unamortized compensation cost related to unvested stock option awards, which is expected to be recognized over a weighted average period of 0.6 years.
Warrants
The following is a summary of warrants as of March 31, 2026:
| | | | | | | | | | | |
| Warrants | | Weighted Average
Exercise Price |
| Outstanding as of December 31, 2025 | 5,079,294 | | $ | 10.18 | |
| Granted | — | | | — | |
| Exercised | — | | | — | |
| Forfeited | — | | | — | |
| Outstanding as of March 31, 2026 | 5,079,294 | | $ | 10.18 | |
| | | |
| Exercisable as of March 31, 2026 | 5,079,294 | | $ | 10.18 | |
The weighted-average remaining term of the warrants outstanding was 5.1 years as of March 31, 2026.
KV Warrants
In accordance with the terms of the Vayu Merger Agreement, upon the closing of the transaction, the Company issued 4,000,000 warrants to a certain Vayu securityholder (the “KV Warrants”). Each KV Warrant entitles the holder to purchase one share of the Company’s common stock, subject to adjustment thereunder, at an exercise price of $10.36 per share (which amount is equal to the 10-day volume-weighted average price of the common stock prior to the closing of the transaction). The KV Warrants contain customary terms and are exercisable at any time on or after August 15, 2025, and terminate on August 15, 2031. The KV Warrants were issued pursuant to an exemption from registration under Section 4(a)(2) of the Securities Act.
At-the-Market Offerings
On March 6, 2025, the Company entered into a Controlled Equity OfferingSM Agreement (the “2025 Distribution Agreement”) with Cantor Fitzgerald & Co., Wedbush Securities Inc., Northland Securities, Inc., Ladenburg Thalmann & Co. Inc. and Seaport Global Securities LLC (collectively, the “2025 ATM Agents”) under which the Company may offer and sell, from time to time in its sole discretion, shares of the Company’s common stock with aggregate gross sales proceeds of up to $150 million through an “at the market” equity offering program. Under the 2025 Distribution Agreement, the Company will set the parameters for the sale of shares. Subject to the terms and conditions of the 2025 Distribution Agreement, the 2025 ATM Agents may sell the shares by methods deemed to be an “at the market” offering as defined in Rule 415 promulgated under the Securities Act. The 2025 Distribution Agreement provides that the Company will pay the 2025 ATM Agents a commission of up to 3% of the gross proceeds of any shares of common stock sold through the 2025 ATM Agents under the 2025 Distribution Agreement.
During the three months ended March 31, 2026, the Company sold 190,000 shares of the Company’s common stock under the 2025 Distribution Agreement at a weighted-average price of $8.17 per share and raised $1.6 million of gross proceeds. After deducting approximately $46.6 thousand of commissions and offering costs incurred by the Company during the three months ended March 31, 2026, the net proceeds from sales of the Company’s common stock under the 2025 Distribution Agreement were $1.5 million during the three months ended March 31, 2026. Inception to date, as of March 31, 2026, the Company has sold a total of 6,689,935 shares of the Company’s common stock under the 2025 Distribution Agreement at a weighted-average price of $12.37 per share and raised $82.8 million of gross proceeds. After deducting approximately $2.5 million of commissions and offering costs incurred by the Company, the net proceeds from sales of the Company’s common stock were $80.3 million as of March 31, 2026. As of March 31, 2026, the Company had approximately $67.2 million of remaining capacity to sell the Company’s common stock under the 2025 Distribution Agreement.
11. INCOME TAXES
For interim financial reporting, the Company estimates its annual effective tax rate based on the projected income for its entire fiscal year and records a provision or benefit for income taxes on a quarterly basis based on the estimated annual effective income tax rate, adjusted for any discrete tax items.
The Company recorded income tax benefit of $0.6 million for the three months ended March 31, 2026 compared to zero expense for the three months ended March 31, 2025. Income tax expense for the three months ended March 31, 2026 was favorably impacted by $0.6 million of net discrete tax benefit, primarily related to the release of prior year valuation allowance amounts. The release was driven by the acquisition of net deferred liabilities of Diligent. Income tax expense for the three months ended March 31, 2025 was entirely attributable to an increase in the valuation allowance of deferred tax assets with no tax expense arising from the estimated annual effective tax rate.
The Company periodically evaluates its valuation allowance requirements as facts and circumstances change and may adjust its deferred tax asset valuation allowances accordingly. It is reasonably possible that the Company will either add to or reverse a portion of its existing deferred tax asset valuation allowances in the future. Such changes in the deferred tax asset valuation allowances will be reflected in the current operations through the Company’s effective income tax rate.
As of March 31, 2026, there have been no material changes in unrecognized tax benefits from those disclosed in the Company’s most recent audited financial statements as of December 31, 2025. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes in its unaudited condensed consolidated statements of operations and comprehensive loss.
The Company regularly assesses the likelihood of an adverse outcome resulting from examinations to determine the adequacy of its tax reserves. As of March 31, 2026, the Company believes that it is more likely than not that the tax positions it has taken will be sustained upon the resolution of its audits resulting in no material impact on its consolidated financial position and the results of operations and cash flows. However, the final determination with respect to any tax audits, and any related litigation, could be materially different from the Company’s estimates and/or from its historical income tax provisions and income tax liabilities and could have a material effect on operating results and/or cash flows in the periods for which that determination is made. In addition, future period earnings may be adversely impacted by litigation costs, settlements, penalties, and/or interest assessments related to income tax examinations.
12. COMMITMENTS AND CONTINGENCIES
Legal Proceedings
From time to time, the Company is a party to litigation and subject to claims incidental to its business. Although the results of litigation and claims cannot be predicted with certainty, the Company currently believes that the final outcome of ongoing matters will not have a material adverse effect on its business. Regardless of the outcome, litigation can have an adverse impact on the Company because of judgment, defense and settlement costs, diversion of management resources, and other factors. At each reporting period, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable, requiring recognition of a loss accrual, or whether the potential loss is reasonably possible, requiring potential disclosure. Legal fees are expensed as incurred.
In December 2024, a class action complaint was filed in the Superior Court of California, County of Los Angeles, alleging that the Company violated the California Labor Code, among other claims. In December 2025, the Company agreed with the plaintiff to settle for the amount of $375.0 thousand. As a result, the Company recorded a total of $408.8 thousand in legal settlement expense, of which $375.0 thousand was recorded for the settlement with the plaintiff and the remaining $33.8 thousand was recorded for the related payroll tax expense as a result of the settlement payment. The legal settlement expense is presented in accrued liabilities on the unaudited condensed consolidated balance sheet as of March 31, 2026.
Tariffs
On February 20, 2026, the U.S. Supreme Court issued a ruling invalidating certain tariffs previously imposed under the International Emergency Economic Powers Act (“IEEPA”). As a result of this ruling, we may be eligible for a refund of tariffs previously paid on imported goods. As the recoverability and timing of any such refund remains uncertain, we have not recognized a receivable and corresponding offset to expense or asset as of March 31, 2026 and will not until such amounts are realized or realizable. We continue to monitor these developments and their potential impact on our results of operations, including reduction of revenue for any potential refunds to certain energy storage customers for which a
contractual obligation exists. Further, we will continue to monitor changes to the import and export policies of the U.S. and other countries that could impact our financial position, results of operations and cash flows.
13. SEGMENT INFORMATION
Based on the applicable criteria under the accounting standard, including quantitative thresholds, the Company has identified one operating and reportable segment (the “Segment”) for the three months ended March 31, 2026. The Segment is focused on enhancing the Company’s advanced, AI-powered robotics mobility platform that integrates proprietary hardware, AI, computer vision, and cloud-based fleet management software to enable autonomous operation in complex, real-world settings.
Operating segments are defined as components of an enterprise for which separate financial information is available for evaluation by the chief operating decision maker (“CODM”) in deciding how to allocate resources and assess performance. The Company has identified our Chief Executive Officer as the chief operating decision maker. The CODM assesses performance for the Segment and decides how to allocate resources based on net loss. The CODM uses net loss in deciding how to allocate capital within the Segment, and as a measurement to monitor budget versus actual results. The CODM also uses net loss in assessing performance of the Segment and in establishing management’s compensation.
The Segment derives revenue from customers by providing (i) services via the Company’s robot fleet, including indoor and outdoor delivery services, branding and experiential services, and (ii) access to software developed for the robot fleet, including certain autonomous capabilities. The majority of the Segment’s revenue is derived from robot delivery services and the Segment’s long-term partnerships with food delivery platforms. The Segment’s operations are primarily based in the United States and Canada, and it manages its business activities on a consolidated basis. The Segment derives all revenue from its United States operations. The Segment’s assets are primarily based in the United States. Assets based in foreign countries are not material to the operations of the Segment. The services provided by the robot fleet are offered and deployed in a similar manner across all jurisdictions in which the Company operates.
The accounting policies of the Segment are the same as those described in the summary of significant accounting policies. The measure of segment assets is reported on the unaudited condensed consolidated balance sheets as total consolidated assets. The Segment does not have intra-entity sales or transfers. Financial information for the Segment is consistent with the financial information presented in these unaudited condensed consolidated financial statements. In addition to the expenses presented on the Company’s unaudited condensed consolidated statements of operations, the CODM considers stock-based compensation expense as a significant expense within net loss. Refer to Note 10 for additional information about the Segment’s stock-based compensation expense, which is consistent with the Company’s consolidated stock-based compensation expense. Additional descriptions of the components of the financial information found throughout these unaudited condensed consolidated financial statements are consistent with the information for the Segment, including the concentration of credit risk.