Serve Robotics Inc. /DE/SERV

Serve Robotics Inc. /DE/ Fair Value Disclosure

10-KFiled Mar 12, 20262 min read
FAIR VALUE MEASUREMENTS
Assets Measured at Fair Value on a Recurring Basis
The following table sets 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 (in thousands):
Fair Value Measurements
as of December 31, 2025:
Level 1Level 2Level 3Total
Cash equivalents
Money market funds
$86,714 $— $— $86,714 
Commercial paper— 3,995— 3,995
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
$86,714 $157,509 $— $244,223 

There were no Level 1, 2 or 3 assets or liabilities as of December 31, 2024.
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.
Assets Measured at Fair Value on a Non-Recurring Basis
Derivative Liability
In connection with the issuance of the Company’s convertible notes, the Company recorded a derivative liability during the year ended December 31, 2024 (see Note 9). The fair value of the derivative liability was valued using a probability-weighted scenario analysis utilizing the terms of the notes under the with-or-without method and was therefore classified as a Level 3 asset. The Company determined a 100% probability of conversion into equity as the notes were converted into shares of the Company’s common stock upon the Offering in April 2024. Upon the consummation of the Offering in April 2024, all the convertible notes, including principal and accrued interest, were converted into 2,104,562 shares of the Company’s common stock. Accordingly, the related derivative liability was converted into additional paid-in capital as of April 2024.
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Historical Timeline

Fiscal YearFiled
2025Mar 12, 2026Showing above
2024Mar 6, 2025
2023Feb 29, 2024

About Fair Value Disclosures

Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.

Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.

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