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Item 1. Financial Statements

2025-11-14 compared with 2025-08-14 · 743 added, 630 removed, 174 unchanged (89% of the section changed)

Financial Statements.

FINANCIAL STATEMENTS

BALANCE SHEETS

June 30, 2025

December 31, 2024

CURRENT ASSETS

2 unchanged sentences

Deferred offering costs

Investments at fair value

Other current assets

1 unchanged sentence

LONG-TERM ASSETS

Property and equipment, net

Property and equipment,

Right of use assets - operating

Security deposit

Long-term assets

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

LIABILITIES AND STOCKHOLDERS’

EQUITY (DEFICIT)

CURRENT LIABILITIES

2 unchanged sentences

Credit card payable

Convertible note payable, net of discount of $ 128,000

Current portion of note payable

Current portion of operating

lease liability

Convertible note payable,

net of discount of $ 282,667 and issuance costs of $ 240,000

Current portion of note

Total current liabilities

NONCURRENT LIABILITIES

Note payables, net of current portion

Noncurrent portion of operating

lease liability

Note payables, net of current

Total liabilities

Commitments and Contingencies (See Note 12)

Commitments and Contingencies

(See Note 13)

STOCKHOLDERS’ EQUITY (DEFICIT)

Common stock, $ 0.0002 par value, 200,000,000 shares authorized, 33,023,385 shares and 29,120,905 issued and outstanding at June

30, 2025, and December 31, 2024, respectively

Treasury stock, 2,500,000 at cost

Additional paid-in capital, net of offering costs

Common stock, $ 0.0002 par

value, 200,000,000 shares

authorized, 34,233,087 issued

and 34,213,387 outstanding as at September 30,

2025, and 29,120,905 issued

and outstanding at December 31, 2024

Treasury stock, at cost, 19,700 and - 0 -

shares as of September 30, 2025, and December 31, 2024

Additional paid-in capital

Subscription receivable

2 unchanged sentences

( 15,920,555 )

Total stockholders’ equity (deficit)

TOTAL LIABILITIES AND

STOCKHOLDERS’ EQUITY (DEFICIT)

Total stockholders’ equity

TOTAL LIABILITIES AND STOCKHOLDERS’

EQUITY (DEFICIT)

accompanying condensed notes to unaudited financial statements.

STATEMENTS OF OPERATIONS

Ended June 30,

Ended September 30,

OPERATING EXPENSES

4 unchanged sentences

OTHER INCOME (EXPENSES)

Interest expense and bank charges

Interest expense and bank

Realized gain on investments

Unrealized loss on investments

Total other income (expenses)

3 unchanged sentences

( 3,199,606 )

( 2,375,855 )

PROVISION FOR INCOME TAXES

5 unchanged sentences

Basic and diluted

WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING:

WEIGHTED-AVERAGE COMMON

SHARES OUTSTANDING:

Basic and diluted

1 unchanged sentence

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

the Three and Six Months Ended June 30, 2025 and 2024 (Unaudited)

the Nine Months Ended September 30, 2025 and 2024 (Unaudited)

of Common Shares

of Treasury Shares

Paid-In Capital,

Net of Offering

Receivable ($)

Stockholders’

Equity (Deficit) ($)

JANUARY 1, 2025

Stockholders’ Equity (Deficit) ($)

BALANCE, JANUARY 1, 2025

$ ( 15,920,555 )

$ ( 983,175 )

of common stock, net

of common stock upon exercise of warrants, net

of common stock for deferred offering costs

Issuance of common stock,

Issuance of common stock

upon exercise of warrants, net

Issuance of common stock

for deferred offering costs

Stock-based compensation

( 1,978,165 )

MARCH 31, 2025

BALANCE, MARCH 31, 2025

$ ( 17,898,720 )

of common stock, net

of common stock upon exercise of warrants, net

of common stock for options exercise

of common stock for settlement of debt

Reclassification

of deferred offering costs

Issuance of common stock,

Issuance of common stock

upon exercise of warrants, net

Issuance of common stock

for options exercise

Issuance of common stock

for settlement of debt

Reclassification of deferred

offering costs

Stock-based compensation

( 4,689,964 )

JUNE 30, 2025

BALANCE, JUNE 30, 2025

$ ( 22,588,684 )

JANUARY 1, 2024

Issuance of common stock,

Issuance of common stock

for options exercise

Issuance of common stock

for the conversion of convertible notes

Repurchase of common stock

Reclassification of deferred

offering costs

Stock-based compensation

( 2,236,543 )

of common stock, net

MARCH 31, 2024

BALANCE, SEPTEMBER 30, 2025

( 24,825,227 )

BALANCE, JANUARY 1, 2024

$ ( 11,382,654 )

$ ( 477,766 )

Issuance of common stock,

Stock-based compensation

BALANCE, MARCH 31, 2024

$ ( 12,299,407 )

of common stock and warrants for cash, net

$ ( 373,549 )

Issuance of common stock

and warrants for cash, net

Stock-based compensation

( 1,459,102 )

JUNE 30, 2024

( 1,459,102 )

BALANCE, JUNE 30, 2024

$ ( 13,758,509 )

1 unchanged sentence

$ ( 13,758,509 )

$ ( 1,046,773 )

Issuance of common stock

Stock-based compensation

- stock awards

Stock-based compensation

- stock options

BALANCE, SEPTEMBER 30, 2024

$ ( 14,582,260 )

$ ( 765,570 )

$ ( 14,582,260 )

$ ( 765,570 )

accompanying condensed notes to unaudited financial statements.

STATEMENTS OF CASH FLOWS

the Six Months Ended June 30, 2025 and 2024 (Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES

the Nine Months Ended September 30, 2025 and 2024 (Unaudited)

CASH FLOWS FROM OPERATING

$ ( 8,904,672 )

$ ( 3,199,606 )

Adjustments to reconcile net loss to net cash used in operating activities

Adjustments to reconcile

net loss to net cash used in operating activities

Stock-based compensation

Depreciation and amortization

Amortization of discount on convertible debt

Changes in operating assets and liabilities

Amortization of discount

on convertible debt

Amortization of issuance

costs on convertible debt

Realized gain on investments

Unrealized depreciation

on investments

Changes in operating assets

and liabilities

(Increase) decrease in

9 unchanged sentences

( 1,959,447 )

CASH FLOWS FROM INVESTING ACTIVITIES

CASH FLOWS FROM INVESTING

Construction in progress

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from sale of common stock, net

Proceeds from the exercise of warrants, net

Proceeds from sales of

Purchase of investments

( 4,967,259 )

Net cash used in investing

( 2,036,474 )

CASH FLOWS FROM FINANCING

Proceeds from sale of common

Purchase of treasury stock

Proceeds from the exercise

of warrants, net

Repayments of note payables

Proceeds from issuance of convertible debt

Proceeds from issuance

of convertible debt

Deferred offering costs

Net cash provided by financing activities

Net cash provided by financing

NET INCREASE (DECREASE) IN CASH

1 unchanged sentence

CASH, END OF PERIOD

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

SUPPLEMENTAL DISCLOSURE

OF CASH FLOW INFORMATION

Cash paid for:

SUPPLEMENTAL DISCLOSURE OF NONCASH INFORMATION

Common stock issued as payment of offering costs

Common stock issued as settlement of legal expenses

Deferred offering costs recognized as additional paid-in capital

Common stock issued as

payment of offering costs

Common stock issued as

settlement of legal expenses

Conversion of notes payable

to common stock

Deferred offering costs

recognized as additional paid-in capital

Cashless exercise of stock options

accompanying condensed notes to unaudited financial statements.

CONDENSED NOTES

TO FINANCIAL STATEMENTS

months ended June 30, 2025

NATURE OF OPERATIONS

Arrive AI Inc.

(the Company) was incorporated

on April 30, 2020, in the State of Delaware as Dronedek Corporation.

On July 27, 2023, Dronedek Corporation changed its name to Arrive

Technology Inc.

NOTES TO FINANCIAL STATEMENTS

the nine months ended September 30, 2025

OF OPERATIONS

(the Company) was incorporated on April 30, 2020, in the State of Delaware as Dronedek Corporation.

On July 27, 2023, Dronedek

Corporation changed its name to Arrive Technology Inc.

On September 27, 2024, Arrive Technology Inc.

changed its name to Arrive AI Inc.

The Company is a developmental technology

company with a focus on designing and implementing a commercially viable smart mailbox for drone, robotic and human package receiving

The Company is subject to a number of

risk similar to those of other companies of similar size in its industry, including, but not limited to, the need for successful development

of products, the need for additional capital (or financing) to fund operating losses, competition from substitute products and services

from larger companies, protection of proprietary technology, patent litigation, dependence on key individuals, and risks associated with

changes in information technology.

SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The financial statements

(unaudited) have been prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP) and

with the instructions to Form 10-Q of Regulation S-K.

These unaudited financial statements should be read in conjunction with the Company’s

audited financial statements and related notes thereto for the year ended December 31, 2024.

In the opinion of management, all adjustments,

consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for

the interim periods presented have been reflected herein.

The results of operations for the interim periods are not necessarily indicative

of the results to be expected for the full year.

Notes to the financial statements that would substantially duplicate the disclosures

contained in the audited financial statements for the fiscal year ended December 31, 2024, have been omitted.

Use of Estimates

The preparation of financial statements

in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities

at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Actual results

could differ from those estimates.

Management evaluates its estimates and assumptions on an ongoing basis using historical experience

and other factors, including the current economic environment and makes adjustments when facts and circumstances dictate.

These estimates

are based on information available as of the date of the financial statements;

therefore, actual results could differ from those estimates.

ARRIVE AI INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

SIGNIFICANT ACCOUNTING POLICIES (Continued)

Concentration of

The Company maintains

its cash balances at one financial institution.

The account is insured by the Federal Deposit Insurance Corporation (FDIC) up to a specified

The Company is a developmental technology company with a focus on designing and implementing a commercially viable smart mailbox for

drone, robotic and human package receiving and storage.

Company is subject to a number of risk similar to those of other companies of similar size in its industry, including, but not limited

to, the need for successful development of products, the need for additional capital (or financing) to fund operating losses, competition

from substitute products and services from larger companies, protection of proprietary technology, patent litigation, dependence on key

individuals, and risks associated with changes in information technology.

ACCOUNTING POLICIES

of Accounting

financial statements (unaudited) have been prepared in accordance with accounting principles generally accepted in the United States

of America (US GAAP) and with the instructions to Form 10-Q of Regulation S-K.

These unaudited financial statements should be read in

conjunction with the Company’s audited financial statements and related notes thereto for the year ended December 31, 2024.

the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial

position and the results of operations for the interim periods presented have been reflected herein.

The results of operations for the

interim periods are not necessarily indicative of the results to be expected for the full year.

Notes to the financial statements that

would substantially duplicate the disclosures contained in the audited financial statements for the fiscal year ended December 31, 2024,

have been omitted.

preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the

reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses

during the reporting period.

Actual results could differ from those estimates.

Management evaluates its estimates and assumptions on

an ongoing basis using historical experience and other factors, including the current economic environment and makes adjustments when

facts and circumstances dictate.

These estimates are based on information available as of the date of the financial statements;

actual results could differ from those estimates.

TO FINANCIAL STATEMENTS (Continued)

SIGNIFICANT ACCOUNTING

POLICIES (Continued)

Concentration

of Credit Risk

Company maintains its cash balances at two financial institutions.

The accounts are insured by the Federal Deposit Insurance Corporation

(FDIC) up to a specified limit.

The Company’s balances at the financial institutions periodically exceed federally insured limits.

At June 30, 2025 and December

31, 2024, the Company’s uninsured cash balances totaled approximately $ 357,500 and $ 0 , respectively.

Management believes

that the Company is not exposed to any significant risk concerning its cash balances.

To date, the Company has not recognized any losses

caused by uninsured balances.

Accounts Receivable

and Allowance for Credit Losses

Accounts receivable

are customer obligations due under normal trade terms, which are typically due upon receipt of the invoice.

Credit is extended based on

evaluation of a customer’s financial condition and collateral is not required.

Accounts receivable are stated at amounts due from

customers net of an allowance for credit losses.

The Company recognizes an allowance for expected credit losses at each balance sheet

At September 30, 2025 and December 31, 2024, the Company’s uninsured cash balances totaled approximately $ 541,775 and $ 0 , respectively.

believes that the Company is not exposed to any significant risk concerning its cash balances.

To date, the Company has not recognized

any losses caused by uninsured balances.

Receivable and Allowance for Credit Losses

receivable are customer obligations due under normal trade terms, which are typically due upon receipt of the invoice.

Credit is extended

based on evaluation of a customer’s financial condition and collateral is not required.

Accounts receivable are stated at amounts

due from customers net of an allowance for credit losses.

The Company recognizes an allowance for expected credit losses at each balance

This estimate is derived from a review of the Company’s historical losses based on the aging of receivables.

Receivables with

similar risk characteristics are pooled for the estimation of expected credits losses.

Management adjusts its historical estimate based

on its assessment of current conditions, reasonable and supportable forecasts regarding future events, and any other factors deemed relevant

by the Company.

At each reporting date, the Company updates its estimate of expected credit losses to reflect any changes in credit risk

since the receivable was initially recorded.

writes off receivables when there is information that indicates the debtor is facing significant financial difficulty and there is no

possibility of recovery.

If any recoveries are made from any accounts previously written off, they will be recognized in earnings in the

year of recovery, in accordance with the entity’s accounting policy election.

The Company has not incurred material write-offs as

a whole for the six months ended June 30, 2025.

Based upon the information available, no allowances for credit losses has been recorded

as the Company believes the balance is fully collectable.

The property and equipment

is recorded at cost.

The Company’s policy is to depreciate the cost of the property and equipment using the straight-line method

over the estimated useful life of the asset.

The costs of maintenance and repairs are charged to expense when incurred (none noted in

the current or prior year as it relates to the vehicle).

The useful life of the property and equipment for purposes of computing depreciation

with similar risk characteristics are pooled for the estimation of expected credits losses.

Management adjusts its historical estimate

based on its assessment of current conditions, reasonable and supportable forecasts regarding future events, and any other factors deemed

relevant by the Company.

At each reporting date, the Company updates its estimate of expected credit losses to reflect any changes in

credit risk since the receivable was initially recorded.

Company writes off receivables when there is information that indicates the debtor is facing significant financial difficulty and there

is no possibility of recovery.

If any recoveries are made from any accounts previously written off, they will be recognized in earnings

in the year of recovery, in accordance with the entity’s accounting policy election.

The Company has not incurred material write-offs

as a whole for the nine months ended September 30, 2025.

Based upon the information available, no allowances for credit losses has been

recorded as the Company believes the balance is fully collectable.

and Equipment

property and equipment is recorded at cost.

The Company’s policy is to depreciate the cost of the property and equipment using

the straight-line method over the estimated useful life of the asset.

The costs of maintenance and repairs are charged to expense when

incurred (none noted in the current or prior year as it relates to vehicles).

The useful life of the property and equipment for purposes

of computing depreciation is:

OF PROPERTY AND EQUIPMENT USEFUL LIFE

Vehicle and Equipment

ARRIVE AI INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

SIGNIFICANT ACCOUNTING POLICIES (Continued)

Intangible Assets – Patents

The Company capitalizes external costs,

such as filing fees, registration documentation, and attorney fees associated with the application and issuance of patents.

expenses costs associated with maintaining and defending patents subsequent to issuance in the period incurred.

The Company amortizes

capitalized patent costs for internally generated patents on a straight-line basis over 20 years or the period in which the goods associated

with the patent will be revenue-generating, which represents the estimated useful lives of the patents.

The estimated useful lives for

internally generated patents are based on the assessment of the following factors:

the integrated nature of the patent portfolios being

licensed (including the ability of the patent to generate viable goods and revenues), the overall makeup of the patent portfolio over

time, and the length of license agreements for such patents.

The Company assesses the potential impairment of all capitalized patent costs

when events or changes in circumstances indicate that the carrying amount of the Company’s patent portfolio may not be recoverable.

Impairment of Long-Lived

Intangibles and other

long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of any long-lived

asset may not be fully recoverable.

In the event that facts and circumstances indicate that the carrying amount of any long-lived assets

may be impaired, an evaluation of recoverability is performed.

If an evaluation was required, the estimated future undiscounted cash flows

associated with the asset (or group of assets) would be compared to the assets’ (or group of assets’) carrying amount to determine

if a write-down to fair value is required on the basis of the assets’ associated undiscounted cash flows.

The Company has three

types of long-lived assets:

property and equipment, including a vehicle, aerial drones;

construction-in-progress (CIP), and intangible

patent assets including those acquired by the acquisition of Airbox Technology in 2023.

The vehicle and drone hexacopter were evaluated

for impairment, and no impairments were considered necessary as of June 30, 2025.

The Company acquired

three “Gen 3” (or “AP3”) Arrive Point units in December 2024, and four in April 2025.

These units are recorded

as construction in progress until they are placed into service.

Six units have been delivered to customer sites, one of which has been

placed into revenue service in April 2025 and is being depreciated on a straight-lined basis over two years.

No impairment loss on these

units was recognized as of June 30, 2025.

ARRIVE AI INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

SIGNIFICANT ACCOUNTING POLICIES (Continued)

Revenue Recognition

The Company recognizes revenue in accordance

with ASC 606, Revenue from Contracts with Customers .

Revenue is derived from consulting and implementation services provided to

clients and recurring subscription services for access to the Arrive Point network.

Revenue is recognized over time as services are performed,

based on the transfer of control to the customer.

Contracts are typically short-term in nature and do not contain significant variable

consideration or multiple performance obligations.

Disaggregated revenue as of the three

and six months ended June 30, 2025 is as follows:

and Equipment

TO FINANCIAL STATEMENTS (Continued)

SIGNIFICANT ACCOUNTING

POLICIES (Continued)

Assets – Patents

Company capitalizes external costs, such as filing fees, registration documentation, and attorney fees associated with the application

and issuance of patents.

The Company expenses costs associated with maintaining and defending patents subsequent to issuance in the period

The Company amortizes capitalized patent costs for internally generated patents on a straight-line basis over 20 years or the

period in which the goods associated with the patent will be revenue-generating, which represents the estimated useful lives of the patents.

The estimated useful lives for internally generated patents are based on the assessment of the following factors:

the integrated nature

of the patent portfolios being licensed (including the ability of the patent to generate viable goods and revenues), the overall makeup

of the patent portfolio over time, and the length of license agreements for such patents.

The Company assesses the potential impairment

of all capitalized patent costs when events or changes in circumstances indicate that the carrying amount of the Company’s patent

portfolio may not be recoverable.

of Long-Lived Assets

and other long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount

of any long-lived asset may not be fully recoverable.

In the event that facts and circumstances indicate that the carrying amount of

any long-lived assets may be impaired, an evaluation of recoverability is performed.

If an evaluation was required, the estimated future

undiscounted cash flows associated with the asset (or group of assets) would be compared to the assets’ (or group of assets’)

carrying amount to determine if a write-down to fair value is required on the basis of the assets’ associated undiscounted cash

Company has three types of long-lived assets:

property and equipment, including operational Arrive Point units, vehicles, office equipment,

and aerial drones;

construction-in-progress (CIP), and intangible patent assets including those acquired by the acquisition of Airbox

Technology in 2023.

The vehicles and drone hexacopter were evaluated for impairment, and no impairments were considered necessary as

of September 30, 2025.

Company acquired three “Gen 3” (or “AP3”) Arrive Point units in December 2024, and four in April 2025.

units are recorded as construction in progress until they are placed into service.

Six units have been delivered to customer sites, four

of which have been placed into revenue service and are being depreciated on a straight-lined basis over two years.

One unit not yet entered

into service was damaged beyond repair.

An impairment loss of $ 10,541 was recognized as of September 30, 2025.

No impairment loss on

these units was recognized as of September 30, 2024.

TO FINANCIAL STATEMENTS (Continued)

SIGNIFICANT ACCOUNTING

POLICIES (Continued)

Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers .

Revenue is derived from consulting

and implementation services provided to clients and recurring subscription services for access to the Arrive Point network.

recognized over time as services are performed, based on the transfer of control to the customer.

Contracts are typically short-term

in nature and do not contain significant variable consideration or multiple performance obligations.

Disaggregated

revenue as of the three and nine months ended September 30, 2025 is as follows:

OF DISAGGREGATED REVENUE

8 unchanged sentences

TOTAL REVENUE

Various economic factors affect the

recognition of revenue and cash flows including availability of skilled labor and prompt payment by customers.

The Company did not generate

revenue during the three or six months ended June 30, 2024.

As such, no comparative disaggregation is presented for that period.

Contract Balances

The timing of revenue

recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer

advances and deposits (contract liabilities) on the balance sheet.

The Company may request advances or deposits from customers before

revenue is recognized, which results in contract liabilities.

Company did no t generate revenue during the three and nine months ended September 30, 2024.

economic factors affect the recognition of revenue and cash flows including availability of skilled labor and prompt payment by customers.

The Company did not generate revenue during the three or nine months ended September 30, 2024.

As such, no comparative disaggregation

is presented for that period.

timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets),

and customer advances and deposits (contract liabilities) on the balance sheet.

The Company may request advances or deposits from customers

before revenue is recognized, which results in contract liabilities.

These contract liabilities are released as the performance obligations

are satisfied.

As of June 30, 2025, there were no such liabilities or contract assets included within the balance sheet.

The beginning

and ending contract balances were as follows:

TO FINANCIAL STATEMENTS (Continued)

ACCOUNTING POLICIES (Continued)

Balances (continued)

of September 30, 2025, there were no such liabilities or contract assets included within the balance sheet.

The beginning and ending

contract balances were as follows:

OF CONTRACT ASSETS/LIABILITIES

June 30, 2025

January 1, 2025

Accounts receivable

ARRIVE AI INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

SIGNIFICANT ACCOUNTING POLICIES (Continued)

Significant Judgments and Estimates

There are no significant

judgments involved in the recognition of revenue from the services provided by the Company.

Equity Financing

The Company engages

in equity financing transactions to obtain the funds necessary to continue operations and develop a commercially viable drone delivery

Judgments and Estimates

are no significant judgments involved in the recognition of revenue from the services provided by the Company.

Company engages in equity financing transactions to obtain the funds necessary to continue operations and develop a commercially viable

drone delivery system.

These equity financing transactions involve the issuance of common stock and may include equity warrants.

Equity warrants are

instruments that bestow upon the holder of the instrument the right to buy a particular stock at a predetermined price within a stipulated

Under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 480, the Company classified the

warrants as equity instruments.

Depending on the terms

and conditions of each equity financing transaction, the warrants are exercisable into additional common shares at an agreed-upon price,

as defined in the Stock and Warrant Purchase Agreement (“the agreement”) prior to the expiration of the warrants as stipulated

by the terms of the transaction in the agreement.

The shares eligible

for issuance under the outstanding warrants were registered under the Securities Act of 1933, on July 28, 2025.

Loss per share

The Company follows

FASB ASC 260, “Earnings per Share,” resulting in the presentation of basic and diluted earnings per share.

Because the Company

reported a net loss in 2025 and 2024, common stock equivalents, including stock options and warrants were anti-dilutive;

therefore, the

amounts reported for basic and dilutive loss per share were the same.

Comprehensive Loss

The Company follows

FASB ASC 220.10, “Reporting Comprehensive Income (Loss).” Comprehensive loss is a more inclusive financial reporting methodology

that includes disclosure of certain financial information that historically has not been recognized in the calculation of net loss.

the Company has no items of other comprehensive loss, comprehensive loss is equal to net loss.

ARRIVE AI INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

SIGNIFICANT ACCOUNTING POLICIES (Continued)

Offering Costs

The Company complies

with the requirements of FASB ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A - Expenses of Offering .

During the three and six months ended June 30, 2025, the Company recognized $ 698,570 and $ 7,626,439 , respectively, in deferred offering

costs related to ongoing and anticipated capital raising activities.

These costs primarily consisted of legal, advisory, and other professional

service fees incurred in connection with financing efforts.

During the six months

ended June 30, 2025, the Company raised gross proceeds of $ 4,711,840 , which included $ 4,330,000 under a prepaid purchase agreement and

$ 381,840 through a crowdfunding offering.

Of the total deferred offering costs recognized, $ 871,882 were allocated and recognized

as a reduction of proceeds raised under the prepaid purchase agreement, based on a pro-rata allocation of total expected funding (Note

In addition, $ 59,468 and $ 90,072 of offering costs were directly associated with the crowdfunding raise and were recognized

as a reduction to the related proceeds for the three and six months ended June 30, 2025, respectively.

The remaining deferred

offering costs are included as current asset on the balance sheet and will be recognized as a reduction to additional paid-in capital

upon completion of the related equity offerings.

Research and Development

warrants are instruments that bestow upon the holder of the instrument the right to buy a particular stock at a predetermined price within

a stipulated time frame.

Under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 480, the Company classified

the warrants as equity instruments.

on the terms and conditions of each equity financing transaction, the warrants are exercisable into additional common shares at an agreed-upon

price, as defined in the Stock and Warrant Purchase Agreement (“the agreement”) prior to the expiration of the warrants as

stipulated by the terms of the transaction in the agreement.

shares eligible for issuance under the outstanding warrants were registered under the Securities Act of 1933 on July 28, 2025.

September 2025, the Board of Directors authorized the Company to repurchase shares of common stock.

The Company repurchased 19,700 shares

for $ 74,743 during the nine months ended September 30, 2025.

The stock is held in Treasury and recorded using the cost method.

TO FINANCIAL STATEMENTS (Continued)

ACCOUNTING POLICIES (Continued)

Company follows FASB ASC 260, “Earnings per Share,” resulting in the presentation of basic and diluted earnings per

Because the Company reported a net loss for the three and nine months ended September 30, 2025 and 2024, common stock

equivalents, including stock options and warrants were anti-dilutive;

therefore, the amounts reported for basic and dilutive loss

per share were the same.

See footnotes 16 and 17 for the details on these instruments.

Comprehensive

Company follows FASB ASC 220.10, “Reporting Comprehensive Income (Loss).” Comprehensive loss is a more inclusive financial

reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation

Since the Company has no items of other comprehensive loss, comprehensive loss is equal to net loss.

Company complies with the requirements of FASB ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A - Expenses

of Offering .

During the three and nine months ended September 30, 2025, the Company recognized $ 0 and $ 7,626,439 , respectively, in

deferred offering costs related to ongoing and anticipated capital raising activities.

These costs primarily consisted of legal, advisory,

and other professional service fees incurred in connection with financing efforts.

the nine months ended September 30, 2025, the Company raised gross proceeds of $ 9,037,007 , which included $ 8,650,000 under prepaid purchase

agreements and $ 387,007 through a crowdfunding offering.

Of the total deferred offering costs recognized, $ 869,868 and $ 1,741,750 were

allocated and recognized as a reduction of proceeds raised under the prepaid purchase agreements for the three and nine months ended

September 30, 2025, respectively, based on a pro-rata allocation of total expected funding (Note 9 and 12).

In addition, $ 1,471 and $ 91,543

of offering costs were directly associated with the crowdfunding raise and were recognized as a reduction to the related proceeds for

the three and nine months ended September 30, 2025, respectively.

remaining deferred offering costs are included as current asset on the balance sheet and will be recognized as a reduction to additional

paid-in capital upon completion of the related equity offerings.

and Development

and development (R&D) costs, that do not meet the criteria for capitalization are expensed as incurred.

Research and development

(R&D) costs, that do not meet the criteria for capitalization are expensed as incurred.

Research and development expenses include

fees paid to outside consultants for the Company’s proprietary technology.

For the three and six months ended June 30, 2025 and

2024, the Company had R&D costs totaling $ 293,468 and $ 384,731 and $ 452,538 and $ 540,939 , respectively.

Marketing Expenses

The Company uses various

marketing methods to create brand awareness to promote and alert the public about future product and service offerings to generate future

capital or revenue when a viable product is created.

The Company’s policy is to charge marketing costs to expenses in the period

they are incurred.

Marketing expenses were $ 49,602 and $ 57,263 and $ 226,289 and $ 252,746 for the three and six months ended June 30, 2025

expenses include fees paid to outside consultants for the Company’s proprietary technology.

TO FINANCIAL STATEMENTS (Continued)

ACCOUNTING POLICIES (Continued)

and Development (Continued)

the three and nine months ended September 30, 2025, and 2024, the Company had R&D costs totaling $ 179,854 and $ 564,585 and $ 7,940

and $ 548,879 , respectively.

Stock-Based Compensation

The Company measures and records the

expense related to stock-based payment awards based on the fair value of those awards as determined on the date of the grant.

recognizes stock-based compensation expense over the requisite service period of the individual grant, generally equal to the vesting

period, and uses the straight-line method to recognize stock-based compensation, as applicable.

For stock-based compensation with performance

conditions, the Company records compensation expenses when the performance condition is met.

The Company uses the Black-Scholes model

to estimate the fair value of stock options and forfeitures are accounted for when incurred.

ARRIVE AI INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

SIGNIFICANT ACCOUNTING POLICIES (Continued)

Stock-Based Compensation

The average fair value of one (1) share

of the Company’s common stock was determined to be $ 13.00 for the period of January 1, 2025 to May 15, 2025 and $ 12.71 as of December

On May 15, 2025, the Company completed its initial public offering and its common stock began trading on the Nasdaq Stock Exchange.

Subsequent to May 15, 2025, the price of the Company’s common stock was determined by the Nasdaq daily closing stock price.

Prior to May 15, 2025, the fair value

of common stock is based on the prior Company’s transaction method.

The prior company transaction method utilizes actual transactions

in the Company’s non-controlling, non-marketable private company equity interests.

Therefore, the result is reflective of a non-controlling,

non-marketable private company value and no discount for lack of control or marketability was considered necessary in the application

of this methodology.

As part of this methodology, there are a number of limiting assumptions, however, management believes it appropriately

represents the fair market value indication for one (1) share of the Company’s common stock.

Since, prior to May 15, 2025, the Company’s

stock was not publicly traded, the expected volatility is based on the historical and implied volatility of similar companies whose stock

or option prices are publicly available, after considering the industry, stage of the life cycle, size, market capitalization, and financial

leverage of the other companies.

There is no income tax benefit for the

losses for the three and six months ended June 30, 2025 and 2024 since management has determined that the realization of the net deferred

tax asset is not assured and has created a valuation allowance for the entire amount of such benefits.

The Company’s policy is to record

interest and penalties associated with unrecognized tax benefits as additional income taxes in the statement of operations.

As of January

1, 2025, the Company had no unrecognized tax benefits, or any tax related interest or penalties, and it does not expect significant changes

in the amount of unrecognized tax benefits to occur within the next twelve months.

There were no changes in the Company’s unrecognized

tax benefits during the three- and six-month period ended June 30, 2025.

The Company did no t recognize any interest or penalties during

2025 related to unrecognized tax benefits.

With few exceptions, the U.S.

income tax returns filed for the tax years ending on December 31, 2021 and thereafter are subject to examination by the relevant taxing

Net operating loss (NOL) carryforwards are subject to examination in the year they are utilized regardless of whether the

tax year in which they are generated has been closed by the statute.

The amount subject to disallowance is limited to the NOL utilized.

Company uses various marketing methods to create brand awareness to promote and alert the public about future product and service offerings

to generate future capital or revenue when a viable product is created.

The Company’s policy is to charge marketing costs to expenses

in the period they are incurred.

expenses were $ 107,530 and $ 164,793 and $ 28,414 and $ 281,160 for the three and nine months ended September 30, 2025 and 2024, respectively.

Company measures and records the expense related to stock-based payment awards based on the fair value of those awards as determined

on the date of the grant.

The Company recognizes stock-based compensation expense over the requisite service period of the individual

grant, generally equal to the vesting period, and uses the straight-line method to recognize stock-based compensation, as applicable.

For stock-based compensation with performance conditions, the Company records compensation expenses when the performance condition is

The Company uses the Black-Scholes model to estimate the fair value of stock options and forfeitures are accounted for when incurred.

average fair value of one (1) share of the Company’s common stock was determined to be $ 13.00 for the period of January 1, 2025

to May 15, 2025 and $ 12.71 as of December 31, 2024.

On May 15, 2025, the Company completed its initial public offering and its common

stock began trading on the Nasdaq Stock Exchange.

Subsequent to May 15, 2025, the price of the Company’s common stock was determined

by the Nasdaq daily closing stock price.

to May 15, 2025, the fair value of common stock is based on the prior Company’s transaction method.

The prior company transaction

method utilizes actual transactions in the Company’s non-controlling, non-marketable private company equity interests.

the result is reflective of a non-controlling, non-marketable private company value and no discount for lack of control or marketability

was considered necessary in the application of this methodology.

As part of this methodology, there are a number of limiting assumptions,

however, management believes it appropriately represents the fair market value indication for one (1) share of the Company’s common

Since, prior to May 15, 2025, the Company’s stock was not publicly traded, the expected volatility is based on the historical

and implied volatility of similar companies whose stock or option prices are publicly available, after considering the industry, stage

of the life cycle, size, market capitalization, and financial leverage of the other companies.

TO FINANCIAL STATEMENTS (Continued)

ACCOUNTING POLICIES (Continued)

is no income tax benefit for the losses for the three and nine months ended September 30, 2025 and 2024 since management has determined

that the realization of the net deferred tax asset is not assured and has created a valuation allowance for the entire amount of such

Company’s policy is to record interest and penalties associated with unrecognized tax benefits as additional income taxes in the

statement of operations.

As of January 1, 2025, the Company had no unrecognized tax benefits, or any tax related interest or penalties,

and it does not expect significant changes in the amount of unrecognized tax benefits to occur within the next twelve months.

no changes in the Company’s unrecognized tax benefits during the three and nine month period ended September 30, 2025.

did no t recognize any interest or penalties during 2025 related to unrecognized tax benefits.

few exceptions, the U.S.

and state income tax returns filed for the tax years ending on December 31, 2021 and thereafter are subject

to examination by the relevant taxing authorities.

Net operating loss (NOL) carryforwards are subject to examination in the year they

are utilized regardless of whether the tax year in which they are generated has been closed by the statute.

The amount subject to disallowance

is limited to the NOL utilized.

Accordingly, the Company may be subject to examination for prior NOLs generated as such NOLs are utilized.

ARRIVE AI INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

SIGNIFICANT ACCOUNTING POLICIES (Continued)

Fair Value of Financial Instruments

The carrying value of the Company’s

short-term financial instruments such as cash, accounts receivable, prepaid expenses, accounts payable and accrued expenses approximate

their fair values because of their short maturities.

The estimated fair value of the Company’s debt approximates the carrying value

due to the interest rates on the debt approximating current market interest rates.

Recently Adopted

Accounting Standard

In November 2023, the Financial Accounting

Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Improvements to Reportable Segment Disclosures

(“ASU 2023-07”), which requires incremental disclosures about reportable segments but does not change the definition of a segment

or the guidance for determining reportable segments.

The requirements are effective for annual reporting periods beginning on January

1, 2024, and are required to be applied retrospectively.

The Company has adopted the additional disclosure requirements under ASU 2023-07.

Value of Financial Instruments

carrying value of the Company’s short-term financial instruments such as cash, accounts receivable, prepaid expenses, accounts

payable and accrued expenses approximate their fair values because of their short maturities.

The estimated fair value of the Company’s

debt approximates the carrying value due to the interest rates on the debt approximating current market interest rates.

Adopted Accounting Standard

November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07,

Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires incremental disclosures about reportable segments

but does not change the definition of a segment or the guidance for determining reportable segments.

The requirements are effective for

annual reporting periods beginning on January 1, 2024, and are required to be applied retrospectively.

The Company has adopted the additional

disclosure requirements under ASU 2023-07.

The additional requirements did not have a material impact on the financial statements.

Recently Issued Accounting Standard

Not Yet Adopted

In November 2024, the FASB issued ASU

2024-03, ASC Subtopic “Disaggregation of Income Statement Expenses (ASC 220-40):

Income Statement—Reporting Comprehensive

Income—Expense Disaggregation Disclosures”.

The amendments require additional disclosure of the nature of expenses included

in the income statement.

The amendments in this update are effective for public business entities for fiscal years, beginning after December

TO FINANCIAL STATEMENTS (Continued)

ACCOUNTING POLICIES (Continued)

Issued Accounting Standard Not Yet Adopted

November 2024, the FASB issued ASU 2024-03, ASC Subtopic “Disaggregation of Income Statement Expenses (ASC 220-40):

Income Statement—Reporting

Comprehensive Income—Expense Disaggregation Disclosures”.

The amendments require additional disclosure of the nature of expenses

included in the income statement.

The amendments in this update are effective for public business entities for fiscal years, beginning

after December 15, 2026.

Early adoption is permitted.

The Company is currently assessing the impact of the adoption of this standard on its financial

The Company is currently assessing the impact of the adoption of this standard

on its financial statements.

SEGMENT REPORTING

The Company’s principal business

is described in Note 1.

Company’s principal business is described in Note 1.

The Company has determined that it operates in a 1 single

1 unchanged sentence

The Company’s Chief Financial Officer is designated as the chief operating decision maker (“CODM”).

The CODM evaluates the business as a whole and does not receive discrete financial information for separatee business units.

CODM is responsible for evaluating financial results and making resource allocation decisions.

ARRIVE AI INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

SEGMENT REPORTING (Continued)

Significant Segment Expenses

The Company considers the following

as significant expenses in evaluating its segment performance:

● Research and Development:

The CODM evaluates the business as a whole and does not receive discrete financial information for separate business units.

is responsible for evaluating financial results and making resource allocation decisions.

Segment Expenses

Company considers the following as significant expenses in evaluating its segment performance:

and Development:

Includes costs related to materials and supplies, prototype hardware development,

and third-party consulting costs.

● General and Administrative:

and Administrative:

Includes personnel costs, contractor expenses, and other overhead expenses.

● Legal and Professional Fees:

and Professional Fees:

Includes the cost of legal services to expand and maintain the Company’s

patent portfolio, fees associated with various business transactions, and compliance with regulatory requirements.

Entity-Wide Disclosures

● Geographic Revenue Information:

For both the three and six months ended June 30, 2025, 100 %

of the Company’s net sales were generated in the United States.

● Major Customers:

patent portfolio, fees associated with various business transactions, and compliance with

regulatory requirements.

Revenue Information:

For both the three and nine months ended September 30, 2025, 100 % of

the Company’s net sales were generated in the United States.

The Company has one customer that accounted for 10 % or more of total revenue.

The Company did not generate revenue

during the same periods in 2024.

Company did no t generate revenue during the three and nine months ended September 30, 2024.

TO FINANCIAL STATEMENTS (Continued)

GOING CONCERN

The Company’s financial statements have

been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course

The financial statements do not include any adjustment relating to recoverability and classification of recorded amounts

of assets and liabilities that might be necessary if the Company is unable to continue as a going concern.

The Company has a minimum cash

balance available for payment of ongoing operating expenses.

As of June 30, 2025, the Company has an accumulated deficit of $ 22,588,684

and a net loss for the current period of $ ( 6,668,129 ) .

These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve

months from the issuance date of this report.

The Company’s continued existence

is dependent upon its ability to continue to execute its operating plan and to obtain additional debt or equity financing.

no assurance that the necessary debt or equity financing will be available or will be available on terms acceptable to the Company.

financial statements do not include any adjustments that might result from the Company’s inability to continue as a going concern

ARRIVE AI INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

Company’s financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction

of liabilities in the normal course of business.

The financial statements do not include any adjustment relating to recoverability and

classification of recorded amounts of assets and liabilities that might be necessary if the Company is unable to continue as a going

Company has a minimum cash balance available for payment of ongoing operating expenses.

As of September 30, 2025, the Company has an

accumulated deficit of $ 24,825,227 and a net loss for the current period of $ 8,904,672 .

These conditions raise substantial doubt about

the Company’s ability to continue as a going concern for a period of twelve months from the issuance date of this report.

Company’s continued existence is dependent upon its ability to continue to execute its operating plan and to obtain additional

debt or equity financing.

There can be no assurance that the necessary debt or equity financing will be available or will be available

on terms acceptable to the Company.

These financial statements do not include any adjustments that might result from the Company’s

inability to continue as a going concern

FAIR VALUE MEASUREMENTS

The Company measures the fair value

of financial assets and liabilities based on the guidance of ASC 820 “Fair Value Measurements and Disclosures” (“ASC

820”) which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

ASC 820 defines fair value as the exchange

price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market

for the asset or liability in an orderly transaction between market participants on the measurement date.

ASC 820 also establishes a fair

value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring

Company measures the fair value of financial assets and liabilities based on the guidance of ASC 820 “Fair Value Measurements and

Disclosures” (“ASC 820”) which defines fair value, establishes a framework for measuring fair value, and expands disclosures

about fair value measurements.

820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the

principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement

ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize

the use of unobservable inputs when measuring fair value.

ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1 — quoted prices

in active markets for identical assets or liabilities

Level 2 — quoted prices for similar

assets and liabilities in active markets or inputs that are observable

Level 3 — inputs that are unobservable

(for example, cash flow modeling inputs based on assumptions)

1 — Quoted prices in active markets for identical assets or liabilities

2 — Quoted prices for similar assets and liabilities in active markets or inputs that are observable

3 — Inputs that are unobservable (for example, cash flow modeling inputs based on assumptions)

TO FINANCIAL STATEMENTS (Continued)

FAIR VALUE MEASUREMENTS

following table sets forth by level, within the fair value hierarchy, the Company’s assets at fair value as of September 30, 2025:

OF FAIR VALUE MEASUREMENTS

Value of September 30, 2025

Money market funds

Common stock and Mutual funds

TOTAL INVESTMENTS AT FAIR VALUE

PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

and equipment consist of the following:

SCHEDULE OF PROPERTY

4 unchanged sentences

TOTAL PROPERTY AND EQUIPMENT, NET

For the three and six months ended June

30, 2025 and 2024, total depreciation expense was $ 9,576 and $ 16,666 and $ 7,030 and $ 14,126 , respectively.

ARRIVE AI INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

the three and nine months ended September 30, 2025 and 2024, total depreciation expense was $ 13,695 and $ 30,360 and $ 7,089 and $ 21,215 ,

respectively.

PREPAID EXPENSES

Prepaid expenses and other current assets consist

of the following:

expenses and other current assets consist of the following:

SCHEDULE OF PREPAID

4 unchanged sentences

TOTAL PREPAID EXPENSES

TO FINANCIAL STATEMENTS (Continued)

Company leases ground robots from a third-party, which are implemented in customer solutions.

The robots are used on delivery routes

to transport goods between Arrive Point units.

the inception of a contract, the Company assesses whether the contract is, or contains, a lease.

The Company’s assessment is based

(1) whether the contract involves the use of a distinct identified asset, (2) whether the Company obtains the right to substantially

all the economic benefit from the use of the asset throughout the term, and (3) whether the Company has the right to direct the use of

The Company allocates the consideration in the contract to each lease and non-lease component based on the component’s

relative stand-alone price to determine the lease payments.

Lease and non-lease components are accounted for separately.

are classified as either finance leases or operating leases based on criteria in Topic 842.

The Company has operating leases which are

generally comprised of distinctly identified assets (ground robots) whereby the Company derives all economic benefits through customer

contracts for use of the service through the term of the contract.

The Company may elect to purchase the assets for a residual value

at the end of the lease term.

lease commencement, the Company records a lease liability equal to the present value of the remaining lease payments, discounted using

the rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate.

A corresponding

right-of-use asset (“ROU asset”) is recorded, measured based on the initial measurement of the lease liability.

also include any lease payments made and exclude lease incentives.

Lease terms may include options to extend or terminate the lease when

it is reasonably certain that the Company will exercise that option.

expense for operating leases, consisting of lease payments, is recognized on a straight-line basis over the lease term.

Included in lease

expense are any variable lease payments incurred in the period that were not included in the initial lease liability.

Lease expense for

finance leases consists of the amortization of the ROU asset on a straight-line basis over the shorter of the useful life of the asset

or the lease term, and interest expense is calculated using the effective interest rate method.

following is a summary of the lease cost recognized in the Company’s consolidated statement of operations:

OF LEASE COST

Operating Leases

Lease cost in general and administrative

lease expense

Total lease cost in general and administrative

TO FINANCIAL STATEMENTS (Continued)

LEASES (Continued)

following is a summary of the impact of the Company’s leases on the statements of cash flows:

Leasing activity in cash flows from operating

Total leasing activity in cash flows from operating

weighted-average remaining lease term in years and weighted-average discount rate for operating leases at September 30, 2025 is 1.75

future minimum lease payments required under the Company’s leases as of September 30, 2025 are as follows:

OF FUTURE MINIMUM LEASE PAYMENTS

Future minimum lease payments

Toal future minimum lease payments

Amount representing interest

Present value of lease liabilities

current portion

Long-term portion

DEFERRED OFFERING COSTS

Pursuant to ASC 340-10-S99-1, costs

directly attributable to an offering of equity securities are deferred and would be charged against the gross proceeds of the offering.

Deferred offering costs consist of underwriting, legal, accounting, and other expenses incurred through the balance sheet date that are

directly related to the proposed public offering.

The Company’s registration statement was declared effective and the stock began

trading on May 15, 2025.

During the three months ended March 31, 2025, the Company issued 532,913 shares of common stock in exchange for

investment banking advisory services with a fair value of $ 6,927,869 , which was recorded as deferred offering costs.

During the six months

ended June 30, 2025, the Company recorded an additional $ 698,570 for filing and legal fees related to the transaction.

Upon completion

of the public listing, $ 871,882 of the deferred offering costs were recorded as a reduction of the proceeds, in proportion to the funds

received from the offering, which were recognized in additional paid-in capital.

Patents consist of the following:

to ASC 340-10-S99-1, costs directly attributable to an offering of equity securities are deferred and would be charged against the gross

proceeds of the offering.

Deferred offering costs consist of underwriting, legal, accounting, and other expenses incurred through the

balance sheet date that are directly related to the proposed public offering.

The Company’s registration statement was declared

effective and the stock began trading on May 15, 2025.

During the three months ended March 31, 2025, the Company issued 532,913 shares

of common stock in exchange for investment banking advisory services with a fair value of $ 6,927,869 , which was recorded as deferred

offering costs.

During the six months ended June 30, 2025, the Company recorded an additional $ 698,570 for filing and legal fees

related to the transaction.

As of September 30, 2025, $ 1,741,750 of the deferred offering costs have been recorded as a reduction of

the proceeds, in proportion to the funds received from the offering, which were recognized in additional paid-in capital.

TO FINANCIAL STATEMENTS (Continued)

consist of the following:

SCHEDULE OF PATENTS

1 unchanged sentence

TOTAL PATENTS

As of June 30, 2025, six of the Company’s

fifty-seven international patents were issued and began being amortized over twenty years .

As of June 30, 2024, five of the Company’s

forty-four patents were approved by the countries in which the patent applications were filed.

Amortization expense was $ 150 and $ 452

and $ 184 and $ 343 for the three and six months ended June 30, 2025 and 2024, respectively.

ARRIVE AI INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

Note payable consists

of the following:

of September 30, 2025, six of the Company’s fifty-seven international patents were issued and began being amortized over twenty

As of September 30, 2024, five of the Company’s forty-four patents were approved by the countries in which the patent applications

Amortization expense was $ 235 and $ 688 and $ 234 and $ 577 for the three and nine months ended September 30, 2025 and 2024,

respectively.

payable consists of the following:

NOTES PAYABLE

Vehicle note payable for $ 40,248 with monthly installment payments of $ 799 , including interest at 6.99 % per annum.

The loan is collateralized by the respective vehicle and is due in February 2027.

payable for $ 40,248 with monthly installment payments of $ 799 , including interest at 6.99 % per annum.

The loan is collateralized

by the respective vehicle and is due in February 2027.

Less current portion

LONG-TERM PORTION

The balance of the

above debt matures as follows:

balance of the above debt matures as follows:

OF MATURITIES OF LONG-TERM DEBT

Twelve Months Ending

Interest expense related to this note

payable for the three and six months ended June 30, 2025 and 2024, was $ 285 and $ 607 and $ 427 and $ 888 , respectively.

Twelve Months

September 30,

expense related to this note payable for the three and nine months ended September 30, 2025 and 2024, was $ 248 and $ 855 and $ 389 and

$ 1,277 , respectively.

TO FINANCIAL STATEMENTS (Continued)

CONVERTIBLE NOTE PAYABLE

On March 21, 2025, the Company issued

a convertible promissory note with a face amount of $ 4,330,000

to Streeterville Capital LLC (“Streeterville”).

The note bears interest at a rate of 8 %

per annum and matures in August 2025.

Under the agreement, Streeterville agrees to purchase an amount of up to $ 40,000,000

in pre-paid purchases of the Company’s common stock, $ 0.0002

par value per share.

The original principal amount is a $ 4,330,000

pre-paid purchase with a $ 4,000,000

initial purchase price and $ 320,000

original issue discount.

In addition, the Company paid $ 10,000

to cover Streeterville’s transaction expenses, along with 62,500

shares of common stock issued as a commitment fee at closing.

In May 2025, Streeterville purchased 2,937,500

shares of common stock, at par value, in exchange for $ 588 .

The Company has the right to repurchase these pre-delivery shares at par value.

March 21, 2025, the Company issued a convertible promissory note with a face amount of $ 4,330,000 , with a $ 4,000,000 initial purchase

price and a $ 320,000 original issue discount, to Streeterville Capital LLC (“Streeterville”).

On August 11, 2025 the Company

issued a second convertible promissory note with a face amount $ 4,320,000 , with a $ 4,000,000 initial purchase price and a $ 320,000 original

issue discount, to Streeterville.

The notes bear interest at a rate of 8 % per annum and are pursuant to a Securities Purchase Agreement

(the “Purchase Agreement”) dated March 21, 2025.

Under the purchase agreement, Streeterville agrees to purchase an amount

of up to $ 40,000,000 in pre-paid purchases of the Company’s common stock, $ 0.0002 par value per share.

The original principal amount

is a $ 8,650,000 pre-paid purchase with a $ 8,000,000 initial purchase price and $ 640,000 original issue discount.

In addition, the Company

paid $ 10,000 to cover Streeterville’s transaction expenses, along with 62,500 shares of common stock issued as a commitment fee

at closing, with a fair value of $ 812,500 .

The commitment fee was recorded as stock based compensation.

A 6% fee on gross proceeds due

to the Company’s investment banker of $ 480,000 has been capitalized in the notes payable as issuance costs.

The original issue

discount and issuance costs are amortized to interest expense using the effective method over a period of six months.

In May 2025, Streeterville

purchased 2,937,500 shares of common stock, at par value, in exchange for $ 588 .

The Company has the right to repurchase these pre-delivery

shares at par value.

OF CONVERTIBLE NOTE PAYABLE

unamortized discount

TOTAL, NET OF DISCOUNT

ARRIVE AI INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

CONVERTIBLE NOTE PAYABLE (Continued)

During the six months ended June 30,

2025 and 2024, the Company charged to interest expense the amounts of $ 192,000 and $ 0 , respectively, in connection with the amortization

of the discount on this note.

The Company charged $ 0 to interest expense, in connection with the amortization of the discount on this

note, during the three months ended June 30, 2025 and 2024.

March 21, 2025 issuance

August 11, 2025 issuance

Issuance costs

Amortization of discount and issuance costs

Conversion of note

( 4,125,000 )

TOTAL BALANCE

the three months ended September 30, 2025, Streeterville converted $ 4,125,000 of the notes payable for 1,207,355 shares of common stock.

Upon conversion, the Company immediately expensed to interest expense the remaining unamortized discount and issuance costs relative

to the proportion of notes converted to total outstanding notes.

During the three and nine months ended September 30, 2025 and 2024,

the Company recognized interest expense associated with the amortization of the discount and issuance costs of $ 405,333 and $ 597,333

and $ 0 and $ 0 , respectively.

During the three and nine months ended September 30, 2025, the Company also recognized interest expense

of $ 165,823 and $ 0 , respectively.

COMMITMENTS AND CONTINGENCIES

Lease Obligation

Effective April

1, 2024, the Company expanded its leased office space.

The new term is nine months , and thereafter a month-to-month lease which can be

canceled with a 90-day written notice and agreement to suitable terms by both parties.

Under this lease, base rent is $ 3,600 per month.

The Company is required to pay insurance, listing the property owner as an additional insured, and normal maintenance costs for certain

of this leased property.

Additionally, the Company rents a warehouse from an officer and shareholder for $ 2,250 per month on a month-to-month

April 1, 2024, the Company expanded its leased office space.

The new term is nine months , and thereafter a month-to-month lease which

can be canceled with a 90-day written notice and agreement to suitable terms by both parties.

Under this lease, base rent is $ 3,600 per

The Company is required to pay insurance, listing the property owner as an additional insured, and normal maintenance costs for

certain of this leased property.

Additionally, the Company rents a warehouse from an officer and shareholder for $ 2,250 per month on

a month-to-month basis.

TO FINANCIAL STATEMENTS (Continued)

COMMITMENTS AND CONTINGENCIES

Obligation (Continued)

2016-02, Topic 842, Leases, allows companies to elect certain policies for short-term leases.

The Company has elected not to recognize right-of-use

assets and lease liabilities arising from short-term leases with an initial term of 12 months or less

From time to time,

the Company may become involved in various legal proceedings in the ordinary course of its business and may be subject to third-party

infringement claims.

In the normal course of business, the Company may agree to indemnify third parties with

whom it enters into

contractual relationships, including customers, lessors, and parties to other transactions with the Company, with respect to certain matters.

The Company has agreed,

under certain conditions, to hold these third parties harmless against specified losses, such as those arising from a breach of representations

or covenants, other third-party claims that the Company’s products, when used for their intended purposes, infringe the intellectual

property rights of such other third parties, or other claims made against certain parties.

It is not possible to determine the maximum

potential amount of liability under these indemnification obligations due to the Company’s limited history of prior indemnification

claims and the unique facts and circumstances that are likely to be involved in each particular claim.

ARRIVE AI INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

The Company has elected not to

recognize right-of-use assets and lease liabilities arising from short-term leases with an initial term of 12 months or less.

September 9, 2025, John Doan and Jami Town named the Company as a defendant in Case No.

3:2025cv00721, pending in U.S.

District Court

for the Eastern District of Virginia.

Doan and Town claim the Company is in breach of contract for loans made to AirBox.

The loans were

extended to AirBox before the Company purchased its assets in 2023.

The Company explicitly acquired only the assets of AirBox and therefore

does not believe it is liable for any of its previous liabilities.

The Company has filed for removal from the claim.

The plaintiffs have

filed to have the case remanded to Virginia state court, where it was originally filed on August 13, 2025.

Since this matter is still

in its initial stages, the Company is unable to predict the outcome at this time.

time to time, the Company may become involved in various legal proceedings in the ordinary course of its business and may be subject

to third-party infringement claims.

In the normal course of business, the Company may agree to indemnify third parties with whom it enters

into contractual relationships, including customers, lessors, and parties to other transactions with the Company, with respect to certain

Company has agreed, under certain conditions, to hold these third parties harmless against specified losses, such as those arising from

a breach of representations or covenants, other third-party claims that the Company’s products, when used for their intended purposes,

infringe the intellectual property rights of such other third parties, or other claims made against certain parties.

It is not possible

to determine the maximum potential amount of liability under these indemnification obligations due to the Company’s limited history

of prior indemnification claims and the unique facts and circumstances that are likely to be involved in each particular claim.

RELATED-PARTY TRANSACTIONS

On May 26, 2020, the Company entered

into a 3-year agreement with a stockholder of the Company for the use of a patent.

Beginning June 1, 2020, the Company began paying the

stockholder a monthly license fee of $ 10,000 .

Once revenue from sales, rentals, and leases begins, the Company is required to pay $ 25.00

per unit sold.

If the Company does not sell 400 units per month (or $10,000), the original fixed $10,000 is paid.

Accordingly, for the

three and six months ended June 30, 2025 and 2024, the Company recorded licensing fee costs in the amount of $ 30,000 and $ 60,000 each

period, respectively.

On March 10, 2025, the Company entered

into the second amendment to the Exclusive Patent License Agreement of May 26, 2020.

The Second Amendment extends the license to perpetuity,

covering the full term and life of the patents, and cures in the event of default.

The Second Amendment also removes prior restrictions

on the Company’s use, sale, or commercialization of the technology after termination, permitting the sale of remaining inventory

for up to 90 days post-termination, provided all required reports and payments are made under the Agreement.

May 26, 2020, the Company entered into a three year agreement with a stockholder of the Company for the use of a patent.

Beginning June

1, 2020, the Company began paying the stockholder a monthly license fee of $ 10,000 .

Once revenue from sales, rentals, and leases begins,

the Company is required to pay $ 25.00 per unit sold.

If the Company does not sell 400 units per month (or $10,000), the original fixed

$10,000 is paid.

Accordingly, for the three and nine months ended September 30, 2025 and 2024, the Company recorded licensing fee costs

in the amount of $ 30,000 and $ 90,000 each period, respectively.

TO FINANCIAL STATEMENTS (Continued)

RELATED-PARTY TRANSACTIONS

March 10, 2025, the Company entered into the second amendment to the Exclusive Patent License Agreement of May 26, 2020.

The Second Amendment

extends the license to perpetuity, covering the full term and life of the patents, and cures in the event of default.

The Second Amendment

also removes prior restrictions on the Company’s use, sale, or commercialization of the technology after termination, permitting

the sale of remaining inventory for up to 90 days post-termination, provided all required reports and payments are made under the Agreement.

STOCKHOLDERS’ EQUITY

As of April 30, 2020 (date of incorporation),

the Company had 100,000,000 shares of common stock, with a par value of $ 0.0001 , authorized and available to issue for purposes of satisfying

any future transactions.

No other class of stock has been authorized or is available for issuance.

Effective September 15, 2021, the Company

authorized a 2-for-1 stock split, with 200,000,000 shares authorized and available, with a par value of $ 0.00005 , to issue for purposes

of satisfying any future transactions.

Effective November 25, 2024, the Company authorized a 1-for-4 reverse stock split, with 200,000,000

shares authorized and available to issue for purposes of satisfying any future transactions.

The par value is now $ 0.0002 .

During the six months ended June 30,

2025, the Company issued 3,902,480 shares of common stock as follows:

a) 11,692 shares with accredited investors in exchange for cash of $ 152,000 at an average share price of

$ 13.00 per share.

7,692 of the shares were issued with warrants and deemed as equity, as described in Note 15.

b) 2,937,500 shares with an accredited investor in exchange for cash of $ 588 .

The shares were issued at par

value, subject to the securities purchase agreement, dated March 21, 2025, by and between Streeterville Capital, LLC and the Company (the “Streeterville Purchase

Agreement”), as described in Note 11.

c) 120,820 warrants exercised, for 120,820 shares in exchange for cash of $ 573,895 .

d) 25,693 shares issued through a crowdfunding campaign with other investors in exchange for net cash of

$ 291,773 , at an average share price of $ 11.36 per share after offering costs.

ARRIVE AI INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

STOCKHOLDERS’ EQUITY (Continued)

Common Stock (Continued)

e) 147,374 shares issued to employees and consultants, recognized as compensation expense, fair valued at

$ 13.00 per share, for a total fair value of $ 1,915,862 , based on the price per stock issued to investors for cash during the period January

1, 2025 to May 15, 2025.

f) 33,815 shares issued in June 2025 to employees or consultants via stock awards, recognized as compensation

expense, for a total of $ 439,595 , fair valued based on the Company’s closing stock price on the day the shares were issued.

g) 532,913 shares issued to a consultant via stock awards, recognized as deferred offering costs, fair valued

at $ 13.00 per share, for a total of $ 6,927,869 , based on the price per stock issued to investors for cash.

h) 92,673 shares issued with a consultant as settlement of legal expenses incurred in prior periods, fair

valued at $ 13.00 per share, for a total of $ 1,204,737 , based on the price per stock issued to investors for cash.

The following table summarizes the warrants

outstanding for the six months ended June 30, 2025:

of April 30, 2020 (date of incorporation), the Company had 100,000,000 shares of common stock, with a par value of $ 0.0001 , authorized

and available to issue for purposes of satisfying any future transactions.

No other class of stock has been authorized or is available

for issuance.

September 15, 2021, the Company authorized a 2-for-1 stock split, with 200,000,000 shares authorized and available, with a par value

of $ 0.00005 , to issue for purposes of satisfying any future transactions.

Effective November 25, 2024, the Company authorized a 1-for-4

reverse stock split, with 200,000,000 shares authorized and available to issue for purposes of satisfying any future transactions.

par value is now $ 0.0002 .

the nine months ended September 30, 2025, the Company issued 5,112,182 shares of common stock as follows:

shares with accredited investors in exchange for cash of $ 152,000 at an average share price

of $ 13.00 per share.

7,692 of the shares were issued with warrants and deemed as equity,

as described in Note 16.

shares with an accredited investor in exchange for cash of $ 588 .

The shares were issued at

par value, subject to the securities purchase agreement, dated March 21, 2025, by and between

Streeterville Capital, LLC and the Company (the “Purchase Agreement”), as described

warrants exercised, for 120,820 shares in exchange for cash of $ 573,895 .

shares issued through a crowdfunding campaign with other investors in exchange for net cash

of $ 295,469 , at an average share price of $ 11.50 per share net of offering costs.

shares issued to employees and consultants, recognized as compensation expense, fair valued

at $ 13.00 per share, for a total fair value of $ 1,915,862 , based on the price per stock issued

to investors for cash during the period January 1, 2025 to May 15, 2025.

shares issued to employees or consultants via stock awards, recognized as compensation expense,

for a total of $ 451,567 , fair valued based on the Company’s closing stock price on

the day the shares were issued.

shares issued for the cashless exercise of vested options under the 2023 equity incentive

plan, for a total of $ 9,269 , fair value based on the Company’s closing stock price

on the day the shares were exercised.

TO FINANCIAL STATEMENTS (Continued)

STOCKHOLDERS’ EQUITY

Stock (Continued)

shares issued to a consultant via stock awards, recognized as deferred offering costs, fair

valued at $ 13.00 per share, for a total of $ 6,927,869 , based on the price per stock issued

to investors for cash.

shares issued with a consultant as settlement of legal expenses incurred in prior periods,

fair valued at $ 13.00 per share, for a total of $ 1,204,737 , based on the price per stock

issued to investors for cash.

shares issued, with a fair value of $ 4,125,000 , as a conversion of $ 4,125,000 notes payable,

as described in Note 12.

Repurchase Program

September 8, 2025, the Company announced a new share repurchase program (the “Repurchase Program”), pursuant to which the

Company may purchase up to $ 10 million of its common stock through March 31, 2026.

repurchases under the Repurchase Program may be made from time to time through various means, including open market purchases, privately

negotiated transactions, and/or pursuant to Rule 10b5-1 trading plans, in each case in accordance with Rule 10b-18 under the Securities

Exchange Act of 1934.

The timing, volume, and nature of share repurchases pursuant to the Repurchase Program are at the discretion of

management and may be suspended or discontinued at any time.

Shares repurchased under the Repurchase Program are held for sale and are

included in the category of treasury stock.

following table sets forth the Company’s share repurchases:

SCHEDULE OF SHARES REPURCHASE

and nine months ended September 30, 2025

Total number of shares repurchased

Amount repurchased

Average price per share

repurchases for the three months ended September 30, 2025 were made on the open market subject to regulatory constraints.

As of September

30, 2025, the Company had approximately $ 9.925 million available for repurchase remaining under the repurchase program.

TO FINANCIAL STATEMENTS (Continued)

following table summarizes the warrants outstanding as of September 30, 2025:

OF WARRANTS OUTSTANDING

Average Exercise Price

Average Grant Date Fair Value

Average Remaining Contractual Term (years)

Intrinsic Value

1 unchanged sentence

Cancelled/Expired

BALANCE, JUNE 30, 2025

The aggregate intrinsic value is calculated

as the difference between the exercise price of the underlying warrants and the closing stock price of $ 11.68 for the Company’s

common shares on June 30, 2025 and the closing stock price of $ 12.71 for the Company’s common shares on December 31, 2024.

ARRIVE AI INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

EQUITY INCENTIVE PLAN

The Company created

the 2023 Equity Incentive Plan (the Plan) on April 27, 2023, under which shares of common stock became available for issuance not to exceed

BALANCE, SEPTEMBER 30, 2025

aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock

price of $ 3.64 for the Company’s common shares on September 30, 2025 and the closing stock price of $ 12.71 for the Company’s

common shares on December 31, 2024.

INCENTIVE PLAN

Company created the 2023 Equity Incentive Plan (the Plan) on April 27, 2023, under which shares of common stock became available for

issuance not to exceed 1,500,000 .

The Stock Plan is designed to attract, retain, and motivate key employees.

Currently, the fair value is recognized as an expense

over the vesting period of the award.

Option awards are generally granted with an exercise price equal to the fair market value of the

Company’s stock at the date of grant, vest over a four-year period, and expire after ten years.

There are certain situations that

may accelerate the vesting or termination of all outstanding options, such as a change in control.

As of June 30, 2025, 886,799 shares

were available for grant.

The compensation expenses related to incentive units is included in general and administrative expenses with

a corresponding increased to additional paid-in-capital.

The following table summarizes the options

outstanding for the six months ended June 30, 2025:

Currently, the fair value

is recognized as an expense over the vesting period of the award.

Option awards are generally granted with an exercise price equal to

the fair market value of the Company’s stock at the date of grant, vest over a four-year period, and expire after ten years.

are certain situations that may accelerate the vesting or termination of all outstanding options, such as a change in control.

September 30, 2025, 854,042 shares were available for grant.

The compensation expenses related to incentive units is included in general

and administrative expenses with a corresponding increase to additional paid-in-capital.

TO FINANCIAL STATEMENTS (Continued)

INCENTIVE PLAN (Continued)

following table summarizes the options outstanding as of September 30, 2025:

OF SHARE OPTIONS OUTSTANDING

Remaining Contractual

Options Outstanding

Average Exercise Price

Average Grant Date Fair Value

Average Remaining Contractual Term (years)

Intrinsic Value

1 unchanged sentence

Canceled/Expired

BALANCE, JUNE 30, 2025

EXERCISABLE, JUNE 30, 2025

The following table summarizes the nonvested

share options for the six months ended June 30, 2025:

BALANCE, SEPTEMBER 30, 2025

EXERCISABLE, SEPTEMBER 30, 2025

following table summarizes the nonvested share options for the nine months ended September 30, 2025:

OF NONVESTED SHARE OPTION

Share Options

Average Exercise Price

Average Grant Date Fair Value

Average Remaining Contractual Term (years)

Intrinsic Value

1 unchanged sentence

Canceled/Expired

BALANCE, JUNE 30, 2025

ARRIVE AI INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

EQUITY INCENTIVE PLAN (Continued)

The aggregate intrinsic value is calculated

as the difference between the exercise price of the underlying share options and the closing stock price of $ 11.68 for the Company’s

common shares on June 30, 2025 and the closing stock price of $ 12.71 for the Company’s common shares on December 31, 2024.

There were no options

granted during the six months ended June 30, 2025.

As of June 30, 2025, there was $ 4,427,738 unrecognized compensation expense related

to nonvested stock options to be recognized over the remaining vesting period.

Total compensation expense related to stock options during

the three and six months ended June 30, 2025 and June 30, 2024 was $ 244,883 and $ 489,766 and $ 246,612 and $ 462,282 , respectively.

the six months ended June 30, 2025 there were 1,094 options exercised in a cashless exchange for 690 shares.

RESEARCH AND DEVELOPMENT TAX CREDITS

The Company qualifies as a small business

under Internal Revenue Code Section 41(h) and has elected to apply a portion of its federal research and development (R&D) credit

against the employer portion of Social Security payroll taxes, in accordance with IRS Form 6765.

As of June 30, 2025, the Company had

$ 166,499 of unused payroll tax credits.

These credits are being applied as an offset to the Company’s payroll tax liability and are

recognized as a reduction of payroll tax expense in the period the benefit is realized.

BALANCE, SEPTEMBER 30, 2025

aggregate intrinsic value is calculated as the difference between the exercise price of the underlying share options and the closing

stock price of $ 3.64 for the Company’s common shares on September 30, 2025 and the closing stock price of $ 12.71 for the Company’s

common shares on December 31, 2024.

TO FINANCIAL STATEMENTS (Continued)

INCENTIVE PLAN (Continued)

were no options granted during the nine months ended September 30, 2025.

As of September 30, 2025, there was $ 4,161,913 unrecognized

compensation expense related to nonvested stock options to be recognized through June 30, 2028.

Total compensation expense related to

stock options during the three and nine months ended September 30, 2025 and September 30, 2024 was $ 268,191 and $ 757,957 and $ 270,011

and $ 732,293 , respectively.

During the nine months ended September 30, 2025 there were 1,251 options exercised in a cashless exchange

for 773 shares.

Additionally,

fully vested stock awards of 2,264 and 35,389

shares were issued under the Plan to employees during the three and nine months ended September 30, 2025 resulting in compensation

expense of $ 20,942 and $ 541,567 , respectively.

AND DEVELOPMENT TAX CREDITS

Company qualifies as a small business under Internal Revenue Code Section 41(h) and has elected to apply a portion of its federal research

and development (R&D) credit against the employer portion of Social Security payroll taxes, in accordance with IRS Form 6765.

of September 30, 2025, the Company had $ 226,011 of unused payroll tax credits.

These credits are being applied as an offset to the Company’s

payroll tax liability and are recognized as a reduction of payroll tax expense in the period the benefit is realized.

SUBSEQUENT EVENTS

On July 2, 2025, subsequent to the end

of the reporting period, Congress enacted the Taxpayer Fairness and Growth Act of 2025, which includes significant amendments to the Internal

Revenue Code.

Key provisions include:

● A reduction in the federal corporate income tax rate from 21 % to 19 %, effective for tax years beginning

after January 1, 2026;

● Limitations on the deductibility of certain interest and R&D expenses;

● Modifications to the foreign-derived intangible income (“FDII “) and global intangible

low-taxed income (“GILTI”) regimes.

The Company is currently evaluating

the impact of the legislation on its consolidated financial statements, including deferred tax assets and liabilities.

Because the enactment

occurred after the end of the reporting period and before issuance of these financial statements, the effects have not been recognized

in the accompanying condensed consolidated financial statements as of and for the period ended June 30, 2025, consistent with ASC 740

The Company expects the corporate rate

reduction to have no material impact on its effective tax rate beginning in fiscal 2026.

However, remeasurement of deferred tax balances

and the application of new limitations may result in non-cash tax charges in future periods.

The Company will continue evaluating the

impact and recognize any required adjustments in the period of enactment.

On July 28, 2025 the Company’s resale

registration statement on Form S-1 was declared effective by the SEC registering up to 8,125,779 shares of common stock for resale by

selling shareholders.

This includes 8,000,000 shares issuable under the Steeterville Purchase Agreement, 114,421 shares issuable upon

exercise of warrants ( 6,680 of which have since expired), and 11,358 shares issued after the initial registration.

On August 11, 2025, the Company entered into a Pre-Paid Purchase No.

2 with Streeterville (the “Pre-Paid Purchase

2”) pursuant to the Streeterville Purchase Agreement dated March 21, 2025.

Under the Pre-Paid Purchase No.

2, the Investor paid

$ 4,000,000 to the Company, representing the purchase price for an unsecured promissory note with an original principal balance of $ 4,320,000 ,

which included a $ 320,000 original issue discount.

October 1, 2025, the Company signed a new five-year lease agreement for office space in Fishers Indiana.

The lessor and building

owner is a related party owned by the Company’s CEO Dan O’Toole.

Under the triple-net lease, the Company is responsible

for monthly rent expense plus taxes, insurance and common area maintenance.

The lease term is October 1, 2025 through September 30,

2030, with a monthly rent payment of $ 54,366 .

October 2, 2025 the Company was the plaintiff in a lawsuit filed in federal court in the Southern District of Indiana for misappropriation

of trade secrets.

Taft, Stettinius & Hollister, LLP is representing the Company in the matter.

Since this matter is still in its

initial stages, the Company is unable to predict the outcome at this time.

October 6, 2025, the Company awarded 21,876 restricted stock units with a fair value of $ 108,942 to three independent board members for

their services during the third quarter of 2025.

These shares vest on September 30, 2026 and are expensed as compensation expense over the

vesting period.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements