ARAI filing — read by section

Item 9A. Controls and Procedures

Item
9A. Controls and Procedures 

 Evaluation
of Disclosure Controls and Procedures 

 Our
management, with the participation of our Chief Executive Officer and our Chief Financial Officer (our principal executive officer and
principal financial officer, respectively), evaluated, as of the end of the period covered by this Annual Report on Form 10-K, the effectiveness
of our disclosure controls and procedures as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act. The term “disclosure
controls and procedures,” as defined in the Exchange Act, means controls and other procedures of a company that are designed to
ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded,
processed, summarized, and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms.
Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required
to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s
management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate
to allow timely decisions regarding required disclosures. Management recognizes that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment
in evaluating the cost-benefit relationship of possible controls and procedures. 

 Based
on that evaluation of our disclosure controls and procedures as required by Rules 13a-15(b) or 15d-15(b) under the Exchange Act, as of
December 31, 2025, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and
procedures were not effective for the period covered by this report. 

 In connection with the preparation of this Annual
Report on Form 10-K, the responsible officers concluded that the Company did not maintain sufficient controls to ensure the proper identification,
bifurcation and fair value measurement of embedded derivatives in hybrid financial instruments, or to ensure that the effective interest
method was applied over the accretion period for host debt instruments containing a discount. Corrective actions have been implemented
to address this control weakness after the period covered by this Annual Report on Form 10-K.

 Additionally, during the year ended December 31, 2025, two officers of the Company reported Section 16(b) trading
violations. These transactions were reported timely on Form 4, but occurred within six months of previously disclosed transactions, creating
short-swing profits. As required by Section 16(b) of the Securities Exchange Act of 1934, the profits were disgorged to the Company on
January 16, 2026.

 Management’s
Report on Internal Control over Financial Reporting 

 This
Annual Report on Form 10-K does not include a report of management’s assessment regarding internal control over financial reporting
or an attestation report of the Company’s independent registered public accounting firm due to a transition period established
by rules of the Securities and Exchange Commission for newly public companies. 

 Changes
in Internal Controls over Financial Reporting 

 During
the fiscal quarter ended December 31, 2025, there have been no changes in our internal control over financial reporting, as such term
is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act, that have materially affected, or are reasonably likely
to materially affect, our internal control over financial reporting. 

 Management is implementing corrective actions to address the material weaknesses discovered in connection with the
preparation of this Annual Report on Form 10-K, including enhancing its technical accounting review procedures for complex financial instruments,
engaging additional external resources with expertise in derivative accounting under ASC 815, and strengthening its controls around the
review and approval of significant accounting estimates and elections. The Company’s Insider Trading Policy has been modified to
emphasize the restrictions on any stock transactions within six months of a previous reported transaction. Management will continue to
monitor the effectiveness of these corrective actions in subsequent periods.

 Item
9B. Other Information 

 Insider
Trading Arrangements 

 On
September 22, 2025, Mark Hamm , the Company’s Chief Operating Officer , entered into a trading plan intended to satisfy the affirmative
defense conditions of Rule 10b5 -1(c) under the Exchange Act. The plan provides for the sale, subject to certain price limits, of 144,102 
shares vesting between September 22, 2025 and September 21, 2026 , pursuant to certain equity awards granted to Mr. Hamm, excluding any
shares withheld by the Company to satisfy income tax withholding and remittance obligations. Mr. Hamm’s plan will expire on September
21, 2026 , subject to early termination in accordance with the terms of the plan. 

 Section
16(b) Short-Swing Profit Matter 

 Section
16(b) of the Securities Exchange Act of 1934 requires directors, executive officers, and beneficial owners of more than 10% of a registered
class of an issuer’s equity securities to disgorge to the issuer any profits realized from the purchase and sale, or sale and purchase,
of the issuer’s equity securities within a six-month period. 

 During
the fiscal year ended December 31, 2025, the Company determined that Daniel O’Toole, a Director, Officer, and beneficial owner
of more than 10% of the Company’s common stock, and Neerav Shah, a Director and Officer, engaged in transactions in the Company’s
common stock that may have resulted in short-swing profits under Section 16(b). These transactions were not undertaken with the intent
to realize short-swing profits and were the result of administrative oversight. 

 Upon
identifying the transactions, the Company notified the applicable individuals. On January 16, 2026, the individuals disgorged to the Company an amount equal to
the calculated short-swing profit of approximately $129,701 in accordance with Section 16(b). The Company does not believe that this
matter will have a material impact on its financial condition or results of operations. 

 Item
9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections 

 Not
applicable. 

 42 

 PART
III 

 Item
10. Directors, Executive Officers and Corporate Governance 

 Executive
Officers and Directors 

 The
following table provides information regarding our executive officers and directors as of December 31, 2025: 

 Directors
 and Executive Officers 
 
 Age 
 
 Position/Title 

 Daniel
 O’Toole 
 
 62 
 
 Chairman
 of the Board and Chief Executive Officer 

 Mark
 Hamm 
 
 60 
 
 Chief
 Operating Officer and Director 

 Neerav
 Shah 
 
 54 
 
 Chief
 Strategy Officer and Director 

 John
 Ritchison (6) 
 
 76 
 
 Director
 and General Counsel 

 Todd
 Pepmeier 
 
 52 
 
 Chief
 Financial Officer 

 John
 Gallina (1), (4), (6) 
 
 66 
 
 Director 

 Kevin
 McAdams (2), (3), (6) 
 
 68 
 
 Director 

 Laurie
 Tucker (2), (4), (5) 
 
 69 
 
 Director 

 (1) Chair
 of the Audit and Finance Committee 

 (2) Member
 of the Audit and Finance Committee 

 (3) Chair
 of the Compensation Committee 

 (4) Member
 of the Compensation Committee 

 (5) Chair
 of the Corporate Governance and Nominating Committee 

 (6) Member
 of the Corporate Governance and Nominating Committee 

 Directors 

 Daniel
O’Toole – Chairman of the Board and Chief Executive Officer; Founder 

 Mr.
O’Toole founded Arrive AI (formerly Dronedek Inc.) in 2020 and has served as Chief Executive Officer since its inception and as
Chairman of the Board since formation. He has over 35 years of experience in founding, operating, and scaling businesses in distribution,
facilities services, and technology-enabled operations. Prior to founding Arrive AI, Mr. O’Toole founded and led several privately
held companies, including Facility Maintenance USA, which provided facility services to national customers. 

 Mr.
O’Toole’s experience as a founder, executive, and operator provides the Board with leadership insight, strategic planning
expertise, and operational oversight experience. 

 Mark
Hamm - Chief Operating Officer and Director 

 Mr.
Hamm has served as Chief Operating Officer of Arrive AI and director since 2022. He has over 20 years of experience in technology, logistics,
and operational leadership. Prior to joining the Company, Mr. Hamm held senior leadership roles at FedEx, ServiceMaster, and AutoZone,
where he led innovation, customer experience, and technology initiatives. 

 Mr.
Hamm’s experience in operations and technology strategy provides the Board with expertise in scaling systems and enterprise execution. 

 Neerav
Shah - Chief Strategy Officer and Director 

 Mr.
Shah has served as Chief Strategy Officer and a director since 2020. He previously founded and operated businesses focused on electromechanical
assemblies and infrastructure inspection services. He has also held roles at Sun Microsystems and Kaiser Permanente. 

 Mr.
Shah’s background in strategic development and regulated industries provides the Board with insight into growth planning and operational
scalability. 

 43 

 John
Ritchison, JD - Director, Corporate Counsel 

 Mr.
Ritchison has served as a director and Corporate Counsel since 2020. He is a registered patent attorney and licensed professional engineer
and has maintained a private intellectual property practice for over 20 years. Prior to his legal career, he held engineering and operations
leadership roles at Delphi and General Motors. 

 Mr.
Ritchison provides the Board with legal, intellectual property, and operational expertise. 

 John
Gallina, Director 

 Mr.
Gallina joined the Board in 2024 and serves as Chair of the Audit and Finance Committee. He previously served as Executive Vice President
and Chief Financial Officer of Elevance Health and held various senior finance and accounting roles over nearly 30 years. He brings extensive
experience in public company financial reporting and internal controls. 

 Kevin
McAdams, Director 

 Mr.
McAdams joined the Board in 2022 and serves as Chair of the Compensation Committee. He previously served as Vice President of Delivery,
Retail and Fleet Operations for the United States Postal Service. He currently serves as Founder and Chief Executive Officer of Vertical
Mile Consulting. He provides experience in logistics operations and national distribution networks. 

 Laurie
Tucker, Director 

 Ms.
Tucker joined the Board in June 2025 and serves as Chair of the Corporate Governance and Nominating Committee. She has over 35 years
of experience in logistics, technology, and operations and previously held senior leadership roles at FedEx Corporation. She currently
serves on several public and nonprofit boards. 

 Executive
Officers 

 The
following individuals serve as executive officers of the Company: 

 ● 
 Daniel O’Toole, Chairman
 and Chief Executive Officer 

 ● 
 Mark Hamm,
 Chief Operating Officer 

 ● 
 Neerav Shah,
 Chief Strategy Officer 

 ● 
 John Ritchison,
 General Counsel 

 ● 
 Todd Pepmeier,
 Chief Financial Officer 

 Biographical
information for Messrs. O’Toole, Hamm, Shah and Ritchison is provided above under “Directors.” 

 Todd
Pepmeier - Chief Financial Officer 

 Mr.
Pepmeier has served as Chief Financial Officer since May 2023. He has over 25 years of experience in finance and accounting across automotive,
healthcare, aerospace, and technology sectors. Prior to joining the Company, he held senior finance roles at Ascension Health and served
as Chief Financial Officer of Agilify, a technology company specializing in robotic process automation. 

 Mr.
Pepmeier’s experience includes financial reporting, internal controls, and capital markets readiness. 

 Family
Relationships 

 There
are no family relationships among any of the Company’s directors or executive officers. 

 44 

 Corporate
Governance 

 Controlled
Company Status 

 The
Company ceased to be a “controlled company” within the meaning of the listing rules of The Nasdaq Stock Market LLC on or
around April 9, 2026, and is permitted to continue to rely on exemptions from certain Nasdaq corporate governance requirements within
a year following such date, including the requirement that a majority of the Board consist of independent directors and the requirement
that the compensation and nominating committees be composed entirely of independent directors. The Company currently relies on these
exemptions. 

 Notwithstanding
these exemptions, the Company maintains an Audit and Finance Committee composed entirely of independent directors in accordance with
applicable Nasdaq and SEC requirements. 

 Board
Leadership Structure 

 Daniel
O’Toole serves as both Chairman of the Board and Chief Executive Officer. The Board believes that combining the roles of Chairman
and Chief Executive Officer promotes unified leadership and direction for the Company and facilitates effective communication between
management and the Board. 

 The
Board does not have a Lead Independent Director. The independent directors meet in executive session without management present on a
periodic basis. The Board believes this structure, together with the presence of independent directors and committee oversight, provides
appropriate independent oversight of management. 

 The
Board retains flexibility to modify its leadership structure in the future as it deems appropriate. 

 Role
of the Board in Risk Oversight 

 The
Board oversees the Company’s risk management processes. Management is responsible for identifying, assessing, and managing material
risks facing the Company, including operational, financial, legal, regulatory, and strategic risks. 

 The
Board receives periodic reports from management regarding significant risks and mitigation efforts. Each Board committee assists the
Board in overseeing risk within its respective area of responsibility: 

 ● The
 Audit and Finance Committee oversees risks related to financial reporting, internal controls,
 accounting policies, compliance, and cybersecurity. 

 ● The
 Compensation Committee oversees risks related to executive compensation policies and practices. 

 ● The
 Corporate Governance and Nominating Committee oversees risks related to board structure,
 governance practices, and director independence. 

 While
committees focus on specific risk areas, the full Board is regularly informed regarding material risks affecting the Company. 

 45 

 Director
Independence 

 Nasdaq
listing standards require that audit committee members satisfy the independence requirements of Rule 10A-3 under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), and that compensation committee members satisfy the independence requirements
of Rule 10C-1 under the Exchange Act. 

 The
Board has affirmatively determined that John Gallina, Kevin McAdams, and Laurie Tucker qualify as independent directors under the applicable
Nasdaq listing standards. The Board has further determined that each member of the Audit and Finance Committee satisfies the enhanced
independence requirements applicable to audit committee members under SEC and Nasdaq rules. 

 During the year ended December 31, 2025,
the Company was a controlled company. It was not required to maintain a majority independent Board or fully independent compensation and
nominating committees, and it relied on those exemptions. 

 Board
Committees 

 The
Board has established three standing committees: 

 ● Audit
 and Finance Committee 

 ● Compensation
 Committee 

 ● Corporate
 Governance and Nominating Committee 

 Each
committee operates under a written charter approved by the Board. The charters are available on the Company’s website. 

 Audit
and Finance Committee 

 The
Audit and Finance Committee consists of John Gallina (Chair), Kevin McAdams, and Laurie Tucker. The Board has determined that each member
of the committee is independent under Nasdaq and SEC rules applicable to audit committee members. 

 The
Audit and Finance Committee’s primary responsibilities include: 

 ● Overseeing
 the integrity of the Company’s financial statements and financial reporting process; 

 ● Reviewing
 annual and quarterly financial statements and related disclosures; 

 ● Overseeing
 the Company’s internal control over financial reporting; 

 ● Appointing,
 compensating, retaining, and overseeing the Company’s independent registered public
 accounting firm; 

 ● Reviewing
 the qualifications, independence, and performance of the independent auditor; 

 ● Establishing
 procedures for the receipt and treatment of complaints regarding accounting, internal controls,
 or auditing matters; 

 ● Reviewing
 related party transactions as required. 

 The
Board has determined that John Gallina qualifies as an “audit committee financial expert” as defined by SEC rules. 

 Compensation
Committee 

 The
Compensation Committee consists of Kevin McAdams (Chair), John Gallina, and Laurie Tucker, each of whom the Board has determined to be
independent under Nasdaq listing standards. Each member is also a “non-employee director” within the meaning of Rule 16b-3
under the Exchange Act. 

 The
Compensation Committee’s primary responsibilities include: 

 ● Reviewing
 and approving corporate goals and objectives relevant to executive officer compensation; 

 ● Evaluating
 executive officer performance; 

 ● Determining
 and approving executive compensation, including salary and incentive awards; 

 ● Administering
 the Company’s equity and incentive compensation plans; 

 ● Recommending
 director compensation to the Board. 

 The
Compensation Committee may form subcommittees and delegate authority to the extent permitted by applicable law and its charter. 

 46 

 Corporate
Governance and Nominating Committee 

 The
Corporate Governance and Nominating Committee consists of Laurie Tucker (Chair), Kevin McAdams, John Gallina, and John Ritchison.
The Board has determined that Ms. Tucker, Mr. Gallina, and Mr. McAdams are independent under Nasdaq listing standards. Mr. Ritchison
is not independent due to his employment with the Company. During the year ended December 31, 2025, the Company relied on the
controlled company exemption with respect to full independence of this committee. 

 The
Corporate Governance and Nominating Committee’s primary responsibilities include: 

 ● Identifying
 and recommending director nominees; 

 ● Considering
 director candidates recommended by stockholders; 

 ● Reviewing
 the size and composition of the Board and its committees; 

 ● Overseeing
 Board evaluations; 

 ● Recommending
 corporate governance principles and policies. 

 Meetings
of the Board 

 The
Board holds regular meetings and may hold special meetings as necessary. Directors are expected to attend Board meetings, meetings of
committees on which they serve, and the Company’s annual meeting of stockholders. 

 Independent
directors meet in executive session without management periodically during the year 

 Code
of Business Conduct and Ethics 

 The
Company has adopted a Code of Business Conduct and Ethics applicable to all directors, officers, and employees, including the Chief Executive
Officer and Chief Financial Officer. The Code addresses, among other matters: 

 ● Conflicts
 of interest 

 ● Compliance
 with laws 

 ● Insider
 trading 

 ● Protection
 of Company assets 

 ● Ethical
 conduct and reporting obligations 

 The
Code of Business Conduct and Ethics is available on the Company’s website and filed as Exhibit 14.1 to this Annual Report on Form 10-K. The Company intends to disclose any amendments to,
or waivers from, provisions of the Code applicable to its principal executive officer or principal financial officer on its website
or in a Current Report on Form 8-K, as required by SEC rules. 

 Delinquent
Section 16(a) Reports 

 Section
16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than 10% of a registered class of our
equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock and other
equity securities. 

 47 

 To
our knowledge, based solely upon a review of Forms 3, 4, and 5 filed with the SEC during the fiscal year ended December 31, 2025, we
believe that our directors, executive officers, and greater than 10% beneficial owners have complied with all applicable filing requirements
during the fiscal year ended December 31, 2025, except for the following. 

 Name
 of Reporting Person 
 
 Type
 of Report Filed Late 
 
 Number
 of Transactions Reported Late 

 John
 Gallina 
 
 Form
 4 (1) 
 
 2
 
 Laurie
 Tucker 
 
 Form
 4 (1) 
 
 1 

 Kevin
 McAdams 
 
 Form
 4 (1) 
 
 2 

 William
 Stafford 
 
 Form
 4 (1) 
 
 2 

 (1)
Form 4 filed on September 3, 2025. 

 Insider
Trading Policies and Procedures 

 The
Company has adopted insider trading policies and procedures governing the purchase, sale, and other dispositions of the
Company’s securities by directors, officers, and employees. A copy of the Company’s insider trading policy is filed as
Exhibit 19.1 to this Annual Report on Form 10-K. 

 Item
11. Executive Compensation 

 All
share and per share amounts in this Item 11 have been adjusted to reflect the Company’s 1-for-4 reverse stock split, applied retrospectively
for all periods presented. 

 The
following table sets forth the compensation paid by the Company to its chief executive officer and other compensated executive officers.
The disclosure is provided for the years ended December 31, 2025 and December 31, 2024. 

 Name
 and Principal Position 
 Year 
 Salary
 ($) 
 Bonus
 ($) 
 Stock
 Awards ($) (1) 
 All
 Other Compensation ($) 
 Total
 ($) 

 Daniel O’Toole 
 2025 
 466,667 
 1,600,966 
 - 
 187,398 (2) 
 2,255,031 

 Chief Executive Officer 
 2024 
 300,000 
 - 
 - 
 120,000 
 420,000 

 Mark Hamm 
 2025 
 256,667 
 137,144 
 328,668 
 24,120 (3) 
 746,599 

 Chief Operating Officer 
 2024 
 240,000 
 - 
 - 
 - 
 240,000 

 Todd Pepmeier 
 2025 
 193,333 
 170,947 
 280,000 
 24,120 (3) 
 
 668,400 

 Chief Financial Officer 
 2024 
 150,000 
 - 
 - 
 - 
 150,000 

 (1) Amounts
 reflected in this column represent the grant date fair value of restricted stock units. The
 grant date fair value is measured based on the closing price of our common stock on the date
 of grant in accordance with FASB ASC Topic 718. The valuation methodology and assumptions
 used in determining such amounts are described in Note 17 of the Company’s financial
 statements for the year ended December 31, 2025. 

 (2) CEO
 Daniel O’Toole received $120,000 compensation in each fiscal year, per the terms of the exclusive patent license agreement.
 For the year ended December 31, 2025, Mr. O’Toole also received $24,445 in employer-paid healthcare insurance and $42,953 in
 imputed income for healthcare and life insurance benefits and other services per his compensation package approved by the Board of
 Directors. 
 
 (3) Mark Hamm and Todd Pepmeier each received $24,120 in employer-paid healthcare insurance. 

 Executive
Compensation 

 This
section discusses the material components of the executive compensation program for the Company’s named executive officers who
appear in the “2025 Summary Compensation Table” below. In 2025, the “named executive officers” and their positions
with the Company were as follows: 

 ● 
Daniel O’Toole: Chairman and Chief Executive Officer 

 ● 
Mark Hamm: Chief Operating Officer 

 ● 
Todd Pepmeier: Chief Financial Officer 

 48 

 We
are an “emerging growth company” under applicable SEC rules and are providing disclosure regarding our executive compensation
arrangements pursuant to the rules applicable to emerging growth companies, which means that we are not required to provide a compensation
discussion and analysis and certain other disclosures regarding our executive compensation. The following discussion relates to the compensation
of our named executive officers for 2025. 

 Following
the adoption of the Compensation Committee charter in October 2023, the Compensation Committee determines and approves all elements of
executive officer compensation. The Compensation Committee’s primary objectives in determining executive officer compensation are
to (i) develop an overall compensation package that is at market levels and thus fosters executive officer retention and (ii) align the
interests of our executive officers with our stockholders by linking a significant portion of the compensation package to performance. 

 Pay
Versus Performance 

 As
required by Item 402(v) of Regulation S-K, we are providing the following information regarding the relationship between executive compensation
actually paid and certain financial performance measures of the Company. As a smaller reporting company and in our first year of providing
this disclosure, we are presenting information for fiscal years 2025 and 2024. 

 Pay
Versus Performance Table 

 Year 
 Summary
 Compensation Table Total for PEO ($) 
 Compensation
 Actually Paid to PEO ($) (2)(3) 
 Average
 Summary Compensation Table Total for Non-PEO NEOs ($) 
 Average
 Compensation Actually Paid to Non-PEO NEOs ($) (2)(4) 
 Net
 Income (Loss) ($) 
 Company
 TSR ($100 Initial Fixed Investment) 
 Company-Selected
 Measure 

 2025 
 2,255,031 
 2,255,031 
 707,500 
 (223,383 ) 
 (12,826,384 ) 
 19.85 
 (12,826,384 ) 

 2024 
 420,000 
 420,000 
 195,000 
 297,938 
 (4,537,901 ) 
 N/A (1) 
 (4,537,901 ) 

 (1) TSR
 for fiscal year 2024 is not presented because the Company’s common stock was not publicly
 traded during that fiscal year. TSR for fiscal year 2025 reflects the cumulative return on
 a $100 investment beginning on May 15, 2025, the first trading day of the Company’s
 common stock on Nasdaq, through December 31, 2025. 

 (2) Compensation
 Actually Paid (“CAP”) is calculated in accordance with Item 402(v) of Regulation
 S-K and differs from the amounts reported in the Summary Compensation Table. CAP reflects
 adjustments to remove the grant date fair value of equity awards included in the Summary
 Compensation Table and to include the fair value of equity awards as of the end of the applicable
 fiscal year or the vesting date, as applicable, together with changes in fair value of such
 awards during the year. 

 (3) The
 Company’s Principal Executive Officer did not receive equity awards during fiscal years
 2025 or 2024. Accordingly, Compensation Actually Paid to the PEO is equal to the total compensation
 reported for the PEO in the Summary Compensation Table for those fiscal years. 

 (4) The
 fair value of stock option awards used in determining Compensation Actually Paid was calculated
 using a Black-Scholes option pricing model based on the Company’s stock price and updated
 valuation assumptions as of the applicable measurement dates. 

 Compensation
Actually Paid 

 Compensation
Actually Paid (“CAP”) is calculated in accordance with Item 402(v) of Regulation S-K and differs from the amounts reported
in the Summary Compensation Table. CAP reflects adjustments to remove the grant date fair value of equity awards and to include the fair
value of equity awards as of the end of the applicable fiscal year or the vesting date, as applicable, together with any changes in fair
value of such awards during the year. 

 Total
Shareholder Return 

 Total
Shareholder Return (“TSR”) reflects the cumulative return on a $100 investment in the Company’s common stock beginning
on May 15, 2025, the first trading day of the Company’s common stock on Nasdaq, through December 31, 2025. The Company did not
pay dividends during fiscal year 2025. Because the Company was not publicly traded during fiscal year 2024, TSR for fiscal year 2024
is not presented. 

 49 

 Company-Selected
Measure 

 For
fiscal year 2025, the Company selected Net Income (Loss) as its Company-Selected Measure. During fiscal year 2025, executive compensation
was not based on a formulaic financial performance metric. Instead, compensation decisions reflected the Company’s strategic objectives,
including completion of its public listing and establishment of a financing facility to support future growth, and Board discretion. 

 Because
revenue was not material and the Company was in an investment and development phase, Net Income (Loss) is the most directly applicable
financial performance measure presented in the table above. 

 Relationship
Between Compensation Actually Paid and Net Income (Loss) 

 The
Company incurred a net loss in fiscal years 2025 and 2024 as it continued to invest in product development, intellectual property, commercialization
activities and public company readiness. Net income (loss) was not used as a determinative factor in setting base salary, equity award
levels, or cash incentive compensation for fiscal year 2025. Accordingly, Compensation Actually Paid to the PEO and the average Compensation
Actually Paid to the non-PEO named executive officers was not directly tied to net income (loss) during these periods. Rather, compensation
decisions were based on overall Company progress and strategic initiatives, including the Company’s public listing and financing
activities. 

 Relationship
Between Compensation Actually Paid and Total Shareholder Return 

 Total
Shareholder Return (“TSR”) reflects the cumulative return on a $100 investment in the Company’s common stock beginning
on May 15, 2025, the first trading day of the Company’s common stock on Nasdaq, through December 31, 2025. Changes in Compensation
Actually Paid during fiscal year 2025 were significantly influenced by changes in the market value of the Company’s common stock
following its public listing. As reflected in the TSR presented above, the Company’s stock price experienced volatility during
fiscal year 2025. Because Compensation Actually Paid includes adjustments reflecting the fair value of equity awards, fluctuations in
stock price directly impact reported CAP amounts. 

 Relationship
Between Compensation Actually Paid and the Company-Selected Measure 

 For
fiscal year 2025, executive compensation was not directly formulaically tied to a specific financial metric. However, compensation decisions
considered the Company’s advancement of strategic objectives, including product development, intellectual property expansion, commercialization
efforts, and public listing milestones. 

 Beginning
in fiscal year 2026, the Company intends to implement an executive incentive compensation program tied to defined corporate goals approved
annually by the Compensation Committee. These corporate goals may include strategic, operational, and financial objectives tailored to
the Company’s stage of development and long-term growth strategy. 

 Outstanding
Equity Awards at December 31, 2025 

 The
following table sets forth information regarding outstanding equity awards held by our named executive officers as of December 31, 2025,
after giving effect to the Reverse Stock Split retrospectively for all periods presented. 

 Option Awards 
 
 Stock Awards 

 Name 
 Grant
 Date 
 Number
 of securities underlying unexercised options (#) exercisable (1) 
 Number
 of securities underlying unexercised options (#) unexercisable 
 Equity
 incentive plan awards: number of securities underlying unexercised unearned options (#) 
 Option
 exercise price ($) 
 Option
 expiration date 
 Number
 of shares of restricted stock # 
 Market
 value of shares of restricted stock ($) (2) 
 
 Mark Hamm 
 6/1/22 
 168,119 
 24,017 
 192,136 
 0.82 
 5/31/32 
 - 
 - 

 Mark Hamm 
 12/31/25 
 - 
 - 
 - 
 - 
 - 
 124,969 
 $ 328,668 

 Todd Pepmeier 
 8/16/23 
 703 
 547 
 - 
 0.76 
 8/15/33 
 - 
 - 

 Todd Pepmeier 
 11/13/23 
 35,156 
 27,344 
 62,500 
 0.76 
 11/12/33 
 - 
 
 Todd Pepmeier 
 12/31/25 
 - 
 - 
 - 
 - 
 - 
 106,464 
 $ 280,000 

 (1)
Securities in this column are 100% vested and exercisable 

 (2)
Market value of shares at December 31, 2025 

 50 

 Employment
Agreements 

 Other
than as set forth below, the Company does not have an employment agreement with any member of the Company’s management team or any
members of the Board. However, the Company plans to enter into executive employment agreements with the Company’s management team. 

 Mark
Hamm – Chief Operating Officer 

 On
June 1, 2022, the Company entered into an employment agreement with Mark Hamm pursuant to which he serves as Chief Operating Officer.
The agreement provides for at-will employment. 

 Base
Salary 

 Pursuant
to his employment agreement dated June 1, 2022, Mr. Hamm’s initial annual base salary was $240,000. Effective September 1, 2025,
the Board approved an increase to $290,000. 

 Bonus 

 Mr.
Hamm was initially eligible to receive discretionary bonus compensation as determined by the Board of Directors. As of September 1, 2025,
his annual short-term cash bonus is subject to the executive compensation plan approved by the Board. 

 Equity
Awards 

 Mr.
Hamm was granted stock options covering 384,272 shares at an exercise price of $0.82 per share, after giving effect to the reverse stock
split. The grant consists of time-based and performance-based components: 

 ● 192,136
 Time-Based Non-Qualified Stock Options (NQSOs): 

 ○ Vest
 over four years. 

 ○ Subject
 to a one-year cliff. 

 ○ 25%
 vest on the first anniversary of the grant date. 

 ○ Thereafter
 vest in equal quarterly installments over the remaining three years. 

 ○ No
 vesting occurs if employment terminates before the first anniversary. 

 ● 192,136
 Performance-Based Incentive Stock Options (ISOs): 

 ○ Eligible
 to vest upon achievement of specified company valuation milestones. 

 ○ 25%
 of the total award vests upon achievement and six-month sustainability of a $500 million
 valuation. 

 ○ 25%
 of the total award vests upon achievement and six-month sustainability of a $1 billion valuation. 

 ○ Performance-based
 vesting remains subject to the same time-based vesting schedule described above. 

 The
exercise price and number of options granted are set pursuant to a separate award agreement under the Company’s equity incentive
plan. 

 51 

 Change
in Control 

 Upon
a change in control: 

 ● 50%
 of the total option award accelerates and becomes vested upon the occurrence of the transaction
 (single trigger). 

 ● The
 remaining 50% accelerates upon a qualifying termination following the change in control (double
 trigger). 

 Severance 

 The
agreement does not provide for severance payments upon termination of employment. 

 Benefits 

 Mr.
Hamm is eligible to participate in employee benefit plans and programs made available to senior executives, including health benefits,
retirement benefits, and paid time off, in accordance with Company policy. 

 Todd
Pepmeier – Chief Financial Officer 

 On
November 13, 2023, the Company entered into an employment agreement with Todd Pepmeier pursuant to which he serves as Chief Financial
Officer. The agreement provides for at-will employment. 

 Base
Salary 

 Pursuant
to his employment agreement dated November 13, 2023, Mr. Pepmeier’s initial annual base salary was $150,000. Effective September
1, 2025, the Board approved an increase to $280,000. 

 Bonus 

 Pursuant
to his employment agreement dated November 13, 2023, Mr. Pepmeier was eligible for an annual discretionary bonus targeted at $25,000.
As of September 1, 2025, his annual short-term cash bonus is subject to the executive compensation plan approved by the Board. 

 Equity
Awards 

 Mr.
Pepmeier was granted stock options covering 125,000 shares at an exercise price of $0.76 per share, after giving effect to the reverse
stock split. The award consists of: 

 ● 62,500
 Time-Based Non-Qualified Stock Options (NQSOs): 

 ○ Vest
 over four years. 

 ○ Subject
 to a one-year cliff. 

 ○ 25%
 vest on the first anniversary of the grant date. 

 ○ Thereafter
 vest in equal quarterly installments over the remaining three years. 

 ○ No
 vesting occurs if employment terminates before the first anniversary. 

 ● 62,500
 Performance-Based Incentive Stock Options (ISOs): 

 ○ 50%
 of this portion (25% of total grant) vests upon achievement and six-month sustainability
 of a $600 million company valuation. 

 ○ 50%
 of this portion (25% of total grant) vests upon achievement and six-month sustainability
 of a $1 billion company valuation. 

 ○ Performance-based
 vesting remains subject to the same time-based vesting schedule described above. 

 52 

 Change
in Control 

 Upon
a change in control: 

 ● 50%
 of the total option award accelerates upon the transaction (single trigger). 

 ● The
 remaining 50% accelerates upon a qualifying termination following the transaction (double
 trigger). 

 Severance 

 The
agreement does not provide for severance payments upon termination of employment. 

 Benefits 

 Mr.
Pepmeier is eligible to participate in employee benefit plans and programs made available to senior executives, including health benefits,
retirement benefits, and paid time off, in accordance with Company policy. 

 Equity
Incentive Plan 

 The
Company maintains the Arrive AI Inc. Stock Equity Incentive Plan (the “Plan”), which was adopted by the Board in 2023. In
November 2025, the Board approved an amendment to increase the number of shares authorized for issuance under the Plan to 7,000,000 shares
of common stock, after giving effect to the Reverse Stock Split. This amendment was approved by written consent of the majority shareholder
on December 16, 2025. 

 The
Plan permits the grant of stock options, restricted stock, restricted stock units, stock appreciation rights and other equity-based awards
to employees, directors and consultants. The Plan is administered by the Compensation Committee. 

 A
copy of the Plan is incorporated to this Annual Report on Form 10-K as exhibit 10.8. 

 Director
Compensation 

 The
following table sets forth information concerning compensation earned by the Company’s non-employee directors for services rendered
as a director during the year ended December 31, 2025: 

 Name 
 Fees
 earned or paid in cash 

 ($) 
 
 Stock
 Awards 

 ($) (1)(2) 
 
 Total 

 ($) 
 
 John
 Gallina 
 22,917 
 145,969 
 168,886 

 Kevin
 McAdams 
 22,917 
 145,969 
 168,886 

 Laurie
 Tucker 
 22,917 
 77,195 
 100,112 

 William
 Stafford (served until July 31, 2025) 
 - 
 72,154 
 72,154 

 (1) The
 amounts reported in the “Stock Awards” column represent the aggregate grant date
 fair value of restricted stock units (“RSUs”) and fully vested shares of common
 stock granted during fiscal year 2025, computed in accordance with Financial Accounting Standards
 Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation
 (“ASC 718”). The grant date fair value of RSUs and fully vested shares was determined
 based on the closing price of our common stock on the applicable grant date. The assumptions
 used in calculating these amounts are described in Note 17 to our audited financial statements
 included in this Annual Report on Form 10-K. 

 (2) As
 of December 31, 2025, the aggregate number of unvested RSUs outstanding for each non-employee
 director was as follows: 

 ● John
 Gallina – 21,551 RSUs 

 ● Kevin
 McAdams – 21,551 RSUs 

 ● Laurie
 Tucker – 21,551 RSUs 

 William
Stafford had no unvested equity awards outstanding as of December 31, 2025. No director held any stock options outstanding at fiscal
year end. 

 53 

 Cash
Compensation 

 Beginning
September 1, 2025, non-employee directors were entitled to receive: 

 ● An
 annual cash retainer of $40,000, payable quarterly in arrears; 

 ● Additional
 annual cash retainers for chairmen of Board committees; and 

 ● Additional
 annual cash retainers for service on Board committees, payable quarterly in arrears. 

 For
fiscal year 2025, John Gallina, Kevin McAdams and Laurie Tucker each received $22,917 in cash compensation. These amounts reflect prorated
annual retainers beginning September 1, 2025. 

 William
Stafford served as a director until July 31, 2025. He did not receive cash compensation during fiscal year 2025. 

 No
meeting fees were paid in fiscal year 2025. 

 Equity
Compensation 

 During
fiscal year 2025, non-employee directors received long-term equity compensation in the form of RSUs and, in certain cases, fully vested
shares of common stock. All equity awards were granted under the Company’s shareholder-approved equity incentive plan. 

 John
Gallina and Kevin McAdams were each granted: 

 ● 9,318
 fully vested shares of common stock; and 

 ● 21,551
 RSUs. 

 Laurie
Tucker was granted: 

 ● 285
 fully vested shares of common stock; and 

 ● 21,551
 RSUs. 

 William
Stafford was granted: 

 ● 9,318
 fully vested shares of common stock. 

 The
RSUs granted in fiscal year 2025 vest twelve months from the applicable grant date, subject to continued service on the Board through
the vesting date. 

 The
fully vested shares granted in fiscal year 2025 were issued in recognition of Board service prior to September 1, 2025 and, in certain
cases, as a one-time award in connection with the Company’s public listing. 

 No
Additional Compensation 

 Executive
officers who serve as directors do not receive additional compensation for their service as directors. 

 Other
than the compensation described above, non-employee directors did not receive any additional compensation during fiscal year 2025, including
perquisites, consulting fees, or other personal benefits. 

 54 

 Compensation
Recovery Policy 

 In
accordance with the final rules adopted by the SEC and Nasdaq implementing the incentive-based compensation recovery provisions of the
Dodd-Frank Act, our Board approved the Arrive AI Inc. Compensation Recovery Policy, effective as of October 24, 2024, which provides
that in the event the Company is required to restate any of its financial statements that have been filed with the SEC, then the Compensation
Committee will seek to recover any erroneously awarded performance-based incentive-based compensation (including any performance-based
cash and equity awards and salary increases earned wholly or in part based on the attainment of financial performance goals) received
by any person who is or was a Section 16 officer during the three-fiscal year recovery period. A copy of our Compensation Recovery Policy, including any amendments thereto, is filed as Exhibit 97.1 to this Annual
Report on Form 10-K. 

 Insider
Trading Policy 

 We
are committed to promoting high standards of ethical business conduct and compliance with applicable laws, rules and regulations. As
part of this commitment, we have adopted our Insider Trading Policy governing the purchase, sale, and/or other dispositions of our securities
by our directors, officers and employees that we believe is reasonably designed to promote compliance with insider trading laws, rules
and regulations, and the exchange listing standards applicable to us. A copy of our Insider Trading Policy, including any amendments
thereto, is filed as Exhibit 19.1 to this Annual Report on Form 10-K. 

 Item
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 

 The following table sets forth information regarding the beneficial ownership
of our common stock as of April 15, 2026, by:

 ● each
 person known by us to beneficially own more than 5% of our outstanding common stock, 

 ● each
 of our directors, 

 ● each
 of our named executive officers, and 

 ● all
 directors and executive officers as a group. 

 Beneficial
ownership is determined in accordance with the rules of the U.S. Securities and Exchange Commission (“SEC”), including Rule
13d-3 under the Securities Exchange Act of 1934, as amended. Under these rules, a person is deemed to beneficially own shares of common
stock if that person has or shares voting power or investment power with respect to such shares. 

 Shares of common stock that a person has the right to acquire within 60
days of April 15, 2026, including through the exercise of options or warrants or the vesting of restricted stock units, are deemed to
be beneficially owned by that person and are included in the percentage ownership of that person, but are not treated as outstanding for
purposes of computing the percentage ownership of any other person.

 Unless
otherwise indicated, the address of each beneficial owner listed below is c/o Arrive AI Inc., 9100 Fall View Drive, Fishers, Indiana
46037. 

 As of April 15, 2026, there were 47,731,391 shares of common stock outstanding.

 Beneficial
ownership information is based on filings made with the SEC and information provided to the Company. 

 Name of Beneficial Owner 
 
 Amount and Nature 

 of Beneficial 

 Ownership (1) 
 
 Percent of Class 
 
 5% Stockholders 
 
 Daniel O’Toole, Chairman and Chief Executive Officer 
 
 23,155,051 
 
 48.5 
 
 Streeterville Capital, LLC (2) 
 
 5,300,000 
 (3) 
 
 9.9 
 
 Directors and Named Executive Officers 
 
 Mark Hamm, Chief Operating Officer and Director 
 
 209,431 
 (4) 
 
 0.4 
 
 Neerav Shah, Chief Strategy Officer and Director 
 
 108,448 
 (5) 
 
 0.2 
 
 John Ritchison, Director and General Counsel 
 
 1,302,500 
 
 2.7 
 
 John Gallina, Director 
 
 18,202 
 
 * 
 
 Kevin McAdams, Director 
 
 16,241 
 
 * 
 
 Laurie Tucker, Director 
 
 7,577 
 
 * 
 
 Todd Pepmeier, Chief Financial Officer 
 
 67,674 
 (6) 
 
 0.1 
 
 All Directors and Executive Officers and a Group (eight persons) 
 
 24,885,124 
 (7) 
 
 51.9 
 
 *
Represents beneficial ownership of less than 0.1% of the outstanding shares of common stock. 

 (1) Beneficial
 ownership is determined in accordance with Rule 13d-3 under the Securities Exchange Act of
 1934. Shares subject to options or warrants exercisable within 60 days and restricted stock
 units vesting within 60 days are deemed outstanding for the person but not for others. 

 55 

 (2) 
 John M. Fife has voting and dispositive power over shares held by Streeterville Capital, LLC. The address of Streeterville Capital, LLC is 297 Auto Mall Drive Suite #4, St. George, Utah 84770. 

 (3) 
 Represents shares issuable to Streeterville within 60 days of April 15, 2026, pursuant to the terms of the Streeterville Securities Purchase Agreement. Pursuant to the Pre-Paid Purchases, the Company will not effect any issuance of Purchase Shares if, after giving effect to such conversion, the holder would beneficially own, together with its affiliates, in excess of 9.99% of the outstanding shares of our common stock on such issuance date. 

 (4) 
 Includes (i) 29,304 shares of common stock held by Mark Hamm; and (ii) 180,127 shares of common stock issuable to Mark Hamm upon the exercise of outstanding options within 60 days of April 15, 2026 (all of which were issued as part of the Plan). 

 (5) 
 Includes (i) 93,448 shares of common stock held by Neerav Shah; and (ii) 15,000 shares of common stock issuable upon the exercise of outstanding options within 60 days of April 15, 2026 (all of which were issued as part of the Plan). 

 (6) 
 Includes (i) 23,847 shares of common stock held by Todd Pepmeier; and (ii) 43,827 shares of common stock issuable to Todd Pepmeier upon the exercise of outstanding options within 60 days of April 15, 2026 (all of which were issued as part of the Plan). 

 (7) 
 Includes (i) 24,646,170 shares of common stock held by the Directors and Executive Officers as a group; and (ii) 238,954 shares of common stock issuable upon the exercise of outstanding options within 60 days of April 15, 2026 (all of which were issued as part of the Plan). 

 Securities
Authorized for Issuance under Equity Compensation Plans 

 The
following table sets forth information as of December 31, 2025 regarding shares of common stock that may be used under our equity compensation
plans. 

 Plan
 Category 
 Number of 

 securities
to be 

 issued upon exercise of

 outstanding 

 options and 

 vesting of restricted stock 
 
 Weighted-average 

 exercise
price of outstanding options
 
 Number of securities 

 remaining available for 

 future issuance under equity 

 compensation plans (excluding securities 

 reflected in the first column) 
 
 Equity
 compensation plans approved by security holders 
 2,302,520 
 $ 0.80 
 4,660,840 

 See
 “Stock Equity Incentive Plan” under Part III, Item 11. Executive Compensation and Note 17 “Stock-Based Compensation” of Notes to Financial Statements included in Part II, Item 8. Financial Statements and Supplementary Data of this
report for additional information about our equity compensation plans and arrangements. 

 Item
13. Certain Relationships and Related Transactions, and Director Independence 

 The
following is a description of transactions since 2020, including currently proposed transactions to which Arrive has been a party in
which the amount involved exceeded or will exceed $120,000, and in which any of Arrive AI’s directors (including nominees), executive
officers or beneficial holders of more than 5% of Arrive AI’s capital stock, or their immediate family members or entities affiliated
with them, had or will have a direct or indirect material interest. We believe the terms and conditions set forth in such agreements
are reasonable and customary for transactions of this type. 

 56 

 Related
Party Lease of Company Headquarters 

 On
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 Daniel O’Toole. Under the triple-net lease, the Company is responsible for base rent plus separately assessed taxes, insurance, and
common area maintenance charges (‘NNN costs’). The base rent is $44,481 per month for the first twelve months, increasing 3% annually
thereafter. Based on current estimates, NNN costs are approximately $9,885 per month, resulting in an estimated all-in monthly cash outlay
of approximately $54,366. NNN costs are variable in nature and subject to change based on actual tax assessments, insurance premiums,
and maintenance charges incurred. The lease term is October 1, 2025 through September 30, 2030. 

 The
terms of the lease, including the base monthly rent and other material provisions, were determined through negotiations between the Company
and the related party lessor. In establishing the rental rate of $54,366 per month, management considered prevailing market rental rates
for comparable office properties in the Fishers, Indiana area, including properties of similar size, class, location and lease structure.
The Company also evaluated then-current commercial real estate market conditions and customary triple-net lease terms. Management believes
that the lease terms, taken as a whole, are consistent with those that would have been obtained in an arm’s-length transaction
with an unrelated third party. 

 The
lease was reviewed and approved in accordance with the Company’s related party transaction review procedures. In evaluating the
transaction, the Board of Directors (with the interested director abstaining) considered, among other factors, comparable market data
for similar office properties, the strategic suitability of the premises, and the overall cost structure relative to available alternatives.
The Company did not obtain an independent third-party appraisal or fairness opinion in connection with the lease; however, based on the
information reviewed and the factors described above, the Board determined that the lease terms are fair to the Company and in its best
interests. 

 Related Party Lease of Warehouse 

 The Company leased warehouse space owned by the Company’s
CEO Daniel O’Toole. The lease was originally signed on November 15, 2021. The monthly rent, including utilities, was $2,250. This month-to-month
lease was terminated on October 5, 2025.

 Exclusive
Patent License Agreement 

 Arrive
executed an exclusive patent license agreement on May 26, 2020 with its CEO, the licensor and sole owner of all right, title and interest
in certain technology consisting of inventions, know-how, patents and patents applications, technology to be patented and trademarks
relating to secured drone delivery ALM mailboxes and receiving containers for residential and commercial applications, collectively the
products which are described in more detail in the table below. The Company, as licensee, has the exclusive right to sell, manufacture,
and otherwise commercialize the technology and the products worldwide in exchange for a pre-revenue monthly fee equal to $10,000.00.
Additionally, once revenue from sales, rentals, and leases begin and exceeds $10,000.00 a month, then the licensee must pay licensor
a fee per unit or product sold, rented or leased equal to $25.00. The agreement also includes a provision where the Arrive must commence
development and marketing of the products within 36 months of the execution of the agreement in order to remain in force, otherwise at
the end of the 36 months, all rights shall revert to licensor with no further rights for such product or obligations of licensor to licensee,
however if no action is taken by the licensor, the agreement has a term of seven years, a period which may be extended upon mutual consent
and in the best interest for both parties. This license agreement also contains
other customary representations and covenants of agreements of similar type and scope. Through December 31, 2024, the total of payments
made to the CEO under the license agreement is $540,000, The Company estimates that the approximate value of the license agreement once
the Company starts generating revenue from commercial operations is approximately $17 million over the course of ten years, this is using
the formula of $25 per each installed unit and based on management’s internal sales projections of approximately 675,000 units
over that period. The foregoing description of the license agreement is not complete and is qualified in its entirety by reference to
the text of such document, which is filed as an exhibit to our Direct Listing Registration Statement. 

 57 

 Products
and intellectual property covered by the exclusive patent license agreement with our CEO: 

 Item 
 
 Patent No. 
 
 Title 
 
 Issue Date 
 
 App. No. 
 
 Inventor 
 
 App. Date 

 1 
 
 US9,840,340B2 
 
 Drone Docking Station and delivery system 
 
 December 12 2017 
 
 14/55,418 
 
 Daniel O’Toole 
 
 December 9, 2014 

 2 
 
 US10,457,421B2 
 
 Drone Docking Station and delivery system 
 
 October 29, 2019 
 
 15/328,027 
 
 Daniel O’Toole 
 
 January 21, 2017 

 3 
 
 Pending-PubNoWO2016/094067 June 16, 2016 
 
 Drone Docking Station and delivery system 
 
 — 
 
 PCT/US15/62034 
 
 Daniel O’Toole 
 
 November 21, 2015 

 4 
 
 Trademark App 88522545 
 
 DRONEDEK 
 
 Registered 
 
 88522545 
 
 Daniel O’Toole 
 
 July 18, 2019 

 5 
 
 US 12,304,671 
 
 Hot and Cold Section drone docking station Temperature Controlled Devic 
 
 May 2025 
 
 63012824 17/233635 
 
 Daniel O’Toole 
 
 April 20, 2020 

 6 
 
 US 11,738,883 
 
 Special Expanding Floor Accordion drone docking station called a Dronedeck Temperature Control Device 
 
 August 2023 
 
 63012824 17/233624 
 
 Daniel O’Toole 
 
 April 20, 2020 

 7 
 
 US 12,591,840 
 
 Device and system for an autonomous mobile robot, drone, and/or courier to deliver, hold, protect, and return parcels for multi-users in both residential and commercial applications 
 
 March 2026 
 
 18/208,803 
 
 Daniel O’Toole et al 
 
 June 12, 2023 

 8 
 
 US12,387,072 
 
 Smart mailbox receptacle and platform to ship packages and goods from a Trimodal system that includes a courier service, an automated vehicle or robot, and/or an unmanned drone 
 
 August 2025 
 
 19/173,731 
 
 Daniel O’Toole et al 
 
 July 25, 2023 CIP 

 On
December 10, 2024, the Company and its CEO, Mr. O’Toole, entered into the First Amendment to the Exclusive Patent License Agreement,
whereby the term of such agreement was extended beyond the original seven years to perpetuity for the full life of the covered patents.
If the Company materially defaults in performing any terms of the agreement and does not cure timely to Mr. O’Toole’s satisfaction,
Mr. O’Toole may terminate the agreement upon proper notice. Subsequent to the termination of the agreement, the Company agrees
to not engage in the use, sale, or other commercialization of the intellectual properties and not sell related products. The foregoing
description of the license agreement is not complete and is qualified in its entirety by reference to the text of such document, which
is filed as an exhibit to our Direct Listing Registration Statement. 

 58 

 On
March 10, 2025, the Company and its CEO, Mr. O’Toole, entered into the Second Amendment to the Exclusive Patent License Agreement.
The Second Amendment extends the license to perpetuity, covering the full term and life of the patents, and incorporates all terms from
the original Agreement and the First Amendment. In the event of a default, the defaulting party has 60 days to cure. If the default is
not cured, the license transitions to a non-exclusive license, allowing both parties to seek additional licensees or sources for similar
technology, while royalty payments continue into perpetuity or until the 20-year patent term ends. 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. The
foregoing description of the license agreement is not complete and is qualified in its entirety by reference to the text of such document,
which is filed as an exhibit to our Direct Listing Registration Statement 

 The
financial terms of the Exclusive Patent License Agreement, including the $10,000 monthly pre-revenue fee and the $25 per-unit royalty
once monthly revenues exceed $10,000, were determined through negotiations between the Company and the licensor. In determining the consideration
structure, the parties considered, among other factors: 

 ● The
 scope and exclusivity of the license (worldwide and exclusive rights); 

 ● The
 stage of development and commercial readiness of the licensed technology at the time of execution; 

 ● Comparable
 royalty structures observed in technology and intellectual property licensing arrangements
 within the industry; 

 ● The
 anticipated commercial value of the patents and related intellectual property; and 

 ● The
 allocation of development, commercialization, and market risk to the Company. 

 The
Company believes the structure of fixed pre-revenue payments combined with a per-unit royalty is consistent with licensing practices
for early-stage, exclusive technology arrangements. 

 The
subsequent amendments were reviewed and approved in accordance with the Company’s related party transaction approval policies.
In evaluating the fairness of the transaction, the Board of Directors (with the interested director abstaining) considered the strategic
importance of securing exclusive rights to the core intellectual property underlying the Company’s business model, the projected
long-term economic benefits to the Company, and the expected royalty obligations relative to projected unit economics and margins. 

 The
Company did not obtain an independent third-party valuation or fairness opinion with respect to the license agreement or its amendments.
The Board concluded that the terms of the agreement, including the amendments extending the term and modifying termination provisions,
were fair to the Company and in its best interests based on the totality of the circumstances and information reviewed at the time of
approval. 

 Item
14. Principal Accounting Fees and Services 

 The
Company’s Board of Directors engaged Stephano Slack LLC (“Stephano Slack”) to serve as the Company’s
independent registered public accounting firm for the fiscal year ended December 31, 2025. For the fiscal year ended December 31,
2024, the Company engaged Assurance Dimensions LLC (“Assurance Dimensions”) as its independent registered public
accounting firm. The change in the Company’s independent registered public accounting firm from Assurance Dimensions to Stephano Slack
was disclosed in the Company’s Registration Statement on Form S-1, as declared effective by the SEC on May 13, 2025. 

 59 

 Set
forth below are the aggregate fees billed by Stephano Slack and Assurance Dimensions for professional services rendered for the
fiscal year ended December 31, 2025, and by Assurance Dimensions for professional services rendered for the fiscal year ended
December 31, 2024. 

 2025 
 2024 

 Audit
 fees (1) 
 $ 184,433 
 $ 68,280 

 Audit-related
 fees (2) 
 - 
 - 

 Tax
 fees (3) 
 - 
 - 

 All
 other fees (4) 
 - 
 - 

 Total
 fees 
 $ 184,433 
 $ 68,280 

 (1) 
 Audit fees consist of fees
 billed for professional services rendered by our independent registered public accounting firm for the audit of our annual financial
 statements and review of our interim financial statements or services that are normally provided by our independent registered public
 accounting firm in connection with statutory and regulatory filings or engagements. $177,433 of the fees for the audit services billed
 and to be billed for the year ended December 31, 2025 relate to services provided by Stephano Slack, our current auditor for 2025.
 The remaining $7,000 relates to consent fees charged by Assurance Dimensions in connection with reissuing prior year financial statements
 for use in 2025 S-1 filings. The 2024 audit fees were related to audit and review services conducted by Assurance Dimensions, our prior
 auditor. 

 (2) 
 Audit-related fees consist
 of fees billed for professional services rendered outside the scope of the audit and review of our financial statements by our independent
 auditors. There were no audit-related fees billed by Stephano Slack or Assurance Dimensions for audit-related services for the years
 ended December 31, 2025 and 2024. 

 (3) 
 Tax fees consist of fees
 billed for professional services rendered by our independent registered public accounting firm for tax compliance, tax advice, and
 tax planning. There were no fees billed by Stephano Slack or Assurance Dimensions for tax services for the years ended December 31,
 2025 and 2024. 

 (4) 
 All other fees consist of
 fees billed for all other services. There were no fees billed by Stephano Slack or Assurance Dimensions for other products and
 services for the years ended December 31, 2025 and 2024. 

 Audit
Committee’s Pre-Approval Policy and Procedures 

 Under
the Audit Committee’s charter, the Audit Committee is required to pre-approve all audit and permitted non-audit services performed
by our independent registered public accountants to ensure that the provision of such services does not impair the public accountants’
independence. All audit and audit-related services by Stephano Slack and Assurance Dimensions were approved by the Audit Committee in
accordance with SEC requirements. 

 60 

 PART
IV 

 Item
15. Exhibits, Financial Statement Schedules 

 We
have filed the following documents as part of this Form 10-K: 

 (1) Financial
 Statements 

 The
following Audited Financial Statement Schedules are filed as part of this Form 10-K Report. 

 Report of Independent Registered Public Accounting Firm (PCAOB ID 3523) 

 Report of Independent Registered Public Accounting Firm (PCAOB ID 5036) 

 Balance Sheets 

 Statements of Operations 

 Statements of Changes in Stockholders’ Equity (Deficit) 

 Statements of Cash Flow 

 Notes to Financial Statements 

 (2) 
 Financial Statement Schedules 

 All
schedules have been omitted because they are not required, not applicable, not present in amounts sufficient to require submission of
the schedule, or the required information is otherwise included. 

 (3) Exhibits 

 The
exhibits filed in response to Item 601 of Regulation S-K are listed in the Exhibit Index. 

 EXHIBIT
INDEX 

 Exhibit 
 
 Incorporated
 by Reference 
 
 Filed or Furnished 

 Number 
 
 Exhibit
 Description 
 
 Form
 
 Exhibit 
 
 Filing
 Date 
 
 Herewith 
 
 3.1 
 
 Certificate of Incorporation 
 
 S-1/A 
 
 3.1 
 
 03/24/2025 
 
 3.2 
 
 Certificate of Amendment of Certificate of Incorporation 

 S-1/A 
 
 3.2 
 
 03/24/2025 
 
 3.3 
 
 Bylaws 
 
 S-1/A 
 
 3.3 
 
 03/24/2025 
 
 10.1 
 
 Executive
 Employment Agreement with chief financial officer (Todd Pepmeier) † 
 
 S-1/A 
 
 10.1 
 
 01/27/2025 
 
 10.2 
 
 Executive Employment Agreement with chief operating officer (Mark D. Hamm) † 
 
 S-1/A 
 
 10.2 
 
 01/27/2025 
 
 10.3 
 
 Design Engineering Services Agreement with HUSH Aerospace, LLC 
 
 S-1/A 
 
 10.3 
 
 03/24/2025 
 
 10.4 
 
 Memorandum of Understanding with Helium Systems Inc. 
 
 S-1/A 
 
 10.4 
 
 03/24/2025 
 
 10.5 
 
 Exclusive Patent License Agreement 
 
 S-1/A 
 
 10.13 
 
 01/27/2025 
 
 10.6 
 
 First Amendment to Exclusive Patent License Agreement 

 S-1/A 
 
 10.14 
 
 01/27/2025 
 
 10.7 
 
 Asset Purchase Agreement with Airbox 
 
 S-1/A 
 
 10.15 
 
 01/27/2025 
 
 10.8 
 
 Stock Equity Incentive Plan 

 X 
 
 10.9 
 
 Service Agreement, dated November 29, 2023, by and between the Registrant and Brandon Pargoe 
 
 S-1/A 
 
 10.17 
 
 01/27/2025 
 
 10.10 
 
 Second Amendment to Exclusive Patent License Agreement 

 S-1/A 
 
 10.10 
 
 03/24/2025 
 
 10.11 
 
 Securities Purchase Agreement between Arrive AI Inc. and Streeterville Capital LLC 
 
 S-1 
 
 10.11 
 
 06/17/2025 
 
 10.12 
 
 Pre-Paid Purchase No. 2, dated August 11, 2025, by and between Arrive AI Inc. and Streeterville Capital LLC 
 
 10-Q 
 
 10.2 
 
 08/14/2025 
 
 10.13 
 
 Pre-Paid Purchase No. 3, dated December 3, 2025, by and between Arrive AI Inc. and Streeterville Capital LLC 
 
 8-K 
 
 10.1 
 
 12/08/2025 
 
 10.14 
 
 Pre-Paid Purchase No. 4, dated January 26, 2026, by and between Arrive AI Inc. and Streeterville Capital, LLC 
 
 8-K 
 
 10.1 
 
 01/30/2026 
 
 10.15 
 
 Side Letter Agreement, dated January 26, 2026, by and between Arrive AI Inc. and Streeterville Capital, LLC 
 
 8-K 
 
 10.2 
 
 01/30/2026 
 
 14.1 
 
 Code of Business Ethics 
 
 X 
 
 61 

 16.1 
 
 Letter from Assurance Dimensions, LLC to the Securities and Exchange Commission 
 
 S-1/A 
 
 16.1 
 
 05/13/2025 

 19.1 
 
 Insider Trading Policy 
 
 X 

 21.1 
 
 List of subsidiaries of the registrant 

 S-1/A 
 
 21.1 
 
 03/24/2025 
 
 23.1 
 
 Consent of Stephano Slack 
 
 X 
 
 23.2 
 
 Consent of Assurance Dimensions 
 
 X 
 
 31.1 
 
 Certification of Chief Executive Officer Required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 
 
 X 

 31.2 
 
 Certification of the Chief Financial Officer Required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 
 
 X 

 32.1 
 
 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 # 
 
 X 

 32.2 
 
 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 # 
 
 X 

 97.1 
 
 Compensation Recovery Policy 
 
 X 

 101.INS 
 
 XBRL
 Instance Document+ 
 
 X 

 101.SCH 
 
 XBRL
 Taxonomy Extension Schema Document+ 
 
 X 

 101.CAL 
 
 XBRL
 Taxonomy Extension Calculation Linkbase Document+ 
 
 X 

 101.DEF 
 
 XBRL
 Taxonomy Extension Definition Linkbase Document+ 
 
 X 

 101.LAB 
 
 XBRL
 Taxonomy Extension Label Linkbase Document+ 
 
 X 

 101.PRE 
 
 XBRL
 Taxonomy Extension Presentation Linkbase Document+ 
 
 X 

 104 
 
 Cover
 Page Interactive Data File - The cover page iXBRL tags are embedded within the inline XBRL document. 
 
 X 

 † 
 
 Management
 or compensatory plan or arrangement. 
 
 # 
 
 This
 certification is being furnished and shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange
 Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing
 under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference. 
 
 + 
 
 Pursuant
 to Rule 406T of Regulation S-T, the Interactive Data Files in Exhibit 101 hereto are deemed not filed or part of a registration statement
 or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section
 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections. 
 
 Item
16. Form 10-K Summary 

 None. 

 62 

 INDEX
TO FINANCIAL STATEMENTS 

 Page(s) 

 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID 3523 ) 
 
 F-2 

 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID 5036 ) 
 
 F-3 

 FINANCIAL
 STATEMENTS 
 
 Balance Sheets 
 
 F-4 

 Statements of Operations 
 
 F-5 

 Statements of Changes in Stockholders’ Equity (Deficit) 
 
 F-6 

 Statements of Cash Flows 
 
 F-7 

 Notes to Financial Statements 
 
 F-8
 - F-32 

 F- 1 

 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM 

 To the Board of Directors and Stockholders of

 Arrive AI Inc.

 Opinion on the Financial Statements 

 We have audited the accompanying balance sheet of
Arrive AI Inc. (the “Company”) as of December 31, 2025 and the related statements of operations, changes in stockholders’
equity, and cash flows for the year ended December 31, 2025, and the related notes (collectively referred to as the financial statements).
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December
31, 2025, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally
accepted in the United States of America.

 Substantial Doubt About the Company’s Ability
to Continue as a Going Concern 

 The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note 4 to the financial statements, the Company has recurring
operating losses and negative cash flows from operations since inception, which raises substantial doubt about their ability to continue
as a going concern. Management’s plans in regard to these matters are also described in Note 4. The financial statements
do not include any adjustments that might result from the outcome of this uncertainty.

 Basis for Opinion 

 These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our
audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required
to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.

 We conducted our audit in accordance with the standards
of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform,
an audit of their internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal
control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal
control over financial reporting. Accordingly, we express no such opinion.

 Our audit included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

 /s/ Stephano Slack LLC 

 We have served as the Company’s auditor since 2025.

 Wayne, Pennsylvania 

 April 15, 2026

 F- 2 

 REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM 

 To
the Board of Directors and 

 Stockholders
of Arrive AI, Inc. (formerly Arrive Technology, Inc.) 

 Opinion
on the Financial Statements 

 We
have audited the accompanying balance sheet of Arrive AI, Inc. (formerly Arrive Technology, Inc.) (the Company) as of December
31, 2024, and the related statements of operations, stockholders’ equity, and cash flows for the year then ended, and the related
notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 2024 and the results of its operations and its cash flows for the
year then ended, in conformity with accounting principles generally accepted in the United States of America. 

 Explanatory
Paragraph – Going Concern 

 The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note
4 to the financial statements, the Company has an accumulated deficit of $15,920,555 and a net loss for the current year of $4,537,901.
These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans regarding
these matters are also described in Note 4. The financial statements do not include any adjustments that might result from the outcome
of this uncertainty. 

 Basis
for Opinion 

 These
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s
financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. 

 We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits,
we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion
on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. 

 Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error
or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits
provide a reasonable basis for our opinion. 

 Critical
Audit Matters 

 The
critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated
or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial
statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters
does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit
matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. 

 We
determined that there were no critical audit matters. 

 Assurance Dimensions 

 We
have served as the Company’s auditor since 2022. 

 Coral
Springs, FL March 12, 2025 

 ASSURANCE
DIMENSIONS, LLC 

 also
d/b/a McNAMARA and ASSOCIATES, LLC 

 TAMPA
BAY : 4920 W Cypress Street, Suite 102 | Tampa, FL 33607 | Office: 813.443.5048 | Fax: 813.443.5053 

 JACKSONVILLE :
7800 Belfort Parkway, Suite 290 | Jacksonville, FL 32256 | Office: 888.410.2323 | Fax: 813.443.5053 

 ORLANDO: 
1800 Pembrook Drive, Suite 300 | Orlando, FL 32810 | Office: 888.410.2323 | Fax: 813.443.5053 

 SOUTH
FLORIDA : 3111 N. University Drive, Suite 621 | Coral Springs, FL 33065 | Office: 754.800.3400 | Fax: 813.443.5053 www.assurancedimensions.com 

 “Assurance
Dimensions” is the brand name under which Assurance Dimensions, LLC including its subsidiary McNamara and Associates, LLC (referred
together as “AD LLC”) and AD Advisors, LLC (“AD Advisors”), provide professional services. AD LLC and AD Advisors
practice as an alternative practice structure in accordance with the AICPA Code of Professional Conduct and applicable laws, regulations,
and professional standards. AD LLC is a licensed independent CPA firm that provides attest services to its clients, and AD Advisors provide
tax and business consulting services to their clients. AD Advisors, and its subsidiary entities are not licensed CPA firms. 

 F- 3 

 ARRIVE
AI INC. 

 BALANCE
SHEETS 

 December 31, 2025 
 December 31, 2024 

 ASSETS 
 
 CURRENT ASSETS 
 
 Cash and cash equivalents 
 $ 2,104,004 
 $ 129,318 

 Accounts receivable 
 4,975 
 - 

 Prepaid expenses 
 189,878 
 55,867 

 Deferred offering costs 
 - 
 427,898 

 Other current assets 
 12,325 
 4,179 

 Total current assets 
 2,311,182 
 617,262 

 OTHER ASSETS 
 
 Property and equipment, net 
 514,684 
 95,425 

 Right of use assets - operating leases 
 2,117,284 
 - 

 Patents, net of accumulated amortization of $ 2,603 and $ 1,099 
 272,097 
 273,601 

 Deferred offering costs
 
 5,650,185 
 - 

 Security deposits 
 65,633 
 1,500 

 Total other assets 
 8,619,883 
 370,526 

 TOTAL ASSETS 
 $ 10,931,065 
 $ 987,788 

 LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) 
 
 CURRENT LIABILITIES 
 
 Accounts payable 
 $ 183,993 
 $ 1,868,689 

 Accrued expenses 
 538,234 
 83,192 

 Operating lease liability 
 392,950 
 - 

 Derivative liabilities 
 1,460,000 
 - 

 Convertible notes payable, net of discount and debt issuance costs of $ 3,379,447 and $ 240,896 , respectively 
 4,144,657 
 - 

 Note payable 
 9,140 
 8,524 

 Total current liabilities 
 6,728,974 
 1,960,405 

 LONG TERM LIABILITIES 
 
 Operating lease liability 
 1,725,073 
 - 

 Note payable, net of current portion 
 1,418 
 10,558 

 Total long term liabilities 
 1,726,491 
 10,558 

 Total liabilities 
 8,455,465 
 1,970,963 

 Commitments and Contingencies (See Note 18) 
 - 
 - 

 STOCKHOLDERS’ EQUITY (DEFICIT) 
 
 Common stock, $ 0.0002 par value, 200,000,000 authorized, 34,213,387 and 29,120,905 issued and outstanding at December 31, 2025 and December 31, 2024 
 6,841 
 5,822 

 Additional paid-in capital 
 31,215,698 
 14,984,561 

 Subscription receivable 
 - 
 ( 53,003 ) 

 Accumulated deficit 
 ( 28,746,939 ) 
 ( 15,920,555 ) 

 Total stockholders’ equity (deficit) 
 2,475,600 
 ( 983,175 ) 

 TOTAL LIABILITIES AND STOCKHOLDERS’
 EQUITY (DEFICIT) 
 $ 10,931,065 
 $ 987,788 

 The
accompanying notes are an integral part of these financial statements. 

 F- 4 

 ARRIVE
AI INC. 

 STATEMENTS
OF OPERATIONS 

 For
the Years Ended December 31, 2025 and 2024 

 2025 
 2024 

 REVENUE 
 $ 113,250 
 $ - 

 OPERATING EXPENSES 
 
 General and administrative 
 9,636,140 
 3,546,520 

 Research and development 
 600,510 
 760,036 

 Sales and marketing 
 229,206 
 266,182 

 Total operating expenses 
 10,465,856 
 4,572,738 

 OTHER INCOME (EXPENSES) 
 
 Interest expense 
 ( 686,897 ) 
 ( 4,645 ) 

 Other income 
 108,351 
 39,482 

 Change in fair value of derivative liabilities 
 1,516,266 
 - 

 Accretion of debt discount 
 ( 249,530 ) 
 - 

 Loss on conversion of convertible notes payable 
 ( 3,295,072 ) 
 - 

 Realized gain on investments 
 133,104 
 - 

 Total other income (expenses) 
 ( 2,473,778 ) 
 34,837 

 NET LOSS BEFORE TAXES 
 ( 12,826,384 ) 
 ( 4,537,901 ) 

 PROVISION FOR INCOME TAXES 
 - 
 - 

 NET LOSS 
 $ ( 12,826,384 ) 
 $ ( 4,537,901 ) 

 NET LOSS PER SHARE: 
 
 Basic and diluted 
 $ ( 0.40 ) 
 $ ( 0.16 ) 

 WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING: 
 
 Basic
 and diluted 
 32,195,123 
 28,971,543 

 The
accompanying notes are an integral part of these financial statements. 

 F- 5 

 ARRIVE
AI INC. 

 STATEMENTS
OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) 

 For
the Years Ended December 31, 2025 and 2024 

 Number of Common Shares 
 Common Stock ($) 
 Number of Treasury Shares 
 Treasury Stock ($) 
 Additional Paid-In Capital ($) 
 Subscription Receivable
 ($) 
 Accumulated Deficit ($) 
 Total Stockholders’ Equity (Deficit) ($) 

 BALANCE, DECEMBER 31, 2023 
 28,844,643 
 $ 5,769 
 - 
 $ - 
 $ 10,924,624 
 $ ( 25,505 ) 
 $ ( 11,382,654 ) 
 $ ( 477,766 ) 

 Issuance of common stock and warrants for cash 
 243,423 
 47 
 - 
 - 
 2,671,077 
 ( 27,498 ) 
 - 
 2,643,626 

 Stock-based compensation 
 32,839 
 6 
 - 
 - 
 1,388,860 
 - 
 - 
 1,388,866 

 Net loss 
 - 
 - 
 - 
 - 
 - 
 - 
 ( 4,537,901 ) 
 ( 4,537,901 ) 

 BALANCE, DECEMBER 31, 2024 
 29,120,905 
 $ 5,822 
 - 
 $ - 
 $ 14,984,561 
 $ ( 53,003 ) 
 $ ( 15,920,555 ) 
 $ ( 983,175 ) 

 Balance 
 29,120,905 
 $ 5,822 
 - 
 $ - 
 $ 14,984,561 
 $ ( 53,003 ) 
 $ ( 15,920,555 ) 
 $ ( 983,175 ) 

 Issuance of common stock, net 
 2,974,885 
 595 
 - 
 - 
 394,459 
 53,003 
 - 
 448,057 

 Issuance of common stock upon exercise of warrants 
 120,820 
 24 
 - 
 - 
 573,871 
 - 
 - 
 573,895 

 Issuance of common stock for options exercise 
 773 
 - 
 - 
 - 
 6,164 
 - 
 - 
 6,164 

 Issuance of common stock for the conversion of convertible notes payable 
 1,207,355 
 241 
 - 
 - 
 4,533,739 
 - 
 - 
 4,533,980 

 Reclassification of derivative

 liabilities upon conversion of convertible notes payable
 
 -
 
 - 
 
 -
 
 - 
 
 1,733,734 
 
 - 
 
 - 
 
 1,733,734 

 Repurchase of common stock 
 - 
 - 
 19,700 
 ( 74,743 ) 
 - 
 - 
 - 
 ( 74,743 ) 

 Retirement of treasury stock 
 ( 19,700 ) 
 ( 4 ) 
 ( 19,700 ) 
 74,743 
 ( 74,739 ) 
 - 
 - 
 - 

 Issuance of common stock for settlement of debt 
 92,673 
 19 
 - 
 - 
 1,204,718 
 - 
 - 
 1,204,737 

 Issuance of common stock for deferred offering costs 
 532,913 
 107 
 - 
 - 
 6,927,762 
 - 
 - 
 6,927,869 

 Reclassification of deferred offering costs upon financing drawdown 
 - 
 - 
 - 
 - 
 ( 2,394,152 ) 
 - 
 - 
 ( 2,394,152 ) 

 Issuance of common stock under stock plans 
 120,263 
 25 
 - 
 - 
 1,399,439 
 - 
 - 
 1,399,464 

 Issuance of common stock for commitment fee 
 62,500 
 12 
 
 828,113 
 
 828,125 

 Stock-based compensation 
 - 
 - 
 - 
 - 
 1,098,029 
 - 
 - 
 1,098,029 

 Net loss 
 - 
 - 
 - 
 - 
 - 
 - 
 ( 12,826,384 ) 
 ( 12,826,384 ) 

 BALANCE, DECEMBER 31, 2025 
 34,213,387 
 $ 6,841 
 - 
 $ - 
 $ 31,215,698 
 $ - 
 $ ( 28,746,939 ) 
 $ 2,475,600 

 Balance 
 34,213,387 
 $ 6,841 
 - 
 $ - 
 $ 31,215,698 
 $ - 
 $ ( 28,746,939 ) 
 $ 2,475,600 

 The
accompanying notes are an integral part of these financial statements. 

 F- 6 

 ARRIVE
AI INC. 

 STATEMENTS
OF CASH FLOWS 

 For
the Years Ended December 31, 2025 and 2024 

 2025 
 2024 

 CASH FLOWS FROM OPERATING ACTIVITIES 
 
 Net loss 
 $ ( 12,826,384 ) 
 $ ( 4,537,901 ) 

 Adjustments to reconcile net loss to net cash used in operating activities 
 
 Stock-based compensation 
 2,503,657 
 1,388,866 

 Depreciation and amortization 
 66,889 
 29,115 

 Impairment loss 
 10,541 
 - 

 Operating lease liability - non-cash adjustment 
 739 
 - 

 Change in fair value of derivative liabilities 
 ( 1,516,266 ) 
 - 

 Loss on conversion of convertible notes payable 
 3,295,072 
 - 

 Accretion of discount on convertible notes payable 
 249,530 
 - 

 Accretion of issuance costs on convertible notes payable 
 332,160 
 - 

 Realized gain on investments 
 ( 133,104 ) 
 - 

 Changes in operating assets and liabilities 
 
 (Increase) decrease in 
 
 Accounts receivable 
 ( 4,975 ) 
 - 

 Prepaid expenses 
 ( 134,011 ) 
 ( 46,724 ) 

 Other current assets 
 ( 8,146 ) 
 ( 4,179 ) 

 Security deposits 
 ( 64,133 ) 
 - 

 Increase (decrease) in 
 
 Accounts payable 
 ( 479,959 ) 
 843,682 

 Accrued expenses 
 455,042 
 37,868 

 Net cash used in operating activities 
 ( 8,253,348 ) 
 ( 2,289,273 ) 

 CASH FLOWS FROM INVESTING ACTIVITIES 
 
 Capital expenditures 
 ( 495,185 ) 
 ( 38,155 ) 

 Proceeds from sales of investments 
 10,275,473 
 - 

 Patent filing costs 
 - 
 ( 76,500 ) 

 Purchase of investments 
 ( 10,142,369 ) 
 - 

 Net cash used in investing activities 
 ( 362,081 ) 
 ( 114,655 ) 

 CASH FLOWS FROM FINANCING ACTIVITIES 
 
 Proceeds from sale of common stock, net 
 448,057 
 2,643,626 

 Purchase of treasury stock 
 ( 74,743 ) 
 - 

 Proceeds from the exercise of warrants, net 
 573,895 
 - 

 Repayments of note payables 
 ( 8,524 ) 
 ( 7,954 ) 

 Proceeds from issuance of convertible notes payable 
 11,000,000 
 - 

 Debt issuance costs 
 ( 660,000 ) 
 - 

 Deferred offering costs 
 ( 688,570 ) 
 ( 427,898 ) 

 Net cash provided by financing activities 
 10,590,115 
 2,207,774 

 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 
 1,974,686 
 ( 196,154 ) 

 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 
 129,318 
 325,472 

 CASH AND CASH EQUIVALENTS, END OF YEAR 
 $ 2,104,004 
 $ 129,318 

 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION 
 
 Cash paid for: 
 
 Interest 
 $ 67,555 
 $ 1,635 

 Income taxes 
 $ - 
 $ - 

 SUPPLEMENTAL DISCLOSURE OF NONCASH INFORMATION 
 
 Common stock issued as payment of offering costs 
 $ 6,927,869 
 $ - 

 Common stock issued as settlement of legal expenses 
 $ 1,204,737 
 $ - 

 Common stock issued for conversion of convertible notes payable 
 $ 4,533,980 
 $ - 

 Derivative liabilities reclassified as additional paid-in capital upon conversion of convertible notes payable 
 $ 1,733,734 
 
 Deferred offering costs reclassified as additional paid-in capital upon financing drawdown 
 $ 2,394,152 
 $ - 

 Cashless exercise of stock options 
 $ 6,164 
 $ - 

 Right-of-use assets obtained in exchange for lease obligations 
 $ 2,216,753 
 $ - 

 The
accompanying notes are an integral part of these financial statements. 

 F- 7 

 ARRIVE
AI INC. 

 NOTES
TO FINANCIAL STATEMENTS 

 DECEMBER
31, 2025 AND 2024 

 NOTE
1 - 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. On September 27, 2024, Arrive Technology Inc. changed its name to Arrive AI Inc.
The Company is an early-stage technology company with a focus on designing and implementing a commercially-viable smart mailbox for
drone, robotic and human package receiving and storage. 

 The
Company is subject to a number of risks 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. 

 The
Company is an emerging growth company as the term is used in The Jumpstart Our Business Startups Act (JOBS Act), enacted on April 5,
2012 and has elected to comply with certain reduced public company reporting requirements. 

 NOTE 
 2 - SIGNIFICANT ACCOUNTING POLICIES 

 Basis
of Presentation 

 The
accompanying financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the
United States of America (“US GAAP”). 

 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. 

 Cash
and Cash Equivalents 

 The
Company considers all highly liquid investments with an original maturity of three months or less at the time of purchase to be cash
equivalents, including money market accounts held at financial institutions. The Company did not have cash equivalents at December 31,
2025 and 2024. 

 Concentration
of Credit Risk 

 The
Company’s policy is to maintain its cash balances in accounts insured by the Federal Deposit Insurance Corporation (the “FDIC”)
or by the Securities Investor Protection Corporation (the “SIPC”). The Company may periodically have cash balances in financial
institutions in excess of FDIC and SIPC insurance limits. For the years ended December 31, 2025 and 2024, the Company had approximately
$ 1,604,004 and $ 0 of cash in excess of insured limits, 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. 

 Investments
at Fair Value 

 During
the year ended December 31, 2025, the Company invested a portion of its excess cash in exchange-traded equity securities. The
Company accounts for these investments in accordance with Financial Accounting Standards Board (“FASB”) Accounting
Standards Codification (“ASC”) ASC 321, Investments—Equity Securities . Equity securities with readily
determinable fair values are measured at fair value at each reporting date, with changes in fair value recognized in the statement
of operations as unrealized gains or losses. Realized gains and losses on the sale or disposition of equity securities are also
recognized in the statement of operations in the period of sale. The Company classifies the fair value of these securities within
Level 1 of the fair value hierarchy established under ASC 820, Fair Value Measurement , as the securities are exchange-traded
with quoted prices in active markets. As of December 31, 2025 and 2024, the Company held no equity securities. 

 During the year ended December 31, 2025, the
Company also wrote covered call options against its long equity security positions to generate income from option premiums. Written
call options are recognized as liabilities at fair value in accordance with ASC 815, Derivatives and Hedging , and are
remeasured at fair value at each reporting date. The Company does not designate these instruments as accounting hedges; accordingly,
changes in fair value are recognized in the statement of operations within other income (expense).
These instruments are classified within Level 1 of the fair value hierarchy, as they are exchange-traded and valued using quoted market prices in active markets. Premiums received are reflected
in the initial fair value of the derivative liability and are subsequently recognized in earnings through changes in fair value over the
life of the contract, as the options are traded on recognized national
exchanges with quoted prices in active markets. Option premium income received at the time of writing is initially recorded as a
liability representing the fair value of the written option and is recognized in earnings upon settlement or expiration of the
contract.

 During the year ended December 31, 2025, the Company
recognized a realized gain of $133,104 related to equity securities and written call option activity, which is included in other income (expense) in the
statement of operations. As of December 31, 2025 and 2024, the
Company held no equity securities or written call option positions.

 F- 8 

 ARRIVE
AI INC. 

 NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

 DECEMBER 31, 2025 AND 2024 

 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 as amounts
due from customers net of an allowance for credit losses. The Company recognizes an allowance for expected credit losses at each balance
sheet date. 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 credit 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. 

 The
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. The Company did not record an allowance for credit
losses at December 31, 2025 or 2024, as management determined that substantially all outstanding receivables were fully collectible.
The Company did not incur material write-offs during the years ended December 31, 2025 and 2024. 

 Property
and Equipment 

 Property
and equipment is recorded at cost. Depreciation is computed using the straight-line method over the estimated useful life of the asset
ranging from 2 two
to 5 five
years. The cost of leasehold improvements is amortized over the lesser of the length of the related leases or the estimated useful lives
of the assets. 

 Maintenance
and repairs of property are charged to operations, and major improvements are capitalized. Upon retirement, sale, or other disposition
of property and equipment, the costs and accumulated depreciation are eliminated from the accounts, and any resulting gain or loss is
included in operations. 

 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. The Company 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 a range of 13 thirteen
to 16 sixteen
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. 

 F- 9 

 ARRIVE
AI INC. 

 NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

 DECEMBER 31, 2025 AND 2024 

 Impairment
of Long-Lived Assets 

 The
Company evaluates the recoverability of its long-lived assets in accordance with ASC 360, Property, Plant, and Equipment. The
Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. Recoverability of long-lived assets are measured by a comparison of the carrying amount of an asset to
future cashflows expected to be generated by the asset, undiscounted and without interest or independent appraisals. If such assets are
considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds
the fair value of the assets. 

 The
Company has three types of long-lived assets: property and equipment, including vehicles, equipment, and leasehold improvements; construction-in-progress
(CIP), and intangible patent assets including those acquired by the acquisition of Airbox Technology in 2023. An impairment loss of $ 10,541 
of one Arrive Point unit that was damaged beyond repair prior to being placed into service was recognized in general and administrative
expense for the year ended December 31, 2025. No other impairments of long-lived assets were considered necessary as of December 31,
2025 or 2024. 

 Revenue
Recognition 

 The
Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers . The Company generates revenue from
consulting and implementation services and recurring subscription services for access to the Arrive Point network. The Company identifies
performance obligations in its contracts with customers, which generally consist of consulting services, installation services, and subscription
services. The transaction price is allocated to each distinct performance obligation based on relative standalone selling prices. Contracts
are typically short-term in nature and generally do not include significant variable consideration or financing components. 

 Consulting
and subscription services are recognized over time as the customer simultaneously receives and consumes the benefits of the services
in accordance with ASC 606-10-25-27(a). Revenue is recognized using an appropriate measure of progress that reflects the transfer of
control to the customer, generally based on time elapsed or services performed. 

 Installation
services are generally recognized at a point in time when control of the service is transferred to the customer, which typically occurs
upon completion of installation and customer acceptance, if applicable. 

 Contract
Balances 

 The
timing of revenue recognition, billings and cash collections results in billed accounts receivable, and, when applicable, 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 disclosed in NOTE 3, the Company did not have any contract
assets or contract liabilities recorded on the balance sheet as of December 31, 2025 and 2024. 

 Leases 

 The
Company accounts for leases in accordance with ASC 842, Leases . The Company determines whether an arrangement is a lease at
contract inception. The Company classifies leases as operating or finance leases at commencement; however, all of the
Company’s leases are currently classified as operating leases. Operating leases are included in “Right-of-use assets
– operating leases” and “Operating lease liabilities” in the Company’s balance sheets. 

 F- 10 

 ARRIVE
AI INC. 

 NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

 DECEMBER 31, 2025 AND 2024 

 Right-of-use
(“ROU”) assets represent the Company’s right to use the underlying asset for the lease term, and lease liabilities
represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and lease
liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Lease payments
included in the measurement of the lease liability consist of fixed payments and variable payments that depend on an index or rate,
as applicable. Variable lease payments that do not depend on an index or rate are expensed as incurred. 

 The
Company uses the rate implicit in the lease when that rate is readily determinable. If the implicit rate is not readily determinable,
the Company uses its incremental borrowing rate at the commencement date, which reflects the rate of interest the Company would pay to
borrow on a collateralized basis over a similar term in a similar economic environment. The lease term includes options to extend or
terminate the lease when it is reasonably certain that the Company will exercise such options. Lease and non-lease components are generally
accounted for separately. The Company has elected the short-term lease exemption and does not recognize ROU assets or lease liabilities
for leases with an initial term of 12 months or less. Lease expense for operating leases is recognized on a straight-line basis over
the lease term. 

 Equity
Financing 

 The
Company has entered into equity financing transactions to obtain the funds necessary to continue operations and develop a commercially
viable smart mailbox system for drone, robotic and human package receiving and storage. These transactions have included the issuance
of common stock and warrants to purchase common stock. 

 The
Company evaluates warrants issued in connection with equity financing transactions under ASC 480, Distinguishing
Liabilities from Equity , and, if the warrants are not required to
be classified as liabilities under ASC 480, the Company then evaluates them under ASC 815-40, Derivatives
and Hedging , to determine whether they are indexed to the Company’s own stock and meet the
criteria for equity classification. The Company concluded that the warrants meet the criteria for equity classification and are accounted
for 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. 

 Treasury
Stock 

 In
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 year ended December 31, 2025. The stock was fully retired as of December 31, 2025, which reduced the number of issued shares of common stock. 

 Loss
per share 

 The
Company follows ASC 260, Earnings per Share , resulting in the presentation of basic and diluted earnings per share. Basic loss
per share is computed by dividing net loss by weighted average number of shares of common stock outstanding during each period. Diluted
loss per share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents, and
potentially dilutive securities outstanding during the period. Because the Company reported a net loss for the years ended December 31,
2025 and 2024, common stock equivalents, including stock options and warrants, were anti-dilutive; therefore, the amounts reported for
basic and diluted loss per share were the same. 

 The following potentially dilutive securities were
excluded from the computation of diluted loss per share because their effect would have been anti-dilutive:

 SCHEDULE OF DILUTIVE SECURITIES 

 2025 
 2024 

 For the Years ended December 31, 

 2025 
 2024 

 Weighted average common shares outstanding 
 32,195,123 
 28,971,543 

 Effect of dilutive securities – when applicable 
 
 Convertible notes payable 
 3,241,618 
 - 

 Warrants 
 - 
 729,546 

 Stock options 
 77,786 
 148,951 

 Restricted stock units 
 826,722 
 - 

 36,341,249 
 29,850,040 

 Comprehensive
Loss 

 The Company follows 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 had no items
of other comprehensive income (loss) for the years ended December 31, 2025 and 2024. Accordingly, comprehensive loss equals net loss
for those periods.

 F- 11 

 ARRIVE
AI INC. 

 NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

 DECEMBER 31, 2025 AND 2024 

 Offering
Costs 

 The
Company accounts for offering costs in accordance with ASC 340-10-S99-1, Other Assets and Deferred Costs and SAB Topic 5A, Expenses
of Offering . Costs that are directly attributable to proposed or actual equity offerings are capitalized as deferred offering costs
until the offering is completed. Deferred offering costs consist of underwriting, legal, accounting, and other expenses. Upon completion
of an equity offering, such costs are recorded as a reduction of the related proceeds and reflected as a reduction of additional paid-in
capital. If an offering is abandoned, the related deferred offering costs are expensed. 

 Research
and Development 

 Research
and Development (“R&D”) costs are expensed as incurred in accordance with ASC 730, Research and Development . R&D
expenses primarily consist of fees paid to third-party consultants and other costs incurred in the development of the Company’s
proprietary technology. 

 For
the years ended December 31, 2025 and 2024, the Company recognized R&D expense of $ 600,510 and $ 760,036 , respectively. 

 Advertising
Costs 

 Advertising
costs are expensed as incurred. Advertising costs were $ 73,896 and $ 189,026 for the years ended December 31, 2025 and 2024. These costs
when incurred are included in sales and marketing expenses. 

 Stock-Based
Compensation 

 The
Company accounts for stock-based compensation under the provisions of ASC 718, Compensation—Stock Compensation, which
requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on
estimated fair values on the grant date. The Company estimates the fair value of stock option awards on the date of grant using the Black-Scholes
model. The fair value of restricted stock units is measured at the market price of the Company’s stock on the date of grant. The
value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using
the straight-line method. 

 In
accordance with Accounting Standards Update (“ASU”) No. 2018-07, Compensation—Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based
Payment Accounting , the Company accounts for share-based payment transactions for
acquiring goods and services from nonemployees in a manner consistent with employee awards. Such awards are measured at the
grant-date fair value of the equity instruments issued and recognized as expense when the goods are delivered or services are
rendered, unless the awards are subject to vesting conditions, in which case expense is recognized over the requisite service
period. 

 The
Company has elected to account for forfeiture of stock-based awards as they occur. 

 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 $ 12.00 for the year ended December 31, 2024. On May 15, 2025, the Company completed its direct listing,
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 was determined using the prior transaction method, which considers actual
transactions in the Company’s non-controlling, non-marketable private company equity interests. This method reflects the value
of a non-controlling, non-marketable interest; however, management concluded that no additional discount for lack of control or
marketability was necessary based on the specific facts and circumstances. 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. Prior to May 15, 2025, because the Company’s stock was not publicly traded, expected
volatility was estimated based on the historical and implied volatility of comparable publicly traded companies, considering factors such as industry, stage of the life cycle, size, market capitalization, and financial leverage. 

 Convertible Notes Payable and
Derivative Liabilities 

 The Company accounts for convertible notes in accordance with ASC 470, Debt ,
and ASC 815, Derivatives and Hedging . At issuance, the Company evaluates each convertible note to determine whether any embedded
features must be bifurcated and accounted for separately as a derivative liability. 

 If an embedded conversion feature fails the indexed-to-own-stock test under ASC 815-40-15, because the conversion price is determined by a path-dependent formula rather than a fixed price or a current observable price, the conversion feature is bifurcated from the host debt instrument and recognized as a derivative liability at fair value on the issuance date. The host debt instrument is then recorded at an initial carrying value equal to the cash proceeds received, reduced by (i) the original issue discount (“OID”), (ii) the fair value of the bifurcated derivative liability at issuance, and (iii) debt issuance costs allocable to the host instrument.

 F- 12 

 ARRIVE
AI INC. 

 NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

 DECEMBER 31, 2025 AND 2024 

 When an embedded derivative is bifurcated
from a convertible note at issuance, the Company initially records the derivative liability at fair value, with the residual
proceeds allocated to the host debt instrument, consistent with ASC 835-30 and ASC 815. Debt issuance costs are allocated
consistently with this initial measurement approach. The portion of issuance costs allocated to the derivative liability is expensed
immediately in the period of issuance. The portion of issuance costs allocated to the host debt instrument is recorded as a
contra-debt balance (debt issuance costs) and amortized to interest expense over the expected term of the note using the effective
interest method (“EIM”).

 The combined discount on each host debt instrument consisting of OID, the fair value of the bifurcated derivative at issuance, and allocated debt issuance costs is accreted to the face amount of the note using the EIM over the expected term of each note in accordance with ASC 835-30.

 Where a convertible note has no stated maturity date, the Company estimates the expected term based on management’s best estimate of the period over which the debt is expected to remain outstanding, considering
the economic substance of the instrument, the contractual terms, the expected timing and pattern of conversion or settlement, and other
relevant facts and circumstances. The expected term used for accretion of the host debt instrument is applied consistently with the expected
term used in valuing any bifurcated embedded derivative. This estimate is reassessed when facts and circumstances indicate a change may
be warranted.

 Bifurcated derivative liabilities are recognized at fair value on the issuance date of the applicable convertible
note and are subsequently remeasured at fair value at each reporting date and at each conversion date, in accordance with ASC 815. Changes
in fair value are recognized in earnings as a gain or loss on change in fair value of derivative liabilities and are presented as a separate
line item within other income (expense) in the statement of operations.

 When
the conversion feature’s fair value cannot be estimated using a closed-form solution because the conversion price is based on a
formula that incorporates path-dependent inputs, the Company estimates fair value using a Monte Carlo simulation model. The model simulates
a large number of potential stock price paths and computes the expected present value of the conversion payoff under each path.
The significant unobservable inputs used in the Monte Carlo simulation include the expected equity volatility, expected instrument term,
risk-free rate, and debt discount rate. These instruments are classified within Level 3 of the fair value hierarchy established under
ASC 820, Fair Value Measurement , because their valuation relies on significant unobservable inputs. See NOTE 5 for a description
of the valuation methodology and significant assumptions.

 When a noteholder elects to convert a portion or all of a convertible note into shares of common stock, the Company
accounts for the conversion as follows:

 The pro-rata portion of the carrying value
of the host debt instrument, including the related pro-rata unamortized OID and pro-rata unamortized debt issuance costs, is derecognized upon conversion. If the carrying amount of the net host instrument differs from the consideration transferred, the difference is
recognized as a gain or loss on conversion of debt in accordance with ASC 470-50.

 The pro-rata portion of the bifurcated
derivative liability attributable to the converted principal is remeasured to fair value as of the conversion date. The change in
fair value from the most recent prior remeasurement date to the conversion date is recognized in earnings as a gain or loss on
change in fair value of derivative liability. Upon conversion of the convertible notes payable, the pro-rata portion of the
remeasured fair value of the derivative liability is then derecognized from the balance sheet with a credit to additional paid-in capital.

 Fair Value of Financial Instruments 

 The Company measures fair value in accordance with ASC 820, Fair
Value Measurement , which defines fair value as the price that would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date. 

 The carrying values of the Company’s short-term financial instruments, including cash, accounts receivable, accounts payable, and accrued liabilities approximate their fair values due to their short-term nature.

 The host portions of convertible notes
payable, excluding the separately recognized bifurcated derivative liabilities, are carried at amortized cost using the effective
interest method as disclosed in NOTE 5. The bifurcated derivative liabilities associated with the convertible notes are carried at
fair value on a recurring basis and classified within Level 3 of the fair value hierarchy. See NOTE 5 for a full description of the
fair value measurement methodology, significant unobservable inputs, and the roll-forward of the derivative liabilities balance.

 The vehicle note payable is carried at amortized cost. The estimated fair value of this instrument approximates its
carrying value due to the interest rate approximating current market rates for similar collateralized borrowings.

 Income
Taxes 

 The
Company recognizes current and deferred tax assets and liabilities for temporary differences between the financial reporting and tax
bases of assets and liabilities and for operating loss carryforwards in accordance with ASC 740, Income Taxes . A valuation
allowance is established when, based on the weight of available evidence, it is more-likely-than-not that some or all of the
deferred tax assets will not be realized. 

 F- 13 

 ARRIVE
AI INC. 

 NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

 DECEMBER
31, 2025 AND 2024 

 Recently
Adopted Accounting Pronouncements 

 In November 2023, the FASB
issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , which requires public entities
to disclose significant segment expenses and other segment items on an interim and annual basis, and provide in interim periods all disclosures
about a reportable segment’s profit or loss and assets that are currently required annually. The ASU does not change how a public
entity identifies its operating segments, aggregates them, or applies the quantitative threshold to determine its reportable segments.
The new disclosure requirements are also applicable to entities that account and report as a single operating segment entity. ASU 2023-07
is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December
15, 2024. The Company adopted the guidance for the annual reporting period ended December 31, 2024. There was no impact on the Company’s
reportable segments identified and additional required disclosures have been included in NOTE 19.

 In December 2023, the FASB issued ASU 2023-09, Improvements
to Income Tax Disclosures (“ASU 2023-09”), which requires the disclosure of a tabular reconciliation for state and local
income tax, tax credits, and changes in valuation allowance. The requirements are effective for annual reporting periods beginning after
December 15, 2024, and may be applied prospectively or retrospectively. The Company has adopted the additional disclosure requirements
under ASU 2023-09. The additional requirements did not have a material impact on the financial statements.

 Recently
Issued Accounting Pronouncements 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 15, 2026. Early adoption is permitted. The Company is currently assessing the impact of the adoption of this standard
on its financial statements. 

 In
July 2025, the FASB issued ASU 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets . The amendments
provide a practical expedient allowing entities to assume that conditions existing at the balance sheet date are expected to remain unchanged
over the life of current accounts receivable when estimating expected credit losses. The amendments are effective for annual reporting
periods beginning after December 15, 2025, including interim periods within those fiscal years. Early adoption is permitted. The Company
is currently assessing the impact of the adoption of this standard on its financial statements. 

 NOTE
3 – REVENUE 

 Disaggregated
revenue for the year ended December 31, 2025 is as follows (the Company did not recognize revenue during the year ended December 31,
2024): 

 SCHEDULE
OF DISAGGREGATED REVENUE 

 Year Ended 

 December 31, 2025 

 Revenue source 
 
 Consulting services 
 $ 89,000 

 Installation services 
 3,675 

 Subscription fees 
 20,575 

 TOTAL REVENUE 
 $ 113,250 

 Timing of Revenue Recognition 
 
 Services transferred over time 
 $ 109,575 

 Services transferred at a point in time 
 3,675 

 TOTAL REVENUE 
 $ 113,250 

 F- 14 

 ARRIVE
AI INC. 

 NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

 DECEMBER 31, 2025 AND 2024 

 NOTE 
 4 - LIQUIDITY AND GOING CONCERN 

 Liquidity 

 As
of December 31, 2025, the Company had cash and cash equivalents of approximately $ 2.1 million. 

 As
disclosed in Note 20, subsequent to year end, on January 26, 2026, the Company received
$ 9.6 million in net proceeds from a convertible note payable financing transaction with Streeterville Capital, LLC (“Streeterville”),
representing $ 10.0 million in gross proceeds less approximately $ 0.4 million in banking fees. 

 As
disclosed in Note 10, the Company is party to a convertible note payable financing arrangement
with Streeterville (the “Streeterville Facility”), which initially provided a maximum facility of up to $ 40,000,000 in gross
borrowings, subject to the terms and conditions of the agreement. The convertible note payable includes limitations that may restrict
additional borrowings, including (i) a limitation on total outstanding indebtedness, (ii) a minimum market capitalization requirement
of $ 100 million,
and (iii) a minimum book value of $ 4 million
at the time of a draw. Availability under this facility is subject to the Company’s ability to satisfy these conditions, or the
investor’s continued practice of extending funds, despite certain conditions not being met. 

 Going
Concern 

 The
accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. 

 In accordance with ASC 205-40, Presentation of Financial Statements
— Going Concern , management evaluated whether conditions or events, considered in the aggregate, raise substantial doubt about
the Company’s ability to continue as a going concern within one year after the date that these financial statements are available
to be issued.

 The Company has incurred recurring operating losses and negative cash flows
from operations since inception and expects to continue to do so as it invests in product development, commercialization, and infrastructure.
These conditions, considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern.

 Management
has developed plans to address these conditions, which include the following: 

 ● 
 Utilizing
 existing cash and cash equivalents of approximately $ 2.1 million as of December 31, 2025; 

 ● 
 Deploying
 the $ 9.6 million in net proceeds received on January 26, 2026 from the issuance of a convertible promissory note to Streeterville
 Capital, LLC, as further described in NOTE 20; and 

 ● 
 Potentially
 drawing additional amounts under the Securities Purchase Agreement with Streeterville, which provides up to an
 additional $ 19.0 
 million in gross borrowings, subject to certain conditions including a limitation on total outstanding indebtedness, a minimum
 market capitalization of $ 100 million
 and a minimum book value of $ 4 
 million at the time of each draw. The Company’s ability to access these funds
is dependent on satisfying these conditions and on Streeterville’s willingness to continue funding draws.

 The Company’s continued existence is
dependent on its ability to continue its operating plan and to access remaining funds under the Securities Purchase Agreement
(“SPA”) or obtain additional debt or equity financing. There can be no assurance that the Company will be able to
access funds under the SPA or obtain additional debt or equity financing. Accordingly, substantial doubt about the
Company’s ability to continue as a going concern is not alleviated by management’s plans. These financial statements
do not include any adjustment that might result from the Company’s inability to continue as a going concern.

 As
of April 10, 2026, the Company’s cash, cash equivalents, and short-term investments were approximately $ 8.2 
million. 

 NOTE 
 5 - FAIR VALUE MEASUREMENTS 

 The
Company accounts for fair value measurements in accordance with ASC 820, which defines fair value as the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820
establishes a three-level hierarchy for inputs used in measuring fair value: 

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

 ● 
 Level
 2 — Observable inputs other than quoted prices included in Level 1 

 ● 
 Level
 3 — Unobservable inputs supported by little or no market activity 

 The
Company measures its bifurcated derivative liabilities associated with its convertible notes at fair value on a recurring basis, see
NOTE 10. These instruments are classified within Level 3 of the fair value hierarchy because their valuation relies on significant unobservable
inputs, including expected equity volatility, expected term, and debt discount rates. 

 The
following table presents the Company’s financial liabilities measured at fair value on a recurring basis: 

 SCHEDULE OF FINANCE LIABILITIES MEASURED AT FAIR VALUE 

 Description 
 Level 
 December 31, 2025 
 December 31, 2024 

 Derivative liabilities 
 3 
 $ 1,460,000 
 $ - 

 The
carrying amounts of cash, accounts receivable, accounts payable, and accrued liabilities approximate fair value due to their short-term
nature. 

 Derivative
Liabilities 

 In connection with the convertible notes issued under the Securities Purchase
Agreement with Streeterville Capital, LLC, as described in NOTE 10, the Company bifurcated the embedded conversion feature from each note
and recognized it as a derivative liability under ASC 815. Each derivative liability is initially recognized at fair value on the issuance
date of the respective convertible note and is subsequently remeasured at fair value at each reporting date and each conversion date.
Changes in fair value are recognized in the statement of operations.

 F- 15 

 ARRIVE
AI INC. 

 NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

 DECEMBER 31, 2025 AND 2024 

 The Company estimates the fair value of each derivative liability
using a Monte Carlo simulation model, which simulates a large number of potential stock price paths and computes the expected present
value of the conversion payoff under each path.

 Valuation
Inputs and Basis of Significant Assumptions 

 The
following inputs were used in the Monte Carlo simulation at each instrument inception measurement date: 

 SCHEDULE OF VALUATION OF MEASUREMENT INPUT 

 Input 
 Derivative 1 (Convertible Note 1) 
 Derivative 2 (Convertible Note 2) 
 Derivative 3 (Convertible Note 3) 

 Assumed instrument term 
 3.0 years 
 3.0 years 
 3.0 years 

 Stock price 
 $ 13.25 
 $ 6.78 
 $ 3.90 

 Selected equity volatility 
 135 % 
 130 % 
 150 % 

 Risk-free rate (continuous compounded, 3-year) 
 3.91 % 
 3.68 % 
 3.47 % 

 Debt discount rate (3-year) 
 25.72 % 
 28.69 % 
 27.06 % 

 The
following inputs were used in the Monte Carlo simulation to remeasure the derivative liabilities at each reporting date: 

 Input 
 6/30/2025 
 9/30/2025 
 12/31/2025 

 Assumed instrument term 
 3.0 years 
 3.0 years 
 3.0 years 

 Stock price 
 $ 11.68 
 $ 3.64 
 $ 2.63 

 Selected equity volatility 
 135 % 
 145 % 
 150 % 

 Risk-free rate (continuous compounded, 3-year) 
 3.65 % 
 3.58 % 
 3.52 % 

 Debt discount rate (3-year) 
 28.93 % 
 26.00 % 
 27.10 % 

 The
following range of inputs were used in the Monte Carlo simulation to remeasure the derivative liabilities at conversion
dates (derivatives with multiple conversions are presented with the range of inputs): 

 Input 
 Derivative 1 (Convertible Note 1) 
 Derivative 2 (Convertible Note 2) 
 Derivative 3 (Convertible Note 3) 

 Assumed instrument term 
 3.0 years 
 3.0 years 
 - 

 Stock price 
 $ 3.18 - 6.78 
 $ 3.45 
 $ - 

 Selected equity volatility 
 130 - 155 % 
 145 % 
 - % 

 Risk-free rate (continuous, 3-year) 
 3.45 - 3.68 % 
 3.54 % 
 - % 

 Debt discount rate (3-year) 
 25.66 - 28.69 % 
 25.91 % 
 - % 

 As
described in NOTE 10, the convertible notes have no stated maturity. The Company estimated an expected term of three years based on the
timing of expected draws from the SPA, the economic structure of the SPA, the conversion mechanics, and its assessment of expected noteholder
conversion behavior. This estimate is reassessed at each remeasurement date. 

 In the above table, the Company disclosed a range of closing day stock prices, historical volatilities, risk-free
rates, and debt discount rates used as model inputs for conversion calculations, if the note had multiple conversions during the period.
Convertible Note 1 had multiple conversions, which fell on the following dates: August 11, 2025, August 25, 2025, August 29, 2025, September
9, 2025, and September 17, 2025. Convertible Note 2 had one conversion on September 23, 2025.

 The
Company estimated expected equity volatility using the historical volatility of a peer group of comparable-stage companies operating
in the autonomous vehicle, robotics, and AI/logistics technology industries, supplemented by the Company’s own limited trading
history. 

 The
risk-free rate was derived from the continuously compounded yield on U.S. Treasury securities with a remaining term approximately equal
to the assumed instrument term, observed as of each measurement date. 

 The
debt discount rate represents the Company’s estimated cost of non-convertible debt with terms comparable to the convertible notes.
This rate was calibrated using observable market data for similarly situated issuers in the Company’s industry and credit profile,
adjusted for the specific terms of the SPA. 

 Sensitivity
of Level 3 Fair Value Measurements 

 Because the derivative liabilities are valued using significant unobservable
inputs, their fair value measurements are classified within Level 3. Changes in those inputs can have a material effect on the reported
fair value. The table below describes the directional sensitivity of the derivative liability fair value to changes in the most significant
unobservable inputs, holding all other inputs constant:

 Input 
 
 Direction
 of Change 
 
 Effect
 on Fair Value 

 Equity
 volatility 
 
 Increase
 (decrease) 
 
 Increase
 (decrease) 

 Expected
 term 
 
 Increase
 (decrease) 
 
 Increase
 (decrease) 

 Debt discount
 rate 
 
 Increase
 (decrease) 
 
 Decrease
 (increase) 

 Stock price 
 
 Increase
 (decrease) 
 
 Increase
 (decrease) 

 F- 16 

 ARRIVE
AI INC. 

 NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

 DECEMBER 31, 2025 AND 2024 

 Equity
volatility is the most significant unobservable input. The conversion feature has an asymmetric payoff structure (the noteholder benefits
from lower stock prices that produce a lower conversion price under the Lookback Formula, subject to the $0.25 floor), and higher volatility
generally increases the expected value of that optionality. A hypothetical 10 percentage point increase or decrease in assumed volatility,
holding other inputs constant, would result in a directionally significant change in the fair value of the derivative liabilities; however,
the magnitude of such change depends on the then-current stock price relative to the conversion price range and cannot be quantified
without reference to the applicable simulation outputs. Management considers the volatility assumption to be the key source of estimation
uncertainty in the Level 3 measurement. 

 Expected
term affects the number of simulated conversion opportunities and the present value weighting of simulated payoffs; a longer term increases
the value of the conversion optionality. Debt discount rate affects the discount applied to the simulated payoffs; a higher rate reduces
present value. 

 The
interrelationship between equity volatility and stock price should also be noted: at lower stock prices, the conversion discount embedded
in the Lookback Formula produces larger absolute payoffs per share for the noteholder, and higher volatility amplifies this effect. The
$0.25 floor price limits downside exposure in scenarios where the stock price falls significantly. 

 Derivative
Liabilities Roll-Forward 

 The
following table provides a reconciliation of the derivative liabilities measured at fair value using Level 3 inputs for the year ended
December 31, 2025: 

 SCHEDULE
OF RECONCILIATION OF THE DERIVATIVE LIABILITIES MEASURED AT FAIR VALUE 

 Convertible Note 1 
 Convertible Note 2 
 Convertible Note 3 
 Total 

 Balance at January 1, 2025 
 $ — 
 $ — 
 $ — 
 $ — 

 Derivative liability recognized upon issuance of convertible note payable at fair value 
 2,250,000 
 — 
 — 
 2,250,000 

 Change in fair value — period-end remeasurement (June 30, 2025) 
 ( 190,000 ) 
 — 
 — 
 ( 190,000 ) 

 Balance on June 30, 2025 
 2,060,000 
 — 
 — 
 2,060,000 

 Derivative liability recognized upon issuance of convertible note payable at fair value 
 — 
 1,710,000 
 — 
 1,710,000 

 Reclassification of derivative liabilities upon conversion of convertible notes payable 
 ( 1,427,021 ) 
 ( 306,713 ) 
 — 
 ( 1,733,734 ) 

 Change in fair value of derivative liabilities – conversion remeasurement 
 ( 424,642 ) 
 ( 650,000 ) 
 — 
 ( 1,074,642 ) 

 Change in fair value — period-end remeasurement (September 30, 2025) 
 161,663 
 16,713 
 — 
 178,376 

 Balance on September 30, 2025 
 370,000 
 770,000 
 — 
 1,140,000 

 Balance 
 370,000 
 770,000 
 — 
 1,140,000 

 Derivative liability recognized upon issuance of convertible note payable at fair value 
 — 
 — 
 750,000 
 750,000 

 Change in fair value — period-end remeasurement (December 31, 2025) 
 ( 90,000 ) 
 ( 190,000 ) 
 ( 150,000 ) 
 ( 430,000 ) 

 BALANCE AT DECEMBER 31, 2025 
 $ 280,000 
 $ 580,000 
 $ 600,000 
 $ 1,460,000 

 Balance 
 $ 280,000 
 $ 580,000 
 $ 600,000 
 $ 1,460,000 

 The
total net change in fair value of derivative liabilities recognized in the statement of operations for the year ended December 31,
2025 was a gain of $ 1,516,266 , presented within “Change in fair
value of derivative liabilities” in the accompanying statement of operations. There was no comparable activity during the year ended
December 31, 2024. 

 Amounts reclassified upon conversion represent the fair value of the pro-rata
portion of each derivative liability, remeasured as of the applicable conversion date and derecognized in connection with the settlement
of the related converted principal. The change in fair value through the conversion date is included in “Change in fair value of
derivative liabilities - conversion remeasurement” in the table above. For a description of the full conversion accounting policy,
including the treatment of the host debt component upon conversion, see NOTE 10.

 Investments 

 During
the year ended December 31, 2025, the Company held exchange-traded equity securities and written call options that were measured at fair
value on a recurring basis and classified within Level 1 of the fair value hierarchy. As of December 31, 2025 and 2024, the Company held
no such instruments. 

 F- 17 

 ARRIVE
AI INC. 

 NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

 DECEMBER 31, 2025 AND 2024 

 NOTE 
 6 - PROPERTY AND EQUIPMENT 

 Property
and equipment consist of the following: 

 SCHEDULE OF PROPERTY
AND EQUIPMENT 

 2025 
 2024 

 December 31, 

 2025 
 2024 

 Vehicles 
 $ 94,751 
 $ 58,443 

 Equipment 
 308,330 
 50,000 

 Leasehold improvements 
 154,375 
 - 

 Construction in progress 
 73,787 
 38,155 

 Total property and equipment 
 631,243 
 146,598 

 Less: accumulated depreciation 
 ( 116,559 ) 
 ( 51,173 ) 

 TOTAL PROPERTY AND EQUIPMENT, NET 
 $ 514,684 
 $ 95,425 

 For
the years ended December 31, 2025 and 2024, total depreciation expense was $ 65,385 and $ 28,303 . 

 NOTE 
 7 – LEASES 

 The Company leases office space and ground robots
under noncancelable operating lease agreements.

 Office
Space – Related Party Lease 

 The
office space is leased from an entity owned by the Company’s Chief Executive Officer and principal shareholder and is therefore
considered a related-party lease. The lease is an operating lease with an initial term of five years commencing on October 1, 2025.
The lease includes an option to renew upon expiration of the initial term; however, renewal periods were not included in the measurement
of the right-of-use asset or lease liability because the Company has determined that exercise of the renewal option is not reasonably
certain at this time. 

 Under
this lease, the base rent is $ 44,481 per month for the first twelve months, increasing 3 % for each twelve-month period thereafter. The
lease is structured as a triple-net arrangement under which the Company also pays taxes, insurance, and common area maintenance charges
directly. These triple-net lease (“NNN”) costs are variable in nature and are not included in the measurement of the right-of-use
asset or lease liability; they are expensed as incurred. Based on current estimates, NNN costs are approximately $ 9,885 per month. Total
variable lease costs recognized under this arrangement during the year ended December 31, 2025 were approximately $ 29,655 . The estimated
all-in monthly occupancy cost is approximately $ 54,366 . This lease arrangement is also disclosed in NOTE 14. 

 Ground
Robot Leases 

 The
Company also leases ground robots used in delivery operations to transport goods between Arrive Point units. These leases have initial
terms of two years commencing on July 31, 2025 . Lease payments are approximately $ 4,200 
per month. Total lease costs recognized under this arrangement during the year ended December 31, 2025 were approximately $ 25,200 .
The lease includes renewal options; however, renewal periods were not included in the measurement of the right-of-use assets or
lease liabilities because the Company has determined that exercise of the renewal options is not reasonably certain at this
time. 

 The
ground robot leases and the office space lease have been aggregated in the disclosures below as they share similar remaining terms, discount
rates, and lease structures. Management has evaluated the leases and concluded that separate presentation is not necessary to provide
a meaningful understanding of the Company’s lease obligations. 

 Right-of-Use
Assets and Lease Liabilities 

 The
following summarizes the right-of-use assets and lease liabilities recorded on the Company’s balance sheet as of December 31, 2025: 

 SCHEDULE
OF RIGHT-OF-USE ASSETS AND LEASE LIABILITIES 

 2025 
 2024 

 December 31, 

 2025 
 2024 

 Right-of-use assets, net 
 $ 2,117,284 
 $ — 

 Operating lease liabilities – current portion 
 392,950 
 — 

 Operating lease liabilities – long-term portion 
 1,725,073 
 — 

 F- 18 

 ARRIVE
AI INC. 

 NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

 DECEMBER 31, 2025 AND 2024 

 Lease
Cost 

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

 SCHEDULE
OF LEASE COST 

 2025 
 2024 

 Years Ended December 31, 

 2025 
 2024 

 Operating lease cost included in general and administrative expense 
 $ 159,382 
 $ - 

 Supplemental
Cash Flow Information 

 The
following is a summary of the supplemental information related to the Company’s operating leases included in the statements of cash flows: 

 SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION 

 2025 
 2024 

 Years Ended December 31, 

 2025 
 2024 

 Cash paid for amounts included in the measurement of operating lease liabilities 
 $ 158,643 
 $ - 

 Right-of-use assets obtained in exchange for lease obligations 
 2,216,753 
 - 

 Discount
Rate and Lease Term 

 As
the Company’s office lease does not provide an implicit interest rate, the Company used its incremental borrowing rate (“IBR”)
to discount future lease payments. Because the Company has no directly observable secured borrowing rate, the IBR was estimated using
a build-up approach consisting of the applicable U.S. Treasury rate for a borrowing term consistent with the expected lease term as of the lease commencement date, plus a credit risk premium based on
prevailing speculative-grade corporate bond spreads, and adjusted to reflect the collateralized nature of the borrowing as contemplated
by ASC 842. 

 The
weighted-average remaining lease term and weighted-average discount rate for operating leases at December 31, 2025 were 4.65 years and
 10.42 %, respectively. 

 Future
Minimum Lease Payments 

 The
future lease payments required under the Company’s leases for the years ending December 31 are as follows: 

 SCHEDULE
OF FUTURE MINIMUM LEASE PAYMENTS 

 Future minimum lease payments 
 
 2026 
 $ 588,174 

 2027 
 579,102 

 2028 
 570,516 

 2029 
 587,634 

 2030 
 300,378 

 Total future lease payments 
 2,625,804 

 Less: Amount representing interest 
 ( 507,781 ) 

 Present value of lease liabilities 
 2,118,023 

 Less: current portion 
 ( 392,950 ) 

 Long-term portion 
 $ 1,725,073 

 Scheduled
amounts represent contractual base rent only and exclude variable NNN costs. Variable lease costs associated with the ground robot leases, if any, were not material for the year ended December
31, 2025. Based on current estimates, NNN costs are approximately
$ 9,885 per month and are expensed as incurred. 

 F- 19 

 ARRIVE
AI INC. 

 NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

 DECEMBER
31, 2025 AND 2024 

 NOTE 
 8 - PATENTS, NET 

 The
Company capitalizes external costs, such as filing fees, registration documentation, and attorney fees associated with the
application and issuance of patents. Amortization commences when the patent is granted and placed in service and is calculated on a
straight-line basis over the remaining legal life of the patent. Costs associated with pending applications are capitalized but not
amortized until issuance. Maintenance patent fees are paid to a government patent authority to maintain a granted patent in force.
Some countries require the payment of maintenance fees for pending patent applications; these are expensed as incurred. Maintenance fees paid after a patent is
granted are expensed, as these are considered ongoing costs to “maintain a patent.” 

 Patents
consist of the following: 

 SCHEDULE OF PATENTS 

 2025 
 2024 

 December 31, 

 2025 
 2024 

 Patents 
 $ 274,700 
 $ 274,700 

 Less: accumulated amortization 
 ( 2,603 ) 
 ( 1,099 ) 

 TOTAL PATENTS 
 $ 272,097 
 $ 273,601 

 As
of December 31, 2025, eight of the Company’s international patent applications were issued and began being amortized over
thirteen 13 to sixteen
years . As of December 31, 2024, five international patent applications were issued. During the year ended December 31, 2024,
the Company filed applications for thirteen patents for total filing fees of $ 76,500 .
The Company did not file for any patents for the year ended December 31, 2025. Patent assets were evaluated for impairment under ASC
360 and no impairment was identified. Amortization expense was $ 1,504 
and $ 812 
for the years ended December 31, 2025 and 2024, respectively. Estimated amortization expense on the existing intangible patent
assets for the next five years is $ 2,066 
for 2026, $ 2,066 
for 2027, $ 2,066 
for 2028, $ 2,066 
for 2029, and $ 2,066 
for 2030. 

 F- 20 

 ARRIVE
AI INC. 

 NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

 DECEMBER 31, 2025 AND 2024 

 NOTE 
 9 - DEFERRED OFFERING COSTS 

 The
Company accounts for offering costs in accordance with ASC 340-10-S99-1, Other Assets and Deferred Costs and SAB Topic 5A, Expenses
of Offering . Costs that are directly attributable to proposed or actual equity offerings are capitalized as deferred offering
costs until the offering is completed. Deferred offering costs consist of underwriting, legal, accounting, and other expenses. Upon
completion of an equity offering, including all pre-paid advances under the Securities Purchase Agreement discussed in NOTE 10, such
costs are recorded as a reduction of the related proceeds and reflected as a reduction of additional paid-in capital. The deferred
offering costs related to the SPA are recorded pro rata based on the pre-paid advance compared to the maximum facility. 

 During
the year ended December 31, 2025, the Company raised gross proceeds of $ 12,277,007 , consisting of $ 11,890,000 under pre-paid purchase
agreements pursuant to the public offering and $ 387,007 through a crowdfunding offering. 

 The
following summarizes the deferred offering balances as of December 31, 2025 and 2024 and changes during the years then
ending: 

 SCHEDULE OF DEFERRED OFFERING COSTS 

 2025 
 2024 

 Beginning balance 
 $ 427,898 
 $ - 

 Costs related to public offering 
 7,616,439 
 427,898 

 Costs related to crowdfunding 
 91,543 
 229,994 

 Reclassification to additional paid-in capital 
 ( 2,485,695 ) 
 ( 229,994 ) 

 OUTSTANDING BALANCE 
 $ 5,650,185 
 $ 427,898 

 The
Company’s public offering registration statement was declared effective, and the stock began trading on May 15, 2025. At December
31, 2024, the Company had deferred offering costs of $ 427,898 consisting of filing and legal costs related to the transaction. On January
2, 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. In May 2025, the Company recorded an additional $ 688,570 for filing and legal
fees related to the transaction. Of the deferred offering costs incurred, $ 2,394,152 was recorded as a reduction of proceeds associated
with the pre-paid purchase agreements. 

 Deferred
offering costs associated with the crowdfunding offering of $ 91,543 and $ 229,994 were capitalized and immediately reclassified to additional
paid-in capital upon completion of the crowdfunding offerings during the year ended December 31, 2025 and 2024, respectively. 

 The
remaining deferred offering costs will be recorded as a reduction of additional
paid-in capital upon completion of the related pre-paid advances under the Securities Purchase Agreement discussed in NOTE 10. 

 NOTE 
 10 - CONVERTIBLE NOTES PAYABLE 

 Overview
of the Purchase Agreement 

 On
March 21, 2025, the Company entered into a Securities Purchase Agreement with Streeterville Capital, LLC
(“Streeterville”). The SPA closed on May 15, 2025, upon satisfaction of all condition precedents. The SPA provides for a
maximum facility of $ 40,000,000 ,
under which three draws were completed during 2025, resulting in aggregate cash proceeds of $ 11,000,000 
and the issuance of convertible notes with an aggregate face amount of $ 11,890,000 . 
As of December 31, 2025, the remaining undrawn capacity under the facility is $ 29,000,000 ;
however, any future draws remain subject to the satisfaction of conditions precedent set forth in the SPA, and no assurance can be
given that additional draws will be made. 

 The
convertible notes issued under the SPA bear interest at a rate of 8 % per annum and have no stated maturity date. In the event of a default
under the SPA, the Company will be required to make monthly cash payments until the default is cured or the notes are repaid in full. 

 F- 21 

 ARRIVE
AI INC. 

 NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

 DECEMBER 31, 2025 AND 2024 

 Pre-Delivery
Shares 

 Pursuant
to the SPA, Streeterville purchased 2,937,500 shares of common stock (the “Pre-Delivery Shares”) at par value ($ 0.0002 per
share) in exchange for aggregate consideration of $ 588 . The Pre-Delivery Shares were issued as a condition of and concurrent with the
closing of the SPA on May 15, 2025, and are contractually linked to the financing arrangement. 

 The
Company has evaluated the Pre-Delivery Shares under ASC 480-10-25 and ASC 505-10-45 and concluded that equity classification is appropriate
on the following basis: (i) the shares represent issued and legally outstanding common stock with full voting rights; (ii) the Company
holds a right, but not an obligation, to repurchase the Pre-Delivery Shares at par value, which is a unilateral call option and does
not, by itself, require liability classification; and (iii) the shares are not mandatorily redeemable and do not embody an unconditional
obligation requiring the Company to transfer assets. Accordingly, the Pre-Delivery Shares are presented within stockholders’ equity
and are included as issued and outstanding shares as of December 31, 2025. 

 The
Pre-Delivery Shares are included in the weighted-average shares outstanding used in the computation of basic and diluted loss per share
beginning on May 15, 2025, the date the SPA closed and the shares were issued, consistent with ASC 260-10-45. The Company considered
whether the nominal issuance price and the Company’s repurchase right created any basis to exclude these shares from EPS and concluded
that, because the shares are legally issued and outstanding with no outstanding contingency that would require their return, the Company’s
inclusion is appropriate. 

 Conversion
Feature and Bifurcation 

 Pursuant
to ASC 815-40-15 and ASC 815-15-25, a conversion feature that fails the indexed-to-own-stock test must be bifurcated from the host instrument
and accounted for separately as a derivative liability, measured at fair value at each reporting date, with changes in fair value recognized
in earnings. Accordingly, the Company has bifurcated the conversion feature as a derivative liability at the inception of each note. 

 Note
Issuance Summary 

 The
three convertible notes issued in 2025 were bifurcated as follows. The initial host carrying value for each note represents the cash
proceeds received, reduced by (i) the original issue discount (“OID”) of approximately 8 %
of the principal proceeds, (ii) the fair value of the bifurcated derivative liabilities at issuance, (iii) the portion of debt issuance
costs of 6 %
that are allocated to the host debt instrument, as described below, and (iv) the fair value of 62,500 
 shares of common stock issued by the company as a commitment
fee. 

 In
connection with the issuance of the notes, the Company incurred debt issuance costs equal to 6% of cash proceeds received, totaling
$ 660,000 ($ 240,000 for Convertible Note 1, $ 240,000 for Convertible Note 2, and $ 180,000 for Convertible Note 3). In accordance with
ASC 835.30 and ASC 815, the Company allocates debt issuance costs between the host debt instrument and the bifurcated derivative
liability based on their relative fair values at the date of issuance. Specifically,
the fair value of the bifurcated derivative liability as a percentage of total proceeds was used to determine the portion of
issuance costs attributable to the derivative component. Accordingly, $ 311,613 of the total $ 660,000 in issuance costs was allocated
to the derivative components and expensed immediately within the statement of operations, as such costs cannot be deferred against a
liability measured at fair value through earnings under ASC 815-15. The remaining $ 348,387 was recorded as a contra-liability
(direct reduction of the carrying value of the host debt instrument) and is being amortized to interest expense using the effective
interest method over the estimated expected term of three years, consistent with the accretion of the OID and derivative discounts
described below. The resulting discount is accreted to par using the effective interest method over the estimated term of each note. 

 F- 22 

 ARRIVE
AI INC. 

 NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

 DECEMBER 31, 2025 AND 2024 

 Although
the notes have no stated maturity date, the Company estimated an expected term of three years for purposes of both the EIM accretion
schedule and the Monte Carlo valuation of the bifurcated derivative. This expected term was determined based on (i) the
Company’s expected timing of draws under the SPA (ii) the economic terms and structure of the SPA, including the conversion
mechanics and the absence of a mandatory redemption date, (iii) the Company’s assessment of the expected conversion behavior
of the noteholder based on the Lookback Formula, and (iv) the provisions of the SPA governing the noteholder’s conversion
rights. The use of an expected term rather than a contractual maturity is consistent with ASC 820-10-35-24C, which requires that
fair value reflect market participant assumptions. Management applied the same three-year expected term in both the EIM accretion
model and the Monte Carlo valuation model based on its estimate of the period over which the notes are expected to remain
outstanding. The three-year assumption will be reassessed each reporting period in connection with the fair value remeasurement of
the derivative liability. 

 SCHEDULE OF NOTE ISSUANCE SUMMARY 

 Convertible Note 1 
 Convertible Note 2 
 Convertible Note 3 
 Total 

 Issuance date 
 May 15, 2025 
 Aug 11, 2025 
 Dec 3, 2025 
 
 Face amount 
 $ 4,330,000 
 $ 4,320,000 
 $ 3,240,000 
 $ 11,890,000 

 Original issue discount 
 ( 330,000 ) 
 ( 320,000 ) 
 ( 240,000 ) 
 ( 890,000 ) 

 Cash proceeds 
 4,000,000 
 4,000,000 
 3,000,000 
 11,000,000 

 Debt issuance costs (contra-liability) 
 ( 75,987 ) 
 ( 137,400 ) 
 ( 135,000 ) 
 ( 348,387 ) 

 Derivative discount (initial fair value of bifurcated derivatives) 
 ( 2,250,000 ) 
 ( 1,710,000 ) 
 ( 750,000 ) 
 ( 4,710,000 ) 

 Commitment shares (discount) 
 ( 828,125 ) 
 - 
 - 
 ( 828,125 ) 

 INITIAL HOST CARRYING VALUE 
 $ 845,888 
 $ 2,152,600 
 $ 2,115,000 
 $ 5,113,488 

 Host
Convertible Note Roll-Forward 

 The
following table sets forth the activity in the carrying value of the host portion of the convertible notes for the year ended December
31, 2025. Discount accretion is computed using the EIM applied to the initial carrying value of each note over its estimated three-year
expected term. Upon conversion, the face amount converted and the pro-rata unamortized discount and issuance costs attributable to
the converted portion are removed from the carrying value. 

 SCHEDULE OF CONVERTIBLE NOTE PAYABLE 

 Convertible
Note 1
 
 Convertible
Note 2
 
 Convertible
Note 3
 
 Total 

 Balance at January 1, 2025 
 $ — 
 $ — 
 $ — 
 $ — 

 Note issuance — initial host carrying value 
 845,888 
 2,152,600 
 2,115,000 
 5,113,488 

 EIM accretion of debt discount and issuance costs 
 137,437 
 109,733 
 22,908 
 270,078 

 Conversions — face amount 
 ( 2,875,000 ) 
 ( 1,250,000 ) 
 — 
 ( 4,125,000 ) 

 Conversions — issuance costs 
 2,211,763 
 587,384 
 — 
 2,799,147 

 Conversions — unamortized discount 
 47,187 
 39,757 
 — 
 86,944 

 HOST CARRYING VALUE AT DECEMBER 31, 2025 
 $ 367,275 
 $ 1,639,474 
 $ 2,137,908 
 $ 4,144,657 

 Conversion
Accounting 

 See
NOTE 2, Convertible Notes Payable and Derivative Liabilities for details on accounting for the conversion of convertible notes payable. 

 F- 23 

 ARRIVE
AI INC. 

 NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

 DECEMBER 31, 2025 AND 2024 

 For
a summary of derivative liability activity during 2025, including amounts derecognized upon conversion, refer to NOTE 5. 

 Other income and expenses related to convertible notes 

 Other income and expenses related to the convertible notes recognized during the year ended December 31, 2025 consisted
of the following, presented in the income statement line items indicated: 

 SCHEDULE OF INTEREST EXPENSE 

 Year Ended

 December 31, 2025
 
 Year Ended

 December 31, 2024
 
 Stated interest at 8% per annum 
 $ 282,930 
 $ — 

 Accretion of debt discount 
 249,530 
 — 

 Accretion of debt issuance costs 
 20,548 
 — 

 Loss on conversion of convertible notes payable 
 1,561,338 
 — 

 The
bifurcated derivative liability associated with the convertible notes is classified as a Level 3 instrument and remeasured at fair value
at each reporting date using a Monte Carlo simulation model. For a full description of the valuation methodology, significant unobservable
inputs (including the expected term, volatility, and risk-free rate assumptions), a roll-forward of the derivative liability balance,
and the amounts of unrealized gains or losses recognized in earnings during 2025, refer to NOTE 5. 

 NOTE 
 11 - NOTE PAYABLE 

 Note
payable consists of the following: 

 SCHEDULE OF
NOTES PAYABLE 

 2025 
 2024 

 December 31, 

 2025 
 2024 

 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. 
 $ 10,558 
 $ 19,082 

 Less current portion 
 ( 9,140 ) 
 ( 8,524 ) 

 LONG-TERM PORTION 
 $ 1,418 
 $ 10,558 

 F- 24 

 ARRIVE
AI INC. 

 NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

 DECEMBER 31, 2025 AND 2024 

 At
December 31, 2025 aggregate future principal payments on the note payable are as follows: 

 SCHEDULE
OF MATURITIES OF LONG-TERM DEBT 

 2026 
 $ 9,140 

 2027 
 1,418 

 TOTAL 
 $ 10,558 

 Interest
expense related to this note payable for the years ended December 31, 2025 and 2024, was $ 1,064 and $ 1,635 , respectively. 

 NOTE
12 - INCOME TAXES 

 The Company recorded no current or deferred income
tax benefit for the years ended December 31, 2025 and 2024, primarily due to losses and a full valuation allowance on deferred tax assets.

 The
income tax benefit consists of the following: 

 SCHEDULE
OF INCOME TAX BENEFIT 

 2025 
 2024 

 Years Ended December 31, 

 2025 
 2024 

 Current Provision 
 $ — 
 
 $ — 
 
 Deferred: 
 
 Federal 
 2,430,664 
 1,071,110 

 State 
 306,523 
 162,039 

 Total deferred provision 
 2,737,187 
 1,233,149 

 Change in valuation allowance 
 ( 2,737,187 ) 
 ( 1,233,149 ) 

 INCOME TAX BENEFIT, NET 
 $ — 
 
 $ — 
 
 As presented above, no benefit (provision) for income taxes has been recognized for the years ended December 31,
2025 and 2024. 

 Enhanced Disclosures (ASU 2023-09 – 2025) 

 The Company adopted ASU 2023-09 on January 1, 2025,
on a prospective basis. Accordingly, the enhanced income tax disclosures required under the ASU are presented only for the year ended December
31, 2025. Prior period amounts have not been recast and are therefore not comparable.

 A reconciliation of the federal statutory rate to
the Company’s effective tax rate is as follows. In accordance with ASU 2023-09, reconciling items greater than 5% of the statutory
tax rate are presented separately. Amounts below this threshold are aggregated within “Other.” The 2025 reconciliation below
is not presented on a comparable basis with prior periods due to the adoption of ASU 2023-09.

 SCHEDULE
OF RECONCILIATION OF THE STATUTORY TAX RATE 

 2025 (in dollars) 
 2025(%) 

 Statutory federal income tax rate 
 $
 ( 2,693,540 ) 
 21.0 % 

 State taxes, net of federal income tax effect 
 ( 428,716 ) 
 3.3 % 

 Other
 
 11,521 
 ( 0.1 )% 

 Equity-settled debt loss (non-deductible) 
 373,549 
 ( 2.9 
 )% 

 Change in valuation allowance 
 2,737,186 
 ( 21.3 )% 

 INCOME TAX BENEFIT, NET 
 $
 — 
 0.0 % 

 There
were no federal, state, or foreign income taxes paid in the year ended December 31, 2025. 

 Legacy
Disclosures (ASC 740 – 2024) 

 The
following is a reconciliation of the statutory federal income tax rate applied to pre-tax net loss compared to the income tax benefit
in the statement of operations as of December 31, 2024. 

 2024 (in dollars) 
 2024(%) 

 Statutory federal income tax rate 
 $ ( 952,951 ) 
 21.0 % 

 State taxes, net of federal income tax effect 
 ( 179,960 ) 
 3.9 % 

 Other 
 — 
 — % 

 Change in valuation allowance 
 1,132,912 
 ( 24.9 )% 

 INCOME TAX BENEFIT, NET 
 $ — 
 0.0 % 

 There
were no federal, state, or foreign income taxes paid in the year ended December 31, 2024. 

 The
net deferred tax amounts in the accompanying balance sheets include the following components: 

 SCHEDULE
OF NET DEFERRED TAX AMOUNTS 

 2025 
 2024 

 December 31, 

 2025 
 2024 

 Net operating loss carryforward 
 $ 3,936,612 
 $ 1,814,039 

 Stock-based compensation 
 1,264,753 
 769,563 

 Property and equipment 
 349,976 
 406,695 

 Intangible assets 
 302,923 
 460,517 

 R&D credits 
 168,322 
 75,571 

 Other 
 664,959 
 423,973 

 Total deferred tax assets 
 6,687,545 
 3,950,358 

 Less: valuation allowance 
 ( 6,687,545 ) 
 ( 3,950,358 ) 

 TOTAL DEFERRED TAX ASSETS, NET 
 $ - 
 $ - 

 The
tax benefit from state net operating loss carryforwards of $ 670,036 begin to expire in 2040. The tax benefit from state research and
development credits of $ 186,134 begin to expire in 2031. The federal net operating loss carryforwards never expire. 

 F- 25 

 ARRIVE
AI INC. 

 NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

 DECEMBER 31, 2025 AND 2024 

 The
change in the valuation allowance was the following at December 31: 

 SCHEDULE
OF CHANGE IN THE VALUATION ALLOWANCE 

 2025 
 2024 

 Beginning balance, January 1 
 $ 3,950,358 
 $ 2,717,209 

 Change in valuation allowance 
 2,737,187 
 1,233,149 

 VALUATION ALLOWANCE 
 $ 6,687,545 
 $ 3,950,358 

 In
assessing the realization of the deferred tax assets, management considers whether it is more likely than not that some portion or all
of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of
future taxable income during the periods in which net operating losses and temporary differences become deductible. Management considers
the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.
After consideration of all of the information available, management believes that significant uncertainty exists with respect to the
future realization of the deferred tax assets and has therefore established a valuation allowance. 

 As
of December 31, 2025, the Company had operating loss carry forwards of approximately $ 15,555,122 , which are allowed for an indefinite
carryforward period but may be subject to limitations. This amount can be used to offset future taxable income of the Company. 

 The
timing and manner in which the Company can utilize operating loss carryforwards in any year may be limited by provisions of the Internal
Revenue Code regarding changes in ownership of corporations. Such limitation may have an impact on the ultimate realization of its carryforwards
and future tax deductions. 

 The
Company follows the guidance under ASC 740, Income Taxes , for the recognition and measurement of uncertain tax positions. Recognition
involves a determination of whether it is more likely than not that a tax position will be sustained upon examination with the presumption
that the tax position will be examined by the appropriate taxing authority having full knowledge of all relevant information. The Company’s
application of the uncertain tax position guidance under ASC 740 did not result in any adjustments to the financial statements. 

 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 and no charge during 2025, and accordingly,
the Company did not recognize any interest or penalties during 2025 related to unrecognized tax benefits. There is no accrual for uncertain
tax positions as of December 31, 2025. 

 The
Company files U.S. income tax returns and Indiana state income tax returns. With few exceptions, the U.S. and state income tax returns
filed for the tax years ended on December 31, 2022 and thereafter are subject to examination by the relevant taxing authorities. 

 NOTE
13 - 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 December 31, 2025 and 2024, the Company had $ 226,010 and $ 206,174 of unused payroll tax credits, respectively. 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. These begin to expire in 2031. 

 NOTE 
 14 - RELATED-PARTY TRANSACTIONS 

 On
May 26, 2020, the Company entered into an initial three-year agreement with the Company’s Chief Executive Officer, Daniel
O’Toole, for the use of a patent. Beginning June 1, 2020, the Company began paying Mr. O’Toole 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 years
ended December 31, 2025 and 2024, the Company recorded licensing fee costs in the amount of $ 120,000 
each period, respectively. 

 F- 26 

 ARRIVE
AI INC. 

 NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

 DECEMBER 31, 2025 AND 2024 

 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 provides for cure provisions 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. 

 Effective
October 1, 2025, the Company entered into a noncancelable lease for an office space with an entity owned by the Company’s Chief Executive Officer and principal shareholder. The lease
terms are described in NOTE 7 and were evaluated for reasonableness using prevailing
market rates for similar properties. 

 The
Company leased a warehouse from an entity owned by the Company’s Chief Executive Officer and principal shareholder on a month-to-month basis at a rate of $ 2,250 per month. This lease was terminated
on October 5, 2025. 

 NOTE
15 - STOCKHOLDERS’ EQUITY (DEFICIT) 

 Common
Stock 

 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 year ended December 31, 2025, the Company issued in the aggregate 5,112,182 shares of common stock as follows: 

 ● 
 11,692 
 shares to accredited investors in exchange for aggregate cash proceeds of $ 152,000 at an average share price of $ 13.00 per share.
 Of these shares, 7,692 were issued with warrants and classified as equity, as further disclosed in Note 
 16. 

 ● 
 2,937,500 
 shares to an accredited investor in exchange for cash proceeds of $ 588 . The shares were issued at par value, pursuant to the securities
 purchase agreement, dated March 21, 2025, by and between the Company and Streeterville Capital, LLC as described in Note 
 10. 

 ● 
 120,820 
 shares upon the exercise of warrants for aggregate cash proceeds of $ 573,895 . 

 ● 
 25,693 
 shares issued through a crowdfunding campaign to other investors in exchange for net cash proceeds of $ 295,469 , at an average net proceeds per share of $ 11.50 after platform fees. 

 ● 
 84,874 
 shares issued to employees and consultants in exchange for services. The shares were recognized as compensation expense immediately
 and were fair valued at $ 13.00 
 per share, for a total fair value of $ 1,103,362 .
 The fair value was determined based on the price per stock issued to investors for cash during the period January 1, 2025 to May 15,
 2025. 

 ● 
 35,389 
 shares to employees and consultants pursuant to stock awards. The shares were recognized as stock-based compensation expense
 immediately with a fair value totaling $ 296,102 ,
 based on the Company’s closing stock price on the grant date. 

 ● 
 62,500 shares to an Streeterville Capital, LLC as commitment shares pursuant to pre-paid purchase 1 under the SPA agreement.
The shares were issued at fair value of $ 828,125 . 

 ● 
 773 
 shares upon the cashless exercise of vested options under the 2023 Equity Incentive Plan. The shares had an aggregate fair value
 of $ 6,164 , determined based on the Company’s closing stock price on the exercise date. 

 ● 
 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. 

 ● 
 92,673 
 shares issued to settle an outstanding payable in the amount of $ 1,204,737 
 with a consultant for legal expenses incurred in prior periods, fair valued at $ 13.00 
 per share, for a total of $ 1,204,737 .
 There was no gain or loss associated with settlement in shares. 

 ● 
 1,207,355 
 shares issued, with a fair value of $ 4,533,980 , as a conversion of convertible notes payable, as described in Note 
 10. 

 F- 27 

 ARRIVE
AI INC. 

 NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

 DECEMBER 31, 2025 AND 2024 

 During
the year ended December 31, 2024, the Company issued in the aggregate 276,626 shares of common stock as follows: 

 ● 
 68,743 
 shares, of which 41,119 shares are inclusive of warrants issued and deemed as equity to accredited investors in exchange for cash
 of $ 825,000 at an average of $ 12.00 per share. 

 ● 
 174,680 
 shares issued through a crowdfunding campaign to other investors in exchange for net cash of $ 1,818,626 , at an average of $ 10.41 
 per share. 

 ● 
 32,839 
 shares issued to employees or consultants via stock awards, recognized as compensation expense, fair valued at an average of
 $ 12.50 
 per share for a total of $ 410,632 ,
 based on the price per stock issued to investors for cash. 

 Share
Repurchase Program 

 On
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. 

 Share
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. 

 The
following sets forth the Company’s share repurchases for the year ended December 31, 2025: 

 SCHEDULE
OF SHARES REPURCHASE 

 Total number of shares repurchased 
 19,700 

 Amount repurchased 
 $ 74,743 

 Average price per share 
 $ 3.79 

 Share
repurchases for the year ended December 31, 2025 were made on the open market subject to regulatory constraints. As of December 31, 2025,
the Company had approximately $ 9,925,000 available for repurchase remaining under the repurchase program. 

 During
the year ended December 31, 2025, the Company retired 19,700 treasury shares acquired at a cost of $ 74,743 . The impact of the
retirement of treasury shares was a reduction to common stock and additional paid-in capital of $ 4 and $ 74,739 , respectively. 

 NOTE
16 - WARRANTS 

 The
following table summarizes the warrants outstanding as of December 31, 2025 and 2024 and changes during the years ending on these dates: 

 SCHEDULE
OF WARRANTS OUTSTANDING 

 Number of Warrants 
 Weighted Average Exercise Price 
 Weighted Average Grant Date Fair Value 
 Weighted Average Remaining Contractual Term (years) 
 Aggregate Intrinsic Value 

 OUTSTANDING, DECEMBER 31, 2023 
 163,215 
 $ 9.52 
 $ 4.16 
 0.53 
 $ 254,615 

 Granted 
 64,334 
 11.49 
 6.30 
 0.59 
 78,341 

 OUTSTANDING, DECEMBER 31, 2024 
 227,549 
 $ 10.08 
 $ 4.76 
 0.97 
 $ 598,996 

 Granted 
 7,692 
 11.00 
 8.55 
 3.19 
 - 

 Exercised 
 ( 120,820 ) 
 9.52 
 3.87 
 - 
 - 

 Cancelled/Expired 
 ( 6,680 ) 
 9.52 
 3.90 
 - 
 - 

 OUTSTANDING, DECEMBER 31, 2025 
 107,741 
 $ 10.80 
 $ 6.09 
 1.02 
 $ - 

 EXERCISABLE, DECEMBER 31, 2025
 
 107,741 
 $
 10.80 
 $
 6.09 
 1.02 
 $
 - 

 F- 28 

 ARRIVE
AI INC. 

 NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

 DECEMBER 31, 2025 AND 2024 

 The
aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock
price of $ 2.63 for the Company’s common shares at December 31, 2025 and the estimated share price of $ 12.71 for the Company’s
common shares at December 31, 2024. 

 The
following table sets forth the assumptions used to estimate the fair value of the warrants for the year ended December 31: 

 SCHEDULE
OF ASSUMPTIONS USED TO ESTIMATE THE FAIR VALUE OF THE WARRANTS 

 2025 
 2024 

 Expected term 
 3.95 years 
 1.5 – 3.7 years 

 Expected volatility 
 95.00 % 
 95.00 % 

 Risk-free interest rate 
 3.90 % 
 3.60 % – 4.50 % 

 Expected dividend yield 
 0.0 % 
 0.0 % 

 Fair value on the date of grant 
 $ 8.55 
 $ 1.44 – $ 1.87 

 NOTE
17 - STOCK-BASED COMPENSATION 

 The
Company created the 2023 Equity Incentive Plan (the “Plan”) on April 27, 2023, under which stock options, restricted
stock awards (“RSAs”), restricted stock units (“RSUs”), and other stock-based awards became available for
issuance not to exceed 1,500,000 .
On November 6, 2025, the Board of Directors resolved to increase the share pool under the Plan to 7,000,000 
shares. The 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. Options 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 five or ten years. There are certain
situations that may accelerate the vesting or termination of all outstanding options, such as a change in control. Vesting of RSUs
awarded to employees may be time- or performance-based. As of December 31, 2025, 4,660,840 
shares were available for grant under the Plan. The compensation expense related to stock-based awards is included in general and
administrative expenses with a corresponding increase to additional paid-in capital. 

 The
following table summarizes the share options outstanding as of December 31, 2025 and 2024 and activity during the years ending on these
dates: 

 SCHEDULE
OF SHARE OPTIONS OUTSTANDING 

 Number of Options 
 Weighted Average Exercise Price 
 Weighted Average Grant Date Fair Value 
 Weighted Average Remaining Contractual Term (years) 
 Aggregate Intrinsic Value 

 OUTSTANDING, DECEMBER 31, 2023 
 569,331 
 $ 0.80 
 $ 10.80 
 6.66 
 $ 5,852,440 

 Granted 
 45,565 
 0.76 
 11.80 
 - 
 - 

 Exercised 
 - 
 - 
 - 
 
 Canceled/Expired 
 ( 192 ) 
 0.76 
 10.30 
 - 
 - 

 OUTSTANDING, DECEMBER 31, 2024 
 614,704 
 $ 0.80 
 $ 10.88 
 5.89 
 $ 7,322,656 

 Granted 
 - 
 - 
 - 
 - 
 - 

 Exercised 
 ( 1,251 ) 
 0.76 
 10.30 
 
 Canceled/Expired 
 ( 4,135 ) 
 0.76 
 11.69 
 - 
 - 

 OUTSTANDING, DECEMBER 31, 2025 
 609,318 
 $ 0.80 
 $ 10.87 
 4.90 
 $ 1,116,368 

 EXERCISABLE, DECEMBER 31, 2025 
 247,991 
 $ 0.80 
 $ 10.86 
 6.92 
 $ 453,656 

 F- 29 

 ARRIVE
AI INC. 

 NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

 DECEMBER 31, 2025 AND 2024 

 The
following table summarizes the nonvested share options for the year ended December 31, 2025 and 2024 and activity during the years ending
on these dates: 

 SCHEDULE
OF NONVESTED SHARE OPTION 

 Number of Shares 
 Weighted Average Exercise Price 
 Weighted Average Grant Date Fair Value 
 Weighted Average Remaining Contractual Term (years) 
 Aggregate Intrinsic Value 

 OUTSTANDING, DECEMBER 31, 2023 
 494,105 
 $ 0.80 
 $ 10.80 
 6.38 
 $ 5,080,434 

 Granted 
 45,565 
 0.76 
 11.80 
 - 
 - 

 Vested 
 ( 86,665 ) 
 0.79 
 10.89 
 - 
 - 

 Canceled/Expired 
 ( 130 ) 
 0.76 
 10.30 
 - 
 - 

 OUTSTANDING, DECEMBER 31, 2024 
 452,875 
 $ 0.80 
 $ 10.89 
 5.21 
 $ 5,397,813 

 Granted 
 - 
 - 
 - 
 - 
 - 

 Vested 
 ( 88,266 ) 
 0.79 
 10.29 
 - 
 - 

 Canceled/Expired 
 ( 3,282 ) 
 0.76 
 11.72 
 - 
 - 

 OUTSTANDING, DECEMBER 31, 2025 
 361,327 
 $ 0.80 
 $ 10.99 
 3.54 
 $ 662,712 

 The
aggregate intrinsic value is calculated as the difference between the exercise price of the underlying shares and the closing stock price
of $ 2.63 for the Company’s common shares on December 31, 2025 and the estimated share price of $ 12.71 for the Company’s common
shares at December 31, 2024. 

 There
were no options granted during the year ended December 31, 2025. As of December 31, 2025, there was $ 3,889,706 unrecognized compensation
expense related to nonvested stock options to be recognized through June 30, 2028. Total compensation expense related to stock options
during the years ended December 31, 2025 and 2024 was $ 1,001,613 and $ 978,234 , respectively. During the year ended December 31, 2025
there were 1,251 options exercised in a cashless exchange for 773 shares. 

 The
assumptions used to calculate the fair value of options granted during the year ended December 31, 2024 are as follows: 

 SCHEDULE
OF FAIR VALUE OF OPTIONS GRANTED 

 Weighted-average volatility 
 95.00 % 

 Risk-free rate 
 3.81 % 

 Dividend yield 
 0.00 % 

 Expected term years 
 10 

 F- 30 

 ARRIVE
AI INC. 

 NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

 DECEMBER 31, 2025 AND 2024 

 The
following table summarizes the restricted stock units (“RSUs”) outstanding as of December 31, 2025 and activity during
the year ended this date: 

 SCHEDULE
OF RESTRICTED STOCK UNITS OUTSTANDING 

 Number of Restricted Stock Units 
 Weighted
 Average Grant 

 Date Fair
 Value 
 
 OUTSTANDING, DECEMBER 31, 2024 
 - 
 $ - 

 Granted 
 1,693,202 
 3.07 

 OUTSTANDING, DECEMBER 31, 2025 
 1,693,202 
 $ 3.07 

 During
the year ended December 31, 2025, RSUs of 1,693,202 
shares were issued under the plan to employees with a total fair value of $ 5,204,697 ,
based on grant date fair value. Of those shares, 1,199,594 
vest and are expensed on a straight line basis over a period of three months to four years. There were no shares vested, forfeited,
cancelled, or modified during the year ended December 31, 2025. Total compensation expense related to time-based RSUs during the
year ended December 31, 2025 was $ 59,586 . 

 The
remaining 493,608 
shares vest over terms up to 4 
years upon the satisfaction of certain operational goals specified in the underlying agreements. Compensation expense for these
performance-based restricted stock units is recognized in accordance with ASC 718 over the requisite service
period, when achievement of the performance condition is considered probable. The Company reassesses the probability of achieving
such performance conditions at each reporting period and adjusts compensation expense accordingly. To the extent applicable,
compensation cost is recognized using an accelerated attribution method for awards with graded vesting features. Total compensation expense related to performance-based RSUs during the year ended December
31, 2025 was $ 36,830 . 

 As
of December 31, 2025, there was $ 5,108,281 unrecognized compensation expense related to nonvested RSUs to be recognized through December
31, 2029. 

 Fully
vested restricted stock awards of 35,389 
 shares were issued under the Plan to employees during the year
ended December 31, 2025 with a fair value of $ 296,102 and was recorded as compensation expense .

 NOTE 
 18 - COMMITMENTS AND CONTINGENCIES 

 Litigation 

 The
Company accounts for loss contingencies in accordance with ASC 450-20, Contingencies — Loss Contingencies . A liability is
accrued when a loss is probable and the amount can be reasonably estimated. When a loss is reasonably possible but not probable, or when
a probable loss cannot be reasonably estimated, the Company discloses the nature of the contingency and, where determinable, an estimate
of the possible loss or range of loss. 

 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. Legal fees are expensed as incurred. 

 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. 

 On
March 15, 2023, the Company was named as a defendant in CAUSE NO. 29 D05-2303-PL-002478, originally filed in Hamilton County, Indiana
and subsequently moved to Marion County as CAUSE NO. 49 D02-2305-PL-020604. This is an employment action alleging breach of employment
agreement; breach of stock purchase agreement; breach of fiduciary duties and non-payment of salary, bonuses, and benefits. Although
the settlement demand includes unpaid salary and stock awards of approximately $ 29 
 million, the Company
does not believe a loss is probable, and the Company is unable to estimate a reasonably possible loss, or range of loss, at this time.
No motions are pending, and depositions are scheduled. No accrual has been recorded as of December 31, 2025. 

 On
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 Plaintiff’s alleged damages and
fees total $ 45,082 .
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. No accrual has been recorded as of December 31, 2025. 

 On October 2, 2025, the Company was the plaintiff
in a lawsuit Case No. 1:2025cv02026 filed in federal court in the Southern District of Indiana for misappropriation of US federal and
Indiana trade secrets. The defendants are former consultants, Myron Wright, an individual, and Wright Flyer Consulting Group Inc., a
Kentucky corporation. The Company is seeking compensatory and punitive damages, attorney fees and costs as well as permanent injunctive
relief against the defendants requiring the immediate cessation of all transactions utilizing the Company’s Trade Secrets and return
of materials constituting the Trade Secrets. Taft, Stettinius & Hollister, LLP is representing the Company in the matter. Settlement
 negotiations are scheduled, and because the Company is the plaintiff in this matter,
no loss contingency has been recorded. 

 F- 31 

 ARRIVE
AI INC. 

 NOTES TO FINANCIAL STATEMENTS (CONTINUED) 

 DECEMBER 31, 2025 AND 2024 

 NOTE
19 - SEGMENT REPORTING 

 The
Company determines its operating segments in accordance with ASC 280, Segment Reporting , based on the information reviewed by
the Chief Operating Decision Maker (“CODM”) for purposes of allocating resources and assessing performance. The Company operates
as a 1 single
reportable segment, as the CODM, the Chief Executive Officer (“CEO”), evaluates the business as a whole and does not receive
discrete financial information for multiple business units. The CODM assesses the Company’s financial performance based on net
loss, as presented in the statements of operations, and uses net loss to evaluate operating results and make resource allocation
decisions.

 The
Company has determined that there are no significant segment expense categories or other segment items that are regularly provided to
the CODM and included in the measure of segment profit or loss. 

 Entity-Wide
Disclosures 

 ● 
 Geographic
 Revenue Information: For the year ended December 31, 2025, 100 % of the Company’s revenue was generated in the United States.
 The Company did not generate revenue during the year ended December 31, 2024. 

 ● 
 Major
 Customers: The Company has one customer, Hancock Health, that accounted for more than 90 % of total revenue. 

 ● 
 Geographic Asset Information: Substantially all of the Company’s assets are located in the United States. 

 NOTE
20 - SUBSEQUENT EVENTS 

 On January 26, 2026, the Company issued a convertible promissory note with a face
amount of $ 10,800,000 , with a $ 10,000,000 initial purchase price and an $ 800,000 original issue discount, to Streeterville pursuant to
the Purchase Agreement described in NOTE 10. 

 On January
26, 2026, Streeterville converted $ 5,000,000 of
principal under the note into 2,221,136 shares
of common stock. On February 18, 2026, $ 300,000 of
principal was converted into 297,855 shares
of common stock; on March 3, 2026, $ 275,000 of
principal was converted into 287,656 shares;
on March 18, 2026, $ 450,000 of
principal was converted into 522,830 shares; and on April 9, 2026, $ 5,319,001 of principal was converted into 10,000,000 shares.
In aggregate, $ 11,344,001 of
principal has been converted into 13,329,477 shares
of common stock subsequent to December 31, 2025. 

 Each conversion
requires remeasurement of the pro-rata portion of the bifurcated derivative liability to fair value as of the applicable conversion date,
with the resulting change in fair value recognized in earnings, and derecognition of both the host carrying value and derivative fair
value attributable to the converted principal. The fair value of the bifurcated derivative at each post-balance sheet conversion date
has not been determined as of the date these financial statements were issued. 

 On February 3, 2026, the Company issued 118,343 shares
of common stock to a vendor in exchange for consulting and media services with fair value of $ 200,000 , based on the share price on the
date of issuance.

 On February 5, 2026, the Company entered into a Loan
Agreement pursuant to which it agreed to provide a bridge loan of up to $ 400,000 in aggregate principal to a third-party borrower. The
loan is secured by a first-priority security interest in all assets of the borrower. The loan is structured as a 24 -month term loan
bearing interest at 40 % per annum, compounded monthly, and no prepayment penalty. Currently the company has extended $ 200,000 .

 On March 31, 2026, the Company
received a notification letter (the “Notification Letter on MVPHS”) from The Nasdaq Stock Market LLC (“Nasdaq”)
that the Company is not in compliance with the minimum Market Value of Publicly Held Shares (the “MVPHS”) set forth in Nasdaq
Listing Rule 5450(b)(2)(C) for continued listing on Nasdaq, which requires a minimum MVPHS of $ 15,000,000 (the “MVPHS Requirement”),
since the Company failed to meet the MVPHS Requirement for a period of 30 consecutive business days from February 11, 2026 to March 31,
2026. The Notification Letter on MVPHS has no immediate effect on the listing or trading of the common stock, par value $ 0.0002 per share,
of the Company (“Common Stock”) on Nasdaq and, as of March 31, 2026, the Common Stock will continue to trade on Nasdaq under
the symbol “ARAI.”

 The Notification Letter on MVPHS
provides that pursuant to Nasdaq Listing Rule 5810(c)(3)(D), the Company has 180 calendar days, or until September 28, 2026, to regain
compliance with Nasdaq Listing Rule 5450(b)(2)(C). To regain compliance, the minimum MVPHS must be at least $ 15,000,000 or more for a
minimum of 10 consecutive business days prior to September 28, 2026. If the Company does not regain compliance by September 28, 2026,
the Company will receive written notification from Nasdaq that its securities are subject to delisting. Alternatively, the Company may
consider applying for a transfer to The Nasdaq Capital Market (the “Capital Market”). In order to transfer, the Company must
submit an on-line transfer application, and meet the Capital Market’s continued listing requirements.

 Additionally, on March 31, 2026,
the Company received a separate notification letter (the “Notification Letter on MVLS”) from Nasdaq, indicating that the Company
was no longer in compliance with the minimum Market Value of Listed Securities (“MVLS”) of $ 50,000,000 required for continued
listing on The Nasdaq Global Market, as set forth in Nasdaq Listing Rule 5450(b)(2)(A) (the “MVLS Requirement”) since the
Company failed to meet the MVLS Requirement for a period of 30 consecutive business days from February 10, 2026 to March 30, 2026. The
Notification Letter on MVLS has no immediate effect on the listing or trading of the Common Stock on Nasdaq and, as of March 31, 2026,
the Common Stock will continue to trade on Nasdaq under the symbol “ARAI.”

 In accordance with Nasdaq Listing
Rule 5810(c)(3)(C), the Company has a period of 180 calendar days, or until September 28, 2026, to regain compliance with the MVLS Requirement.
To regain compliance, the Company’s MVLS must close at $ 50,000,000 or more for a minimum of 10 consecutive business days prior to
September 28, 2026. If the Company does not regain compliance by September 28, 2026, the Company will receive written notification from
Nasdaq that its securities are subject to delisting. Alternatively, the Company may consider applying for a transfer to the Capital Market.
In order to transfer, the Company must submit an on-line transfer application, and meet the Capital Market’s continued listing requirements.

 The Company intends to monitor the MVPHS Requirement
and MVLS Requirement of its Common Stock and will consider implementing available options to regain compliance with the MVPHS Requirement
and MVLS Requirement under the Nasdaq Listing Rules.

 On March 31, 2026, the Company issued 70,184 shares
of common stock, net of taxes, upon the vesting of 102,492 restricted stock units to three officers, at a fair value of $ 56,147 .

 On March 31, 2026, the Company’s tenth U.S.
patent was issued. Patent number 12,591,840 is for multi-users such as offices and retirement villages.

 F- 32 

 SIGNATURES 

 Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized. 

 ARRIVE
 AI INC. 

 Dated:
 April 15, 2026 
 By: 
 /s/
 Daniel S. O’Toole 

 Chief
 Executive Officer 

 (Principal
 Executive Officer) 

 Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, this Annual Report on Form 10-K has been signed by the following
persons in the capacities indicated on the date indicated. 

 Signature 
 
 Title 
 
 Date 

 Chief Executive Officer, and Chairman of the Board of Directors 
 
 April 15, 2026 

 /s/ Daniel S, O’Toole 
 
 (Principal Executive Officer) 
 
 Daniel S. O’Toole 
 
 Chief Financial Officer 
 
 April 15, 2026 

 /s/ Todd Pepmeier 
 
 (Principal Financial and Accounting Officer) 
 
 Todd Pepmeier 
 
 /s/ Mark Hamm 
 
 Chief Operating Officer and Director 
 
 April 15, 2026 

 Mark Hamm 
 
 /s/ Neerav Shah 
 
 Chief Strategy Officer and Director 
 
 April 15, 2026 

 Neerav Shah 
 
 /s/ John Ritcheson 
 
 Chief Legal Officer and Director 
 
 April 15, 2026 

 John Ritchison 
 
 /s/ John Gallina 
 
 Director 
 
 April 15, 2026 

 John Gallina 
 
 /s/ Laurie A. Tucker 
 
 Director 
 
 April 15, 2026 

 Laurie A. Tucker 
 
 /s/ Kevin McAdams 
 
 Director 
 
 April 15, 2026 

 Kevin McAdams 
 
 63
Arrive AI Inc. 10-K

Item 9A. Controls and Procedures
