What changed in this filing

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Item 1. Financial Statements

2026-04-15 compared with 2026-04-15 · 751 added, 948 removed, 400 unchanged (81% of the section changed)

1 unchanged sentence

BALANCE SHEETS

June 30, 2025

December 31, 2024

(As Restated)

3 unchanged sentences

Deferred offering costs

Investments at fair value

Other current assets

1 unchanged sentence

LONG-TERM ASSETS

Property and equipment,

Right of use assets - operating

Deferred offering costs, net of current portion

Property and equipment, net

Deferred offering costs

Security deposit

Long-term assets

LIABILITIES AND STOCKHOLDERS’

EQUITY (DEFICIT)

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

CURRENT LIABILITIES

2 unchanged sentences

Credit card payable

Current portion of operating

lease liability

Convertible note payable,

net of discount and debt issuance costs of $ 2,522,944 and $ 118,290 , respectively

Convertible note payable, net of discount and debt issuance costs of $ 3,380,387

and $ 74,132 , respectively

Derivative liabilities

Current portion of note

Current portion of note payable

Total current liabilities

NONCURRENT LIABILITIES

Noncurrent portion of operating

lease liability

Note payables, net of current

Note payables, net of current portion

Total long term liabilities

Total liabilities

Commitments and Contingencies

(See Note 13)

Commitments and Contingencies (See Note 12)

STOCKHOLDERS’ EQUITY (DEFICIT)

Common stock, $ 0.0002 par

value, 200,000,000 shares

authorized, 34,233,087 issued

and 34,213,387

outstanding at September 30, 2025, and 29,120,905 issued

and outstanding at December 31, 2024

Treasury stock, at cost, 19,700

shares as of September 30, 2025

Additional paid-in capital

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

30, 2025, and December 31, 2024, respectively

Additional paid-in capital, net of offering costs

Subscription receivable

2 unchanged sentences

( 15,920,555 )

Total stockholders’ equity

TOTAL LIABILITIES AND STOCKHOLDERS’

EQUITY (DEFICIT)

Total stockholders’ equity (deficit)

TOTAL LIABILITIES AND

STOCKHOLDERS’ EQUITY (DEFICIT)

accompanying condensed notes to unaudited financial statements.

STATEMENTS OF OPERATIONS

September 30,

Ended June 30,

(As Restated)

and administrative

and development

and marketing

OPERATING EXPENSES

INCOME (EXPENSES)

expense and bank charges

in fair value of derivative liabilities

of debt discount

on conversion of convertible notes payable

gain on investments

loss on investments

General and administrative

Research and development

Sales and marketing

Total operating expenses

OTHER INCOME (EXPENSES)

( 2,776,928 )

Interest expense and bank charges

Change in fair value of derivative liabilities

Amortization of debt discount

Total other income (expenses)

NET LOSS BEFORE TAXES

( 3,689,071 )

LOSS BEFORE TAXES

( 1,459,102 )

1 unchanged sentence

( 2,375,855 )

FOR INCOME TAXES

PROVISION FOR INCOME TAXES

$ ( 3,689,071

2 unchanged sentences

$ ( 2,375,855 )

LOSS PER SHARE:

WEIGHTED-AVERAGE

COMMON SHARES OUTSTANDING:

NET LOSS PER SHARE:

Basic and diluted

WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING:

Basic and diluted

accompanying condensed notes to unaudited financial statements.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

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

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

Paid-In Capital,

Net of Offering

Receivable ($)

Stockholders’

(Deficit) ($)

BALANCE, JANUARY 1, 2025

Equity (Deficit) ($)

JANUARY 1, 2025

$ ( 15,920,555 )

$ ( 983,175 )

Issuance of common stock,

Issuance of common stock

upon exercise of warrants

Issuance of common stock

for deferred offering costs

Stock-based compensation

of common stock, net

of common stock upon exercise of warrants

of common stock for deferred offering costs

( 1,978,165 )

BALANCE, MARCH 31, 2025

MARCH 31, 2025

$ ( 17,898,720 )

Issuance of common stock,

Issuance of common stock

upon exercise of warrants

Issuance of common stock

for options exercise

Issuance of common stock

for settlement of debt

Reclassification of deferred

offering costs

of common stock, net

of common stock upon exercise of warrants

of common stock for options exercise

of common stock for settlement of debt

Reclassification

of deferred offering costs

Issuance of common stock for commitment fee

Stock-based compensation

( 3,689,071 )

BALANCE, JUNE 30, 2025 (As Restated)

$ ( 21,587,791 )

Issuance of common stock,

Issuance of common stock

for options exercise

Issuance of common stock

for the conversion of convertible note payable

Reclassification of derivative liabilities upon conversion

Repurchase of common stock

Reclassification of deferred

offering costs

Stock-based compensation

( 4,427,208 )

BALANCE, SEPTEMBER 30, 2025 (As Restated)

$ ( 26,014,999 )

BALANCE, JANUARY 1, 2024

$ ( 11,382,654 )

JUNE 30, 2025 (As Restated)

$ ( 21,587,791 )

Issuance of common stock,

Stock-based compensation

BALANCE, MARCH 31, 2024

JANUARY 1, 2024

$ ( 11,382,654 )

$ ( 477,766 )

Issuance of common stock

and warrants for cash, net

Stock-based compensation

of common stock, net

MARCH 31, 2024

$ ( 12,299,407 )

$ ( 373,549 )

BALANCE, JUNE 30, 2024

$ ( 12,299,407 )

$ ( 373,549 )

of common stock and warrants for cash, net

( 1,459,102 )

Issuance of common stock

Stock-based compensation

- stock awards

Stock-based compensation

- stock options

BALANCE, SEPTEMBER 30, 2024

JUNE 30, 2024

$ ( 13,758,509 )

4 unchanged sentences

STATEMENTS OF CASH FLOWS

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

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

(As Restated)

CASH FLOWS FROM OPERATING

CASH FLOWS FROM OPERATING ACTIVITIES

$ ( 5,667,236 )

$ ( 2,375,855 )

Adjustments to reconcile

net loss to net cash used in operating activities

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

Stock-based compensation

1 unchanged sentence

Change in fair value of derivative liabilities

Loss on extinguishment of convertible note payable

Amortization of discount

on convertible debt

Amortization of issuance

costs on convertible debt

Realized gain on investments

Unrealized depreciation

on investments

Changes in operating assets

and liabilities

Amortization of discount on convertible debt

Amortization of debt issuance costs

Changes in operating assets and liabilities

(Increase) decrease in

9 unchanged sentences

( 1,353,985 )

CASH FLOWS FROM INVESTING

CASH FLOWS FROM INVESTING ACTIVITIES

Construction in progress

Proceeds from sales of

Purchase of investments

( 4,967,259 )

Net cash used in investing

( 2,036,474 )

CASH FLOWS FROM FINANCING

Proceeds from sale of common

Purchase of treasury stock

Proceeds from the exercise

of warrants, net

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from sale of common stock, net

Proceeds from the exercise of warrants, net

Repayments of note payables

Proceeds from issuance

of convertible debt

Proceeds from issuance of convertible debt

Debt issuance costs

Deferred offering costs

Net cash provided by financing

Net cash provided by financing activities

NET INCREASE (DECREASE) IN CASH

1 unchanged sentence

CASH, END OF PERIOD

SUPPLEMENTAL DISCLOSURE

OF CASH FLOW INFORMATION

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid for:

SUPPLEMENTAL DISCLOSURE OF NONCASH INFORMATION

Common stock issued as

payment of offering costs

Common stock issued as

settlement of legal expenses

Common stock issued for

the conversion of convertible note payable

Derivative liabilities reclassified as additional paid-in capital upon conversion

Deferred offering costs

recognized as additional paid-in capital upon financing drawdown

Common stock issued as payment of offering costs

Common stock issued as settlement of legal expenses

Deferred offering costs recognized as additional paid-in capital

Cashless exercise of stock options

accompanying condensed notes to unaudited financial statements.

NOTES TO FINANCIAL STATEMENTS

the nine months ended September 30, 2025

OF OPERATIONS (AS RESTATED)

(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.

CONDENSED NOTES

TO FINANCIAL STATEMENTS

months ended June 30, 2025

NATURE OF OPERATIONS (AS RESTATED)

Business and 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 a developmental technology company with a focus on designing and implementing a commercially viable smart mailbox for

drone, robotic and human package receiving and storage.

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

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

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

individuals, and risks associated with changes in information technology.

of previously issued financial statements

Subsequent to the filing of the Company’s

Quarterly Report on Form 10-Q for the quarter ended September 30, 2025, management, in consultation with the Company’s independent

registered public accounting firm, identified errors in the accounting for certain hybrid financial instruments issued pursuant to the

Securities Purchase Agreement, dated March 21, 2025, by and between the Company and Streeterville Capital, LLC.

Specifically, management determined that

certain embedded conversion features contained in the Pre-Paid Purchases issued under the Securities Purchase Agreement should have been

bifurcated from the related host instruments and accounted for as derivative liabilities at fair value at inception in accordance with

In addition, management determined that the original issue discount and debt issuance costs associated with the host instruments

were not properly accreted using the effective interest method over the appropriate accretion period.

Management also determined that

Commitment Shares issued in connection with the Pre-Paid Purchases should have been reflected in the determination of the carrying value

of the related host instruments, rather than recognized immediately as general and administrative expense.

As a result of these errors, the Company

understated derivative liabilities, misstated the carrying amount of the related host instruments, and incorrectly recorded certain related

non-cash expenses in its previously issued unaudited condensed financial statements as of and for the quarter ended September 30, 2025.

Accordingly, the Company has restated its unaudited condensed financial statements as of September 30, 2025 and for the three and nine

months then ended.

The following tables summarize the effect

of the restatement on the Company’s previously issued unaudited condensed financial statements for the periods presented.

SCHEDULE OF RESTATEMENT

The Company is a developmental technology

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

The Company is subject to a number of

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

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

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

changes in information technology.

of previously issued financial statements

BALANCE SHEETS — Effect of Restatement as of September 30, 2025

to the filing of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2025, management, in consultation with

the Company’s independent registered public accounting firm, identified errors in the accounting for certain hybrid financial instruments

issued pursuant to the Securities Purchase Agreement, dated March 21, 2025, by and between the Company and Streeterville Capital, LLC.

Specifically,

management determined that certain embedded conversion features contained in the Pre-Paid Purchases issued under the Securities Purchase

Agreement should have been bifurcated from the related host instruments and accounted for as derivative liabilities at fair value at

inception in accordance with ASC 815.

In addition, management determined that the original issue discount and debt issuance costs associated

with the host instruments were not properly accreted using the effective interest method over the appropriate accretion period.

also determined that Commitment Shares issued in connection with the Pre-Paid Purchases should have been reflected in the determination

of the carrying value of the related host instruments, rather than recognized immediately as general and administrative expense.

a result of these errors, the Company understated derivative liabilities, misstated the carrying amount of the related host instruments,

and incorrectly recorded certain related non-cash expenses in its previously issued unaudited condensed financial statements as of and

for the quarter ended June 30, 2025.

Accordingly, the Company has restated its unaudited condensed financial statements as of June 30,

2025 and for the three and six months then ended.

following tables summarize the effect of the restatement on the Company’s previously issued unaudited condensed financial statements

for the periods presented.

BALANCE SHEETS — Effect of Restatement as of June 30, 2025

SCHEDULE OF ERROR CORRECTION FOR

FINANCIAL STATEMENTS

Deferred offering costs

$ ( 6,312,586 )

Total current assets

2 unchanged sentences

Long-term assets

Accounts payable

Convertible note payable, net of discount and debt issuance costs of $ 3,380,387 and $ 74,132 , respectively

2 unchanged sentences

Total current liabilities

( 1,026,518 )

Total liabilities

( 1,026,518 )

STOCKHOLDERS’ EQUITY (DEFICIT)

Additional paid-in capital

Additional paid-in capital, net of offering costs

Accumulated deficit

1 unchanged sentence

( 21,587,791 )

( 26,014,999 )

Total stockholders’ equity (deficit)

Total liabilities and stockholders’ equity (deficit)

TO FINANCIAL STATEMENTS (Continued)

OF OPERATIONS (AS RESTATED) (Continued)

STATEMENTS OF OPERATIONS — Effect of Restatement For the Three Months Ended September 30, 2025

STATEMENTS OF OPERATIONS — Effect of Restatement For the Three Months Ended June 30, 2025

General and administrative

$ ( 812,499 )

Total operating expenses

2 unchanged sentences

Amortization of debt discount

Loss on conversion of convertible notes payable

( 3,295,072 )

Total other income (expense), net

( 2,190,666 )

( 2,776,928 )

Net loss before income taxes

3 unchanged sentences

( 3,689,071 )

( 2,190,665 )

( 4,427,208 )

Net loss per share — basic and diluted

STATEMENTS OF OPERATIONS — Effect of Restatement For the Nine Months Ended September 30, 2025

ARRIVE AI INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

OF OPERATIONS (AS RESTATED) (Continued)

STATEMENTS OF OPERATIONS — For the Six Months Ended June 30, 2025

General and administrative

4 unchanged sentences

Amortization of debt discount

Loss on conversion of convertible notes payable

( 3,295,072 )

Total other income (expense), net

( 2,002,272 )

( 2,723,857 )

Net loss before income taxes

3 unchanged sentences

( 5,667,236 )

( 1,189,772 )

( 10,094,444 )

Net loss per share — basic and diluted

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) — Effect of Restatement For the Six and Nine months ended June 30, 2025 and September 30, 2025

of June 30, 2025

Additional paid-in capital, net of offering costs

Accumulated deficit

( 22,588,684 )

( 21,587,791 )

Total stockholders’ equity (deficit)

As of September 30, 2025

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) — Effect of Restatement For the Three and Six Months Ended June

Additional paid-in capital, net of offering costs

2 unchanged sentences

( 21,587,791 )

( 26,014,999 )

Total stockholders’ equity (deficit)

STATEMENTS OF CASH FLOWS — Effect of Restatement For the Nine Months Ended September 30, 2025

STATEMENTS OF CASH FLOWS — Effect of Restatement For the Six Months Ended June 30, 2025

CASH FLOWS FROM OPERATING ACTIVITIES

1 unchanged sentence

$ ( 5,667,236 )

$ ( 10,094,444 )

Stock-based compensation

Change in fair value of derivative liabilities

( 1,086,266 )

Loss on conversion of convertible notes payable

Amortization of discount on convertible debt

Amortization of issuance costs on convertible debt

Amortization of debt issuance costs

Net cash used in operating activities

2 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issuance of convertible notes payable

Debt issuance costs

Proceeds from issuance of convertible debt

Deferred offering costs

Net cash provided by financing activities

SUPPLMENTAL DISCLOSURE OF NONCASH INFORMATION

Common stock issued for conversion of convertible notes payable

Derivative liabilities reclassified as additional paid-in capital upon conversion of convertible notes payable

was no impact to total cash and cash equivalents as of September 30, 2025 as a result of the restatement.

The restatement had no effect

on the Company’s revenue for any period presented.

ACCOUNTING POLICIES

of Accounting

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

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

These unaudited financial statements should be read in

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

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

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

The results of operations for the

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

Notes to the financial statements that

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

have been omitted.

TO FINANCIAL STATEMENTS (Continued)

SIGNIFICANT ACCOUNTING

POLICIES (Continued)

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

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

during the reporting period.

Actual results could differ from those estimates.

Management evaluates its estimates and assumptions on

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

facts and circumstances dictate.

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

actual results could differ from those estimates.

Concentration

of Credit Risk

Company maintains its cash balances at two financial institutions.

The accounts are insured by the Federal Deposit Insurance Corporation

(FDIC) up to a specified limit.

was no impact to total cash and cash equivalents as of June 30, 2025 as a result of the restatement.

The restatement had no effect on

the Company’s revenue for any period presented.

SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The financial statements

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

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

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

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

In the opinion of management, all adjustments,

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

the interim periods presented have been reflected herein.

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

of the results to be expected for the full year.

Notes to the financial statements that would substantially duplicate the disclosures

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

Use of Estimates

The preparation of financial statements

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

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

Actual results

could differ from those estimates.

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

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

These estimates

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

therefore, actual results could differ from those estimates.

ARRIVE AI INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

SIGNIFICANT ACCOUNTING POLICIES (Continued)

Concentration of

The Company maintains

its cash balances at one financial institution.

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

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

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

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

To date, the Company has not recognized

any losses caused by uninsured balances.

Receivable and Allowance for Credit Losses

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

Credit is extended

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

Accounts receivable are stated at amounts

due from customers net of an allowance for credit losses.

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

At June 30, 2025 and December

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

Management believes

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

To date, the Company has not recognized any losses

caused by uninsured balances.

Accounts Receivable

and Allowance for Credit Losses

Accounts receivable

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

Credit is extended based on

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

Accounts receivable are stated at amounts due from

customers net of an allowance for credit losses.

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

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

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

Management adjusts its historical estimate

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

relevant by the Company.

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

credit risk since the receivable was initially recorded.

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

is no possibility of recovery.

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

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

The Company has not incurred material write-offs

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

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

recorded as the Company believes the balance is fully collectable.

and Equipment

property and equipment is recorded at cost.

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

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

The costs of maintenance and repairs are charged to expense when

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

The useful life of the property and equipment for purposes

of computing depreciation is:

Receivables with

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

Management adjusts its historical estimate based

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

by the Company.

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

since the receivable was initially recorded.

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

possibility of recovery.

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

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

The Company has not incurred material write-offs as

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

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

as the Company believes the balance is fully collectable.

The property and equipment

is recorded at cost.

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

over the estimated useful life of the asset.

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

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

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

OF PROPERTY AND EQUIPMENT USEFUL LIFE

and Equipment

TO FINANCIAL STATEMENTS (Continued)

SIGNIFICANT ACCOUNTING

POLICIES (Continued)

Assets – Patents

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

and issuance of patents.

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

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

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

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

the integrated nature

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

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

The Company assesses the potential impairment

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

portfolio may not be recoverable.

of Long-Lived Assets

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

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

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

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

If an evaluation was required, the estimated future

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

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

Company has three types of long-lived assets:

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

and aerial drones;

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

Technology in 2023.

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

of September 30, 2025.

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

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

Six units have been delivered to customer sites, four

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

One unit not yet entered

into service was damaged beyond repair.

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

No impairment loss on

these units was recognized as of September 30, 2024.

TO FINANCIAL STATEMENTS (Continued)

SIGNIFICANT ACCOUNTING

POLICIES (Continued)

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

Revenue is derived from consulting

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

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

Contracts are typically short-term

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

Disaggregated

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

Vehicle and Equipment

ARRIVE AI INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

SIGNIFICANT ACCOUNTING POLICIES (Continued)

Intangible Assets – Patents

The Company capitalizes external costs,

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

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

The Company amortizes

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

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

The estimated useful lives for

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

the integrated nature of the patent portfolios being

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

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

The Company assesses the potential impairment of all capitalized patent costs

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

Impairment of Long-Lived

Intangibles and other

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

asset may not be fully recoverable.

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

may be impaired, an evaluation of recoverability is performed.

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

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

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

The Company has three

types of long-lived assets:

property and equipment, including a vehicle, aerial drones;

construction-in-progress (CIP), and intangible

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

The vehicle and drone hexacopter were evaluated

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

The Company acquired

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

These units are recorded

as construction in progress until they are placed into service.

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

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

No impairment loss on these

units was recognized as of June 30, 2025.

ARRIVE AI INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

SIGNIFICANT ACCOUNTING POLICIES (Continued)

Revenue Recognition

The Company recognizes revenue in accordance

with ASC 606, Revenue from Contracts with Customers .

Revenue is derived from consulting and implementation services provided to

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

Revenue is recognized over time as services are performed,

based on the transfer of control to the customer.

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

consideration or multiple performance obligations.

Disaggregated revenue as of the three

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

OF DISAGGREGATED REVENUE

8 unchanged sentences

TOTAL REVENUE

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

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

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

As such, no comparative disaggregation

is presented for that period.

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

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

The Company may request advances or deposits from customers

before revenue is recognized, which results in contract liabilities.

Various economic factors affect the

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

The Company did not generate

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

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

Contract Balances

The timing of revenue

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

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

The Company may request advances or deposits from customers before

revenue is recognized, which results in contract liabilities.

These contract liabilities are released as the performance obligations

are satisfied.

TO FINANCIAL STATEMENTS (Continued)

ACCOUNTING POLICIES (Continued)

Balances (continued)

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

The beginning and ending

contract balances were as follows:

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

The beginning

and ending contract balances were as follows:

OF CONTRACT ASSETS/LIABILITIES

June 30, 2025

January 1, 2025

Accounts receivable

Judgments and Estimates

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

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

drone delivery system.

ARRIVE AI INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

SIGNIFICANT ACCOUNTING POLICIES (Continued)

Significant Judgments and Estimates

There are no significant

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

Equity Financing

The Company engages

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

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

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

a stipulated time frame.

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

the warrants as equity instruments.

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

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

stipulated by the terms of the transaction in the agreement.

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

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

The Company repurchased 19,700 shares

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

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

TO FINANCIAL STATEMENTS (Continued)

ACCOUNTING POLICIES (Continued)

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

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

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

therefore, the amounts reported for basic and dilutive loss

per share were the same.

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

Comprehensive

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

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

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

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

of Offering .

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

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

These costs primarily consisted of legal, advisory,

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

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

agreements and $ 387,007 through a crowdfunding offering.

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

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

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

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

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

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

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

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

and Development

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

Equity warrants are

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

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

warrants as equity instruments.

Depending on the terms

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

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

by the terms of the transaction in the agreement.

The shares eligible

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

Loss per share

The Company follows

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

Because the Company

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

therefore, the

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

Comprehensive Loss

The Company follows

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

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

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

ARRIVE AI INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

SIGNIFICANT ACCOUNTING POLICIES (Continued)

Offering Costs

The Company complies

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

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

costs related to ongoing and anticipated capital raising activities.

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

service fees incurred in connection with financing efforts.

During the six months

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

$ 381,840 through a crowdfunding offering.

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

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

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

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

The remaining deferred

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

upon completion of the related equity offerings.

Research and Development

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

TO FINANCIAL STATEMENTS (Continued)

ACCOUNTING POLICIES (Continued)

and Development (Continued)

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

Research and development

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

Research and development expenses include

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

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

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

Marketing Expenses

The Company uses various

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

capital or revenue when a viable product is created.

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

they are incurred.

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

and 2024, respectively.

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

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

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

in the period they are incurred.

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

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

on the date of the grant.

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

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

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

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

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

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

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

stock began trading on the Nasdaq Stock Exchange.

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

by the Nasdaq daily closing stock price.

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

The prior company transaction

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

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

was considered necessary in the application of this methodology.

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

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

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

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

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

TO FINANCIAL STATEMENTS (Continued)

ACCOUNTING POLICIES (Continued)

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

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

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

statement of operations.

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

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

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

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

few exceptions, the U.S.

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

to examination by the relevant taxing authorities.

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

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

The amount subject to disallowance

is limited to the NOL utilized.

Stock-Based Compensation

The Company measures and records the

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

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

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

For stock-based compensation with performance

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

The Company uses the Black-Scholes model

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

ARRIVE AI INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

SIGNIFICANT ACCOUNTING POLICIES (Continued)

Stock-Based Compensation

The average fair value of one (1) share

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

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

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

Prior to May 15, 2025, the fair value

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

The prior company transaction method utilizes actual transactions

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

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

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

of this methodology.

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

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

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

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

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

leverage of the other companies.

There is no income tax benefit for the

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

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

The Company’s policy is to record

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

As of January

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

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

There were no changes in the Company’s unrecognized

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

The Company did no t recognize any interest or penalties during

2025 related to unrecognized tax benefits.

With few exceptions, the U.S.

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

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

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

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

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

Convertible Notes Payable and Derivative

Liabilities (As Restated)

The Company accounts for convertible notes

in accordance with ASC 470, Debt , and ASC 815, Derivatives and Hedging .

ARRIVE AI INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

SIGNIFICANT ACCOUNTING POLICIES (Continued)

Convertible Note Payable and

Derivative Liabilities (As Restated)

The Company accounts for the convertible

note in accordance with ASC 470, Debt , and ASC 815, Derivatives and Hedging .

At issuance, the Company evaluates each convertible

8 unchanged sentences

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

from a convertible note at issuance, the Company initially records derivative liabilities at fair value, with the residual proceeds

allocated to the host debt instrument, consistent with ASC 835-30 and ASC 815.

1 unchanged sentence

initial measurement approach.

The portion of issuance costs allocated to the derivative liability is expensed immediately in the period

The portion of issuance costs allocated to derivative liabilities is expensed immediately in the period

The portion of issuance costs allocated to the host debt instrument is recorded as a contra-debt balance (debt issuance costs)

26 unchanged sentences

See NOTE 5 for a description of the valuation methodology and significant assumptions.

TO FINANCIAL STATEMENTS (Continued)

ACCOUNTING POLICIES (Continued)

When a noteholder elects to convert a portion

6 unchanged sentences

The pro-rata portion of the bifurcated derivative

liability attributable to the converted principal is remeasured to fair value as of the conversion date.

liabilities attributable to the converted principal is remeasured to fair value as of the conversion date.

The change in fair value from

1 unchanged sentence

derivative liability.

Upon conversion of the convertible notes payable, the pro-rata portion of the remeasured fair value of the derivative

Upon conversion of the convertible note 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.

ARRIVE AI INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

SIGNIFICANT ACCOUNTING POLICIES (Continued)

Value of Financial Instruments (As Restated)

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.

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.

host portion of convertible note 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

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.

Adopted Accounting Standard

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

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

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

The requirements are effective for

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

The Company has adopted the additional

disclosure requirements under ASU 2023-07.

The 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 portion of convertible note payable,

excluding the separately recognized bifurcated derivative liability, are carried at amortized cost using the effective interest method

as disclosed in NOTE 5.

The bifurcated derivative liability associated with the convertible note is 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

The estimated fair value of this instrument approximates its carrying value due to the interest rate approximating current market

rates for similar collateralized borrowings.

Recently Adopted

Accounting Standard

In November 2023, the Financial Accounting

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

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

or the guidance for determining reportable segments.

The requirements are effective for annual reporting periods beginning on January

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

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

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

TO FINANCIAL STATEMENTS (Continued)

ACCOUNTING POLICIES (Continued)

Issued Accounting Standard Not Yet Adopted

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

Income Statement—Reporting

Comprehensive Income—Expense Disaggregation Disclosures”.

The amendments require additional disclosure of the nature of expenses

included in the income statement.

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

after December 15, 2026.

Recently Issued Accounting Standard

Not Yet Adopted

In November 2024, the FASB issued ASU

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

Income Statement—Reporting Comprehensive

Income—Expense Disaggregation Disclosures”.

The amendments require additional disclosure of the nature of expenses included

in the income statement.

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

Early adoption is permitted.

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

on its financial statements.

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

SEGMENT REPORTING

Company’s principal business is described in Note 1.

The Company’s principal business

is described in Note 1.

The Company has determined that it operates in a 1 single

2 unchanged sentences

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

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

Segment Expenses

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

and Development:

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

ARRIVE AI INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

SEGMENT REPORTING (Continued)

Significant Segment Expenses

The Company considers the following

as significant expenses in evaluating its segment performance:

● Research and Development:

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

and third-party consulting costs.

and Administrative:

● General and Administrative:

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

and Professional Fees:

● Legal and Professional Fees:

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

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

regulatory requirements.

Revenue Information:

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

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

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

Entity-Wide Disclosures

● Geographic Revenue Information:

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

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

● Major Customers:

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

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

TO FINANCIAL STATEMENTS (Continued)

CONCERN (AS RESTATED)

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

of liabilities in the normal course of business.

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

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

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

As of September 30, 2025, the Company has an

accumulated deficit of $ 26,014,999 and a net loss for the current period of $ 10,094,444 .

These conditions raise substantial doubt about

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

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

debt or equity financing.

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

on terms acceptable to the Company.

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

inability to continue as a going concern

VALUE MEASUREMENTS (AS RESTATED)

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 did not generate revenue

during the same periods in 2024.

GOING CONCERN (AS RESTATED)

The Company’s financial statements have

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

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

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

The Company has a minimum cash

balance available for payment of ongoing operating expenses.

As of June 30, 2025, the Company has an accumulated deficit of $ 21,587,791

and a net loss for the current period of $ ( 5,667,236 ).

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

months from the issuance date of this report.

The Company’s continued existence

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

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

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

ARRIVE AI INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

FAIR VALUE MEASUREMENTS (AS RESTATED)

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.

establishes a three-level hierarchy for inputs used in measuring fair value:

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

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

3 — Unobservable inputs supported by little or no market activity

Company measures its bifurcated derivative liabilities associated with its convertible notes at fair value on a recurring basis, see

2 unchanged sentences

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

SCHEDULE OF FINANCIAL LIABILITIES MEASURED AT FAIR VALUE

September 30, 2025

Investments at fair value

OF FINANCIAL LIABILITY MEASURED AT FAIR VALUE

June 30, 2025

Derivative liabilities

1 unchanged sentence

connection with the convertible notes issued under the Securities Purchase Agreement with Streeterville Capital, LLC, as described in

NOTE 12, the Company bifurcated the embedded conversion feature from each note and recognized it as a derivative liability under ASC

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.

NOTE 11, the Company bifurcated the embedded conversion feature from the note and recognized it as a derivative liability under ASC 815.

The derivative liabilities are initially recognized at fair value on the issuance date of the 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.

Company estimates the fair value of each derivative liability using a Monte Carlo simulation model, which simulates a large number of

Company estimates the fair value of the 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.

TO FINANCIAL STATEMENTS (Continued)

FAIR VALUE MEASUREMENTS

(AS RESTATED) (Continued)

Inputs and Basis of Significant Assumptions

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

following inputs were used in the Monte Carlo simulation to measure the instrument at inception:

SCHEDULE OF VALUATION INPUTS AND

BASIS OF SIGNIFICANT ASSUMPTIONS

Convertible Note Inception

Assumed instrument term

2 unchanged sentences

Debt discount rate ( 3 -year)

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

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

Assumed instrument term

2 unchanged sentences

Debt discount rate ( 3 -year)

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):

Assumed instrument term

$ 3.18 - 6.78

Selected equity volatility

Risk-free rate (continuous, 3 -year)

3.45 - 3.68 %

Debt discount rate ( 3 -year)

25.66 - 28.69 %

described in NOTE 12, the convertible notes have no stated maturity.

Derivative Liability Measurement Input

described in NOTE 11, the convertible note had no stated maturity.

The Company estimated an expected term of three years based on the

2 unchanged sentences

This estimate is reassessed at each remeasurement date.

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

Convertible Note 2 had one conversion on September 23, 2025.

Company estimated expected equity volatility using the historical volatility of a peer group of comparable-stage companies operating

3 unchanged sentences

to the assumed instrument term, observed as of each measurement date.

TO FINANCIAL STATEMENTS (Continued)

FAIR VALUE MEASUREMENTS

(AS RESTATED) (Continued)

debt discount rate represents the Company’s estimated cost of non-convertible debt with terms comparable to the convertible notes.

debt discount rate represents the Company’s estimated cost of non-convertible debt with terms comparable to the convertible note.

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.

ARRIVE AI INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

VALUE MEASUREMENTS (AS RESTATED) (Continued)

of Level 3 Fair Value Measurements

the derivative liabilities are valued using significant unobservable inputs, their fair value measurements are classified within Level

Because 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.

1 unchanged sentence

of the derivative liability fair value to changes in the most significant unobservable inputs, holding all other inputs constant:

Direction of Change

Effect on Fair Value

Equity volatility

Increase (decrease)

Expected term

Increase (decrease)

Debt discount rate

Increase (decrease)

Decrease (increase)

Increase (decrease)

on Fair Value

discount rate

volatility is the most significant unobservable input.

19 unchanged sentences

Liabilities Roll-Forward

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 DERIVATIVE LIABILITIES ROLL-FORWARD

following table provides a reconciliation of derivative liabilities measured at fair value using Level 3 inputs for the six months

ended June 30, 2025:

OF RECONCILIATION OF THE DERIVATIVE LIABILITY MEASURED AT FAIR VALUE

Balance at January 1, 2025

1 unchanged sentence

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

Balance on June 30, 2025

Derivative liabilities recognized upon issuance of convertible note payable at fair value

Reclassification of derivative liabilities upon conversion of convertible notes payable

( 1,427,021 )

( 1,733,734 )

Change in fair value of derivative liabilities – conversion remeasurement

( 1,074,642 )

Change in fair value — period-end remeasurement (September 30, 2025)

BALANCE AT SEPTEMBER 30, 2025

total net change in fair value of derivative liabilities recognized in the statement of operations for the three and nine months ended

September 30, 2025, was a gain of $ 896,266 and $ 1,086,266 , respectively, presented within “Change in fair value of derivative liabilities”

in the accompanying statement of operations.

BALANCE AT JUNE 30, 2025

total net change in fair value of the derivative liabilities recognized in the statement of operations for the three and six months ended

June 30, 2025 was a gain of $ 190,000 , 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.

TO FINANCIAL STATEMENTS (Continued)

FAIR VALUE MEASUREMENTS

(AS RESTATED) (Continued)

reclassified upon conversion represent the fair value of the pro-rata portion of each derivative liability, remeasured as of the applicable

reclassified upon conversion represent the fair value of the pro-rata portion of the derivative liabilities, 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

For a description of the full conversion accounting policy, including the treatment of the host debt component upon conversion,

During the nine months ended September 30, 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.

the conversion date is included in “Change in fair value of the derivative liabilities - conversion remeasurement”.

For a description

of the full conversion accounting policy, including the treatment of the host debt component upon conversion, see NOTE 11.

PROPERTY AND EQUIPMENT

and equipment consist of the following:

Property and equipment consist of the following:

SCHEDULE OF PROPERTY

4 unchanged sentences

TOTAL PROPERTY AND EQUIPMENT, NET

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

respectively.

For the three and six months ended June

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

ARRIVE AI INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

PREPAID EXPENSES

expenses and other current assets consist of the following:

Prepaid expenses and other current assets consist

of the following:

SCHEDULE OF PREPAID

4 unchanged sentences

TOTAL PREPAID EXPENSES

TO FINANCIAL STATEMENTS (Continued)

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

The robots are used on delivery routes

to transport goods between Arrive Point units.

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

The Company’s assessment is based

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

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

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

relative stand-alone price to determine the lease payments.

Lease and non-lease components are accounted for separately.

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

The Company has operating leases which are

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

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

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

at the end of the lease term.

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

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

A corresponding

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

also include any lease payments made and exclude lease incentives.

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

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

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

Included in lease

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

Lease expense for

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

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

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

OF LEASE COST

Operating Leases

Lease cost in general and administrative

lease expense

Total lease cost in general and administrative

TO FINANCIAL STATEMENTS (Continued)

LEASES (Continued)

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

Leasing activity in cash flows from operating

Total leasing activity in cash flows from operating

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

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

OF FUTURE MINIMUM LEASE PAYMENTS

Future minimum lease payments

Total future minimum lease payments

Amount representing interest

Present value of lease liabilities

current portion

Long-term portion

DEFERRED OFFERING COSTS

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

proceeds of the offering.

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

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

The Company’s registration statement was declared

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

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

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

offering costs.

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

related to the transaction.

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

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

TO FINANCIAL STATEMENTS (Continued)

consist of the following:

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

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

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

directly related to the proposed public offering.

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

trading on May 15, 2025.

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

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

During the six months

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

Upon completion

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

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

Patents consist of the following:

SCHEDULE OF PATENTS

1 unchanged sentence

TOTAL PATENTS

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

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

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

respectively.

payable consists of the following:

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

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

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

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

Amortization expense was $ 150 and $ 452

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

ARRIVE AI INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

Note payable consists

of the following:

NOTES PAYABLE

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.

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.

Less current portion

LONG-TERM PORTION

balance of the above debt matures as follows:

The balance of the

above debt matures as follows:

OF MATURITIES OF LONG-TERM DEBT

Twelve Months

September 30,

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

$ 1,277 , respectively.

TO FINANCIAL STATEMENTS (Continued)

NOTES PAYABLE (AS RESTATED)

Twelve Months Ending

Interest expense related to this note

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

CONVERTIBLE NOTE PAYABLE (AS RESTATED)

of the Purchase Agreement

2 unchanged sentences

The SPA provides for a maximum facility of $ 40,000,000 ,

under which two draws were completed during the nine months ended, September 30, 2025, resulting in aggregate cash proceeds of $ 8,000,000

and the issuance of convertible notes with an aggregate face amount of $ 8,650,000 .

As of September 30, 2025, the remaining undrawn capacity

under the facility is $ 32,000,000 ;

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.

under which one draw was completed during the six months ended June 30, 2025, resulting in aggregate cash proceeds of $ 4,000,000 and

the issuance of a convertible note with an aggregate face amount of $ 4,330,000 .

As of June 30, 2025, the remaining undrawn capacity under

the facility is $ 36,000,000 ;

however, any future draws remain subject to the satisfaction of conditions precedent set forth in the SPA.

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

No assurance can be given that additional draws will be made.

convertible notes issued under the SPA bear interest at a rate of 8 % per annum and have no stated maturity date.

14 unchanged sentences

Accordingly, the Pre-Delivery Shares are presented within stockholders’ equity

and are included as issued and outstanding shares as of December 31, 2025.

and are included as issued and outstanding shares as of June 30, 2025.

Pre-Delivery Shares are included in the weighted-average shares outstanding used in the computation of basic and diluted loss per share

7 unchanged sentences

and accounted for separately as a derivative liability, measured at fair value at each reporting date, with changes in fair value recognized

Accordingly, the Company has bifurcated the conversion feature as a derivative liability at the inception of each note.

Accordingly, the Company has bifurcated the conversion feature as a derivative liability at the inception of the note.

Issuance Summary

two 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

TO FINANCIAL STATEMENTS (Continued)

NOTES PAYABLE (AS RESTAED) (Continued)

connection with the issuance of the notes, the Company incurred debt issuance costs equal to 6 % of cash proceeds received, totaling $ 480,000

($ 240,000 for Convertible Note 1 and $ 240,000 for Convertible Note 2).

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, $ 266,613 of the total $ 480,000 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 $ 213,387 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.

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

convertible note issued was 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.

ARRIVE AI INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

NOTE PAYABLE (AS RESTATED) (Continued)

connection with the issuance of the note, the Company incurred debt issuance costs equal to 6 % of cash proceeds received, totaling $ 240,000 .

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, $ 164,013 of the total $ 240,000 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 $ 75,987 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 the note.

the note has 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.

2 unchanged sentences

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.

estimate of the period over which the note is expected to remain outstanding.

The three-year assumption will be reassessed each reporting

2 unchanged sentences

Convertible Note

Convertible Note 2

Issuance date

2 unchanged sentences

Debt issuance costs (contra-liability)

Derivative discount (initial fair value of bifurcated derivatives)

( 2,250,000 )

( 1,710,000 )

Derivative discount (initial fair value of bifurcated derivative)

( 2,250,000 )

2 unchanged sentences

Convertible Note Roll-Forward

following table sets forth the activity in the carrying value of the host portion of the convertible notes for the nine months ended

September 30, 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.

OF HOST CONVERTIBLE NOTE ROLL-FORWARD

following table sets forth the activity in the carrying value of the host portion of the convertible note for the 6 months ended June

Discount accretion is computed using the EIM applied to the initial carrying value of the 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.

CONVERTIBLE NOTE

3 unchanged sentences

EIM accretion of debt discount and issuance costs

Conversions — face amount

( 2,875,000 )

( 1,250,000 )

( 4,125,000 )

Conversions — issuance costs

Conversions — unamortized discount written off

HOST CARRYING VALUE AT SEPTEMBER 30, 2025

TO FINANCIAL STATEMENTS (Continued)

NOTES PAYABLE (AS RESTAED) (Continued)

HOST CARRYING VALUE AT JUNE 30, 2025

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

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

income and expenses related to convertible notes

income and expenses related to the convertible notes recognized during the three and nine months ended September 30, 2025 consisted of

the following, presented in the income statement line items indicated:

SCHEDULE OF OTHER INCOME AND EXPENSES RELATED TO THE CONVERTIBLE NOTES

Three Months Ended

September 30, 2025

Nine Months Ended

September 30, 2025

Stated interest at 8 % per annum

Accretion of debt discount

Accretion of debt issuance costs

Loss on conversion of convertible notes payable

bifurcated derivative liability associated with the convertible notes is classified as a Level 3 instrument and remeasured at fair value

a summary of derivative liability activity during the six months ended 2025, including amounts derecognized upon conversion, refer to

income and expenses related to convertible note

income and expenses related to the convertible note recognized during the three and six months ended June 30, 2025 consisted of accretion

of debt discount and accretion of debt issuance costs of $ 27,738 and $ 1,856 , respectively.

bifurcated derivative liabilities 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,

inputs (including the expected term, volatility, and risk-free rate assumptions), a roll-forward of the derivative liabilities balance,

and the amounts of unrealized gains or losses recognized in earnings during 2025, refer to NOTE 5.

COMMITMENTS AND CONTINGENCIES

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

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

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

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

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

certain of this leased property.

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

a month-to-month basis.

TO FINANCIAL STATEMENTS (Continued)

ARRIVE AI INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

COMMITMENTS AND CONTINGENCIES

Obligation (Continued)

Lease Obligation

Effective April

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

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

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

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

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

of this leased property.

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

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

The Company has elected not to

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

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

3:2025cv00721, pending in U.S.

District Court

for the Eastern District of Virginia.

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

The loans were

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

The Company explicitly acquired only the assets of AirBox and therefore

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

The Company has filed for removal from the claim.

The plaintiffs have

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

Since this matter is still

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

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

to third-party infringement claims.

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

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

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

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

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

It is not possible

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

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

RELATED-PARTY TRANSACTIONS

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

Beginning June

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

Once revenue from sales, rentals, and leases begins,

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

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

$10,000 is paid.

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

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

TO FINANCIAL STATEMENTS (Continued)

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

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

From time to time,

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

infringement claims.

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

whom it enters into

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

The Company has agreed,

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

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

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

It is not possible to determine the maximum

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

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

ARRIVE AI INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

RELATED-PARTY TRANSACTIONS

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

The Second Amendment

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

The Second Amendment

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

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

STOCKHOLDERS’

EQUITY (AS RESTATED)

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

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

No other class of stock has been authorized or is available

for issuance.

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

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

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

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

par value is now $ 0.0002 .

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

shares with accredited

investors in exchange for cash of $ 152,000

at an average share

price of $ 13.00

of the shares were

issued with warrants and deemed as equity, as described in Note 16.

shares with an

accredited investor in exchange for cash of $ 588 .

The shares were issued at par value, subject to the securities purchase agreement, dated

March 21, 2025, by and between Streeterville Capital, LLC and the Company (the “Purchase

On May 26, 2020, the Company entered

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

Beginning June 1, 2020, the Company began paying the

stockholder a monthly license fee of $ 10,000 .

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

per unit sold.

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

Accordingly, for the

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

period, respectively.

On March 10, 2025, the Company entered

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

The Second Amendment extends the license to perpetuity,

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

The Second Amendment also removes prior restrictions

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

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

STOCKHOLDERS’ EQUITY (AS RESTATED)

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

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

any future transactions.

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

Effective September 15, 2021, the Company

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

of satisfying any future transactions.

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

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

The par value is now $ 0.0002 .

During the six months ended June 30,

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

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

$ 13.00 per share.

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

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

The shares were issued at par

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

Agreement”), as described in Note 11.

warrants exercised,

shares in exchange

for cash of $ 573,895 .

shares issued through

a crowdfunding campaign with other investors in exchange for net cash of $ 291,773 ,

at an average share price of $ 11.50

per share net of

offering costs.

shares issued to

employees and consultants, recognized as compensation expense, fair valued at $ 13.00

per share, for

a total fair value of $ 1,103,362 ,

based on the price per stock issued to investors for cash during the period January 1, 2025

c) 120,820 warrants exercised, for 120,820 shares in exchange for cash of $ 573,896 .

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

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

ARRIVE AI INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

STOCKHOLDERS’ EQUITY (Continued)

Common Stock (Continued)

e) 84,874 shares issued to employees and consultants, recognized as compensation expense, fair valued at

$ 13.00 per share, for a total fair value of $ 1,103,362 , based on the price per stock issued to investors for cash during the period January

1, 2025 to May 15, 2025.

shares issued to Streeterville Capital, LLC as commitment shares pursuant to the SPA, fair

valued at $ 828,125

shares issued to

employees or consultants via stock awards, recognized as compensation expense, for a total

of $ 451,567 ,

fair valued based on the Company’s closing stock price on the day the shares were issued.

shares issued for

the cashless exercise of vested options under the 2023 equity incentive plan, for a total

fair value based on the Company’s closing stock price on the day the shares were exercised.

TO FINANCIAL STATEMENTS (Continued)

STOCKHOLDERS’ EQUITY

(AS RESTATED) (Continued)

Stock (Continued)

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

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

to investors for cash.

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

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

issued to investors for cash.

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

as described in Note 12.

Repurchase Program

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

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

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

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

Exchange Act of 1934.

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

management and may be suspended or discontinued at any time.

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

included in the category of treasury stock.

following table sets forth the Company’s share repurchases:

SCHEDULE OF SHARES REPURCHASE

and nine months ended September 30, 2025

Total number of shares repurchased

Amount repurchased

Average price per share

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

As of September

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

TO FINANCIAL STATEMENTS (Continued)

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

62,500 shares issued to Streeterville Capital, LLC as commitment shares pursuant to the SPA, fair valued at $ 828,125 .

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

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

h) 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.

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

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

The following table summarizes the warrants

outstanding for the six months ended June 30, 2025:

OF WARRANTS OUTSTANDING

Average Exercise Price

Average Grant Date Fair Value

Average Remaining Contractual Term (years)

Intrinsic Value

1 unchanged sentence

Cancelled/Expired

BALANCE, SEPTEMBER 30, 2025

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

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

common shares on December 31, 2024.

INCENTIVE PLAN

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

issuance not to exceed 1,500,000 .

BALANCE, JUNE 30, 2025

The aggregate intrinsic value is calculated

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

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

ARRIVE AI INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

EQUITY INCENTIVE PLAN

The Company created

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

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

Currently, the fair value

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

Option awards are generally granted with an exercise price equal to

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

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

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

The compensation expenses related to incentive units is included in general

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

TO FINANCIAL STATEMENTS (Continued)

INCENTIVE PLAN (Continued)

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

Currently, the fair value is recognized as an expense

over the vesting period of the award.

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

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

There are certain situations that

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

As of June 30, 2025, 886,799 shares

were available for grant.

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

a corresponding increased to additional paid-in-capital.

The following table summarizes the options

outstanding for the six months ended June 30, 2025:

OF SHARE OPTIONS OUTSTANDING

Options Outstanding

Average Exercise Price

Average Grant Date Fair Value

Average Remaining Contractual Term (years)

Remaining Contractual

Intrinsic Value

1 unchanged sentence

Canceled/Expired

BALANCE, SEPTEMBER 30, 2025

EXERCISABLE, SEPTEMBER 30, 2025

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

BALANCE, JUNE 30, 2025

EXERCISABLE, JUNE 30, 2025

The following table summarizes the nonvested

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

OF NONVESTED SHARE OPTION

Share Options

Average Exercise Price

Average Grant Date Fair Value

Average Remaining Contractual Term (years)

Intrinsic Value

1 unchanged sentence

Canceled/Expired

BALANCE, SEPTEMBER 30, 2025

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

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

common shares on December 31, 2024.

TO FINANCIAL STATEMENTS (Continued)

INCENTIVE PLAN (Continued)

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

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

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

Total compensation expense related to

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

and $ 732,293 , respectively.

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

for 773 shares.

Additionally,

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

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

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

AND DEVELOPMENT TAX CREDITS

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

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

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

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

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

BALANCE, JUNE 30, 2025

ARRIVE AI INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

EQUITY INCENTIVE PLAN (Continued)

The aggregate intrinsic value is calculated

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

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

There were no options

granted during the six months ended June 30, 2025.

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

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

Total compensation expense related to stock options during

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

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

RESEARCH AND DEVELOPMENT TAX CREDITS

The Company qualifies as a small business

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

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

As of June 30, 2025, the Company had

$ 166,499 of unused payroll tax credits.

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

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

SUBSEQUENT EVENTS

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

The lessor and building

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

Under the triple-net lease, the Company is responsible

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

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

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

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

of trade secrets.

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

Since this matter is still in its

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

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

their services during the third quarter of 2025.

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

vesting period.

On July 2, 2025, subsequent to the end

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

Revenue Code.

Key provisions include:

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

after January 1, 2026;

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

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

low-taxed income (“GILTI”) regimes.

The Company is currently evaluating

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

Because the enactment

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

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

The Company expects the corporate rate

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

However, remeasurement of deferred tax balances

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

The Company will continue evaluating the

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

On July 28, 2025 the Company’s resale

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

selling shareholders.

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

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

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

2 with Streeterville (the “Pre-Paid Purchase

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

Under the Pre-Paid Purchase No.

2, the Investor paid

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

which included a $ 320,000 original issue discount.

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

What changed 10-Q/A

Item 1. Financial Statements