Item 1. Legal Proceedings
Item
1. Legal Proceedings
From
time to time, Arrive AI Inc. (the “Company) may be subject to various claims, lawsuits and other legal and administrative
proceedings arising in the ordinary course of business. Defending such proceedings is costly and can impose a significant burden on
management and employees. The results of any current or future litigation cannot be predicted with certainty, and regardless of the
outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and
other factors. Other than as set forth below, Arrive AI is not presently a party to any litigation the outcome of which, if
determined adversely to us, would in our estimation, have a Material Adverse Effect on our business, operating results, cash flows
or financial condition. The following is a summary of the Company’s ongoing legal proceedings:
Byfield
Management, Inc. and Ohrn II, Richard B v. Dronedek Corporation . This is an employment action, originally filed in the Hamilton County
Court of the State of Indiana Hamilton Superior Court/File: 5 29 D05-2303-PL-002478. Orhn, working as Byfield Management, Inc., was the
original chief financial officer of the Company under an oral agreement. The amount in dispute includes two years of salary and stock
options. The Company terminated this executive contract for cause. The case was moved to Marion Superior Court No. 2 of the State of
Indiana on March 15, 2023 CAUSE NO. 49D02-2305-PL-020604. Plaintiffs alleged breach of employment agreement; breach of stock purchase
agreement; breach of fiduciary duties and non-payment of salary, bonuses, and benefits. Arrive terminated Ohrn/Byfield’s employment
because of several misrepresentations in connection with the financial stability by Ohrn, including bankruptcy and mortgage foreclosure.
Indiana is an at-will employment state. Affirmative defenses and counterclaims were filed, discovery documents have been exchanged by
the parties, but no further motions are pending. No trial dates or case management plan has been filed. In May 2024, the court asked
for a dismissal which prompted the plaintiff to request some third-party documents. No other motions are pending. The settlement demand
includes unpaid salary and stock awards. Arrive has engaged Taft Stettinius & Hollister LLP as its external counsel to represent
the company in this matter. The Company firmly believes there is no unpaid salary since there was no written or oral contract of employment.
The potential stock issue was never completed. Any partial vesting required a small purchase which never happened in Ohrn’s case,
therefore Ohrn held no stock upon termination. Even though plaintiff’s allegations amount to approximately $29 million in total
damages, plaintiff’s allegations have no merit, it is not possible at this time to ascertain an exact figure upon the outcome of
this litigation through a court’s final decision, or if any damages may be granted at all, in the opinion of the company’s
management and litigation counsel, such allegations may not proceed given the facts presented before the court, such as the breach of
the plaintiff’s obligations under the agreement and the termination of the agreement by the Company for cause.
An
initial Cease and Desist letter on Arrive AI’s trademark from Arrive Logistics was received July 19, 2023. An open, positive discussion
is ongoing between counsel.
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