Earnings call transcript: Arrive AI’s Q4 2025 shows widening losses amid growth investments

Arrive AI Inc. (ARAI) reported its fourth-quarter and full-year 2025 earnings, revealing a significant increase in net losses as the company continues to invest heavily in its infrastructure and workforce. Despite generating minimal revenue, Arrive AI remains focused on expanding its product offerings and market presence. The company’s stock experienced a sharp decline in pre-market trading, reflecting investor concerns about its financial performance and future prospects.

Key Takeaways

• Arrive AI reported a Q4 2025 net loss of $2.7 million, more than doubling from the previous year.
• The company generated $15,000 in revenue for Q4 2025, primarily from subscription services.
• Pre-market trading saw Arrive AI’s stock plummet by 39.38%.
• Arrive AI continues to expand its product development and patent portfolio.

Company Performance

Arrive AI’s performance in Q4 2025 was marked by substantial investment in its infrastructure and workforce, resulting in a net loss of $2.7 million, a 107.7% increase compared to Q4 2024. The company’s revenue for the quarter was $15,000, with over 90% derived from a deployment at Hancock Health. Despite the losses, Arrive AI remains committed to its long-term growth strategy, focusing on developing its secure delivery endpoint platform.

Financial Highlights

• Revenue: $15,000 in Q4 2025, all from recurring subscriptions.
• Net Loss: $2.7 million in Q4 2025, up from $1.3 million in Q4 2024.
• Full Year 2025 Net Loss: $12.8 million, compared to $4.5 million in 2024.

Market Reaction

Arrive AI’s stock experienced a significant drop of 39.38% in pre-market trading, with the price falling to $1 from a previous close of $1.65. This movement reflects investor concerns over the company’s widening losses and limited revenue growth. The stock’s performance is at the lower end of its 52-week range, indicating a challenging market environment.

Outlook & Guidance

Looking ahead, Arrive AI anticipates continued investments in product development and infrastructure. The company projects ongoing losses in the near term but expects its strategic initiatives, such as the deployment of its AP5 platform, to drive future growth. Arrive AI’s guidance for fiscal years 2025 and 2026 reflects expectations of negative earnings per share, highlighting the company’s focus on long-term development over short-term profitability.

Executive Commentary

CEO Dan O’Toole emphasized the importance of ongoing investments, stating, "We are committed to building a robust infrastructure that will position Arrive AI for future success. Our focus remains on developing innovative solutions that meet the evolving needs of our customers." He also highlighted the company’s strategic partnerships and patent portfolio as key competitive advantages.

Risks and Challenges

• Continued financial losses could strain Arrive AI’s cash reserves and limit future investments.
• Market adoption of autonomous delivery solutions may take longer than anticipated, affecting revenue growth.
• The competitive landscape in the logistics and delivery sector poses challenges for market share expansion.
• Economic uncertainties and regulatory hurdles could impact the company’s operational and financial performance.

Q&A

During the earnings call, analysts inquired about Arrive AI’s strategy to achieve profitability and the timeline for deploying its next-generation platforms. Executives reiterated their commitment to innovation and highlighted ongoing efforts to optimize operational efficiencies and expand market reach.

Full transcript - Arrive Ai Inc (ARAI) Q4 2025:

Kylie, Investor Relations / Call Moderator, Arrive AI: Good morning everyone, and thank you for joining us today. With me on the call are Dan O’Toole, Arrive AI’s Chairman, CEO, and Founder, and Todd Pepmeier, Chief Financial Officer. The earnings press release issued this morning is available in the investor relations section of the company’s website at arriveai.com. Before we begin, please note that today’s remarks may include forward-looking statements regarding the future financial results, operations, and performance. These statements are not guarantees of future results and are subject to risk and uncertainties that could cause actual outcomes to differ materially. We encourage investors to review the risk factors detailed in Arrive AI’s SEC filings, which are also available on the company’s website. Now, I’ll turn the call over to Dan O’Toole.

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Hey guys, Dan O’Toole, CEO of Arrive AI here. I want to thank you so much for joining our earnings call today. I’m really excited about where we are and the trajectory that this company is under, so I couldn’t be more excited. I wanted to start out by saying that running Arrive AI has been the journey of a lifetime for me, and I would not trade one moment of it. What I mean by that, true integrity dictates that acknowledging the challenges and the successes equally is what it’s all about. Is anything ever straight up and perfect? Of course not. You know what? That creates opportunities, and that’s what this company is all about.

I want you to know that I continue to be hyper-confident about where we are heading, how we’re getting there, and I know that in the very near future, there’s gonna be a moment when a switch flips and things happen in a hyperscale way. Right now, we are super focused on prudently executing on our roadmap. As part of that roadmap, it’s crucial to have the right people guiding your business. Our Board of Directors plays a key role every single day with their decades of experience and leadership across logistics, healthcare, finance, and now cellular networks. I’m really happy right now to announce Mike Fitz has just joined our Board. Mike is the Vice President of Indirect Channels and Solution Sales at T-Mobile for Business. He brings over three decades of experience in telecommunications, enterprise technology, and global network solutions.

His insight into 5G, IoT, and partner ecosystems will be invaluable in accelerating our growth. These are all areas that we are very focused on right now. It’s a very timely acquisition to get Mike on our board, and I’m looking for some big things. I’m gonna let CFO Todd Pepmeier provide details on our financial results in a moment. Before that, I do want to stress that we are in a moment where new partnerships, deployments, and innovations have significant potential to drive material growth and revenue. We have put together a dynamic sales team to execute on that every single day. Now, speaking of innovation, one of the areas we particularly are excited about is artificial intelligence. We believe AI will play a critical role in how packages move, how delivery networks operate, and how systems coordinate with one another in the future.

In the spirit of that, we decided to do something kind of novel today. I’m not sure that it’s been done before, but we are going to have today’s entire earnings call given to you in AI voices of the team that’s reporting. We wanted to showcase in a small way how AI can be used as a practical tool to help communicate and operate more efficiently. Our leadership team will join the call shortly after, and we will all be live to answer your questions. For now, let’s begin with our prepared remarks voiced with AI. Kylan, why don’t you go ahead and hit the play button, and let’s see what happens. When we founded Arrive AI and set out to change last-mile logistics forever, it was a bold move.

We started by shaping and building a market before it even existed, including by securing patents that we believe provide a significant competitive advantage for the company. The logistics industry has spent billions of dollars trying to automate how packages move between trucks, drones, robots, couriers, but we are the first company to strictly focus on how and where these packages successfully and securely arrive. They need a home, and for that to happen, there has to be an infrastructure. That final exchange point, the secure handoff between sender, courier, and recipient is what we call the last inch of the last mile. That’s the problem Arrive AI was created to solve. We are building the infrastructure layer for autonomous logistics, a network of intelligent delivery endpoints that allow people, robots, drones, and logistics providers to exchange goods securely.

You can think of it as the shipping store at your door. Said another way, if cell towers created the network for mobile phones, then Arrive AI is building the network for autonomous delivery. Next, company progress. We kicked things off in 2020, and since then, we have raised capital through three successful crowdfunding campaigns, completed our direct public offering in May 2025, built a team of nearly 50 full-time employees, began real-world deployments of our technology. Today, Arrive AI trades on Nasdaq under the symbol ARAI with approximately 47 million shares outstanding and roughly 52% insider ownership. That level of insider ownership reflects our belief in the long-term value we’re building and closely aligns our leadership team with shareholders. Part of that long-term value comes from our robust portfolio of U.S. and international patents, which is one of the most important assets we possess.

Our patents protect the digital architecture around secure delivery endpoints, autonomous handoff between humans and machines, climate-assisted storage, chain of custody verification, and interoperability across multiple delivery methods. We recently secured our 10th patent, which allows multiple people to use the same secure Arrive Point. The patent was issued on March 31st, 2026, and protects the IP that enables our units to handle packages for many different users with built-in storage and sorting to manage deliveries and pickups efficiently. These units offer the same security, chain of custody, and communication features as a single Arrive Point but are designed for shared use across multiple homes or businesses. Additionally, the patent advances the intelligence and coordination capabilities of our logistics platform, enhancing how secure delivery endpoints interact with drones, ground robotics, and human couriers.

With these IP-protected capabilities combined, the Arrive Point becomes the clear winner for an exchange point in the delivery ecosystem. The more endpoints we have connected to that network, the more valuable the network becomes. That’s the network effect. I saw a meme recently that drove this point home. You know what was better than the first telephone? The second telephone. The scale of our opportunity is enormous. In the United States alone, there are approximately 170 million delivery addresses, and this number increases by 4,000 addresses every day. Each of those locations receives packages, increasingly including items that require secure or time-sensitive delivery, like pharmaceuticals and medical supplies, groceries, lab samples, and high-value retail goods.

An Arrive Point allows for unattended asynchronous delivery and pickup across these addresses, meaning each mode of delivery can come and go at its own cadence without waiting on a human or any other party to arrive. This prevents wasted time and increases efficiency and opportunity. Think of it this way. Right now, a ground robot can bring a delivery to you, but you have to be there to accept that delivery before it can move to the next. A drone might drop its package in a puddle-filled yard. Arrive AI solves these and many similar issues. With our solution, a robot can drop its package into our Arrive Point and immediately continue on its route. For drones, our network enables secure, weatherproof delivery while optimizing routing so drones carry payloads on more flights, significantly reducing empty return trips.

It can deliver your hamburger and at the same time pick up the shirt you need to return. One of the most important proof points of our progress is our live deployment with Hancock Health in Indiana. In that deployment, Arrive Points were installed between the Sue Ann Wortman Cancer Center and the hospital laboratory to support biospecimen transport using an autonomous robot. The route covers roughly a quarter-mile round trip and supports multiple deliveries throughout the day. We recently released an in-depth white paper to explain our findings in detail. During this live deployment at Hancock Health, we demonstrated that our platform can seamlessly integrate into real-world hospital workflows while delivering measurable efficiency gains. We reduced staff walking time without adding steps and effectively extended staff capacity in a resource-constrained environment, freeing up their time for higher-value patient-facing care.

The system operated reliably within active care conditions, reinforcing trust through consistent performance and clear handoff signals. These results validate our ability to drive durable operational improvements in complex healthcare environments. You can find the white paper on our website for more details. Now, I’d like to speak briefly about our partnerships. Autonomous delivery is not a single technology. It involves robotics, drones, logistics platforms, and AI coordination systems. Rather than trying to build every one of those components ourselves, Arrive AI focuses on the network layer. We provide the secure endpoint infrastructure and orchestration platform while partners provide delivery systems. For example, our partnership with Ottonomy, a like-minded early-stage company that develops autonomous delivery robots, allows robots to integrate directly into Arrive Point deployments.

This allows us to quickly evolve and refine how our network aligns with their hardware, iterating and adapting in real time for better efficiencies and processes from software to hardware. This ecosystem approach allows us to support multiple delivery technologies while we stay focused on building the network itself. We are also taking advantage of being a member in the NVIDIA Connect program. NVIDIA is proving to be an invaluable asset for our development by exponentially increasing our speed to deployment. Our engineers are using NVIDIA Blackwell workstations, allowing them to create models that are taking them hours instead of days, which has materially accelerated our development. I also want to provide some context on how our product development has evolved over the past year.

Before we became a public company, Arrive AI had a relatively small engineering team working on what was essentially the third generation of our Arrive Point platform, the AP3. When we went public, gaining access to capital allowed us to significantly expand our workforce. In fact, we were able to grow our team 10-fold. Those additional engineers immediately began advancing the next generation of Arrive Point technology, creating the AP5 platform. Today, we’ve brought all of those engineering teams together around a single objective, accelerating product development and refining the Arrive Point platform as quickly and cohesively as possible. Instead of separate development tracks, we now have the full strength of our engineering organization focused on building, improving, and advancing the Arrive Point platform together. Our development can now happen internally, leveraging the expertise of the team we’ve built while materially reducing our dependence on external resources.

This has also allowed us to move faster, remove redundancies, reduce third-party R&D costs, and have more real-time quality control. For example, we’ve implemented AI simulations to support the growing Arrive network for the next-generation AP5 platform while remaining backwards compatible with our AP3 platform, ensuring that both systems can work seamlessly together. Now, our goal is to convert these innovations into sales in the near future. We are advancing our conversations with organizations in the healthcare and manufacturing sectors with a goal of securing early-stage deployment arrangements for both our AP3 and AP5 systems. With that, I’d now like to turn the call over to Arrive AI’s Chief Financial Officer, Todd Pepmeier, to talk through the financials and provide more background on our revenue model.

Todd Pepmeier, Chief Financial Officer, Arrive AI: Thank you, Dan. When Arrive AI became a public company, we were clear that the early years would be about building the right infrastructure rather than maximizing short-term revenue. After all, infrastructure businesses require upfront investment. You build the network first, and revenue grows as that network expands. For the fourth quarter, our total revenue was $15,000, all of which was recurring subscription revenue. For the full year, revenue was just over $113,000. Our net loss for the fourth quarter was $2.7 million, compared to a loss of about $1.3 million in the same quarter of 2024. The increase was primarily due to higher operating expenses. For the full year, net loss was $12.8 million versus $4.5 million in the prior year.

We ended the year with $2.1 million in cash on the balance sheet, and in January 2026, we executed a $10 million draw from our existing credit facility on favorable terms. This significantly strengthens our balance sheet and provides a meaningful runway to continue executing our business plan and funding our growth initiatives. Our quarterly cash burn rate of approximately $3 million has been mostly driven by increased hiring as we built out the team to support growth, and we expect that level of investment to moderate over time as revenue scales. These 2025 results are being filed within the 15-day extension we requested on March 31st, 2026. During our preparation of these financial statements, we discovered an error with the previous accounting treatment related to our convertible note payable financing. In short, the structure of the agreement creates a derivative instrument according to U.S. accounting standards.

This complexity required us to engage an independent expert to perform the complex modeling required to accurately fair value both the convertible notes and attached derivative instruments. As a result, we have subsequently applied the new method to our previously reported quarterly results. We expect to file amended reports for both the June 30th quarter and the September 30th quarter alongside the full year results. The net result of this change will be higher reported net income in the June 30th period and lower net income in the September 30th period. This change affects net income and the presentation of assets, liabilities, and stockholders’ equity on the balance sheet. There is no cash impact. Revenue model, as we look ahead, our long-term revenue model has three primary components.

The first is Arrive Point subscriptions, where organizations like hospitals, laboratories, manufacturers, and enterprise campuses deploy Arrive Points as part of their logistics infrastructure. The second is network as a service revenue. As more endpoints are deployed, they connect into the Arrive AI network, enabling logistics providers to route deliveries between locations. The third and final revenue component is from data and AI insights. Autonomous logistics generates valuable operational data that can be used to optimize delivery networks. Over time, we expect our revenue mix to evolve toward approximately 50% network infrastructure revenue and 50% transactional and data-driven services. With that, Dan, I’ll turn it back over to you.

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Thank you, Todd. Looking ahead, our overall strategy for the next five years focuses on scaling the network in stages. Early deployments provide real-world learning and product refinement, and from there, we plan to scale manufacturing and deployment. Our long-term goal is to have 1,000s, then 10,000s, and eventually 100,000s of Arrive Points deployed annually. That scale is where the network effects of autonomous logistics infrastructure begin to emerge. Our focus is simple. Build the network, connect the endpoints, enable the future of autonomous logistics.

At the end of the day, we are ahead of where we plan to be at this stage. Our stock price might not indicate that, but everything else about what we are doing does. Ultimately, I would not trade a higher stock price in this moment for an inferior product that would ultimately not scale. Success and scale are built on the foundation of diligence and dedication, and that is what will ultimately deliver for every shareholder, every customer, and every partner. Thank you for joining us today. We’ll now return live to answer your questions.

Kylie, Investor Relations / Call Moderator, Arrive AI: Thank you. To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. If you wish to ask a question via the webcast, please use the Q&A box available on the webcast link. Please stand by while we compile the Q&A roster. The first question comes from Jack Vander Aarde with Maxim Group. Your line is now open.

Jack Vander Aarde, Analyst, Maxim Group: Okay. Hey, Dan. Hey, Todd. Good morning. Thanks for the update. Thanks for taking my questions.

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Hey, thanks for being here, Jack. Dan here. Go ahead, man.

Jack Vander Aarde, Analyst, Maxim Group: Absolutely. Dan, just a quick question to start. Can you speak to your recent team hiring and expansion progress? I think I heard you hired a team of maybe 50 employees during 2025. One, is that true? Two, what’s on tap for 2026 with the team expansion? Thanks.

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Yeah. Thanks for being on here, Jack, and asking. That’s fairly accurate. We’re just under 50 employees currently. We just onboarded two new employees this week. We’re pedal to the metal. We’ve got a plan, and we’re executing it. One great thing I can say is through the advent of AI, our future hiring plan over the next year called for around 200 people, and we now see an opportunity to complete that full demand with about 20% of those people, so about 40 new people. That is the reality of AI and how it’s impacting businesses in real time. That’s a big tailwind on the company, and it should deliver some good progress in our operational costs. We’re really excited about that. Todd, do you have anything you want to add to that?

Todd Pepmeier, Chief Financial Officer, Arrive AI: I think we just want to highlight a couple of the particularly key adds that we announced, Ian Geise to lead our sales organization, really important guy to head our commercialization efforts along with a lot of very talented engineers from the AI and robotics space.

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Yeah, actually, everybody that we are hiring is what I would say is accretive to what we’re doing. Todd just mentioned Ian Geise. Ian came from the early days of DIRECTV when it was a nascent technology being developed. He was present for every aspect of product market fit, pricing strategies, all those kind of things. Also came from Sirius XM Radio, which is much a similar platform from a pricing or a recurring revenue model and things like that. We’re really proud to get Ian. He happened to be available in our own backyard, so it was just a kind of a thing that I say was meant to be. We’re building out the sales team, and we’re doing a lot of things to lay groundwork for a big opportunity that presents itself this year.

Jack Vander Aarde, Analyst, Maxim Group: Okay, great. I have two more questions. Dan, I’ll come back to you on the product design, but just a real quick one for Todd. Just given the comments about restating 2Q, 3Q, are the numbers, the 4Q numbers in this press release? It says that you back out the nine months 3Q numbers. Are these numbers correct, at least like the revenue, the subscription revenue?

Todd Pepmeier, Chief Financial Officer, Arrive AI: Yeah. Nothing.

Jack Vander Aarde, Analyst, Maxim Group: That’s my first question.

Todd Pepmeier, Chief Financial Officer, Arrive AI: Yeah, Jack, nothing changed. Nothing in the restatement affected revenue.

Jack Vander Aarde, Analyst, Maxim Group: Okay, great. My next question is, what can we extrapolate, if anything, from the subscription revenue of about $15 thousand in the fourth quarter of 2025? Was this all Hancock Health? Just can you maybe just kind of expand on that a little bit more? Thanks.

Todd Pepmeier, Chief Financial Officer, Arrive AI: Yeah, Jack. I would say over 90% of the number you see there was from Hancock Health in the quarter. We had one other smaller deployment in the period, but that’s predominantly what you see there. Our deployments are limited right now. We haven’t put hundreds of units out there only to replace them with the next generation and so on.

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: One other thing I’d like to jump in on, this is Dan, Jack. When you’re nascent and you’re conditioning the market for a new technology, what you don’t want to do is extinguish those opportunities by trying to monetize the heck out of them. A lot of times on the deployments that we’re doing, the ROI for us is the learnings and figuring out how to condition the market. That’s the most important thing that we can be doing right now, and that’s what we’re doing, and that is totally aligned with our business strategy. When Google announced Waymo back in 2009, that’s how long ago they came up with that idea. They spent $30 billion between 2009 and today, and they’re still not scaled.

I would put what we’re doing here at Arrive AI up against the biggest companies in the world as to traction, market acceleration, first position, all the IP we have, and all the opportunities that we continue to see throughout the world. I could tell you that every metric that we track internally is pegged to the max. I know we have an impatient world out here, and frankly, we’re part of it, as the largest shareholders represented here in the whole company, insiders. We want to deliver as quickly as we can too, but we want that to be durable, and the way you do that is by building a great foundation. I appreciate that question and the opportunity for us to share that with you. Go ahead, Jack, what else you got?

Jack Vander Aarde, Analyst, Maxim Group: Yep. Absolutely. Just one last question, then I’ll hop back in the queue. Dan, on the product development and design stage, I heard you mention some updates on the AP3 and the AP5 platforms. Is there an AP4 or do we leapfrog that? Also just how does the AP5 compare to the AP3 and any customer discussions you could touch on regarding your recent design updates? Thanks.

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Absolutely. Yep. Hey, great question. I want to announce to everyone in the room with me, in addition to Todd, our CFO, and me, Dan O’Toole, CEO, we have Kylie, obviously, Neerav Shah, our Chief Strategy Officer, John Ritchison, our Chief Legal Counsel. I want to throw that one over to Neerav and let him speak to that. Neerav?

Neerav Shah, Chief Strategy Officer, Arrive AI: Yeah. Thanks, Jack. Thanks, Dan. Yeah, regarding some of the product changes and design changes that we’re looking at on AP3, I’ll start with that, Jack, is we’re looking at an improved door design that’s going to make a big difference in the robotic handoffs. We kind of optimized a lot for the drones, but we’re seeing a lot more activity in the ground robotic space. The optimization of the door design is going to be shared both with AP3 and AP5. That should be coming out this summer. I think what was the other part of that, Jack, was around just some of the development.

Jack Vander Aarde, Analyst, Maxim Group: Yeah

Neerav Shah, Chief Strategy Officer, Arrive AI: AP4. Yeah, sorry.

Jack Vander Aarde, Analyst, Maxim Group: I guess maybe we skipped over the AP4.

Neerav Shah, Chief Strategy Officer, Arrive AI: Yeah.

Jack Vander Aarde, Analyst, Maxim Group: Just how does the AP5 compare to the AP3?

Neerav Shah, Chief Strategy Officer, Arrive AI: Sure. Okay. I’ll start with the AP4. The AP4 is something that we have a placeholder for a sorting unit that we’re looking at potentially for getting packages dropped in by aerial robot or drone and basically sort the package, and then just the package that the user would want would come out with the access control. That’s for multi-dwelling units. Now, some of the changes for AP5 are a brand new receiving unit for the drone deliveries. I think that’s going to be something that we can’t really touch on too much, but stay tuned for some big developments on getting packages via drone for AP5 units and beyond.

Jack Vander Aarde, Analyst, Maxim Group: Excellent. Very cool. Well, guys, I appreciate the update. Wish you best of luck and look forward to tracking the story. Thanks.

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Thank you.

Kylie, Investor Relations / Call Moderator, Arrive AI: Thank you. Our next question will come from Alex Latimore with Northland. Your line is open.

Alex Latimore, Analyst, Northland: Hey, guys. Thanks for taking my question. I love that you had some fun here on the earnings call with your voices and AI. I think that was cool to hear. I just got two questions for you. My first one is, are you guys pursuing an acquisition pipeline? If so, what are some capabilities at the top of that pipeline?

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Hey, Alex, Dan O’Toole here. Thanks for joining. I think we can all agree that I sound better in person than AI. Thanks for noting that we do try to have fun, and every day we have a lot of fun here, and that’s the main thing. As far as M&A, when we went public, as the leader of the company, there’s a couple things that are really important to me. I’ve been an investor since I was a kid, and companies that I was always attracted to were companies that were actively always doing deals, doing things that were organically accretive, but also bolt-on opportunities that were equally as accretive from a revenue standpoint or strategic or technology. I also like companies that split the right way. Early on when we started as a company, we did a 2-for-1 split through our crowdfunding.

Later, we did a four-for-one reverse, which wasn’t as popular, but we had to do that to go public to get to a threshold. But I digress a little bit. We do have a big appetite for M&A. We think that being a public company opens up so many opportunities to use our stock as currency to acquire great opportunities that are out there. We have a big leg up as a public company. It’s very rare air, as you know, and it gives us a lot of market clout. And we are exploring opportunities every day. One of the things we do here is we do not focus on one thing. And what I mean by that is if you’re so hyper-focused on one thing, sometimes you miss the bigger opportunity that might be right beside it. So we explore the horizon every day. We look at everything.

One of the prisms of how I personally look at things is if the last guy that put a dime into this company, if he would be happy with the deal, then I know I would be happy with it. That’s a prism. We don’t want our investors to trade dollars. We want everybody to win, and that’s how we’re looking at things. I hope that answers your questions. We do have deals that we’re evaluating.

Alex Latimore, Analyst, Northland: Awesome. I appreciate it. My second question is, can you guys talk about how many Arrive Points you expect by year-end, maybe in a ballpark?

Kylie, Investor Relations / Call Moderator, Arrive AI: Pardon me, this is the host. Please stand by. Your conference will resume momentarily. Thank you for your patience. Your conference will resume momentarily.

Alex Latimore, Analyst, Northland: Thank you. Okay.

Kylie, Investor Relations / Call Moderator, Arrive AI: Dan, I see that you have rejoined. Are you able to hear me?

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Yes, I am.

Kylie, Investor Relations / Call Moderator, Arrive AI: Okay.

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Did we drop out?

Kylie, Investor Relations / Call Moderator, Arrive AI: Yes, you may go ahead and proceed.

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Okay. Hey, Alex, sorry about that. I don’t know what happened. See, when you go from AI to live, this is what happens. Hey, Alex, where did I end on that? Do you know?

Alex Latimore, Analyst, Northland: You just started, I’d say, closing up the question, talking about exploring opportunities.

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Okay. I’ll just restate that last sentence. We do have M&A targets in front of us right now that we are exploring, not in a position to talk about those right now. I can tell you, we’re going to actively be looking at exciting opportunities, things that could accelerate what we’re doing or enhance the offerings that we already have. We’re a small, nimble company that likes to evaluate opportunities. That’s kind of summing that up. I’m sorry about the blip that we had there. I’m not sure exactly what happened, but we’ll keep this thing going here.

Alex Latimore, Analyst, Northland: All good, Dan, all good. I appreciate it. My next question is, can you guys give maybe a ballpark of how many Arrive Points you expect by year-end here?

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: I’ll tell you what, we’re not trying to get totally granular on things. There’s a lot of moving parts, and what we’re doing is we’re not doing permanent deployments right now. What I mean by that is, as I mentioned a little bit earlier on when we were speaking to Jack, is the ROI for us is the learnings. What we’re doing is we’re doing short-term deployments, learning how the customer is interacting with our product. We’re trying to get ergonomically better with each deployment. We’re trying to rapidize the way the system works, speed it up, be 100%. You can’t work most of the time. You have to work every time. That’s what we’re really focused on.

For that reason, as Todd mentioned a little bit ago, we don’t want to put out a ton of units that we believe essentially are kind of obsolete going out the door because you can see we’ve already got two additional products on our roadmap right now that we’re developing simultaneously. What we’re doing is we’re working with our AP3 units right now and getting learnings off of those and rapidly iterating those into our AP4 and AP5 models. Those are going to be the scalable units that we will start hoping to put out later this year.

Alex Latimore, Analyst, Northland: Okay, great. Maybe if I can ask one more here. I know you guys talked about your AI services pipeline and ALM marketplace last quarter. I was wondering if there are any active trials there or any insights you’ve gained on the process there and just any information would be great.

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Yeah, those are gifts that we’re going to have at scale, obviously, right? Those are also things that we are developing right now. We have our own in-house team, as we mentioned, through the hiring of nearly 50 people. The people that we’ve hired are skilled. We’re not hiring admin and management layers. They’re all hands-on AI informatics, human-

Factors

Factors. I’m sorry, I’m losing it here. We’re doing a lot of things that are really dedicated to the product development, really linear to what we’re doing. When we roll this stuff out, you’re not going to believe it, I can tell you that. I’m privileged to see next-gen tech that we’re developing in our own building every day, and it’s just amazing. I’m so proud of what we’re doing here, and it is all very real. Nobody wants to get that out sooner than I do. We also want to make sure when we do put it out, it’s the right thing at the right time and working the way it needs to. I hope that answers that.

Alex Latimore, Analyst, Northland: Awesome. Dan, Todd, thank you. Best of luck this year. I appreciate it, guys.

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Thank you. Thanks for joining the call. Appreciate that.

Kylie, Investor Relations / Call Moderator, Arrive AI: Thank you.

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Go ahead.

Kylie, Investor Relations / Call Moderator, Arrive AI: I am sorry. Thank you. I am showing there are no further questions through the phone, and I would now like to turn it back over to Kylie.

Kylan, Investor Relations / Call Moderator, Arrive AI: Michelle, thank you. We are going to continue with questions and answers that were pre-submitted and those that came in during the webcast. We’ll get to every single one of them. Before we get to the questions, Dan has one more thing he would like to add.

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Yeah, thanks, Kyla. A couple of things, actually. Quick story. My son, Bryce, I saw him this morning when I was heading out. I said, "Hey, Bryce, I hope you’re going to listen to our earnings call." He goes, "Dad, I’m going to get a haircut." I said, "Well, Bryce, I hope you get them all cut." Anyway, Bryce, I hope you got back to hear this. Anyway, one of the things I want to jump on real quick here is, you may have noticed that we had an 8-K that came out last night announcing a couple of things. One is, obviously Mike Fitz joining from T-Mobile, big get for us, really aligned with what we’re doing. Proud of that. I’m so excited about the leadership that we have in-house already, too. Don’t want to leave anybody out.

I wanted to also call attention to the fact that we did restate the earnings from Q2 and Q3 of last year. I wanted to hand this to Todd to talk about a little bit. One thing I wanted to say about it is, when you go public, you have an accounting team that you work with that’s external, and then you also have an auditor, a PCAOB auditor, which is a public company audit board. It’s a very specialized form of audits that are done. It’s very important that the cadence is always kept up and you keep these things up. Timing is everything when you’re public. One of the things we always did is, since we’ve really started as a business, we always had a cadence of PCAOB audits, even before we were public companies. I’m really proud of that.

I’m proud of my internal team here, led by Todd, doing our own internal quality control check on our earnings. It came to note that the Streeterville deal that we have in place is a derivative. I know speaking a little bit above some of the normal parlance here that we talk about, but it was something that came to light, and we vetted it very thoroughly internally. When we felt like there was something there, we approached both our external CPAs and our auditors, and I’ll let Todd take it from there. I just want to say that this is the kind of work we do here at Arrive AI. We’re highly focused on transparency, communication, and even though you hear restatement, and people don’t like that, admittedly, I don’t think this has any impact on us.

I want to say that, but I also want to say how proud I am that we found it, and we were able to timely report it, and I think we’re moving forward in a great way and that this is the kind of company you guys want to deal with. Todd, jump in there, man.

Todd Pepmeier, Chief Financial Officer, Arrive AI: Yeah. As we mentioned earlier on the call, in addition to filing these annual results today, we also announced last night that we’ll be restating Q2 and Q3 from 2025. As discussed, the underlying cause was the derivative portion of the convertible notes payable, so one of the most complex aspects of corporate accounting. We discovered it. We needed an extra 15 days to get these annual results out. From the time we discovered the material impact on Q2 and Q3, we had a certain amount of time to disclose that, which we did last night. We’ll be filing those amended quarters alongside what we’re filing today. I would say that it’s a positive net income effect on the second quarter results last year, kind of similar size negative impact on the third quarter results.

For the full year, broadly in line with where we would’ve been under the old accounting treatment. That’s the long and short of it.

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Yeah. Hey, I’m not throwing anyone under the bus, but when you do go public, sometimes you don’t know what you don’t know. I just want to say that we rely on experts. We hire experts to help support what we’re doing here. Our own internal team are the guys that found this, and we did the right thing. We came out immediately with it. We still are reporting our earnings today within the time constraints of being timely, and I’m really proud of that. Anyway, back to you, Kylie.

Kylan, Investor Relations / Call Moderator, Arrive AI: One more thing before we get to the Q&A is all of our subscribers to Arrive AI or notifications received an email yesterday to opt in to a new subscription. This is a legitimate email. We recently launched a new investor relations site that will provide you with instant alerts like daily stock quotes, SEC filings, news releases, a lot more. You only have to click a button and you’ll begin receiving all of these. The email came from Arrive AI with a different email address. That email address is [email protected]. If you have any questions about your shares or transferring them, email [email protected]. We will respond to each and every one of those and help you as much as possible. Now we will get to the question and answers. We’ll first go to the pre-submitted questions that came in through our Arrive AI ideas board.

We’ve emailed that out over the last couple of weeks. Several of the questions address the same things. We will be answering those singularly, but we do want to thank every single person who did submit these questions. The first one that had the most votes, which was a common question, was about stock shares and what is being done in an effort to increase the stock price. We want to thank Hans, Jake, Kailyn, Anthony, and a few others we’ll get to in a bit for asking this question.

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Thanks, Kylie. Hey, thanks everyone for participating and asking questions and voting. What are we doing about our stock price? The answer is everything. I’ve said this before. This is Dan here, by the way. I always used to think the market was a leading indicator. After seeing the stark difference between how we’re executing here at Arrive AI every single day, and how the market has treated our shares, I believe now that it’s a lagging indicator. As I mentioned earlier, I believe every factor that we internally track is pegged to the top, except for our share price, and that’s a little bit of a disappointment. You know what? That creates a ton of opportunity. I always say the day we went public, we traded as high as $40 a share, that we were a unicorn in that moment.

I think that shows that we have the ability to be back there and much higher, and that’s what we are dedicated to every day. Everything we do has the long-term prospect of share appreciation. We’re not doing things for the day. We’re not doing flash in the pan kind of things to surge for a moment. That’s a sugar high and pretty soon you’re back down lower than you were. We’re building a great foundation here. If you track the real news that’s coming out of this company, the addition of new patents, which are just monumental in this space, I don’t know how anyone could do anything near what we’re doing with the amount of IP that we have at this company without us being a part of it.

We have built a huge moat around this company. If you guys believe like I do with every piece of my being that autonomous delivery is going to happen, and the idea of it happening without Mailbox 2.0, is what I call it in that infrastructure, it’s just not going to happen. If you look back to 1858 when the first mailbox was created, even in 1858, there was a notion that you can’t drop things on the ground and picking them up from the ground. If you believe the same today as people did in 1858, the idea of drones dropping things on the ground or picking up from the ground or robots, it’s a non-starter. It’s not scalable. We have unattended, asynchronous delivery. We own that platform. We own the sidewalk. We own the front of the business.

We’re the gateway to every home and business throughout the world. We have an IP in the U.S. and the world. We are executing on that every day in such a big way. This is the next Google. I truly believe that. If you look at the amount of shares I own in this company, I haven’t sold anything below $13 when we went public. I’ve even bought more shares if you check that along the way. I’m hyper-focused on Arrive AI. I believe with every fabric of my being in this company. I want you guys to all know that stock appreciation, in addition, obviously, to building the best product ever, is job one here.

I’m kind of ranting here, but I am passionate about this. When we went public, the thing that we said to ourselves was, "We’re not going to be focused on the share price every day." Guess what? That’s not really possible. It drives everything. It drives your mood, frankly. Being down in the doldrums sometimes with bad share prices, it’s really depressing, but you know what else it is? It’s very motivating. I can tell you that we’re executing. You guys are going to see it. We’re in a show me, don’t tell me world, and that’s what we’re hyper-focused on. Great questions, guys. I understand why everybody asks those, and I’m sorry that we didn’t handle them all individually, but the theme of all those were very much the same. We wanted to acknowledge everyone’s name, right?

Kylan, Investor Relations / Call Moderator, Arrive AI: Absolutely, one from Callion, just about the Nasdaq notice. Callion said, could the team provide any updates on the Nasdaq delisting notice? What steps has the Management taken to prevent a delisting? Any possibility of a reverse stock split speculation?

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Yeah, I’ll jump in, and I’m going to let Todd, our CFO, say something to that as well. Thank you for your question. Transparency and communication, if you guys watch our Dan Show, you know that we’re out ahead of everything. The minute we got those, Kylie and I did a Dan Show. Our philosophy is you’re always going to hear everything here first, good, bad, whatever it is. That’s our promise. The minute we were notified of those opportunities or potential situations, we wanted to get out with those. As far as the reverse stock split, that specifically comes into play when your shares are below $1 for a 30-day period or longer, a 30-day trading period. We have not experienced that yet.

We did proactively discuss the potential of that in the last Dan Show because I know it’s out there, and some people are thinking about it. Today, we’re above $1. The cure for that is anytime you trade above $1 without having gone 30 straight days below $1, you kind of reset that. None of us want to get into the world of reverse splits. As of today, that’s not a reality. I’ll turn this over to Todd, and he can speak out. I think we somewhat cured the float thing, and the market cap is hanging out there. Go ahead, Todd.

Todd Pepmeier, Chief Financial Officer, Arrive AI: Yeah, we received two deficiency letters from Nasdaq. One related to being below the 15 million publicly available float. To some extent, that has been cured in the last few weeks. Just we need to give the updated share count information to Nasdaq to confirm that. The second letter we got related very much, but it was around being below the $50 million market capitalization threshold. Again, with share conversions in the last few weeks, we believe that’s largely been eliminated, but we’re going to work with Nasdaq to give the most updated information we can.

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Yeah. The one thing I also want to say on these are not overnight. You get a notice and the next day you’re delisted. There’s a long process, usually six months or more, to allow for curing. We think that good things take care of themselves. While we obviously take everything seriously, I personally don’t believe that we are going to be in the world of reverse splits anytime soon, if ever. Knock on wood. That’s something I don’t want to do. I want to do the splits the other way, if you remember that. We will deal with things in real-time as they occur, and we’ll always report those to you guys. You guys are all co-owners in Arrive AI with me and this team, and you have a right to know what’s going on when it’s happening. Okay?

Kylan, Investor Relations / Call Moderator, Arrive AI: Dan, you kind of just touched on this, so we’ll go to Brian’s question. What if delisting occurs? I want to not only ask about preventing delisting, but confirming what would happen if it happened.

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Thanks for your question, Brian. Obviously, you have to think about every scenario, right? That’s just good stewardship. While you don’t want something to happen, what if it does, right? Appreciate the question. We were a non-public company before we went public, right? Everyone that was a shareholder was a shareholder. If that should happen, I don’t see anything changing. Everybody would still be a shareholder. We would just not be listed on the Nasdaq at that point. I hate even saying that. We worked so hard to be a Nasdaq company. We’re so proud to be a Nasdaq company, and it’s such a great thing, a status thing for us from a customer perception and gravitas. It opens up so many doors. It’s opened up the public capital markets to us. We could not have done anywhere near the hiring that we’ve done.

We would not have the building that we have. There’s so many things we couldn’t do had we not done this. It was the best thing we ever did. Hopefully it was great for every one of our investors. The thing I’m proud of along those lines is when we went public day one, every single shareholder that had come into this company was a winner on day one. Unfortunately, today I can’t say that, but I think we can get back there. I think we will. Let’s just keep rolling here. What else we have, Kyla?

Kylan, Investor Relations / Call Moderator, Arrive AI: From Ryan, a question regarding capital structure. Could you please explain the current capital structure of the company? As I understand it, most of the operating cash the company holds is currently debt on the balance sheet. Many other small companies do not take on debt financing. I’m curious as to why the company hasn’t focused more on equity financing. Could you please provide short-term measurable steps the company plans on achieving in the next 12 months, as in Arrive Points, how many should we expect, or when the company expects to be generating revenue to cover operating expenses? Something to give us clarity on progress of the business as revenue is still not materializing. Could you also briefly describe the lease relationship on your primary operating facility, specifically the structure with the CEO?

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Great. A lot of questions there, Ryan.

Kylan, Investor Relations / Call Moderator, Arrive AI: Yeah.

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Thanks for doing your homework, man. That’s really good. Real quick, and I’m going to let Todd handle this, but I do want to state, as most of you know, our legacy or our heritage as a company, I call us a We the People story. We had 5,000 pre-public retail investors on our cap table. Proud of that. The way that we were able to all come together was through three successive rounds of crowdfunding. While crowdfunding was great and it really got us to where we are today, it is a grind. I can tell you can never get ahead of your burn rate when you’re crowdfunding. It keeps you in the moment, but it’s very important when you have a very ambitious project like we do here, that you get access to the public capital markets to really accelerate what you’re doing.

I wouldn’t trade one thing about the fact that we did the crowdfunding, but I also wouldn’t trade the fact that we had to go public, and we were able to do that. When we were able to do that, the way that we were able to capitalize the company was through the financing that you’re talking about there. I’m going to turn it over to Todd to shed a little bit of light on that. Todd?

Todd Pepmeier, Chief Financial Officer, Arrive AI: Thanks for your question, Ryan. The equity line of capital that we entered upon going public presents on the balance sheet as convertible debt. In reality, it becomes equity upon conversion, so it’s not a cash repayment. It converts to equity. That has been our primary really method of financing the company. In absence of significant revenue, we’re dependent on that. The other thing I would say is when we went public as a pre-revenue company, we weren’t really an ideal candidate for a more traditional equity IPO, underwritten IPO that you see with a lot of other companies. This structure that we put in place was really the best option we evaluated to fund the future of the business. The question about the building, I think, the lease relationship.

When we set out to hire 40+ people in the middle of last year, we needed permanent office space. We did an extensive study of the community here in Fishers, Indiana. We needed a rather unique setup, which included both office facility and workshop space, so kind of dual use. We evaluated the market, got a lot of quotes, got a lot of estimates. The one building that met all of our needs was available for purchase. The company did not have the liquidity at the time to make the purchase outright. Dan, our CEO, ended up purchasing the building and entering into a lease arrangement back to the company. Those lease terms, I would add, are actually in line or slightly favorable than the prior tenant was paying under that arrangement. We did a lot of economic evaluation of it.

Price is competitive, and it’s on point.

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Yep. I just want to add to that. Thanks for answering that, Ryan. I mean, Todd. Thanks for your question, Ryan. I didn’t want to buy the building, to be honest with you. It’s a big liquidity hit for me personally. In the interest of executing the vision of what we’re trying to do here, and I can see how much buy-in the team had to really being attracted to this building, it just made sense to do it. I did go ahead and buy it, and I did offer it at, in my mind, a below market. As Todd said, there was obviously the fact that it’s a related party transaction. It gets through all the scrutiny of our auditors and things like that, and I wanted to really show good faith. I came in.

I would think fairly substantially lower than the market on this building. I’m proud that we did it. It’s validated every day I walk in here. I can see the morale, the utility we have being able to operate here in the great location that we have. That’s it. Thank you for asking that question.

Kylan, Investor Relations / Call Moderator, Arrive AI: Raul also asked the question about the stock price. He has a few questions in his one submission. We’ve already answered much of the stock price questions and the revenue by selling unit providers. The third part of his question is, "What are some other sources of revenue and potential acquisition by larger, established companies?

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Great question. I don’t want to answer every question here. We do have John Ritchison, our Patent Attorney, who’s Chief Legal Counsel, and Neerav Shah’s here, our Chief Strategy Officer. I will speak to this one. I’m sorry, I’m going to cough here. You’d think my voice would be better because I did all that AI stuff. I didn’t have to talk as much. Everybody has the dream and vision of being acquired by Amazon or Google or Walmart or one of these big guys. Those are aspirational dreams that we would all love to explore and experience. The reality is, I think I said this earlier, we’re in a show me, don’t tell me space. People want to see what you’re doing.

What we want to do here is we want to build something so compelling, so much needed, and we want to create something that some of these companies can’t live without. I have this kind of internal mantra that I say. In five years, we will be either acquired by one of the biggest companies in the world, or we will be one of the biggest companies in the world, and I’ll take either one of those. In the absence of Amazon or one of these guys coming in today and making us an offer, we have a job to do every day, and that’s what we’re doing.

If you came to this company today and you saw all the activity, the high morale, the synergies that are happening, the new ideas that are coming every single day, so much so that John Ritchison, our Patent Attorney, is located on-site, and he’s fielding new IP every week. Right, John?

John Ritchison, Chief Legal Counsel and Patent Attorney, Arrive AI: That’s correct.

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: You want to talk about that real quick?

John Ritchison, Chief Legal Counsel and Patent Attorney, Arrive AI: Yeah, I was going to hit a couple things on patents, if I could jump in just for a sec. We talked a lot about the patents and where we are with the U.S. We’ve got 10 approved patents that have been issued. Most recent one, you mentioned it earlier, the multi-use patent, which gives us the ability to handle commercial situations and residential situations with more than one user. A person doesn’t have to have their own Arrive Point. They can have an Arrive Point that they share with some other folks. Outside the U.S., currently we’re in 23 different countries where we’re seeking patents. We’ve got about 77 outstanding patent applications. We achieved issue on 11 of those, so we are moving forward.

We had a couple questions in there, and I know I’m rambling around a little bit, but I’m trying to hit them, about are we here or are we there? We’re going to go wherever the opportunities are. At the same point, when we chose the 23 countries, we chose that in a logical way, we think. We hit the big three. We hit Europe, of course, the European Union. We hit China, we hit India, because that’s where the volume is. We chose at the time to not go after Russia because of the Ukrainian conflict, and I think that was the right decision at the time. It continues to be the right decision until those folks learn how to play good together. As we look at our patents, the interesting point, and my being on site, is we’ve got 40+ engineers.

I want to say young engineers, and they are young compared to me, but we’ve got a couple right out of school. We’ve got a couple that have been out there for 20, 25 years. I will tell you, I’ve been in engineering for my entire life, and these folks make your head hurt. They are thinking so far beyond what we need to think, and they’re taking the AP3, which was a good start, into the APX or AP4, which is a big change up, like Neerav mentioned earlier, and into the AP5 and 6, which are going to be the Cadillacs of, I don’t want to get too much GM on, but they’re the Cadillacs of the future. I think that our patent position is out there. Dan came up with the idea very early.

Dan and I have been together for over 10 years. We started talking drone decks. We started talking Arrive Points. This is great. The other question that comes through, and I’ll try and answer it up front, is what about licensing? What are you going to do with these patents? Well, first thing we’re going to do is get the patents out there, getting our product out there, get the market started. We mentioned a couple things where our new Board Member, or Board Director, Mike Fitz, is going to bring on. We’ve got a great sales guy coming in that’s here now, Ian Geise. They’re both bringing major focus into where the market’s going to go and get more sales out there.

Once that starts, we believe that this thing is going to catapult into such a big market that there’s going to be a lot of people out there trying to copycat.

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: When those folks need the license, we’re going to be available to sell those licenses to other makers and manufacturers and go from there, and generate more revenue.

Kylan, Investor Relations / Call Moderator, Arrive AI: John, thank you. You just answered two of the different submitted questions. One was from Ron about how the patents be used. You just eloquently delivered that answer. The other was from Lance about sales plan introductory, which also went hand in hand with your answer.

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Great. What about the top write-up, the 4 for 1?

Kylan, Investor Relations / Call Moderator, Arrive AI: Yeah, I was going to get to that. We can go to that right now if you want.

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Okay. Great.

Kylan, Investor Relations / Call Moderator, Arrive AI: Todd had a question about the reverse share split that happened pre-public offering. What do you say to people who invested, and then you did a reverse 4-to-1 stock split to get on Nasdaq?

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Yep. Thank you. I wanted to address this. I’ve heard this from people along the way, right? Todd, good question. Did we arbitrarily, going public, just say, "Hey, let’s do a 4 for 1?" It was actually a 1 for 4 split is what it was. If you had 4 shares, those shares became 1. I kind of liken it to this, if you’re holding a dollar and I say, "Hey, give me your 4 quarters, I’m going to give you a dollar." That’s kind of what it was. It was an even transaction. We didn’t diminish any value or anything. There was no change in value whatsoever. It’s just that Nasdaq has a limit when you go public. We had to have a threshold of, I think it was $12 a share. We came at $13. In no way did we mean to diminish.

In fact, I said earlier in this call, as a student of the market, like I’ve been my whole life, I love companies that split the right way, two for one versus one for four. That wasn’t something we did, again, because we wanted to. We didn’t mean to hurt anybody’s share count. Hopefully we get to a point where our shares get really high, and we can start doing the splits the back way and get you back those shares and do all that kind of thing. That’s what I want to do. Let’s stay tuned on that.

Kylan, Investor Relations / Call Moderator, Arrive AI: The next question is regarding expansion. It comes from Verushka. Given the awareness of the vast opportunities within emerging markets, will Arrive AI go into countries like South Africa, Botswana, and Namibia? Will Arrive AI ever think of building the units in the countries that will be serviced? This will bring down the overhead costs and duties that tend to have an impact on entry to market.

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Okay, thanks for your question. I’m going to throw this one over to Neerav Shah. Neerav, you got that?

Neerav Shah, Chief Strategy Officer, Arrive AI: Yeah. Thanks, Dan. Yeah, we would absolutely support a distributed supply chain. We want to minimize shipping costs and take advantage of unique strengths of local supply chains. That’s very much on our agenda. Just speaking about different countries, I don’t know how much, Verushka, you’ve been looking at the news, but we’re announcing some activity in India. We’re working with a company called Skye Air and other leading delivery companies. Effectively what we’re doing is taking part in a revolution there called quick commerce, where they’re expecting deliveries in minutes, 10 minutes or less, not hours or days. Yeah, great question. 100% open. As J.R. mentioned, we have patents in 23 countries.

Just to kind of round out this thought is that, following the old adage of follow the money, in order to maintain the patents in the 23 countries, there’s quite a lot of dollars involved in maintaining them on an annual.

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Sure

Neerav Shah, Chief Strategy Officer, Arrive AI: Monthly basis, and J.R. can speak to that. Effectively, we’re extremely committed, and you can see that we pay on a very regular basis to maintain those international patents. Thank you, Verushka.

Kylan, Investor Relations / Call Moderator, Arrive AI: Neerav, thanks. Joseph, thanks for a very kind comment that you placed in our ideas board. Let’s get to Wilkinson right now for a question here. He says, do you guys see any type of partnership with those companies like Amazon, et cetera, for the endpoint smart box in the near future? Is there any approach from NVIDIA to partner with us or some type of capital investment because we’ve been using their product for a while now? Please and thank you.

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Great questions. We are exploring partnerships with several companies. You’re aware of the NVIDIA Connect opportunity. We’re leveraging that every day. We would love to have NVIDIA take a bigger look at us, and that’s part of our hope that we’re focused on, frankly. We will keep you apprised as to when and if something like that happens. As far as any big partnerships, we’re early, and we believe that those are big drivers for us. We are focused on developing some big opportunities. When the moment is right, we will be able to announce those as they happen. Just executing every day. We hear what you guys are all saying, and all the things that you’re saying are the things that we’re saying and doing within the four walls of this company every single day.

I always say Rome wasn’t built in a day. I think it took a day and a half. I would literally put up the evolution of this company, where we are against the biggest companies in the world and where they were in the same moment of evolution, and I would say we’re blowing them away. We are moving at the speed of a startup. We’re agile. We’re proactive. We’re inquisitive. We’re doing all the things that you would want to see us doing. I would just say, just watch us. Just watch. Great things are about to happen.

Kylan, Investor Relations / Call Moderator, Arrive AI: Thanks to Rock for sending in a question about the patents. John has answered your question as well. The final question we’ll be taking from the pre-submitted questions is from Brian, some of which has also been answered, but we’ll go ahead and make sure we thoroughly answer this one. It says, "See some actual products. When do we see the products in a working situation, actual video of real deliveries, and not animated depiction? I’d like to see an end product that you’re presenting to future partners at work. Are they in production, and how many are being used in testing areas? I have to admit, I haven’t followed as closely as I should. I’m an early investor from StartEngine.

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Yeah. Hey, Brian, thanks for your question. Thanks for being an early investor. We have made that transition. In fact, we talk about that a lot. We’re not showing vaporware, we’re showing reality. If you start following us more closely, I think you’ll see those things happening really all over the world. We’re pretty good about keeping everyone updated, and we’re proud of that. I would also say that any shareholder in this company has the invitation. If you want to get a hold of us, we’d love that. If you want to come visit, we’d love to show you what we’re doing in real time, and you can go out and tell the world what you’ve seen. That’s what we’re doing.

Kylan, Investor Relations / Call Moderator, Arrive AI: Now we’ll go over to the questions that were submitted through the webcast. First is from Ami. As premium costs are rising globally, how are we planning to maintain our competitive position against competitors that may be leveraging cheaper materials? There are the recent price hikes in Japan, and also now we have the uncertainty with the gold.

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: You want me to take that?

Neerav Shah, Chief Strategy Officer, Arrive AI: Yeah. Thanks, Dan. Yeah, it’s a multi-response here. Regarding the current situation, we’re obviously optimizing, looking for multiple sources for product and not sticking to one market to minimize shipping, which I mentioned earlier. The other thing I want to mention is that we’ve got a Head of Supply Chain that’s constantly looking at the future and thinking about what materials are going to be more costly, et cetera. In fact, I can’t speak to the specifics, but he had identified the material that we were going to use in two to three years’ time, and the plan, again, not to really get into specifics, was to do some risk buying on that to minimize our future risk. These are the kinds of things that we’re constantly thinking about.

Kylan, Investor Relations / Call Moderator, Arrive AI: Next question is from James. Can you say more about Arrive AI and how AI is allowing you to so dramatically reduce your hiring plans? Are advances in agentic AI powering that? Is it automation of support functions, sales, or some other source of leverage? Are advances in agentic AI also potentially speeding your time to market and revenue?

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Yeah. I’ll jump in there. I would like to announce who’s taking it so our listeners know.

Neerav Shah, Chief Strategy Officer, Arrive AI: Yeah. Thanks, Dan. Neerav Shah, Chief Strategy Officer. Yeah, for sure, we’re definitely looking at agentic AI. In fact, there’s a lot of desire internally to use OpenAI, but we’re trying to hold that back until we understand some of the risks. Regarding some of the other questions around agentic AI, we’re looking at implementing that very much some workflows and customer service. Again, can’t say too much on that, but, yeah, it’s all happening currently.

Kylan, Investor Relations / Call Moderator, Arrive AI: Next is a multi-faceted, multi-part question from Sergio. Hi, Sergio. Thanks for this. I appreciate a concise response across the areas of, based on your recent SEC filings, could you help investors understand, one, how you’re managing current and potential dilution under the Streeterville Agreement, particularly in a more conservative or downside scenario, and how this could impact shareholders over time, including its effect on future ownership, value per share, and overall capital structure? I’ll get to part two in a second.

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Sergio, that was a nice, concise question. This is Dan here. I’m going to let Todd answer, but I do want to say one thing. There is dilution that has taken place, and not all dilution is bad. What I mean by that is, even though I’ve been substantially diluted, I still have the exact number of shares that I have. One of the recent Nasdaq violations that we had was centered around our float. I think a byproduct of the Streeterville Agreement has been a way to cure the float issue. I’m going to let Todd jump in. I just wanted to preface it with that.

Todd Pepmeier, Chief Financial Officer, Arrive AI: Yeah. Thanks for the question, Sergio. Regarding dilution, one of the things is we don’t control when the convertible notes become equity. That’s up to the investor, Streeterville. What we do control is how quickly we use the cash, and how soon we take more. In that aspect, I think we’re managing cost very relentlessly here. We’re monitoring our burn rate. Non-essential costs are being sacrificed to focus on real product development expenses. AI, these technologies we’re using are quite expensive. We’re trying to focus our expenditure where it has the biggest return on investment for us.

Kylan, Investor Relations / Call Moderator, Arrive AI: second part is help investors to understand your approach to capital allocation and risk management, particularly in light of the options trading activity disclosed in your filings.

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Go ahead, Todd.

Todd Pepmeier, Chief Financial Officer, Arrive AI: Yeah. From time to time, we have cash sitting on the balance sheet to fund operations. What is not being actively used to fund daily operations is typically invested in money market funds, things that will generate some return. We do occasionally use a covered call strategy to produce income. These are some of the ways we’re trying to get a return on that cash while it’s waiting to be consumed.

Kylan, Investor Relations / Call Moderator, Arrive AI: Sergio, I believe we addressed your questions three and five regarding Nasdaq compliance and building out the team. Let’s go to number four, how your current liquidity position and expected runway support your ability to execute.

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Todd, I’ll let you continue with that.

Todd Pepmeier, Chief Financial Officer, Arrive AI: As we mentioned earlier on the call, in January, we had an unusually high volume day that gave both the investor and us the opportunity to bring down $10 million from our equity line. It’s important to us to have that money when it’s available, secure the next several months of runway. We mentioned our cash burn rate earlier on the call, about $1 million a month. You can do the math to see why it was prudent to take down the money when we had the opportunity to do it. It really adds some security for our operations in the next several months.

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Todd, why don’t you talk about the fact that that wasn’t like an impromptu thing? Those shares were already envisioned to be sold.

Todd Pepmeier, Chief Financial Officer, Arrive AI: Yeah, absolutely. I mean, the Streeterville line went in place last May with a defined number of shares. It was simply a matter of timing when we request the money and when the investor converts out. That was all known to the market. It’s the timing of when we choose to take it that we have to disclose.

Kylan, Investor Relations / Call Moderator, Arrive AI: The next two questions come from Deepak. First is, on the AP3 to AP5 transition, what’s the unit economics difference? What’s the target unit cost of scale, and when do you expect AP5 to be deployment ready?

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Niro.

Neerav Shah, Chief Strategy Officer, Arrive AI: Yeah. Thanks, Dan. Deepak, regarding AP3 to AP5 unit economics is order of magnitude. I can’t really talk about the exact unit cost of scale, but again, order of magnitude difference in not only the cost but the functionality, the use case, the intelligence on board. Dan had mentioned earlier some NVIDIA products that we’re using in there. We’re expecting a very powerful endpoint with a much cheaper price point. Regarding the deployment, the plan is for this year. We’re going to be modeling things and showing some key customers potentially. Stay tuned on that and you’ll see something, hopefully, in Q3, Q4.

Kylan, Investor Relations / Call Moderator, Arrive AI: Question two from Deepak, on the recurring subscription revenue, what’s the typical contract duration? Is there any minimum commitment from customers or can they churn quarter-to-quarter?

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Yeah. Let me handle this. I think I can handle quickly. Thank you, Todd. Dan here. As I mentioned earlier in the call, the big ROI that we are getting right now is the learnings. What’s important to us is we don’t want to make tons and tons of units and have them simultaneously out. The thing that we’re finding is really good for us is to deploy a small amount of units for a short period of time in different use cases and bring those back and get the learnings and spool those into new development. In the situations where we are doing more permanent deployments, we’re looking for a minimum of a two-year deal.

We think that is a good time horizon to condition the customer and have them realize the benefit of what we’re doing so that we can have a long-term life cycle through these deployments. Churn is obviously something that, if you have a great product and you’re bringing great ROIs, hopefully churn takes care of itself. We haven’t outscaled to a level yet where we can really quote a churn rate. We’re mindful of that and we’re conditioning every deployment with patience built in, flexibility, and the customer knows that everything we learn at their specific use case are benefits that they’re going to be able to take advantage of because they’re going to be centric to what they’re already doing.

Kylan, Investor Relations / Call Moderator, Arrive AI: We have three questions left. Next question from Greg. For the early investors, such as the first 3,000, can you provide an estimate as to how long it might be before the share price gets back to our investment purchase cost per share after 4-to-1 split at $13? I’m in for the long haul and still completely believe in Arrive AI.

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Hey Greg, good to hear you out there, man. I know we’ve talked several times. Thank you for your question. Obviously, I want the same thing you do. It’s really inappropriate for us to talk about specific share price or time horizons to get back where you want to be, or I think I had mentioned earlier, I’d love to get to a point where we start splitting the stock the right way and by giving more shares and all those kind of things, but we have to get there. Just know that we are aligned in that way of thinking. I’m an investor doing a lot of the same things you guys do, and I want the same things that you guys want, and I just want you to know that’s the thought leadership that you have here at this company.

If you’re aligned with that, stay tuned.

Kylan, Investor Relations / Call Moderator, Arrive AI: From Owen, what would a five to 10 year outlook as robotics and drones are becoming increasingly popular? What would be a field for heavy interest, such as food, medical, or package?

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Niro.

Neerav Shah, Chief Strategy Officer, Arrive AI: Yeah, thanks, Dan. Owen, yeah, great question. As you’re following us, you’re seeing that we’re really focusing on medical initially. High-value items, smaller, easy to move around. In five or 10 years, frankly, we see everything on the table, from food to just all kinds of things moving your kids’ lunch from if you forget to drop their lunch off. We see this as being completely ubiquitous by 10 years out. Again, starting at medical, but we’ll be hitting everything in 10 years.

Kylan, Investor Relations / Call Moderator, Arrive AI: Niro just had a thought leadership piece published regarding restaurant infrastructure and food deliveries and things like that. Be looking for that. We’re getting our leadership out there with some great pieces. Finally, second question and our last question is from Amen. It’s already been addressed by Dan, just about dilution and things of that nature. That concludes all of our questions for the call.

Dan O’Toole, Chief Executive Officer and Founder, Arrive AI: Yep. Hey, thanks everyone for joining. We love the interaction. When we do these calls, we’re committed to answering every question, and no matter how long it takes. I know these can be lengthy. We apologize for that, but we don’t want to leave anything. We want to be totally transparent, communicative, and this is your company. Stay tuned. We’ve got some great things happening. You’ve seen it in the market recently, and I want you to stay tuned for the next great thing that’s coming down the pike here. Thanks, guys.

Kylan, Investor Relations / Call Moderator, Arrive AI: Michelle, we’ll send it back to you.

Michelle, Conference Call Operator: Thank you. This concludes today’s conference call. Thank you for participating, and you may now disconnect.

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