Company: ARAI
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001493152-25-023457
Chunk: 58

Company: Arrive AI Inc.
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 8
Chunk 58
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 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
met. The Company uses the Black-Scholes model to estimate the fair value of stock options and forfeitures are accounted for when incurred.

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 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.

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.

    - 13 -

ARRIVE
                                            AI INC. 

NOTES
                                            TO FINANCIAL STATEMENTS (Continued)

2.SIGNIFICANT
                                            ACCOUNTING POLICIES (Continued)

Income
Taxes

There
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