Company: ARAI
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001493152-25-023457
Chunk: 62

Company: Arrive AI Inc.
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 8
Chunk 62
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     51,577  
     7,579 

    TOTAL PREPAID EXPENSES 
    $164,777  
    $55,867 

    - 17 -

ARRIVE
                                            AI INC. 

NOTES
                                            TO FINANCIAL STATEMENTS (Continued)

  8.
  LEASES

The
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.

At
the inception of a contract, the Company assesses whether the contract is, or contains, a lease. The Company’s assessment is based
on: (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 asset. 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.

Leases
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.

At
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. ROU assets
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.

Lease
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