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

Company: Arrive AI Inc.
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 1
Chunk 25
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 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
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 basis. 

    - 21 -

ARRIVE
                                            AI INC. 

NOTES
                                            TO FINANCIAL STATEMENTS (Continued)

  13.
  COMMITMENTS AND CONTINGENCIES
  (Continued)

Lease
Obligation (Continued)

FASB
ASU No. 2016-02, 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.

Litigation

On
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.

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