Company: ARAI
Filing Date: 2025-06-05
Form Type: 10-Q
Source: 0001641172-25-013826
Chunk: 9

Company: Arrive AI Inc.
Filing Date: 2025-06-05
Form: 10-Q
Item: Part I, Item 1
Chunk 9
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5.

The
Company acquired three “Gen 3” Arrive Point units in December 2024 for approximately $38,000. One of the units entered into
commercial service in April 2025 and the remaining two units are expected to enter commercial service in May 2025. The Company believes
the cost of the Gen 3 Arrive Point units have an alternative future use and the cost of these units and associated installation costs
were capitalized but had not been placed into service as of March 31, 2025. These units will be placed into service once accepted by
the end customer. No impairment loss on these units was recognized as of March 31, 2025.

     - 9 - 

ARRIVE
AI INC. 

(FORMERLY
ARRIVE TECHNOLOGY INC.)

NOTES
TO FINANCIAL STATEMENTS (Continued)

2.SIGNIFICANT
                                            ACCOUNTING POLICIES (Continued)

Accounts
Payable and Accrued Liabilities

Payables
are obligations to pay for materials or services that have been acquired or have been rendered in the ordinary course of business from
suppliers or vendors. Payables and accrued liabilities are classified as current if payment is due within one year.

Equity
Financing

The
Company engages in equity financing transactions to obtain the funds necessary to continue operations and develop a commercially viable
drone delivery system. These equity financing transactions involve the issuance of common stock and at times, if the cash investment
by each investor exceeds $250,000, include equity warrants.

Equity
warrants are instruments that bestow upon the holder of the instrument the right to buy a particular stock at a predetermined price within
a stipulated time frame. Under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 480, the Company classified
the warrants as equity instruments and carries the warrants at the grant date fair market value.

Depending
on the terms and conditions of each equity financing transaction, the warrants are exercisable into additional common shares at an agreed-upon
price, as defined in the Stock and Warrant Purchase Agreement (“the agreement”) prior to the expiration of the warrants as
stipulated by the terms of the transaction in the agreement. The fair value of the stock purchase warrants issued is determined by using
the Black-Scholes-Merton (“Black-Scholes”) model. The Black-Scholes model requires the use of highly subjective and complex
assumptions,