Company: ARAI
Filing Date: 2025-06-05
Form Type: 10-Q
Source: 0001641172-25-013826
Chunk: 19

Company: Arrive AI Inc.
Filing Date: 2025-06-05
Form: 10-Q
Item: Part I, Item 1
Chunk 19
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 option that the lessee is
reasonably certain to exercise.

Litigation

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 third-party claims that the Company’s products, when used for their intended purposes,
infringe the intellectual property rights of such other third parties, or other claims made against certain parties. It is not possible
to determine the maximum potential amount of liability under these indemnification obligations due to the Company’s limited history
of prior indemnification claims and the unique facts and circumstances that are likely to be involved in each particular claim. On February
7, 2024, the Company entered into a settlement agreement to resolve a long-standing dispute. The settlement relates to a case brought
against the Company’s CEO in 2020, prior to the formation of the Company, by a contractor hired to perform certain services for
the Company. As a result of the agreement, a payment of $18,500 was made in exchange for full settlement and mutual release of all claims
in the matter.

12. RELATED-PARTY TRANSACTIONS

On
May 26, 2020, the Company entered into a 3-year agreement with a stockholder of the Company for the use of a patent. Beginning June 1,
2020, the Company began paying the stockholder a monthly license fee of $10,000. Once revenue from sales, rentals, and leases begins,
the Company is required to pay $25.00 per unit sold. If the Company does not sell 400 units per month (or $10,000), the original fixed
$10,000 is paid. Accordingly, for the three
months ended March 31, 2025 and 2024, the Company recorded licensing fee costs in the amount of $30,000 each period.

     - 18 - 

ARRIVE
                                            AI INC. 

(FORMERLY
ARRIVE TECHNOLOGY INC.)

NOTES
TO FINANCIAL STATEMENTS (Continued)

12