ARAI

Welcome to the Arrive AI Inc Q1 2026 earnings call. At this time, all participants are in listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question, you will need to press star one one on your touch-tone telephone. Please note this call is being recorded. I would like to turn the call over to Kylie Conway, Arrive AI Senior Communications. Please go ahead.

Thank you, Michelle. Before we go any further, our CEO, Dan O'Toole, has something he'd like to recognize this morning.

Hey, thanks, Kylie. Everybody, thanks for being here and listening. This is an exciting day for us. One year ago today, we actually made our public debut on the NASDAQ ticker ARAI. It was the culmination of a huge journey that took us through a lot of twists and turns, and it's something that I'll never forget my whole life. I appreciate everyone that helped make that happen. I ordered a chicken and egg a little bit earlier, and I'm gonna let you know which one comes first, but go ahead, Kylie, take it back.

Dan, thank you. Good morning, everyone. Thank you for joining us today. With me on the call, of course, you just heard from him, Dan O'Toole, Arrive AI's Chairman, CEO, and Founder, and Todd Pepmeier, Chief Financial Officer. The rest of our leadership team is also here in the room to answer questions later in the call. The earnings press release issued this morning is available in the Investor Relations section of the company's website at arriveai.com. Before we begin, please note that today's remarks may include forward-looking statements regarding future financial results, operations, and performance. These statements are not guarantees of future results and are subject to risks and uncertainties that could cause actual outcomes to differ materially. We encourage investors to review the risk factors detailed in Arrive AI's SEC filings, which are also available on the company's website.

Now, I'll turn the call over to Arrive AI CEO, Dan O'Toole.

Hey, everyone. Dan O'Toole here. Thank you for joining us today. As always, we appreciate you taking the time to be with us and follow our progress. Building Arrive AI continues to be an incredible journey. Like any company creating entirely new infrastructure, the path is not always linear, but our vision remains clear, and we continue executing against that vision with discipline and focus. One thing I wanna emphasize before we begin is how we think about our progress as we continue to build the infrastructure and processes that will help us begin to ramp our commercial activities beginning later this year. The same way an early-stage pharmaceutical company's progress is evaluated by milestones they achieve along their way to commercialization, development progress, validation points, regulatory steps, manufacturing readiness, and commercialization preparation is the way we view the consistent progress we are making.

What matters most right now for the company is whether we are continuing to hit our operational milestones that move us closer to scalable deployment and recurring revenue. Over the last 30 days, we believe we've made measurable progress in several important areas. Before we get into those updates, I also wanna mention that we're continuing to experiment with innovative formats for our earnings calls. The prepared remarks you're about to hear will be delivered using the AI-generated versions of my voice and Todd Pepmeier, Chief Financial Officer at Arrive AI. For us, this is more than a novelty. It reflects how we think about artificial intelligence as a practical tool that can improve efficiency, scalability, and communication. The same philosophy that drives our broader platform and autonomous logistics network.

After the prepared remarks conclude, Todd and I will return live to answer questions that were submitted ahead of this call. I'll also be joined by the rest of our leadership team, Chief Strategy Officer, Neerav Shah, Chief Operating Officer, Mark Hamm, and Chief Legal Counsel, John Ritchison. Also, Todd will rejoin. With that, let's begin the prepared remarks. Thanks, everyone. Given it has only been about 30 days since our last update, today's call will focus primarily on our execution progress and operational milestones. As I noted earlier on this call, we believe we've made meaningful progress in this short period of time. As I've said before, building a category-defining company is not linear, but we continue executing deliberately, and we're seeing those efforts translate into stronger operational fundamentals across the business.

At Arrive AI, we believe our most meaningful metric of progress right now is not financial, such as revenue or EPS. It is MPQ or milestones per quarter. At this phase, our focus is on building the right infrastructure, validating deployments, strengthening our technology, expanding partnerships, and preparing for scalable recurring revenue opportunities. These milestones matter because they are what ultimately create the foundation for long-term shareholder value. When we look back since becoming a public company in May of 2025, we believe we've accomplished a significant amount in a relatively short period of time.

Since going public, we have strengthened and reorganized our leadership team, advanced our AP3 platform, optimized our supply chain, brought software development in-house, expanded development of our proprietary operating system, Arrive OS, advanced deployment and demonstration initiatives, added experienced leadership to our board, expanded strategic conversations across logistics and infrastructure sectors, and continued positioning Arrive AI as a foundational platform for autonomous logistics and intelligent delivery infrastructure. We have also strengthened our patent portfolio to now 10 U.S. utility patents.

While we recognize we are still early in the commercialization cycle, we believe these operational milestones continue moving the company meaningfully forward. I'll walk through several recent important updates before turning it over to Todd. One of the most important developments since our last call has been progress within our supply chain and manufacturing operations. We've taken significant steps to optimize and stabilize AP3 production through a new manufacturing partnership in India. This has improved both our supply chain reliability and cost structure, giving us a more scalable and predictable manufacturing base moving forward, while also speeding up unit delivery. This configuration represents what we believe is the finalized supply chain structure for the current AP3 platform as we prepare for our transition toward next-generation hardware. Importantly, we remain on track for an improved AP3 release in July, with broader availability expected beginning in October.

We believe this increased availability is important because, until now, deployment capacity has naturally limited the pace at which we could onboard new customers and expand deployments. The July release is not a complete platform redesign. It is a meaningful refinement and enhancement of the existing AP3 platform focused on reliability, deployment readiness, and customer scalability. At the same time, we continue progressing toward our next-generation platform, internally referred to as APX. We expect to receive early APX prototypes in the coming development cycle, and this platform represents a major step forward in functionality, manufacturability, and long-term scalability.

While AP3 establishes the operational network foundation, APX is designed to support larger scale commercialization and broader deployment opportunities across autonomous logistics, healthcare, enterprise delivery, and smart infrastructure applications. Another important development is the advancement of Arrive OS, the software layer that will help unify deployment management, monitoring, integrations, and future network functionality across the Arrive ecosystem. Much of this foundational work was completed during Q1, and we expect phased rollout activity to begin during Q3. This is an important strategic initiative as it creates a more scalable and cohesive operating environment across our intelligent delivery network. In addition, following our recent internal reorganization, we have now brought software development fully in-house, which has already created meaningful operational efficiencies.

We have stripped out portions of our legacy software stack and replaced them with internally developed systems that are already improving performance and iteration speed on our current AP3 units. Owning more of our software stack internally improves our ability to move faster, deploy updates more efficiently, and build a stronger long-term technology foundation. To sum this up, we own and control all of our software that is being built in-house. It's saving us money and time while keeping us in control of our success. This is exactly where we wanna be. We've also continued advancing plans for a digital demonstration initiative with a realistic target of conducting that demonstration in Texas later this year. This important milestone will provide customers, enterprise partners, municipalities, and logistics stakeholders with the opportunity to evaluate our platform operating in more realistic deployment conditions.

These demonstrations are critical because autonomous logistics infrastructure requires trust, validation, and operational proof points. As we continue demonstrating real-world functionality, it strengthens both customer confidence and future deployment opportunities. From a governance standpoint, we recently held our first board meeting with Mike Fitz as a member of our board. Mike is a member of T-Mobile's leadership team and brings invaluable experience in networks, connectivity, and large-scale infrastructure operations to Arrive AI. His addition further strengthens what we believe is an experienced and highly engaged leadership group, and we are already benefiting from his strategic perspective and operational insight. We continue to believe strong governance and experienced leadership will play an important role as we scale the business. While we remain careful about discussing initiatives prior to execution, we are encouraged by the level of engagement and interest we continue to see.

Given the progress I've just highlighted, I am confident you will agree with me that the foundation we are building continues getting stronger quarter by quarter. With that, I'll turn it over to Todd Pepmeier, Chief Financial Officer of Arrive AI.

Thanks, Dan. Given the short period since our last update, there are a few major changes to report from a financial standpoint today. Our priorities remain consistent, disciplined capital allocation, infrastructure investment, deployment readiness, and operational scalability. As we've said previously, Arrive AI is building a network-driven business model. For the first quarter, our total revenue was $14,925. All of which was recurring subscription revenue from our deployed Arrive Points. Our net loss for the first quarter was $6.4 million, compared to a loss of about $2 million in the same quarter of 2025. The increase was primarily due to higher operating expenses and non-cash items related to our convertible note facility.

We ended the quarter with $5.7 million in cash and $2.8 million in short-term investments on the balance sheet, primarily as a result of the January 2026 $10 million draw from our existing credit facility. This significantly strengthens our balance sheet and provides a meaningful runway to continue executing our business plan and funding our growth initiatives. Our quarterly cash burn rate of approximately $3 million has been mostly driven by salary costs and R&D expenses as we built out the team to support growth. We expect expenses to remain at or near this level in the short term before increasing modestly in the fourth quarter. We continue managing capital carefully while maintaining a focus on long-term scalability.

On a housekeeping note related to capital markets activity, in the days immediately following this call, we expect to file a shelf registration statement with the SEC as we are now eligible to do so. This filing is standard corporate practice for public companies and does not reflect any immediate financing plans. What it does reflect is the optionality that benefits the company. When the opportunity arises to capitalize Arrive AI on our own terms and at the lowest cost of capital, the shelf filing will position us to take advantage of that opportunity in the most efficient manner. Our capital strategy has not changed, our operating framework has not changed, and we remain focused on disciplined execution moving forward.

As an example of this discipline, earlier this week, we reached a standstill agreement with Streeterville Capital through the end of the year, which we believe represents an important step forward in strengthening Arrive AI's capital markets position. The standstill substantially reduces the volatility which resulted from the previous routine conversion activity by the investor. This should provide the conditions for more natural price discovery and thus reduce a significant source of market uncertainty. Importantly, we accomplish this from a position of operational and balance sheet strength. We believe we have sufficient capital available to support our business plan through the standstill period under ordinary market conditions. At the same time, the structure of this recent agreement preserves flexibility for the orderly reduction of the remaining Streeterville balance during periods of significant market liquidity, which could further improve our capital structure over time.

Overall, we view this as a positive alignment between shareholder interests, market stability, and long-term value creation for Arrive AI. Additional details for this standstill agreement will be noted in a Form 8-K we plan to file later today. Additional financial commentary and detailed results will be included in our filed earnings materials. With that, I'll turn it back to Dan.

Thanks, Todd. To wrap up, we believe the last 30 days have demonstrated meaningful operational progress across several important areas of the business. We strengthened our supply chain, we improved execution internally, we advanced software infrastructure, we continued progressing deployment demonstrations, and we further positioned the company for future scalability. We strengthened our first position patent portfolio. We added significant bandwidth to our world-class team. Most importantly, we continued building the foundation required to support long-term autonomous logistics infrastructure. Our focus remains straightforward. Execute the roadmap, expand deployments, and continue positioning Arrive AI to capture what we believe is a significant long-term market opportunity. We appreciate your continued support and engagement. With that, Todd and I will now return live for Q&A along with the rest of our team.

Thank you. As a reminder to ask a question, please press star one one. If your question has been answered and you'd like to remove yourself from the queue, please press star one one again. Our first question comes from James Kisner with Water Tower Research. Your line is open.

Hi, thanks for taking my question. Hancock Health has been a very encouraging proof point. Can you talk about your confidence about, you know, healthcare in general? Like, how repeatable a vertical for Arrive AI is that?

Yeah. Hey, thanks, James. Dan O'Toole here, CEO. Appreciate that very much. We do highly value and appreciate the Hancock opportunity. It's been a great showcase for us, not only within the hospital and how it's really helped our ROI as far as maintaining healthcare professionals dedicated to areas, keeping them in those areas and letting automation streamline a lot of things. It's also afforded us an opportunity to bring several other groups to Hancock to showcase what we're doing there. I can say that that opportunity is growing. We've newly identified additional opportunities within Hancock that we're gonna be rolling out. Neerav Shah, our Chief Strategy Officer, do you wanna add to that in any way? Go ahead.

Yeah. Thanks, Dan. I just wanted to kind of hone in on one point Dan made, and that's about the labor. You know, Dan had said about saving time, and that pressure isn't going anywhere. Labor pressures are gonna continue to grow. In fact, nursing shortages will be there. If we're taking that basic burden off of the nurses is massive and cuts across the entire country, frankly.

James, you have anything else, James, you wanna ask?

Yeah, sure. A couple quick ones if I can sneak them in. As you talk about kind of the near-term opportunity, just I'm kind of wondering how much it depends on kind of drone approvals, you know, versus workflows that can see all the day, you know, with ground robots, couriers, and kind of internal campus logistics.

Hey, Mark, do you wanna take that one?

Mark Hamm, our CEO.

Yeah.

While there are still some hurdles on the drone front, there are areas of the country that are very active with drones, like Texas, for instance. We are targeting them in time. With regard to kind of robots and traditional logistics couriers and now kind of DoorDash services, things like that, of course, that's all very active now, and you can see that on hundreds of campuses. Yeah, we're actively pursuing that.

Okay. James, what else you got?

All right. You guys, I mean, talked about kind of international opportunities. Just how are you kind of balancing pursuit of international versus the opportunity to go deeper in the U.S.? Like, how are you prioritizing that?

Yeah. You know, we being a low-to-no-revenue company as we are really building a brand new, you know, platform in an emerging technology market. You know, what's really important to us is, you know, deploying human resources as efficiently and cost effectively as we can for support of those opportunities and also just capital overall. We're kind of doing a home first approach. We're trying to iterate and develop as close to home just for all those reasons. For us, the ROI right now is the learnings. We're able to have those learnings be very linear and pull them back and redeploy new things that we're learning and getting those into our next gen products. That's kind of our strategy.

I mean, the reality is there's lesser restrictions in a lot of the parts of the world besides the U.S., and it would be easy to iterate in those areas. When you put that against the backdrop of all those costs and human resource costs, it just really makes sense to iterate here at home as close as possible, and that's what we're really focused on.

That's helpful. Last one for me. Just, you know, I apologize if you addressed this in the opening comments because I had to hop from another call. You know, just talk about the cash runway, like how to kind of think about that. You know, especially given I assume that some of the stuff you're working on, has some cash requirements, like the AP3 availability and software development, all that.

Yep. I'm gonna have Todd, our CFO, jump in on it, but I wanna preface one thing that we're really excited about. Today, we announced a standstill agreement with Streeterville. We figure that we feel like we're really well positioned from a capital standpoint to not have that headwind of draws coming off of that line. I'm gonna hand this over to Todd.

Yeah. Thanks, Dan. James, as we noted earlier, our cash burn is about $3 million a quarter right now. You know, we expect it to remain at that level for the next couple of quarters. It may kick up modestly as we go into the fourth quarter and increase unit deliveries and things like that. We ended the quarter with about $8.5 million of cash and short-term investments on the balance sheet, which is something like eight months of runway at the end of the quarter if we do, you know, if we do nothing else. As we said earlier, we are going to file a shelf registration statement and access capital at much lower cost of capital here, you know, at the right opportunity.

We do have that available to us as well. Finally, with regard to Streeterville, we did request a standstill agreement. They complied. We think that will significantly reduce the volatility, you know, their routine conversions were at their choosing, not ours. They've agreed to stand still and vice versa. We don't really need to take more cash in the very short term. We think we have runway to get much further out in the year. I would say we do still have $19 million capital left on the facility with Streeterville if we choose to take it. With all that said, we feel like we're in a pretty good place runway-wise to execute the business plan in front of us.

All right. That's great color. Congratulations on getting that done. I'll pass the mic.

Thank you.

Thank you. Our next question comes from Jack Vander Aarde with Maxim Group. Your line is open.

Hi. How's it going? This is Jack Roderick calling in for Jack Vander Aarde. Thanks for taking my questions. You know, first kind of clarification question quick. On the revenue front, you know, it was relatively small, but, you know, any revenue is positive. Can you parse that out? Is that entirely Hancock Health? You know, can you just give us kind of a general update on, you know, all of the different, you know, sort of pilot programs that are progressing, you know, where you expect to see kind of, you know, revenue start to build?

Yeah. Hey, hey, thanks, Jack, for being here. Appreciate it. I'm going to hand this to Todd, but I'd just like to preface this by saying, you know, we are very early. We are building the platform. We are building the technology. We are not focused on some de minimis revenue that becomes the guidepost of our valuation. The value in what we're building is the product and all the software layers and all the proprietary AI items that we're engineering and developing right here in our building. If you could contrast that against the small revenue, you'd be really shocked at where we are and how fast we're moving. We will flip a switch at some point, and you'll see this in a big way. I'm going to hand that over to Todd, our CFO, and Todd can further answer that. Todd?

Yeah, thanks for the question, Jack. Yeah, more than 90% of the reported revenue was from the deployment at Hancock Health, not unlike what we reported in Q4 as well. They remain the vast preponderance of our revenue stream at the moment. We did have one other small revenue deployment that was active in the quarter, but de minimis compared to the Hancock opportunity. One other thing I want to come back with just to kind of put a bow on this is, you know, being an early company in an early emerging market, what's important is not nickel-and-diming opportunities to the point where you extinguish them. You know, for us, the ROI is the opportunity more than the capital at this point or the revenue.

We're focused on that. We're not trying to extinguish opportunities by being very giddy about how can we nickel-and-dim this thing. You know, that to us, the cost of doing business is being in these opportunities. I can say that we are having a very robust cycle of, you know, inbound contacts, wanting to explore how to work together, you know, doing deployments, scheduling opportunities, doing presentations. This is a very frothy environment for us right now as the market starts to, you know, realize that scalability of autonomous delivery and pickup cannot happen without the infrastructure, and that's us.

Okay, that's helpful. I had another question, you know, kind of in that same ilk. What do you think catalyzes that kind of commercialization progress? Is it, you know, just time through these pilots where people realize how useful it is? You know, you mentioned kind of the OpEx expected to stay, you know, roughly flat to near this level. You know, given the headcount increase, you know, do you expect the headcount to drive things forward, or do you have any plans to kind of scale sales and marketing? How should we think about that?

Yeah. I'm gonna throw this over to Mark, I do wanna say one thing. There's a lot of alignment happening. You know, drone delivery, robotic delivery, Arrive AI, all these things are converging. It's really coming to a boiling point, which is gonna be huge for everybody. I can say there's, on the deployment at Hancock that we have, we've had dozens of groups come in and see that. That is what's creating excitement and people becoming aware of us. As that continues to happen, we continue to roll out. You know, we see a day when the biggest challenge we have is filling opportunities and not getting ahead of ourselves in that regard. I'm gonna let Mark finish that thought here. Go ahead, Mark.

Yeah. What I would add is, our intention is to continue learning in the present mode at the present levels. Then as we stated by end of next year, we're pursuing deploying the next generation. As we build up to that, you also heard that we've announced a digital demo that we're exposing strategic partners to, that we believe is the foundation for engaging them in preparing for that next gen. It's really that next gen where we're targeting larger deployments with larger customers. That, I believe, is the step function that kind of you're referring to. I think that's the real trigger point.

Okay, that's super helpful. I'll hop back in the queue. Thanks, guys.

Thank you.

Thank you. That concludes our analyst questions. Now I'll pass the call back over to Kylie.

Thank you, Michelle. We did receive a number of thoughtful pre-submitted investor questions ahead of today's call, many centered around similar themes, so we've grouped them into broader topics to make the discussion as efficient and informative as possible. We'd like to thank Benjamin, Billy, Kelly, John, Raul, Betty, Sung Yin, Christopher, Matthew, Ryan, Shelly, Tim, and also thanks to James and Jack for dialing in. First, kind of piggybacking off of some of James's questions, we received several regarding Arrive AI's international initiatives, including updates on Antigua and Skye Air pilot programs, the expected path toward monetization from those deployments, broader international expansion opportunities, including healthcare markets overseas, and the company's global intellectual property position and patent protection.

That's a lot. Thanks for asking your questions. For future calls, just so you guys know, we do have a proprietary questionnaire that we put out to all of our shareholders, and you're welcome and encouraged to submit your questions so we can get to all of them. I'm gonna let Neerav start on that one, and I think John-

That's right.

... want to add to that too.

Thanks, Dan. I'll start with Antigua. Right now, the unit economics of BVLOS operations are just not there because of the regulations. For an example, in the U.S. with Part 107, you need to have visual observers, that just drives up the cost of drone operations. With Part 108, we see that dropping, that would reduce the cost internationally of beyond visual line of sight type operations and autonomy. Once that happens, I think unit economics in places like Antigua will make a lot more sense. Stay tuned on that. We're monitoring that very closely. The second question was around Skye Air. Stay tuned. There's a lot happening there. The CEO of Skye Air was in Indianapolis, about two weeks ago, for some critical conversations and discussions.

Stay tuned. Like I said, we'll be announcing something hopefully here in the not-too-distant future. I'll turn it over to John around the international patents.

Thanks, Neerav. Before we started commercially here in the U.S., we secured our position. Dan mentioned already that we've got 10 issued patents. We've actually now with our M-Plus system, excellent engineering staff, we've got over 14 in the pipeline. IP in the U.S. continues where it's been, and it's growing very rapidly with the new personnel. Similar to that, we have prepared ourselves internationally. You say, okay, how do you do that? Where do you go from here? We looked around and used the World Bank GNP, took the top countries from that and looked at their GNP and looked at other things. If we had contacts there, if we had interest from marketeers, potential licensors, also contacts with drone and robotic people.

All those places that we've got, and that's over we've got 23 countries now around the world. In those places we've now got 77 international patents in the pending stage. Of those 77, we've had over 10 issued or allowed, and the rest of them are still in the pending stage going through examination. The important part, I'd say, is with the commercialization, we're prepared with our protection ahead of time.

All right, John. Thanks. Thanks, Neerav. We also received a number of questions related to commercialization progress and operational scale, including current deployments, recurring revenue expectations, production timelines, commercialization milestones investors should be watching over the next 12-18 months, and the broader path towards scaling operations and achieving cash flow breakeven.

I would ask Mark to handle this one.

Yeah. Thanks, Dan. Yes. We know everybody wants revenue, and we want it, too. Towards that end, we're executing a milestone-based process framework to innovate and produce more revenue. The way we think of it is innovation equals invention plus realization plus commercialization. Right now we're kind of in that realization phase where we're building next-gen AI-enabled products. We're building an AP network and a new Arrive Point platform to go with all of that. Last quarter, we actually slowed down to incorporate some of the latest learnings from the AP3 in the field, from Hancock and others, and also to improve the supply chain of the AP3, as well as to pull forward some next-gen technologies we've already developed for what was referred to earlier as APX.

All of that is improving what we plan to release in July as our AP3, which is a significant set of improvements and will allow us to do some further deployments and learning. The AP3 will also be available in higher quantities in Q4 with the supply chain improvements. Beyond that, as stated earlier, we're looking in the second half of this year to be employing our digital demo with some strategics as we build towards larger next-gen deployments and delivering next-gen Arrive Points by the end of next year. Those are the major milestones I'd say for the next 18 months.

Thanks, Mark. Another topic investors asked about was residential adoption, including opportunities with home builders, integrating Arrive AI technology into new housing developments, and the company's long-term vision for residential delivery infrastructure.

Thanks, Kylie. This is Dan. I'm gonna answer that. We're looking at every aspect of delivery and deployment for Arrive Points. You know, the total addressable market in the U.S. is 170 million addresses. The cool thing is that number grows by 4,000 new addresses every day. When you talk about rolling out into new subdivisions and things like that is something that is on our radar. Studying infrastructure for new developments is a great and easy way to do it. We see that as a great growth opportunity. Also, 80% of the market is residential, 20% is commercial. The residential aspect is probably the largest opportunity ultimately for us. We are looking at all these areas.

We're developing some really optically and aesthetically, really modern, you know, I would say Apple-esque looking products that are gonna really modernize the streets of America and the world. Stay tuned for that. Obviously we're looking at all these opportunities and it's an exciting moment, I can tell you that.

Thanks, Dan. We also saw several questions around strategic partnerships and infrastructure opportunities, including potential licensing arrangements with major logistics providers, collaboration opportunities with biotech and medical device companies, and how the platform could support medication and grocery delivery for elderly or disabled populations.

Mark, why don't you take that one?

Yeah. We're excited and our investors are thinking along the same lines we are about the future of all those opportunities. I think, I guess it was right around the time we were going public, we did talk about some of the assisted living and those types of opportunities. Of course, in due course down the road, we will definitely be looking at international and licensing. Again, when you're delivering next-gen products, a network, a platform, the AI, and then all the associated certifications and compliance that goes with that. We believe the big opportunity here is here for quite a while, and we will not be limited on opportunity, and so we'll get to those items as it makes sense to continue the momentum.

Thank you, Mark. Finally, we received questions related to capital strategy, including the company's cash runway, approach to dilution, and future financing, as well as questions surrounding treasury management activities referenced on previous calls.

Todd, CFO.

Thanks, Dan. As we noted earlier, I think it was Jack's question, at the end of the quarter, we had liquidity on hand, including the cash and the liquid investments to fund us for the next eight months or so. We're also putting in place an at-the-market facility, which will give us the opportunity to raise additional capital at a much lower overall cost of capital. Together, we believe that gives us enough dry powder to execute our plan into 2027 and beyond. You have to remember, we're developing and deploying a whole new technology platform in an emerging market, and this business plan will require new capital over the next several years to achieve the scale we're talking about. My job is to make sure we do that in the most efficient way for the shareholders.

In the meantime, we do have a treasury management program that puts a portion of our idle cash to work to earn favorable returns until we need it. We evaluate that risk tolerance periodically to ensure we're being good stewards of our assets, and we may adjust that treasury allocation from time to time.

Todd, thank you. I'll turn it to Dan for final closing remarks.

Yeah. Thanks, Kylie. Thanks everyone for being here. Thanks to my team, everyone that invested in this company or is considering that. This is all of our company. I just want to reiterate that today marks a huge milestone in this company's evolution. We are marking our one-year anniversary to the day of us going public on the NASDAQ. That was a North Star goal that we had for a long time, we accomplished it. If you loved us as we went through that journey, you should really love us now because as we move forward, we've never been more well-positioned than we are at this moment. With the acceleration of the market around us, with the announcement of the Streeterville standstill agreement today, I see that as a big breathing opportunity for our stock to breathe. I think that's important.

We are moving fast. We're up to nearly 50 employees at this point. We're well-capitalized, and we've got cutting-edge technology that the market is gonna be anxious to take receipt of. Thanks for being with us. Thanks for all of your questions, and I'll hand it back to our operator, Michelle.

Thank you for your participation. This does conclude the program. You may now disconnect. Everyone, have a great day.

Good morning everyone, and thank you for joining us today. With me on the call are Dan O'Toole, Arrive AI's Chairman, CEO, and Founder, and Todd Pepmeier, Chief Financial Officer. The earnings press release issued this morning is available in the Investor Relations section of the company's website at arriveai.com. Before we begin, please note that today's remarks may include forward-looking statements regarding the future financial results, operations, and performance. These statements are not guarantees of future results and are subject to risk and uncertainties that could cause actual outcomes to differ materially. We encourage investors to review the risk factors detailed in Arrive AI's SEC filings, which are also available on the company's website. Now, I'll turn the call over to Dan O'Toole.

Hey guys, Dan O'Toole, CEO of Arrive AI here. I want to thank you so much for joining our earnings call today. I'm really excited about where we are and the trajectory that this company is under, so I couldn't be more excited. I wanted to start out by saying that running Arrive AI has been the journey of a lifetime for me, and I would not trade one moment of it. What I mean by that, true integrity dictates that acknowledging the challenges and the successes equally is what it's all about. Is anything ever straight up and perfect? Of course not. You know what? That creates opportunities, and that's what this company is all about.

I want you to know that I continue to be hyper-confident about where we are heading, how we're getting there, and I know that in the very near future, there's gonna be a moment when a switch flips and things happen in a hyperscale way. Right now, we are super focused on prudently executing on our roadmap. As part of that roadmap, it's crucial to have the right people guiding your business. Our Board of Directors plays a key role every single day with their decades of experience and leadership across logistics, healthcare, finance, and now cellular networks. I'm really happy right now to announce Mike Fitz has just joined our board. Mike is the Vice President of Indirect Channels and Solution Sales at T-Mobile for Business. He brings over three decades of experience in telecommunications, enterprise technology, and global network solutions.

His insight into 5G, IoT, and partner ecosystems will be invaluable in accelerating our growth. These are all areas that we are very focused on right now. It's a very timely acquisition to get Mike on our board, and I'm looking for some big things. I'm gonna let CFO Todd Pepmeier provide details on our financial results in a moment. Before that, I do want to stress that we are in a moment where new partnerships, deployments, and innovations have significant potential to drive material growth and revenue. We have put together a dynamic sales team to execute on that every single day. Now, speaking of innovation, one of the areas we particularly are excited about is artificial intelligence. We believe AI will play a critical role in how packages move, how delivery networks operate, and how systems coordinate with one another in the future.

In the spirit of that, we decided to do something kind of novel today. I'm not sure that it's been done before, but we are going to have today's entire earnings call given to you in AI voices of the team that's reporting. We wanted to showcase in a small way how AI can be used as a practical tool to help communicate and operate more efficiently. Our leadership team will join the call shortly after, and we will all be live to answer your questions. For now, let's begin with our prepared remarks voiced with AI. Kylie, why don't you go ahead and hit the play button, and let's see what happens. When we founded Arrive AI and set out to change last-mile logistics forever, it was a bold move.

We started by shaping and building a market before it even existed, including by securing patents that we believe provide a significant competitive advantage for the company. The logistics industry has spent billions of dollars trying to automate how packages move between trucks, drones, robots, couriers, but we are the first company to strictly focus on how and where these packages successfully and securely arrive. They need a home, and for that to happen, there has to be an infrastructure. That final exchange point, the secure handoff between sender, courier, and recipient is what we call the last inch of the last mile. That's the problem Arrive AI was created to solve. We are building the infrastructure layer for autonomous logistics, a network of intelligent delivery endpoints that allow people, robots, drones, and logistics providers to exchange goods securely.

You can think of it as the shipping store at your door. Said another way, if cell towers created the network for mobile phones, then Arrive AI is building the network for autonomous delivery. Next, company progress. We kicked things off in 2020, and since then, we have raised capital through three successful crowdfunding campaigns, completed our direct public offering in May. 2025, built a team of nearly 50 full-time employees, began real-world deployments of our technology. Today, Arrive AI trades on Nasdaq under the symbol ARAI with approximately 47 million shares outstanding and roughly 52% insider ownership. That level of insider ownership reflects our belief in the long-term value we're building and closely aligns our leadership team with shareholders. Part of that long-term value comes from our robust portfolio of U.S. and international patents, which is one of the most important assets we possess.

Our patents protect the digital architecture around secure delivery endpoints, autonomous handoff between humans and machines, climate-assisted storage, chain of custody verification, and interoperability across multiple delivery methods. We recently secured our 10th patent, which allows multiple people to use the same secure Arrive Point. The patent was issued on March 31st, 2026, and protects the IP that enables our units to handle packages for many different users with built-in storage and sorting to manage deliveries and pickups efficiently. These units offer the same security, chain of custody, and communication features as a single Arrive Point but are designed for shared use across multiple homes or businesses. Additionally, the patent advances the intelligence and coordination capabilities of our logistics platform, enhancing how secure delivery endpoints interact with drones, ground robotics, and human couriers.

With these IP-protected capabilities combined, the Arrive Point becomes the clear winner for an exchange point in the delivery ecosystem. The more endpoints we have connected to that network, the more valuable the network becomes. That's the network effect. I saw a meme recently that drove this point home. You know what was better than the first telephone? The second telephone. The scale of our opportunity is enormous. In the United States alone, there are approximately 170 million delivery addresses, and this number increases by 4,000 addresses every day. Each of those locations receives packages, increasingly including items that require secure or time-sensitive delivery, like pharmaceuticals and medical supplies, groceries, lab samples, and high-value retail goods.

An Arrive Point allows for unattended asynchronous delivery and pickup across these addresses, meaning each mode of delivery can come and go at its own cadence without waiting on a human or any other party to arrive. This prevents wasted time and increases efficiency and opportunity. Think of it this way. Right now, a ground robot can bring a delivery to you, but you have to be there to accept that delivery before it can move to the next. A drone might drop its package in a puddle-filled yard. Arrive AI solves these and many similar issues. With our solution, a robot can drop its package into our Arrive Point and immediately continue on its route. For drones, our network enables secure, weatherproof delivery while optimizing routing so drones carry payloads on more flights, significantly reducing empty return trips.

It can deliver your hamburger and at the same time pick up the shirt you need to return. One of the most important proof points of our progress is our live deployment with Hancock Health in Indiana. In that deployment, Arrive Points were installed between the Sue Ann Wortman Cancer Center and the hospital laboratory to support biospecimen transport using an autonomous robot. The route covers roughly a quarter-mile round trip and supports multiple deliveries throughout the day. We recently released an in-depth white paper to explain our findings in detail. During this live deployment at Hancock Health, we demonstrated that our platform can seamlessly integrate into real-world hospital workflows while delivering measurable efficiency gains. We reduced staff walking time without adding steps and effectively extended staff capacity in a resource-constrained environment, freeing up their time for higher-value patient-facing care.

The system operated reliably within active care conditions, reinforcing trust through consistent performance and clear handoff signals. These results validate our ability to drive durable operational improvements in complex healthcare environments. You can find the white paper on our website for more details. Now, I'd like to speak briefly about our partnerships. Autonomous delivery is not a single technology. It involves robotics, drones, logistics platforms, and AI coordination systems. Rather than trying to build every one of those components ourselves, Arrive AI focuses on the network layer. We provide the secure endpoint infrastructure and orchestration platform while partners provide delivery systems. For example, our partnership with Ottonomy, a like-minded early-stage company that develops autonomous delivery robots, allows robots to integrate directly into Arrive Point deployments.

This allows us to quickly evolve and refine how our network aligns with their hardware, iterating and adapting in real time for better efficiencies and processes from software to hardware. This ecosystem approach allows us to support multiple delivery technologies while we stay focused on building the network itself. We are also taking advantage of being a member in the NVIDIA Connect program. NVIDIA is proving to be an invaluable asset for our development by exponentially increasing our speed to deployment. Our engineers are using NVIDIA Blackwell workstations, allowing them to create models that are taking them hours instead of days, which has materially accelerated our development. I also want to provide some context on how our product development has evolved over the past year.

Before we became a public company, Arrive AI had a relatively small engineering team working on what was essentially the third generation of our Arrive Point platform, the AP3. When we went public, gaining access to capital allowed us to significantly expand our workforce. In fact, we were able to grow our team 10-fold. Those additional engineers immediately began advancing the next generation of Arrive Point technology, creating the AP5 platform. Today, we've brought all of those engineering teams together around a single objective, accelerating product development and refining the Arrive Point platform as quickly and cohesively as possible. Instead of separate development tracks, we now have the full strength of our engineering organization focused on building, improving, and advancing the Arrive Point platform together. Our development can now happen internally, leveraging the expertise of the team we've built while materially reducing our dependence on external resources.

This has also allowed us to move faster, remove redundancies, reduce third-party R&D costs, and have more real-time quality control. For example, we've implemented AI simulations to support the growing Arrive network for the next-generation AP5 platform while remaining backwards compatible with our AP3 platform, ensuring that both systems can work seamlessly together. Now, our goal is to convert these innovations into sales in the near future. We are advancing our conversations with organizations in the healthcare and manufacturing sectors with a goal of securing early-stage deployment arrangements for both our AP3 and AP5 systems. With that, I'd now like to turn the call over to Arrive AI's Chief Financial Officer, Todd Pepmeier, to talk through the financials and provide more background on our revenue model.

Thank you, Dan. When Arrive AI became a public company, we were clear that the early years would be about building the right infrastructure rather than maximizing short-term revenue. After all, infrastructure businesses require upfront investment. You build the network first, and revenue grows as that network expands. For the fourth quarter, our total revenue was $15,000, all of which was recurring subscription revenue. For the full year, revenue was just over $113,000. Our net loss for the fourth quarter was $2.7 million, compared to a loss of about $1.3 million in the same quarter of 2024. The increase was primarily due to higher operating expenses. For the full year, net loss was $12.8 million versus $4.5 million in the prior year.

We ended the year with $2.1 million in cash on the balance sheet, and in January 2026, we executed a $10 million draw from our existing credit facility on favorable terms. This significantly strengthens our balance sheet and provides a meaningful runway to continue executing our business plan and funding our growth initiatives. Our quarterly cash burn rate of approximately $3 million has been mostly driven by increased hiring as we built out the team to support growth, and we expect that level of investment to moderate over time as revenue scales. These 2025 results are being filed within the 15-day extension we requested on March 31st, 2026. During our preparation of these financial statements, we discovered an error with the previous accounting treatment related to our convertible note payable financing. In short, the structure of the agreement creates a derivative instrument according to U.S. accounting standards.

This complexity required us to engage an independent expert to perform the complex modeling required to accurately fair value both the convertible notes and attached derivative instruments. As a result, we have subsequently applied the new method to our previously reported quarterly results. We expect to file amended reports for both the June 30th quarter and the September 30th quarter alongside the full year results. The net result of this change will be higher reported net income in the June 30th period and lower net income in the September 30th period. This change affects net income and the presentation of assets, liabilities, and stockholders' equity on the balance sheet. There is no cash impact. Revenue model, as we look ahead, our long-term revenue model has three primary components.

The first is Arrive Point subscriptions, where organizations like hospitals, laboratories, manufacturers, and enterprise campuses deploy Arrive Points as part of their logistics infrastructure. The second is network as a service revenue. As more endpoints are deployed, they connect into the Arrive AI network, enabling logistics providers to route deliveries between locations. The third and final revenue component is from data and AI insights. Autonomous logistics generates valuable operational data that can be used to optimize delivery networks. Over time, we expect our revenue mix to evolve toward approximately 50% network infrastructure revenue and 50% transactional and data-driven services. With that, Dan, I'll turn it back over to you.

Thank you, Todd. Looking ahead, our overall strategy for the next five years focuses on scaling the network in stages. Early deployments provide real-world learning and product refinement, and from there, we plan to scale manufacturing and deployment. Our long-term goal is to have 1,000s, then 10,000s, and eventually 100,000s of Arrive Points deployed annually. That scale is where the network effects of autonomous logistics infrastructure begin to emerge. Our focus is simple. Build the network, connect the endpoints, enable the future of autonomous logistics.

At the end of the day, we are ahead of where we plan to be at this stage. Our stock price might not indicate that, but everything else about what we are doing does. Ultimately, I would not trade a higher stock price in this moment for an inferior product that would ultimately not scale. Success and scale are built on the foundation of diligence and dedication, and that is what will ultimately deliver for every shareholder, every customer, and every partner. Thank you for joining us today. We'll now return live to answer your questions.

Thank you. To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. If you wish to ask a question via the webcast, please use the Q&A box available on the webcast link. Please stand by while we compile the Q&A roster. The first question comes from Jack Aarde with Maxim Group. Your line is now open.

Okay. Hey, Dan. Hey, Todd. Good morning. Thanks for the update. Thanks for taking my questions.

Hey, thanks for being here, Jack. Dan here. Go ahead, man.

Absolutely. Dan, just a quick question to start. Can you speak to your recent team hiring and expansion progress? I think I heard you hired a team of maybe 50 employees during 2025. One, is that true? Two, what's on tap for 2026 with the team expansion? Thanks.

Yeah. Thanks for being on here, Jack, and asking. That's fairly accurate. We're just under 50 employees currently. We just onboarded two new employees this week. We're pedal to the metal. We've got a plan, and we're executing it. One great thing I can say is through the advent of AI, our future hiring plan over the next year called for around 200 people, and we now see an opportunity to complete that full demand with about 20% of those people, so about 40 new people. That is the reality of AI and how it's impacting businesses in real time. That's a big tailwind on the company, and it should deliver some good progress in our operational costs. We're really excited about that. Todd, do you have anything you want to add to that?

I think we just want to highlight a couple of the particularly key adds that we announced, Ian Geise to lead our sales organization, really important guy to head our commercialization efforts along with a lot of very talented engineers from the AI and robotics space.

Yeah, actually, everybody that we are hiring is what I would say is accretive to what we're doing. Todd just mentioned Ian Geise. Ian came from the early days of DIRECTV when it was a nascent technology being developed. He was present for every aspect of product market fit, pricing strategies, all those kind of things. Also came from SiriusXM Radio, which is much a similar platform from a pricing or a recurring revenue model and things like that. We're really proud to get Ian. He happened to be available in our own backyard, so it was just a kind of a thing that I say was meant to be. We're building out the sales team, and we're doing a lot of things to lay groundwork for a big opportunity that presents itself this year.

Okay, great. I have two more questions. Dan, I'll come back to you on the product design, but just a real quick one for Todd. Just given the comments about restating 2Q, 3Q, are the numbers, the 4Q numbers in this press release? It says that you back out the nine months 3Q numbers. Are these numbers correct, at least like the revenue, the subscription revenue?

Yeah. Nothing.

That's my first question.

Yeah, Jack, nothing changed. Nothing in the restatement affected revenue.

Okay, great. My next question is, what can we extrapolate, if anything, from the subscription revenue of about $15,000 in the fourth quarter of 2025? Was this all Hancock Health? Just can you maybe just kind of expand on that a little bit more? Thanks.

Yeah, Jack. I would say over 90% of the number you see there was from Hancock Health in the quarter. We had one other smaller deployment in the period, but that's predominantly what you see there. Our deployments are limited right now. We haven't put hundreds of units out there only to replace them with the next generation and so on.

One other thing I'd like to jump in on, this is Dan, Jack. When you're nascent and you're conditioning the market for a new technology, what you don't want to do is extinguish those opportunities by trying to monetize the heck out of them. A lot of times on the deployments that we're doing, the ROI for us is the learnings and figuring out how to condition the market. That's the most important thing that we can be doing right now, and that's what we're doing, and that is totally aligned with our business strategy. When Google announced Waymo back in 2009, that's how long ago they came up with that idea. They spent $30 billion between 2009 and today, and they're still not scaled.

I would put what we're doing here at Arrive AI up against the biggest companies in the world as to traction, market acceleration, first position, all the IP we have, and all the opportunities that we continue to see throughout the world. I could tell you that every metric that we track internally is pegged to the max. I know we have an impatient world out here, and frankly, we're part of it, as the largest shareholders represented here in the whole company, insiders. We want to deliver as quickly as we can too, but we want that to be durable, and the way you do that is by building a great foundation. I appreciate that question and the opportunity for us to share that with you. Go ahead, Jack, what else you got?

Yep. Absolutely. Just one last question, then I'll hop back in the queue. Dan, on the product development and design stage, I heard you mention some updates on the AP3 and the AP5 platforms. Is there an AP4 or do we leapfrog that? Also just how does the AP5 compare to the AP3 and any customer discussions you could touch on regarding your recent design updates? Thanks.

Absolutely. Yep. Hey, great question. I want to announce to everyone in the room with me, in addition to Todd, our CFO, and me, Dan O'Toole, CEO, we have Kylie, obviously, Neerav Shah, our Chief Strategy Officer, John Ritchison, our Chief Legal Counsel. I want to throw that one over to Neerav and let him speak to that. Neerav?

Yeah. Thanks, Jack. Thanks, Dan. Yeah, regarding some of the product changes and design changes that we're looking at on AP3, I'll start with that, Jack, is we're looking at an improved door design that's going to make a big difference in the robotic handoffs. We kind of optimized a lot for the drones, but we're seeing a lot more activity in the ground robotic space. The optimization of the door design is going to be shared both with AP3 and AP5. That should be coming out this summer. I think what was the other part of that, Jack, was around just some of the development.

Yeah.

AP4. Yeah, sorry.

I guess maybe we skipped over the AP4.

Yeah.

Just how does the AP5 compare to the AP3?

Sure. Okay. I'll start with the AP4. The AP4 is something that we have a placeholder for a sorting unit that we're looking at potentially for getting packages dropped in by aerial robot or drone and basically sort the package, and then just the package that the user would want would come out with the access control. That's for multi-dwelling units. Now, some of the changes for AP5 are a brand new receiving unit for the drone deliveries. I think that's going to be something that we can't really touch on too much, but stay tuned for some big developments on getting packages via drone for AP5 units and beyond.

Excellent. Very cool. Well, guys, I appreciate the update. Wish you best of luck and look forward to tracking the story. Thanks.

Thank you.

Thank you. Our next question will come from Alex Latimore with Northland Securities. Your line is open.

Hey, guys. Thanks for taking my question. I love that you had some fun here on the earnings call with your voices and AI. I think that was cool to hear. I just got two questions for you. My first one is, are you guys pursuing an acquisition pipeline? If so, what are some capabilities at the top of that pipeline?

Hey, Alex, Dan O'Toole here. Thanks for joining. I think we can all agree that I sound better in person than AI. Thanks for noting that we do try to have fun, and every day we have a lot of fun here, and that's the main thing. As far as M&A, when we went public, as the leader of the company, there's a couple things that are really important to me. I've been an investor since I was a kid, and companies that I was always attracted to were companies that were actively always doing deals, doing things that were organically accretive, but also bolt-on opportunities that were equally as accretive from a revenue standpoint or strategic or technology. I also like companies that split the right way. Early on when we started as a company, we did a two-for-one split through our crowdfunding.

Later, we did a four-for-one reverse, which wasn't as popular, but we had to do that to go public to get to a threshold. But I digress a little bit. We do have a big appetite for M&A. We think that being a public company opens up so many opportunities to use our stock as currency to acquire great opportunities that are out there. We have a big leg up as a public company. It's very rare air, as you know, and it gives us a lot of market clout. And we are exploring opportunities every day. One of the things we do here is we do not focus on one thing. And what I mean by that is if you're so hyper-focused on one thing, sometimes you miss the bigger opportunity that might be right beside it. So we explore the horizon every day. We look at everything.

One of the prisms of how I personally look at things is if the last guy that put a dime into this company, if he would be happy with the deal, then I know I would be happy with it. That's a prism. We don't want our investors to trade dollars. We want everybody to win, and that's how we're looking at things. I hope that answers your questions. We do have deals that we're evaluating.

Awesome. I appreciate it. My second question is, can you guys talk about how many Arrive Points you expect by year-end, maybe in a ballpark?

Pardon me, this is the host. Please stand by. Your conference will resume momentarily. Thank you for your patience. Your conference will resume momentarily.

Thank you.

Okay.

Dan, I see that you have rejoined. Are you able to hear me?

Yes, I am.

Okay.

Did we drop out?

Yes, you may go ahead and proceed.

Okay. Hey, Alex, sorry about that. I don't know what happened. See, when you go from AI to live, this is what happens. Hey, Alex, where did I end on that? Do you know?

You just started, I'd say, closing up the question, talking about exploring opportunities.

Okay. I'll just restate that last sentence. We do have M&A targets in front of us right now that we are exploring, not in a position to talk about those right now. I can tell you, we're going to actively be looking at exciting opportunities, things that could accelerate what we're doing or enhance the offerings that we already have. We're a small, nimble company that likes to evaluate opportunities. That's kind of summing that up. I'm sorry about the blip that we had there. I'm not sure exactly what happened, but we'll keep this thing going here.

All good, Dan, all good. I appreciate it. My next question is, can you guys give maybe a ballpark of how many Arrive Points you expect by year-end here?

I'll tell you what we do have. We're not trying to get totally granular on things. There's a lot of moving parts, and what we're doing is we're not doing permanent deployments right now. What I mean by that is, as I mentioned a little bit earlier on when we were speaking to Jack, is the ROI for us is the learnings. What we're doing is we're doing short-term deployments, learning how the customer is interacting with our product. We're trying to get ergonomically better with each deployment. We're trying to rapidize the way the system works, speed it up, be 100%. You can't work most of the time. You have to work every time. That's what we're really focused on.

For that reason, as Todd mentioned a little bit ago, we don't want to put out a ton of units that we believe essentially are kind of obsolete going out the door because you can see we've already got two additional products on our roadmap right now that we're developing simultaneously. What we're doing is we're working with our AP3 units right now and getting learnings off of those and rapidly iterating those into our AP4 and AP5 models. Those are going to be the scalable units that we will start hoping to put out later this year.

Okay, great. Maybe if I can ask one more here. I know you guys talked about your AI services pipeline and ALM marketplace last quarter. I was wondering if there are any active trials there or any insights you've gained on the process there and just any information would be great.

Yeah, those are gifts that we're going to have at scale, obviously, right? Those are also things that we are developing right now. We have our own in-house team, as we mentioned, through the hiring of nearly 50 people. The people that we've hired are skilled. We're not hiring admin and management layers. They're all hands-on AI informatics, human-

Factors.

- factors. I'm sorry, I'm losing it here. We're doing a lot of things that are really dedicated to the product development, really linear to what we're doing. When we roll this stuff out, you're not going to believe it, I can tell you that. I'm privileged to see next-gen tech that we're developing in our own building every day, and it's just amazing. I'm so proud of what we're doing here, and it is all very real. Nobody wants to get that out sooner than I do. We also want to make sure when we do put it out, it's the right thing at the right time and working the way it needs to. I hope that answers that.

Awesome. Dan, Todd, thank you. Best of luck this year. I appreciate it, guys.

Thank you. Thanks for joining the call. Appreciate that.

Thank you.

Go ahead.

I am sorry. Thank you. I am showing there are no further questions through the phone, and I would now like to turn it back over to Kylie.

Michelle, thank you. We are going to continue with questions and answers that were pre-submitted and those that came in during the webcast. We'll get to every single one of them. Before we get to the questions, Dan has one more thing he would like to add.

Yeah, thanks, Kylie. A couple of things, actually. Quick story. My son, Bryce, I saw him this morning when I was heading out. I said, "Hey, Bryce, I hope you're going to listen to our earnings call." He goes, "Dad, I'm going to get a haircut." I said, "Well, Bryce, I hope you get them all cut." Anyway, Bryce, I hope you got back to hear this. Anyway, one of the things I want to jump on real quick here is, you may have noticed that we had an 8-K that came out last night announcing a couple of things. One is, obviously Mike Fitz joining from T-Mobile, big get for us, really aligned with what we're doing. Proud of that. I'm so excited about the leadership that we have in-house already, too. Don't want to leave anybody out.

I wanted to also call attention to the fact that we did restate the earnings from Q2 and Q3 of last year. I wanted to hand this to Todd to talk about a little bit. One thing I wanted to say about it is, when you go public, you have an accounting team that you work with that's external, and then you also have an auditor, a PCAOB auditor, which is a public company audit board. It's a very specialized form of audits that are done. It's very important that the cadence is always kept up and you keep these things up. Timing is everything when you're public. One of the things we always did is, since we've really started as a business, we always had a cadence of PCAOB audits, even before we were public companies. I'm really proud of that.

I'm proud of my internal team here, led by Todd. During our own internal quality control check on our earnings, it came to note that the Streeterville deal that we have in place is a derivative. I know speaking a little bit above some of the normal parlance here that we talk about, but it was something that came to light, and we vetted it very thoroughly internally. When we felt like there was something there, we approached both our external CPAs and our auditors, and I'll let Todd take it from there. I just want to say that this is the kind of work we do here at Arrive AI. We're highly focused on transparency, communication, and even though you hear restatement, and people don't like that, admittedly, I don't think this has any impact on us.

I want to say that, but I also want to say how proud I am that we found it, and we were able to timely report it, and I think we're moving forward in a great way and that this is the kind of company you guys want to deal with. Todd, jump in there, man.

Yeah. As we mentioned earlier on the call, in addition to filing these annual results today, we also announced last night that we'll be restating Q2 and Q3 from 2025. As discussed, the underlying cause was the derivative portion of the convertible notes payable, so one of the most complex aspects of corporate accounting. We discovered it. We needed an extra 15 days to get these annual results out. From the time we discovered the material impact on Q2 and Q3, we had a certain amount of time to disclose that, which we did last night. We'll be filing those amended quarters alongside what we're filing today.

I would say that it's a positive net income effect on the second quarter results last year, kind of similar size negative impact on the third quarter results, and for the full year, broadly in line with where we would've been under the old accounting treatment. That's the long and short of it.

Yeah. Hey, I'm not throwing anyone under the bus, but when you do go public, sometimes you don't know what you don't know. I just want to say that we rely on experts. We hire experts to help support what we're doing here. Our own internal team are the guys that found this, and we did the right thing. We came out immediately with it. We still are reporting our earnings today within the time constraints of being timely, and I'm really proud of that. Anyway, back to you, Kylie.

One more thing before we get to the Q&A is all of our subscribers to Arrive AI or notifications received an email yesterday to opt in to a new subscription. This is a legitimate email. We recently launched a new investor relations site that will provide you with instant alerts like daily stock quotes, SEC filings, news releases, a lot more. You only have to click a button and you'll begin receiving all of these. The email came from Arrive AI with a different email address. That email address is [email protected]. If you have any questions about your shares or transferring them, email [email protected]. We will respond to each and every one of those and help you as much as possible. Now we will get to the question and answers. We'll first go to the pre-submitted questions that came in through our Arrive AI ideas board.

We've emailed that out over the last couple of weeks. Several of the questions address the same things. We will be answering those singularly, but we do want to thank every single person who did submit these questions. The first one that had the most votes, which was a common question, was about stock shares and what is being done in an effort to increase the stock price. We want to thank Hans, Jake, Kailyn, Anthony, and a few others we'll get to in a bit for asking this question.

Thanks, Kylie. Hey, thanks everyone for participating and asking questions and voting. What are we doing about our stock price? The answer is everything. I've said this before. This is Dan here, by the way. I always used to think the market was a leading indicator. After seeing the stark difference between how we're executing here at Arrive AI every single day, and how the market has treated our shares, I believe now that it's a lagging indicator. As I mentioned earlier, I believe every factor that we internally track is pegged to the top, except for our share price, and that's a little bit of a disappointment. You know what? That creates a ton of opportunity. I always say the day we went public, we traded as high as $40 a share, that we were a unicorn in that moment.

I think that shows that we have the ability to be back there and much higher, and that's what we are dedicated to every day. Everything we do has the long-term prospect of share appreciation. We're not doing things for the day. We're not doing flash in the pan kind of things to surge for a moment. That's a sugar high and pretty soon you're back down lower than you were. We're building a great foundation here. If you track the real news that's coming out of this company, the addition of new patents, which are just monumental in this space, I don't know how anyone could do anything near what we're doing with the amount of IP that we have at this company without us being a part of it.

We have built a huge moat around this company. If you guys believe like I do with every piece of my being that autonomous delivery is going to happen, and the idea of it happening without Mailbox 2.0, is what I call it in that infrastructure, it's just not going to happen. If you look back to 1858 when the first mailbox was created, even in 1858, there was a notion that you can't drop things on the ground and picking them up from the ground. If you believe the same today as people did in 1858, the idea of drones dropping things on the ground or picking up from the ground or robots, it's a non-starter. It's not scalable. We have unattended, asynchronous delivery. We own that platform. We own the sidewalk. We own the front of the business.

We're the gateway to every home and business throughout the world. We have an IP in the U.S. and the world. We are executing on that every day in such a big way. This is the next Google. I truly believe that. If you look at the amount of shares I own in this company, I haven't sold anything below $13 when we went public. I've even bought more shares if you check that along the way. I'm hyper-focused on Arrive AI. I believe with every fabric of my being in this company. I want you guys to all know that stock appreciation, in addition, obviously, to building the best product ever, is job one here.

I'm kind of ranting here, but I am passionate about this. When we went public, the thing that we said to ourselves was, "We're not going to be focused on the share price every day." Guess what? That's not really possible. It drives everything. It drives your mood, frankly. Being down in the doldrums sometimes with bad share prices, it's really depressing, but you know what else it is? It's very motivating. I can tell you that we're executing. You guys are going to see it. We're in a show me, don't tell me world, and that's what we're hyper-focused on. Great questions, guys. I understand why everybody asks those, and I'm sorry that we didn't handle them all individually, but the theme of all those were very much the same. We wanted to acknowledge everyone's name, right?

Absolutely, one from Callion, just about the Nasdaq notice. Callion said, could the team provide any updates on the Nasdaq delisting notice? What steps has the Management taken to prevent a delisting? Any possibility of a reverse stock split speculation?

Yeah, I'll jump in, and I'm going to let Todd, our CFO, say something to that as well. Thank you for your question. Transparency and communication, if you guys watch our Dan Show, you know that we're out ahead of everything. The minute we got those, Kylie and I did a Dan Show. Our philosophy is you're always going to hear everything here first, good, bad, whatever it is. That's our promise. The minute we were notified of those opportunities or potential situations, we wanted to get out with those. As far as the reverse stock split, that specifically comes into play when your shares are below $1 for a 30-day period or longer, a 30-day trading period. We have not experienced that yet.

We did proactively discuss the potential of that in the last Dan Show because I know it's out there, and some people are thinking about it. Today, we're above $1. The cure for that is anytime you trade above $1 without having gone 30 straight days below $1, you kind of reset that. None of us want to get into the world of reverse splits. As of today, that's not a reality. I'll turn this over to Todd, and he can speak out. I think we somewhat cured the float thing, and the market cap is hanging out there. Go ahead, Todd.

Yeah, we received two deficiency letters from Nasdaq. One related to being below the 15 million publicly available float. To some extent, that has been cured in the last few weeks. Just we need to give the updated share count information to Nasdaq to confirm that. The second letter we got related very much, but it was around being below the $50 million market capitalization threshold. Again, with share conversions in the last few weeks, we believe that's largely been eliminated, but we're going to work with Nasdaq to give the most updated information we can.

Yeah. The one thing I also want to say on these are not overnight. You get a notice and the next day you're delisted. There's a long process, usually six months or more, to allow for curing. We think that good things take care of themselves. While we obviously take everything seriously, I personally don't believe that we are going to be in the world of reverse splits anytime soon, if ever. Knock on wood. That's something I don't want to do. I want to do the splits the other way, if you remember that. We will deal with things in real-time as they occur, and we'll always report those to you guys. You guys are all co-owners in Arrive AI with me and this team, and you have a right to know what's going on when it's happening. Okay?

Dan, you kind of just touched on this, so we'll go to Brian's question. What if delisting occurs? I want to not only ask about preventing delisting, but confirming what would happen if it happened.

Thanks for your question, Brian. Obviously, you have to think about every scenario, right? That's just good stewardship. While you don't want something to happen, what if it does, right? Appreciate the question. We were a non-public company before we went public, right? Everyone that was a shareholder was a shareholder. If that should happen, I don't see anything changing. Everybody would still be a shareholder. We would just not be listed on the Nasdaq at that point. I hate even saying that. We worked so hard to be a Nasdaq company. We're so proud to be a Nasdaq company, and it's such a great thing, a status thing for us from a customer perception and gravitas. It opens up so many doors. It's opened up the public capital markets to us. We could not have done anywhere near the hiring that we've done.

We would not have the building that we have. There's so many things we couldn't do had we not done this. It was the best thing we ever did. Hopefully it was great for every one of our investors. The thing I'm proud of along those lines is when we went public day one, every single shareholder that had come into this company was a winner on day one. Unfortunately, today I can't say that, but I think we can get back there. I think we will. Let's just keep rolling here. What else we have, Kylie?

From Ryan, a question regarding capital structure. Could you please explain the current capital structure of the company? As I understand it, most of the operating cash the company holds is currently debt on the balance sheet. Many other small companies do not take on debt financing. I'm curious as to why the company hasn't focused more on equity financing. Could you please provide short-term measurable steps the company plans on achieving in the next 12 months, as in Arrive Points, how many should we expect, or when the company expects to be generating revenue to cover operating expenses? Something to give us clarity on progress of the business as revenue is still not materializing. Could you also briefly describe the lease relationship on your primary operating facility, specifically the structure with the CEO?

Great. A lot of questions there, Ryan.

Yeah.

Thanks for doing your homework, man. That's really good. Real quick, and I'm going to let Todd handle this, but I do want to state, as most of you know, our legacy or our heritage as a company, I call us a We the People story. We had 5,000 pre-public retail investors on our cap table. Proud of that. The way that we were able to all come together was through three successive rounds of crowdfunding. While crowdfunding was great and it really got us to where we are today, it is a grind. I can tell you can never get ahead of your burn rate when you're crowdfunding. It keeps you in the moment, but it's very important when you have a very ambitious project like we do here, that you get access to the public capital markets to really accelerate what you're doing.

I wouldn't trade one thing about the fact that we did the crowdfunding, but I also wouldn't trade the fact that we had to go public, and we were able to do that. When we were able to do that, the way that we were able to capitalize the company was through the financing that you're talking about there. I'm going to turn it over to Todd to shed a little bit of light on that. Todd?

Thanks for your question, Ryan. The equity line of capital that we entered upon going public presents on the balance sheet as convertible debt. In reality, it becomes equity upon conversion, so it's not a cash repayment. It converts to equity. That has been our primary really method of financing the company. In absence of significant revenue, we're dependent on that. The other thing I would say is when we went public as a pre-revenue company, we weren't really an ideal candidate for a more traditional equity IPO, underwritten IPO that you see with a lot of other companies. This structure that we put in place was really the best option we evaluated to fund the future of the business. The question about the building, I think, the lease relationship.

When we set out to hire 40+ people in the middle of last year, we needed permanent office space. We did an extensive study of the community here in Fishers, Indiana. We needed a rather unique setup, which included both office facility and workshop space, so kind of dual use. We evaluated the market, got a lot of quotes, got a lot of estimates. The one building that met all of our needs was available for purchase. The company did not have the liquidity at the time to make the purchase outright. Dan, our CEO, ended up purchasing the building and entering into a lease arrangement back to the company. Those lease terms, I would add, are actually in line or slightly favorable than the prior tenant was paying under that arrangement. We did a lot of economic evaluation of it. Price is competitive, and it's on point.

Yep. I just want to add to that. Thanks for answering that, Ryan. I mean, Todd. Thanks for your question, Ryan. I didn't want to buy the building, to be honest with you. It's a big liquidity hit for me personally. In the interest of executing the vision of what we're trying to do here, and I can see how much buy-in the team had to really being attracted to this building, it just made sense to do it. I did go ahead and buy it, and I did offer it at, in my mind, a below market. As Todd said, there was obviously the fact that it's a related party transaction. It gets through all the scrutiny of our auditors and things like that, and I wanted to really show good faith. I came in.

I would think fairly substantially lower than the market on this building. I'm proud that we did it. It's validated every day I walk in here. I can see the morale, the utility we have being able to operate here in the great location that we have. That's it. Thank you for asking that question.

Raul also asked the question about the stock price. He has a few questions in his one submission. We've already answered much of the stock price questions and the revenue by selling unit providers. The third part of his question is, "What are some other sources of revenue and potential acquisition by larger, established companies?

Great question. I don't want to answer every question here. We do have John Ritchison, our Patent Attorney, who's Chief Legal Counsel, and Neerav Shah's here, our Chief Strategy Officer. I will speak to this one. I'm sorry, I'm going to cough here. You'd think my voice would be better because I did all that AI stuff. I didn't have to talk as much. Everybody has the dream and vision of being acquired by Amazon or Google or Walmart or one of these big guys. Those are aspirational dreams that we would all love to explore and experience. The reality is, I think I said this earlier, we're in a show me, don't tell me space. People want to see what you're doing.

What we want to do here is we want to build something so compelling, so much needed, and we want to create something that some of these companies can't live without. I have this kind of internal mantra that I say. In five years, we will be either acquired by one of the biggest companies in the world, or we will be one of the biggest companies in the world, and I'll take either one of those. In the absence of Amazon or one of these guys coming in today and making us an offer, we have a job to do every day, and that's what we're doing.

If you came to this company today and you saw all the activity, the high morale, the synergies that are happening, the new ideas that are coming every single day, so much so that John Ritchison, our Patent Attorney, is located on-site, and he's fielding new IP every week. Right, John?

That's correct.

You want to talk about that real quick?

Yeah, I was going to hit a couple things on patents, if I could jump in just for a sec. We talked a lot about the patents and where we are with the U.S. We've got 10 approved patents that have been issued. Most recent one, you mentioned it earlier, the multi-use patent, which gives us the ability to handle commercial situations and residential situations with more than one user. A person doesn't have to have their own Arrive Point. They can have an Arrive Point that they share with some other folks. Outside the U.S., currently we're in 23 different countries where we're seeking patents. We've got about 77 outstanding patent applications. We achieved issue on 11 of those, so we are moving forward.

We had a couple questions in there, and I know I'm rambling around a little bit, but I'm trying to hit them, about are we here or are we there? We're going to go wherever the opportunities are. At the same point, when we chose the 23 countries, we chose that in a logical way, we think. We hit the big three. We hit Europe, of course, the European Union. We hit China, we hit India, because that's where the volume is. We chose at the time to not go after Russia because of the Ukrainian conflict, and I think that was the right decision at the time. It continues to be the right decision until those folks learn how to play good together. As we look at our patents, the interesting point, and my being on site, is we've got 40+ engineers.

I want to say young engineers, and they are young compared to me, but we've got a couple right out of school. We've got a couple that have been out there for 20, 25 years. I will tell you, I've been in engineering for my entire life, and these folks make your head hurt. They are thinking so far beyond what we need to think, and they're taking the AP3, which was a good start, into the APX or AP4, which is a big change up, like Neerav mentioned earlier, and into the AP5 and AP6, which are going to be the Cadillacs of, I don't want to get too much GM on, but they're the Cadillacs of the future. I think that our patent position is out there. Dan came up with the idea very early.

Dan and I have been together for over 10 years. We started talking drone decks. We started talking Arrive Points. This is great. The other question that comes through, and I'll try and answer it up front, is what about licensing? What are you going to do with these patents? Well, first thing we're going to do is get the patents out there, getting our product out there, get the market started. We mentioned a couple things where our new Board Member, or Board Director, Mike Fitz, is going to bring on. We've got a great sales guy coming in that's here now, Ian Geise. They're both bringing major focus into where the market's going to go and get more sales out there.

Once that starts, we believe that this thing is going to catapult into such a big market that there's going to be a lot of people out there trying to copycat. When those folks need the license, we're going to be available to sell those licenses to other makers and manufacturers and go from there, and generate more revenue.

John, thank you. You just answered two of the different submitted questions. One was from Ron about how the patents be used. You just eloquently delivered that answer. The other was from Lance about sales plan introductory, which also went hand in hand with your answer.

Great. What about the top write-up, the four-for-one?

Yeah, I was going to get to that. We can go to that right now if you want.

Okay. Great.

Todd had a question about the reverse share split that happened pre-public offering. What do you say to people who invested, and then you did a reverse four-to-one stock split to get on Nasdaq?

Yep. Thank you. I wanted to address this. I've heard this from people along the way, right? Todd, good question. Did we arbitrarily, going public, just say, "Hey, let's do a four-for-one?" It was actually a one-for-four split is what it was. If you had four shares, those shares became one. I kind of liken it to this, if you're holding a dollar and I say, "Hey, give me your four quarters, I'm going to give you a dollar." That's kind of what it was. It was an even transaction. We didn't diminish any value or anything. There was no change in value whatsoever. It's just that Nasdaq has a limit when you go public. We had to have a threshold of, I think it was $12 a share. We came at $13. In no way did we mean to diminish.

In fact, I said earlier in this call, as a student of the market, like I've been my whole life, I love companies that split the right way, two-for-one versus one-for-four. That wasn't something we did, again, because we wanted to. We didn't mean to hurt anybody's share count. Hopefully we get to a point where our shares get really high, and we can start doing the splits the back way and get you back those shares and do all that kind of thing. That's what I want to do. Let's stay tuned on that.

The next question is regarding expansion. It comes from Verushka. Given the awareness of the vast opportunities within emerging markets, will Arrive AI go into countries like South Africa, Botswana, and Namibia? Will Arrive AI ever think of building the units in the countries that will be serviced? This will bring down the overhead costs and duties that tend to have an impact on entry to market.

Okay, thanks for your question. I'm going to throw this one over to Neerav Shah. Neerav, you got that?

Yeah. Thanks, Dan. Yeah, we would absolutely support a distributed supply chain. We want to minimize shipping costs and take advantage of unique strengths of local supply chains. That's very much on our agenda. Just speaking about different countries, I don't know how much, Verushka, you've been looking at the news, but we're announcing some activity in India. We're working with a company called Skye Air and other leading delivery companies. Effectively what we're doing is taking part in a revolution there called quick commerce, where they're expecting deliveries in minutes, 10 minutes or less, not hours or days. Yeah, great question. 100% open. As J.R. mentioned, we have patents in 23 countries.

Just to kind of round out this thought is that, following the old adage of follow the money, in order to maintain the patents in the 23 countries, there's quite a lot of dollars involved in maintaining them on an annual-

Sure

- or monthly basis, and J.R. can speak to that. Effectively, we're extremely committed, and you can see that we pay on a very regular basis to maintain those international patents. Thank you, Verushka.

Neerav, thanks. Joseph, thanks for a very kind comment that you placed in our ideas board. Let's get to Wilkinson right now for a question here. He says, do you guys see any type of partnership with those companies like Amazon, et cetera, for the endpoint smart box in the near future? Is there any approach from NVIDIA to partner with us or some type of capital investment because we've been using their product for a while now? Please and thank you.

Great questions. We are exploring partnerships with several companies. You're aware of the NVIDIA Connect opportunity. We're leveraging that every day. We would love to have NVIDIA take a bigger look at us, and that's part of our hope that we're focused on, frankly. We will keep you apprised as to when and if something like that happens. As far as any big partnerships, we're early, and we believe that those are big drivers for us. We are focused on developing some big opportunities. When the moment is right, we will be able to announce those as they happen. Just executing every day. We hear what you guys are all saying, and all the things that you're saying are the things that we're saying and doing within the four walls of this company every single day.

I always say Rome wasn't built in a day. I think it took a day and a half. I would literally put up the evolution of this company, where we are against the biggest companies in the world and where they were in the same moment of evolution, and I would say we're blowing them away. We are moving at the speed of a startup. We're agile. We're proactive. We're inquisitive. We're doing all the things that you would want to see us doing. I would just say, just watch us. Just watch. Great things are about to happen.

Thanks to Rock for sending in a question about the patents. John has answered your question as well. The final question we'll be taking from the pre-submitted questions is from Brian, some of which has also been answered, but we'll go ahead and make sure we thoroughly answer this one. It says, "See some actual products. When do we see the products in a working situation, actual video of real deliveries, and not animated depiction? I'd like to see an end product that you're presenting to future partners at work. Are they in production, and how many are being used in testing areas? I have to admit, I haven't followed as closely as I should. I'm an early investor from StartEngine.

Yeah. Hey, Brian, thanks for your question. Thanks for being an early investor. We have made that transition. In fact, we talk about that a lot. We're not showing vaporware, we're showing reality. If you start following us more closely, I think you'll see those things happening really all over the world. We're pretty good about keeping everyone updated, and we're proud of that. I would also say that any shareholder in this company has the invitation. If you want to get a hold of us, we'd love that. If you want to come visit, we'd love to show you what we're doing in real time, and you can go out and tell the world what you've seen. That's what we're doing.

Now we'll go over to the questions that were submitted through the webcast. First is from Ami. As premium costs are rising globally, how are we planning to maintain our competitive position against competitors that may be leveraging cheaper materials? There are the recent price hikes in Japan, and also now we have the uncertainty with the gold.

You want me to take that?

Yeah. Thanks, Dan. Yeah, it's a multi-response here. Regarding the current situation, we're obviously optimizing, looking for multiple sources for product and not sticking to one market to minimize shipping, which I mentioned earlier. The other thing I want to mention is that we've got a Head of Supply Chain that's constantly looking at the future and thinking about what materials are going to be more costly, et cetera. In fact, I can't speak to the specifics, but he had identified the material that we were going to use in two to three years' time, and the plan, again, not to really get into specifics, was to do some risk buying on that to minimize our future risk. These are the kinds of things that we're constantly thinking about.

Next question is from James. Can you say more about Arrive AI and how AI is allowing you to so dramatically reduce your hiring plans? Are advances in agentic AI powering that? Is it automation of support functions, sales, or some other source of leverage? Are advances in agentic AI also potentially speeding your time to market and revenue?

Yeah. I'll jump in there. I would like to announce who's taking it so our listeners know.

Yeah. Thanks, Dan. Neerav Shah, Chief Strategy Officer. Yeah, for sure, we're definitely looking at agentic AI. In fact, there's a lot of desire internally to use OpenAI, but we're trying to hold that back until we understand some of the risks. Regarding some of the other questions around agentic AI, we're looking at implementing that very much some workflows and customer service. Again, can't say too much on that, but, yeah, it's all happening currently.

Next is a multi-faceted, multi-part question from Sergio. Hi, Sergio. Thanks for this. I appreciate a concise response across the areas of, based on your recent SEC filings, could you help investors understand, one, how you're managing current and potential dilution under the Streeterville Agreement, particularly in a more conservative or downside scenario, and how this could impact shareholders over time, including its effect on future ownership, value per share, and overall capital structure? I'll get to part two in a second.

Sergio, that was a nice, concise question. This is Dan here. I'm going to let Todd answer, but I do want to say one thing. There is dilution that has taken place, and not all dilution is bad. What I mean by that is, even though I've been substantially diluted, I still have the exact number of shares that I have. One of the recent Nasdaq violations that we had was centered around our float. I think a byproduct of the Streeterville Agreement has been a way to cure the float issue. I'm going to let Todd jump in. I just wanted to preface it with that.

Yeah. Thanks for the question, Sergio. Regarding dilution, one of the things is we don't control when the convertible notes become equity. That's up to the investor, Streeterville. What we do control is how quickly we use the cash, and how soon we take more. In that aspect, I think we're managing cost very relentlessly here. We're monitoring our burn rate. Non-essential costs are being sacrificed to focus on real product development expenses. AI, these technologies we're using are quite expensive. We're trying to focus our expenditure where it has the biggest return on investment for us.

Second part is help investors to understand your approach to capital allocation and risk management, particularly in light of the options trading activity disclosed in your filings.

Go ahead, Todd.

Yeah. From time to time, we have cash sitting on the balance sheet to fund operations. What is not being actively used to fund daily operations is typically invested in money market funds, things that will generate some return. We do occasionally use a covered call strategy to produce income. These are some of the ways we're trying to get a return on that cash while it's waiting to be consumed.

Sergio, I believe we addressed your questions three and five regarding Nasdaq compliance and building out the team. Let's go to number four, how your current liquidity position and expected runway support your ability to execute.

Todd, I'll let you continue with that.

As we mentioned earlier on the call, in January, we had an unusually high volume day that gave both the investor and us the opportunity to bring down $10 million from our equity line. It's important to us to have that money when it's available, secure the next several months of runway. We mentioned our cash burn rate earlier on the call, about $1 million a month. You can do the math to see why it was prudent to take down the money when we had the opportunity to do it. It really adds some security for our operations in the next several months.

Todd, why don't you talk about the fact that that wasn't like an impromptu thing? Those shares were already envisioned to be sold.

Yeah, absolutely. I mean, the Streeterville line went in place last May with a defined number of shares. It was simply a matter of timing when we request the money and when the investor converts out. That was all known to the market. It's the timing of when we choose to take it that we have to disclose.

The next two questions come from Deepak. First is, on the AP3 to AP5 transition, what's the unit economics difference? What's the target unit cost of scale, and when do you expect AP5 to be deployment ready?

Neerav.

Yeah. Thanks, Dan. Deepak, regarding AP3 to AP5 unit economics is order of magnitude. I can't really talk about the exact unit cost of scale, but again, order of magnitude difference in not only the cost but the functionality, the use case, the intelligence on board. Dan had mentioned earlier some NVIDIA products that we're using in there. We're expecting a very powerful endpoint with a much cheaper price point. Regarding the deployment, the plan is for this year. We're going to be modeling things and showing some key customers potentially. Stay tuned on that and you'll see something, hopefully, in Q3, Q4.

Question two from Deepak, on the recurring subscription revenue, what's the typical contract duration? Is there any minimum commitment from customers or can they churn quarter-to-quarter?

Yeah. Let me handle this. I think I can handle quickly. Thank you, Todd. Dan here. As I mentioned earlier in the call, the big ROI that we are getting right now is the learnings. What's important to us is we don't want to make tons and tons of units and have them simultaneously out. The thing that we're finding is really good for us is to deploy a small amount of units for a short period of time in different use cases and bring those back and get the learnings and spool those into new development. In the situations where we are doing more permanent deployments, we're looking for a minimum of a two-year deal.

We think that is a good time horizon to condition the customer and have them realize the benefit of what we're doing so that we can have a long-term life cycle through these deployments. Churn is obviously something that, if you have a great product and you're bringing great ROIs, hopefully churn takes care of itself. We haven't outscaled to a level yet where we can really quote a churn rate. We're mindful of that and we're conditioning every deployment with patience built in, flexibility, and the customer knows that everything we learn at their specific use case are benefits that they're going to be able to take advantage of because they're going to be centric to what they're already doing.

We have three questions left. Next question from Greg. For the early investors, such as the first 3,000, can you provide an estimate as to how long it might be before the share price gets back to our investment purchase cost per share after four-to-one split at $13? I'm in for the long haul and still completely believe in Arrive AI.

Hey Greg, good to hear you out there, man. I know we've talked several times. Thank you for your question. Obviously, I want the same thing you do. It's really inappropriate for us to talk about specific share price or time horizons to get back where you want to be, or I think I had mentioned earlier, I'd love to get to a point where we start splitting the stock the right way and by giving more shares and all those kind of things, but we have to get there. Just know that we are aligned in that way of thinking. I'm an investor doing a lot of the same things you guys do, and I want the same things that you guys want, and I just want you to know that's the thought leadership that you have here at this company. If you're aligned with that, stay tuned.

From Owen, what would a 5-10 year outlook as robotics and drones are becoming increasingly popular? What would be a field for heavy interest, such as food, medical, or package?

Neerav.

Yeah, thanks, Dan. Owen, yeah, great question. As you're following us, you're seeing that we're really focusing on medical initially. High-value items, smaller, easy to move around. In five or 10 years, frankly, we see everything on the table, from food to just all kinds of things moving your kids' lunch from if you forget to drop their lunch off. We see this as being completely ubiquitous by 10 years out. Again, starting at medical, but we'll be hitting everything in 10 years.

Neerav just had a thought leadership piece published regarding restaurant infrastructure and food deliveries and things like that. Be looking for that. We're getting our leadership out there with some great pieces. Finally, second question and our last question is from Amen. It's already been addressed by Dan, just about dilution and things of that nature. That concludes all of our questions for the call.

Yep. Hey, thanks everyone for joining. We love the interaction. When we do these calls, we're committed to answering every question, and no matter how long it takes. I know these can be lengthy. We apologize for that, but we don't want to leave anything. We want to be totally transparent, communicative, and this is your company. Stay tuned. We've got some great things happening. You've seen it in the market recently, and I want you to stay tuned for the next great thing that's coming down the pike here. Thanks, guys.

Michelle, we'll send it back to you.

Thank you. This concludes today's conference call. Thank you for participating, and you may now disconnect.