Arrive AI (ARAI) risk factors, FY2025 10-K

Risks Related to Our Early-Stage Commercial Operations and Financial Condition

1. 01We are an early-stage commercial company with a limited operating history and a history of losses
2. 02We have experienced negative operating cash flow and will require additional capital
3. 03We will need to raise substantial additional funds in the future, which funds may not be available or, if available, may not be available on acceptable terms
4. 04Raising additional capital may directly or indirectly cause dilution to our existing stockholders or restrict our commercial operations
5. 05We are highly dependent on our management team, and the loss of key personnel could materially adversely affect our business
6. 06Our insurance coverage may not adequately protect us against future operating risks
7. 07Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters could significantly affect our financial results
8. 08Product development is a long, expensive and uncertain process
9. 09Rapid technological changes may adversely affect the market acceptance of our products and services and could adversely affect our business, financial condition and results of operations
10. 10We may face competition from other Smart Mailbox for Automation companies, many of which have substantially greater resources
11. 11If the drone and mobile robot automated delivery and pickup services do not experience significant growth, if we cannot create and expand our customer base, or if our products and these services do not achieve broad acceptance, then we may not be able to achieve our anticipated level of growth
12. 12If our marketing efforts are unsuccessful, we may not generate sufficient revenue to become profitable

Risks Related to the Streeterville Purchase Agreement

1. 13Triggering Events May Require Substantial Monthly Cash Repayments That Could Materially Impair Our Liquidity
2. 14On March 21, 2025, we entered into a securities purchase agreement with Streeterville Capital, LLC pursuant to which Streeterville committed, subject to conditions, to purchase up to $40 million of our common stock through Pre-Paid Purchases
3. 15Repayment mechanics could result in substantial dilution and downward pressure on our stock price
4. 16Hedging or other market activities may adversely affect our stock price

Risks Related to Intellectual Property and Related-Party Arrangements

1. 17Our business depends on intellectual property licensed from our Chief Executive Officer
2. 18We may become reliant on our intellectual property; failure to protect our intellectual property could negatively affect our business, financial condition or results of operations
3. 19We may be forced to litigate to defend our intellectual property rights, or to defend against claims by third parties against us relating to intellectual property rights
4. 20Other companies may claim that we infringe their intellectual property, which could materially increase our costs and harm our ability to generate future revenue and profit
5. 21We engage in related-party transactions with our officers, directors or significant stockholders that may create actual or potential conflicts of interest

Risks Related to Our Technology, AI Initiatives, and SaaS Platform

1. 22Our commercial operations will be exposed to the risk of rapid technological advancements in the development and deployment of our products, which could render our existing infrastructure obsolete and adversely impact our financial performance
2. 23We may not be successful in our artificial intelligence initiatives, which could adversely affect our business, reputation, or financial results
3. 24We may face a shortage of talent or professionals with the appropriate experience and training in AI technology
4. 25Our SaaS model exposes us to recurring revenue risks
5. 26A significant failure or deterioration in our quality control systems could have a material adverse effect on our business and operating results
6. 27We may experience physical breaches of security at our facilities, any security breaches could result in loss of sensitive information as well as loss as a result of any such breach
7. 28Our technology may contain third-party open-source software components, third-party commercial software, and proprietary software that we develop in-house. Failure to comply with the terms of these underlying software licenses could restrict our ability to provide our offered products and services
8. 29Failures in internet infrastructure or interference with internet or Wi-Fi access could cause prospective users to believe that our systems are unreliable, potentially leading our customers to decline to renew their subscriptions

Risks Related to Information Systems, Privacy and Cybersecurity

1. 30A disruption of our information technology systems could impair our operations, harm our reputation, and have a material adverse effect on our business, financial condition and results of operations
2. 31Cybersecurity threats and data breaches could result in unauthorized access to our systems and data, financial losses, reputational harm, legal liability, and disruption to our business
3. 32We are subject to evolving and expanding privacy and data security laws and regulations. Compliance with these requirements is costly, and any failure to comply could result in material liability, regulatory penalties, and harm to our business

Risks Related to Regulation and Compliance

1. 33Operating in highly regulated businesses requires significant resources
2. 34The growth of our business will be subject to potential new and changing federal, state, and local laws and regulations
3. 35Our support of automated delivery strategies and technologies by other companies using our smart mailboxes for automation, is dependent upon our ability to successfully mitigate unique technological, operational, and regulatory risks
4. 36We and our future third-party suppliers must comply with environmental, health and safety laws and regulations, which can be expensive and restrict how we do, or interrupt, our business
5. 37The Company is subject to ongoing litigation and may be subject to more including securities litigation, which is expensive and could divert management attention, including securities class action and derivative lawsuits which could result in substantial costs

Risks Related to Our Public Company Status and Common Stock

1. 38The public trading market may not continue to be liquid and the market price of our shares of common stock may be volatile
2. 39You may be diluted by future issuances of preferred stock or additional common stock in connection with our incentive plans, acquisitions or otherwise; future sales of such shares in the public market, or the expectations that such sales may occur, could lower our stock price
3. 40On March 31, 2026, we received two separate notification letters from The Nasdaq Stock Market LLC (“Nasdaq”) indicating that we are not in compliance with certain continued listing requirements of The Nasdaq Global Market
4. 41There is substantial doubt about our ability to continue as a going concern. If we are unable to continue as a going concern, our stockholders would likely lose all or a substantial portion of their investment

General Economic and Geopolitical Risks

1. 42Our growth and financial health are subject to a number of economic risks including extreme volatility in securities prices
2. 43The ongoing conflict between Ukraine and Russia could adversely affect our business, consolidated financial condition, and results of operations
3. 44Geopolitical conditions, including direct or indirect acts of war or terrorism, could have an adverse effect on our operations and financial results
4. 45We may be exposed to the effects of changing energy prices, and interruptions in supplies of this commodity