ARAI 10-K & 10-Q changes, risk factors and insider trading

Subsequent to June 30, 2026, the risk factor entitled “Triggering Events May Require Substantial Monthly Cash Repayments That Could Materially Impair Our Liquidity” has materialized. As described in Note 4, Going Concern, Note 18, Subsequent Events, and the Liquidity and Capital Resources section of Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, the Company’s VWAP fell below the Floor Price of $0.25 per share, constituting a Floor Price Trigger under the Securities Purchase Agreement with Streeterville Capital, LLC. As a result, the Company is obligated to make mandatory monthly cash repayments totaling $962,500, plus accrued and unpaid interest, until such time as the Company’s VWAP exceeds 120% of the Floor Price (i.e., $0.30 per share) for five consecutive Trading Days. There can be no assurance that this cure condition will occur. The Company is currently in discussions with Streeterville regarding potential remediation of the obligations arising from the Floor Price Trigger. There can be no assurance that the Company and Streeterville will reach any agreement with respect thereto.

Standstill Agreement

On May 14, 2026, we entered into a Standstill Agreement (the “Standstill Agreement”) with Streeterville Capital, LLC, a Utah limited liability company (the “Investor”). The Standstill Agreement was entered into in connection with that certain Securities Purchase Agreement, dated March 21, 2025, by and between us and the Investor (the “Purchase Agreement” and, together with all other documents entered into in connection therewith, the “Transaction Documents”), pursuant to which we previously sold and issued to the Investor a series of Pre-Paid Purchases.

Pursuant to the Standstill Agreement, the Investor has agreed, subject to certain conditions, to refrain from delivering Purchase Notices to us under any outstanding Pre-Paid Purchases for the period beginning on May 14, 2026 and ending on December 31, 2026 (the “Standstill Period”). Notwithstanding the foregoing, the Investor may submit purchase notices during the Standstill Period on any trading day on which our shares of common stock trade at a price that is at least fifteen percent (15%) greater than the Nasdaq Minimum Price (as defined under Nasdaq Rule 5635(d)) for such trading day.

Except as set forth in the Standstill Agreement, each outstanding pre-paid purchase remains in full force and effect in accordance with its terms. The Standstill Agreement will terminate upon the occurrence of any material breach of the Standstill Agreement by us or any event of default under any Transaction Document, at which time the Investor shall have the right to submit Purchase Notices in accordance with the applicable outstanding Pre-Paid Purchases. No additional cash or other property consideration was exchanged in connection with the Standstill Agreement.

The foregoing description of the Standstill Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Standstill Agreement, a copy of which was filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 18, 2026, and is incorporated herein by reference.

Equity Distribution Agreement

On June 11, 2026, the Company entered into an Equity Distribution Agreement (the “Sales Agreement”) with Maxim Group LLC (“Maxim”), to sell shares of its common stock, par value $0.0002 per share (the “Shares”), having an aggregate offering price of up to $14,967,247, from time to time, through an “at the market offering” program under which Maxim, acting as sales agent, will offer and sell the Shares. The Company will pay Maxim a commission rate equal to 2.5% of the gross sales price from each sale of Shares. The Sales Agreement contains customary representations and warranties and conditions to the sale of the Shares.

The Company is not obligated to sell any of the Shares under the Sales Agreement and may at any time suspend sales thereunder. The Sales Agreement may be terminated by the Company with five days’ notice following six months from the date of the Sales Agreement, or by Maxim with five days’ notice at any time, or earlier under certain circumstances.

The Shares will be issued pursuant to the Company’s shelf registration statement on Form S-3 (File No. 333-296392) filed by the Company with the SEC and declared effective by the SEC on June 11, 2026 (the “Registration Statement”). The Company filed a prospectus supplement (the “Prospectus Supplement”), dated June 12, 2026, to the Registration Statement with the SEC in connection with the offer and sale of the Shares.

The foregoing description of the Sales Agreement is not complete and is qualified in its entirety by reference to the full text of such agreement, a copy of which is filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 12, 2026, and is incorporated herein by reference.

Departure of Chief Financial Officer and Director

On July 27, 2026, Todd Pepmeier, Chief Financial Officer of the Company, notified the Company of his resignation from his position as Chief Financial Officer, effective August 10, 2026.

On July 29, 2026, Laurie Tucker resigned from her position as a director of the Company. Ms. Tucker’s resignation was not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

Floor Price Trigger

On August 6, 2026, our VWAP fell below the Floor Price of $0.25 per share for at least five Trading Days within a seven consecutive Trading Day period, constituting a Floor Price Trigger under the SPA. As a result of this triggering event, we became obligated to make mandatory monthly cash repayments totaling $962,500, plus accrued and unpaid interest, beginning three Trading Days after the trigger date. These mandatory repayments consist of $550,000 under Pre-paid Purchase Agreement 2 and $412,500 under Pre-paid Purchase Agreement 3. These mandatory repayment obligations will continue until such time as our VWAP exceeds 120% of the Floor Price (i.e., $0.30 per share) for five consecutive Trading Days. There can be no assurance that this cure condition will occur.

The Company is currently in discussions with Streeterville regarding potential remediation of the obligations arising from the Floor Price Trigger. There can be no assurance that the Company and Streeterville will reach any agreement with respect thereto.

Appointment of Chief Financial Officer

On August 10, 2026, our Board of Directors appointed Piyush Phadke as our Chief Financial Officer, with his duties and responsibilities as Chief Financial Officer commencing as of August 17, 2026. Mr. Phadke brings more than 20 years of capital markets and investment banking experience, including senior roles at Bank of America, BTIG, and Jefferies. For a more complete description of Mr. Phadke’s appointment, please refer to our Current Report on Form 8-K filed on August 12, 2026, which is incorporated herein by reference.

On June 2, 2026, we received an additional deficiency letter from Nasdaq notifying us that, based upon the closing bid price of our common stock for the last 30 consecutive business days, we are not in compliance with the minimum bid price requirement of $1.00 per share for continued listing on The Nasdaq Global Market, as set forth in Nasdaq Listing Rule 5450(a)(1) (the “Minimum Bid Price Requirement”). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we have 180 calendar days, or until November 30, 2026, to regain compliance. To regain compliance, the closing bid price of our common stock must meet or exceed $1.00 per share for a minimum of ten consecutive business days prior to November 30, 2026.

If we do not regain compliance by November 30, 2026, we may be eligible for a second 180-day compliance period. However, such eligibility requires that we apply to transfer our listing from The Nasdaq Global Market to The Nasdaq Capital Market and that we meet all applicable initial listing standards for The Nasdaq Capital Market, other than the minimum bid price requirement, at the time of any such application. There can be no assurance that we would meet those standards or that Nasdaq would approve any such transfer. If we do not regain compliance within the first 180-day period and are not eligible for or do not obtain a second compliance period, Nasdaq will provide notice that our common stock will be subject to delisting, and we would be entitled to appeal that determination to a Nasdaq hearings panel.

The Minimum Bid Price deficiency notice has no immediate effect on the listing or trading of our common stock, which continues to trade on Nasdaq under the symbol “ARAI.” We intend to actively monitor our common stock bid price and evaluate available options to regain compliance, including the potential use of a reverse stock split, though there can be no assurance that we will be able to do so within the allotted compliance period.

Subsequent to June 30, 2026, on July 21, 2026, we received a new notification letter from Nasdaq advising that we were again not in compliance with the MVPHS Requirement under Nasdaq Listing Rule 5450(b)(2)(C), as we failed to meet the $15,000,000 minimum Market Value of Publicly Held Shares for 32 consecutive business days from June 3, 2026 to July 20, 2026. This is a renewed deficiency under the same rule for which we previously regained compliance, as described above. We have 180 calendar days, or until January 19, 2027, to regain compliance, which requires the MVPHS to equal or exceed $15,000,000 for a minimum of 10 consecutive business days prior to that date. If we do not regain compliance by that date, we may consider applying to transfer our listing to The Nasdaq Capital Market, subject to meeting that market’s initial listing standards. The notification letter has no immediate effect on the listing or trading of our common stock, which continues to trade on Nasdaq under the symbol “ARAI.”

As of the date of this Quarterly Report, we therefore have three separate outstanding Nasdaq continued listing deficiencies: the MVLS deficiency (cure deadline September 28, 2026), the Minimum Bid Price deficiency (cure deadline November 30, 2026), and the renewed MVPHS deficiency (cure deadline January 19, 2027).

Controlled Company Status

The Company ceased to be a “controlled company” within the meaning of the listing rules of The Nasdaq Stock Market LLC on or around April 9, 2026, and is permitted to continue to rely on exemptions from certain Nasdaq corporate governance requirements within a year following such date, including the requirement that a majority of the Board consist of independent directors and the requirement that the compensation and nominating committees be composed entirely of independent directors. The Company currently relies on these exemptions.

Notwithstanding these exemptions, the Company maintains an Audit and Finance Committee composed entirely of independent directors in accordance with applicable Nasdaq and SEC requirements.

During the three months ended June 30, 2025, we recognized total revenues of $90,725. Of this $89,000 was for design and consulting services, $1,500 for installation fees, and $225 for monthly subscriptions.

Loss on disposal of fixed assets was $5,974 and was the result of a partially depreciated Arrive Point taken out of service.

Comparison of the Six Months Ended June 30, 2026, and June 30, 2025

Financial Overview

For the six months ended June 30, 2026 and 2025, we generated revenues of $29,625 and $90,725, respectively, and reported net loss of $20,446,633 and $5,667,236, respectively. During the six months ended June 30, 2026, operating expenses reflect growing investment in the size of our team for product development, engineering and marketing activities. During the six months ended June 30, 2026, other expenses reflect the activities associated with our convertible notes payable facility.

Revenues

During the six months ended June 30, 2026, we recognized total revenues of $29,625 for monthly subscriptions to the Arrive Point network.

During the six months ended June 30, 2025, we recognized total revenues of $90,725. Of this $89,000 was for design and consulting services, $1,500 for installation fees, and $225 for monthly subscriptions.

Operating Expenses

General and administrative expenses were $8,258,917 for the six months ended June 30, 2026, an increase of $2,889,879, as compared to the six months ended June 30, 2025. Primary components of general and administrative expenses were:

Research and Development expenses were $703,614 for the six months ended June 30, 2026, an increase of $318,883 as compared to the same period in the prior year. This is primarily due to an increase in engineering projects resulting in an increase in expense of $359,670, offset by lower independent contractor spend of $40,787.

Sales and marketing expenses were $183,414 for the six months ended June 30, 2026, an increase of $126,152 from the same period in the prior year. The increase is due to increased advertising expenses of $49,976, travel and meals and entertainment expense increase of $60,401, and trade show expense increase of $15,776.