Arrive AI Q2 2025 Earnings Call Transcript

Quartr
Provided by Quartr
August 14, 2025

Key Takeaways

  • Positive Sentiment: Strategic pilots with AllMart, Sky Air Mobility, and Hancock Health validate Arrive AI’s autonomous delivery platform across retail, drone, and healthcare verticals.
  • Positive Sentiment: Issuance of patent No. 12304671 on intelligent chain of custody and climate control features strengthens the company’s IP moat.
  • Positive Sentiment: Closed a $40 million structured capital line and achieved positive net cash flow, extending the company’s runway into 2027 without near-term liquidity pressure.
  • Negative Sentiment: Reported a Q2 net loss of $4.69 million, up from $1.46 million a year ago, largely driven by over $3 million in public-listing expenses.
  • Positive Sentiment: Five-year growth plan targets scalable deployments of 10,000 units in year 4 and 100,000 units in year 5, underpinned by a network-as-a-service and AI marketplace model for recurring revenue.
AI Generated. May Contain Errors.
Earnings Conference Call
Arrive AI Q2 2025
00:00 / 00:00

There are 8 speakers on the call.

Operator

Good

Speaker 1

day, and thank you for standing by. Welcome to the Arrive AI Inc. Second Quarter twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session.

Speaker 1

To ask a question during the session, you will need to press 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press 11 again. To submit a question via the webcast, click the Ask a Question button. Please be advised that today's conference is being recorded.

Speaker 1

I would now like to hand the conference over to your speaker today, Kylie Conway, senior marketing and communications manager. Please go ahead.

Speaker 2

Thank you, Daniel, and good afternoon, everyone. Thank you for joining us today. With me on the call are Dan O'Toole, Arrive AI's Chairman, CEO, and Founder Mark Ham, Chief Operating Officer Nirav Shah, Chief Strategy Officer Todd Pepmeyer, Chief Financial Officer and John Richardson, our chief legal officer. The earnings press release that was issued this afternoon is available in the investor relations section of the company's website, arriveai.com. Also, today, we may make forward looking statements with respect to future financial results.

Speaker 2

These statements are not guarantees of future performance, and the company's actual results may differ materially from the anticipated events, performance, or results expressed or implied by these forward looking statements. Arrive AI advises you to read the risk factors detailed in its SEC filings, which can also be accessed through the company's website. Now I'll turn the call over to Dan O'Toole. Dan?

Speaker 3

Thanks Connie. Hey everybody, great to see you today. Quick question, did anybody hear about the streaker in the church? He got caught by the organ. Did you guys know that?

Speaker 3

I wanted to start with some levity. This is our first ever public earnings call and so thanks for joining us to Arrive AI's inaugural earnings call. It's a privilege to speak with you today, and I want to begin by framing what we're building here, a foundational infrastructure for the future of autonomous last mile logistics. Arrive AI is pioneering an autonomous last mile platform centered around our patented ArrivePoints. ArrivePoints are AI powered smart delivery units that serve as nodes in our connected delivery network.

Speaker 3

Our technology enables secure, verifiable and frictionless delivery for any courier whether it's a drone, ground robot or a traditional human driver. We're not just creating a product, we're creating a system that solves the most complex part of the delivery process, the last inch. Our platform provides chain of custody, ensuring every delivery is tracked and authenticated from the moment it enters an arrive point until it is retrieved. Our units include advanced features like climate assist for sensitive goods such as pharmaceuticals and groceries, and they integrate seamlessly with existing smart home and city infrastructures. We are building the nervous system for a new era of automated logistics, one where packages arrive not only on time, but securely, intelligently, and precisely where they are needed.

Speaker 3

Our future is about moving from pilot projects to defining and dominating key market verticals. The pilot programs that we've launched with hospitals, retail partners and municipalities are more than tests. They're validating capabilities for how our platform will operate and scale. We believe the future of logistics is not about a single delivery method, but an intelligent interoperable network. Arrive AI is positioned to be the connective tissue between a rapidly expanding ecosystem of autonomous vehicles, drone fleets, and e commerce platforms.

Speaker 3

We're focused on building a defensible mode of intellectual property and strategic partnerships. Our new patent grant for our intelligent chain of custody network isn't just a legal victory, it's a strategic asset that will protect our core technology as the market matures. As autonomous delivery becomes a reality, our technology will become an essential component of every last inch interaction. We're looking beyond today's logistics problems to create solutions that will underpin the smart cities and automated economies of tomorrow. The delivery landscape is a large and dynamic market that is ripe for innovation.

Speaker 3

By focusing on the immediate pain points in delivery, we can drive significant cost savings and deliver a measurable return on investment for our partners. Our long term vision is to build a differentiated universal network that serves all participants in the delivery ecosystem, including shippers, delivery services, and emerging autonomous networks. We aim to create a cohesive platform that not only solves today's challenges, but also anticipates and integrates the future of logistics. Further, we're thrilled to celebrate the current administration's proposed beyond visual line of sight rule entitled Unleashing America's Drone Dominance as a Watershed Moment for American Innovation. This new regulation will safely integrate drones into our national airspace allowing Arrive AI to deploy our solution for the $191,000,000,000 US package delivery market.

Speaker 3

Our patented arrive points will enable a secure, verifiable and frictionless chain of custody for every delivery, whether by drone, robot or human. We're eager for Americans to enjoy the same fast convenient and sustainable delivery already popular in countries like India, where our partnership with Sky Air Mobility is just taking flight. We are ready to make the last inch of delivery better for everyone. From an investment standpoint, our strategy is built on disciplined, intelligent growth. We're not chasing short term revenue.

Speaker 3

We're deploying capital to build a scalable and defensible business model. We are focused on three key areas. Number one, commercialization and operational excellence. We are investing in our AP3 and product roadmap units. As stated earlier, arrive points are temperature assisted AI powered endpoints able to send and receive all deliveries.

Speaker 3

Think Tesla's universal nature of charging network. One platform for all electric cars in ArrivePoint is one autonomous delivery endpoint for all shipments. This investment reduces hardware costs in our operational model to make deployments repeatable and efficient. Each successful pilot is a template for hundreds more, creating a clear pathway to commercial scalability. The second one, patents and partnerships.

Speaker 3

Our strategy to create a powerful patent portfolio and forge strategic partnerships with industry leaders. These relationships not only validate our technology, but also embed our platform into the broader ecosystem, accelerating our path to market. Three, building recurring value. Our revenue model is designed to deliver recurring revenue. As we sign on commercial partners like Walmart and Hancock Health, we're not just making a one time sale.

Speaker 3

We are establishing a foundation for a platform as a service model where our revenue grows with every delivery, every data point and every new arrive point deployed. Our recent successful capital raise gives us the runway to execute this strategy and build our revenue base without near term liquidity pressure. We have the right team, the right technology and a clear vision to build a legacy of enduring value for our shareholders. This quarter was about turning vision into action. We moved from R and D into execution, putting our AP3 units into the field, engaging real world users and sharpening our technology with every delivery.

Speaker 3

As the founder, I've never been more confident we have the right team, the right tech and now the right timing. We didn't just file patents this quarter. We protected a future logistics layer that others are just beginning to imagine. Our NASDAQ debut marked a new chapter and I want every shareholder to know we're building this for scale, for impact and for legacy. The road to autonomous delivery is real and Arrive AI is paving the last inch.

Speaker 3

This isn't just about deploying product, it's about defining the category. What we're building at Arrive AI doesn't exist anywhere else in the world. We are a networked intelligent delivery infrastructure optimized for the last inch. Our pilots are teaching us how this system can serve hospitals, retail municipalities, and in time millions of consumers. As we build, we're also learning, iterating fast, staying agile, and always focused on creating value where the complexity is highest and the stakes are real.

Speaker 3

I'd now like to turn this over to Mark Ham, Arrive AI COO to provide further comments. Mark, take it over. Thanks, Dan. I'm proud how our team executed to our plan in Q2. Over the last ten plus years, we've been executing a dual path

Speaker 4

for creating value. Path one of value creation is growing organizational capabilities, enhancing our teams, systems, and processes for innovation, efficiency, compliance, and security. In Q2, we formed a strategic relationship with the managed service provider Synoptic to bolster continued development of long term capabilities, security, and compliance. On path two for value creation, our R and D solutions team continues to build unique autonomous last mile delivery solutions for customers. In the early years, we established our vision and a lot of foundational IP.

Speaker 4

Over the last three years, we've continued to progress IP as well as delivering prototypes and pilots to realize and refine new capabilities at an increasing rate. Q2 pilots included hospitals, specialty pharma couriers, and municipalities continuing that trend and filling the pipeline. Nyarav Shah will speak to those in more detail shortly. Both initial paths of value creation have been executed within a pre revenue focus, akin to a biotech company prioritizing innovation, learning, and validation in clinical trials before mainstreaming and obtaining market traction. Now we're excited with the funds to begin path three of value creation to build a scalable and profitable product and platform.

Speaker 4

In Q2, we secured public funding to develop our ArrivePoint product network and platform aimed at profitable unit economics at scale and scalable manufacturing and operations. We have a solid five year plan that begins this quarter focused on a new greenfield product development effort harvesting all we've learned to date, followed by large pilots with strategics in coming years. By year four, we plan to produce and install 10,000 units annually and scaling up to 100,000 units annually in year five. And we have bigger plans beyond that. This five year plan, we believe, can translate to a 10x increase in the company value.

Speaker 4

Q3 growth plans include tripling team size with 40 plus hires in technology like AI, engineering, robotics, operations research, development, and more, adding a bunch of advanced software and tools to get the job done. So with that, I'd like to turn it over to Todd Beckmeyer, our CFO, for further comments.

Speaker 5

Thanks, Mark. From a financial standpoint, our strategy remains clear: disciplined investment in scalable infrastructure. We're deploying capital where it matters the most: productization, pilots, and intellectual property. Importantly, our Pick Me crowdfunding campaign was not only successful but strategic, bringing in nearly 2,000 new retail investors who are now aligned with that long term vision. This quarter, we also closed a $40,000,000 structured capital line from Streeterville Capital, giving the access to liquidity that we need to execute our strategy.

Speaker 5

Here are some key aspects of the Q2 financial results. Revenue, just over $90,000 in the quarter, the first we've recorded in history. Our net loss in the quarter was $4,690,000 compared to $1,460,000 for the same quarter in 2024 and $1,980,000 loss for the first quarter of this year. Now, these results need to be considered in the context of some unique aspects this quarter. While our operating expenses were higher than the same quarter last year, 4,630,000 versus $1,480,000 much of that increase was a result either directly or indirectly to the public listing which occurred in May.

Speaker 5

Major items like legal expenses, insurance and investor relations all saw distinct spikes in the period. In total, over $3,000,000 of our operating expenses in the quarter were attributed to the public listing. Without these unique expenses, our net loss for the quarter would be in line or slightly better than the same period in 2024, dollars 1,350,000.00 versus $1.46 in the same quarter last year and 1,980,000.00 for the first quarter this year. Despite that headwind, our net cash flow was positive. Our cash balance ended at $607,000 which was an increase of $478,000 from

Speaker 3

the balance at the end of

Speaker 5

the year. And as we described earlier, we have nearly all that capital facility still available to meet future growth. We've maintained a disciplined approach to our capital use, focusing on long term shareholder value. Every dollar we raise, every contract we enter, and every new hire is measured against this one core question. Will this accelerate our ability to deliver scalable, defensible, recurring value?

Speaker 5

I'm also pleased to report that our accounting systems are now fully capable to support public company standards with real time dashboarding, financial controls, and compliance workflows in place. As mentioned, we recorded our first revenue in the quarter, primarily coming via our partnership with Hancock Health, a multi year project through which we'll pilot our arrive points working in hospitals to provide secure space for robotic delivery of items, including biospecimens from the oncology center to nurses stations. Our CSO, Nirav Shah, will have more on that in a minute. At this early stage of our commercial development, our infrastructure build out will require significant investment, and we expect to use our funding this year to lay our foundation for growth. As is the case with most early stage companies, we expect our expense base to grow faster than our revenue base until we are fully commercialized.

Speaker 5

We plan to use our capital facility to support this effort. Over time, we may refinance this facility or seek additional financing for major project pushes. Overall, our five year plan envisions improving the enterprise value by tenfold as we fully commercialize, and we're targeting a revenue mix that is evenly split between our ArrivePoint network and the AI platform services. I'd now like to turn it over to Nirav for further comments.

Operator

Thanks, Todd. What makes Q2 different is not just a number of deals. It's the signal quality. These aren't test partners. These are category leaders with infrastructure needs.

Operator

This quarter, we sent three commercial engagements that Todd, Dan and Mark have mentioned, I'll go into a little more detail, that validate our platform across distinct verticals. Almart, a national retail partner, expanding our footprint in e commerce delivery. Secondly, Sky Air, a drone logistics partner paving the way for aerial to ground automation. And finally, Hancock Health, who we've spoken to, spoken about quite a bit, a hospital system bringing secure medical transport into the field. Hancock, as mentioned, is a multiyear agreement through which we will pilot our arrive points, working in the hospital to provide secure space for robotic delivery of items, including biospecimens from the cancer center to the lab, among many other routes that we planned.

Operator

We are confident this trial will prove important cost and time savings, enabling medical professionals to focus on patient care rather than faring samples around the hospital. Key strategies for enhancing efficiency and reliability at Hancock include a few items, replacing manual specimen transport with robotic automation, providing a ride point storages for devices around the clock deliveries, and finally, deploying drones for urgent and off campus transport needs. This automation will open the door for transformative improvements, reducing costs, accelerating the delivery of critical items like test results, medications, and lab specimens, and strengthening the security and reliability of hospital services. Success here can propel expansion throughout Hancock's 30 other locations in Central Indiana and could prompt additional health care facilities to adopt the technology. Our strategy remains crystal clear.

Operator

We don't chase volume. We validate verticals. The quality of our pipeline speaks to the precision of that focus. These aren't warm leads. They're high intent, pain aware organizations with budget authority.

Operator

AllMart is bringing e commerce delivery closer to the doorstep of its neighborhoods. Hancock Health is solving a true problem in hospital logistics. And finally, Sky Air is tackling air to ground custody in one of the most complex regulatory environments in logistics. We win because we solve the problems others can't. I'd now like to turn it over to John Richardson, Arrive AI's chief legal officer to provide further comments.

Operator

Go ahead John.

Speaker 6

Thanks Nero. We're continuing to strengthen our position at the intersection of technology and law. In the second quarter we filed two additional patent applications focused on secure climate optimization, adaptive access control and drone landing coordination. And on June 10, we proudly announced the issuance of patent number 12304671. It's a cornerstone patent protecting our heating and cooling elements of our intelligent chain of custody delivery network.

Speaker 6

This brings in quarter two our issued patents to a total of eight. The recent issue of a hot cold compartment, cold compartment pattern targets more and better temperature control and support. In addition to the secured smart box and encrypted communications, other new and protected features are optional charging of different electrical, Trimodal abilities for drones, ground robots, and couriers. The ability to check packages for hazards such as explosives, anthrax, and illegal drugs. The ability to check for diseases such as different viruses, COVID and other.

Speaker 6

In addition to these features, we have a weight and dimension scan. We have weather queries. We have what they call tag and track drive bys. And for all you pet owners out there, we have facial and pet recognition cameras. This quarter's patent grant is more than a legal milestone.

Speaker 6

It's a strategic enabler. We're not just protecting what we've built. We're creating options for licensing partnership leverage and enforcing our position. That will matter more as competitors enter our space. We build our filings to be future forward, covering uses of the AI directed drone fleets and to multi agent chain of custody flows.

Speaker 6

On the compliance side, our team continues to lead the conversation with fleets to multi agent chain of custody. Excuse me. Chain or conversation with both municipal and federal regulators. Whether it's the FAA drone integration or public safety access, we're shaping the policy of environment that will all operate in one in one day. Now I'm going to turn it back to Dan.

Speaker 7

Thanks John. I'm not going

Speaker 3

to tell another joke guys. I want to thank John, Todd, Mark, Mirab and Kylie for assisting on this call. Really appreciate that. Our operating and strategic objectives for the remainder of the year are as follows. One, we are building the team.

Speaker 3

Hiring commenced in q three under our plans to triple our staff. These roles will include artificial intelligence scientists delivering on the company's commitment to be AI first in its operation and deliverables. Other jobs will include software and product engineering underscoring Arrive AI's commitment to continuous refinements of its proprietary technology and patent products patented products, sorry. Additional positions will support critical sales and marketing functions as the company prepares for widespread deployment. This expansion is critical for us to remain on the forefront of technology and to begin production of our arrive points for rollout internationally as well as to attract new clients and partners.

Speaker 3

Number two, product development. We offer the world's first autonomous delivery network anchored by our patented AI powered arrive points. Since 2014, when our first patent filing beat industry giants like Amazon and the US Postal Service, arrive AI has been at the forefront of developing autonomous delivery industry. Supported by growth capital and our investors, we now turn to producing our units and scaling deployment. This will be our focus for the remainder of 2025 and well into 2026 in accordance with our five year strategic plan.

Speaker 3

In closing, I want to thank all of our shareholders for joining us on this pivotal journey. We would not be here without you. This quarter we demonstrated that our vision is just not a concept. It is a tangible reality with our AP3 units now active in the field and commercial engagements underway. We are no longer a company in R and D, we are a functional execution based company building the last inch of the logistics layer, a category that we believe is essential for the future of autonomous delivery.

Speaker 3

The progress that we've made on everything from our patents and partnerships to our operational efficiency and financial discipline is a testament to the hard work of our team and the strategic clarity of our mission. We're building a company for the long term, one focused on creating scalable, defensible and recurring value. The road to autonomous delivery is being paved right now And with every deployment, every patent and every new hire, we are laying the groundwork for our legacy of innovation. We will now open up the floor for questions, first from the teleconference and then from the webcast.

Speaker 1

Our first question from the phone comes from Mike McCormick with Water Tower Research. Your line is open.

Speaker 7

Great, thanks. Hey Dan, how does the company plan to transition from its current pilot centric pre revenue model to scalable profitable business? What are the key milestones for achieving this including partnerships and what partnerships are necessary for you to achieve your objectives? Thanks.

Speaker 3

Mike, thanks for your question. I'm going to defer that to Mark Ham, our COO. Mark, you want have that? Sure.

Speaker 4

So this strategic five year plan is year one. We're realizing or finishing designs on the next generation AP5 product system that will, in the second year, serve a number of strategics, drone companies, ground robotics companies, delivery service companies. In one or two areas where they are already deployed, we will be providing a connected network as Dan referred to earlier. Year three, all that learning is getting folded back into incremental improvements for unit economics and scaled manufacturing. And by year four, we plan to be shipping 10,000 a year, year five, one hundred thousand a year and bigger plants than that beyond.

Speaker 4

So that's kind of at a high level what we're prepared to detail at this point. But we've been working on how this product system will be built, designed. And many of the 30 to 40 AI developer engineers, industrial designers, etcetera, that are coming in this quarter will be hitting the ground running and working on that right away. That answer the question or was there more?

Speaker 7

No, it does. I've got a follow-up question with you online. How will your platform as a service model work? And what the pricing structure for your commercial partners? Will it be based on per delivery fee, a subscription fee, or a hybrid model?

Speaker 4

Yeah, great question. So there's actually three components to the product which actually break into three planned revenue streams. First, there's the ArrivePoint network itself that we expect to serve all networks of drones and robots and services. And that will be deployed on a network as a service model for a monthly fee. A lot of detail is being explored how that monthly fee is covered, but that then becomes a turnkey service for all field support, upgrades, maintenance, software, integration, security, etcetera.

Speaker 4

The second component is what we call an autonomous last mile marketplace. As the network grow and units become high demand units in front of apartment complexes or on campuses, the marketplace will resolve the demand for automation to come and go, much like planes coming and going from an airport gate. And in addition, it will optimize the use of the high demand inventory space that our units will have. It will optimize it both within customers and competing networks that want access to that inventory. Kind of a classic example is you're throwing a Super Bowl party.

Speaker 4

Your pizzas are on the way. UPS wants to complete the fifth delivery in the neighborhood. There's some competition for both time and space there. And the system will resolve that. The marketplace will resolve that.

Speaker 4

You get your pizzas. The party goes on. The end customers informed that the package is just down the street and they can either pick it up or given a couple hours will coordinate with other networks in the area with spare capacity to complete the delivery on behalf of UPS and all of that demand for the space is resolved. We expect those situations to be more like a Google AdSense and to increase a base transactional fee that will be nominal but on every transaction. And then the third stream, which we expect to be 50% of revenue over time as we get to hundreds of thousands of units in the field, will be the AI platform and associated services.

Speaker 4

And if you think about the type of network that we have out there serving these networks, we have many return logistics, completing the journey, multimodal logistics, and other kind of arbitrage opportunities that we can help all our logistics partners, be more efficient, grow their business while we take a cut of that activity. So we think that will start culminating really in year five of the plan.

Speaker 7

Great. That was an exciting time. Look forward to watching it. Thank you.

Speaker 1

Thank you. I'm showing no further questions over the phone line at this time. This concludes the live call and Q and A portion of the call. We will now turn the call over to Kylie Conway.

Speaker 2

Yes, we are going to take more questions from those on the webcast, so be sure to stick around for that. Thank you, Daniel. Right now, we want to turn our attention to some of the more frequently asked questions we received from the investment community in our first quarter of being a public company. So I'm gonna ask our management team some of those right now. And again, stand by for those webcast listeners.

Speaker 2

We will get to as many of questions many of those questions as possible after a run through of these FAQs. First up, for Dan, can you talk about your status as a closely held company and your float? Do you plan to remain as closely held? Are you considering putting more stock into the market whether through a secondary or a primary offering so institutions can buy it?

Speaker 3

Thank you Kyle. Appreciate that. It's a question I get asked often from both individuals. Sorry it's a question I get asked often from both individuals and institutions. Institutions have a need to have a high degree of liquidity as they may want to be able to maneuver in and out.

Speaker 3

It aligns with me personally. As far as putting more shares into the float, many of you know we are a closely held company. Actually it's called a controlled company which when a single individual owns a high percentage which we have in this case and that's me. Over the last year and a half I put a survey out to our 5,000 investors asking the question, how would you feel if I sold some shares when we went public? And 95% of our respondents said that they were in favor of that.

Speaker 3

For the last eleven years, I've funded this company substantially out of my own pocket for six and a half of them. And so I do have a large portion of my net worth in Arrive dot ai stock. So consistent with that, I do want to rebalance my portfolio when possible, put parameters on myself. I don't want to undervalue anybody that invested in this company. And so my plan would be to sell some shares at the appropriate time to create further liquidity and to increase the flow.

Speaker 3

So that's kind of our position on that. I appreciate that question.

Speaker 2

Okay, next question is for Todd Pepmeyer, our CFO. How should we think about your capital allocation into CapEx and R and D costs this year and over the next couple of years, as well as investments in pilot programs, IP and the manufacturing scale up of ArriveI's IP3 unit?

Speaker 5

So let's talk thanks, Kylie. Let's talk about this year first. So preponderance of our spending this year, as we've said earlier on the call, be really to mobilize that engineering team, those developers to build out the future products. Beyond that, we will start to scale unit deliveries. That will require a capital investment over time.

Speaker 5

We've accommodated for all of that in our models. But we are being selective in those opportunities that make the most financial and strategic sense. We have a lot of opportunities to deploy capital and we're trying to stay focused on that strategic plan, really building out, the next generation product.

Speaker 2

Okay. Also, Streaterville, talk about this convertible note coming up shortly. What's the plan for that and, the plans for conversion?

Speaker 5

Yeah, as we've disclosed in various filings, so Streeterville does have the ability to convert out of that note at a time of their choosing with equity purchase. There are no restrictions on that. And in that case, we would issue shares to retire the note. And as we execute our plan and continue to draw on the line, same pattern repeats and they can convert it as they choose.

Speaker 2

What is your projected cash burn for the remainder of the year and into next year as you execute your growth plan? How long does your current capital runway last?

Speaker 6

So first of all, I would

Speaker 5

bit premature to give those kind of forward projections at this stage. What we can say is that we feel well positioned with that Streaterville facility. That takes us safely into 2027 in terms of the five year plan. Now beyond that, as manufacturing starts to scale up and we head towards that 100,000 installed base, there will be a need for more capital know, starting in about 2027. And so that's about as specific as we can give right now.

Speaker 2

Okay. And next question is for John Richardson, our Chief Legal Officer. How will you defend your patents? It's possible that Amazon doesn't enjoy being beaten to the punch.

Speaker 6

It's a good question. We've had that a few times. The fact that you beat somebody to the punch, at least here in The United States is a good thing. Of course, we like being in as pretty much in the front position for our portfolio. And I don't want be a school teacher now, but just for a second, I just want to recall for everybody that the patent system, the way it's set up.

Speaker 6

If even the small guy or small lady that's got a great idea and has received her patent can go to the federal courts and protect themselves. It's still a pretty flat surface and it's pretty fair. As you go forward depending on your ideas, obviously Amazon or whoever it is have got bigger pockets than we do. But we think we've got a pretty good set of litigation people out there that we've already worked in. So we we don't have a a concern there.

Speaker 6

But as you go forward, the whole thing is is trying to get everybody to understand that this is a good system. And in fact, whether it's Amazon or somebody else, we hope to be, partnership with them or licensing them to use our system and go forward.

Speaker 2

Great, John. Thank you. And last question of our FAQs is for Dan. Dan, what do you worry about and what keeps you up at night?

Speaker 3

Well, first of all, don't sleep at night, so I don't have to worry about that. You know, I have to say when we went public, I said to myself, I made a promise which I broke, and I wasn't going to watch that share price but given that you know I'm the largest shareholder and it's near and dear to my heart like every one of our shareholders it's something that I do do and it gets a little a little bit frantic sometimes around here. But the thing that really keeps me up at night is iterating on Arrive AI and coming up with new ideas, new technology, filing new patents and all the things that are going to drive this company to the finish line. So people ask me about our share price, what's your share price going to do today? And I tell the story at one point in my life, I owned a racehorse and everybody would say to me, hey, is your horse going to win today?

Speaker 3

And I never knew if it was going to win or not. I ended up winning one race through the tenure of that ownership and I didn't even bet my horse that race because I didn't know I was going to win or lose. But what I can say is this team, this place, this time with the IP that we have, the market acceleration around us, we're set up for success and all of our early investors that came in that have seen this vision. If you loved us then you really love us now because things have gotten bigger, brighter and better than we even could have ever hoped at this time. So I'm really excited about that.

Speaker 3

So Kylie, back to you.

Speaker 2

And we do hope that you get some sleep eventually.

Speaker 3

I might just crash on the desk one day, you never know. Okay,

Speaker 2

so now let's get to the many submitted questions we've received for the webcast. So thank you everyone who has joined via the webcast and for these contributions. Our first one is from Jack. The question is, thanks for the update, taking my questions. As it relates to your five year strategic road map, which has overlap with overall autonomous AI industry and infrastructure global build out, how do you prioritize that roadmap for Arrive AI, AR AI, and where does AR AI fit within the overall ecosystem?

Speaker 2

What are your thoughts on the largest mail and parcel supply chain providers and how they fit with AR AI and autonomous opportunities in the future?

Speaker 3

Jack, thanks for that question. I'm going give that to Mark Ham and see if he can knock that one out of the park.

Speaker 4

Yeah, great question. And we do love to think of it as an ecosystem. And that's why while it's an overused word, that's why we use the word platform to serve the whole ecosystem. So similar to EV manufacturers building out their technologies and ultimately building their own chargers, they eventually realized that interoperable horizontal network that they could all invest in was a better route to go. And they adopted the best technology out there in North America.

Speaker 4

And in a similar way, we view ourselves as supporting all the modes of delivery by robot and drone and pickup as well that we see being demonstrated out there and increasingly the backbone of many business models. And so our goal is to support all those methods and to be a neutral network that helps everybody increase adoption and ROI faster by supporting all those modes of delivery and pickup. So within that, yes, there are multiple business models. You may have a vertically integrated drone network like a wing or a zip line. Often they'll work with maybe a service provider like a door dash or an Uber Eats or a CVS or a Walmart and then of course we have our traditional US mail and specialty logistics and supply parcel supply chain providers like FedEx, UPS, etcetera, all of whom have their own business models but can leverage autonomous networks for the last mile to chase some really amazing cost savings and deliver better customer experience.

Speaker 4

Now what we like to say is the Judson's were right. That is the future. But we follow that very quickly with the observation that we don't think the last 50% of savings or customer experience or really the rapid adoption will be there until the industry adopts an interoperable horizontal network, which is what we are pursuing, have the lead on, have all our IP, all our talent and resources aimed at. And we're increasingly working with strategics and different types of customers to deploy facets of that. And you've heard the five years plan to start putting that network out there.

Speaker 4

And that's where we think those parcel carriers and others will play. And as the parcel carriers have experience, there's many business models that leverage them in different ways. And so by being a horizontal piece of infrastructure, we allow everybody to innovate and optimize and maximize their business model.

Speaker 7

Great. Thanks, Mark.

Speaker 2

Our next question is from Jabari. The question is, do you anticipate the new tariffs will materially affect your supply chain costs? If so, how would that impact your current runway?

Speaker 3

Yarav Shah, our Chief Strategy Officer, you want handle that?

Operator

Yeah, thanks Dan. So currently we do make a lot of our product in India to manufacture there. But we see that supply chain is mostly supporting Asian demand. We're currently looking at three suppliers in The United States to onshore the production of the a p three units, and that should be happening by the end of this year. We should make an announcement, so stay tuned for that, Jabari.

Operator

Next

Speaker 2

question is from Ryan. Who do you see as your ideal investor for Arrive AI For example, are you more interested in capturing individual or corporate investors?

Speaker 3

Dan O'Toole here, I'll grab that one. Thank you Ryan for your question. We are we the people story. Know we've always been, we beat Amazon by four days on our foundational patent. We're the little guys taking on the big guys and we welcome everyone.

Speaker 3

If you put $1 into this company you're a co owner with me and the team and that's how we celebrate this. So we're not picking who we do or don't want to be an investor in the company, we welcome everyone And that's the spirit. Everyone that invested came of their own free will and at the exact amount they wanted to and we celebrate that every day. So thank you for that question, Ryan.

Speaker 2

Next question is from Jaime. The question is previously you've mentioned plans to monetize Arrabbi's patents and proprietary technology through partnerships. Can you share any concrete developments, timelines, or new partner commitments on that front?

Speaker 7

Mark, you want to take that one?

Speaker 4

Yeah. We presently are not pursuing what some would refer to as like a Qualcomm model. What we are doing is we're investing in working with all parties to use and accelerate the use of a horizontal interoperable network. And those parties that use that network will be covered under our IP. On the other hand, as vertical solutions that may not join our network attempt to go deeper and deeper into our capabilities, we think one, we will outperform them because of our volume and going down the cost curve faster because we will be used by more parties.

Speaker 4

But two, in that scenario, then we'll begin to defend our IP, if you will. Now around the partnerships, we think there's a lot of great partners out there, a lot of great supply chains, and that there's plenty of room for cross licensing and other types of partnerships to facilitate developing those supply chains and accelerating going to market for us.

Speaker 2

The next question is from Aaron. Once the product hits nationwide installations, what does that look like? He's assuming there will be local salesmen and also installers. Will this be done by franchise locations or remote locations set up by Arrive? Aaron says he has a home improvement.

Speaker 2

He's been in home improvement sales for fourteen years and would like to help advise and think tank on this.

Speaker 3

Hey Aaron, really appreciate that Dan O'Toole here. First of all, all of our initial investors know that we have an initiative called from within. Everyone that invested in this company along our evolution, we've always tried to consider them for any opportunities that we have. So we'd love to talk to you and get any kind of advice that you want to give us. Really appreciate that.

Speaker 3

Having said that, we also want to consider anybody that has a viable offer. But I would say that we see this as a situation where we probably have a blended team both internal and external contractors that can handle the whole country. I want to see what else you wrote here. Your home improvement business would love to leverage that as well. And I would also say that we're building our units, our customers don't have to buy them, they can subscribe to them much like an Amazon Prime model.

Speaker 3

What that means is each unit is on our own balance sheet. We're building these for longevity and low maintenance. We're building them in a modular fashion, plug and play much like a Tesla with the theory that the best part is no part. And so what we're trying to do is have these streamlined, built for longevity and dependability, perhaps working a deal with a UPS to come out and hot swap modules when something is detected to be defective and at the same time taking the broken part back to a rehab facility to get that refurbed for redeployment or to dispose of. But that's how we're viewing that.

Speaker 3

It's a big consideration that we're thinking about. So my email is danarriveai dot com. Aaron, I'd love to hear from you so that we can keep that discussion going. Thank you.

Speaker 2

Next question is from Ron. What would help Arrive AI succeed in the short term and long term? What can speed up the growth and success?

Speaker 7

Who wants to take that one?

Speaker 3

Nirav, do want take that?

Operator

Yeah, thanks Dan. So Dan had mentioned earlier that there was an announcement from Sean Duffey, US Secretary of Transportation, kind of alluded to that drone dominance. So a really big a big win for us would be really freeing the skies and allowing beyond visual line of sight operations. That would be massive for us and accelerate our growth. Thank you.

Speaker 3

Thank you, Nira.

Speaker 2

And next question is from Tully. Have you worked out your technical issue with safety for drone delivery?

Speaker 3

I'll take that. Which one Tully? I'm just kidding. I'm not sure what you're speaking about there but what I can say is we are developing our own API to work on an open source basis. Obviously we want everyone to be able to integrate with our solution.

Speaker 3

As Mark laid out earlier, we consider ourselves the Tesla charger network if you will. We're going be ubiquitous. You're not going to have three arrive points in front of a home or business, a Walmart, an Amazon and a USPS. There's only going to be one. So it's important that you integrate universally and that's what we're working on every day.

Speaker 3

So thanks for that question.

Speaker 2

This next question comes from Jose. What are the biggest risks you see in the next few quarters and how are you preparing to turn those challenges into opportunities?

Speaker 7

Todd, do you want to take that one?

Speaker 5

Yeah, Dan. So thank you, Jose, for the question. There's a lot of risk in emerging business like ours, especially one in emerging segment with new technologies. Risks, or said differently, our success is gonna be dependent on how many pilots we're able to deploy in the next few quarters, how many units are out there in the field, really getting that installed base built up to the point where we can start, A, receiving meaningful revenue quarter over quarter, but B, taking the learnings we get from these early pilots, turning them into solutions for the next generation of products. So I just turned the risks into an opportunity.

Speaker 3

How about that? Yeah, that's a CFO, guys. Thank you. We're all winning.

Speaker 2

Next question from Lucas. What concrete strategic initiatives are you implementing to drive a four to five times increase in shareholder value over the coming months?

Speaker 3

Thanks Lucas. I appreciate that question. This is Dan. What I want to highlight is in this very call we talked about a five year strategy where we're hoping to 10x the value of the company. So let's not settle for four or five Lucas.

Speaker 3

We're going to try to go for that 10. And I think we've addressed a lot of the strategic initiatives, those that we could talk about in this call. But stay tuned every day we're out there with new exciting things. That's what makes it so much fun to come to work every day. Every day is a new day and it's never the same.

Speaker 3

So thank you for that question.

Speaker 2

Since Spencer now in the best of times many companies in their infancy do not always survive. If we were to experience a pullback in equities or recession how is Arrive AI positioned to weather the storm and come out the other side?

Speaker 3

Todd, CFO, you wanna grab that one?

Speaker 5

Thanks, Dan. Yeah. So I guess first of all, I would say the markets are the markets. The economy is gonna do what it's gonna do. There are volatilities out there that we can't control.

Speaker 5

And so you ask how weathering that. I would say we're more focused on what we're doing, where we're deploying, and the success of those deployments. So we know what we can't control. We can't control the market volatility. And so we're trying to look inward and focus on our plan.

Speaker 2

Next question from Keith. As an early angel investor in Arab AI, could you please explain how a potential sale of the company's patent Amazon would impact my investment and the value of my shares?

Speaker 3

Keith, thanks for asking the question. Also thanks for being an early investor. Really appreciate that. This is Dan. What I would say is we're not hyper focused on any exit per se.

Speaker 3

What we do is we span the globe and we look at every opportunity that comes across our horizon. The prism of how I always look at everything is through the eyes of the last investor. Would he be happy with the outcome? And if he would, it's something we're going to definitely consider. But we're giving forward looking statements here.

Speaker 3

We're giving our own opinions. As the founder and CEO of Arrive, obviously nobody is more electrified about what we're doing than I am. My running mantra to myself is in the next few years either we're going to be owned by the biggest company in the world or we're going to be the biggest company in the world. And that's my own view and that's what keeps me going every day and that's why I never get any sleep. But let's see what happens and thanks for that great question.

Speaker 2

Next question from Matt. Has there been a desire within Amazon or USPS to work with Arrive to assist with deliveries? Also, has there been any connection made with pharmacy chains like Walgreens, CVS, and even insurance companies to assist getting insulin and other life saving medications delivered with Arrive.

Speaker 3

Thanks Matt. Dan here again. I'm not trying to monopolize all these answers. Want to move fast for you guys and give you the best that we can. What I want to say is we obviously have a lot of ongoing conversations with people and companies that you guys all know about and people and companies that you don't know about.

Speaker 3

It's not really proper to have a dialogue or to discuss things that might be under NDA or things that the public doesn't know about. So right now I can just tell you that every day we're super focused on getting the most out of every opportunity out there and really hitting it hard. We're tripling our team right now. We've got the capital to really execute. One thing that we've always done is have our foot on the accelerator all the way down.

Speaker 3

I always use this analogy that if you have your foot all the way down on the gas and you let up even for a second and then you reapply, you never get back to where you were. And I'm just really proud of what we've been able to do and keeping it all the way down and where we're going.

Speaker 2

Next question from Ben. On stock switch threads, there were some concerns over the investment from Streator Rail Capital. I think the SEC filings can be hard to understand for a lot of us. How can you help us understand what kind of deal that was in layman's terms and how that deal helps with the trajectory of the company during this stage growth?

Speaker 3

Yep, I'm gonna jump in first and I'm let Todd our CFO take that. We do not comment on bulletin board material out there. It's a rabbit hole. I just want everyone to know that every day we're doing the right thing for every one of us. From Ben to George there and me and this whole team, anybody that put 1 dime into this company.

Speaker 3

So I just want that to be the underlying theme of how Todd's gonna answer this. So go ahead Todd.

Speaker 5

Yeah, the basic structure of the deal and I'll try to simplify it, but it's basically an equity line of credit starts with a prepaid advance.

Speaker 3

Our partner

Speaker 5

Streaterville advances us funds to purchase shares of the future. That shows up as a convertible note that it bears interest. Over time, as that note is converted out with equity purchases, kind of the bank is restored if you will, and we're able to take another prepaid advance at a future point of our choosing. So essentially, that's what it is.

Speaker 2

Okay. George Cusci has, three submitted questions. I'm gonna loop them into one question. They are, what are Arrive plans to deploy ArrivePoint? What's the value proposition for the end user?

Speaker 2

And what partnerships are currently in progress?

Speaker 6

I'm gonna

Speaker 3

let Mark and Nero both tackle that.

Operator

So yeah, go ahead. I was gonna say with the deployment right now, George, we're looking at a lot of smaller engagements. I mean, at some point we'll deploy in a larger scale. So we're looking for small controlled areas that we can kind of deploy arrive points. So one example that we announced was the go to delivery in the Virginia Beach area.

Operator

So we're able to like kind of have small pilots and things that and that's the plan for the next few months. Mark you want to take that?

Speaker 4

Yeah I would I would go back to the paths of value creation. Nirup was just referring to how he is validating all these verticals out there and mentioned that we do that selectively and economically where we can learn the most flesh out the latest capabilities and bring that all to bear and then the value creation path we're just creating now is the new greenfield scalable product that we have the five year plan for deploying tens of thousands of units year four, one hundred thousand year five and that's the deployment plan. Now all arrive points fundamentally deliver what we call asynchronous delivery so that a human doesn't have to be there to take the drone package or to ship something as well as the robot. They also deliver security and chain of custody So packages dropped on lawns and VITO assaults them or billions of dollars of porch piracy each year. Those scenarios are avoided as well as business to business, high value goods, medical, all of that.

Speaker 4

So asynchronous delivery, chain of custody, and security, and a lot of other features that are built in and increasingly managed by AI. So two paths that were creating value in deploying units for different reasons. And they're coming to emerging out there to one ubiquitous network with all our learning and all our capabilities delivering all that value to every end customer and every business model that needs autonomous delivery embedded in.

Speaker 2

Sergio, thank you for your question submissions. It seems like we've answered them both. I'm gonna go ahead and read them because we do appreciate all of these submissions. First one is how does Arrive AI generate revenue from its platform and services? Is it hardware sales, subscriptions, delivery fees, and other channels?

Speaker 2

Mark, you went into detail.

Speaker 4

Yeah. Free strength of revenue.

Speaker 2

And then the other one is large scale manufacturing. Are there plans for it? If so, where will production take place, and will it be in house or outsourced? NEAR, if you kind of tapped into this earlier as well. So we'll continue.

Speaker 2

Sergio, thanks for another question here. Can you share the full experience and feedback from the first deployed mailbox both from the customer's perspective and from a arrive AI's operational view?

Speaker 3

Gerald, you want to handle that one? Yeah

Operator

sure thanks Dan. So yeah we've had a lot of learnings. So we're learning a ton from the customers on the positioning and the placement and what they like and what they don't like. I'll just give you a couple of interesting examples. So we're in Hancock right now and Hancock Regional Health in Greenfield, Indiana.

Operator

And we discovered that there was one spot in the hospital where it was next to the MRI machines and that interviewed with some signaling. So we figured things like that out. Another one would be that we have the ground robot docking with our unit in another location at Hancock. And so we're learning that there's kind of some flow of traffic. So we're figuring out a lot of things about placement, use cases and how to better serve the customer.

Operator

So there's a lot more there, but I know we're kind of running short on time. But yeah, we've had a wonderful run.

Speaker 2

Next question is from Gary. In June, we saw a wave of insiders selling immediately following the public listing. This included the CEO selling over $6,000,000 in stock, his daughter liquidating her entire position and other key executives like the chief strategy officer and a director also selling substantial amounts? Was this coordinated selling executed under prearranged 10b5-one trading plans, or were they these discretionary sales? And how should investors interpret this broad based selling from the core team at such a critical early stage for the company?

Speaker 3

Gary, thanks for the question. This is Dan O'Toole. I want to answer that. Think I touched on it earlier, put a survey out over a year and a half ago about this very thing just in anticipation of us getting to the public market. It was something that I wanted to consider through the eyes of our 5,000 shareholders.

Speaker 3

You may have heard 95% of our shareholders said they were in favor of me being able to sell and take some money off the table. Just to put this in context and I'm going to say it, it's private business but it's also public because I'm an insider in this company. So I own $200,000,000 give or take in shares in this company. My core holdings and the largest percentage of my personal net worth is in this company. I'm being prudent and I always think about it this way.

Speaker 3

While I'm the most zealous guy and the biggest cheerleader for this company, what if you started a company that was worth zero, you took it to $2,000,000,000 in value and for some reason it ended up back at zero. And all that time you're the biggest rah rah cheerleader in the world and you never took a dime off the table. You never rebalanced your portfolio and you spent the rest of your life kicking yourself. That's not something that I'm willing to do. When I took this company public, I was adamant we had 5,000 investors.

Speaker 3

This is a we the people story. Everyone in this company has the same shares, all common shares with voting rights. I didn't create any preference shares that anybody else had a better position than anyone else. I want people to have the same shares as I do. And so I did sell some shares.

Speaker 3

I announced it to the market. I did not, I put I want to say this, when we went public there was a big push for me to lock up everybody in this company, every shareholder that came in all 5,000 pre public shareholders, our c team, everybody And I wouldn't agree to it. I didn't want to lock up or hold hostage one person that took an early bet on this company in the event they wanted to sell shares when we went public. The promise of investing in any company is liquidity and that has been very important to me to get all of our shareholders to liquidity. Three tenths of 1% of every crowdfunded company ever get to the public market.

Speaker 3

I'm proud to say that we're one of them. I make no excuse for the shares I sold. I did them openly, transparently and communicatively. I got pre approval which I didn't need to get from our shareholders and I sold $6,000,000 out of 200,000,000. I have invested in this company personally for the first six and a half years.

Speaker 3

I've subsidized it beyond that and I've also gone without pay sporadically over that last eleven years. I've built value here. I'm proud of it And I'm going to state this, I will sell more shares in the future when the timing is right and under the parameters that I've set for myself. I will say this that I did not sell one share for a price lower than anybody invested in this company prior to going public. And I think that's the integrity of what you get when you deal with us.

Speaker 3

So I'm not apologizing for it. I'm proud that I was able to build something and to monetize it in a way that rewarded me for the last eleven years of my life and I'm gonna be here for a lot more. As far as others that sold, I know you mentioned my daughter. She did not sell every share she had. I think she only sold 40 or $50,000 worth and I know she's got probably close to a million or so.

Speaker 3

So that was a very de minimis amount as well. And I can't speak for others but what I can say is I have not restricted one person. The promise of investing here is you have freedom. There's no animosity or judging. If you took the risk and this stock went to a billion dollars day one and you wanted to take that off the table, I want to shake your hand and thank you for being here with us and do whatever you want with that money.

Speaker 3

I'm proud that we created that value. The stock does fluctuate and I just want everyone to know that we're trying to get it as high as we can every day. That's what we do here. But if anybody has any questions, everyone knows how to reach me and this is what it's about. Everyone invested in this company because they want to get a great return.

Speaker 3

I sold a company and made this mind living in my life for the last eleven years so I can build something big for all of us. I appreciate that question. Thank you, Gary.

Speaker 2

And Gary I know you submitted this question a few times so hopefully Dan got around to that question for you. Next question is from Sergio. This is Dan, previously commented on the potential of Bitcoin. How is that idea evolving within Arrive AI and what role could it play in your overall strategy?

Speaker 3

Sergio, thanks for asking. You know, we're an innovative tech company. We are looking at everything every day. People make things happen for certain, you know, I always say why is something done this way why not that way. That's how I explore and that's how I look at everything.

Speaker 3

I come at it from the other side. I see Bitcoin when we say crypto in my terms I'm talking about Bitcoin. I think it's not the me too, it's the actual crypto that's out there. If it makes sense for us to do things in crypto with Bitcoin whether it's receiving payments, making payments, paying salaries, any of those kind of things we want to explore all of them. We are an emerging tech company.

Speaker 3

We want to be on the cutting edge of everything and I threw it out there to get some responses and see how that played with our shareholder community. It is something we're evaluating. Obviously you want to walk before you run but it is something that we're looking at right now and as things develop and we come up with a strategy on that you'll know and that's and I know you know that. So thanks.

Speaker 2

And this is the final question from from T. Has there been any market research on consumer sentiment on how they feel about this new technology?

Speaker 3

You know there has not been any consumer sentiment studies per se that have been commissioned but I can tell you this internally we have great personnel. I'll talk about Sonali. If you want to speak about that a little bit Nirav and the insights that we're garnering and how we approach things.

Operator

Yeah sure thing. Yes Sonali has her PhD in user research and so we've employed a researcher on the team that's looking at the different things. For example, investor profiles, you know, what are typical ages, what kinds of things people look for, what what excites people, from both our product perspective and also looking at our general market. So I think, you know, and Mark talks about this a lot of research versus organization and thinking about what actually matters to people. So, we're pretty excited about that.

Speaker 3

Thank you, Matt.

Speaker 2

And, those that will end our questions here for the call. Dan, I know that you have some final remarks that you would like to give.

Speaker 3

Yeah, thanks, Kylie. I just want to say thanks to everybody for enduring this long conference here. I do want to say that everyone that invested $1 in Arrive AI is a co owner with all of us. I also want to say that every metric that we are hyper focused on tracking right now is pegged all the way in a great way. And I'm speaking about metrics like capital, team, IP, partnership opportunities, market acceleration around us and the overall frothiness of this whole emerging industry.

Speaker 3

This is our moment. I hope that you'll join us. If you have anything to say you know how to reach me and I just want to thank you again for being a part of our journey. That concludes this call, right, Kylie?

Speaker 2

It does. We Thank you, did. It. Thank you everyone for joining us. Coming up, we will be presenting at the HC Wainwright conference in September and engaging in additional marketing to investors as always.

Speaker 2

Thank you for your continued support. We look forward to sharing our progress with you again next quarter. Have a great day.

Speaker 3

Bye, guys.

Speaker 1

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

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