Arrive AI (NASDAQ:ARAI) held its fourth-quarter earnings conference call on Wednesday. Below is the complete transcript from the call.
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The full earnings call is available at https://edge.media-server.com/mmc/p/k6eh9dyv/
Summary
Full Transcript
OPERATOR
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 Pepmeyer, 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 risks and uncertainties that could cause actual outcomes to differ materially. We encourage investors to review the risk factors detailed and arrive at AI’s SEC filings which are also available on the company’s website. Now I’ll turn the call over to Dan o’. Toole.
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. And what I mean by that is 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. But 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 going to be a moment where when a switch flips and things happen in a hyperscale way. But 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 Fitzgerald has just joined our board.. Mike is the Vice President of Indirect Channels and Solutions 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. And these are all areas that we are very focused on right now and it’s a very timely acquisition to get Mike on our board and I’m looking for some big things. I’m going to let CFO Todd Pepmeyer provide details on our financial results in a moment. But 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. And 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. So 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. But 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. Or 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 US 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 31, 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. And 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 and increasingly including items that require secure or time sensitive delivery like pharmaceuticals, 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. And 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. Or 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, driving 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 Autonomy, 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 this 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 ArrivePoint 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 tenfold. Those additional engineers immediately began advancing the next generation of ArrivePoint 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 ArrivePoint 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 arrivepoint 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 Pepmeyer to talk through the financials and provide more background on our revenue model.
Todd Pepmeyer
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 31, 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 30 quarter and the September 30 quarter alongside the full year results. The net result of this change will be higher reported net income in the June 30 period and lower net income in the September 30 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 ArrivePoint 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.
Dan O’Toole
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 thousands, then tens of thousands, and eventually hundreds of thousands 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, and 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. And 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.
OPERATOR
Thank you. To ask a question, please press star 11 on your telephone and wait for your name to be announced. And to withdraw your question, please press star 11 again. If you wish to ask a question via the webcast, please use the QA box available on the webcast link Please stand by while we compile the Q and A roster. And the first question comes from Jack Hardy with Maxim Group. Your line is now open.
Jack Hardy
Okay. Hey, Dan. Hey, Tom, Good morning. Thanks for the update. Thanks for taking my questions. Thanks for being here, Jack. Dan here. Go ahead, man. Absolutely. So, 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? And then two, what’s on tap for 2026 with the team expansion?
Dan O’Toole
Thanks. Yeah, thanks for being on here, Jack, and asking. That’s fairly accurate. We’re just under 50 employees currently. We just opened 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. So that is the reality of AI and how it’s impacting businesses in real time. So that’s a big tailwind on the company and it should deliver some good progress in our operational costs. So we’re really excited about that. Todd, do you have anything you want to add to that?
Todd Pepmeyer
I think we just want to highlight a couple of the particularly key ads that we announced. Ian Geist to lead our sales organization.
Dan O’Toole
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 Geiss. Ian came from the early days of DirecTV, where 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 Sirius XM Radio, which is, you know, much similar platform from a pricing or recurring revenue model and things like that. So 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. But, you know, we building out the sales team and we, you know, we’re doing a lot of things to lay groundwork for a big opportunity that presents itself this year. Okay, great.
Jack Hardy
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 Q2 and Q3 are the numbers, the 4q numbers. In this press release, it says that you back out the nine months, three Q numbers. So are these numbers correct, at least? Like the revenue, the subscription revenue?
Todd Pepmeyer
Yeah. Nothing changed. Yeah, Jack, nothing changed. Nothing affect. Nothing in the Restatement affected revenue.
Jack Hardy
Okay, great. So my next question is, what can we extrapolate, if anything, from the subscription revenue of about $15,000 in the fourth quarter? 2025. Was this all Hancock Health and just Steve, maybe just. Just kind of expand on that a little bit more.
Todd Pepmeyer
Thanks. Yeah, Jack, So 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. And our deployments are limited right now. We haven’t. We haven’t put hundreds of units out there only to replace them with the
Dan O’Toole
next generation and so on. So one other thing I’d like to jump in on this is Dan. Jack, you know when you’re new 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. So 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. And I could tell you that every metric that we track internally is pegged to the max. And 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. So I appreciate that question and opportunity for us to share that with you. Go ahead, Jack, what else you got? Yep, absolutely.
Jack Hardy
Just one last question, then I’ll hop back in the queue. Dan, on the product development and design stage. So I heard you mentioned some Updates on the AP3 and the AP5. platforms. Is there an AP4 or do we leapfrog that? And then also just how does the AP5. compare to the AP3 and any customer discussions you could touch on regarding your, your recent design updates.
Dan O’Toole
Thanks. Absolutely. Yep. Hey, great question. I want to announce to everyone in the room with me. In addition to Todd, our CFO and MediaNoTools CEO, we have Kylie obviously at Nirav Shah, our chief Strategy Officer, John Richardson, our chief Legal counsel. I’m going to throw that one over to NIRAV and let him speak to that nirav.
Nirav Shah
Yeah, thanks. Thanks, Jack. Thanks, Dan. So, yeah, regarding some of the product changes and design changes that we’re looking at in 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. So 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, I guess maybe we skipped over the AP4. And then just how does the AP5. compare to the AP3? Sure. Okay, so I’ll start with the AP4. So the AP4 is something that we have a placeholder for for a sorting unit that we’re looking at potentially for getting packages dropped in by robot or drone, aerial robot or drone, and basically sort the package and then just the package that the user would want would come out with access control. So that’s for multi dwelling units. Now some of the changes for AP5 are a brand new receiving unit for the drone deliveries and 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 by a drone for AP5 units and beyond.
Jack Hardy
Excellent. Very cool. Well guys, I appreciate the update. Wish you best of luck and look forward to tracking the story. Thanks. Thank you.
OPERATOR
Thank you. And our next question will come from Alex Latimore with Northland. Your line is open.
Alex Latimore
Hey guys, thanks for taking my question. I love that you had some fun here on the earnings call with, with your voices in AI. I think that was, that was cool to hear. I just got two questions for you. My, my first one is are you guys pursuing an acquisition pipeline and if so, what are some capabilities at the Top of that pipeline.
Dan O’Toole
Hey, Alex, Dan o’ Toole here. Thanks for joining. I think we can all agree that I sound better in person than AI but 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. But as far as ma, 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. Also like companies that split the right way. You know, early on when we started as a company, we did a 2 for 1 split through our crowdfunding. Later we did a 4 for 1 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 and A. We think that being part 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. 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 a deal, then I knew I would be happy with it. And that’s, that’s a prism. We don’t want our investors to trade dollars. We want everybody to win. And that’s, you know, that’s how we’re looking at things. So I hope that answers your questions. We do have, we do have deals that we’re evaluating.
Alex Latimore
Awesome. 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.
HOST
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. Did we drop out? Yes, you May. Go ahead and proceed.
Dan O’Toole
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, what part of. Where did I end on that? Where did I end on that? Dnf. You just started. I’d say closing up the question, talking about exploring opportunities. Okay. Did I, Did I tell you? I’ll just kind of restate that last sentence. You know, we do have, we do have M and A targets in front of us right now that we are exploring. Not in a position to talk about those right now, but, you know, I can tell you we want to actively be looking at, you know, exciting opportunities, things that could accelerate what we’re doing or enhance the offerings that we already have. And we’re not. We’re a small, nimble company that likes to evaluate opportunities. And so 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.
Alex Latimore
All good, Dan. All good. Appreciate it. My next question is, can you guys give maybe a ballpark of how many arrive points you expect by year end here?
Dan O’Toole
You know, we have a. I’ll tell you what we do have. We’re not trying to get totally granular on things. There’s a lot of, you know, moving parts. And what we’re doing is we’re doing. We’re not doing permanent deployments right now. What I mean by that is, as I mentioned a little bit earlier 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. And so that’s what we’re really focused on. And for that reason, you know, we’re not, 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. And so 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 APX and AP5 models and those are going to be the scalable units that we will start hoping to put out later this year. Okay, great.
Alex Latimore
And then 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.
Dan O’Toole
Yeah, those are, those are gifts that we’re going to have at scale obviously. Right. But 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. And you know, the people that we’ve hired are skilled. We’re not hiring admin and management layers, they’re all hands on AI informatics, you know, human I’m sorry, I’m losing it here. We’re doing a lot of things are really dedicating to the product development, really linear to what we’re doing and we are going to have some really when we roll this stuff out, you’re not going to believe it, I can tell you that. You know, I’m privileged to see next gen tech that we’re developing in our own building every day. And it is, it’s, it’s just amazing. I’m so proud of what we’re doing here and it is a real, it is, it is all very real. So nobody wants to get that out sooner than I do. But 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. So I hope that answers that.
Alex Latimore
Awesome. Dan, Todd, thank you. Best of luck this year. I appreciate it guys. Thanks for joining the call. Appreciate that.
OPERATOR
Thank you. Go ahead. I am sorry. Thank you. And I am showing there are no further questions through the phone and I would now like to turn it back over to Kylie.
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 closer to the questions, Dan has one more thing he would like to add.
Dan O’Toole
Yeah, thanks Kylie. A couple 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 gonna listen to our earnings call. He goes, dad, I’m going to get a haircut. And I said, well Bryce, I hope you get them all cut. So anyway, Bryce, I hope you got back to hear this. But anyway, one of the things I wanted to jump on real quick. Here is you may have noticed that we had an 8k that came out last night announcing a couple things. One is obviously Mike Fitz joining from T Mobile. Big gift for us, really aligned with what we’re doing. So proud of that. And I’m so excited about the leadership that we have in house already too. Don’t want to leave anybody out. But I wanted to also call attention to the fact that we did restate the earnings from Q2 and Q3 of last year. And I wanted to hand this to Todd to talk about a little bit, but I wanted to say about it is, you know, when you go public, you have an accounting team that you work with that’s external. Then you also have an auditor, PCAOB auditor, which is a public company audit board. It’s a very specialized form of audits that are done. And it’s very important that the cadence is always kept up and you keep these things up. Timing is everything when you’re public. And one of the things we always did as a since we’ve really started as a business, we always had a cadence of PCAOB audits even before we are a public company. So I’m really proud of that. But I’m proud of my internal team here, led by Todd, doing 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. And 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. But 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 this is the kind of company you guys want to deal with. So, Todd, jump in there, man.
Todd Pepmeyer
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. It’s one of the most complex aspects of corporate accounting. We discovered it, we needed an extra 15 days to get these annual results out. When we discovered, 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. So we’ll be filing those amended quarters alongside what we’re filing today. I would say that, you know, this, this is really, it’s a, 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 have been under the old accounting treatment.
Dan O’Toole
So that’s the long and short of that. Yeah, and hey, not throwing anyone under the bus, but when you do go public, sometimes you don’t know what you don’t know. And I just want to say that we rely on experts, we hire experts to help support what we’re doing here. But 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. So I can’t underscore that enough. So anyway, back to you, Kylie.
Kylie
And one more thing before we get to the Q and 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 noreply@alert gcs. 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 when we 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. So we want to thank Hans, Jake, Kaylin, Anthony and a few others we’ll get to in a bit for asking this question.
Dan O’Toole
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’m quite. 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. But you know what, that creates a ton of opportunity. You know, I always say the day we went public we traded as high as $40 a share that we were a unicorn in that moment. And 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 it 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 and 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. And 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 in front of the business. We’re the gateway to every home and business throughout the world. We have IP in the US and the world and 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 bucks when we went public and I’ve even bought more shares if you check that along the way. I’m hyper focused on Arrive AI and I believe with every fabric of my being in this company and I want you guys to all know that stock appreciation in addition obviously to building the best product ever is job one here. And you know, when we went public, and I’m kind of ranting here, but I am passionate about this. When we went public, the thing that we kind of 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. And being down in the doldrums sometimes with bad share prices, it’s really depressing. But what else it is, it’s very motivating. I can tell you that. We are executing. You guys are going to see it, but we’re in a show me, don’t tell me world and that’s what we’re hyper focused on. So great questions guys. I understand why everybody asked those and I’m sorry that we didn’t handle them all individually but the theme of all those were very much the same. So. But we wanted to acknowledge everyone’s name, right?
Kylie
Absolutely. One from Callien just about the NASDAQ notice, Callie and said could the team provide any updates on the NASDAQ delisting notice? What steps have the management taken to prevent a delisting and then any possibility of reverse stock split speculation.
Dan O’Toole
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. You know, 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 dance show. We wanted to, you know, our philosophy is you’re always going to hear everything here first, good, bad, whatever it is. That’s our, that’s our promise. So 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 a dollar 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 a dollar. The cure for that is anytime you trade above a dollar without having gone 30 straight days below a dollar, you kind of reset that. So none of us want to get into the world of reverse splits. And you know, as of today, that’s not a reality. I’ll turn this over to Todd and he can speak how I think we somewhat cured the flu thing and the market cap is hanging out there. Go ahead, Todd.
Todd Pepmeyer
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.
Dan O’Toole
One thing I also want to say on these, these are not overnight. You know, you get a notice and the next day you’re deemed listed. There’s a long process, usually six months or more to allow for curing. And you know, we think that, you know, good things take care of themselves while, you know, we’re 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. And then, you know, we will deal with things in real time as they occur and we’ll always report those to you guys. And 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. And 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. No, you always. Thanks for your question, Brian. You know, obviously you have to think about every scenario, right? That’s just good stewardship, you know, while you don’t want something to happen, what if it does? Right. I appreciate the question. You know, we were a non public company before we went public. Right. And everyone that was a shareholder was a shareholder. If that should have happened, I Don’t see anything changing. Everybody would still be a shareholder. We would just not be listed on the NASDAQ at that point. You know, 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 is so. 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. We wouldn’t. There’s so many things we couldn’t do had we not done this. It was the best thing we ever did and 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. And you know, unfortunately today I can’t say that, but you know, I think we can get back there. I think we will. And just, let’s just keep rolling here. What else do we have?
Kylie
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?
Dan O’Toole
Great, a lot of questions there, Ron. 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. We had, I call this a we the people story. We had 5,000 pre public retail investors on our cap table. So. And you know, the way that we were able to all come together was through three successive rounds of crowdfunding. And while crowdfunding was great and it really got us to where we are today, it is a grind. And I can tell you 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. So 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. And 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. And I’m going to turn it over to Todd to shed a little bit of light on that.
Todd Pepmeyer
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, it’s not a cash repayment. It converts to equity. Our 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. So 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. So when we hired, or set out to hire 40 plus 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. So we did a lot of economic evaluation of it. Price is competitive and it.
Dan O’Toole
Yep. I just want to add to that. Thanks for answering that, Ron. I mean Todd. Thanks for your question, Ron. I didn’t want to buy the building, to be honest with you. It’s a big liquidity hit for me personally. But in the interest of doing, you know, executing the vision of what we’re trying to do here and I could see how much buy in the team had to really Being attracted to this building, it just made sense to do it. So I did go ahead and buy it and I did offer it at a below market, in my mind, a below market. And we did. As Todd said, there was obviously the fact that there, 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, so I came in, I think fairly substantially lower than the market on this building. So. But 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. So that’s it. But thank you for asking that question.
Kylie
Raul also asks 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?
Dan O’Toole
You know, great question. I don’t want to answer every question here. We do have John Richardson, our patent attorney, chief legal counsel. Nirav Shah’s here, our chief strategy officer. But I will speak to this one. Of course, part of the dream is. I’m sorry, I’m going to cough here, but you 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. But 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. You know, 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, 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 Richison, our patent attorney is located on site and he’s fielding new IP every week, right, John?
John Richardson
That’s correct. You want to talk about that real quick? Yeah. I was going to hit a couple things on patents if I, if I could jump in just for a second. We talk a lot about the patents and where we are with the US we’ve got 10 approved patents that have been issued. Most recent one you mentioned earlier, the multi use patent which gives us the ability to handle commercial situations and residential situations with, with more than one user. So a person doesn’t have to have their own arrive point. They can have, you know, arrive point that they share with some other folks. But outside the US we’ve got, 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 about are we here, are we there? We’re going to go wherever the opportunities are. But at the same point, when we chose the 23 countries, we chose that in a logical way. We think we’ll 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 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. But as we look at our patents, the interesting point and my being on site is we’ve got 40 plus engineers, I want to say young engineers and they are young compared to me. But you know, they, they. We’ve got a couple right out of school, we’ve got a couple that have been out there for 20, 25 years. But 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 Nieroff mentioned earlier, and into the AP5 and 6 which are going to be, they’re going to be the Cadillacs of, I don’t want to get too much GM on, but they’re the Cadillacs of, of the future. And I think that our patent position is out there. Dan came up with the idea very early Dan and I’ve been together for over 10 years and we started talking drone decks and then we started talking arrive points and 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. And 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 Geist. They’re both bringing major focus into work. 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. And 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.
Kylie
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. And then the other was from Lance about sales plan and trajectory, which also went hand in hand with your answer. Great. What about the top. Right, the four for one?
Dan O’Toole
Yeah, I was going to get to that. We can go right now if you want. So Todd had a question about the reverse share split that happened pre public offering. So what do you say to people who invested and then you did a reverse 4 to 1 stock split to get on that stack? 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 1 for 4? It was actually a 1 for 4 split is what it was. If you had four shares, those shares became one. And I kind of liken it to this. If you’re holding a dollar and I say, hey, let me give you. Or I’m holding a dollar and I say, I’m gonna give you four, I’m gonna give me your four quarters. I’m gonna give you a dollar. That’s kind of what it was. It was, it was an even transaction. We didn’t diminish any value or anything. There’s 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, but in no way did we mean to diminish. In fact, I said earlier in this call, one of the things, 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. And that wasn’t something we did again because we wanted to didn’t mean to hurt anybody’s share count. But hopefully we get to a point where our shares are 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. So let’s stay tuned on that.
Kylie
The next question is regarding expansion that comes from Barushka. Given the awareness of the vast opportunities within emerging markets will rive AI go into countries like South Africa, other 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.
Dan O’Toole
Hey, thanks for your question. I’m going to throw this one over to Nirav Shah. Nirav, you got that?
Nirav Shah
Yeah, thanks, Dan. So, yeah, we would absolutely support a distributed supply chain. We want to minimize shipping costs and take advantage of unique strength in local supply chains. So that’s very much on our agenda. And then just speaking about different countries, I don’t know how much Baruski, you’ve been looking at the news, but we’re announcing some activity in India. We’re working with a company called Sky Air and other leading delivery companies. And 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. So, yeah, great question. 100% open. As JR mentioned, we have patents in 23 countries. And just to kind of round up this thought is that, you know, 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 monthly basis and JR can speak to that. But so effectively, we’re extremely committed and you can see that we pay on a very regular basis to maintain those international patents. So thank you, Hrushka.
Kylie
Nir, 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. And 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.
Dan O’Toole
Great questions. You know, we are exploring partnerships with several companies. You’re aware of the Nvidia Connect opportunity. You know, we’re leveraging that every day and you know, we would love to have Nvidia take a bigger, you know, look at us. And that’s, that’s part of our hope that we’re focused on frankly. But we will keep you apprised as to when, if something like that happens. You know, as far as any big partnerships, you know, we’re early and we believe that those are big drivers for us. So we are focused on developing some big opportunities and when the moment is right, we will be able to announce those as they happen. But you know, 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. So I always say REM 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. And I would just say just watch us. Just watch. Great things are about to happen.
Kylie
And 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 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.
Dan O’Toole
Hey Brian, thanks for your question. Thanks for being an early investor. You know, we have made that transition. In fact, we talk about that a lot. We’re not showing vaporware, we’re showing reality. And 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 ahold of us, if you want to come visit, we’d love to show you what we’re doing in real time and you could go out and, and tell the world what you’ve seen. So that’s what we’re doing now.
Kylie
We’ll go over to the questions that were submitted through the webcast. First is from Amin. As premium costs are rising globally, how are we planning to maintain our competitive position against competitors that may be leveraging cheaper materials? There were the recent price hikes in Japan and also now we have the uncertainty with the gold.
Nirav Shah
You want to take that?
Dan O’Toole
Yeah, thanks, Dan. So, yeah, kind of, I mean a multi, multi response here. So regarding the current situation, we’re obviously optimizing looking for multiple sources for product and not, not sticking to one market. So we can be in my shipping, which I mentioned earlier. And then the other thing I want to mention is that we’ve got ahead 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 a 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, to do some risk buying on that to minimize our future risk. So these are the kinds of things that we’re constantly thinking about.
Kylie
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 function sales or some other source of leverage? Are advances in agentic AI also potentially speeding your time to market revenue?
Nirav Shah
Yeah, they’re all jump in there. I would like to announce who’s taking it so our listeners know.
Kylie
Yeah, thanks, Dan. Nirav Shah Chief Strategy Officer so yeah, for sure we’re definitely looking@agentic AI. In fact, there’s a lot of desire internally to use OpenClaw but we’re trying to pull that back until we understand some of the risks. So regarding some of the other questions around agentic AI, we’re looking at implementing that very much so in workflows and customer service. Again, can’t say too much on that, but yeah, it’s all happening currently.
Todd Pepmeyer
Next is a multifaceted, multi part question from Sergio. Hi Sergio, thanks for this. 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.
Dan O’Toole
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 that all dilution is bad. And by what I mean by that is even though I’ve been substantially diluted, I still look at, 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. And 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.
Todd Pepmeyer
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. And 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. So 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 filing. Go ahead, Todd. Yeah, so we do have from time to time we have cash setting 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. So these are some of the ways
Kylie
we’re trying to get a return on that cash while it’s waiting to be consumed.
Todd Pepmeyer
Sergio, I believe we addressed your questions 3 and 5 regarding NASDAQ compliance and building out the team. So 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. So 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 put that money, 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 a million dollars a month. So 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. And Todd wants to 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 the defined number of shares. It was simply a matter of timing when we request the money and when the investor converts out.
Kylie
So that was all known to the market. It’s the timing of when we choose to take it that we have to disclose.
Todd Pepmeyer
The next two questions come from DPIC. First is on the AP3 to AP5 transition. What’s the unit economics difference? What’s the target unit cost at scale and when do you expect AP5 to be deployed? Deployment ready, Nero?
Nirav Shah
Yeah, thanks, Dan. So Deepak, regarding AP3 to AP5 unit economics in order of magnitude, I can’t really talk about the exact unit cost at 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. So we’re expecting a very powerful endpoint with a much cheaper price point regarding the deployment. The plan is for this year, so we’re going to be modeling things and showing some key customers potentially. So stay tuned on that and you’ll see something hopefully in Q3. Q4. Question 2 from Deepak on the recurring subscription revenue. What’s the typical contract duration and is there any minimum commitment from customers or can they churn quarter to quarter?
Dan O’Toole
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. And so what’s important to us is us. We don’t want to make tons and tons of units and have them simultaneously out. What we 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 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 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. And we haven’t outscaled to a level yet where we can really quote a Churn rate. But we’re mindful of that and we’re conditioning every deployment with patients 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.
Kylie
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 41 split at $13. I’m in for the long haul, so completely believe in arrive AI.
Dan O’Toole
Hey Greg, good to hear you out there, man. I know we’ve talked several times. Thank you for your question. Obviously, you know 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 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. But 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. So if you’re aligned with that. Stay tuned.
Nirav Shah
From Owen, what would a 5 to 10 year outlook as robotics and drones are becoming increasingly popular and what would what would be a field for heavy interest such as food, medical or package? Yeah, thanks Dan.
Dan O’Toole
Yeah, great question. So you know, as you’re following us, you’re seeing that we’re really focusing on medical initially high value items. Smaller, right. Easy to move around in five or ten years, frankly we see everything on the table from food to people to just all kinds of things. Moving your kids lunch from if you forget to drop it on shop. We see this as being completely ubiquitous by 10 years out. So again, starting at medical, but we’ll be hitting everything in 10 years. And Nir just had a thought leadership piece published regarding restaurant infrastructure and food deliveries and things like that. So be looking for that. We’re getting our leadership out there with some great pieces. Finally, question, second question, question. And our last question is from Amin. It’s already been addressed by Dan just about dilution and things of that nature. So 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, you know, we want to be totally transparent, communicative, and this is your company, so stay tuned. We’ve had 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.
Kylie
And Michelle, we’ll send it back to you.
Michelle
Thank you. This concludes today’s conference call. Thank you for participating. And you may now disconnect it.
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