Arrive AI Inc.

CONDENSED NOTES TO FINANCIAL STATEMENTS

NOTE 1 -NATURE OF OPERATIONS

Arrive AI Inc. (the Company) was incorporated on April 30, 2020, in the State of Delaware as Dronedek Corporation. On July 27, 2023, Dronedek Corporation changed its name to Arrive Technology Inc. On September 27, 2024, Arrive Technology Inc. changed its name to Arrive AI Inc. The Company is an early-stage technology company with a focus on designing and implementing a commercially-viable smart mailbox for drone, robotic and human package receiving and storage.

The Company is subject to a number of risks similar to those of other companies of similar size in its industry, including, but not limited to, the need for successful development of products, the need for additional capital (or financing) to fund operating losses, competition from substitute products and services from larger companies, protection of proprietary technology, patent litigation, dependence on key individuals, and risks associated with changes in information technology.

The Company is an emerging growth company as the term is used in The Jumpstart Our Business Startups Act (JOBS Act), enacted on April 5, 2012 and has elected to comply with certain reduced public company reporting requirements.

NOTE** 2 -SIGNIFICANT ACCOUNTING POLICIES**

Basis of Presentation

The accompanying financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). These statements include all adjustments which management believes are necessary for a fair presentation of the statements and have been prepared on a consistent basis using the accounting policies described in the Significant Accounting Policies included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 as originally filed with the Securities and Exchange Commission on April 15, 2026 (“the 2025 Annual Report”). Certain financial information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, although the Company firmly believes that the accompanying disclosures are adequate to make the information presented not misleading. The financial statements should be read in conjunction with the financial statements and notes thereto included in the 2025 Annual Report. The interim operating results for the three and six months ended June 30, 2026 may not be indicative of operating results expected for the full year.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less at the time of purchase to be cash equivalents, including money market accounts held at financial institutions. The Company had cash equivalents of $1,649,682 at June 30, 2026, and $0 at December 31, 2025.

Concentration of Credit Risk

The Company’s policy is to maintain its cash balances in accounts insured by the Federal Deposit Insurance Corporation (the “FDIC”) or by the Securities Investor Protection Corporation (the “SIPC”). The Company may periodically have cash balances in financial institutions in excess of FDIC and SIPC insurance limits. At June 30, 2026, and December 31, 2025, the Company had approximately $2,476,535 and $1,604,004 of cash in excess of insured limits, respectively.

-8-

Management believes that the Company is not exposed to any significant risk concerning its cash balances. To date, the Company has not recognized any losses caused by uninsured balances.

Investments at Fair Value

During the three and six months ended June 30, 2026, the Company invested a portion of its excess cash in exchange-traded equity securities. The Company accounts for these investments in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) ASC 321,Investments—Equity Securities. Equity securities with readily determinable fair values are measured at fair value at each reporting date, with changes in fair value recognized in the statement of operations as unrealized gains or losses. Realized gains and losses on the sale or disposition of equity securities are also recognized in the statement of operations in the period of sale. The Company classifies the fair value of these securities within Level 1 of the fair value hierarchy established under ASC 820,Fair Value Measurement, as the securities are exchange-traded with quoted prices in active markets. As of June 30, 2026 the company held equity securities. At December 31, 2025, the Company held no equity securities.

During the three and six months ended June 30, 2026 and the year ended December 31, 2025, the Company wrote covered call options against its long equity security positions to generate income from option premiums. Written call options are recognized as liabilities at fair value in accordance with ASC 815,Derivatives and Hedging, and are remeasured at fair value at each reporting date. The Company does not designate these instruments as accounting hedges; accordingly, changes in fair value are recognized in the statement of operations within other income (expense). These instruments are classified within Level 1 of the fair value hierarchy, as they are exchange-traded and valued using quoted market prices in active markets. Premiums received are reflected in the initial fair value of the derivative liability and are subsequently recognized in earnings through changes in fair value over the life of the contract, as the options are traded on recognized national exchanges with quoted prices in active markets. Option premium income received at the time of writing is initially recorded as a liability representing the fair value of the written option and is recognized in earnings upon settlement or expiration of the contract.

Accounts Receivable and Allowance for Credit Losses

Accounts receivable are customer obligations due under normal trade terms, which are typically due upon receipt of the invoice. Credit is extended based on an evaluation of a customer’s financial condition and collateral is not required. Accounts receivable are stated as amounts due from customers net of an allowance for credit losses. The Company recognizes an allowance for expected credit losses at each balance sheet date. This estimate is derived from a review of the Company’s historical losses based on the aging of receivables. Receivables with similar risk characteristics are pooled for the estimation of expected credit losses. Management adjusts its historical estimate based on its assessment of current conditions, reasonable and supportable forecasts regarding future events, and any other factors deemed relevant by the Company. At each reporting date, the Company updates its estimate of expected credit losses to reflect any changes in credit risk since the receivable was initially recorded.

The Company writes off receivables when there is information that indicates the debtor is facing significant financial difficulty and there is no possibility of recovery. If any recoveries are made from any accounts previously written off, they will be recognized in earnings in the year of recovery, in accordance with the entity’s accounting policy. At June 30, 2026 and December 31, 2025, management determined that substantially all outstanding receivables were fully collectible. The Company did not incur material write-offs during the six months ended June 30, 2026 and year ended December 31, 2025.

Property and Equipment

Property and equipment is recorded at cost. Depreciation is computed using the straight-line method over the estimated useful life of the asset ranging fromtwo tofive years. The cost of leasehold improvements is amortized over the lesser of the length of the related leases or the estimated useful lives of the assets.

Maintenance and repairs of property are charged to operations, and major improvements are capitalized. Upon retirement, sale, or other disposition of property and equipment, the costs and accumulated depreciation are eliminated from the accounts, and any resulting gain or loss is included in operations.

-9-

Intangible Assets – Patents

The Company capitalizes external costs, such as filing fees, registration documentation, and attorney fees associated with the application and issuance of patents. Amortization commences when the patent is granted and placed in service and is calculated on a straight-line basis over the remaining legal life of the patent. Costs associated with pending applications are capitalized but not amortized until issuance. Maintenance patent fees are paid to a government patent authority to maintain a granted patent in force. Some countries require the payment of maintenance fees for pending patent applications; these are expensed as incurred. Maintenance fees paid after a patent is granted are expensed, as these are considered ongoing costs to “maintain a patent.” The Company expenses costs associated with maintaining and defending patents subsequent to issuance in the period incurred. The Company assesses the potential impairment of all capitalized patent costs when events or changes in circumstances indicate that the carrying amount of the Company’s patent portfolio may not be recoverable.

Impairment of Long-Lived Assets

The Company evaluates the recoverability of its long-lived assets in accordance with ASC 360,*Property, Plant, and Equipment.*The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets are measured by a comparison of the carrying amount of an asset to future cashflows expected to be generated by the asset, undiscounted and without interest or independent appraisals. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the assets.

The Company has three types of long-lived assets: property and equipment, including vehicles, equipment, and leasehold improvements; construction-in-progress (CIP), and intangible patent assets including those acquired by the acquisition of Airbox Technology in 2023. No impairments of long-lived assets were considered necessary as of June 30, 2026 and December 31, 2025.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606,Revenue from Contracts with Customers. The Company generates revenue from consulting and implementation services and recurring subscription services for access to the Arrive Point network. The Company identifies performance obligations in its contracts with customers, which generally consist of consulting services, installation services, and subscription services. The transaction price is allocated to each distinct performance obligation based on relative standalone selling prices. Contracts are typically short-term in nature and generally do not include significant variable consideration or financing components.

Consulting and subscription services are recognized over time as the customer simultaneously receives and consumes the benefits of the services in accordance with ASC 606-10-25-27(a). Revenue is recognized using an appropriate measure of progress that reflects the transfer of control to the customer, generally based on time elapsed or services performed.

Installation services are generally recognized at a point in time when control of the service is transferred to the customer, which typically occurs upon completion of installation and customer acceptance, if applicable.

Contract Balances

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, and, when applicable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on the balance sheet. The Company may request advances or deposits from customers before revenue is recognized, which results in contract liabilities. These contract liabilities are released as the performance obligations are satisfied. As disclosed in NOTE 3, the Company did not have any contract assets or contract liabilities recorded on the balance sheet as of June 30, 2026 and December 31, 2025.

-10-

Leases

The Company accounts for leases in accordance with ASC 842,Leases. The Company determines whether an arrangement is a lease at contract inception. The Company classifies leases as operating or finance leases at commencement; however, all of the Company’s leases are currently classified as operating leases. Operating leases are included in “Right-of-use assets – operating leases” and “Operating lease liabilities” in the Company’s balance sheets.

Right-of-use (“ROU”) assets represent the Company’s right to use the underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Lease payments included in the measurement of the lease liability consist of fixed payments and variable payments that depend on an index or rate, as applicable. Variable lease payments that do not depend on an index or rate are expensed as incurred.

The Company uses the rate implicit in the lease when that rate is readily determinable. If the implicit rate is not readily determinable, the Company uses its incremental borrowing rate at the commencement date, which reflects the rate of interest the Company would pay to borrow on a collateralized basis over a similar term in a similar economic environment. The lease term includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. Lease and non-lease components are generally accounted for separately. The Company has elected the short-term lease exemption and does not recognize ROU assets or lease liabilities for leases with an initial term of 12 months or less. Lease expense for operating leases is recognized on a straight-line basis over the lease term.

Equity Financing

The Company has entered into equity financing transactions to obtain the funds necessary to continue operations and develop a commercially viable smart mailbox system for drone, robotic and human package receiving and storage. These transactions have included the issuance of common stock and warrants to purchase common stock.

The Company evaluates warrants issued in connection with equity financing transactions under ASC 480,Distinguishing Liabilities from Equity, and, if the warrants are not required to be classified as liabilities under ASC 480, the Company then evaluates them under ASC 815-40,Derivatives and Hedging, to determine whether they are indexed to the Company’s own stock and meet the criteria for equity classification. The Company concluded that the warrants meet the criteria for equity classification and are accounted for as equity instruments.

Depending on the terms and conditions of each equity financing transaction, the warrants are exercisable into additional common shares at an agreed-upon price, as defined in the Stock and Warrant Purchase Agreement (“the agreement”) prior to the expiration of the warrants as stipulated by the terms of the transaction in the agreement.

The shares eligible for issuance under the outstanding warrants were registered under the Securities Act of 1933 on July 28, 2025.

Loss per share

The Company follows ASC 260,Earnings per Share, resulting in the presentation of basic and diluted earnings per share. Basic loss per share is computed by dividing net loss by weighted average number of shares of common stock outstanding during each period. Diluted loss per share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents, and potentially dilutive securities outstanding during the period. Because the Company reported a net loss for the three and six months ended June 30, 2026 and 2025, common stock equivalents, including stock options and warrants, were anti-dilutive; therefore, the amounts reported for basic and diluted loss per share were the same.

-11-

The following securities were excluded from the computation of diluted loss per share because their effect would have been anti-dilutive:

Comprehensive Loss

The Company follows ASC 220-10,“Reporting Comprehensive Income (Loss).” Comprehensive loss is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net loss. The Company had no items of other comprehensive income (loss) for three and six months ended June 30, 2026 and 2025. Accordingly, comprehensive loss equals net loss for those periods.

Offering Costs

The Company accounts for offering costs in accordance with ASC 340-10-S99-1,Other Assets and Deferred Costs and SAB Topic 5A,Expenses of Offering. Costs that are directly attributable to proposed or actual equity offerings are capitalized as deferred offering costs until the offering is completed. Deferred offering costs consist of underwriting, legal, accounting, and other expenses. Upon completion of an equity offering, such costs are recorded as a reduction of the related proceeds and reflected as a reduction of additional paid-in capital. If an offering is abandoned, the related deferred offering costs are expensed.

Research and Development

Research and Development (“R&D”) costs are expensed as incurred in accordance with ASC 730,Research and Development. R&D expenses primarily consist of fees paid to third-party consultants and other costs incurred in the development of the Company’s proprietary technology.

For the three and six months ended June 30, 2026 and 2025, the Company recognized R&D expense of $346,541 and $703,614 and $293,468 and $384,731 respectively.

Advertising Costs

Advertising costs are expensed as incurred. Advertising costs for the three and six months ended June 30, 2026 and 2025, were $63,861 and $91,889 and $49,602 and $57,263, respectively. These costs when incurred are included in sales and marketing expenses.

-12-

Stock-Based Compensation

The Company accounts for stock-based compensation under the provisions of ASC 718,*Compensation—Stock Compensation,*which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. The Company estimates the fair value of stock option awards on the date of grant using the Black-Scholes model. The fair value of restricted stock units is measured at the market price of the Company’s stock on the date of grant. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method.

In accordance with Accounting Standards Update (“ASU”) No. 2018-07,Compensation—Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting, the Company accounts for share-based payment transactions for acquiring goods and services from nonemployees in a manner consistent with employee awards. Such awards are measured at the grant-date fair value of the equity instruments issued and recognized as expense when the goods are delivered or services are rendered, unless the awards are subject to vesting conditions, in which case expense is recognized over the requisite service period.

The Company has elected to account for forfeiture of stock-based awards as they occur.

The average fair value of one (1) share of the Company’s common stock was determined to be $13.00 for the period of January 1, 2025 to May 15, 2025. On May 15, 2025, the Company completed its direct listing, and its common stock began trading on the Nasdaq Stock Exchange. Subsequent to May 15, 2025, the price of the Company’s common stock was determined by the Nasdaq daily closing stock price.

Prior to May 15, 2025, the fair value of common stock was determined using the prior transaction method, which considers actual transactions in the Company’s non-controlling, non-marketable private company equity interests. This method reflects the value of a non-controlling, non-marketable interest; however, management concluded that no additional discount for lack of control or marketability was necessary based on the specific facts and circumstances. As part of this methodology, there are a number of limiting assumptions, however, management believes it appropriately represents the fair market value indication for one (1) share of the Company’s common stock.

Convertible Notes Payable and Derivative Liabilities

The Company accounts for convertible notes in accordance with ASC 470,Debt, and ASC 815,Derivatives and Hedging. At issuance, the Company evaluates each convertible note to determine whether any embedded features must be bifurcated and accounted for separately as a derivative liability.

If an embedded conversion feature fails the indexed-to-own-stock test under ASC 815-40-15, because the conversion price is determined by a path-dependent formula rather than a fixed price or a current observable price, the conversion feature is bifurcated from the host debt instrument and recognized as a derivative liability at fair value on the issuance date. The host debt instrument is then recorded at an initial carrying value equal to the cash proceeds received, reduced by (i) the original issue discount (“OID”), (ii) the fair value of the bifurcated derivative liability at issuance, and (iii) debt issuance costs allocable to the host instrument.

When an embedded derivative is bifurcated from a convertible note at issuance, the Company initially records the derivative liability at fair value, with the residual proceeds allocated to the host debt instrument, consistent with ASC 835-30 and ASC 815. Debt issuance costs are allocated consistently with this initial measurement approach. The portion of issuance costs allocated to the derivative liability is expensed immediately in the period of issuance. The portion of issuance costs allocated to the host debt instrument is recorded as a contra-debt balance (debt issuance costs) and amortized to interest expense over the expected term of the note using the effective interest method (“EIM”).

The combined discount on each host debt instrument consisting of OID, the fair value of the bifurcated derivative at issuance, and allocated debt issuance costs is accreted to the face amount of the note using the EIM over the expected term of each note in accordance with ASC 835-30.

-13-

Where a convertible note has no stated maturity date, the Company estimates the expected term based on management’s best estimate of the period over which the debt is expected to remain outstanding, considering the economic substance of the instrument, the contractual terms, the expected timing and pattern of conversion or settlement, and other relevant facts and circumstances. The expected term used for accretion of the host debt instrument is applied consistently with the expected term used in valuing any bifurcated embedded derivative. This estimate is reassessed when facts and circumstances indicate a change may be warranted.

Bifurcated derivative liabilities are recognized at fair value on the issuance date of the applicable convertible note and are subsequently remeasured at fair value at each reporting date and at each conversion date, in accordance with ASC 815. Changes in fair value are recognized in earnings as a gain or loss on change in fair value of derivative liabilities and are presented as a separate line item within other income (expense) in the statement of operations.

When the conversion feature’s fair value cannot be estimated using a closed-form solution because the conversion price is based on a formula that incorporates path-dependent inputs, the Company estimates fair value using a Monte Carlo simulation model. The model simulates a large number of potential stock price paths and computes the expected present value of the conversion payoff under each path. The significant unobservable inputs used in the Monte Carlo simulation include the expected equity volatility, expected instrument term, risk-free rate, and debt discount rate. These instruments are classified within Level 3 of the fair value hierarchy established under ASC 820,Fair Value Measurement, because their valuation relies on significant unobservable inputs. See NOTE 5 for a description of the valuation methodology and significant assumptions.

When a noteholder elects to convert a portion or all of a convertible note into shares of common stock, the Company accounts for the conversion as follows:

The pro-rata portion of the carrying value of the host debt instrument, including the related pro-rata unamortized OID and pro-rata unamortized debt issuance costs, is derecognized upon conversion. If the carrying amount of the net host instrument differs from the consideration transferred, the difference is recognized as a gain or loss on conversion of debt in accordance with ASC 470-50.

The pro-rata portion of the bifurcated derivative liability attributable to the converted principal is remeasured to fair value as of the conversion date. The change in fair value from the most recent prior remeasurement date to the conversion date is recognized in earnings as a gain or loss on change in fair value of derivative liabilities. Upon conversion of the convertible notes payable, the pro-rata portion of the remeasured fair value of the derivative liability is then derecognized from the balance sheet with a credit to additional paid-in capital.

-14-

Income Taxes

The Company recognizes current and deferred tax assets and liabilities for temporary differences between the financial reporting and tax bases of assets and liabilities and for operating loss carryforwards in accordance with ASC 740,Income Taxes. A valuation allowance is established when, based on the weight of available evidence, it is more-likely-than-not that some or all of the deferred tax assets will not be realized. The Company has recorded no current or deferred income tax benefit primarily due to losses and a full valuation allowance on deferred tax assets.

Recently Adopted Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09,Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires the disclosure of a tabular reconciliation for state and local income tax, tax credits, and changes in valuation allowance. The requirements are effective for annual reporting periods beginning after December 15, 2024, and may be applied prospectively or retrospectively. The Company has adopted the additional disclosure requirements under ASU 2023-09. The additional requirements did not have a material impact on the financial statements.

In July 2025, the FASB issued ASU 2025-05,Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments provide a practical expedient allowing entities to assume that conditions existing at the balance sheet date are expected to remain unchanged over the life of current accounts receivable when estimating expected credit losses. The amendments are effective for annual reporting periods beginning after December 15, 2025, including interim periods within those fiscal years. The impact of adopting this standard was immaterial to the Company.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, ASC SubtopicDisaggregation of Income Statement Expenses (ASC 220-40): Income Statement-Reporting Comprehensive Income—Expense Disaggregation Disclosures. The amendments require additional disclosure of the nature of expenses included in the income statement. The amendments in this update are effective for public business entities for fiscal years, beginning after December 15, 2026. Early adoption is permitted. The Company is currently assessing the impact of the adoption of this standard on its financial statements.

NOTE 3 –REVENUE

Disaggregated revenue for the three and six months ended June 30, 2026 and 2025 is as follows:

-15-

NOTE** 4 -GOING CONCERN**

As of June 30, 2026, the Company had cash and cash equivalents of approximately $2,976,535 and short-term investments of $2,160,954.

As discussed in Note 10, the Company has entered into a Securities Purchase Agreement with Streeterville that provides for additional financing, subject to the terms and conditions of the agreement.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

In accordance with ASC 205-40,Presentation of Financial Statements — Going Concern, management evaluated whether conditions or events, considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that these financial statements are available to be issued.

The Company has incurred recurring operating losses and negative cash flows from operations since inception and expects to continue to do so as it invests in product development, commercialization, and infrastructure. These conditions, considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern.

Management has developed plans to address these conditions, which include the following:

-16-

The Company’s ability to continue as a going concern is dependent upon its ability to execute its operating plan and obtain additional financing, whether through additional borrowings under the Securities Purchase Agreement (“SPA”) or other debt or equity financings. There can be no assurance that the Company will be able to access funds under the SPA or obtain additional debt or equity financing. Accordingly, substantial doubt about the Company’s ability to continue as a going concern is not alleviated by management’s plans. These financial statements do not include any adjustment that might result from the Company’s inability to continue as a going concern.

Subsequent to June 30, 2026, on August 6, 2026, the Company experienced a Floor Price Trigger under the SPA when its volume weighted average price (“VWAP”) fell below the Floor Price of $0.25 per share for at least five Trading Days within a seven consecutive Trading Day period. As a result, the Company became obligated to make mandatory monthly cash repayments totaling $962,500, plus accrued and unpaid interest, beginning three Trading Days after the trigger date. These mandatory repayment obligations will continue until such time as the Company’s VWAP exceeds 120% of the Floor Price (i.e., $0.30 per share) for five consecutive Trading Days. There can be no assurance that this cure condition will occur. The Company is currently in discussions with Streeterville regarding potential remediation of the obligations arising from the Floor Price Trigger. There can be no assurance that the Company and Streeterville will reach any agreement with respect thereto.

As of August 13, 2026, the Company’s cash, cash equivalents, and short-term investments were approximately $3 million.

NOTE** 5 -FAIR VALUE MEASUREMENTS**

The Company accounts for fair value measurements in accordance with ASC 820, which defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-level hierarchy for inputs used in measuring fair value:

The Company measures its bifurcated derivative liabilities associated with its convertible notes at fair value on a recurring basis, see NOTE 10. These instruments are classified within Level 3 of the fair value hierarchy because their valuation relies on significant unobservable inputs, including expected equity volatility, expected term, and debt discount rates.

The following table presents the Company’s financial liabilities measured at fair value on a recurring basis:

The carrying amounts of cash, accounts receivable, accounts payable, and accrued liabilities approximate fair value due to their short-term nature.

The note payables are carried at amortized cost. The estimated fair value of these instruments approximate their carrying value due to the interest rate approximating current market rates for similar collateralized borrowings.

Derivative Liabilities – Convertible Note Payables

In connection with the convertible notes issued under the Securities Purchase Agreement with Streeterville Capital, LLC, as described in NOTE 10, the Company bifurcated the embedded conversion feature from each note and recognized it as a derivative liability under ASC 815. Each derivative liability is initially recognized at fair value on the issuance date of the respective convertible note and is subsequently remeasured at fair value at each reporting date and each conversion date. Changes in fair value are recognized in the statement of operations.

-17-

The Company estimates the fair value of each derivative liability using a Monte Carlo simulation model, which simulates a large number of potential stock price paths and computes the expected present value of the conversion payoff under each path.

Valuation Inputs and Basis of Significant Assumptions

The following inputs were used in the Monte Carlo simulation at each instrument inception measurement date:

The following inputs were used in the Monte Carlo simulation to remeasure the derivative liabilities at each reporting date:

The following range of inputs were used in the Monte Carlo simulation to remeasure the derivative liabilities at conversion dates (derivatives with multiple conversions are presented with the range of inputs):

-18-

As described in NOTE 10, the convertible notes have no stated maturity. The Company estimated an expected term based on the timing of expected draws from the SPA, the economic structure of the SPA, the conversion mechanics, and its assessment of expected noteholder conversion behavior. This estimate is reassessed at each remeasurement date.

In the above table, the Company disclosed a range of closing day stock prices, historical volatilities, risk-free rates, and debt discount rates used as model inputs for conversion calculations, if the note had multiple conversions during the period. Convertible Note 1 had multiple conversions which fell on the following dates: April 16, 2026 and April 21, 2026. Convertible Note 4 had multiple conversions which fell on the following dates: January 26, 2026, February 18, 2026, March 3, 2026, March 18, 2026 and April 9, 2026.

The Company estimated expected equity volatility using the historical volatility of a peer group of comparable-stage companies operating in the autonomous vehicle, robotics, and AI/logistics technology industries, supplemented by the Company’s own limited trading history.

The risk-free rate was derived from the continuously compounded yield on U.S. Treasury securities with a remaining term approximately equal to the assumed instrument term, observed as of each measurement date.

The debt discount rate represents the Company’s estimated cost of non-convertible debt with terms comparable to the convertible notes. This rate was calibrated using observable market data for similarly situated issuers in the Company’s industry and credit profile, adjusted for the specific terms of the SPA.

Sensitivity of Level 3 Fair Value Measurements

Because the derivative liabilities are valued using significant unobservable inputs, their fair value measurements are classified within Level 3. Changes in those inputs can have a material effect on the reported fair value. The table below describes the directional sensitivity of the derivative liability fair value to changes in the most significant unobservable inputs, holding all other inputs constant:

Equity volatility is the most significant unobservable input. The conversion feature has an asymmetric payoff structure (the noteholder benefits from lower stock prices that produce a lower conversion price under the Lookback Formula, subject to the $0.25 floor), and higher volatility generally increases the expected value of that optionality. A hypothetical 10 percentage point increase or decrease in assumed volatility, holding other inputs constant, would result in a directionally significant change in the fair value of the derivative liabilities; however, the magnitude of such change depends on the then-current stock price relative to the conversion price range and cannot be quantified without reference to the applicable simulation outputs. Management considers the volatility assumption to be the key source of estimation uncertainty in the Level 3 measurement.

Expected term affects the number of simulated conversion opportunities and the present value weighting of simulated payoffs; a longer term increases the value of the conversion optionality. Debt discount rate affects the discount applied to the simulated payoffs; a higher rate reduces present value.

-19-

The interrelationship between equity volatility and stock price should also be noted: at lower stock prices, the conversion discount embedded in the Lookback Formula produces larger absolute payoffs per share for the noteholder, and higher volatility amplifies this effect. The $0.25 floor price limits downside exposure in scenarios where the stock price falls significantly.

Derivative Liabilities – Convertible Notes Payable Roll-Forward

The following table provides a reconciliation of the derivative liabilities – convertible notes payable measured at fair value using Level 3 inputs for the three and six months ended June 30, 2026:

The total net change in fair value of derivative liabilities – convertible notes payable recognized in the statement of operations for the three months and six months ended June 30, 2026 and 2025 was a gain of $93,053, and $1,222,822, and a gain of $190,000, and $190,000, respectively. This is presented within “Change in fair value of derivative liabilities” in the accompanying statement of operations.

Amounts reclassified upon conversion represent the fair value of the pro-rata portion of each derivative liability, remeasured as of the applicable conversion date and derecognized in connection with the settlement of the related converted principal. The change in fair value through the conversion date is included in “Change in fair value of derivative liabilities - conversion remeasurement” in the table above. For a description of the full conversion accounting policy, including the treatment of the host debt component upon conversion, see NOTE 10.

Derivative Liabilities - Written Call Options

During the three and six months ended June 30, 2026, the Company wrote (sold) call options on exchange-traded equity securities as part of its cash management program. Written call options are accounted for as derivative instruments under ASC 815 and are reported as derivative liabilities in the accompanying balance sheet. The options are measured at fair value on a recurring basis using quoted prices for identical instruments in active markets and are classified within Level 1 of the fair value hierarchy. Changes in fair value are recognized in gain (loss) on investments in other income (expense) in the statement of operations. As of June 30, 2026, the aggregate fair value of written call options was $58,830 covering 10,600 underlying shares with an aggregate notional of $2,067,000, all of which expire within twelve months. The Company held no written option positions at December 31, 2025.

Investments

During the three and six months ended June 30, 2026, the Company held exchange-traded equity securities and written call options that were measured at fair value on a recurring basis and classified within Level 1 of the fair value hierarchy.

During the three and six months ended June 30, 2026, the Company recognized a realized loss of $123,506 and a gain of $322,818, and an unrealized gain of $241,136 and a loss of $260,976 related to equity securities and written call option activity, which is included in other income (expense) in the statement of operations.

As of June 30, 2026, the Company held exchange-traded equity securities and written call options. At December 31, 2025, the Company held no equity securities or written call option positions.

-20-

NOTE** 6 -PROPERTY AND EQUIPMENT**

Property and equipment consist of the following:

For the three and six months ended June 30, 2026 and 2025, total depreciation expense was $64,823 and $120,520, and $9,576 and $16,666 respectively.

NOTE** 7 –LEASES**

The Company leases office space and ground robots under noncancelable operating lease agreements.

Office Space – Related Party Lease

The office space is leased from an entity owned by the Company’s Chief Executive Officer and principal shareholder and is therefore considered a related-party lease. The lease is an operating lease with an initial term of five years commencing on October 1, 2025. The lease includes an option to renew upon expiration of the initial term; however, renewal periods were not included in the measurement of the right-of-use asset or lease liability because the Company has determined that exercise of the renewal option is not reasonably certain at this time.

Under this lease, the base rent is $44,481 per month for the first twelve months, increasing 3% for each twelve-month period thereafter. The lease is structured as a triple-net arrangement under which the Company also pays taxes, insurance, and common area maintenance charges directly. These triple-net lease (“NNN”) costs are variable in nature and are not included in the measurement of the right-of-use asset or lease liability; they are expensed as incurred. Based on current estimates, NNN costs are approximately $9,885 per month. Total variable lease costs recognized under this arrangement during the three and six months ended June 30, 2026 were approximately $29,655 and $59,310. The estimated all-in monthly occupancy cost is approximately $54,366. This lease arrangement is also disclosed in NOTE 12.

Ground Robot Leases

The Company also leases ground robots used in delivery operations to transport goods between Arrive Point units. These leases have initial terms of two years commencing on July 31, 2025. Lease payments are approximately $4,200 per month. Total lease costs recognized under this arrangement during the six months ended June 30, 2026 were approximately $25,200. The lease includes renewal options; however, renewal periods were not included in the measurement of the right-of-use assets or lease liabilities because the Company has determined that exercise of the renewal options is not reasonably certain at this time.

-21-

The ground robot leases and the office space lease have been aggregated in the disclosures below as they share similar remaining terms, discount rates, and lease structures. Management has evaluated the leases and concluded that separate presentation is not necessary to provide a meaningful understanding of the Company’s lease obligations.

Right-of-Use Assets and Lease Liabilities

The following summarizes the right-of-use assets and lease liabilities recorded on the Company’s balance sheet as of June 30, 2026 and December 31,2025:

Lease Cost

The following is a summary of the lease cost of operating leases recognized in the Company’s statement of operations:

Supplemental Cash Flow Information

The following is a summary of the supplemental information related to the Company’s operating leases included in the statements of cash flows:

Discount Rate and Lease Term

As the rate implicit in the Company’s office lease was not readily determinable, the Company used its incremental borrowing rate to discount future lease payments. The Company’s incremental borrowing rate represents the rate of interest that it would have to pay to borrow, on a collateralized basis and over a similar term, an amount equal to the lease payments in a similar economic environment.

The weighted-average remaining lease term and weighted-average discount rate for operating leases at June 30, 2026 were 4.17 years and 10.32%, respectively.

-22-

Future Lease Payments

The future lease payments required under the Company’s leases as of June 30, 2026 for the years ending December 31 are as follows:

Scheduled amounts represent contractual base rent only and exclude variable NNN costs. Variable lease costs associated with the ground robot leases, if any, were not material for the three and six months ended June 30, 2026. Based on current estimates, NNN costs are approximately $9,885 per month and are expensed as incurred.

NOTE** 8 -PATENTS, NET**

Patents consist of the following:

-23-

Eight of the Company’s international patent applications have been issued and are being amortized over the remaining legal life of up to 16 years. The Company did not file for any patents during the three and six months ended June 30, 2026. Amortization expense was $516 and $1,033 and $150 and $452 for the three and six months ended June 30, 2026 and 2025, respectively. Estimated amortization expense on the existing intangible patent assets for the next five years is $2,066 per year.

NOTE** 9 -DEFERRED OFFERING COSTS**

Upon completion of an equity offering, including all pre-paid advances under the Securities Purchase Agreement discussed in NOTE 10, such costs are recorded as a reduction of the related proceeds and reflected as a reduction of additional paid-in capital. The deferred offering costs related to the SPA are recorded pro rata based on the pre-paid advance compared to the maximum facility.

During the six months ended June 30, 2026, the Company raised gross proceeds of $10,000,000 under pre-paid purchase agreements.

The following summarizes the deferred offering balances as of and for the six months ended June 30, 2026:

During the six months ended June 30, 2026, the Company recorded $2,174,671 of deferred offering costs as a reduction of additional paid-in capital in connection with the convertible note financing transaction discussed in NOTE 10. As of June 30, 2026, the Company had remaining deferred offering costs of $3,475,514 related to equity financing transactions under the Securities Purchase Agreement discussed in NOTE 10, which are expected to be recorded as a reduction of additional paid-in capital upon completion of the related transactions.

-24-

NOTE** 10 -CONVERTIBLE NOTES PAYABLE**

Overview of the Purchase Agreement

On March 21, 2025, the Company entered into a Securities Purchase Agreement with Streeterville Capital, LLC (“Streeterville”). The SPA closed on May 15, 2025, upon satisfaction of all conditions precedent. The SPA provides for a maximum facility of $40,000,000, under which three draws were completed during 2025, resulting in aggregate cash proceeds of $11,000,000 and the issuance of convertible notes with an aggregate face amount of $11,890,000. One draw was completed in the first quarter of 2026 resulting in cash proceeds of $10,000,000. As of June 30, 2026, the remaining undrawn capacity under the facility is $19,000,000; however, any future draws remain subject to the satisfaction of conditions precedent set forth in the SPA, and no assurance can be given that additional draws will be made.

The convertible notes issued under the SPA bear interest at a rate of 8% per annum and have no stated maturity date. In the event of a default under the SPA, the Company will be required to make monthly cash payments until the default is cured or the notes are repaid in full.

Pre-Delivery Shares

Pursuant to the SPA, Streeterville purchased 2,937,500 shares of common stock (the “Pre-Delivery Shares”) at par value ($0.0002 per share) in exchange for aggregate consideration of $588. The Pre-Delivery Shares were issued as a condition of and concurrent with the closing of the SPA on May 15, 2025, and are contractually linked to the financing arrangement.

The Company has evaluated the Pre-Delivery Shares under ASC 480-10-25 and ASC 505-10-45 and concluded that equity classification is appropriate on the following basis: (i) the shares represent issued and legally outstanding common stock with full voting rights; (ii) the Company holds a right, but not an obligation, to repurchase the Pre-Delivery Shares at par value, which is a unilateral call option and does not, by itself, require liability classification; and (iii) the shares are not mandatorily redeemable and do not embody an unconditional obligation requiring the Company to transfer assets. Accordingly, the Pre-Delivery Shares are presented within stockholders’ equity and are included as issued and outstanding shares as of December 31, 2025.

The Pre-Delivery Shares are included in the weighted-average shares outstanding used in the computation of basic and diluted loss per share beginning on May 15, 2025, the date the SPA closed and the shares were issued, consistent with ASC 260-10-45. The Company considered whether the nominal issuance price and the Company’s repurchase right created any basis to exclude these shares from EPS and concluded that, because the shares are legally issued and outstanding with no outstanding contingency that would require their return, the Company’s inclusion is appropriate.

Conversion Feature and Bifurcation

Pursuant to ASC 815-40-15 and ASC 815-15-25, a conversion feature that fails the indexed-to-own-stock test must be bifurcated from the host instrument and accounted for separately as a derivative liability, measured at fair value at each reporting date, with changes in fair value recognized in earnings. Accordingly, the Company has bifurcated the conversion feature as a derivative liability at the inception of each note.

Note Issuance Summary

The convertible notes issued were bifurcated as follows. The initial host carrying value for each note represents the cash proceeds received, reduced by (i) the original issue discount (“OID”) of approximately 8% of the principal proceeds, (ii) the fair value of the bifurcated derivative liabilities at issuance, (iii) the portion of debt issuance costs of 4% in 2026 that are allocated to the host debt instrument, as described below.

-25-

In connection with the issuance of the Convertible Note 4 in January 2026, the Company incurred debt issuance costs equal to 4% of cash proceeds in 2026 which was $400,000 for Convertible Note 4. In accordance with ASC 835.30 and ASC 815, the Company allocated the debt issuance costs between the host debt instrument and the bifurcated derivative liability based on their relative fair values at the issuance date. Accordingly, $92,400 of the debt issuance costs was allocated to the derivative liability and recognized immediately in other expense during the three months ended March 31, 2026, because costs allocated to a derivative liability measured at fair value through earnings are not eligible for deferral. The remaining $307,600 was recorded as a contra-liability (direct reduction of the carrying value of the host debt instrument) and is being amortized to interest expense using the effective interest method over the estimated expected term, consistent with the accretion of the OID and debt discounts described below. The resulting discount is accreted to par using the effective interest method over the estimated term of each note.

Although the notes have no stated maturity date, the Company estimated an expected term of 2.93 years for purposes of both the EIM accretion schedule and the Monte Carlo valuation of the bifurcated derivative of convertible note 4. This expected term was determined based on (i) the Company’s expected timing of draws under the SPA (ii) the economic terms and structure of the SPA, including the conversion mechanics and the absence of a mandatory redemption date, (iii) the Company’s assessment of the expected conversion behavior of the noteholder based on the Lookback Formula, and (iv) the provisions of the SPA governing the noteholder’s conversion rights. The use of an expected term rather than a contractual maturity is consistent with ASC 820-10-35-24C, which requires that fair value reflect market participant assumptions. Management applied the same expected term in both the EIM accretion model and the Monte Carlo valuation model based on its estimate of the period over which the notes are expected to remain outstanding. The expected term assumption will be reassessed each reporting period in connection with the fair value remeasurement of the derivative liability. The following table shows the initial host carrying value of Convertible Note 4 at inception:

Host Convertible Notes Roll-Forward

The following table sets forth the activity in the carrying value of the host portion of the convertible notes for the six months ended June 30, 2026. Discount accretion is computed using the EIM applied to the initial carrying value of each note over its estimated expected term. Upon conversion, the face amount converted and the pro-rata unamortized discount and issuance costs attributable to the converted portion are removed from the carrying value.

-26-

Conversion Accounting

See NOTE 2, Convertible Notes Payable and Derivative Liabilities for details on accounting for the conversion of convertible notes payable.

For a summary of derivative liability activity during 2026, including amounts derecognized upon conversion, refer to NOTE 5.

Other income and expenses related to convertible notes

Other income and expenses related to the convertible notes recognized during the three and six months ended June 30, 2026 consisted of the following, presented in the statement of operations:

-27-

NOTE** 11 -NOTES PAYABLE**

Notes payable consists of the following:

At June 30, 2026 aggregate future principal payments on the notes payable are as follows:

Interest expense related to the notes payable for the three and six months ended June 30, 2026 and 2025, was $132 and $304, and $285 and $607, respectively.

NOTE** 12 -RELATED-PARTY TRANSACTIONS**

On May 26, 2020, the Company entered into an initial three-year agreement with the Company’s Chief Executive Officer, Daniel O’Toole, for the use of a patent. Beginning June 1, 2020, the Company began paying Mr. O’Toole a monthly license fee of $10,000. Once revenue from sales, rentals, and leases begins, the Company is required to pay $25.00 per unit sold. If the Company does not sell 400 units per month (or $10,000), the original fixed $10,000 is paid.

On March 10, 2025, the Company entered into the second amendment to the Exclusive Patent License Agreement of May 26, 2020. The Second Amendment extends the license to perpetuity, covering the full term and life of the patents, and provides for cure provisions in the event of default. The Second Amendment also removes prior restrictions on the Company’s use, sale, or commercialization of the technology after termination, permitting the sale of remaining inventory for up to 90 days post-termination, provided all required reports and payments are made under the Agreement.

For the three and six months ended June 30, 2026 and 2025, the Company recorded licensing fee costs in the amount of $30,000 for each of the three months ended and $60,000 for each of the six months ended, respectively.

Effective October 1, 2025, the Company entered into a noncancelable lease for an office space with an entity owned by the Company’s Chief Executive Officer and principal shareholder. The lease terms are described in NOTE 7 and were evaluated for reasonableness using prevailing market rates for similar properties.

-28-

NOTE 13 -STOCKHOLDERS’ EQUITY

Common Stock

During the six months ended June 30, 2026, the Company issued in the aggregate 17,678,268 shares of common stock as follows:

Share Repurchase Program

On September 8, 2025, the Company announced a new share repurchase program (the “Repurchase Program”), pursuant to which the Company may purchase up to $10 million of its common stock through March 31, 2026.

Share repurchases under the Repurchase Program may be made from time to time through various means, including open market purchases, privately negotiated transactions, and/or pursuant to Rule 10b5-1 trading plans, in each case in accordance with Rule 10b-18 under the Securities Exchange Act of 1934. The timing, volume, and nature of share repurchases pursuant to the Repurchase Program are at the discretion of management and may be suspended or discontinued at any time.

There wereno shares repurchased during the six months ended June 30, 2026.19,700 shares were repurchased in 2025 totaling $74,743. The 19,700 shares were fully retired as of December 31, 2025, which reduced the number of issued shares of common stock.

-29-

NOTE 14 -WARRANTS

The following table summarizes the warrants outstanding as of June 30, 2026 and changes during the six months ended June 30, 2026:

The aggregate intrinsic value represents the excess, if any, of the Company’s common stock price over the exercise price of in-the-money warrants as of the applicable reporting date. The stock prices used were $2.63 and $0.429 as of December 31, 2025 and June 30, 2026, respectively.

NOTE 15 -STOCK-BASED COMPENSATION

The Company created the 2023 Equity Incentive Plan (the “Plan”) on April 27, 2023, under which stock options, restricted stock awards (“RSAs”), restricted stock units (“RSUs”), and other stock-based awards became available for issuance not to exceed 1,500,000. On November 6, 2025, the Board of Directors resolved to increase the share pool under the Plan to 7,000,000 shares. The Plan is designed to attract, retain, and motivate key employees. Currently, the fair value is recognized as an expense over the vesting period of the award. Options are generally granted with an exercise price equal to the fair market value of the Company’s stock at the date of grant, vest over a four-year period, and expire after five or ten years. There are certain situations that may accelerate the vesting or termination of all outstanding options, such as a change in control. Vesting of RSUs awarded to employees may be time or performance-based. As of June 30, 2026,1,523,552 shares were available for grant under the Plan. The compensation expense related to stock-based awards is included in general and administrative expenses with a corresponding increase to additional paid-in capital.

The following table summarizes the option activity during the six months ended June 30, 2026:

-30-

The following table summarizes the nonvested share options for the six months ended June 30, 2026 and activity during the six months ending June 30, 2026:

The aggregate intrinsic value represents the excess, if any, of the Company’s common stock price over the exercise price of in-the-money options as of the applicable reporting date. The stock prices used were $2.63 and $0.429 as of December 31, 2025 and June 30, 2026, respectively.

As of June 30, 2026, there was $3,393,054 unrecognized compensation expense related to nonvested stock options to be recognized through June 30, 2028. Total compensation expense related to stock options during the three and six months ended June 30, 2026 and 2025 was $239,268 and $480,478, and $244,883 and $489,766, respectively.

The following table summarizes the restricted stock units (“RSUs”) outstanding as of June 30, 2026 and activity during the six months ended June 30, 2026:

-31-

During the six months ended June 30, 2026, 3,278,103 RSUs of shares were issued under the plan to employees with a total fair value of $2,370,750, based on grant date fair value. Of those shares,1,835,641 vest and are expensed on a straight line basis over a period of three months to four years. There were 102,492 shares vested and 101,886 canceled during the three months ended June 30, 2026. Total compensation expense related to time-based RSUs during the three and six months ended June 30, 2026 and 2025 was $409,357 and $922,539, and $0 and $0, respectively.

During the six months ended June 30, 2026, the remaining 1,442,462 shares vest over terms up to 3 years upon the satisfaction of certain operational goals specified in the underlying agreements. Compensation expense for these performance-based restricted stock units is recognized in accordance with ASC 718 over the requisite service period, when achievement of the performance condition is considered probable. The Company reassesses the probability of achieving such performance conditions at each reporting period and adjusts compensation expense accordingly. To the extent applicable, compensation cost is recognized using an accelerated attribution method for awards with graded vesting features. There were 36,679 performance-based restricted stock units canceled during the six months ended June 30, 2026. Total compensation expense related to performance-based RSUs during the three and six months ended June 30, 2026 and 2025 was $73,164 and $308,895, and $0 and $0, respectively.

As of June 30, 2026, there was $4,686,018 unrecognized compensation expense related to nonvested RSUs to be recognized through June 30, 2030.

NOTE** 16 -COMMITMENTS AND CONTINGENCIES**

Litigation

The Company accounts for loss contingencies in accordance with ASC 450-20,Contingencies — Loss Contingencies. A liability is accrued when a loss is probable and the amount can be reasonably estimated. When a loss is reasonably possible but not probable, or when a probable loss cannot be reasonably estimated, the Company discloses the nature of the contingency and, where determinable, an estimate of the possible loss or range of loss.

From time to time, the Company may become involved in various legal proceedings in the ordinary course of its business and may be subject to third-party infringement claims. In the normal course of business, the Company may agree to indemnify third parties with whom it enters into contractual relationships, including customers, lessors, and parties to other transactions with the Company, with respect to certain matters. Legal fees are expensed as incurred.

The Company has agreed, under certain conditions, to hold these third parties harmless against specified losses, such as those arising from a breach of representations or covenants, other third-party claims that the Company’s products, when used for their intended purposes, infringe the intellectual property rights of such other third parties, or other claims made against certain parties. It is not possible to determine the maximum potential amount of liability under these indemnification obligations due to the Company’s limited history of prior indemnification claims and the unique facts and circumstances that are likely to be involved in each particular claim.

On March 15, 2023, the Company was named as a defendant in CAUSE NO. 29 D05-2303-PL-002478, originally filed in Hamilton County, Indiana and subsequently moved to Marion County as CAUSE NO. 49 D02-2305-PL-020604. This is an employment action alleging breach of employment agreement; breach of stock purchase agreement; breach of fiduciary duties and non-payment of salary, bonuses, and benefits. Although the settlement demand includes unpaid salary and stock awards of approximately $29 million, the Company does not believe a loss is probable, and the Company is unable to estimate a reasonably possible loss, or range of loss, at this time. No motions are pending, and depositions are underway. No accrual has been recorded as of June 30, 2026.

On September 9, 2025, John Doan and Jami Town named the Company as a defendant in Case No. CL25-3626, pending in Virginia State Court. Doan and Town claim the Company is in breach of contract for loans made to AirBox. The loans were extended to AirBox before the Company purchased its assets in 2023. The Company explicitly acquired only the assets of AirBox and therefore does not believe it is liable for any of its previous liabilities. The Plaintiff’s originally alleged damages and fees total $45,082. They have a current demand of $175,000 which the Company has declined. The Company has filed for removal from the claim. This case was remanded from Federal Court back to Virginia State Court. Since this matter is still in its initial stages, the Company is unable to predict the outcome at this time. No accrual has been recorded as of June 30, 2026.

-32-

On October 2, 2025, the Company was the plaintiff in a lawsuit Case No. 1:2025cv02026 filed in federal court in the Southern District of Indiana for misappropriation of US federal and Indiana trade secrets. The defendants are former consultants, Myron Wright, an individual, and Wright Flyer Consulting Group Inc., a Kentucky corporation. The Company is seeking compensatory and punitive damages, attorney fees and costs as well as permanent injunctive relief against the defendants requiring the immediate cessation of all transactions utilizing the Company’s Trade Secrets and return of materials constituting the Trade Secrets. Taft, Stettinius & Hollister, LLP is representing the Company in the matter. The Company is the plaintiff in this matter, no loss contingency has been recorded.

NOTE 17 -SEGMENT REPORTING

The Company determines its operating segments in accordance with ASC 280,Segment Reporting, based on the information reviewed by the Chief Operating Decision Maker (“CODM”) for purposes of allocating resources and assessing performance. The Company operates as asingle reportable segment, as the CODM, the Chief Executive Officer (“CEO”), evaluates the business as a whole and does not receive discrete financial information for multiple business units. The CODM assesses the Company’s financial performance based on net loss, as presented in the statements of operations, and uses net loss to evaluate operating results and make resource allocation decisions.

The Company has determined that there are no significant segment expense categories or other segment items that are regularly provided to the CODM and included in the measure of segment profit or loss.

Entity-Wide Disclosures

NOTE 18 -SUBSEQUENT EVENTS

On July 21, 2026, the Company received a notification letter from The Nasdaq Stock Market LLC stating that it was not in compliance with the Market Value of Publicly Held Shares requirement of Nasdaq Listing Rule 5450(b)(2)(C) for a period of 32 consecutive business days from June 3, 2026 to July 20, 2026. The Company has until January 19, 2027 to regain compliance. This matter is described further in “Nasdaq Listing Compliance” in Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, which description is incorporated herein by reference. The notification has no immediate effect on the listing or trading of the Company’s common stock.

On July 27, 2026, Todd Pepmeier, Chief Financial Officer of the Company, notified the Company of his resignation from his position as Chief Financial Officer, effective August 10, 2026. On July 29, 2026, Laurie Tucker resigned from her position as a director of the Company. Ms. Tucker’s resignation was not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

Subsequent to June 30, 2026, on August 6, 2026, our VWAP fell below the Floor Price of $0.25 per share for at least five Trading Days within a seven consecutive Trading Day period, constituting a Floor Price Trigger under the SPA. As a result of this triggering event, we became obligated to make mandatory monthly cash repayments totaling $962,500, plus accrued and unpaid interest, beginning three Trading Days after the trigger date. These mandatory repayments consist of $550,000 under Pre-paid Purchase Agreement 2 and $412,500 under Pre-paid Purchase Agreement 3. These mandatory repayment obligations will continue until such time as our VWAP exceeds 120% of the Floor Price (i.e., $0.30 per share) for five consecutive Trading Days. There can be no assurance that this cure condition will occur. The Company is currently in discussions with Streeterville regarding potential remediation of the obligations arising from the Floor Price Trigger. There can be no assurance that the Company and Streeterville will reach any agreement with respect thereto.

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

-33-