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December 5, 2024
Daniel S. O'Toole
Chief Executive Officer
Arrive AI Inc.
12175 Visionary Way
Fishers, Indiana 46038
Re: Arrive AI Inc.
Amendment No. 1 to Draft Registration Statement on Form S-1
Submitted November 8, 2024
CIK No. 0001818274
Dear Daniel S. O'Toole:
We have reviewed your amended draft registration statement and have the
following
comment(s).
Please respond to this letter by providing the requested information and
either
submitting an amended draft registration statement or publicly filing your
registration
statement on EDGAR. If you do not believe a comment applies to your facts and
circumstances or do not believe an amendment is appropriate, please tell us why
in your
response.
After reviewing the information you provide in response to this letter
and your
amended draft registration statement or filed registration statement, we may
have additional
comments. Unless we note otherwise, any references to prior comments are to
comments in
our October 28, 2024 letter.
Amendment No. 1 to Draft Registration Statement on Form S-1 Submitted November
8, 2024
Risk Factors
Our listing differs significantly...., page 24
1. You state that Maxim Partners LLC has entered into "contractual lock-up
agreements
or other contractual restrictions on transfer that are applicable to the
Direct Listing";
here and in the Plan of Distribution, please describe these agreements
and restrictions.
You state that your "directors, named executive officers and certain
other stockholders
are subject to restrictions as to the number of shares of common stock
each may
dispose of in any given period"; here and in the Plan of Distribution,
please describe
these restrictions.
December 5, 2024
Page 2
Business, page 31
2. We note your amended disclosure in response to prior comment 9, however
the
current status of your operations remains unclear. Please further revise
this section as
follows:
State in the first paragraph that you are a development stage company
with
no revenues to date.
Where you name certain businesses, please state that you do not have
contracts
with them and may never have contracts with them.
State that there is no guarantee that you will meet your business and
partnership
goals.
Revise your statement that Arrive Points and Arrive Point Network
"are the
foundation to a platform approach to support the ALM ecosystem" to
state that
you anticipate they will be the foundation.
Where you discuss the "first post-pilot MaaS production support,"
clarify that you
do not know whether customers currently on pilot programs will choose
to
subscribe for your services after the pilot program ends.
Clarify the difference between "active customer agreements" and
"Statements of
Work." Where you identify the companies with customer agreements/SOW,
revise to describe the nature and material terms of such agreements,
clarify
whether they are for your pilot programs or for revenue-generating
activity, and
file them as exhibits.
Where you discuss your "2025 prospect pipeline," revise to state that
you do not
know if any of the assisted living communities and hospital chains
that expressed
interest will enter into agreements with you for your services.
You state that you "are installing AP3 units...for which we will
provide MaaS in
2025." Please revise to state whether you have agreements in place to
provide
such services for compensation, with whom, and under what terms.
Where you discuss operational platform fees and state that these
"capabilities will
be introduced through our AP5 development and pilot program," clarify
whether
you have engaged participants for such a pilot program.
3. Please revise to provide sources for the following statements or revise
to clarify that
they are management's beliefs:
Arrive is pioneering the emerging market for the automated exchange
of packages
and goods between people, robots, and drones with our autonomous last
mile
( ALM ) mailbox.
The future of automated last-mile delivery, consumer services, and
business
operations all need smart, secure, and seamless exchanges of
packages, goods,
supplies, food, and medicine between people, robots, and drones.
4. We note your statement that ALM Access Point is designed to provide a
"frictionless
exchange point." Please define "frictionless" and give an example of how
ALM
Access Point is designed to work as a frictionless exchange point.
December 5, 2024
Page 3
5. We note your statement comparing your ALM mailboxes to "traditional
smart
mailboxes and locker boxes." Please describe the differences in further
detail.
6. We note your statement that "[n]ote that the rate of data accumulation
could be
slowed if there are insufficient numbers of units deployed or if the
units are under-
utilized, either of which would result in slower data accumulation and
therefore would
delay the expected timeframe for likely AI improvements and
monetization." Please
elaborate to disclose the metrics necessary to meet your data
accumulation goals.
7. We note your statement that "Arrive AI s MaaS subscription model is
designed to
accelerate market adoption by making implementation simple and
affordable while
enabling us to support an increasingly large ALM mailbox network. After
12-18
months of delivering MaaS, beginning in December 2024, Arrive AI should
collect
sufficient data by 2026 to begin to better leverage the growing dataset
with improved
AI and ML models for enhanced services and insights for customers and
partners."
Please elaborate on each claim in this statement by providing support
for the claims
made.
8. We note your amended disclosure in response to prior comment 11 and we
reissue it
in part. Please revise as follows:
Revise the statement "As Arrive operations scale, they will produce
large amounts
of unique data that will become the foundation for monetization
using ML and
AI to clarify that it is aspirational.
Revise the statements in bullets 7, 8, and 9, and the last statement
in the comment
regarding pilots with Amazon, Google/Wing, Zipline, Walmart and
others, to
clarify that you do not know whether you will be able to achieve
such goals.
9. We note your amended disclosure in response to prior comment 12 and we
reissue it
in part. On page 34 where you reference open-source software, revise to
state, if true,
that all of your software is open-source/third-party and none of it is
proprietary.
Additionally, please clarify the terms under which 12-18 months of
operational data
will enable you to reach "critical mass," including whether that
estimated time-frame
is based on a certain level of operations, number of customers, etc.
Please also clarify
how machine learning and artificial intelligence will be used to
generate additional
revenue, and not just further operational efficiencies. Finally, please
update your risk
factors accordingly.
10. We note your amended disclosure in response to prior comment 13 in the
risk factors
section; please also include this disclosure in the business section.
Please revise this
section to disclose your plan to use machine learning and artificial
intelligence by
employing algorithms as they relate to delivery, pickup, users,
environment, and
autonomous logistics. In each example, please provide a more detailed
discussion of
the specific data points or types of data that would be collected/used
in each category
and revise to include appropriate risk factor disclosure that addresses
the material
risks associated with collecting, storing, and using such data in an
algorithm.
Intellectual Property, page 32
11. We note your statement that your intellectual property position includes
four
foundational patents. However, we note your list following this
statement appears to
December 5, 2024
Page 4
include seven different patents. Please disclose which patents are the
"foundational"
patents and explain the 170 granted claims associated with such patents.
Early Market Progress, page 37
12. We note your amended disclosure in response to prior comment 7. Please
disclose the
businesses of the customers with whom you have active customer
agreements.
Additionally, we note your added disclosure regarding Google Wing,
Zipline, Serve
Robotics, and Starship Robotics, and large retailers and delivery
services like
Walmart, DoorDash, and Uber Eats and the various pilots associated with
those
companies. Please revise to make it clear that you and your operations
are not
affiliated with such companies or their associated pilots and may never
be.
Begin with a Beachhead, page 38
13. We note your revised disclosure in response to prior comment 16 that
"[n]o definitive
agreements have been executed yet and technology development
partnerships are in
progress at this moment." Please revise to elaborate on the number,
terms, status and
anticipated completion date of the technology development partnerships,
state with
whom you are negotiating, and state there is no guarantee you will
actually enter into
such agreements.
Industry Overview and Opportunity
US Market Overview, page 40
14. We note your amended disclosure in response to prior comment 14. Please
revise to
include as part of the narrative text the statements that these figures
are based on
management's projections in the disclosure, instead of as a footnote to
the disclosure,
as the footnote you included conflicts with another footnote already on
this page.
Additionally, please revise to note the date of which management made
such
projections and revise to include any assumptions or limitations
associated with such
projections.
Regulatory Background, page 41
15. We note your amended disclosure in response to prior comment 18. We note
that you
did not include any disclosure regarding the regulatory implications
with respect to
medical operations and the transport/delivery of prescriptions,
biologics, etc. To the
extent that you believe that you will not be subject to any regulations
in these areas,
please revise to state as much and explain why not.
Patents, page 43
16. We note your amended disclosure in response to prior comment 19,
including your
note that you are using the term "anticipated expiration" because
maintenance fees are
required to assure the full 20 years. Please revise your risk factor on
page 13 regarding
your reliance on intellectual property to reflect this. Additionally,
please revise to
disclose whether the maintenance fees are due up-front, on a schedule,
or otherwise.
Finally, please clarify which party is responsible for paying the
maintenance fees
while you are licensing the IP from your CEO.
December 5, 2024
Page 5
17. We note your revised disclosure in response to prior comment 29. However,
it appears
that your revised disclosure still does not align with the patent
information in your
investor presentation. For example:
Your revised disclosure states "Arrive has three (6) approved,
registered, and
issued United States patents." Please clarify the number of patents
that Arrive
holds.
Your revised disclosure states that you have 43 international
patents, whereas
your investor presentation states that you have 48 international
patents.
Your revised disclosure does not mention the 130+ filed feature
claims that is
highlighted in the investor presentation.
Please revise for consistency.
Recent Developments and Current Licenses Held, page 44
18. We note your response to prior comment 30. Please revise your disclosure
in this
section regarding the Bruush merger to include the date that the Merger
Agreement
was terminated.
Legal Proceedings, page 45
19. We note your amended disclosure in response to prior comment 21. Please
revise to
name the "neutral state court" in which the proceedings are currently
pending and the
value of the unpaid salary and stock awards. Refer to Item 103 of
Regulation S-K.
Employment Agreements, page 52
20. We note your amended disclosure in response to prior comment 10 and we
reissue it.
Please revise to include a summary of the material terms of the Pargoe
Agreement and
file it as an exhibit.
Executive and Director Compensation
Summary Compensation Table, page 52
21. We note your amended disclosure in response to prior comment 23. Please
revise the
Summary Compensation Table to include a footnote to the Stock Awards
column,
based on Instruction 1 to Item 402(n)(2)(v) of Regulation S-K. Please
also amend the
compensation paid to your CEO to include the amounts paid under the
consulting
agreement. If that amount is included here, please include appropriate
narrative
description so that an investor can understand the breakdown of CEO
compensation.
Please also revise your narrative disclosure to explain the stock awards.
Finally, we
note the table titled Outstanding Equity Awards at September 25, 2024.
However, this
table should reflect outstanding equity awards at fiscal year end. Please
revise.
Director Compensation
Fiscal Year 2022 and 2021 Director Compensation, page 56
22. We note your statement that "[w]e have note yet paid any compensation to
the
directors in connection with their directorship." We also note your
statement that
"John Callan (former Director) 133,000 shares awarded 2021." Please
explain.
December 5, 2024
Page 6
Certain Relationships and Related Person Transactions, page 57
23. We note your amended disclosure in response to prior comment 24 and we
reissue it
in part. Please revise to state, if true, that there is no explicit
provision of the
agreement that allows you to extend the contract by continuing to pay
licensing fees.
State the current effective term of the agreement or termination date.
Clarify what will
happen after the seventh year under the agreement, including what would
happen to
the company in the event that the agreement is terminated. Clarify what
will happen to
the company if Mr. O'Toole attempts to terminate for any reason. Please
update your
risk factors to describe the related risks to the company and investors.
24. We note your amended disclosure in response to prior comment 25. Please
revise to
include the dollar value that has been paid to the CEO to date under the
exclusive
patent license agreement. Additionally, please elaborate on the $17
million valuation
of the license agreement, including the assumptions underlying the total
number of
units to be installed and the sales projections. Please revise to state
whether the
valuation, number of units, and sales projections were prepared by
management, a
financial advisor, or another third party.
Report of Independent Registered Public Accounting Firm, page F-3
25. We note your response to our prior comment 26 and associated revised
disclosure to
remove subsequent event information not reviewed by your auditors. It
appears the
information removed is material and should be disclosed pursuant to
paragraph b of
the definition of subsequent events in ASC 855-10-20 and 855-10-50-2.
Please revise
your disclosure accordingly and have your auditors update the date of
their audit
report pursuant to AS 3110.05.
Signatures, page II-6
26. We note your response to comment 27. Please confirm whether your
principal
financial officer is also your principal accounting officer.
General
27. We note your amended disclosure in response to prior comment 32 and we
reissue it
in part. Please identify the Registered Stockholders and provide the
disclosure
required by Item 403 and Item 507 of Regulation S-K.
28. We note your response to prior comment 28, but you have not revised the
risk factor
disclosure as requested. Please revise to discuss the risks associated
with your ability
to meet such quantitative requirements and any related risks to your
shareholders.
Prospectus Cover Page
29. Please move the following disclosure from the prospectus cover page to
the
Prospectus Summary, as it may be confusing to investors to describe
securities that
are not part of the direct listing on the cover page: "As of September
25, 2024, we
had a total of 910,189 warrants outstanding. The shares issued upon the
exercise of
the warrants may be freely sold upon effectiveness of a registration
statement
covering such shares, these shares may be freely sold in reliance on an
exemption
from registration subject to Rule 144 under the Securities Act ( Rule
144 ). We also
December 5, 2024
Page 7
have 2,459,575 shares of common stock issuable upon the exercise of
options
outstanding as of the date of this prospectus. All the shares of common
stock subject
to stock options outstanding and reserved for issuance under our equity
incentive plan
are expected to be registered on Form S-8 under the Securities Act and
such shares are
eligible for sale in the public markets, subject to the limitations
applicable to affiliates
under Rule 144." Also revise to clarify whether any of the options or
warrants are held
by Registered Stockholders.
Please contact Aamira Chaudhry at 202-551-3389 or Doug Jones at
202-551-3309 if
you have questions regarding comments on the financial statements and related
matters. Please contact Cara Wirth at 202-551-7127 or Lilyanna Peyser at
202-551-3222 with
any other questions.
Sincerely,
Division of
Corporation Finance
Office of Trade &
Services
cc: Joseph Lucosky