S-1: Cyngn Inc. Seeks to Raise $8 Million in Public Offering to Fuel Autonomous Vehicle Technology

Cyngn Inc., an autonomous vehicle technology company, is offering up to $8 million in shares of common stock and pre-funded warrants to advance its industrial autonomous vehicle solutions.

Summary

• Cyngn Inc. is conducting a firm commitment public offering to raise up to $8 million.
• The offering includes shares of common stock and pre-funded warrants, with an assumed public offering price of $0.1538 per share based on the last reported sale price on April 9, 2024.
• The company is offering up to 52,015,605 shares of common stock and pre-funded warrants to purchase up to 52,015,605 shares of common stock.
• The pre-funded warrants are offered to purchasers whose acquisition of common stock would result in beneficial ownership exceeding 4.99% (or 9.99% at the purchaser's election).
• Each pre-funded warrant is exercisable for one share of common stock at an exercise price of $0.00001 per share.
• Aegis Capital Corp. is the sole underwriter for the offering and has a 45-day option to purchase up to an additional 15% of the shares and/or pre-funded warrants sold.
• Cyngn intends to use the net proceeds for general corporate purposes, including working capital.
• As of December 31, 2023, Cyngn had $3.6 million in cash and has incurred net losses of $22.8 million and $19.2 million for the years ended December 31, 2023, and 2022, respectively.
• The company's management has concluded there is substantial doubt about its ability to continue as a going concern if it cannot raise sufficient capital.

Sentiment

Score: 3

Explanation: The sentiment is low due to the company's financial losses, limited cash, and going concern warning, despite its innovative technology and market positioning.

Positives

• Cyngn's technology aims to address labor shortages, high labor costs, and work safety issues in industrial settings.
• The company's DriveMod software is designed to be vehicle-agnostic, allowing for integration with various industrial vehicles.
• Cyngn has secured paid projects with leading global customers.
• The company's patent portfolio expanded with 16 new U.S. patent grants in 2023, bringing the total grants to 19.

Negatives

• Cyngn has a history of net losses, with $22.8 million in 2023 and $19.2 million in 2022.
• The company has limited cash reserves, with $3.6 million as of December 31, 2023.
• Management expresses substantial doubt about the company's ability to continue as a going concern without additional capital.
• The company currently does not generate substantial revenue from product sales.

Risks

• The company's management has concluded there is substantial doubt as to its ability to continue as a going concern if it is not able to raise sufficient capital.
• There is no established public trading market for the Pre-funded Warrants being offered.
• The Pre-funded Warrants are speculative in nature.
• The company is not in compliance with The NASDAQ Capital Market $1.00 minimum bid price requirement and failure to maintain compliance with this standard could result in delisting and adversely affect the market price and liquidity of our common stock.
• The company's management will have broad discretion over the use of the net proceeds from this offering.
• Future sales of the company's common stock could lower the stock price and dilute existing stockholders.
• The company has not paid cash dividends in the past and does not expect to pay dividends in the future.

Future Outlook

The company's ability to continue as a going concern is dependent on management's ability to successfully execute its business plan, which includes increasing revenue while controlling operating costs and expenses to generate positive operating cash flows and obtaining funds from outside sources of financing to generate positive financing cash flows.

Management Comments

• Management is of the opinion that the Company has insufficient funds for sustainable operations, and it may not be able to meet its payment obligations from operations and related commitments, if the Company is not able to raise sufficient capital or to allow the Company to continue as a going concern, for the next year.

Industry Context

Cyngn operates in the autonomous vehicle (AV) technology sector, specifically targeting industrial applications. The company aims to address challenges such as labor shortages, high labor costs, and work safety by integrating its autonomous driving software, DriveMod, with vehicles manufactured by Original Equipment Manufacturers (OEMs).

Comparison to Industry Standards

• It is difficult to compare Cyngn directly to industry standards due to its specific focus on industrial autonomous vehicles and its business model of partnering with OEMs.
• Companies like Mobileye (now part of Intel) and NVIDIA provide autonomous driving platforms, but their primary focus is on the automotive industry.
• Other companies like Boston Dynamics and Clearpath Robotics focus on robotics and autonomous solutions for various industries, but their approaches and target markets differ from Cyngn's.
• Cyngn's success will depend on its ability to establish strong partnerships with OEMs, demonstrate the value of its technology in industrial settings, and scale its operations effectively.

Stakeholder Impact

• Shareholders face potential dilution from the offering and the risk of further stock price decline.
• Employees' job security is uncertain due to the company's financial instability.
• Customers may be concerned about the company's ability to provide ongoing support and maintenance for its products.
• Suppliers and creditors face increased risk of non-payment due to the company's financial difficulties.

Next Steps

• The company will negotiate the final public offering price with the underwriter, Aegis Capital Corp.
• The underwriter will market and sell the shares of common stock and pre-funded warrants to investors.
• The company will use the net proceeds from the offering for general corporate purposes, including working capital.
• Cyngn needs to regain compliance with the Nasdaq minimum bid price rule by August 19, 2024.

Key Dates

Keywords

Cyngn, autonomous vehicles, industrial autonomy, DriveMod, pre-funded warrants, public offering, capital raise, Aegis Capital Corp, stockchaser, forklift