CYN 10-K & 10-Q changes, risk factors and insider trading
Cyngn Inc. · Nasdaq · Services-Computer Programming Services · CIK 1874097 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “We have incurred significant losses and continue to manage our cash resources to support our ongoing operations.”
New heading “Natural disasters, outbreaks of infectious diseases, terrorist attacks, wars and threats of war may negatively impact our operations, revenue, costs, and stock price.”
New heading “General Risk Factors”
New heading “The restatement of our previously issued financial statements for the Affected Periods has resulted in unanticipated costs, stockholder litigation and regulatory actions, and may adversely affect investor confidence, our stock price, our ability to raise capital in the future and our reputation.”
Removed heading “We have incurred significant losses, have limited cash on hand and there is substantial doubt as to our ability to continue as a going concern.”
Removed heading “Catastrophic events, such as pandemics and epidemics, or outbreak of an infectious disease, such as COVID-19 and subsequent variants, natural disasters, terrorist activities, political unrest, and other manmade problems such as war could have a material adverse impact on our business, results of operations, financial condition and cash flows or liquidity.”
Removed heading “We are 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.”
Largest changes
“We incurred unanticipated costs for accounting and legal fees in connection with the restatement of our financial statements for the fiscal year ended December 31, 2024. The restatement may erode investor confidence in our company, our financial reporting, accounting practices and processes, and may raise reputational issues for our business. The restatement may also negatively impact the trading price of our securities and make it more difficult for us to raise capital on acceptable terms, or at all. …”see in full comparison
“The restatement of our previously issued financial statements for the Affected Periods has resulted in unanticipated costs, stockholder litigation and regulatory actions, and may adversely affect investor confidence, our stock price, our ability to raise capital in the future and our reputation.”see in full comparison
“We are 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.”see in full comparison
“Other considerations related to the ongoing conflicts between Russia and Ukraine, and Israel and Palestine that may affect the Company include possible cyberattacks and potential disruptions in the banking systems and capital market, as well as supply chain and increased costs and expenditures on domestic and internationally-sourced materials and services. As an example, we engage third-party software development engineers who reside in Russia. Due to the ongoing conflict, we may experience an interruption in the services provided by these parties.”see in full comparison
“The recent inflation in the United States, foreign and domestic government sanctions imposed on Russia as a result of its invasion of Ukraine, and the conflicts in Israel and Palestine has caused or may continue to result in extreme volatility and disruptions in the capital and credit markets, which may adversely affect investor’s confidence and, in turn may affect our ability to raise additional capital.”see in full comparison
“Catastrophic events, such as pandemics and epidemics, or outbreak of an infectious disease, such as COVID-19 and subsequent variants, natural disasters, terrorist activities, political unrest, and other manmade problems such as war could have a material adverse impact on our business, results of operations, financial condition and cash flows or liquidity.”see in full comparison
Full comparison: every changed paragraph (32)
We partner with OEMs that
are seeking to manufacture purpose-built industrial vehicles capable of incorporating our autonomous driving technology. The collaborativeCollaborative
partnerships are established through mutually beneficial, non-binding memorandums of understanding or partnership agreements for
the purpose
of joint go-to-market efforts. In addition to OEMs, we depend on other third parties to produce hardware components,
and, in some cases
adjacent software solutions, that support our core suite of autonomous driving software products and tools. The timely
development and
performance of our autonomous driving programs is dependent on the materials, cooperation, and quality delivered by these
partners. Further,
we do not control the initial design of the industrial vehicles we work with and therefore have limited influence
over the production
and design of systems for braking, gear shifting, and steering. There can be no assurance that these systems and supporting technologies
technologies can be developed and validated at the high reliability standard required for deployment of autonomous industrial vehicles
using our technology
in a cost-effective and timely manner. Our dependence on these relationships exposes us to the risk that components
manufactured by OEMs
or other suppliers could contain defects that would cause our autonomous driving technology not to operate as intended.
Our technology suite is currently
available on stockchasers and tuggers for production release. However, this technology will need to be continually developed and enhanced
for further scaled
commercialization. Continued enhancement of our autonomous driving technology is and will be subject to risks, including
with respect
to:
We were founded in 2013. As
a result of our limited operating history, our ability to accurately forecast our future results of operations is limited and subject
to a number of uncertainties, including our ability to plan for and model future growth. Our historical performance should not be considered
indicative of our future performance. Further, in future periods, our revenue growth could fluctuate for a number of reasons, including
shifts in our offering and revenue mix, slowing demand for our offering, increasing competition, decreased effectiveness of our sales
and marketing organization, and our sales and marketing efforts to acquire new customers, failure to retain existing customers, changing
technology, a decrease in the growth of our overall market, or our failure, for any reason, to continue to take advantage of growth opportunities.
We anticipate that we will encounter,encounter risks and uncertainties frequently experienced by growing companies in rapidly changing industries,
such as the risks and uncertainties described in this Annual Report.
We have incurred significant losses and continue to manage our cash resources to support our ongoing operations.
We have incurred significant losses, have
limited cash on hand and there is substantial doubt as to our ability to continue as a going concern.
The Company incurred net losses
of approximately $29.3$23.5 million and $22.8$33.3 million for the yearyears ended December 31, 20242025, and 2023,2024, respectively. In addition, the Company
had accumulated deficits of approximately $189.3$216.8 million and $160.0$193.4 million as of December 31, 20242025 and December 31, 2023,2024, respectively,
and net cash used in operating activities was approximately $9.5$23.6 million and $19.5$19.2 million for the year ended December 31, 20242025 and 2023,2024,
respectively. As of December 31, 2025, the Company’s cash and cash equivalents balance was approximately $1.0 million and the short-term
investments balance was $33.7 million. As of December 31, 2024, the Company’s unrestricted cash balance was $23.6 million. As of December 31, 2023,
the Company’sand cash equivalents balance was
$23.6 approximately $3.6 million,million and theno short-termshort-terms investments balance was $4.6 million.investments. Based on cash
flow projections from operatingoperating, investing and financing activities and the
existing balance of cash and short-term investments, management is of
the opinion that the Company has insufficientsufficient funds for sustainable
operations, and it may notwill be able to meet its payment obligations
from operations and related commitments, if the Company is not able to complete the required funding transactions to allow the Company
to continue as a going concern. Based on these factors, the Company has substantial doubt that it will continue as a going concerncommitments for
the 12 months following the issuance
date ofthese theconsolidated financial statements includedwere elsewhere in this report.issued.
The Company’s plan to
alleviate the going concern issue is to increase revenue while controlling operating costs and expenses and obtaining funds from outside
sources of financing to generate positive financing cash flows. While management is optimistic about its ability to raise substantial
funds to continue as a going concern for one year following the financial statement issuance date, there can be no assurance that any
such measures will be successful. We currently do not generate substantial revenue from product sales. Accordingly, we expect to rely
primarily on equity and/or debt financings to fund our continued operations. The Company’s ability to raise additional funds will
depend, in part, on the success of our product development activities, and other events or conditions that may affect the share value
or prospects, as well as factors related to financial, economic and market conditions, many of which are beyond our control. There can
be no assurances that sufficient funds will be available to us when required or on acceptable terms, if at all. Accordingly,
management has concluded that these plans do not alleviate substantial doubt about the Company’s ability to continue as a going
concern. Our failure to achieve or maintain profitability could negatively impact the value of our common stock.
Natural disasters, outbreaks of infectious diseases, terrorist attacks, wars and threats of war may negatively impact our operations, revenue, costs, and stock price.
Natural disasters such as earthquakes, floods, severe weather conditions, outbreaks of infectious diseases in addition to COVID-19 or other catastrophic events may severely affect our operations or those of our suppliers and customers. Acts of terrorism, as well as events occurring in response or connection to them, including potential future terrorist attacks, rumors or threats of war, actual military conflicts or trade disruptions impacting our domestic or foreign customers or suppliers, may negatively impact our operations by causing, among other things, delays, or losses in the delivery of supplies or finished goods and decreased sales of our products. More generally, any of these events could cause consumer confidence and spending to decrease and/or result in increased volatility in the worldwide financial markets and economy. They also could result in economic recession either globally or in the markets in which we operate. Any of these occurrences could have a significant adverse impact on our business.
Catastrophic events,
such as pandemics and epidemics, or outbreak of an infectious disease, such as COVID-19 and subsequent variants, natural disasters,
terrorist activities, political unrest, and other manmade problems such as war could have a material adverse impact on our business,
results of operations, financial condition and cash flows or liquidity.
Our business is vulnerable
to damage or interruption from pandemics and epidemics, or outbreak of an infectious disease, such as COVID-19 and subsequent variants,
natural disasters, terrorist attacks, political unrest, acts of war (such as the ongoing conflicts between Russia and Ukraine, and Israel
and Palestine).
The recent inflation in the
United States, foreign and domestic government sanctions imposed on Russia as a result of its invasion of Ukraine, and the conflicts in
Israel and Palestine has caused or may continue to result in extreme volatility and disruptions in the capital and credit markets, which
may adversely affect investor’s confidence and, in turn may affect our ability to raise additional capital.
The occurrence of an epidemic
or a pandemic, such as the COVID-19 pandemic, has had and may continue to have an adverse effect on our operating results. The extent
to which epidemics and pandemics impact our financial condition or results of operations will depend on many factors outside of our control
and whether there is a material impact on the businesses or productivity of our customers, employees, suppliers and other partners.
Other considerations related
to the ongoing conflicts between Russia and Ukraine, and Israel and Palestine that may affect the Company include possible cyberattacks
and potential disruptions in the banking systems and capital market, as well as supply chain and increased costs and expenditures on domestic
and internationally-sourced materials and services. As an example, we engage third-party software development engineers who reside in
Russia. Due to the ongoing conflict, we may experience an interruption in the services provided by these parties.
We are also vulnerable to
natural disasters and other calamities. Although we have servers that are hosted in an offsite location, our backup system does not capture
data on a real-time basis, and we may be unable to recover certain data in the event of a server failure. We cannot assure you that
any backup systems will be adequate to protect us from the effects of fire, floods, typhoons, earthquakes, power loss, telecommunications
failures, break-ins, war, riots, terrorist attacks or similar events. Any of the foregoing events may give rise to interruptions,
breakdowns, system failures, technology platform failures or internet failures, which could cause the loss or corruption of data or malfunctions
of software or hardware as well as adversely affect our ability to provide services.
International trade policies, including
protectionisttariffs, sanctions and trade policies,barriers, such as tariffs and sanctions, couldmay adversely affect our business, financial performance.condition, results of operations and prospects.
Beginning in our fiscal year 2025, significant new and expanded tariffs, reciprocal tariffs and other trade restrictions have been imposed with selective tariff exemptions impacting global trade.
Current or future tariffs or other restrictive trade measures may raise the costs of raw materials, components or finished goods, which may adversely impact both our product offerings and our operational expenses. Such cost increases may reduce our margins and require us to increase prices, which could harm our competitive position, reduce customer demand and damage customer relationships.
Trade disputes, trade restrictions, tariffs and other political tensions between the U.S. and other countries may also exacerbate unfavorable macroeconomic conditions including inflationary pressures, foreign exchange volatility, financial market instability, and economic recessions or downturns, which may also negatively impact customer demand for our products or services, delay purchases or renewals, limit expansion opportunities with customers, limit our access to capital, or otherwise negatively impact our business and operations. Ongoing tariff policies, trade restrictions and macroeconomic uncertainty have and may continue to contribute to volatility in the price of our common stock.
Ongoing uncertainty regarding trade policies may also complicate our short- and long-term strategic planning, and that of our partners and customers, including decisions regarding hiring, product strategy, capital investment, supply chain design and geographic expansion. While we continue to monitor trade developments, the ultimate impact of these risks remains uncertain and any prolonged economic downturn, escalation in trade tensions, or deterioration in international perception of U.S.-based companies could materially and adversely affect our business, results of operations, financial condition and prospects.
Due to the interconnectedness
of the global economy, policy changes in one area of the world can have an immediate and material adverse impact on markets around the
world. Changes in international trade policies, including: (i) changes to existing trade agreements; (ii) greater restrictions on free
trade generally; and (iii) significant increases in customs duties and tariffs on goods imported into the United States and reciprocal
actions by other countries, can adversely affect our financial condition and operating results.
On March 3, 2025, the President
of the United States announced the imposition of new tariffs on imports from Mexico and Canada, to take effect on March 4, 2025. Effective
at 12.01 a.m. ET on March 4, 2025, all goods arriving at U.S. ports and originating from Canada or Mexico are subject to 25 percent tariffs.
Certain Canadian energy resources are subject to a lower 10 percent tariff. Effective February 4, 2025, all goods presented for entry
at U.S. ports and originating from China, including Hong Kong, are subject to a 10 percent tariff on Chinese imports. The impact of these
potential tariffs on our business and financial condition, if any, is subject to a number of factors that are not yet known, including
any countermeasures that the target countries may take in response to such tariffs. In light of these uncertainties, we can provide no
assurance that any mitigating actions that may become available to us, such as our ability to pass along some or all of the costs of any
tariffs to some or all of our customers, will be successful.
In addition to potential increases
in customs duties and tariffs in the United States and other countries, the United States-Mexico-Canada Agreement ("USMCA")
is subject to renewal in 2026. There can be no assurance that any newly negotiated terms in the USMCA will not adversely affect our business
and the business of our customers. It remains unclear what specific actions the current U.S. administration may take to resolve trade-related
issues with China and other countries.
Any of the above factors could
impact our supply chain, as well as our operations, and adversely affect our financial condition and operating results.
If we fail to maintain
an an
effective system of internal controls, we may not be able to accurately report our financial results. As a result, our
stakeholders could
lose confidence in our financial reporting, which could adversely affect the results of our business and our
enterprise value. In connection
with our assessment of internal control over financial reporting, we identified two material
weaknesses in our internal control over financial
reporting as of December 31, 20242025 (see Item 9A. Controls and Procedures for
additional detail). The deficiencydeficiencies above
led to atwo misstatementmisstatements, one of which was corrected prior to the issuance of the current prior
year’s financial statements.statements, Thisand the other lead to the restatement of the Affected Periods. These material weakness
createsweaknesses create a
reasonable possibility that material misstatements to our consolidated financial statements may not be prevented or detected
in a
timely manner. Accordingly, management concluded that the Company’s internal control over financial reporting was not
effective as of December 31, 2024.2025. The disclosure of thisthese material weakness,weaknesses, even if quickly remediated, could reduce the
market’s market’s
confidence in our financial statements and harm our enterprise value.
ThereChanges arein aU.S. numberPatent of recentlaw
changes to the patent laws that may have a significant impact on our ability to protect our technology and enforce our intellectual property
rights. For example, the
Leahy-Smith America Invents Act (the “AIA”) enacted in September 2011, resulted in significant
changes in patent legislation.
An important change introduced by the AIA is that, as of March 16, 2013, the United States transitioned
from a “first-to-invent”
to a “first-to-file” system for deciding which party should be granted
a patent when two or more patent applications are filed
by different parties claiming the same invention. Under a “first-to-file” system,
assuming the other requirements for patentability
are met, the first inventor to file a patent application generally will be entitled
to a patent on the invention regardless of whether
another inventor had made the invention earlier. A third party that files a patent
application in the United States Patent and Trademark
Office (“USPTO”) after that date but before us could therefore be awarded
a patent covering an invention of ours even if we
made the invention before it was made by the third party. Circumstances could prevent
us from promptly filing patent applications on our
inventions.
We are 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.
Our common stock is currently traded on The Nasdaq Capital Market under
the symbol “CYN”. On February 6, 2025, we received a notification letter from The Nasdaq Stock Market advising that, for 30
consecutive business days preceding the notification letter, the Company did not meet the minimum $1.00 per share bid price requirement
for continued inclusion on The Nasdaq Capital Market pursuant to Nasdaq Marketplace Listing Rule 5550(a)(2). Normally, a company would
be afforded a 180-calendar day period to demonstrate compliance with the Minimum Bid Price Requirement. However, pursuant to Listing Rule
5810(c)(3)(A)(iv) the Company is not eligible for any compliance period specified in Rule 5810(c)(3)(A) because the Company has effected
a reverse stock split over the prior one-year period or has effected one or more reverse stock splits over the prior two-year period with
a cumulative ratio of 250 shares or more to one. Accordingly, the Company’s securities are subject to delisting from Nasdaq unless
the Company requests an appeal of this determination by February 13, 2025. The Company timely requested an appeal of the determination,
and a hearing is scheduled for March 18, 2025. On February 18, 2025, the Company effected a reverse stock split of its common stock and
the Company’s common stock has traded above $1.00 since the effectuation of the reverse stock split.
While we intend to regain
compliance with the minimum bid price rule, there can be no assurance that we will be able to maintain continued compliance with this
rule or the other listing requirements of The Nasdaq Capital Market. If we were unable to meet these requirements, we would receive another
delisting notice from the Nasdaq Capital Market for failure to comply with one or more of the continued listing requirements. If our common
stock were to be delisted from The Nasdaq Capital Market, trading of our common stock most likely will be conducted in the over-the-counter
market on an electronic bulletin board established for unlisted securities such as the OTC Markets or in the “pink sheets.”
Such a downgrading in our listing market may limit our ability to make a market in our common stock and which may impact purchases or
sales of our securities.
General Risk Factors
The restatement of our previously issued financial statements for the Affected Periods has resulted in unanticipated costs, stockholder litigation and regulatory actions, and may adversely affect investor confidence, our stock price, our ability to raise capital in the future and our reputation.
We incurred unanticipated costs for accounting and legal fees in connection with the restatement of our financial statements for the fiscal year ended December 31, 2024. The restatement may erode investor confidence in our company, our financial reporting, accounting practices and processes, and may raise reputational issues for our business. The restatement may also negatively impact the trading price of our securities and make it more difficult for us to raise capital on acceptable terms, or at all. In addition, the restatement and related material weaknesses in our internal control over financial reporting may result in stockholder litigation against us and adverse regulatory consequences. These and any future regulatory consequences, litigation, claims or disputes, whether successful or not, could subject us to additional costs, divert the attention of our management, or impair our reputation. Each of these consequences could have a material adverse effect on our business, results of operations and financial condition.
Management's Discussion & Analysis (MD&A)
Largest changes
“We currently derive revenue from four sources. We enter into fixed-price NRE contracts related to trial projects that consist of several independent phases and include design, data gathering, hardware installation on an industrial vehicle, customer-specific configuration of the DriveMod software, and demonstrations. The determination of the contract price is based on labor and hardware costs estimated to achieve the required milestones specified in the contract. …”see in full comparison
Based on cash flow projections fromsee in full comparisonoperatingoperating, investing and financing activities and the existing balance of cash and short-term investments, management is of the opinion that the Company hasinsufficientsufficient funds for sustainable operations, and itmay notwill be able to meet its payment obligations from operations and relatedcommitments, if the Company is not able to complete the required funding transactions to allow the Company to continue as a going concern, for the next year. Based on these factors, the Company has substantial doubt that it will be able to continue as a going concerncommitments for the 12 months following the datethattheseinterimconsolidated financial statements were issued.These consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets and liabilities that may result in the Company not being able to continue as a going concern.
“The change in estimate was accounted for prospectively in accordance with ASC 250, Accounting Changes and Error Corrections, and did not require restatement of prior-period financial statements. For the year ended December 31, 2025, the Company recognized a total of $1.4 million related to costs originally capitalized in 2024 and $1.2 million related to costs capitalized during the first two quarters of 2025 as research and development expense resulting from this change.”see in full comparison
The Company’s liquidity is based on its ability to enhance its operating cash flow position, obtain capital financing from equity interest investors and borrow funds to fund its general operations, research and development activities and capital expenditures.see in full comparisonThe 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 and obtaining funds from outside sources of financing to generate positive financing cash flows.
“Computer software to be sold, leased or otherwise marketed is classified as an intangible asset. Capitalized software development costs are amortized using the greater of (a) the amount computed using the ratio that current gross revenue for a product bear to total of current and anticipated future gross revenue for that product or (b) the straight-line method, beginning upon commercial release of the product, and continuing over the remaining estimated economic life of the product, not to exceed three years to five years and recorded as cost of revenue. …”see in full comparison
“On May 31, 2023, the Company entered into an ATM Sales Agreement with Virtu Americas LLC (the “ATM Sales Agreement”), under which the Company may, from time to time, sell shares of the Company’s common stock at market prices by methods deemed to be an “at-the-market offering” as defined in Rule 415 promulgated under the Securities Act of 1933, as amended. The ATM Sales Agreement and related prospectus are limited to sales of up to $8.8 million of shares of the Company’s common stock. …”see in full comparison
Full comparison: every changed paragraph (39)
We expect our technology to
generate revenue through two main methods: deployment and EAS subscriptions. Deploying our EAS requires us and our integration partners
to work with a new client to map the facility, gather data, and install our AV technology within their fleet and site. We anticipate that
newThese deployments
typically willresult yieldin project-based revenuesrevenue based on the overall scope of the deployment.project After deployment, we expect to generate revenues
by offering EAS through a Software as a Service (“SaaS”) model, which can be consideredand the AVintegrated softwaresolution component of Robotics
as a Service (“RaaS”).delivered.
Following deployment, we continue to generate revenue through ongoing access to and use of our Enterprise Autonomy Suite (“EAS”), which includes software-enabled functionality, monitoring, updates, and support. These arrangements provide customers with continuous access to our evolving autonomous vehicle capabilities and are generally structured over a contractual term during which the customer receives and consumes the benefits of the integrated solution.
RaaS is a subscription model
that allows customers to use robots/vehicles without purchasing the hardware assets upfront. We will seek to achieve sustained
revenue revenue
growth largely from ongoing SaaS-style EAS subscriptions that enable companies to tap into our ever-expanding suite of AV and
AI capabilities as organizations transition into full industrial autonomy.
Although both the components
and the combined solutions of EAS are still under development, we have EAS licenses with paying customers and have piloted EAS for paid
customer trial and pilot deployments. We expect EAS to continually be developed and enhanced according to evolving customer needs, which
will take place concurrently while other completed features of EAS are commercialized. We expect annual R&D expenditures in the foreseeable
future to exceed that of 2024.2025. We also had limited paid deployments in 20242025 that offset some of the ongoing R&D costs of continually
developing EAS. We target scaled deployments to begin in 2025.
The Company capitalizes certain
costs related to internal-use software, primarily consisting of direct labor and third-party vendor costs associated with creating the
software. Software development projects generally include three stages: the preliminary project stage (all costs are expensed as incurred),
the application development stage (certain costs are capitalized and certain costs are expensed as incurred) and the post-implementation/operation
stage (all costs are expensed as incurred). Costs capitalized in the application development stage include costs related to the design
and implementation of the selected software components, software build and configuration infrastructure, and software interfaces. Capitalization
of costs requires judgment in determining when a project has reached the application development stage, the proportion of time spent
in in
the application development stage, and the period over which the Company expects to benefit from the use of that software. Once the
software software
is placed in service, these costs are amortized on the straight-line method over the estimated useful life of the software,
which is generally
three to five years. There is judgment involved in the determination of the useful life. Internal-use software is
classified as property
and equipment in accordance with ASC 350, Intangibles –- Goodwill and Other.
The Company accounts for research
costs of computer software to be sold, leased or otherwise marketed as expense until technological feasibility has been established for
for the product. Once technological feasibility is established, all software costs are capitalized until the product is available for general
general release to customers. Judgment is required in determining when technological feasibility of a product is established. We have determined
determined that technological feasibility for our software products is reached shortly after a working prototype is complete and meets
or exceeds
design specifications including functions, features, and technical performance requirements. After technological feasibility
is established,
judgment is required to determine the amount of payroll and stock-based compensation costs to be capitalized on the remaining development
development efforts. These costs will continue to be capitalized until such time as when the product or enhancement is available for general release
release to customers. Computer software to be sold, leased or otherwise marketed is classified as an intangible asset in accordance with
ASC 985, Software.
Computer software to be sold, leased or otherwise marketed is classified as an intangible asset. Capitalized software development costs are amortized using the greater of (a) the amount computed using the ratio that current gross revenue for a product bear to total of current and anticipated future gross revenue for that product or (b) the straight-line method, beginning upon commercial release of the product, and continuing over the remaining estimated economic life of the product, not to exceed three years to five years and recorded as cost of revenue. Amortization will begin when the product or enhancement is available for general release to customers. No amortization has begun for externally sold software, as the software enhancement is still in development. Management evaluates the useful lives of these assets on a quarterly basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. No impairment charges were associated with the Company’s sold, leased or otherwise marketed software for the year ended December 31, 2025.
During the year ended December 31, 2025, management completed a review of the Company’s capitalized software development projects. Based on this review, management determined that projects previously capitalized as developed software no longer met the criteria for capitalization under ASC 985-20, External-Use Software, resulting from new technical development issues that did not exist and could not have been reasonably anticipated in prior periods.
As a result, the Company revised its estimate regarding the point at which technological feasibility is achieved for software development activities. This change in estimate was made to reflect management’s current expectations about the timing and certainty of future technological milestones.
The change in estimate was accounted for prospectively in accordance with ASC 250, Accounting Changes and Error Corrections, and did not require restatement of prior-period financial statements. For the year ended December 31, 2025, the Company recognized a total of $1.4 million related to costs originally capitalized in 2024 and $1.2 million related to costs capitalized during the first two quarters of 2025 as research and development expense resulting from this change.
The Company issued to its
lead underwriter in the Company’s initial public offering consummated in October 2021, (the “IPO”), warrants to purchase
up to 9(1) shares of its common stock, exercisable at a price per share of $140,625(1)$40,650 and expiring on October
19, 2026. Additionally, in connection
with the Private Placement offering completed on April 29, 2022, the Company issued warrants to
purchase 426(1) shares of its common stock,
exercisable at a price per share of $40,650(1)$140,625 and expiring
on April 29, 2027. The Company accounts for warrants in accordance with ASC
480, Distinguishing Liabilities from Equity,
depending on the specific terms of the warrant agreement. The Company determined the fair
value of the warrants using the Black-Scholes
pricing model and treated the valuation as equity instruments in consideration of the cashless
settlement provisions in the warrant agreements.
The Company issued Series
A warrants and Series B warrants in connection
with securities purchase agreement on December 20, 2024. The Company accounts for warrants
in accordance with ASC 480, Distinguishing
Liabilities from Equity, depending on the specific terms of the warrant agreement. The estimated
fair value of the Company’s warrant agreements has been determined to be Level 3 measurement, as certain inputs used to determine
the fair value of these agreements are unobservable. The Company determined the fair value of
the warrants using the Monte Carlo pricing
model and treated the valuation as a liability in consideration of the variable number of the
issuer’s equity shares in the warrant
agreements. agreements.The resulting warrant liabilities are re-measured at each balance sheet date until their exercise or expiration, and any change
in fair value is recognized in the Company’s consolidated statements of operations under other income (expense). After shareholder
approval on January 30, 2025, the strike price and the number of equity shares are now fixed. Therefore, in accordance with ASC 815-40-35-8,
Derivatives and Hedging Reclassification of Contracts, the Series A warrants were re-measured utilizing the Black Scholes model and reclassified
into equity. The Series A warrants are included in equity in the consolidated balance sheet as of December 31, 2025. The Series B warrants
were re-measured utilizing the Black Scholes model immediately before exercise and were fully exercised in February 2025.
We currently derive revenue
from four sources. We enter into fixed-price NRE contracts related to trial projects that consist of several independent phases and include
design, data gathering, hardware installation on an industrial vehicle, customer-specific configuration of the DriveMod software, and
demonstrations. The determination of the contract price is based on labor and hardware costs estimated to achieve the required milestones
specified in the contract. The purpose of these fully funded projects is to exhibit the feasibility of the Company’s technology
offering to the customer on additional vehicle types and provide a level of confidence to encourage the customer to enter into a multi-year,
commercial arrangement with the Company in the future. Revenue on these multi-phase contracts is generally recognized at the point in
time when the performance obligations of each independent phase have been completed and customer acceptance has been acknowledged. Contracts
often allow mutual termination without penalty. To the extent our actual costs vary from the fixed fee, we will generate more or less
profit or could incur a loss.
In addition, weWe derive revenue
from EAS
subscriptions with relative add-on offerings such as hardware revenue and other revenue (i.e., deployment/set up costs). Revenue
from these subscriptions
and add-ons are recognized monthly over the service contract life, beginning at the time that a customer acknowledges
acceptance of the
service.
During 2025, the Company recognized $0.2 million of revenue, substantially all related to EAS subscriptions and hardware revenue. During 2024, the Company recognized $0.4 million of revenue, substantially all related to EAS subscriptions and hardware revenue.
During 2024, the Company recognized
$0.4 million of revenue, substantially all related to EAS subscriptions and hardware revenue. During 2023, the Company recognized $1.5
million of revenue, of which $1.4 million was associated with NRE contracts and the remaining $0.1 million related to revenue from EAS
subscriptions.
During 2024,2025, the Company reported
cost of revenue of $0.1 million consisting primarily of deployment costs related to personnel costs and travel expenses. During 2024,
the Company reported cost of revenue of $0.5 million consisting primarily of deployment costs, related to personnel costs, travel expenses
and associated
hardware costs to specific customers. During 2023, the company reported cost of revenue of $1.2 million consisting primarily of fully
burdened internal engineering development resources and hardware costs incurred for the completion of the final phases of NRE contracts.
Research and development expense
consistsconsist primarily of outsourced engineering services, internal engineering and development expenses, materials, labor and stock-based compensation and outsourced engineering
compensationservices related to development of the Company’s products and services. Research and development costs incurred during NRE projectsdeployments
are capitalized and expensed when the associated NREcontract revenue is recognized. All other research and development costs are expensed
as incurred.
Research and development expense
for the year ended December 31, 20242025 decreasedincreased by $1.4$1.2 million or 11.5%10.7% to $11.3$12.5 million from $12.7$11.3 million for the year ended December
31, 2023.2024. The decreaseincrease is primarily attributable theto capitalizationpersonnel ofrelated costs related to capitalized software and customerexpanded contract.leased space.
General and administrative
expenses increased by approximately $0.5$1.9 million or 4.7%16.7% to $11.4$13.3 million for the year ended December 31, 20242025 from $10.9$11.4 million for
the year ended December 31, 2023.2024. The increase primarily relates to additional executive bonuses offset by a decreases in insurance, professional
fees and other general and administrative expenses.advertising.
Interest income (expense),
decreasednet increased by $1.3 million to $0.2 million for the year ended December 31, 2025 from ($1.1 million) for the year ended December 31, 2024 from $137.9 thousand for the year ended December 31,
2023.2024. Interest income consists primarily of interest earned of $111.7$0.2 thousandmillion from the Company’s interest-bearing bank accounts,
offset by interest expense of $1.3 million related to the Notes issued in November 2024.accounts.
Other income decreased(expense), net
increased by
$5.7 $12.7 million to $5.3$2.2 million for the year ended December 31, 20242025 from $396.8($10.5 thousandmillion) for the year ended December 31, 2023. 2024.
Other income
(expense), net consists primarily of fair value measurementremeasurement of $5.4$1.1 million for the warrant liability,and realized gains earned on the Company’s short-term
short-term investments of $113$0.9 thousand and interest earned of $40.4 thousand related to the office lease offset by the impairment charge
of $118.8 thousand related to expired international patents.million.
The Company’s principal
source of liquidity is its cash and current maturities of short-term investments. Short-term investments consist of placements in U.S.
government securities with original maturities between three to nine months. As of December 31, 2025, the Company had unrestricted cash
of approximately $0.1 million and short-terms investments of $33.7 million. As of December 31, 2024, the Company had unrestricted cash
of approximately $23.6 million. As of December 31, 2023, the Company had unrestricted cash of approximately $3.6 million and short-term
investmentsno ofshort-terms $4.6 million.investments.
On May 31, 2023, the Company entered into an ATM Sales Agreement with
Virtu Americas LLC (the “ATM Sales Agreement”), under which the Company may, from time to time, sell shares of the Company’s
common stock at market prices by methods deemed to be an “at-the-market offering” as defined in Rule 415 promulgated under
the Securities Act of 1933, as amended. The ATM Sales Agreement and related prospectus are limited to sales of up to $8.8 million of shares
of the Company’s common stock. The ATM Sales Agreement expires at the earliest of 5 years after the date of the agreement or exhaustion
of the aggregate limit available under the ATM Sales Agreement. The Company pays Virtu Americas LLC up to 3.0% of the gross proceeds as
a commission. As of December 31, 2024, a total of 4,524(1), shares of common stock were sold through Virtu Americas LLC under
the ATM Sales Agreement for net proceeds of $8,597,957 after payment of commission fees of $175,468 and other related expenses of $60,465.
As of December 31, 2024, the Company had $0 of common stock remaining available for sale under the ATM Sales Agreement.
On December 8, 2023, the Company
entered into a Placement Agent Agreement with Aegis Capital Corp. (“Aegis”), pursuant to which Aegis acted as the Company’s
placement agent, on a reasonable best efforts basis, in connection with the sale by the Company of an aggregate of 2,222(1)
shares of common stock in a public offering, which included: (i) 764(1) shares of common stock, and (ii) pre-funded warrants
to purchase 1,458(1) shares of common stock. The Pre-Funded Warrants had a nominal exercise price of $0.00001. Each
share of common stock was sold at an offering price of $2,250(1), and each Pre-Funded Warrant was sold at an offering price
of $2,249.85(1). The Company received net proceeds of approximately $4.5 million, after deducting the estimated offering expenses
payable by the Company, including the placement agent fees.
On April 23, 2024, the Company
entered into an underwritten Agreementagreement with Aegis Capital Corp. (“Aegis”), pursuant to which Aegis acted as the Company’s
underwriter on a firm commitment basis in connection with the sale by the Company of an aggregate of 3,333(1) shares
of common stock in a
public offering, which included: (i) 1,320 (1) shares of common stock, and (ii) pre-funded warrants
to purchase 2,013(1) shares of common stock.
The Pre-Fundedpre-funded Warrantswarrants had a nominal exercise price of $0.0015(2).$0.0015. Each
share of common stock was sold at an offering price of $1,500(1),$1,500, and
each Pre-Fundedpre-funded Warrantwarrant was sold at an offering price
of $1,499.85(1).$1,499.85. The Pre-Fundedpre-funded Warrantswarrants are classified as a component of permanent
stockholders’ equity within additional
paid-in capital and were recorded at the issuance date concluding the purchase price approximated
the fair value. The offering closed
on April 25, 2024. On May 3 2024, the Company closed on the sale of an additional 136 (1) shares of common
stock, stock,
upon exercise by the underwriter of the over-allotment option. The Company received net proceeds of approximately $4.6 million,
after after
deducting the estimated offering expenses payable by the Company, including the placement agent fees.
On
November 12, 2024, the
Company entered into a securities purchase agreement with certain investors pursuant to which we sold, in a private
placement, senior
notes with an aggregate principal amount of $4,375,000 (the “Notes”), and received proceeds before expenses
of $3,500,000.
As consideration for entering into the agreement, we issued a total of 2,701(2) shares of common stock of the
Company to the Purchasers on
November 13, 2024. The principal amount of the Notes were repaid on December 23, 2024.
On December 20, 2024, the
Company entered into a securities purchase agreement for the sale and issuance of (i) 20,507(2) units at a public offering
price per Unit
of $241.50(2) with each Unit consisting of one share of common stock, par value $0.00001 per share, one Series A warrant to purchase one
Ashare of Common Stock at an exercise price of $301.875 per share and one Series B warrant to purchase one share of Common Stock at an
exercise price of $301.875(2) per share and one Series B warrant to
purchase one share of Common Stock at an exercise price of $301.875(2) and (ii) 62,309(2) pre-funded units at a
public offering price of $241.485 (2) per Pre-Funded Unit, with each Pre-Funded
Unit consisting of one pre-funded warrant
exercisable for one share of Common Stock at an exercise price of $0.015(2) per share, one Series
A Warrant and one Series
B Warrant. The net proceeds to the Company from the Offering were approximately $18.2 million, after deducting
placement agent’s
fees and the payment of other offering expenses associated with the offering that were payable by the Company.
On December 30, 2024, the
“Company entered into a securities purchase agreement pursuant to which the Company agreed to sell and issue, in a registered direct
offering, 44,333(2) shares of its common stock, par value $0.015(2) per share at a purchase price of $90(2)
per share and 55,667(2) pre-funded warrants
to purchase shares of Common Stock, at a purchase price of $89.985(2)
per Pre-Funded Warrant. The Company received net proceeds of approximately
$8.1 million from the Offering,offering, after deducting the
estimated offering expenses payable by the Company, including the placement agent
fees.
On June 26, 2025, the Company entered into a securities purchase agreement with certain investors, pursuant to which the Company agreed to sell and issue, in a registered direct offering, 192,496 shares of its common stock, par value $0.00001 per share, at a purchase price of $5.01 per share and 2,801,516 pre-funded warrants to purchase shares of common stock, at a purchase price of $5.00999 per pre-funded warrant. The Company received net proceeds of approximately $15.9 million from the offering, after deducting the estimated offering expenses payable by the Company of $1.3 million, including the placement agent fees.
On June 27, 2025, the Company entered into a securities purchase agreement with certain investors, pursuant to which the Company agreed to sell and issue, in a registered direct offering, 313,564 shares of its common stock, par value $0.00001 per share, at a purchase price of $7.50 per share and 1,979,769 pre-funded warrants to purchase shares of common stock, at a purchase price of $7.49999 per pre-funded warrant. The Company received net proceeds of approximately $13.7 million from the offering, after deducting the estimated offering expenses payable by the Company of $1.3 million, including the placement agent fees.
On September 5, 2025, the Company entered into an At-The-Market Issuance Sales Agreement (the “Sales Agreement”) with Aegis Capital Corp. (the “Agent”), under which the Company may, from time to time, sell shares of the Company’s common stock having an aggregate offering price of up to $100,000,000 in “at the market” offerings through or to the Agent, as sales agent or principal. Sales of the shares of common stock, if any, will be made at prevailing market prices at the time of sale, or as otherwise agreed with the Agent. The Agent will receive a commission from the Company of up to 3.0% of the gross proceeds of any shares of common stock sold under the Sales Agreement.
In October 2025, the Company sold an aggregate of 935,114 shares of common stock pursuant to the Sales Agreement for gross proceeds of $5,778,031. The Company paid a commission of $173,341 to Aegis Capital Corp., representing 3% of the gross proceeds, and $131,990 in issuance costs resulting in net proceeds of approximately $5,472,691. The shares were issued at a par value of $0.00001 per share. The par value of the shares issued was recorded as common stock, with the excess of net proceeds over par value recorded as additional paid-in capital.
The
Company’s liquidity
is based on its ability to enhance its operating cash flow position, obtain capital financing from equity interest
investors and borrow
funds to fund its general operations, research and development activities and capital expenditures. 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 and obtaining funds from outside sources of financing to generate positive
financing cash flows.
Based
on cash flow projections
from operatingoperating, investing and financing activities and the existing balance of cash and short-term investments, management
is of the opinion
that the Company has insufficientsufficient funds for sustainable operations, and it may notwill be able to meet its payment obligations
from operations
and related commitments, if the Company is not able to complete the required funding transactions to allow the Company
to continue as a going concern, for the next year. Based on these factors, the Company has substantial doubt that it will be able to
continue as a going concerncommitments for the 12 months following the date that these interimconsolidated financial statements were issued. These consolidated
financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of
assets and liabilities that may result in the Company not being able to continue as a going concern.
Net cash used in operating
activities for the year ended December 31, 20242025 was $9.5$23.6 million, aan decreaseincrease of approximately $10$4.4 million or 51%22.8% compared to $19.5$19.2
million million
for the year ended December 31, 2023.2024. The decreaseincrease is primarily attributed to increase costs for customer deployment, an increase in inventory
related to the DriveMod Kits, an increase in lease payments due totuggers, the lease extension and the
fair value remeasurement of the warranty
liabilities. liabilities, and the security deposit for the new office location.
Net cash providedused byin investing
activities for the year ended December 31, 20242025 was $2.9$34.1 million, aan decreaseincrease of approximately $3.4$37.1 million or 54% compared to $6.4net cash provided
by investing activities of $2.9 million
for the year ended December 31, 2023.2024. The decreaseincrease consists of smallershort-term investment maturities
of $12.2$54.5 million, which were offset by purchases
of short-term investmentsinvestment purchases of approximately $7.6$87.4 million and approximately $1.7 million in purchases ofmillion, R&D-related hardware equipment,equipment
purchases of approximately $1.2 million, and approximately $0.03 million in acquisition of intangible asset, capitalization of software and disposal of assets.
Net cash provided by financing
activities for the year ended December 31, 20242025 was $26.6$35.1 million, ana increasedecrease of approximately $20.5$1.2 million compared to $6.1$36.3 million
for the year ended December 31, 2023.2024. The increasedecrease is due to the following net proceeds received in each year:
The
increase in cash from financing activities from the above transactions were offset by the repayment of the senior notes in the amount
of $4,375,000 and the portion of the proceeds allocated to the warrant liabilities for the securities purchase agreement on December
20, 2024.
What changed in the latest 10-Q
Risk Factors
Factors that could cause our actual results to differ materially from those in this Quarterly Report are any of the risks described in “Part I, Item 1A. Risk Factors” in the Form 10-K. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations.
As of the date of this Quarterly Report, there were no material changes to the risks and uncertainties described in the section titled “Risk Factors” in the Form 10-K during the six months ended June 30, 2026.
Full comparison: every changed paragraph (1)
As of the date of this Quarterly
Report, there were no material changes to the risks and uncertainties described in the section titled “Risk Factors” in the
Form 10-K during the threesix months ended MarchJune 31,30, 2026.
Management's Discussion & Analysis (MD&A)
New heading “Dissolution of Cyngn Singapore PTE. LTD.”
Largest changes
“On March 28, 2026, the Company's wholly owned subsidiary, Cyngn Singapore PTE. LTD. ("Cyngn-SG"), was struck off and dissolved by the Accounting and Corporate Regulatory Authority of Singapore. The Company was notified of the strike off during the second quarter of 2026 and recorded the related deconsolidation in its financial statements for the quarter then ended (see Note 3, Dissolution of Subsidiary).”see in full comparison
On March 16, 2026, the Company entered into a securities purchase agreement with certain investors, pursuant to which the Company agreed to sell and issue, in a registered direct offering, 1,686,788 shares of its common stock, par value $0.00001 per share, at a purchase price of $1.93 per share and 3,313,212 pre-funded warrants to purchase shares of Common Stock, at a purchase price of $1.92999 per Pre-Funded Warrant. On March 16, 2026, Empery Asset Master, Ltd. and Empery Tax Efficient, LP exercised 18,223 and 6,777 of their outstanding Pre-Funded Warrants, respectively (25,000 in total), issued in connection with the March 16, 2026 offering, for aggregate proceeds of $1.92999, at an exercise price of $0.00001 per share. The exercise resulted in the issuance of 25,000 shares of common stock. On May 4, 2026, Empery Asset Master, Ltd. and Empery Tax Efficient, LP exercised 594,072 and 220,932 of their outstanding Pre-Funded Warrants, respectively (815,004 in total), issued in connection with the March 16, 2026 offering, for aggregate proceeds of $8.15, at an exercise price of $0.00001 per share. The exercise resulted in the issuance of 815,000 shares of common stock.see in full comparison
Net cash used in operating activities for thesee in full comparisonthreesix months endedMarchJune31,30, 2026 was approximately$8.4$13.2 million, an increase of approximately$1.9$0.4 million or29.0%3.1% compared to approximately$6.5$12.8 million for thethreesix months endedMarchJune31,30, 2025. The year-over-year increase is primarily attributed toana $0.9 million decrease in accrued payroll and sales & use tax payable, a $0.6 million increase in accrued interest on short-term investments, and a $0.2 million decrease in stock-based compensation, offset by a $0.8 million increase in accountsreceivable,and other receivables and a $0.6 million increase in deferredcosts, and deferred revenue due to new customer contracts.revenue.
“Research and development expense for the six months ended June 30, 2026 increased by approximately $1.9 million or 48.2% to $6.0 million from approximately $4.1 million for the six months ended June 30, 2025. The increase is primarily attributable to an increase in personnel related costs, external contractor costs and software expense offset by the capitalization of costs related to customer contracts.”see in full comparison
Net cash used in investing activities for thesee in full comparisonthreesix months endedMarchJune31,30, 2026 was approximately$5.4$3.5 million, a decrease of approximately$10.7$5.6 million or 61.5% compared to net cash used in investing activities of approximately$16.1$9.1 million for thethreesix months endedMarchJune31,30, 2025. The decrease consists primarily of short-term investmentpurchases of approximately $2.0 million, short-term investmentmaturities of approximately$8.2$20.9 million andacquisitionaofdecrease in intangible assets acquisition of approximately$0.7$1.2 million, offset by an increase in short-term investment purchases of approximately $16.2 million and R&D-related hardware equipment purchases of approximately$0.1$0.3 million.
Full comparison: every changed paragraph (23)
Unless the context requires
otherwise, references in this Quarterly Report on Form 10-Q to “we,” “us,” “our,”
and Cyngn refer to Cyngn Inc. and its condensed consolidated subsidiaries.
On February 3, 2026, the Board of Directors, appointed
Mr. Ran Makavy to serve as a member of the Board, effective as of immediately, to fill a vacancy on the Board of Directors.
On March 16, 2026, the Company entered into a securities purchase agreement with certain investors, pursuant to which the Company agreed to sell and issue, in a registered direct offering, 1,686,788 shares of its common stock, par value $0.00001 per share, at a purchase price of $1.93 per share and 3,313,212 pre-funded warrants to purchase shares of Common Stock, at a purchase price of $1.92999 per Pre-Funded Warrant. On March 16, 2026, Empery Asset Master, Ltd. and Empery Tax Efficient, LP exercised 18,223 and 6,777 of their outstanding Pre-Funded Warrants, respectively (25,000 in total), issued in connection with the March 16, 2026 offering, for aggregate proceeds of $1.92999, at an exercise price of $0.00001 per share. The exercise resulted in the issuance of 25,000 shares of common stock. On May 4, 2026, Empery Asset Master, Ltd. and Empery Tax Efficient, LP exercised 594,072 and 220,932 of their outstanding Pre-Funded Warrants, respectively (815,004 in total), issued in connection with the March 16, 2026 offering, for aggregate proceeds of $8.15, at an exercise price of $0.00001 per share. The exercise resulted in the issuance of 815,000 shares of common stock.
Dissolution of Cyngn Singapore PTE. LTD.
On March 28, 2026, the Company's wholly owned subsidiary, Cyngn Singapore PTE. LTD. ("Cyngn-SG"), was struck off and dissolved by the Accounting and Corporate Regulatory Authority of Singapore. The Company was notified of the strike off during the second quarter of 2026 and recorded the related deconsolidation in its financial statements for the quarter then ended (see Note 3, Dissolution of Subsidiary).
The Company issued to its
lead underwriter in the Company’s initial public offering consummated in October 2021, (the “IPO”), warrants to purchase
up to 9 shares of its common stock, exercisable at a price per share of $40,650 and expiring on October 19, 2026. Additionally, in connection
with the Privateprivate Placementplacement offering completed on April 29, 2022,2022 (the “Private Placement”), the Company issued warrants to purchase 426 shares of its common stock,
exercisable at a price per share of $140,625 and expiring on April 29, 2027. The Company accounts for warrants in accordance with ASC
480, Distinguishing Liabilities from Equity, depending on the specific terms of the warrant agreement. The Company determined
the fair value of the warrants using the Black-Scholes pricing model and treated the valuation as equity instruments in consideration
of the cashless settlement provisions in the warrant agreements.
The Company issued Series A warrants and Series B warrants in connection
with a securities purchase agreement on December 20, 2024. The Company accounts for warrants in accordance with ASC 480, Distinguishing
Liabilities from Equity, depending on the specific terms of the warrant agreement. The estimated fair value of the Company’s warrant
agreements has been determined to be Level 3 measurement, as certain inputs used to determine the fair value of these agreements are unobservable.
The Company determined the fair value of the warrants using the Monte Carlo pricing model and treated the valuation as a liability in
consideration of the variable number of the issuer’s equity shares in the warrant agreements. The resulting warrant liabilities
are re-measured at each balance sheet date until their exercise or expiration, and any change in fair value is recognized in the Company’s
consolidated statements of operations under other income (expense). After shareholder approval on January 30, 2025, the strike price and
the number of equity shares are now fixed. Therefore, in accordance with ASC 815-40-35-8, Derivatives and Hedging Reclassification of
Contracts, the Series A warrants were re-measured utilizing the Black Scholes model and reclassified into equity. The Series A warrants
are included in equity in the consolidated balance sheet as of December 31, 2025. The Series B warrants were re-measured utilizing the
Black Scholes model immediately before exercise and were fully exercised in February 2025.
Revenue recognized for the three months ended June 30, 2026 increased by $110,733 or 328.3% to $144,459 from $33,726 for the three months ended June 30, 2025. Revenue recognized for the six months ended June 30, 2026 increased by $168,154 or 207.9% to $249,032 from $80,878 for the six months ended June 30, 2025. The increase is attributable to an increase in tugger deployments in 2026.
Revenue recognized for three months ended March 31, 2026 increased
by $57,421 or 121.8% to $104,573 from $47,152 for the three months ended March 31, 2025.
The increase is attributable to an increase in tugger deployments in 2026.
Cost of revenues reported for the three months ended MarchJune 31,30, 2026 increased
by $45,537$72,039 or 385.5%425.2% to $57,350$88,983 from $11,813$16,944 for the three months ended MarchJune 31,30, 2025. Cost of revenues reported for the six months ended June 30, 2026 increased by $117,575 or 408.8% to $146,333 from $28,758 for the six months ended June 30, 2025. The
increase is attributable to costs related to an increase in tugger deployments in 2026, including personnel costs, travel expenses and
associated hardware costs to specific customers.
Research and development expense
for the three months ended MarchJune 31,30, 2026 increased by approximately $0.8$1.2 million or 37.1%60.1% to $2.9$3.2 million
from approximately $2.1$2.0 million for the three months ended MarchJune 31,30, 2025. The increase is primarily attributable to an
increase in personnel related costs, external contractor costs related to a change in estimate of capitalizedand software expense offset by the capitalization of costs related
to customer contracts.
Research and development expense for the six months ended June 30, 2026 increased by approximately $1.9 million or 48.2% to $6.0 million from approximately $4.1 million for the six months ended June 30, 2025. The increase is primarily attributable to an increase in personnel related costs, external contractor costs and software expense offset by the capitalization of costs related to customer contracts.
General and administrative expenses
for the three months ended MarchJune 31,30, 2026 increased by approximately $1.0$0.2 million or 30.4%3.0% to $4.1$3.7 million
from approximately $3.1$3.5 million for the three months ended MarchJune 31,30, 2025. The increase is primarily attributable to an
increase in personnel related costs and an increase in marketing and advertising expenses.
General and administrative expenses for the six months ended June 30, 2026 increased by approximately $1.1 million or 15.9% to $7.8 million from approximately $6.7 million for the six months ended June 30, 2025. The increase is primarily attributable to an increase in personnel related costs and an increase in marketing and advertising expenses.
Interest income (expense),
net decreasedincreased by $52,749$219,586 to $22,070$21,594 for the three months ended MarchJune 31,30, 2026 from $74,819($197,992) for
the three months ended MarchJune 31,30, 2025. Interest income consists primarily of interest earned of $22,070$21,594 from the Company’s
interest-bearing bank accounts.
Interest income (expense), net increased by $166,837 to $43,664 for the six months ended June 30, 2026 from ($123,173) for the six months ended June 30, 2025. Interest income consists primarily of interest earned of $43,664 from the Company’s interest-bearing bank accounts.
Other income (expense), net decreasedincreased by $0.8$0.1 million to $0.4 million
for the three months ended March 31, 2026 from $1.2 million for the three months ended MarchJune 31,30, 2026 from $0.3 million for the three months ended June 30, 2025. Other
income consists primarily of discount amortization on the Company’s short-term investments of $0.4 million. The decrease
in other income was primarily driven by the fair value measurement of warrants issued in the first quarter of 2025.
Other income (expense), net increased by $0.5 million to $0.8 million for the six months ended June 30, 2026 from $0.3 million for the six months ended June 30, 2025. Other income consists primarily of discount amortization on the Company’s short-term investments of $0.8 million.
The Company’s
principal source of liquidity is its cash and current maturities of short-term investments. Short-term investments consist of
placements in U.S. government securities with original maturities between three to six months. As of MarchJune 31,30, 2026, the
Company had unrestricted cash of approximately $5.1$2.2 million and short-term investments of
approximately $39.2$37.5 million. As of December 31, 2025, the Company had unrestricted cash of
approximately $1.0 million and short-term investments of approximately $33.7 million.
Net cash used in operating
activities for the threesix months ended MarchJune 31,30, 2026 was approximately $8.4$13.2 million, an increase of approximately $1.9$0.4 million
or 29.0%3.1% compared to approximately $6.5$12.8 million for the threesix months ended MarchJune 31,30, 2025. The year-over-year increase is primarily
attributed to ana $0.9 million decrease in accrued payroll and sales & use tax payable, a $0.6 million increase in accrued interest on short-term investments, and a $0.2 million decrease in stock-based compensation, offset by a $0.8 million increase in accounts receivable,and other receivables and a $0.6 million increase in deferred costs, and deferred revenue due to new customer contracts.revenue.
Net cash used in
investing activities for the threesix months ended MarchJune 31,30, 2026 was approximately $5.4$3.5 million, a decrease of
approximately $10.7$5.6 million or 61.5% compared to net cash used in investing activities of approximately $16.1$9.1 million
for the threesix months ended MarchJune 31,30, 2025. The decrease consists primarily of short-term investment purchases of approximately
$2.0 million, short-term investment maturities of approximately $8.2$20.9 million and acquisitiona ofdecrease in intangible assets acquisition of approximately
$0.7 $1.2 million, offset by an increase in short-term investment purchases of approximately $16.2 million and R&D-related hardware equipment purchases of approximately $0.1$0.3 million.
Net cash provided by financing
activities for the threesix months ended MarchJune 31,30, 2026 was $17.9 million, which consisted of $9.2 million in proceeds from at-the-market equity financing and $8.7 million in proceeds
from a registered direct offering of common stockstock, anda $9.2decrease of approximately $11.7 million inor 39.5% compared to $29.6 million for the six months ended June 30, 2025, which consisted of proceeds from at-the-marketthe equitysale financings.of common stock.
We will cease to be an emerging
growth company upon the earliest of: (i) the end of the fiscal year following the fifth anniversary of the initial public offering; (ii)
the first fiscal year after our annual gross revenuerevenues are $1.07 billion or more; (iii) the date on which we have, during the previous three-year
period, issued more than $1.0 billion in non-convertible debt securities; or (iv) the end of any fiscal year in which the market value
of our common stock held by non-affiliates exceeded $700 million as of the end of the second quarter of that fiscal year. We cannot predict
if investors will find our common stock less attractive if we choose to rely on these exemptions. If, as a result of our decision to reduce
future disclosure, investors find our common shares less attractive, there may be a less active trading market for our common shares and
the price of our common shares may be more volatile.
CYN insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
No Form 4 stock transactions in this period.
Well-known investors holding CYN (13F)
None of the 59 investors we track reported a position in their latest 13F.