Cyngn Inc
For the period ended Jun 30, 2024. Filed Aug 8, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 8, 2024
CYN$0.27-1.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-09.
0001213900-24-041350
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0001213900-24-066682
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 64 previous paragraphs and 80 current paragraphs.
48 unchanged; 13 reworded; 16 added; 3 removed; 0 previous and 3 current paragraphs rearranged.
Tables are not compared: 2 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (16)
Current report
Recent Developments
Current report
ATM
Current report
Public Offering
Current report
On April 23, 2024, the Company entered into an underwritten Agreement 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 500,000(1) shares of common stock in a public offering, which included: (i) 198,000(1) shares of common stock, and (ii) pre-funded warrants to purchase 302,000(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 $0.10, and each Pre-Funded Warrant was sold at an offering price of $0.09999. On May 3, the Company closed on the sale of an additional 20,400(1) shares of common stock, upon exercise by the underwriter of the over-allotment option. The Company received gross proceeds of approximately $5.2 million before deducting transaction related expenses payable by the Company.
Current report
Amended Bylaws
Current report
On May 7, 2024, we amended our Amended and Restated Bylaws (the “Amended Bylaws”), for the purpose of reducing the quorum required to hold meetings of the stockholders of the Company (the “Quorum Requirement”). The Amended Bylaws reduced the Quorum Requirement from a majority to one-third (1/3rd) of the voting power of the shares of stock issued and outstanding and entitled to vote at the meeting. The Amended Bylaws was approved by the Board of Directors of the Company on May 7, 2024.
Current report
Reverse Stock Split
Current report
At the Annual Meeting of Stockholders on June 25, 2024, the stockholders of the Company approved the grant of discretionary authority to the board of directors of the Company to effect a reverse stock split of its outstanding shares of common stock at a specific ratio within a range of one-for-five (1-for-5) to a maximum of a one-for-one hundred (1-for-100) split. On July 3, 2024, we implemented a 1-for-100 reverse stock split (the “Reverse Stock Split”) of our common stock. As a result of the Reverse Stock Split, every one hundred (100) shares of our pre-Reverse Stock Split common stock were combined and reclassified into one share of our common stock. The number of shares of common stock subject to outstanding options and warrants were also reduced by a factor of one hundred and the exercise price of such securities increased by a factor of one hundred effective as of July 3, 2024. Our common stock commenced trading on a post- reverse stock split basis on July 5, 2024.
Current report
NASDAQ Compliance
Current report
On July 19, 2024, the Company was notified by Nasdaq that the Company has regained compliance with the bid price requirement as set forth in Listing Rule 5550(a)(2), and that the Company is therefore in compliance with the Nasdaq Capital Market’s listing requirements and will remain listed on Nasdaq.
Current report
Research and development expense for the three months ended June 30, 2024 decreased by approximately $0.5 million or 14.4% to $3.2 million from approximately $3.7 million for the three months ended June 30, 2023. The decrease is primarily attributable the capitalization of costs related to capitalized software and customer contracts.
Current report
Research and development expense for the six months ended June 30, 2024 decreased by approximately $0.4 million or 6.1% to $6.4 million from approximately $6.8 million for the six months ended June 30, 2023. The decrease is primarily attributable the capitalization of costs related to capitalized software and customer contracts.
Current report
General and administrative expenses decreased by approximately $0.6 million or 10.3% to approximately $5.3 million for the six months ended June 30, 2024 from approximately $5.9 million for the six months ended June 30, 2023. The decrease was attributed to a decrease in consultant costs due to hiring employees full-time, as well as decreases in insurance, professional fees and other general and administrative expenses.
Current report
Interest Income (Expense), net
Current report
On April 23, 2024, the Company entered into an underwritten Agreement 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 500,000(1) shares of common stock in a public offering, which included: (i) 198,000(1) shares of common stock, and (ii) pre-funded warrants to purchase 302,000(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 $0.10, and each Pre-Funded Warrant was sold at an offering price of $0.09999. On May 3, the Company closed on the sale of an additional 20,400(1) shares of common stock, upon exercise by the underwriter of the over-allotment option. The Company received gross proceeds of approximately $5.2 million before deducting transaction related expenses payable by the Company. All commissions, qualified legal, accounting, registration and other direct costs of $0.6 million related to the public offering were offset against the gross proceeds. The Company is using the net proceeds to fund its cash needs.
Current report
Net cash used in operating activities for the six months ended June 30, 2024 was approximately $10.2 million, a decrease of approximately $0.02 million or 0.2% compared to approximately $10.2 million for the six months ended June 30, 2023. The decrease is attributed to a smaller net loss and less stock-based compensation expense due to the mix of employees offset by lower short-term investment gains and the patent impairment charge.
Removed paragraphs (3)
Previous report
Research and development expense for the three months ended March 31, 2024 increased by approximately $0.1 million or 3% to $3.1 million from approximately $3.0 million for the three months ended March 31, 2023. The increase is primarily attributable to the increase in personnel engaged in the research and development of our AV technology in 2024 compared to headcount levels in 2023, including provisions for non-cash stock-based compensation expense. The Company plans to expand its level of engineering and other R&D personnel to support its research and development efforts and expects research and development costs to increase over time.
Previous report
Interest income
Previous report
Net cash used in operating activities for the three months ended March 31, 2024 was approximately $5.8 million, an increase of approximately $0.4 million or 8% compared to approximately $5.4 million for the three months ended March 31, 2023. The increase is primarily attributed to the level of increases in personnel costs and professional services related to the Company’s research and development activities as the Company continues to grow, which led to the increase in the Company’s net loss for the period.
Reworded paragraphs (13)
Previous wording
Although both the components and the combined solutions of EAS are still under development, EAS has already been used for a paid customer deployment as well as for paid trial and pilot deployments. We have not yet derived any significant recurring revenues from EAS but began marketing EAS to customers in 2022 with our first commercial deployment commencing in the first quarter of 2023. 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 2023. We also had limited paid deployments in 2023 which offset some of the ongoing R&D costs of continually developing EAS. We target scaled deployments to begin in the second half of 2024.
Current wording
Although both the components and the combined solutions of EAS are still under development, EAS has already been used for a paid customer deployment as well as for paid trial and pilot deployments. We have not yet derived any significant recurring revenues from EAS but began marketing EAS to customers in 2022 with our first commercial deployment commencing in the first quarter of 2023. 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 2023. We also had limited paid deployments in 2023 which offset some of the ongoing R&D costs of continually developing EAS. We target scaled deployments to begin in the towards the end of 2024.
Previous wording
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 140,000 shares of its common stock, exercisable at a price per share of $9.373 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 7,096,776 shares of its common stock, exercisable at a price per share of $2.71 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 warrants as equity instruments in consideration of the cashless settlement provisions in the warrant agreement.
Current wording
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 1,400(1) shares of its common stock, exercisable at a price per share of $9.373 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 70,969(1) shares of its common stock, exercisable at a price per share of $2.71 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 warrants as equity instruments in consideration of the cashless settlement provisions in the warrant agreement.
Previous wording
During the three months ended March 31, 2024, the Company recognized $5,513 of revenue, substantially all related to EAS subscriptions and hardware revenue.
Current wording
During the three and six months ended June 30, 2024, the Company recognized $8,665 and $14,179, respectively, of revenue, substantially all related to EAS subscriptions and hardware revenue.
Previous wording
During the three months ended March 31, 2024, the Company reported cost of revenue of $113,776 consisting primarily of deployment costs, related to personnel costs, travel expenses and associated hardware costs to specific customers.
Current wording
During the three and six months ended June 30, 2024, the Company reported cost of revenue of $14,922 and $128,698, respectively, consisting primarily of deployment costs, related to personnel costs, travel expenses and associated hardware costs to specific customers.
Previous wording
Research and development expense consist primarily of outsourced engineering services, internal engineering and development expenses, materials, labor and stock-based compensation related to development of the Company’s products and services. Research and development costs incurred during NRE projects are capitalized and expensed when the associated NRE revenue is recognized. All other research and development costs are expensed as incurred.
Current wording
Research and development expense consist primarily of internal engineering and development expenses, materials, labor and stock-based compensation and outsourced engineering services related to development of the Company’s products and services. Research and development costs incurred during NRE projects are capitalized and expensed when the associated NRE revenue is recognized. All other research and development costs are expensed as incurred.
Previous wording
General and administrative expenses decreased by approximately $0.4 million or 12.9% to approximately $2.7 million for the three months ended March 31, 2024 from approximately $3.1 million for the three months ended March 31, 2023. The decrease was attributed to a decrease in personnel related costs, including provisions for non-cash stock-based compensation expense, as well as decreases in insurance, legal and professional fees and other general and administrative expenses.
Current wording
General and administrative expenses decreased by approximately $0.2 million or 8.4% to approximately $2.6 million for the three months ended June 30, 2024 from approximately $2.8 million for the three months ended June 30, 2023. The decrease was attributed to a decrease in consultant costs due to hiring employees full-time, as well as decreases in insurance, professional fees and other general and administrative expenses.
Previous wording
Interest income decreased by $45,575 to $1,327 for the three months ended March 31, 2024 from $46,902 for the three months ended March 31, 2023. Interest income consists primarily of interest earned of $24,638 from the Company’s interest-bearing bank accounts offset by interest expense of 23,311 related to the office lease.
Current wording
Interest income (expense), net decreased by $20,560 to $(1,669) for the three months ended June 30, 2024 from $18,891 for the three months ended June 30, 2023. Interest income consists primarily of interest earned of $16,382 from the Company’s interest-bearing bank accounts offset by interest expense of $18,051 related to the office lease.
Previous wording
Other income decreased by $174,257 to $(5,047) for the three months ended March 31, 2024 from $169,210 for the three months ended March 31, 2023. Other income consists primarily of realized gains earned on the Company’s short-term investments of $47,676 and the impairment charge of $52,723 related to expired international patents.
Current wording
Other income (expense), net decreased by $128,201 to $(5,079) for the three months ended June 30, 2024 from $123,122 for the three months ended June 30, 2023. Other income (expense), net consists primarily of realized gains earned on the Company’s short-term investments of $48,973 and the impairment charge of $66,107 related to expired international patents.
Previous wording
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 March 31, 2024, the Company had unrestricted cash of approximately $2.2 million and short-term investments of approximately $2.6 million. As of December 31, 2023, the Company had unrestricted cash of approximately $3.6 million and short-term investments of approximately $4.6 million.
Current wording
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 June 30, 2024, the Company had unrestricted cash of approximately $5.9 million and short-term investments of approximately $1.1 million. As of December 31, 2023, the Company had unrestricted cash of approximately $3.6 million and short-term investments of approximately $4.6 million.
Previous wording
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 is limited to sales of up to an aggregate maximum of $8.8 million of shares of the Company’s common stock. The Company pays Virtu Americas LLC up to 3.0% of the gross proceeds as a commission. As of March 31, 2024, a total of 17,034,205 shares of common stock were sold through Virtu Americas LLC under the ATM Sales Agreement for net proceeds of $4,460,639 after payment of commission fees of $91,033 and other related expenses of $60,465. As of March 31, 2024, the Company had $4,222,297 million of common stock remaining available for sale under the ATM Sales Agreement.
Current wording
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 is limited to sales of up to an aggregate maximum of $8.8 million of shares of the Company’s common stock. The Company pays Virtu Americas LLC up to 3.0% of the gross proceeds as a commission. As of June 30, 2024, a total of 170,342 shares of common stock were sold through Virtu Americas LLC under the ATM Sales Agreement for net proceeds of $4,460,639 after payment of commission fees of $91,033 and other related expenses of $60,465. As of June 30, 2024, the Company had $4,222,297 million of common stock remaining available for sale under the ATM Sales Agreement.
Previous wording
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 33,333,333 shares of common stock in a public offering, which included: (i) 11,466,733 shares of Common Stock, and (ii) pre-funded warrants to purchase 21,866,600 shares of Common Stock. The public offering closed on December 12, 2023. The Company received gross proceeds of approximately $5 million before deducting transaction related expenses payable by the Company. All commissions, qualified legal, accounting, registration and other direct costs of $0.5 million related to the public offering were offset against the gross proceeds.
Current wording
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 333,334(1) shares of common stock in a public offering, which included: (i) 114,668(1) shares of Common Stock, and (ii) pre-funded warrants to purchase 218,666(1) shares of Common Stock. The public offering closed on December 12, 2023. The Company received gross proceeds of approximately $5 million before deducting transaction related expenses payable by the Company. All commissions, qualified legal, accounting, registration and other direct costs of $0.5 million related to the public offering were offset against the gross proceeds.
Previous wording
Net cash provided by investing activities for the three months ended March 31, 2024 was approximately $1.8 million, an decrease of approximately $1.0 million compared to net cash used in investing activities of approximately $2.8 million for the three months ended March 31, 2023. The decrease consists of smaller investment maturities of $3.8 million, which were offset by purchases of short-term investments of approximately $1.8 million and approximately $0.3 million in purchases of R&D-related hardware equipment, acquisition of intangible asset and capitalization of software.
Current wording
Net cash provided by investing activities for the six months ended June 30, 2024 was approximately $2.9 million, an increase of approximately $0.2 million compared to net cash used in investing activities of approximately $2.7 million for the six months ended June 30, 2023. The increase consists of smaller investment maturities of $7.0 million, which were offset by purchases of short-term investments of approximately $10.6 million and approximately $0.6 million in purchases of R&D-related hardware equipment, acquisition of intangible asset and capitalization of software.
Previous wording
Cash provided by financing activities for the three months ended March 31, 2024 was $2.7 million, which consisted of proceeds from the sale of common stock. Cash provided by financing activities for the three months ended March 31, 2023 was approximately $6.8 thousand, which consisted of proceeds from the exercise of stock options.
Current wording
Cash provided by financing activities for the six months ended June 30, 2024 was $9.6 million, which consisted of proceeds from the sale of common stock. Cash provided by financing activities for the six months ended June 30, 2023 was approximately $8.1 thousand, which consisted of proceeds from the exercise of stock options.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
As of August 8, 2024, the Company has sold 2,565(1) additional shares under the ATM Sales Agreement, for net proceeds of $1,772,284 after payment of commission and fees of $36,169.
Current report — wording carried from elsewhere
Interest income (expense), net decreased by $66,135 to $(342) for the six months ended June 30, 2024 from $65,793 for the six months ended June 30, 2023. Interest income consists primarily of interest earned of $41,020 from the Company’s interest-bearing bank accounts offset by interest expense of $41,362 related to the office lease.
Current report — wording carried from elsewhere
Other income (expense), net decreased by $302,457 to $(10,126) for the six months ended June 30, 2024 from $292,331 for the six months ended June 30, 2023. Other income (expense), net consists primarily of realized gains earned on the Company’s short-term investments of $88,912 and the impairment charge of $118,831 related to expired international patents.