Cyngn Announces Pricing of $20.0 Million Follow On Offering Priced At-the-Market

Rhea-AI Summary

Cyngn Inc. (Nasdaq: CYN), an AI-powered autonomous driving software developer, has announced a $20.0 million follow-on offering priced at-the-market. The offering includes 12,422,360 Common Units at $1.61 per unit (or $1.6099 for Pre-Funded Units), each consisting of one share of Common Stock or Pre-Funded Warrant, plus Series A and B Common Warrants. The Series A Warrants have an exercise price of $2.0125 and expire after 60 months, while Series B Warrants share the same exercise price but expire after 30 months.

The transaction is expected to close around December 23, 2024. The company plans to use the proceeds for working capital, general corporate purposes, and repayment of outstanding senior notes. Aegis Capital Corp. is serving as the Exclusive Placement Agent for this offering.

Positive

• Secured $20.0 million in gross proceeds through follow-on offering
• Warrants priced at $2.0125, representing a 25% premium to the offering price

Negative

• Potential significant shareholder dilution through issuance of new shares and warrants
• Need to repay outstanding senior notes indicates debt burden
• Requires stockholder approval for warrant exercises

Insights

Financial Analyst

This $20.0 million follow-on offering represents a significant capital raise for Cyngn, structured through a complex combination of common units and warrants. The pricing at $1.61 per unit reflects current market conditions, with warrant exercise prices set at $2.0125, suggesting potential upside expectations. The dual-warrant structure (Series A and B) with different expiration periods (60 and 30 months) provides flexibility but also indicates potential dilution concerns. Key points: 1) The offering represents approximately 25% dilution at current pricing, 2) The warrant exercise prices are set 25% above the offering price, creating potential future value catalysts, 3) The proceeds will strengthen the balance sheet and provide working capital, including debt repayment. The immediate share price impact is likely to be negative due to dilution, but the capital injection strengthens Cyngn's ability to execute its autonomous vehicle technology deployment strategy in the industrial sector.

Tech Industry Analyst

The capital raise comes at a important time for Cyngn's autonomous vehicle technology deployment strategy. The DriveMod Kit's retrofit capability presents a unique value proposition in the industrial automation market, addressing the critical pain points of labor shortages and safety concerns. The ability to upgrade existing vehicle fleets rather than requiring complete replacements significantly reduces the customer's adoption barriers and total cost of ownership. The fresh capital should accelerate market penetration, particularly important as the industrial automation sector faces increasing pressure to improve efficiency and reduce operational costs. The Enterprise Autonomy Suite's comprehensive approach, combining autonomous systems with fleet management and analytics, positions Cyngn competitively in the industrial AV space. However, execution risks remain high in this rapidly evolving market segment.

MENLO PARK, Calif., Dec. 20, 2024 /PRNewswire/ -- Cyngn Inc. (the "Company" or "Cyngn") (Nasdaq: CYN), a developer of AI-powered autonomous driving software solutions for industrial applications, today announced the pricing of a follow on offering, priced at the market, with gross proceeds to the Company expected to be approximately $20.0 million, before deducting placement agent fees and other estimated offering expenses payable by the Company.

The offering consists of 12,422,360 Common Units (or Pre-Funded Units), each consisting of one (1) share of Common Stock or one (1) Pre-Funded Warrant to purchase one (1) share of Common Stock, one (1) Series A Common Warrant to purchase one (1) share of Common Stock per warrant, and one (1) Series B Common Warrant to purchase one (1) share of Common Stock per warrant. The public offering price per Common Unit is $1.61 (or $1.6099 for each Pre-Funded Unit, which is equal to the public offering price per Common Unit to be sold in the offering minus an exercise price of $0.0001 per Pre-Funded Warrant). The Pre-Funded Warrants will be immediately exercisable and may be exercised at any time until exercised in full. For each Pre-Funded Unit sold in the offering, the number of Common Units in the offering will be decreased on a one-for-one basis. The initial exercise price of each Series A Common Warrant is $2.0125 per share of Common Stock. The Series A Common Warrants are exercisable upon stockholder approval and expire 60 months thereafter.   The initial exercise price of each Series B Common Warrant is $2.0125 per share of Common Stock or pursuant to an alternative cashless exercise option. The Series B Common Warrants are exercisable upon stockholder approval and expire 30 months thereafter.  

Aggregate gross proceeds to the Company are expected to be approximately $20.0 million. The transaction is expected to close on or about December 23, 2024, subject to the satisfaction of customary closing conditions. The Company expects to use the net proceeds from the offering, together with its existing cash, for working capital and other general corporate purposes, including repayment of outstanding senior notes.

Aegis Capital Corp. is acting as Exclusive Placement Agent for the offering. Sichenzia Ross Ference Carmel LLP is acting as counsel to the Company. Kaufman & Canoles, P.C. is acting as counsel to Aegis Capital Corp.

A registration statement on Form S-1 (No. 333-283514) previously filed with the U.S. Securities and Exchange Commission (the "SEC") on November 27, 2024 was declared effective by the SEC on December 19, 2024. The offering is being made only by means of a prospectus. A final prospectus describing the terms of the proposed offering will be filed with the SEC and will be available on the SEC's website located at www.sec.gov. Electronic copies of the preliminary prospectus supplement and the accompanying prospectus may be obtained, when available, by contacting Aegis Capital Corp., Attention: Syndicate Department, 1345 Avenue of the Americas, 27th floor, New York, NY 10105, by email at syndicate@aegiscap.com, or by telephone at +1 (212) 813-1010. Before investing in this offering, interested parties should read in their entirety the prospectus, which provides more information about the Company and such offering.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About Cyngn

Cyngn develops and deploys scalable, differentiated autonomous vehicle technology for industrial organizations. Cyngn's self-driving solutions allow existing workforces to increase productivity and efficiency. The Company addresses significant challenges facing industrial organizations today, such as labor shortages, costly safety incidents, and increased consumer demand for eCommerce.

Cyngn's DriveMod Kit can be installed on new industrial vehicles at end of line or via retrofit, empowering customers to seamlessly adopt self-driving technology into their operations without high upfront costs or the need to completely replace existing vehicle investments.

Cyngn's flagship product, its Enterprise Autonomy Suite, includes DriveMod (autonomous vehicle system), Cyngn Insight (customer-facing suite of AV fleet management, teleoperation, and analytics tools), and Cyngn Evolve (internal toolkit that enables Cyngn to leverage data from the field for artificial intelligence, simulation, and modeling).

Forward-Looking Statements

The foregoing material may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, each as amended. Forward-looking statements include all statements that do not relate solely to historical or current facts, including without limitation statements regarding the timing of closing, expected use of  proceeds of the offering, the completion of the offering, the satisfaction of customary closing conditions related to the offering, and can be identified by the use of words such as "may," "will," "expect," "project," "estimate," "anticipate," "plan," "believe," "potential," "should," "continue" or the negative versions of those words or other comparable words. Forward-looking statements are not guarantees of future actions or performance. These forward-looking statements are based on information currently available to the Company and its current plans or expectations and are subject to a number of risks and uncertainties that could significantly affect current plans. Should one or more of these risks or uncertainties materialize, or the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, performance, or achievements. Except as required by applicable law, including the security laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

Investor Contact:
Donald Alvarez, CFO
investors@cyngn.com
Media Contact:
Luke Renner, Head of Marketing
media@cyngn.com

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SOURCE Cyngn

FAQ

What is the size and price of Cyngn's (CYN) December 2024 follow-on offering?

Cyngn's follow-on offering is approximately $20.0 million, with Common Units priced at $1.61 per unit and Pre-Funded Units at $1.6099.

What are the terms of CYN's Series A and B warrants in the December 2024 offering?

Both Series A and B warrants have an exercise price of $2.0125. Series A warrants expire 60 months after stockholder approval, while Series B warrants expire after 30 months.

How will Cyngn (CYN) use the proceeds from its $20M offering?

Cyngn plans to use the net proceeds for working capital, general corporate purposes, and repayment of outstanding senior notes.

When is CYN's December 2024 follow-on offering expected to close?

The offering is expected to close on or about December 23, 2024, subject to customary closing conditions.