Cyngn Inc. Announces Pricing of $9.0 Million Registered Direct Offering Priced At-The-Market

Rhea-AI Summary

Cyngn (Nasdaq: CYN), an AI-powered autonomous driving software developer for industrial applications, has announced a $9.0 million registered direct offering. The company will sell 15,000,000 shares of common stock and/or pre-funded warrants at $0.60 per share (or $0.5999 for pre-funded warrants with a $0.0001 exercise price). The transaction is expected to close around December 31, 2024. Aegis Capital Corp is acting as the Exclusive Placement Agent, and the proceeds will be used for general corporate purposes and working capital. The offering is being made through an effective shelf registration statement previously declared effective by the SEC on June 13, 2023.

Positive

• Secured $9.0 million in additional funding
• Transaction structured through registered direct offering, typically faster than traditional public offerings

Negative

• Significant dilution with 15,000,000 new shares being issued
• Low share price of $0.60 indicates potential market weakness
• Non-specific use of proceeds (general corporate purposes) provides visibility on strategic direction

Insights

Financial Analyst

This $9.0 million registered direct offering by Cyngn represents a significant dilutive event, with 15 million new shares being offered at $0.60 per share - a substantial 41% discount to the previous closing price. The pricing structure, including pre-funded warrants with a nominal $0.0001 exercise price, suggests urgency in raising capital. This capital raise will increase the outstanding shares by approximately 44%, significantly diluting existing shareholders. While the funding strengthens the company's working capital position, the steep discount and substantial dilution signal potential market concerns about the company's current valuation and cash burn rate. The timing, coming at year-end, may indicate immediate cash needs for operational sustainability.

Market Research Analyst

The structure and timing of this offering reveals critical insights about Cyngn's market position in the AI-powered autonomous driving sector. The decision to pursue a registered direct offering with institutional investors, rather than a traditional public offering, suggests a strategic move to secure funding while minimizing market volatility. However, the significant discount to market price indicates challenging market conditions for small-cap AI companies. The involvement of Aegis Capital as the exclusive placement agent, combined with the use of pre-funded warrants, points to a carefully orchestrated financing strategy aimed at ensuring deal completion despite market headwinds. This financing round could impact investor sentiment in the broader autonomous vehicle technology sector, particularly for early-stage companies seeking capital.

MENLO PARK, Calif., Dec. 30, 2024 /PRNewswire/ -- Cyngn Inc. (the "Company" or "Cyngn") (Nasdaq: CYN), a developer of AI-powered autonomous driving software solutions for industrial applications, today announced that it has entered into definitive agreements in a registered direct offering with certain institutional investors for the purchase and sale of 15,000,000 shares of common stock and/or pre-funded warrants to acquire common stock in a registered direct offering. The purchase price of each share is $0.60 (or $0.5999 for each pre-funded warrant, which is equal to the public offering price per share to be sold in the offering minus an exercise price of $0.0001 per pre-funded warrant).

Aggregate gross proceeds to the Company are expected to be approximately $9.0 million. The transaction is expected to close on or about December 31, 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 general corporate purposes and working capital.

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.

The registered direct offering is being made pursuant to an effective shelf registration statement on Form S-3, as amended (File No. 333-271567), previously filed with the United States Securities and Exchange Commission (the "SEC"), which was declared effective by the SEC on June 13, 2023. A final prospectus supplement and accompanying 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/edgar. Electronic copies of the final 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.

Interested parties should read in their entirety the prospectus supplement and the accompanying prospectus and the other documents that the Company has filed with the SEC that are incorporated by reference in such prospectus supplement and the accompanying prospectus, which provide more information about the Company and such offering.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state or jurisdiction in which such 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 Company's product development and business prospects, 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 registered direct offering?

Cyngn's registered direct offering is for $9.0 million, consisting of 15,000,000 shares priced at $0.60 per share and/or pre-funded warrants at $0.5999.

When will Cyngn's (CYN) $9.0M registered direct offering close?

The offering is expected to close on or about December 31, 2024, subject to customary closing conditions.

How will Cyngn (CYN) use the proceeds from its $9.0M offering?

Cyngn plans to use the net proceeds from the offering, along with existing cash, for general corporate purposes and working capital.

What is the exercise price of Cyngn's (CYN) pre-funded warrants in the December 2024 offering?

The pre-funded warrants have an exercise price of $0.0001 per warrant.

Who is the placement agent for Cyngn's (CYN) $9.0M registered direct offering?

Aegis Capital Corp. is acting as the Exclusive Placement Agent for the offering.