Cyngn Inc 10-Q for FY2026 Q1
Cyngn Inc. (CYN)
About this 10-Q
Cyngn Inc filed this 10-Q on May 14, 2026, covering the quarter ended March 31, 2026 (FY2026 Q1).
Headline figures
Quarter ended March 31, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $104.57K
- up 121.8% from $47.15K a year earlier
- Net loss
- $6.49M
- compared with a net loss of $3.91M a year earlier
- Diluted EPS
- -$0.59
- compared with -$3.40 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
or
For the transition period from _______ to _______
Commission file number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant
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preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
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of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check
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As of May 14, 2026, the issuer had
CYNGN INC.
TABLE OF CONTENTS
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PART 1 — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CYNGN INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Short-term investments | ||||||||
| Accounts and other receivables | ||||||||
| Inventory | ||||||||
| Prepaid expenses and other current assets | ||||||||
| TOTAL CURRENT ASSETS | ||||||||
| NON-CURRENT ASSETS | ||||||||
| Property and equipment, net | ||||||||
| Right of use asset, net | ||||||||
| Intangible assets, net | ||||||||
| Other non-current assets | ||||||||
| TOTAL NON-CURRENT ASSETS | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | $ | ||||||
| Deferred revenue | ||||||||
| Accrued expenses and other current liabilities | ||||||||
| Current operating lease liability | ||||||||
| TOTAL CURRENT LIABILITIES | ||||||||
| NON-CURRENT LIABILITIES | ||||||||
| Non-current operating lease liability | ||||||||
| TOTAL NON-CURRENT LIABILITIES | ||||||||
| TOTAL LIABILITIES | ||||||||
| Commitments and Contingencies (Note 12) | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Preferred stock, Par $ | ||||||||
| Common stock, Par $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| TOTAL STOCKHOLDERS’ DEFICIT | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
1
CYNGN INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Revenue | $ | $ | ||||||
| Costs and expenses | ||||||||
| Cost of revenue | ||||||||
| Research and development | ||||||||
| General and administrative | ||||||||
| Total costs and expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income, net | ||||||||
| Interest income, net | ||||||||
| Change in fair value of warrant liabilities | ||||||||
| Other income, net | ||||||||
| Total other income, net | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Net loss per share attributable to common stockholders, basic and diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted | ||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
CYNGN INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY
(Unaudited)
| Additional | Total | |||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-in | Accumulated | Stockholders’ | ||||||||||||||||||||||||
| Three Months Ended March 31, 2026 | Shares | Amount | Shares | Amount | Capital | Deficit | Equity | |||||||||||||||||||||
| Balance as of December 31, 2025 | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||
| Issuance of at-the-market common stock, net of issuance costs | ‒ | |||||||||||||||||||||||||||
| Issuance of common stock in connection with the public offering | ‒ | |||||||||||||||||||||||||||
| Stock-based compensation | ‒ | ‒ | ||||||||||||||||||||||||||
| Net loss | ‒ | ‒ | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance as of March 31, 2026 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Additional | Total | |||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-in | Accumulated | Stockholders’ | ||||||||||||||||||||||||
| Three Months Ended March 31, 2025 | Shares | Amount | Shares | Amount | Capital | Deficit | Equity | |||||||||||||||||||||
| Balance as of December 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Reclassification of Series A warrants to equity | ‒ | ‒ | ||||||||||||||||||||||||||
| Exercise of Series B warrants in connection with the public offering | ‒ | |||||||||||||||||||||||||||
| Stock-based compensation | ‒ | ‒ | ||||||||||||||||||||||||||
| Net loss | ‒ | ‒ | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance as of March 31, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
The accompanying notes are an integral part of these condensed financial statements.
3
CYNGN INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( |
) | $ | ( |
) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Stock-based compensation | ||||||||
| Accretion on short-term investments | ( |
) | ( |
) | ||||
| Change in fair value of warrant liability | ( |
) | ||||||
| Change in assets and liabilities: | ||||||||
| Accounts and other receivables | ( |
) | ||||||
| Inventory | ( |
) | ||||||
| Prepaid expenses, operating lease right-of-use assets, and other assets | ( |
) | ( |
) | ||||
| Accounts payable | ||||||||
| Deferred revenue | ( |
) | ||||||
| Accrued expenses, lease liabilities, and other current liabilities | ( |
) | ( |
) | ||||
| Net cash used in operating activities | ( |
) | ( |
) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchase of property and equipment | ( |
) | ( |
) | ||||
| Acquisition of intangible asset | ( |
) | ( |
) | ||||
| Disposal of assets | ||||||||
| Purchase of short-term investments | ( |
) | ( |
) | ||||
| Proceeds from maturity of short-term investments | ||||||||
| Net cash used in investing activities | ( |
) | ( |
) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from at-the-market equity financing, net of issuance costs | ||||||||
| Proceeds from public issuance of common stock, net of offering costs | ||||||||
| Issuance costs for public issuance of common stock and pre-funded warrants and exercise of pre-funded warrants | ( |
) | ||||||
| Net cash provided by (used in) financing activities | ( |
) | ||||||
| Net increase (decrease) in cash and cash equivalents | ( |
) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Supplemental disclosure: | ||||||||
| Acquisition of property and equipment included in accounts payable and accrued expenses | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
CYNGN INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Description of Business
Cyngn Inc., together with its subsidiary (collectively, “Cyngn” or the “Company”), was incorporated in Delaware in 2013. Our wholly owned subsidiary, Cyngn Singapore PTE. LTD., is a Singaporean limited company organized in 2015. The Company is headquartered in Mountain View, CA.
Cyngn develops and deploys scalable, differentiated autonomous vehicle technology for industrial organizations. Our full-stack autonomous driving software, (“DriveMod”), can be integrated onto vehicles manufactured by Original Equipment Manufacturers (“OEM”) by integration directly into vehicle assembly. The Enterprise Autonomy Suite (“EAS”) is designed to be compatible with sensors and components from leading hardware technology providers and integrate our proprietary Autonomous Vehicle (“AV”) software to produce differentiated autonomous vehicles.
The Company has been operating autonomous vehicles in production environments and in 2023 began licensing EAS commercially. Built and tested in difficult and diverse real-world environments, DriveMod, the fleet management system and our proprietary Software Development Kit (“DriveMod Kit”) combine to create a full-stack advanced autonomy solution designed to be modular, extendable, and safe. The Company operates in one business segment.
Liquidity
The Company has incurred losses from operations
since inception. The Company incurred net losses of approximately $
The Company’s liquidity is based on its
ability to increase its operating cash flow position, obtain capital financing from equity interest investors and borrow money to fund
its general operations, research and development activities, and capital expenditures. As of March 31, 2026, the Company’s
unrestricted cash balance was approximately $
Based on cash flow projections from operating, investing and financing activities and the existing balance of cash and short-term investments, management is of the opinion that the Company has sufficient funds for sustainable operations, and it will be able to meet its payment obligations from operations and related commitments for the 12 months following the date these condensed consolidated financial statements were issued.
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2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying condensed consolidated financial statements as of and for the three months ended March 31, 2026 and 2025 have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and pursuant to applicable rules and regulations of the Securities and Exchange Commission (“SEC”). These financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, which was filed with the SEC on March 27, 2025.
The accompanying unaudited condensed consolidated financial statements have been prepared on a consistent basis with the audited consolidated financial statements for the fiscal years ended December 31, 2025, and 2024, and include all adjustments, consisting of only normal recurring adjustments, necessary to fairly state the information set forth herein. There have been no changes to the Company’s significant accounting policies described in its Annual Report on Form 10-K for the fiscal year ended December 31, 2025 that have had a material impact on the consolidated financial statements and the related notes.
The results reported for the interim period presented are not necessarily indicative of results that may be expected for any subsequent quarter or for the full year ending December 31, 2026. These unaudited condensed consolidated financial statements include all adjustments and accruals that are necessary for a fair statement of all interim periods reported herein.
Principles of Consolidation
The condensed consolidated financial statements include the accounts of Cyngn Inc. and its wholly owned subsidiary. Intercompany accounts and transactions have been eliminated upon consolidation.
Foreign Currency Translation
The functional and reporting currency for Cyngn is the U.S. dollar. Monetary assets and liabilities denominated in currencies other than U.S. dollar are translated into the U.S. dollar at period end rates, income and expenses are translated at the weighted average exchange rates for the period and equity is translated at the historical exchange rates. Foreign currency translation adjustments and transactional gains and losses are immaterial to the condensed consolidated financial statements.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the balance sheet date, as well as reported amounts of revenue and expenses during the reporting period. The Company’s significant estimates and judgments include but are not limited to internal-use software and developed software to be sold, leased or marketed, warrants and share-based compensation. Management bases its estimates on historical experience and on various other assumptions believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates.
6
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash, which is placed with high-credit-quality financial institutions and at times exceeds federally insured limits.
Cash maintained with domestic financial institutions generally exceed the Federal Deposit Insurance Corporation insurable limit. To date, the Company has not experienced any losses on its deposits of cash. Cyngn invests in U.S. Treasury securities and carries these at amortized cost and recognizes gains and losses when realized.
Concentration of Supplier Risk
The Company generally utilizes suppliers for outside development and engineering support. The Company does not believe that there is any significant supplier concentration risk as of March 31, 2026 and December 31, 2025.
Cash and Short-term Investments
The Company considers its bank accounts and all
highly liquid investments that are both readily convertible to cash with minimal risk of changes in value due to changes in interest rates,
to be cash. As of March 31, 2026 and December 31, 2025, the Company had $
The Company considers short-term investments to include marketable U.S. government securities that it intends to hold until maturity and redeem within one year. The Company treated its U.S. government treasury bill placements as held-to-maturity securities in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification Topic (“ASC”) 320, “Investments – Debt and Equity Securities”, and recorded these securities at amortized cost on the accompanying condensed consolidated balance sheet as of March 31, 2026 and December 31, 2025.
Accounts and Other Receivables
Accounts and other receivables are recorded at
the invoiced amount and do not bear interest. The Company provides for probable uncollectible amounts based upon its assessment of the
current status of the individual receivables and after using reasonable collection efforts. The allowance for credit losses was
Fair Value Measurements
The accounting guidance under ASC Topic 820, Fair Value Measurement, defines fair value, establishes a consistent framework for measuring fair value, and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as an exit price representing the amount that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants. As such, fair value is considered a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.
The Company uses the following fair value hierarchy prescribed by U.S. GAAP, which prioritizes the inputs used to measure fair value as follows:
Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2—Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Assets and liabilities are considered to be fair valued on a recurring basis if fair value is measured regularly. However, if the fair value measurement of an instrument does not necessarily result in a change in the amount recorded on the condensed consolidated balance sheets, assets and liabilities are considered to be fair valued on a nonrecurring basis. This typically occurs when accounting guidance requires assets and liabilities to be recorded at the lower of cost or fair value, or on certain nonfinancial assets and liabilities. Nonfinancial assets and liabilities that are measured at fair value on a nonrecurring basis include certain long-lived assets, intangible assets, and share-based compensation measured at fair value upon initial recognition.
7
The carrying amounts of the Company’s cash, short-term investments, and accounts and other receivables are reasonable estimates of their fair values due to their short-term nature. The fair values of the Company’s share-based compensation were based on observable inputs and assumptions used in Black-Scholes valuation models derived from independent external valuations.
Inventory
Inventory consists of autonomous vehicle units, including tuggers equipped with DriveMod Kits (“DMKs”), which are integrated with the Company’s proprietary Enterprise Autonomy Suite (“EAS”) software and sold to customers as part of a fully integrated autonomous vehicle solution. Substantially all assembly and integration activities are performed by third-party suppliers prior to receipt; therefore, the Company classifies its inventory as finished goods and does not maintain separate classifications for raw materials or work in process.
Inventory is stated at the lower of cost or net realizable value. Cost is determined using the specific identification method, as each autonomous vehicle is individually serialized and tracked, and the Company is able to identify the specific cost associated with each unit. The specific cost of each vehicle is transferred to deferred costs upon deployment. The Company periodically reviews inventory for excess quantities, obsolescence, or other indicators that the carrying value may not be recoverable. If the carrying value of inventory exceeds its net realizable value, the Company records a write-down to net realizable value, with the adjustment recognized in cost of goods sold.
Property and Equipment
Property and equipment is stated at cost less accumulated
depreciation. Work in progress includes production costs and costs of materials used in the development of the Company’s autonomous
driving software. Assets are held as work in progress until placed into service, at which date depreciation commences over the estimated
useful lives of the respective assets.
| Useful life | |||
| Property and Equipment | (years) | ||
| Automobiles (DMV-registered) | |||
| Machinery, tools and equipment | |||
| Computer and equipment | |||
| Internal-use software | |||
| Furniture and fixtures | |||
| Leasehold improvements |
Operating Leases
The Company accounts for leases in accordance with ASC Topic 842 (“ASC 842”), Leases. All contracts are evaluated to determine whether or not they represent a lease. A lease conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Leases are classified as finance or operating in accordance with the guidance in ASC 842. The Company does not hold any finance leases. The Company recognized a right-of-use asset and lease liability in the condensed consolidated balance sheets under ASC 842 on the office space lease in Mountain View, California that commenced in May 2025 and the previous office space lease in Menlo Park, California that ended in May 2025. Lease expense will be recognized on a straight-line basis over the remaining term of the lease. Operating leases are recognized on the balance sheet as right-of-use assets, and operating lease liabilities.
Costs to Develop Software
The Company incurs costs related to internally developed software. Based on the nature of the software, the Company capitalizes software costs under the following guidance.
8
Internal-Use Software costs
The Company determined when to capitalize its internal-use software after planning and design efforts are successfully completed. Management has implicitly authorized funding and the software is expected to be completed and used as intended. The Company determines the amount of internal software costs to be capitalized based on the amount of time spent by the developers on projects in the application stage of development. There is judgment involved in estimating time allocated to a particular project in the application stage. Costs associated with building or significantly enhancing the internally built software platform for internal use are capitalized, while costs associated with planning new developments and maintaining the internally built software platforms are expensed as incurred. Capitalized costs include certain payroll and stock compensation costs, as well as subscription server and consulting costs.
Internal-use software is classified as property
and equipment and is amortized on a straight-line basis over their estimated useful life of
Costs to Develop Software to be Sold, Leased or Otherwise Marketed
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 the product. Once technological feasibility is established, certain payroll and stock compensation, occupancy, and professional service costs that are incurred to develop functionality for the Company’s software and internally built software platforms, as well as certain upgrades and enhancements that are expected to result in enhanced functionality are capitalized. Judgment is required in determining when technological feasibility of a product is established. Management has determined that technological feasibility is established when a working model is complete. After technological feasibility is established, judgement is required to determine the amount of payroll and stock-based compensation costs to be capitalized on the remaining development efforts. These costs will continue to be capitalized until such time as when the product or enhancement is available for general release to customers.
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
During the third quarter of 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.
9
Long-Lived Assets and Finite Lived Intangibles
The Company has finite-lived intangible assets
consisting of patents and trademarks. These assets are amortized on a straight-line basis over their estimated remaining economic lives.
The patents and trademarks are amortized over
The Company reviews its long-lived assets and finite-lived intangibles for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The events and circumstances the Company monitors and considers include significant decreases in the market price of similar assets, significant adverse changes to the extent and manner in which the asset is used, an adverse change in legal factors or business climate, an accumulation of costs that exceed the estimated cost to acquire or develop a similar asset, and continuing losses that exceed forecasted costs. The Company assesses the recoverability of these assets by comparing the carrying amount of such assets or asset group to the future undiscounted cash flow it expects the assets or asset group to generate. The Company recognizes an impairment loss if the sum of the expected long-term undiscounted cash flows that the long-lived asset is expected to generate is less than the carrying amount of the long-lived asset being evaluated. An impairment charge would then be recognized equal to the amount by which the carrying amount exceeds the fair value of the asset.
For the three months ended March 31, 2026 and 2025, there were impairment charges.
Income Taxes
The Company accounts for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis.
A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. Due to the Company’s lack of earnings history, the net deferred tax assets have been fully offset by a valuation allowance as of March 31, 2026 and December 31, 2025 (see Note 11. Income Taxes).
There are no uncertain tax positions that would require recognition in the condensed consolidated financial statements. If the Company were to incur an income tax liability in the future, interest on any income tax liability would be reported as interest expense and penalties on any income tax would be reported as income taxes. Management’s conclusions regarding uncertain tax positions may be subject to review and adjustment at a later date based upon on ongoing analysis of or changes in tax laws, regulations and interpretations thereof as well as other factors.
Common Stock Warrants
The Company issued to its lead underwriter in
the Company’s IPO warrants to purchase up to
The Company also applied the guidance in ASC 340-10-S99-1, Other Assets and Deferred Costs, that states specific incremental costs directly attributable to a proposed or actual offering of equity securities may properly be deferred and charged against the gross proceeds of the offering. The Company treated the valuation of the warrants as directly attributable to the issuance of an equity contract, and accordingly, classified the warrants as additional paid-in capital.
10
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. 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 condensed consolidated balance sheet as of March 31, 2026. The Series B warrants were re-measured utilizing the Black Scholes model immediately before exercise and were fully exercised in February 2025 (see Note 7. Capital Structure).
Stock-based Compensation
The Company recognizes the cost of share-based awards granted to employees and directors based on the estimated grant-date fair value of the awards. Cost is recognized on a straight-line basis over the service period, which is generally the vesting period of the award. The Company recognizes stock-based compensation cost and reverses previously recognized costs for unvested awards in the period forfeitures occur, if any. The Company determines the fair value of stock options using the Black-Scholes option pricing model, which is impacted by the fair value of common stock, expected price volatility of common stock, expected term, risk-free interest rates, and expected dividend yield (see Note 9. Stock-based Compensation Expense).
Net Loss Per Share Attributable to Common Stockholders
The Company computes loss per share attributable to common shareholders by dividing net loss attributable to common shareholders by the weighted-average number of common shares outstanding. Diluted net loss per share reflects the potential dilution that could occur if securities or other contracts to issue shares were exercised into shares. In calculating diluted net loss per share, the numerator is adjusted for the change in the fair value of the shares (only if dilutive) and the denominator is increased to include the number of potentially dilutive common shares assumed to be outstanding (see Note 8. Net Loss per Share Attributable to Common Stockholders).
Research and Development Expense
Research and development expenses consists primarily of outsourced engineering services, internal engineering and development expenses, materials, labor and stock-based compensation of Company personnel involved in the development of the Company’s products and services, and allocated lease costs based on the approximate square footage area used in research and development activities. Research and development costs are expensed as incurred.
General and Administrative Expense
General and administrative expense consist primarily
of personnel costs, facilities expenses, depreciation and amortization, travel, and advertising costs. Advertising costs are expensed
as incurred in accordance with ASC 720-35, “Other Expense – Advertising Costs”, other than trade show expenses which
are deferred until occurrence of the future event. Advertising costs for the three months ended March 31, 2026 and 2025 were $
Contingencies
The Company recognizes a liability with regard to loss contingencies when it believes it is probable a liability has occurred and the amount can be reasonably estimated. If some amount within a range of loss appears at the time to be a better estimate than any other amount within the range, the Company accrues that amount. When no amount within the range is a better estimate than any other amount the Company accrues the minimum amount in the range (see Note 12. Commitments and Contingencies).
11
Segment Reporting
The Company operates as one operating segment.
The one operating segment generates revenues from EAS subscriptions with relative add-on offerings such as hardware revenue and other revenue (i.e., deployment/set up costs) and fixed-price NRE contracts related to customer-specific configuration 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.
For the Company’s one segment, the executive management team use revenue and net loss to allocate resources, both reported on the condensed Consolidated Statement of Operations as Revenue and Net loss. The executive management team also uses revenue and net loss, along with non-financial inputs and qualitative information, to evaluate the Company’s performance, establish compensation, monitor budget versus actual results, and decide the level of investment in various operating activities and other capital allocation activities. The measure of segment assets is reported on the condensed Consolidated Balance Sheet as Total assets.
Reclassifications
Certain prior period amounts on the consolidated
balance sheet have been reclassified to conform to the current period presentation. Specifically, deferred contract costs as of December
31, 2025 have been reclassified to separately present the short-term portion of $
Certain prior period balances for the consolidated financial statement for March 31, 2026 have been reclassified to conform with the current year presentation. These reclassifications relate to inventory and accounts and other receivables that were previously presented as prepaid expenses and other current assets, as well as deferred revenue that was previously presented as accrued expenses and other current liabilities. These reclassifications had no impact on previously reported net loss, total assets, or total shareholders’ equity.
Revenue Recognition
The Company accounts for revenue in accordance with ASC 606, Revenue from Contracts with Customers. The Company generates revenue from vehicle units, including tuggers equipped with DriveMod Kits (“DMKs”), which are integrated with the Company’s proprietary Enterprise Autonomy Suite (“EAS”) software, or leases of hardware, and other professional services. These offerings are highly interdependent and integrated to provide customers with a fully functional autonomous industrial vehicle solution. Because these components are not separately identifiable from one another in the context of the contract, the Company accounts for these combined goods and services as a single performance obligation.
General Recognition Principle. The Company recognizes revenue when control of the combined autonomous vehicle and software solution is transferred to the customer in an amount that reflects the consideration to which the Company expects to be entitled in exchange for the goods and services.
Method of Measuring Progress. Revenue associated with the Company’s integrated autonomous vehicle solution is generally recognized over time because the customer simultaneously receives and consumes the benefits provided by the Company’s performance as the services are performed.
The Company measures progress toward satisfaction of the performance obligation using an output method based on the passage of time, recognizing revenue ratably over the estimated customer life, which is typically three years. In accordance with ASC 606-10-55-17 through 55-18, the output method reflects the pattern in which control of the promised goods and services is delivered to the customer, who receives continuous access to the integrated autonomous vehicle functionality, including the software-enabled operation, monitoring, updates, and support necessary for the system to function as intended.
Management believes that recognizing revenue on a straight-line basis over the contract period faithfully depicts the Company’s performance in transferring control of the integrated solution, as the customer receives and consumes the benefits of the solution evenly throughout the contract term.
Payment Terms. Payment terms vary by customer and contract but generally do not exceed 90 days.
Discounts. The Company may offer pricing discounts to certain customers, primarily to establish relationships with new customers. These discounts are reflected in the contractual transaction price at contract inception. Revenue is recognized based on the discounted contract price and is accounted for in the same manner as other contracts. The Company recognizes revenue from these arrangements ratably over the contract term, consistent with the pattern in which the customer receives and consumes the benefits of the integrated autonomous vehicle solution.
Stand-Alone Selling prices. The Company also applies judgment in estimating stand-alone selling prices when allocating the transaction price to performance obligations. Stand-alone selling prices are generally determined based on observable prices when available or, when not directly observable, are estimated using management’s assessment of expected pricing for similar goods and services and market conditions.
12
Material Rights and Renewal Options. The Company’s contracts with customers may include renewal or other options at stated prices. Determining whether these options provide the customer with a material right, and therefore represent a separate performance obligation, requires judgment. The Company evaluates the pricing of each option to determine whether it reflects the stand-alone selling price for the underlying goods or services or whether it provides the customer with a discount that would not be available without entering into the initial contract.
In certain legacy customer contracts, the Company has provided customers with the option to extend the contract term for an additional one-year period. Management evaluates these renewal provisions to determine whether they provide a material right by comparing the renewal pricing to the expected stand-alone selling price of the services at the time of renewal. This assessment requires judgment and includes consideration of expected pricing for similar services, historical pricing practices, and market conditions.
If a material right exists, the Company allocates a portion of the transaction price to the option and recognizes the related revenue when the option is exercised or expires.
Significant financing component. In certain arrangements, the Company receives payment from a customer either before or after the performance obligation has been satisfied. The Company’s contracts with customer prepayment terms do not include a significant financing component because the prepayment terms are designed to provide customers with contractual protections and billing convenience, not to provide financing to the customer or receive financing from the customer.
Contract modifications. The Company may modify contracts to offer customers additional products or services. Each of the additional products and services is evaluated to determine whether it is distinct from the goods or services transferred prior to the modification. The Company evaluates whether the contract price for the additional products and services reflects the stand-alone selling price as adjusted for facts and circumstances applicable to that contract. In these cases, the Company accounts for the additional products or services as a separate contract. In other cases where the pricing in the modification does not reflect the stand-alone selling price for the modified goods or services, the Company accounts for the modification either (i) on a prospective basis if the remaining goods and services are distinct from those already transferred, or (ii) on a cumulative catch-up basis if the remaining goods and services are not distinct from those already transferred.
Warranties. The Company provides assurance-type warranties on certain hardware components that guarantee the products will perform as intended. These warranties are not sold separately and do not represent a separate performance obligation. The Company would account for assurance-type warranties as loss contingencies and record a warranty liability when it is probable that costs will be incurred and the amount can be reasonably estimated; however, the Company does not currently have sufficient historical information to reasonably estimate potential warranty costs and, therefore, has not recorded a warranty liability.
Principal vs. Agent Considerations. Judgment is required in determining whether we are the principal or agent in transactions with dealers, OEMs and end-users. We evaluate the presentation of revenue on a gross or net basis based on whether we control the service provided to the end-user and are the principal (i.e., “gross”), or we arrange for other parties to provide the service to the end-user and are an agent (i.e., “net”). In making this determination, the Company considers several factors, including whether the Company is primarily responsible for fulfilling the promise to provide the specified goods or services, bears inventory risk before the goods are transferred, and has discretion in establishing pricing for the specified goods or services. This determination also impacts the presentation of incentives provided to dealers and OEMs and discounts and promotions offered to end-users to the extent they are not customers.
Cost to Obtain a Contract. The Company capitalizes incremental costs incurred to obtain contracts, principally sales commissions and third-party referral fees. These costs are amortized on a straight-line basis over the estimated customer life and recognized in general and administrative expenses.
13
Costs to Fulfill a Contract. The Company capitalizes such costs when they are (i) incremental to obtaining that specific contract, (ii) expected to be recovered, and (iii) subject to an amortization period exceeding one year. Capitalized fulfillment costs are amortized on a straight-line basis over the expected period of benefit, which corresponds to the contractual term, and are recognized in cost of revenue. The Company evaluates capitalized fulfillment costs for impairment at each reporting date.
The short-term portion of deferred contract
costs totaled $
Taxes collected from customers. The Company collects and remits certain taxes assessed by governmental authorities on its revenue transactions, including sales, use, value-added, and excise taxes. These taxes are excluded from the transaction price and are not included in reported revenue. Shipping and handling fees billed to customers are included in net sales; the related costs are included in cost of revenue.
Judgments and estimates. Accounting for contracts recognized over time requires judgment in estimating the transaction price, the measure of progress, and expected contract costs. Due to uncertainties inherent in the estimation process, it is possible that estimates of costs to complete a performance obligation will be revised in the near term. The Company reviews and updates its contract-related estimates regularly, and records adjustments as needed. There were no material adjustments to contract-related estimates during the three months ended March 31, 2026.
Concentration of Credit Risk
The following table sets forth the percentages of total revenue for customers that represents 10% or more of the respective amounts for the three months ended March 31, 2026 and 2025, respectively.
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Customer A | % | % | ||||||
| Customer B | % | % | ||||||
| Customer C | % | |||||||
| Customer D | % | |||||||
| * |
Cost of Revenue
Cost of revenue consists primarily of direct labor and related fringe benefits for internal engineering resources, and deployment related travel costs incurred for the completion of the contracts and hardware costs.
Recent Accounting Standards
In November 2024, the FASB issued ASU 2024-03, “Disaggregation of Income Statement Expenses,” which requires the disaggregated disclosure of certain income statement items. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026 and interim periods beginning after December 15, 2027, with early adoption permitted. The Company has not adopted this standard early and is currently evaluating the impact of this amendment on its consolidated financial statements.
In July 2025, the FASB issued ASU 2025-05, “Measurement of Credit Losses for Accounts Receivable and Contract Assets,” which provides a practical expedient related to the estimation of expected credit losses for current accounts receivable and contract assets arising from transactions under ASC 606. ASU 2025-05 is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company adopted ASU 2025-05 effective January 1, 2026. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements.
In September 2025, the FASB issued ASU 2025-06, “Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software,” which modernizes the guidance for internal-use software costs by replacing the existing project stage model with a principles-based framework for cost capitalization. ASU 2025-06 is effective for annual reporting periods beginning after December 15, 2027, for all entities, including interim periods within those annual periods, with early adoption permitted. The Company has not adopted this standard early and is currently evaluating the impact of this amendment on its consolidated financial statements.
14
3. Revenue and Contracts with Customers
Contract Balances
Timing differences between revenue recognized, billings, and customer payments result in contract assets and contract liabilities. Contract assets represent revenue recognized in excess of amounts billed to customers. Contract liabilities represent payments received from customers in advance of satisfying the related performance obligations.
The Company’s contract balances
consist primarily of accounts receivable and deferred revenue (contract liabilities). Accounts receivable represents the
Company’s unconditional rights to consideration for goods and services transferred to customers. Contract liabilities
represent amounts billed or collected in advance of satisfying performance obligations and are recognized as revenue as the related
performance obligations are satisfied. As of March 31, 2026 and December 31, 2025, accounts receivable
totaled $
Revenue Recognized from Prior Period Contract Liabilities
For the three months ended March 31, 2026 and 2025, the
Company recognized revenue of $
Remaining Performance Obligations
As of March 31, 2026, the remaining performance obligations on
existing contracts are $
For the three months ended March 31, 2026 and 2025, revenue was $
4. Balance Sheet Components
Financial Instruments
Funds in the Company’s investment brokerage account were held
in cash equivalents, consisting of a money market account, along with short-term investments consisting of U.S. government treasury bills,
which are accounted for as held-to-maturity (“HTM”) securities, and classified as Level 1 in the hierarchy of fair value measurements.
HTM securities are carried at amortized cost and, as a result, are not remeasured to fair value on a recurring basis. All of the Company’s
short-term investments will mature within one year of March 31, 2026.
| As of March 31, 2026 | As of December 31, 2025 | |||||||||||||
| Financial assets | Level | Amount | Level | Amount | ||||||||||
| Cash equivalents: | ||||||||||||||
| Money market account | 1 | $ | 1 | $ | ||||||||||
| U.S. government treasury bills maturing < 90 days | 1 | 1 | ||||||||||||
| Short-term investments: | ||||||||||||||
| U.S. government treasury bills maturing > 90 days | 1 | 1 | ||||||||||||
| $ | $ | |||||||||||||
15
Accounts and Other Receivables
As of March 31, 2026 and December 31, 2025, accounts receivable
was $
As of March 31, 2026 and December 31, 2025, other receivables
totaled $
Inventory
Inventory is stated at the lower of cost or net realizable value. Cost is determined using the specific identification method, as each autonomous vehicle is individually serialized and tracked, allowing the Company to identify the specific cost associated with each unit. The specific cost of each vehicle is transferred to deferred costs upon deployment.
As of March 31, 2026 and December 31, 2025,
inventory totaled $
Prepaid expenses and other current assets
Prepaid expenses and other current assets are comprised of the following:
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Prepaid Expenses | $ | $ | ||||||
| Short-term Deposits | ||||||||
| Short-term Deferred Costs | ||||||||
| Other current assets | ||||||||
| Total prepaid and expenses and other current assets | $ | $ | ||||||
Property and Equipment, Net
Property and equipment is comprised of the following:
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Automobiles (DMV-registered) | $ | $ | ||||||
| Machine, tools and equipment | ||||||||
| Computers and equipment | ||||||||
| Internal-Use Capitalized software | ||||||||
| Furniture and fixtures | ||||||||
| Leasehold improvements | ||||||||
| Testing equipment (Work in Progress) | ||||||||
| Property and equipment, gross | ||||||||
| Less: accumulated depreciation and amortization | ( | ) | ( | ) | ||||
| Total property and equipment, net | $ | $ | ||||||
Depreciation expense for the three months
ended March 31, 2026 and 2025 was $
Accounts Payable
Accounts payable includes independent director
fees payable of $
16
Deferred Revenue
Deferred revenue consists primarily of amounts billed to customers for tugger sales and related services for which revenue has not yet been recognized. Revenue is recognized as the Company satisfies its performance obligations in accordance with its revenue recognition policy.
As of March 31, 2026 and December
31, 2025, deferred revenue related to tugger sales totaled $
Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities are comprised of the following:
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Credit card payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Accrued payroll | ||||||||
| Total accrued expenses and other current liabilities | $ | $ | ||||||
5. Operating Leases
Operating lease right-of-use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Lease payments consist of the fixed payments under the arrangement, less any lease incentives, such as tenant improvement allowances. Variable costs, such as maintenance and utilities based on actual usage, are not included in the measurement of right-of-use (“ROU”) assets and lease liabilities but are expensed when the event determining the amount of variable consideration to be paid occurs. As the implicit rate of the leases is not determinable, the Company uses an incremental borrowing rate (“IBR”) based on the information available at the lease commencement date in determining the present value of lease payments. Rather than relying on a single rate source, the Company evaluated three data points calculated from the three standard methods to determine a reasonable, supportable, and entity-specific IBR consistent with ASC 842. Based on this analysis, the rate applied is the median of the available supportable rates, which reflects a secured borrowing assumption and balances entity-specific credit risk and market benchmarks. Lease expenses are recognized on a straight-line basis over the lease term.
The Company leases its office space in Mountain View, California, under
an operating lease agreement dated March 25, 2025, originally signed for a term of six and one half years that commenced in May 2025.
Monthly payments are approximately $
The Company also leases storage containers from a third-party provider
for use on-site in Mountain View, California, at a monthly rate of $
The Company’s right-of-use asset, net balance as of March 31, 2026 and December 31, 2025, respectively are presented on the Company’s consolidated balance sheets.
The Company’s future lease payments under the non-cancellable lease as of March 31, 2026, which are presented as lease liabilities on the Company’s condensed consolidated balance sheet, are as follows:
| Operating | ||||
| Period | Lease | |||
| Remainder in 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| 2031 | ||||
| Total lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Present value of lease liability | $ | |||
17
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Weighted-average remaining lease term (in years) | ||||||||
| Weighted -average discount rate | % | % | ||||||
Lease expense was $
6. Intangible Assets, Net
The gross carrying amount and accumulated amortization of separately identifiable intangible assets are as follows:
| As of March 31, 2026 | ||||||||||||||||||||
| Gross | Fair | Net | ||||||||||||||||||
| Carrying | Accumulated | Market Value | Carrying | |||||||||||||||||
| Amount | Amortization | Adjustment | Impairment | Amount | ||||||||||||||||
| Patents | $ | $ | ( | ) | $ | $ | $ | |||||||||||||
| Trademark | ( | ) | ||||||||||||||||||
| Total intangible assets | $ | $ | ( | ) | $ | $ | $ | |||||||||||||
| As of December 31, 2025 | ||||||||||||||||||||
| Gross | Fair | Net | ||||||||||||||||||
| Carrying | Accumulated | Market Value | Carrying | |||||||||||||||||
| Amount | Amortization | Adjustment | Impairment | Amount | ||||||||||||||||
| Patents | $ | $ | ( | ) | $ | $ | $ | |||||||||||||
| Trademark | ( | ) | ||||||||||||||||||
| Total intangible assets | $ | $ | ( | ) | $ | $ | $ | |||||||||||||
Amortization expense for the three months
ended March 31, 2026 and 2025 was $
ASC 360, Property, Plant, and Equipment, defines a multi-step process to test long-lived assets, including intangible assets, for recoverability that if failed would indicate impairment. First, the Company must consider whether indicators of impairment of long-lived assets are present.
Next, the Company must review the long-lived assets to define asset group(s) that would reflect the lowest level of assets to which discrete cash flows are identifiable, and test these asset groups for impairment.
For the three months ended March 31, 2026 and 2025, the Company did not record any impairment charges related to long-lived assets.
It was determined for all remaining long-lived assets that there were no triggering events, and therefore, no impairment charges to long-lived assets were necessary as of March 31, 2026 and December 31, 2025.
Estimated amortization expense for all intangible assets subject to amortization in future years is expected to be:
| Years ended December 31, | Amortization | |||
| Remainder 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total | $ | |||
18
7. Capital Structure
Common Stock
As of March 31, 2026 and December 31, 2025 , the Company
is authorized to issue
Preferred Stock
In October 2021, the Company amended its Certificate of Incorporation
and revised the number of preferred stock shares authorized for issuance to
Reverse Stock Split
On January 30, 2025, the Company’s stockholders
voted to authorize the Company’s Board of Directors to effect a reverse stock split of the outstanding shares of common stock within
a range of
The Company’s primary reason for effecting the reverse stock splits was to increase the per share price of our common stock to meet Nasdaq’s minimum bid price requirement for continued listing on Nasdaq.
Common Stock Offerings
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,
On June 27, 2025, the Company entered into a securities purchase agreement
pursuant to which the Company agreed to sell and issue, in a registered direct offering,
On June 26, 2025, the Company entered into a securities purchase agreement
pursuant to which the Company agreed to sell and issue, in a registered direct offering,
At the Market Equity Financing
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 $
As of March 31, 2026, a total of
19
Common Stock Warrants
The following warrants were outstanding as of March
31, 2026 and December 31, 2025, each of which is exercisable on a one-for-one basis for shares of the Company’s common stock
(i.e., one warrant for one share). All warrants contain standard anti-dilution protections in the event of subsequent rights offerings,
stock splits, stock dividends or other extraordinary dividends, or other similar changes in the Company’s common stock or capital
structure, and none of which have any participating rights for any losses. All Series B warrants, which were issued as a part of the December
20, 2024 public offering, were fully exercised as of February 11, 2025 utilizing the cashless exercise provision in the warrant agreement.
| Warrants | Exercise | Expiration | Fair | |||||||||||
| Securities into which warrants are convertible | outstanding | Price | Date | value | ||||||||||
| Common stock (Initial Public Offering) | $ | $ | ||||||||||||
| Common stock (Private Placement) | $ | |||||||||||||
| Common stock (Series A) | $ | |||||||||||||
| Total | $ | |||||||||||||
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 Initial Public Offering and Private Placement 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 warrants are not marked-to-market each reporting period, and thus there is no impact to earnings. Any future exercises of the warrants will be recorded as cash received and recorded in cash, with a corresponding increase to common stock and additional paid-in capital in stockholders’ equity.
The Company used the following assumptions for March 31, 2026 and December 31, 2025:
| Initial | ||||||||
| Public | Private | |||||||
| Offering | Placement | |||||||
| Warrants | Warrants | |||||||
| (Oct 2021) | (Apr 2022) | |||||||
| Fair value of underlying securities | $ | $ | ||||||
| Expected volatility | % | % | ||||||
| Expected term (in years) | ||||||||
| Risk-free interest rate | % | % | ||||||
Under ASC 815-40-35-8, Derivatives and Hedging
Reclassification of Contracts, shareholder approval on January 30, 2025, initiated the price reset period, resulting in a fixed exercise
price for the warrants.
| Series A | ||||
| Warrants | ||||
| Fair value of underlying securities | $ | |||
| Expected volatility | % | |||
| Expected term (in years) | ||||
| Risk-free interest rate | % | |||
The fair value of the Series B warrants were re-measured prior to exercise using the Black-Scholes model, now that the exercise price has been fixed, based on the following assumptions:
| Series B | ||||
| Warrants | ||||
| Fair value of underlying securities | $ | |||
| Expected volatility | % | |||
| Expected term (in years) | ||||
| Risk-free interest rate | % | |||
20
8. Net Loss Per Share Attributable to Common Stockholders
In accordance with ASC 260, basic and diluted
earnings per shares amounts, and weighted-average shares outstanding have been restated for all periods presented to reflect the effect
of the stock dividends and reverse stock split.
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Net loss attributable to common stockholders | $ | ( | ) | $ | ( | ) | ||
| Basic and diluted weighted average common shares outstanding | ||||||||
| Loss per share: | ||||||||
| Basic and diluted | $ | ( | ) | $ | ( | ) | ||
Basic loss per share is based upon the weighted average number of shares of common stock outstanding during the period. Diluted loss per share would include the effect of unvested restricted stock awards and the convertible preferred stock; however, such items were not considered in the calculation of the diluted weighted average common shares outstanding since they would be anti-dilutive.
9. Stock-based Compensation Expense
Stock-Based Compensation
The Company uses stock-based compensation, including restricted stock units, to provide long-term performance incentives for its employees and board directors. The Company measures employee and director stock-based compensation awards based on the award’s estimated fair value on the date of grant. Forfeitures are recognized as they occur. Expense associated with these awards is recognized using the straight-line attribution method over the requisite service period for stock options, restricted stock units (“RSUs”) and restricted stock and is reported in our condensed consolidated statements of stockholders’ equity.
The fair value of the Company’s stock options
is estimated using the Black-Scholes option-pricing model. The resulting fair value is recognized on a straight-line basis over the period
during which an employee is required to provide service in exchange for the award. The Company has elected to recognize forfeitures as
they occur. Stock options generally vest over
Determining the grant date fair value of options requires management to make assumptions and judgments. These estimates involve inherent uncertainties and if different assumptions had been used, stock-based compensation expense could have been materially different from the amounts recorded.
The assumptions and estimates for valuing stock options are as follows:
| ● | Fair value per share of Company’s common stock. Because there was no public market for Cyngn’s common stock prior to the IPO, its Board of Directors, with the assistance of a third-party valuation specialist, determined the common stock fair value at the time of the grant of stock options by considering a number of objective and subjective factors, including its actual operating and financial performance, market conditions and performance of comparable publicly traded companies, developments and milestones in the company, and the likelihood of achieving a liquidity event among other factors. Since the Company’s common stock began publicly trading on the Nasdaq, the value of its common stock underlying stock options or RSUs have been valued based on prevailing market prices. |
| ● | Expected volatility. Because the Company’s common stock had no publicly traded history prior to the IPO, it estimated the expected volatility using a combination of its stock price volatility and the stock price volatility of peer companies, for a period equal to the expected term of the options. |
| ● | Expected term. The expected term of employee stock options represents the weighted-average period that the stock options are expected to remain outstanding. The Company estimates the expected term of options granted based upon the “simplified method” provided under Staff Accounting Bulletin, Topic 14, or SAB Topic 14. |
| ● | Risk-free interest rate. The risk-free interest rate is based on the U.S. Treasury yield curve in effect during the period the options were granted corresponding to the expected term of the awards. |
| ● | Estimated dividend yield. The estimated dividend yield is |
21
Equity Incentive Plans
In February 2013, the Company’s Board of Directors adopted the 2013 Equity Incentive Plan (“2013 Plan”). The 2013 Plan authorizes the award of stock options, stock appreciation rights, restricted stock awards, stock appreciation rights, RSUs, performance awards, and other stock or cash awards.
In October 2021, the Company’s Board of Directors adopted the Cyngn Inc. 2021 Equity Incentive Plan (the “2021 Plan”). The 2021 Plan replaces the 2013 Plan. However, awards outstanding under the 2013 Plan will continue to be governed by their existing terms.
In November 2023, the shareholders of the Company
approved an amendment to the Company’s 2021 Equity Incentive Plan to increase the number of shares authorized for issuance by
As of March 31, 2026 and December
31, 2025, approximately
The following table summarizes information about the Company’s stock options outstanding as well as stock options vested and exercisable as of March 31, 2026, and activity during the three month period then ended:
| Weighted- | ||||||||||||||||
| average | ||||||||||||||||
| Weighted- | remaining | |||||||||||||||
| average | contractual | Aggregate | ||||||||||||||
| exercise | term | intrinsic | ||||||||||||||
| Shares | price | (years) | value | |||||||||||||
| Outstanding as of December 31, 2025 | $ | $ | ||||||||||||||
| Granted | ||||||||||||||||
| Exercised | ||||||||||||||||
| Cancelled/forfeited | ( | ) | $ | |||||||||||||
| Outstanding as of March 31, 2026 | $ | $ | ||||||||||||||
| Vested and expected to vest at March 31, 2026 | $ | $ | ||||||||||||||
| Vested and exercisable at March 31, 2026 | $ | $ | ||||||||||||||
For the three months ended March 31, 2026, no restricted stock units (RSUs) were granted nor vested.
The fair value of a stock option is estimated using the Black-Scholes option-pricing model that takes into account as of the grant date the exercise price and expected life of the option, the current price of the underlying stock and its expected volatility, expected dividends on the stock, and the risk-free interest rate for the expected term of the option. The Company has used the simplified method in calculating the expected term of all option grants based on the vesting period and contractual term. Compensation costs related to share-based payment transactions are recognized in the financial statements upon satisfaction of the requisite service or vesting requirements.
The weighted average per share grant-date fair
value of options granted during the three months ended March 31, 2026 and 2025 was $
22
The following weighted average assumptions were used in estimating the grant date fair values on March 31, 2026 and 2025:
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Fair value of common stock | $ | $ | ||||||
| Expected term (in years) | ||||||||
| Risk-free rate | % | % | ||||||
| Expected volatility | % | % | ||||||
| Dividend yield | % | % | ||||||
The Company recorded stock-based compensation
expense from stock options and RSUs of approximately $
As of March 31, 2026 total stock-based compensation
cost related to outstanding unvested stock options that are expected to vest was $
10. Retirement Savings Plan
Effective November 17, 2017, the Company established the Cyngn Inc. 401(k) Plan for the exclusive benefit of all eligible employees and their beneficiaries with the intention to provide a measure of retirement security for the future. This plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA) and qualifies under Section 401(k) of the Internal Revenue Code. The Company did not offer and has not provided a company match for its 401(k) Plan.
11. Income Taxes
For the three months ended March 31, 2026
and 2025, the Company recorded no income tax expense.. The effective tax rate is
For financial reporting purposes, the Company’s effective tax rate used for the interim periods is based on the estimated full-year income tax rate. For the three months ended March 31, 2026, the Company’s effective tax rate differs from the statutory rate, primarily due to a valuation allowance recorded against the net deferred tax asset balance. Currently, the Company is not under examination by any taxing authority.
12. Commitments and Contingencies
Legal Proceedings
From time to time, the Company may become involved in legal proceedings arising in the ordinary course of business. Regardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity, reputational harm and other factors. The assessment as to whether a loss is probable or reasonably possible, and as to whether such loss or a range of such loss is estimable, often involves significant judgment about future events, and the outcome of litigation, which is inherently uncertain.
In May 2025, a former contractor of the Company filed a complaint alleging
breach of contract and related claims arising from certain professional services agreements entered into between 2021 and 2024. The complainant
sought approximately $
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In August 2025, a former employee filed a complaint
with the U.S. Department of Labor, Occupational Safety and Health Administration (“OSHA”), alleging retaliation in connection
with the employee’s internal reporting. In April 2026, the matter was settled and paid in full for $
Under the terms of a settlement agreement with
a former placement agent, the Company may be obligated to pay a $
There is no other material pending or threatened litigation against the Company that remains outstanding as of March 31, 2026.
13. Risks and Uncertainties
The Company’s business operations, operating results, and financial condition are vulnerable to certain risks and uncertainties including:
| ● | Inflation and its related impact on costs and expenditures on domestic and foreign-sourced materials and services; |
| ● | Rising interest rates and its impact on the equity markets, investment valuations, and interest rate-sensitive calculations such as discount rate assumptions used in cash flow projections and going concern assessments; |
| ● | Effects of the Russia-Ukraine conflict such as possible cyberattacks and potential disruptions in the banking systems and capital markets and the supply chain; and |
| ● | Other factors beyond its control such as natural disasters, terrorism, civil unrest, infectious diseases and pandemics including COVID-19 and its variants. |
The Company is unable to predict and quantify at this time the extent of the related potential adverse effects but continuously monitors these risks and uncertainties on its future operations and financial performance.
14. Subsequent Events
The Company has evaluated subsequent events through May 14, 2026, the date the financial statements were available to be issued.
In April 2026, the Company settled two previously
disclosed legal matters. A breach of contract complaint filed by a former contractor in May 2025 was settled and paid in full for $
In May 2026, in connection with the registered
direct offering that closed on March 17, 2026,
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The objective of this Management’s Discussion and Analysis is to allow investors to view the Company from management’s perspective, considering items that would have a material impact on future operations. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the accompanying notes thereto included elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the “Form 10-K”), which we filed with the U.S. Securities and Exchange Commission (“SEC”) on March 14, 2025. The information in this discussion contains forward-looking statements and information within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are subject to the “safe harbor” created by those sections. These forward-looking statements include, but are not limited to, statements concerning our strategy, future operations, future financial position, future revenues, projected costs, prospects and plans and objectives of management. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, the risks set forth in our other filings with the SEC, including the Form 10-K. The forward-looking statements are applicable only as of the date on which they are made, and we do not assume any obligation to update any forward-looking statements.
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.
Overview
We are an autonomous vehicle (“AV”) technology company that is focused on addressing industrial uses for autonomous vehicles. We believe that technological innovation is needed to enable adoption of autonomous industrial vehicles that will address the substantial industry challenges that exist today. These challenges include labor shortages, lagging technological advancements from incumbent vehicle manufacturers, and high upfront investment commitment.
Industrial sites are typically rigid environments with consistent standards as opposed to city streets that have more variable environmental and situational conditions and diverse regulations. These differences in operational design domains will be major factors that make proliferation of industrial AVs in private settings achievable with less time and resources than AVs on public roadways. Namely, safety and infrastructure challenges are cited as roadblocks that have delayed AVs from operating on public roadways at scale. Our focus on industrial AVs simplifies these challenges because industrial facilities (especially those belonging to a single end customer that operates similarly at different sites) share much more in common than different cities do. Furthermore, our end customers own their infrastructure and can make changes more easily than governments can on public roadways.
With these challenges in mind, we are developing an Enterprise Autonomy Suite (“EAS”) that leverages advanced in-vehicle autonomous driving technology and incorporates leading supporting technologies like data analytics, asset tracking, fleet management, cloud, and connectivity. EAS provides a differentiated solution that we believe will drive pervasive proliferation of industrial autonomy and create value for customers at every stage of their journey towards full automation and the adoption of Industry 4.0.
EAS is a suite of technologies and tools that we divide into three complementary categories:
| 1. | DriveMod, our modular industrial vehicle autonomous driving software; |
| 2. | Cyngn Insight, our customer-facing tool suite for monitoring and managing AV fleets (including remotely operated vehicles) and generating/aggregating/analyzing data (including the IoT gateway device); and |
| 3. | Cyngn Evolve, our internal tool suite and infrastructure that facilitates artificial intelligence (“AI”) and machine learning (“ML”) training to continuously enhance our algorithms and models and provides a simulation framework (both record/rerun and synthetic scenario creation) to ensure that data collected in the field can be applied to validating new releases. |
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Legacy automation providers manufacture specialized industrial vehicles with integrated robotics software for rigid tasks, limiting automation to narrow uses. Unlike these specialized vehicles, EAS can be compatible with the existing vehicle assets in addition to new vehicles that have been purposely built for autonomy by vehicle manufacturers. EAS is operationally expansive, vehicle agnostic, and compatible with indoor and outdoor environments. By offering flexible autonomous services, we aim to remove barriers to industry adoption.
We understand that scaling of autonomy solutions will require an ecosystem made up of different technologies and services that are enablers for AVs. Our approach is to forge strategic collaborations with complementary technology providers that accelerate AV development and deployment, provide access to new markets, and create new capabilities. Our focus on designing DriveMod to be modular will combine with our experience deploying AV technology on diverse industrial vehicle form factors, which will be difficult for competitors to replicate.
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. These deployments typically result in revenue based on the overall scope of the project and the integrated solution 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.
We will seek to achieve sustained 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 2025. We also had limited paid deployments in 2025 that offset some of the ongoing R&D costs of continually developing EAS.
Our go-to-market strategy is to acquire new customers that use industrial vehicles in their mission-critical and daily operations by (a) leveraging the relationships and existing customers of our network of strategic partners, (b) bringing AV capabilities to industrial vehicles as a software service provider, and (c) executing a robust in-house sales and marketing effort to nurture a pipeline of industrial organizations. Our focus is on acquiring new customers who are looking to embed our technology into their vehicle product roadmaps. In turn, our customers are any organizations that could utilize our EAS solution, including original equipment manufacturers (“OEMs”) that supply industrial vehicles, end customers that operate their own industrial vehicles, or service providers that operate industrial vehicles for end customers.
As OEMs and leading industrial vehicle users seek to increase productivity, reinforce safer working environments, and scale their operations, we believe we are uniquely positioned to deliver a dynamic autonomy solution via our EAS to a wide variety of industrial uses. Our long-term vision is for EAS to become a universal autonomous driving solution with minimal marginal cost for companies to adopt new vehicles and expand their autonomous fleets across new deployments. We have already deployed DriveMod software on more than 10 different vehicle form factors that range from stockchasers and forklifts to 14-seat shuttles and 5-meter-long cargo vehicles demonstrating the extensibility of our AV building blocks.
Our strategy upon establishing a customer relationship with an OEM is to seek to embed our technology into their vehicle roadmap and expand our services to their many clients. Once we solidify an initial AV deployment with a customer, we intend to seek to expand within the site to additional vehicle platforms and/or expand the use of similar vehicles to other sites operated by the customer. This “land and expand” strategy can repeat iteratively across new vehicles and sites and is at the heart of why we believe industrial AVs that operate in geo-fenced, constrained environments are poised to create value.
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Recent Developments
Appointment of New Board Member
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.
Mr. Makavy was elected as a Class III director and will serve on the Board until the Company’s 2027 annual meeting of stockholders at which time he will stand for election alongside the Company’s other Class III directors. The Board has also appointed Mr. Makavy to serve as Chairman of the Nominating and Corporate Governance Committee, and a member of the Compensation Committee and Audit Committee.
Mr. Makavy is a global business leader, investor, and professional board director with approximately 30 years’ experience in the engineering and product management arena. In 2007, he started a company called Snaptu and sold it to Facebook in 2011, led growth in emerging markets at Facebook, started internet.org, built the growth team at Lyft, then led the tech org and the ridesharing business and took the company public in 2019. He has invested in over sixty startup companies since 2013. Mr. Makavy currently serves as lead investor to the Ran Makavy Angel Investment Fund, and as an advisor to Passport Global, Dimension, Fora Travel, Argo, and Honeybook.
Mr. Makavy will be compensated in accordance with the Company’s standard compensation policies and practices for non-employee directors of the Board, which is described in the Company’s Definitive Proxy Statement on Schedule 14A, filed with the SEC on October 22, 2025.
Registered Direct Offering
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.
The Offering was made pursuant to that certain Registration Statement on Form S-3, as amended (File No. 333-290079), which was originally filed on September 5, 2025, and declared effective by the Securities and Exchange Commission on September 18, 2025, including the Prospectus contained therein and a prospectus supplement dated March 16, 2026 filed with the Securities and Exchange Commission on March 17, 2026.
The closing of the Offering occurred on March 17, 2026. The Company received net proceeds of approximately $8.8 million from the Offering, after deducting the estimated offering expenses payable by the Company, including the placement agent fees. The Company intends to use the net proceeds from the Offering for general corporate purposes, including working capital.
In connection with the Offering, the Company entered into a Placement Agent Agreement with Aegis Capital Corp., as the exclusive placement agent in connection with the Offering. As compensation to Aegis Capital Corp., the Company paid Aegis Capital Corp. a cash fee of 7% of the aggregate gross proceeds raised in the Offering and reimbursed certain expenses of Aegis Capital Corp.
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Critical Accounting Policies and Estimates and Judgements
Our condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. We continually evaluate our estimates and judgments. We base our estimates and judgments on historical experience and other factors that we believe to be reasonable under the circumstances. Materially different results can occur as circumstances change and additional information becomes known. Besides the estimates identified below that are considered critical, we make many other accounting estimates in preparing our condensed consolidated financial statements and related disclosures. All estimates, whether or not deemed critical, affect reported amounts of assets, liabilities, revenues and expenses, as well as disclosures of contingent liabilities. These estimates and judgments are also based on historical experience and other factors that are believed to be reasonable under the circumstances. Materially different results can occur as circumstances change and additional information becomes known, even for estimates and judgments that are not deemed critical.
The Company considers costs to develop software, warrants and share-based compensation to be critical accounting estimates and believes the associated assumptions and estimates to have the greatest potential impact on our condensed consolidated financial statements.
Costs to Develop Software
The Company incurs costs related to internally developed software. Based on the nature of the software the Company capitalizes software costs under the following guidance.
Internal-Use Software
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 the application development stage, and the period over which the Company expects to benefit from the use of that software. Once the 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.
Costs to develop software to be sold, leased or otherwise marketed
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 the product. Once technological feasibility is established, certain payroll and stock compensation, occupancy, and professional service costs that are incurred to develop functionality for the Company’s software and internally built software platforms, as well as certain upgrades and enhancements that are expected to result in enhanced functionality are capitalized. Judgment is required in determining when technological feasibility of a product is established. Management has determined that technological feasibility is established when a working model is complete. After technological feasibility is established, judgement is required to determine the amount of payroll and stock-based compensation costs to be capitalized on the remaining development efforts. These costs will continue to be capitalized until such time as when the product or enhancement is available for general release to customers.
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.
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During the third quarter of 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 third quarter of 2025, this change resulted in an increase to research and development expense of approximately $2.6 million, with a corresponding decrease in capitalized software costs of $2.6 million.
Common Stock Warrants
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 Private Placement offering completed on April 29, 2022, 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 also applied the guidance in ASC 340-10-S99-1, Other Assets and Deferred Costs, that states specific incremental costs directly attributable to a proposed or actual offering of equity securities may properly be deferred and charged against the gross proceeds of the offering. The Company treated the valuation of the warrants as directly attributable to the issuance of an equity contract and, accordingly, classified the warrants as additional paid-in capital.
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. 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.
Stock-based Compensation
The Company recognizes the cost of share-based awards granted to employees and directors based on the estimated grant-date fair value of the awards. Cost is recognized on a straight-line basis over the service period, which is generally the vesting period of the award. The Company recognizes stock-based compensation cost and reverses previously recognized costs for unvested awards in the period forfeitures occur, if any. The Company determines the fair value of stock options using the Black-Scholes option pricing model, which is impacted by the fair value of the Company’s common stock, expected price volatility of the common stock, expected term, risk-free interest rates, and expected dividend yield.
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Results of Operations
Revenue
We derive revenue from EAS subscriptions with relative add-on offerings such as hardware revenue and other revenue (i.e., deployment 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.
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 Revenue
Cost of revenues consists primarily of direct labor and related fringe benefits for internal engineering resources costs incurred for the completion of the contracts and hardware costs.
Cost of revenues reported for the three months ended March 31, 2026 increased by $45,537 or 385.5% to $57,350 from $11,813 for the three months ended March 31, 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
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 deployments are capitalized and expensed when the associated contract revenue is recognized. All other research and development costs are expensed as incurred.
Research and development expense for the three months ended March 31, 2026 increased by approximately $0.8 million or 37.1% to $2.9 million from approximately $2.1 million for the three months ended March 31, 2025. The increase is primarily attributable to an increase in personnel related costs related to a change in estimate of capitalized software offset by the capitalization of costs related to customer contracts.
General and Administrative
General and administrative expenses consist primarily of personnel costs, facilities expenses, depreciation and amortization, travel, and advertising costs.
General and administrative expenses for the three months ended March 31, 2026 increased by approximately $1.0 million or 30.4% to $4.1 million from approximately $3.1 million for the three months ended March 31, 2025. The increase is primarily attributable to an increase in personnel related costs and an increase in marketing and advertising expenses.
Interest Income, net
Interest income (expense), net decreased by $52,749 to $22,070 for the three months ended March 31, 2026 from $74,819 for the three months ended March 31, 2025. Interest income consists primarily of interest earned of $22,070 from the Company’s interest-bearing bank accounts.
Other Income, net
Other income (expense), net decreased by $0.8 million to $0.4 million for the three months ended March 31, 2026 from $1.2 million for the three months ended March 31, 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.
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Liquidity and Capital Resources
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 March 31, 2026, the Company had unrestricted cash of approximately $5.1 million and short-term investments of approximately $39.2 million. As of December 31, 2025, the Company had unrestricted cash of approximately $1.0 million short-term investments of approximately $33.7 million.
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. The Company received net proceeds of approximately $8.75 million from the 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, 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, 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.
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.
Based on cash flow projections from operating and financing activities and the existing balance of cash and short-term investments, management is of the opinion that the Company has sufficient funds for sustainable operations, and it will be able to meet its payment obligations from operations and related commitments for the 12 months following the date that these condensed consolidated financial statements were issued. Based on the above considerations, the Company’s condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities during the normal course of operations.
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Cash Flows
Operating activities
Net cash used in operating activities for the three months ended March 31, 2026 was approximately $8.4 million, an increase of approximately $1.9 million or 29.0% compared to approximately $6.5 million for the three months ended March 31, 2025. The increase is primarily attributed to an increase in accounts receivable, deferred costs, and deferred revenue due to new customer contracts.
Investing activities
Net cash used in investing activities for the three months ended March 31, 2026 was approximately $5.4 million, a decrease of approximately $10.7 million compared to net cash used in investing activities of approximately $16.1 million for the three months ended March 31, 2025. The decrease consists primarily of short-term investment purchases of approximately $2.0 million, short-term investment maturities of approximately $8.2 million and acquisition of intangible assets of approximately $0.7 million, offset by R&D-related hardware equipment purchases of approximately $0.1 million.
Financing activities
Net cash provided by financing activities for the three months ended March 31, 2026 was $17.9 million, which consisted of $8.7 million in proceeds from a registered direct offering of common stock and $9.2 million in proceeds from at-the-market equity financings.
Emerging Growth Company Status
We are an “emerging-growth company”, as defined in the JOBS Act, and, for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to emerging growth companies, including, but not limited to, not being required to have our independent registered public accounting firm audit our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As an emerging growth company we can also delay adopting new or revised accounting standards until such time as those standards apply to private companies. We intend to avail ourselves of these options. Once adopted, we must continue to report on that basis until we no longer qualify as an emerging growth company.
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 revenue 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.
We are also a “smaller reporting company”, meaning that the market value of our stock held by non-affiliates plus the aggregate amount of gross proceeds to us as a result of the IPO is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250 million or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a “Smaller Reporting Company”, this Item and the related disclosure is not required.
ITEM 4. CONTROLS AND PROCEDURES
Management’s Report on Disclosure Controls and Procedures
Our management, under the supervision and with the participation of our Principal Executive Officer (our Chief Executive Officer) and Principal Financial Officer (our Chief Financial Officer), has evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2026. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or person performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of March 31, 2026, our Chief Executive Officer and Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures are effective, except as described below.
Changes in Internal Control over Financial Reporting
As reported in our Annual Report on Form 10-K as of December 31, 2025, we identified a material weakness, the misinterpretation of accounting guidance to a complex accounting transaction was identified in the third quarter of 2025 and plans to be fully remediated by the first quarter of 2026. Management has revised the processes surrounding this material weakness, and while a new control has been implemented, no relevant transactions occurred during the fourth quarter of 2025 or the first quarter of 2026. Thus, the effectiveness of the new control could not be tested and the material weakness remains unremediated as of March 31, 2026. Notwithstanding this material weakness, management believes that the condensed consolidated financial statements included in this report fairly present, in all material respects, the Company’s financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP.
The SEC defines ‘material weakness’ as a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the registrant’s annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls. While we are in the process of adopting remediation procedures related to this identified material weakness, there can be no assurance that such remedies will be effective. In addition, if this is not remediated, we will be unable to certify that our internal control over financial reporting is effective. We cannot assure you that there will not be material weaknesses or significant deficiencies in our internal control over financial reporting in the future. Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition or results of operations. If we are unable to conclude that our internal control over financial reporting is effective, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, and we could be subject to sanctions or investigations by the SEC or other regulatory authorities. Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.
Except as described as above, there has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Management’s Remediation
In order to remediate the material weakness, we will hire a third-party expert to review the accounting for complex transactions.
33
PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are not currently a party to any material legal proceedings. From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. Regardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity, reputational harm and other factors.
ITEM 1A. 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 three months ended March 31, 2026.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
Rule 10b5-1 Trading Arrangement
During the three months ended March 31, 2026, no director or officer
of the Company
ITEM 6. EXHIBITS
| * | Filed herewith. |
| ** | Furnished herewith. |
34
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized, on this 14th day of May, 2026.
| CYNGN INC. | |
| /s/ Lior Tal | |
| Lior Tal | |
| Chief Executive Officer, | |
| Chairman of the Board of Directors and Director | |
| (Principal Executive Officer) | |
| /s/ Natalie Russell | |
| Natalie Russell | |
| Chief Financial Officer | |
| (Principal Financial and Accounting Officer) |
35
Exhibit 31.1
CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULES 13A-14 AND 15D-14
OF THE SECURITIES EXCHANGE ACT OF 1934
I, Lior Tal, certify that:
| 1) | I have reviewed this quarterly report on Form 10-Q of Cyngn Inc.; |
| 2) | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; |
| 3) | Based on my knowledge, the financial statements and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; |
| 4) | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared. |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and |
| d. | Disclosed in this quarterly report any changes in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5) | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: May 14th, 2026 | |
| /s/ Lior Tal | |
| Lior Tal | |
| Chief Executive Officer | |
| (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATIONS OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULES 13A-14 AND 15D-14
OF THE SECURITIES EXCHANGE ACT OF 1934
I, Natalie Russell, certify that:
| 1) | I have reviewed this quarterly report on Form 10-Q of Cyngn Inc.; |
| 2) | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; |
| 3) | Based on my knowledge, the financial statements and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; |
| 4) | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared. |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and |
| d. | Disclosed in this quarterly report any changes in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5) | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: May 14th, 2026 | |
| /s/ Natalie Russell | |
| Natalie Russell | |
| Chief Financial Officer | |
| (Principal Financial and Accounting Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Cyngn Inc. (“Company”) on Form 10-Q for the quarter ended March 31, 2026, as filed with the Securities and Exchange Commission on the date hereof (“Report”), the undersigned, in the capacities and on the date indicated below, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the knowledge of each of the undersigned:
| 1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: May 14th, 2026 | |
| /s/ Lior Tal | |
| Lior Tal | |
| Chief Executive Officer | |
| (Principal Executive Officer) | |
| /s/ Natalie Russell | |
| Natalie Russell | |
| Chief Financial Officer | |
| (Principal Financial and Accounting Officer) |