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Cyngn Inc.

Cyngn Inc.CYNEarnings & Financial Report

Nasdaq · Information Technology · Services-Computer Programming Services

Cyngn Inc. is a technology firm specializing in AI-powered autonomous driving solutions for industrial use cases. It develops self-driving software and hardware integration tools for industrial vehicles including forklifts and pallet trucks, serving manufacturing, warehousing, and logistics customers across North America to improve operational efficiency and worksite safety.

What changed in Cyngn Inc.'s 10-K — 2023 vs 2024

Top changes in Cyngn Inc.'s 2024 10-K

196 paragraphs added · 158 removed · 135 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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The core vehicle-agnostic DriveMod software stack is targeted and deployed to different vehicles through DriveMod Kits , which are the AV hardware systems that take into account the specific needs of operating the DriveMod software on a specific target vehicle. Then, after prototyping and productization, DriveMod kits streamline the integration AV hardware and software integration onto vehicles at scale.
The core vehicle-agnostic DriveMod software stack is targeted and deployed to different vehicles through DriveMod Kits , which are the AV hardware systems that take into account the specific needs of operating the DriveMod software on a specific target vehicle. Then, after prototyping and productization, DriveMod kits streamline the integration of AV hardware and software onto vehicles at scale.
These competitors are also working to advance technology, reliability, and innovation in their development of new and improved solutions. 11 We will continue to face competition from existing competitors and new companies entering the industrial autonomy landscape.
These competitors are also working to advance technology, reliability, and innovation in their development of new and improved solutions. We will continue to face competition from existing competitors and new companies entering the industrial autonomy landscape.
EAS Subscription According to ABI Research, the cloud robotics opportunity is expected to grow from $3.3 billion in 2019 to $157.8 billion by 2030, accounting for 30% of the robotic industry’s total worth (source: Cloud Robotics Market Predicted to Grow to $157.8 billion by 2030, article by Robotics & Automation News).
EAS License According to ABI Research, the cloud robotics opportunity is expected to grow from $3.3 billion in 2019 to $157.8 billion by 2030, accounting for 30% of the robotic industry’s total worth (source: Cloud Robotics Market Predicted to Grow to $157.8 billion by 2030, article by Robotics & Automation News).
Go-to-Market Strategy Our go-to-market strategy hinges on strategic collaboration and is based on a set of three basic principles: ● Collaborate with industrial vehicle OEMs ● Land & expand with end customers ● Partner instead of compete on adjacent enabling technology Collaborate — industrial vehicle OEMs Our focus is on acquiring new customers who are either (a) looking to embed our technology into their vehicle products or (b) upsell their existing clients with our vehicle retrofits.
Go-to-Market Strategy Our go-to-market strategy hinges on strategic collaboration and is based on a set of three basic principles: ● Collaborate with industrial vehicle OEMs and their dealer and service networks ● Land & expand with end customers ● Partner instead of compete on adjacent enabling technology Collaborate — industrial vehicle OEMs Our focus is on acquiring new customers who are either (a) looking to embed our technology into their vehicle products or (b) upsell their existing clients with our vehicle retrofits.
Cyngn’s business model is thereby more attuned to Driver as a Service (DaaS) as our EAS software integrated with the vehicle hardware enables the customer to remove the human driver into self-driving functionality.
Cyngn’s business model is thereby more attuned to Driver as a Service (DaaS) as our EAS software integrated with the vehicle hardware enables the customer to remove the human driver for self-driving functionality.
Securities Exchange Commission (the “SEC”) and are subject to the requirements of the Securities and Exchange Act of 1934, as amended (the Exchange Act). These filings are available to the public on the Internet at the SEC’s website at http://www.sec.gov. 13
Securities Exchange Commission (the “SEC”) and are subject to the requirements of the Securities and Exchange Act of 1934, as amended (the Exchange Act). These filings are available to the public on the Internet at the SEC’s website at http://www.sec.gov. 14
In our served markets where customers primarily purchase and own their industrial vehicle fleet, we deliver the software that enables self-driving vehicle capability. As such, our EAS software is designed to provide level 4 high automation, fully autonomous driving without the need for a human in the vehicle.
In our served markets where customers primarily purchase and own their industrial vehicle fleet, we deliver the software that enables self-driving vehicle capability. As such, our EAS software is designed to provide level-4 “high automation”, fully autonomous driving without the need for a human in the vehicle.
DriveMod: Industrial Autonomous Vehicle System We built DriveMod as a modular software product that is compatible with various sensor and computer hardware components that are widely used throughout the autonomous vehicle industry. Our software combined with sensors and components from industry leading technology providers covers the end-to-end requirements that enable vehicles to operate autonomously with leading-edge technology.
DriveMod: Industrial Autonomous Vehicle System We built DriveMod as a modular software product that is compatible with various sensor and computer hardware components that are widely used throughout the autonomous vehicle industry. Our software combined with sensors and components from industry-leading hardware providers covers the end-to-end requirements that enable vehicles to operate autonomously with advanced navigation capabilities.
Together with a highly talented and skilled support team, we solve real-world industrial applications in autonomy. As of February 29, 2024, we had 81 full-time employees. The majority of our employees are based in Silicon Valley, California. Our core values include focus on impact, display curiosity, communicate proactively, apply good judgment, and demonstrate selflessness.
Together with a highly talented and skilled support team, we solve real-world industrial applications in autonomy. As of February 28, 2025, we had 58 full-time employees. The majority of our employees are based in Silicon Valley, California. Our core values include focus on impact, display curiosity, communicate proactively, apply good judgment, and demonstrate selflessness.
We integrate our full-stack autonomous driving software, DriveMod, onto vehicles manufactured by Original Equipment Manufacturer (“OEM”) either via retrofit of existing vehicles or by integration directly into vehicle assembly. We design the Enterprise Autonomy Suite (“EAS”) to be compatible with sensors and components from leading hardware technology providers and integrate our proprietary AV software to produce differentiated autonomous vehicles.
We integrate our full-stack autonomous driving software, DriveMod, onto vehicles manufactured by Original Equipment Manufacturers (“OEM”) either via retrofit of existing vehicles or by integration directly into vehicle assembly. We design the DriveMod to be compatible with sensors and components from leading hardware technology providers and integrate our proprietary AV software to produce differentiated autonomous vehicles.
More than five past deployments have been at customer or beta customer sites. Other past deployments were part of our normal R&D activities and product validation that was performed with beta customers. Our AV development and testing have included road vehicles that navigate complex dynamic environments.
Other autonomous vehicles were deployed as prototypes or as a part of proof-of-concept project. More than five past deployments have been at customer or beta customer sites. Other past deployments were part of our normal R&D activities and product validation that was performed with beta customers. Our AV development and testing have included road vehicles that navigate complex dynamic environments.
With the convergence of AI/ML, robotics, connectivity, mapping and interoperability, autonomous vehicle technology is the next leap-frog advancement in materials handling and supply chain logistics efficiency and safety propelling manufacturing into the Industry 5.0 phase.
With the convergence of AI/ML, robotics, connectivity, mapping and interoperability, autonomous vehicle technology is the next leap-frog advancement in materials handling and supply chain logistics efficiency and safety propelling manufacturing into the Industry 5.0 phase. 2 Figure 1: Illustration of the progression from Industry 1.0 to Industry 5.0.
The DriveMod Kit for Columbia Stockchasers is commercially released and available at scale. Subsequently, we expect to create different instances of DriveMod Kits to support the commercial release of new vehicles on the EAS platform, such as the electric forklifts and other industrial vehicles.
The DriveMod Kit for Columbia Stockchasers and Motrec MT160 Tuggers are released to mass production and available at scale. Subsequently, we expect to create different instances of DriveMod Kits to support the commercial release of new vehicles on the EAS platform, such as the electric forklifts and other industrial vehicles.
As of February 29, 2024, we have 19 granted U.S. patents and submitted 6 pending U.S. patent and 20 international patent applications and expect to continue to file additional patent applications with respect to our technology in the future. 12 Corporate Social Responsibility and Sustainability Our mission is to deliver the benefits of autonomous industrial vehicle technology to enhance the safety and operational efficiency of materials handling in a cost-effective method in supply chain logistics.
As of February 28, 2025, we have 21 granted U.S. patents and submitted 5 pending U.S. patent and expect to continue to file additional patent applications with respect to our technology in the future. 13 Corporate Social Responsibility and Sustainability Our mission is to deliver the benefits of autonomous industrial vehicle technology to enhance the safety and operational efficiency of materials handling in a cost-effective method in supply chain logistics.
The regulatory environment for autonomous industrial vehicles is still being developed. In 2016, the United States Department of Transportation (“US DoT”) issued regulations that require the submission of documentation covering specific topics related to autonomy and government regulators, but these regulations are targeted towards road vehicles.
In 2016, the United States Department of Transportation (“US DoT”) issued regulations that require the submission of documentation covering specific topics related to autonomy and government regulators, but these regulations are targeted towards road vehicles.
Figure 1: Illustration of the progression from Industry 1.0 to Industry 5.0. 2 Automation Solutions for Industrial Equipment The Industrial Equipment market covers a broad range of use cases and product categories, with automation solutions targeting Material Transport Equipment (“MTE”) heavily utilized by the majority of industry market sectors.
Automation Solutions for Industrial Equipment The Industrial Equipment market covers a broad range of use cases and product categories, with automation solutions targeting Material Transport Equipment (“MTE”) heavily utilized by the majority of industry market sectors.
With specific regard to manufacturing and distribution, a number of competitors have already begun to deploy products, but we believe the benefits stemming from our modular software-centric approach, technical expertise in the area of autonomous vehicles, and the ubiquitous applicability of EAS gives us the potential to displace current offerings and capture a significant share of this rapidly growing market.
With specific regard to manufacturing and distribution, a number of competitors have already begun to deploy products, but we believe the benefits stemming from our modular software-centric approach, technical expertise in the area of autonomous vehicles, and the ubiquitous applicability of EAS gives us the potential to displace current offerings and capture a significant share of this rapidly growing market. 12 Governmental and Environmental Regulations Regulatory considerations contribute to our current strategic position that targets enterprise customers with operations mostly confined to private property.
Our archetypal customers are corporations that deploy fleets of heterogeneous industrial vehicles across many sites. DriveMod’s flexibility is intertwined with the wide-ranging applicability of our EAS and creates the unique leveraged opportunity of expanding across vehicles and sites with these major customers.
DriveMod’s flexibility is intertwined with the wide-ranging applicability of our EAS and creates the unique leveraged opportunity of expanding across vehicles and sites with these major customers.
The market for automated vehicle solutions is burgeoning, and the advanced technology required to enable autonomous solutions in industrial environments is still developing. As a result, we face competition from a range of companies seeking to develop autonomous vehicle solutions.
Autonomous vehicles are an enabling technology that gives us the opportunity to add more value to customers. The market for automated vehicle solutions is burgeoning, and the advanced technology required to enable autonomous solutions in industrial environments is still developing. As a result, we face competition from a range of companies seeking to develop autonomous vehicle solutions.
Our Technology Autonomous vehicles must integrate a suite of technologies to generate operational value. Our core competencies are in DriveMod, the on-vehicle AV technology stack that is underpinned by AI and robotics expertise and paramount to enabling autonomous mobility.
Our core competencies are in DriveMod, the on-vehicle AV technology stack that is underpinned by AI and robotics expertise and paramount to enabling autonomous mobility.
We have already deployed DriveMod software on more than ten different vehicle form factors that range from stockchasers and stand-on floor scrubbers to 14-seat shuttles and electric forklifts as part of prototypes and proof of concept projects, demonstrating the extensibility of our AV building blocks. Our recent progress contributes to the validation of EAS with OEM partners and end customers.
We have already deployed DriveMod software on more than ten different vehicle form factors that range from tow tractors and stand-on floor scrubbers to 14-seat shuttles and electric forklifts in a combination of commercially released products, prototypes, and proof of concept projects, demonstrating the extensibility of our AV building blocks.
Figure 3: The EAS product flywheel As the deployment of industrial vehicles with DriveMod scales up, the amount and diversity of data flowing through Cyngn Insight expands, creating an accelerated feedback loop and powers our ability to use Cyngn Evolve to further enhance DriveMod, and update the on-vehicle software over-the-air, resulting in an ever-improving EAS offering.
Figure 3: The EAS product flywheel As the deployment of industrial vehicles with DriveMod scales up, the amount and diversity of data flowing through Cyngn Insight expands, creating an accelerated feedback loop and powers our ability to use Cyngn Evolve to further enhance DriveMod, and update the on-vehicle software over-the-air, resulting in an ever-improving EAS offering. 5 Continual Improvement Drives Technology Advancement DriveMod’s building blocks enable a more consistent cadence of upgrades, improvements, and customer-specific feature development that can be deployed via over-the-air updates.
Our major collaborators in this area are our OEM partners, and we can reinforce our deployment capability with integration and services from third party partners. Working directly with our OEM partners as well as with third party experts ensures that we can deploy our technology globally and at-scale.
Working directly with our OEM partners as well as with third party experts ensures that we can deploy our technology globally and at-scale.
Our patent portfolio expanded with 16 new U.S. patent grants in 2023, bringing the total grants to 19. 1 Figure 0: Summary of recent Cyngn technical and commercial milestones Overview: Automation and Autonomy in Industry 5.0 The fifth industrial revolution is upon us with self-driving industrial vehicles operating alongside with human workers and encompasses the benefits from the fourth industrial revolution of smart factories and automated supply chain logistics, with big data connectivity.
Overview: Automation and Autonomy in Industry 5.0 The fifth industrial revolution is upon us with self-driving industrial vehicles operating alongside with human workers and encompasses the benefits from the fourth industrial revolution of smart factories and automated supply chain logistics, with big data connectivity.
Factoring in ancillary costs like installation, maintenance, on-site testing, integration, and deployment, can also represent a significant annual cost burden, according to findings by Ricoh & ABI Research Report.
Depending on fleet size, traditional automation solutions such as “robot-in-a-box” may command ROI horizons of up to 4 years. Factoring in ancillary costs like installation, maintenance, on-site testing, integration, and deployment, can also represent a significant annual cost burden, according to findings by Ricoh & ABI Research Report.
Land & expand — end customers Our go-to-market strategy is to acquire new customers that use industrial vehicles in their mission-critical operations. We pursue this strategy by being hyper-focused on building a robust pipeline of prospective customers (“land”) and utilizing strategic sales channels that will result in coordinated opportunities to accelerate growth (“expand”).
We pursue this strategy by being hyper-focused on building a robust pipeline of prospective customers (“land”) and utilizing strategic sales channels that will result in coordinated opportunities to accelerate growth (“expand”). Our archetypal customers are corporations that deploy fleets of heterogeneous industrial vehicles across many sites.
CbW addresses this issue by decoupling the hardware and software components of DbW systems. For vehicles with legacy ECU’s, CbW allows customers to replace existing ECUs with DbW hardware that can be tuned to meet the needs of the selected vehicle platform using CbW software.
For vehicles with legacy ECU’s, CbW allows customers to replace existing ECUs with DbW hardware that can be tuned to meet the needs of the selected vehicle platform using CbW software. When vehicles have DbW ECUs already installed, the CbW software layer is configured and applied without the need for replacing the hardware.
Rather than trying to compete with other technology suppliers, we intend to rely on our strategic collaborations that give both partners access to new markets and capabilities. For example, partners like Symboticware and Airbiquity respectively provide complementary solutions in technologies like cyber security, digital asset management, and connectivity.
Rather than trying to compete with other technology suppliers, we intend to rely on our strategic collaborations that give both partners access to new markets and capabilities. For example, hardware partners like Motrec and BYD provide complementary solutions that stand to benefit from Cyngn’s autonomy software.
Our EAS plugs into business operations by creating and collecting real-time data and aggregating it into configurable analytics dashboards that inform customer operations as well as future DriveMod releases, creating a data set specific to each customer from high-resolution data collected during their operations. 5 Our Approach Augments and Upskills Workforces Industrial vehicle autonomy represents an opportunity to minimize the adverse impact that labor shortages, employee health, and safety have on a company’s core operations.
Our EAS plugs into business operations by creating and collecting real-time data and aggregating it into configurable analytics dashboards that inform customer operations as well as future DriveMod releases, creating a data set specific to each customer from high-resolution data collected during their operations.
Furthermore, customer service, workforce training, and repair fall under service lifecycle management and must be taken into account along with the technology in order to scale efficiently, according to the “Trends in Supporting and Scaling Modern Automation” report by Ricoh & ABI Research Report.
Furthermore, customer service, workforce training, and repair fall under service lifecycle management and must be taken into account along with the technology in order to scale efficiently, according to the “Trends in Supporting and Scaling Modern Automation” report by Ricoh & ABI Research Report. 3 Lagging technological advancement — Manufacturers of material transport vehicles have core competencies in mechanical, electrical, and control systems while the end users of the vehicles typically specialize in logistics, manufacturing, and material moving.
DriveMod’s vehicle-agnostic capability to deploy AV technology on diverse vehicle fleets has been proven through its deployment on more than ten different vehicle form factors that we have operated autonomously. DriveMod has been commercially released for the Columbia Stockchaser. Other autonomous vehicles were deployed as prototypes or as a part of proof-of-concept project.
DriveMod’s vehicle-agnostic capability to deploy AV technology on diverse vehicle fleets has been proven through its deployment on more than ten different vehicle form factors that we have operated autonomously. DriveMod solutions have been commercially released for the Columbia Stockchaser and Motrec MT160 Tugger, with BYD ECB50+ Forklift targeted next.
Actuation A subsystem of our software stack, Cyngn-by-Wire (“CbW”), addresses the basic requirements of mechanical vehicle components that must be met for DriveMod to make a vehicle operate autonomously. Legacy electronic control units (“ECU”) that do not use Drive-by-Wire (“DbW”) technology that enables software commands to electronically control vehicle actuation typically create a hurdle for integrating AV technology.
Legacy electronic control units (“ECU”) that do not use Drive-by-Wire (“DbW”) technology that enables software commands to electronically control vehicle actuation typically create a hurdle for integrating AV technology. CbW addresses this issue by decoupling the hardware and software components of DbW systems.
Key elements of our market entry and expansion roadmap include: Focus: manufacturing and distribution material handling vehicles Manufacturing and distribution applications require the shortest timeline for deployment due to the common use of material handling vehicles in these environments and the commercial availability of our DriveMod Stockchaser solution.
Key elements of our market entry and expansion roadmap include: Focus: manufacturing and distribution material handling vehicles Manufacturing and distribution applications can be conducive to short deployment timelines due to the similar use of material handling vehicles across these environments.
Considering the incumbents’ gaps in leading-edge AV and AI technologies and the pressure existing suppliers face to ship manually-operated vehicles that address the multi-billion dollar demand that already exists, we believe it is unlikely that existing stakeholders will be able to invest in the technological advancements that will solve the industry’s fundamental challenges. 3 High barriers to adoption — Many solutions for automated material transport require an all-or-nothing commitment from customers: either make a major upfront investment to overhaul operations for automation or postpone automation at the risk of falling behind competition.
Considering the incumbents’ gaps in leading-edge AV and AI technologies and the pressure existing suppliers face to ship manually-operated vehicles that address the multi-billion dollar demand that already exists, we believe it is unlikely that existing stakeholders will be able to invest in the technological advancements that will solve the industry’s fundamental challenges.
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.
Our long-term vision is for our Enterprise Autonomy Suite (“EAS”)—which includes the DriveMod autonomous driving stack as well as the Cyngn Insight and Cyngn Evolve tools for fleet management, analytics, and data collection—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.
Competitive Environment There is an increasing demand for autonomous vehicle solutions in an effort to increase safety, improve efficiency, and enhance productivity to meet the goals set out by Industry 4.0 and 5.0. Autonomous vehicles are an enabling technology that gives us the opportunity to add more value to customers.
Thus, CbW enables AV actuation across vehicle fleets with varying levels of vehicle age and sophistication. Competitive Environment There is an increasing demand for autonomous vehicle solutions in an effort to increase safety, improve efficiency, and enhance productivity to meet the goals set out by Industry 4.0 and 5.0.
Robots as a Service (RaaS) is a useful business model given the high cost of AGVs and AMRs where industrial warehouse managers may prefer to rent robots and pay a monthly subscription fee for both software and hardware usage.
Robots as a Service (RaaS) is a useful business model given the high cost of AGVs and AMRs where industrial customers may want to explore different buying models for both software and hardware usage to align with their needs for capital expenditures and operational expenditures.
Deployment Deploying our EAS requires us and our integration partners to work with a new client to map the job site, gather data, and install our AV technology within their fleet and site. New deployments yield project-based revenues that are assessed based on the scope of the deployment.
Revenue Sources We anticipate that our technology will generate revenue through three main methods: deployment, EAS subscriptions, and DriveMod customization. Deployment Deploying our EAS requires us and our integration partners to work with a new client to map the job site, gather data, and install our AV technology within their fleet and site.
We believe that developing the sales and marketing infrastructure to access these markets is an essential aspect of driving growth in these areas. Revenue Sources We anticipate that our technology will generate revenue through three main methods: deployment, EAS subscriptions, and DriveMod customization.
Because our core autonomous technology is universal, the Company has an opportunity to generate revenue across a variety of industries. We believe that developing the sales and marketing infrastructure to access these markets is an essential aspect of driving growth in these areas.
Expand: develop autonomous vehicle technologies across other sectors According to a CB Insights report, “33 Industries Other Than Auto That Driverless Cars Could Turn Upside Down,” autonomous vehicle technology brings value to at least 33 industries. Because our core autonomous technology is universal, the Company has an opportunity to generate revenue across a variety of industries.
DriveMod has been architected to be vehicle agnostic and allow for efficient expansion to industries such as mining, construction, yard operations, and agriculture. Expand: develop autonomous vehicle technologies across other sectors According to a CB Insights report, “33 Industries Other Than Auto That Driverless Cars Could Turn Upside Down,” autonomous vehicle technology brings value to at least 33 industries.
We also continue to build upon our ability to scale our products and generate novel technological developments. The DriveMod Stockchaser became commercially available in early 2023 starting with the deployment from our partner-customer US Continental, a California-based leading manufacturer of quality leather and fabric care products.
The DriveMod Stockchaser with a 6,000-lb towing capacity became commercially available in early 2023 and was first commercially deployed with our partner-customer US Continental (“USC”), a California-based manufacturer of quality leather and fabric care products.
Governmental and Environmental Regulations Regulatory considerations contribute to our current strategic position that targets enterprise customers with operations mostly confined to private property. This decreases our exposure to regulations, which mitigates some deployment risks. Typically, we will satisfy regulatory requirements by adhering to the protocols of the site operator (the end customer).
This decreases our exposure to regulations, which mitigates some deployment risks. Typically, we will satisfy regulatory requirements by adhering to the protocols of the site operator (the end customer). The regulatory environment for autonomous industrial vehicles is still being developed.
The decision engine pulls together insights from mapping, perception, and path planning to enable more complex vehicle maneuvers and automated conflict resolution. The system is extensible to introduce new capabilities with logic that is designed to achieve a high level of abstraction, which enables us to adopt new driving behaviors.
The decision engine pulls together insights from mapping, perception, and path planning to enable more complex vehicle maneuvers and automated conflict resolution.
Continual Improvement Drives Technology Advancement DriveMod’s building blocks enable a more consistent cadence of upgrades, improvements, and customer-specific feature development that can be deployed via over-the-air updates. These capabilities ensure that the deployed system stays in sync with the changing application demands while allowing customers to focus on monetary and operational ROI.
These capabilities ensure that the deployed system stays in sync with the changing application demands while allowing customers to focus on monetary and operational ROI.
Lagging technological advancement — Manufacturers of material transport vehicles have core competencies in mechanical, electrical, and control systems while the end users of the vehicles typically specialize in logistics, manufacturing, and material moving. There is limited expertise throughout the material handling value chain in software algorithms, sensing, and high-performance computing.
There is limited expertise throughout the material handling value chain in software algorithms, sensing, and high-performance computing.
We also launched the DriveMod Forklift and the DriveMod Tugger as we expand our vehicle-type portfolio fleet through our OEM partnership with BYD and Motrec, respectively. We secured paid projects with leading global customers like Arauco, along with additional projects from big brands in the Global 500 and the Fortune 100.
We secured paid projects with leading global customers like Arauco, along with additional projects from big brands in the Global 500 and the Fortune 100. Paid development projects of this nature are selectively pursued to springboard new products or technology advancements, yielding promising outcomes such as the DriveMod Forklift.
This all-or-nothing approach to unlocking future return on investment (“ROI”) can be problematic for risk-averse companies that seek to adopt automation solutions. Depending on fleet size, traditional automation solutions such as “robot-in-a-box” may command ROI horizons of up to 4 years.
High barriers to adoption — Many solutions for automated material transport require an all-or-nothing commitment from customers: either make a major upfront investment to overhaul operations for automation or postpone automation at the risk of falling behind competition. This all-or-nothing approach to unlocking future return on investment (“ROI”) can be problematic for risk-averse companies that seek to adopt automation solutions.
We believe this category represents a substantial opportunity to generate revenue as a single relationship with an OEM that can lead to revenue opportunities across the entire marketplace. For example, our partner, Columbia Vehicle Group with whom we have partnered through a non-binding memorandum of understanding, provides over 70 years of vehicle manufacturing experience and customer insight.
We believe this category represents a substantial opportunity to generate revenue as a single relationship with an OEM that can lead to revenue opportunities across the entire marketplace. Land & expand — end customers Our go-to-market strategy is to acquire new customers that use industrial vehicles in their mission-critical operations.
Broaden: address other industrial vehicle use cases The industries that utilize material transport vehicles share trends, challenges, and opportunities. DriveMod has been architected to be vehicle agnostic and allow for efficient expansion to industries such as mining, construction, yard operations, and agriculture.
We have already deployed DriveMod-powered industrial vehicles at multiple manufacturing and distribution facilities of varying sizes, including facilities as large as 4 million square feet. Broaden: address other industrial vehicle use cases The industries that utilize material transport vehicles share trends, challenges, and opportunities.
These collaborative partnerships are established through mutually beneficial, non-binding memorandums of understanding or partnering agreements for the purpose of joint go-to-market efforts. Thereby we leverage our limited R&D resources with our technology partners through out-sourcing versus in-house development resulting in a more efficient asset-light approach in product development.
Thereby, we leverage our R&D resources with existing core competencies of our technology partners through collaboration, resulting in a more efficient asset-light approach in product development and manufacturing. Our Technology Autonomous vehicles must integrate a suite of technologies to generate operational value.
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We have already deployed DriveMod-powered industrial vehicles at multiple manufacturing and distribution facilities. These vehicles were previously deployed as prototypes or as a part of a proof-of-concept project. Of these past deployments, one was paid. Future deployments will primarily be commercial deployments with limited prototype or proof-of-concept deployments that may be engaged opportunistically for strategic value.
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Our recent progress contributes to the validation of EAS with OEM partners and end customers. We also continue to build upon our ability to scale our products and generate novel technological developments.
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When vehicles have DbW ECUs already installed, the CbW software layer is configured and applied without the need for replacing the hardware. Thus, CbW enables AV actuation across vehicle fleets with varying levels of vehicle age and sophistication.
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We then launched the DriveMod Forklift and the DriveMod Tugger as we continued to expand our vehicle-type portfolio fleet through our OEM partnerships with BYD and Motrec, respectively. The DriveMod MT160 Tugger with a 12,000-lb towing capacity was commercially released in 2024 in partnership with Motrec and is now deployed with multiple customers.
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The primary focus of the company is to achieve and expand production deployments with its commercially released DriveMod vehicles. As of the end of 2024, those commercial deployments include the named accounts of John Deere, Coats Automotive, and USC, as well as other business awards that have not yet been publicly disclosed.
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Our patent portfolio expanded with 16 new U.S. patent grants in 2023 and 2 granted in 2024, bringing the total grants to 21. 1 Figure 0: Summary of recent Cyngn technical and commercial milestones We intend to continue to pursue and win additional license agreements with companies that depend heavily on the use of material handling vehicles and that all recognize the need for automation to i) compete in today’s economy, ii) combat the significant labor shortages and escalating costs, and iii) improve safety.
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Our approach to securing these opportunities will be a continued direct sales effort coupled with increasing our network of industrial vehicle dealers that already have significant sales of industrial vehicles.
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Our Approach Augments and Upskills Workforces Industrial vehicle autonomy represents an opportunity to minimize the adverse impact that labor shortages, employee health, and safety have on a company’s core operations.
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New deployments yield project-based revenues that are assessed based on the scope of the deployment. Our major collaborators in this area are our OEM partners, and we can reinforce our deployment capability with integration and services from third party partners.
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The system is extensible to introduce new capabilities with logic that is designed to achieve a high level of abstraction, which enables us to adopt new driving behaviors. 11 Actuation A subsystem of our software stack, Cyngn-by-Wire (“CbW”), addresses the basic requirements of mechanical vehicle components that must be met for DriveMod to make a vehicle operate autonomously.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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You should consider our business and prospects in light of the risks and challenges we face as a new entrant into a novel industry, including, among other things, with respect to our ability to: ● design, integrate, and deploy safe, reliable, and quality autonomous vehicle software products and tools for industrial vehicles with our partners on an ongoing basis; ● navigate an evolving and complex regulatory environment; ● successfully produce with OEM partners a line of purpose-built autonomous industrial vehicles on the timeline we estimate; ● improve and enhance our software and autonomous technology; 14 ● establish and expand our customer base; ● successfully market our autonomous driving solutions and our other products and services; ● properly price our products and services; ● improve and maintain our operational efficiency; ● maintain a reliable, secure, high-performance, and scalable technology infrastructure; ● attract, retain, and motivate talented employees; ● anticipate and adapt to changing market conditions, including technological developments and changes in competitive landscape; and ● build a well-recognized and respected brand.
You should consider our business and prospects in light of the risks and challenges we face as a new entrant into a novel industry, including, among other things, with respect to our ability to: ● design, integrate, and deploy safe, reliable, and quality autonomous vehicle software products and tools for industrial vehicles with our partners on an ongoing basis; ● navigate an evolving and complex regulatory environment; ● successfully produce with OEM partners a line of purpose-built autonomous industrial vehicles on the timeline we estimate; ● improve and enhance our software and autonomous technology; ● establish and expand our customer base; ● successfully market our autonomous driving solutions and our other products and services; ● properly price our products and services; ● improve and maintain our operational efficiency; ● maintain a reliable, secure, high-performance, and scalable technology infrastructure; ● attract, retain, and motivate talented employees; ● anticipate and adapt to changing market conditions, including technological developments and changes in competitive landscape; and ● build a well-recognized and respected brand.
If existing competitors or new entrants commercialize earlier than expected, our competitive advantage could be adversely affected. Business collaboration with third parties is subject to risks and these relationships may not lead to significant revenue. Strategic business relationships are and will continue to be an important factor in the growth and success of our business.
If existing competitors or new entrants commercialize earlier than expected, our competitive advantage could be adversely affected. 17 Business collaboration with third parties is subject to risks and these relationships may not lead to significant revenue. Strategic business relationships are and will continue to be an important factor in the growth and success of our business.
In addition, the number of high-profile data breaches at major companies continues to accelerate, which will likely lead to even greater regulatory scrutiny. 28 The scope and interpretation of the laws and regulations that are or may be applicable to us are often uncertain and may be conflicting, particularly with respect to foreign laws. For example, the E.U.
In addition, the number of high-profile data breaches at major companies continues to accelerate, which will likely lead to even greater regulatory scrutiny. The scope and interpretation of the laws and regulations that are or may be applicable to us are often uncertain and may be conflicting, particularly with respect to foreign laws. For example, the E.U.
If the development of EAS and our other technologies and products is delayed or customers do not adopt and buy our solutions to the extent we anticipate, our business and operating results will be adversely impacted. We have a limited operating history in a new market and face significant challenges as our industry is rapidly evolving.
If the development of EAS and our other technologies and products is delayed or customers do not adopt and buy our solutions to the extent we anticipate, our business and operating results will be adversely impacted. 15 We have a limited operating history in a new market and face significant challenges as our industry is rapidly evolving.
If we are not able to scale our IT infrastructure in a cost-effective and secure manner, our ability to offer competitive solutions will be harmed and our business, financial condition, and operating results may suffer. 20 We must also continue to manage our employees, operations, finances, research and development, and capital investments efficiently.
If we are not able to scale our IT infrastructure in a cost-effective and secure manner, our ability to offer competitive solutions will be harmed and our business, financial condition, and operating results may suffer. We must also continue to manage our employees, operations, finances, research and development, and capital investments efficiently.
In addition, if we cease to be an emerging growth company, we will no longer be able to use the extended transition period for complying with new or revised accounting standards. 32 We will remain an emerging-growth company until the earliest of: (1) the last day of the fiscal year following the fifth anniversary of our initial public offering; (2) the last day of the first fiscal year in which our annual gross revenue is $1.07 billion or more; (3) the date on which we have, during the previous rolling three-year period, issued more than $1 billion in non-convertible debt securities; and (4) the date we qualify as a “large accelerated filer,” with at least $700 million of equity securities held by non-affiliates.
In addition, if we cease to be an emerging growth company, we will no longer be able to use the extended transition period for complying with new or revised accounting standards. 34 We will remain an emerging-growth company until the earliest of: (1) the last day of the fiscal year following the fifth anniversary of our initial public offering; (2) the last day of the first fiscal year in which our annual gross revenue is $1.07 billion or more; (3) the date on which we have, during the previous rolling three-year period, issued more than $1 billion in non-convertible debt securities; and (4) the date we qualify as a “large accelerated filer,” with at least $700 million of equity securities held by non-affiliates.
As such, we do not know the degree of future protection that we will have on our technologies, products, and services. While we will endeavor to try to protect our technologies, products, and services with intellectual property rights such as patents, as appropriate, the process of obtaining patents is time-consuming, expensive, and sometimes unpredictable. Additionally, the U.S.
As such, we do not know the degree of future protection that we will have on our technologies, products, and services. While we will endeavor to try to protect our technologies, products, and services with intellectual property rights such as patents, as appropriate, the process of obtaining patents is time-consuming, expensive, and sometimes unpredictable. 26 Additionally, the U.S.
Our ability to develop, deliver, and commercialize at scale our technology to support or perform autonomous operation of industrial vehicles is still unproven. 15 Our technology suite is currently available on stockchasers and tuggers for production release. However, this technology will need to be continually developed and enhanced for further scaled commercialization .
Our ability to develop, deliver, and commercialize at scale our technology to support or perform autonomous operation of industrial vehicles is still unproven. Our technology suite is currently available on stockchasers and tuggers for production release. However, this technology will need to be continually developed and enhanced for further scaled commercialization.
This could result in increased costs to us and result in significant legal and financial exposure and/or reputational harm. 27 We also rely on service providers, and similar incidents relating to their information technology systems could also have a material adverse effect on our business.
This could result in increased costs to us and result in significant legal and financial exposure and/or reputational harm. We also rely on service providers, and similar incidents relating to their information technology systems could also have a material adverse effect on our business.
Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and to have consented to the provisions of our amended and restated certificate of incorporation described above. 33 These choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, which may discourage such lawsuits against us and our directors, officers and employees.
Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and to have consented to the provisions of our amended and restated certificate of incorporation described above. 35 These choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, which may discourage such lawsuits against us and our directors, officers and employees.
Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license, which could adversely affect our business, financial condition, results of operations, and prospects. 25 In addition to patented technology, we rely on our unpatented proprietary technology, trade secrets, processes, and know-how.
Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license, which could adversely affect our business, financial condition, results of operations, and prospects. 27 In addition to patented technology, we rely on our unpatented proprietary technology, trade secrets, processes, and know-how.
However, the measures we take to protect our intellectual property from unauthorized use by others may not be effective and there can be no assurance that our intellectual property rights will be sufficient to protect against others offering products, services, or technologies that are substantially similar or superior to ours and that compete with our business. 23 Litigation may be necessary in the future to enforce our intellectual property rights and to protect our trade secrets.
However, the measures we take to protect our intellectual property from unauthorized use by others may not be effective and there can be no assurance that our intellectual property rights will be sufficient to protect against others offering products, services, or technologies that are substantially similar or superior to ours and that compete with our business. 25 Litigation may be necessary in the future to enforce our intellectual property rights and to protect our trade secrets.
This re-engineering process could require us to expend significant additional research and development resources, and we cannot guarantee that we will be successful. 26 Additionally, the use of certain open-source software can lead to greater risks than use of third-party commercial software, as open-source licensors generally do not provide warranties or controls on the origin of software.
This re-engineering process could require us to expend significant additional research and development resources, and we cannot guarantee that we will be successful. 28 Additionally, the use of certain open-source software can lead to greater risks than use of third-party commercial software, as open-source licensors generally do not provide warranties or controls on the origin of software.
In addition to the other risks described herein, factors that may affect our results of operations include the following: ● changes in our revenue mix and related changes in revenue recognition; ● changes in actual and anticipated growth rates of our revenue, customers, and key operating metrics; ● fluctuations in demand for or pricing of our product offerings; ● our ability to attract new customers; ● our ability to retain our existing customers, particularly large customers; ● customers and potential customers opting for alternative products, including developing their own in-house solutions; ● investments in new offerings, features, and functionality; ● fluctuations or delays in development, release, or adoption of new features and functionality for our offering; ● delays in closing sales which may result in revenue being pushed into the next quarter; ● changes in customers’ budgets and in the timing of their budget cycles and purchasing decisions; ● our ability to control costs; ● the amount and timing of payment for operating expenses, particularly research and development and sales and marketing expenses; ● timing of hiring personnel for our research and development and sales and marketing organizations; ● the amount and timing of costs associated with recruiting, educating, and integrating new employees and retaining and motivating existing employees; ● the effects of acquisitions and their integration; ● general economic conditions, both domestically and internationally, as well as economic conditions specifically affecting industries in which our customers participate; ● the impact of new accounting pronouncements; ● changes in revenue recognition policies that impact our technology license revenue; ● changes in regulatory or legal environments that may cause us to incur, among other things, expenses associated with compliance; ● the impact of changes in tax laws or judicial or regulatory interpretations of tax laws, which are recorded in the period such laws are enacted or interpretations are issued and may significantly affect the effective tax rate of that period; ● the impact of global events, including the outbreak of war or conflicts ● health epidemics or pandemics, such as the COVID-19 pandemic; ● changes in the competitive dynamics of our market, including consolidation among competitors or customers; and ● significant security breaches of, technical difficulties with, or interruptions to, the delivery and use of our offering. 18 Any of these and other factors, or the cumulative effect of some of these factors, may cause our results of operations to vary significantly.
In addition to the other risks described herein, factors that may affect our results of operations include the following: ● changes in our revenue mix and related changes in revenue recognition; ● changes in actual and anticipated growth rates of our revenue, customers, and key operating metrics; ● fluctuations in demand for or pricing of our product offerings; ● our ability to attract new customers; ● our ability to retain our existing customers, particularly large customers; ● customers and potential customers opting for alternative products, including developing their own in-house solutions; ● investments in new offerings, features, and functionality; ● fluctuations or delays in development, release, or adoption of new features and functionality for our offering; 19 ● delays in closing sales which may result in revenue being pushed into the next quarter; ● changes in customers’ budgets and in the timing of their budget cycles and purchasing decisions; ● our ability to control costs; ● the amount and timing of payment for operating expenses, particularly research and development and sales and marketing expenses; ● timing of hiring personnel for our research and development and sales and marketing organizations; ● the amount and timing of costs associated with recruiting, educating, and integrating new employees and retaining and motivating existing employees; ● the effects of acquisitions and their integration; ● general economic conditions, both domestically and internationally, as well as economic conditions specifically affecting industries in which our customers participate; ● the impact of new accounting pronouncements; ● changes in revenue recognition policies that impact our technology license revenue; ● changes in regulatory or legal environments that may cause us to incur, among other things, expenses associated with compliance; ● the impact of changes in tax laws or judicial or regulatory interpretations of tax laws, which are recorded in the period such laws are enacted or interpretations are issued and may significantly affect the effective tax rate of that period; ● the impact of global events, including the outbreak of war or conflicts ● health epidemics or pandemics, such as the COVID-19 pandemic; ● changes in the competitive dynamics of our market, including consolidation among competitors or customers; and ● significant security breaches of, technical difficulties with, or interruptions to, the delivery and use of our offering.
Our dependence on these relationships exposes us to the risk that components manufactured by OEMs or other suppliers could contain defects that would cause our autonomous driving technology not to operate as intended. Our autonomous driving technology is available for production release and is currently being licensed to customers. We plan to continue our scaled commercialization throughout 2024 and beyond.
Our dependence on these relationships exposes us to the risk that components manufactured by OEMs or other suppliers could contain defects that would cause our autonomous driving technology not to operate as intended. Our autonomous driving technology is available for production release and is currently being licensed to customers. We plan to continue our scaled commercialization throughout 2025 and beyond.
Any concerns about our data privacy and security practices (even if unfounded), or any failure, real or perceived, by us to comply with our posted privacy policies, contractual obligations, or any legal or regulatory requirements, standards, certifications, or orders, or other privacy or consumer protection-related laws and regulations applicable to us, could cause our clients to reduce their use of our autonomous industrial vehicles and could affect our financial condition, operating results, and our reputation, and may result in governmental or regulatory investigations, enforcement actions, regulatory fines, criminal compliance orders, litigations, breach of contract claims, or public statements against us by government regulatory authorities, our partners and/or clients, data subjects, consumer advocacy groups, or others, all of which could be costly and have an adverse effect on our business. 29 Furthermore, enforcement actions and investigations by regulatory authorities related to data security incidents and privacy violations continue to increase.
Any concerns about our data privacy and security practices (even if unfounded), or any failure, real or perceived, by us to comply with our posted privacy policies, contractual obligations, or any legal or regulatory requirements, standards, certifications, or orders, or other privacy or consumer protection-related laws and regulations applicable to us, could cause our clients to reduce their use of our autonomous industrial vehicles and could affect our financial condition, operating results, and our reputation, and may result in governmental or regulatory investigations, enforcement actions, regulatory fines, criminal compliance orders, litigations, breach of contract claims, or public statements against us by government regulatory authorities, our partners and/or clients, data subjects, consumer advocacy groups, or others, all of which could be costly and have an adverse effect on our business.
The market price of our common stock may fluctuate or decline significantly in response to numerous factors, many of which are beyond our control, including: ● actual or anticipated fluctuations in our financial condition or results of operations; ● variance in our financial performance from expectations of securities analysts; ● changes in the pricing of the solutions on our platforms; ● changes in our projected operating and financial results; ● changes in laws or regulations applicable to our technology; ● announcements by us or our competitors of significant business developments, acquisitions or new offerings; ● sales of shares of our common stock by us or our shareholders; ● significant data breaches, disruptions to or other incidents involving our technology; ● our involvement in litigation; ● future sales of our common stock by us or our stockholders; ● changes in senior management or key personnel; ● the trading volume of our common stock; ● changes in the anticipated future size and growth rate of our market; ● general economic and market conditions; and ● other events or factors, including those resulting from war, incidents of terrorism, global pandemics or responses to these events.
The market price of our common stock may fluctuate or decline significantly in response to numerous factors, many of which are beyond our control, including: ● actual or anticipated fluctuations in our financial condition or results of operations; ● variance in our financial performance from expectations of securities analysts; ● changes in the pricing of the solutions on our platforms; ● changes in our projected operating and financial results; ● changes in laws or regulations applicable to our technology; ● announcements by us or our competitors of significant business developments, acquisitions or new offerings; ● sales of shares of our common stock by us or our shareholders; ● significant data breaches, disruptions to or other incidents involving our technology; ● our involvement in litigation; ● future sales of our common stock by us or our stockholders; ● changes in senior management or key personnel; ● the trading volume of our common stock; ● changes in the anticipated future size and growth rate of our market; ● general economic and market conditions; and ● other events or factors, including those resulting from war, incidents of terrorism, global pandemics or responses to these events. 33 Broad market and industry fluctuations, as well as general economic, political, regulatory and market conditions, may also negatively impact the market price of our common stock.
Acquired assets or businesses may not generate the financial results we expect. Acquisitions could result in the use of substantial amounts of cash, potentially dilutive issuances of equity securities, significant goodwill impairment charges, amortization expenses for other intangible assets and exposure to potential unknown liabilities of the acquired business. Moreover, the costs of identifying and consummating acquisitions may be significant.
Acquired assets or businesses may not generate the financial results we expect. Acquisitions could result in the use of substantial amounts of cash, potentially dilutive issuances of equity securities, significant goodwill impairment charges, amortization expenses for other intangible assets and exposure to potential unknown liabilities of the acquired business.
While our R&D costs were $12.7 million and $9.5 million during the years ended December 31, 2023 and 2022, respectively, and are likely to grow in the future, we have minimal recurring revenues. Further, because we account for R&D as an operating expense, these expenditures will adversely affect our results of operations in the future.
While our R&D costs were $11.3 million and $12.7 million during the years ended December 31, 2024 and 2023, respectively, and are likely to grow in the future, we have minimal recurring revenues. Further, because we account for R&D as an operating expense, these expenditures will adversely affect our results of operations in the future.
If our common stock were to be delisted from The Nasdaq Capital Market, trading of our common stock most likely will be conducted in the over-the-counter market on an electronic bulletin board established for unlisted securities such as the OTC Markets or in the “pink sheets.” Such a downgrading in our listing market may limit our ability to make a market in our common stock and which may impact purchases or sales of our securities. 30 Future sales of our common stock in the public market could cause the market price of our common stock to decline.
If our common stock were to be delisted from The Nasdaq Capital Market, trading of our common stock most likely will be conducted in the over-the-counter market on an electronic bulletin board established for unlisted securities such as the OTC Markets or in the “pink sheets.” Such a downgrading in our listing market may limit our ability to make a market in our common stock and which may impact purchases or sales of our securities.
We have not recognized a substantial amount of revenue to date, and we had an accumulated deficit of $160.0 million and $135.7 million as of December 31, 2023 and December 31, 2022, respectively. We have developed and tested our autonomous driving technology but there can be no assurance that it will be commercially successful at scale.
We have not recognized a substantial amount of revenue to date, and we had an accumulated deficit of $189.3 million and $160.0 million as of December 31, 2024 and December 31, 2023, respectively. We have developed and tested our autonomous driving technology but there can be no assurance that it will be commercially successful at scale.
We expect the rate at which we will incur losses to be significantly higher in future periods as we: ● design, develop, and deploy our autonomous vehicle software products and tools on industrial vehicle platforms with OEM partners and end customers. ● seek to achieve and commercialize deployments of level 4 autonomy for industrial vehicles; ● seek to expand our commercial deployments, on a nationwide basis in the United States and internationally; ● expand our design, development, maintenance, and repair capabilities; ● respond to competition in the autonomous driving market and from traditional industrial solution providers; ● respond to evolving regulatory developments in the nascent autonomous industrial vehicle and industrial automation markets; ● increase our sales and marketing activities; and ● increase our general and administrative functions to support our growing operations and for being a public reporting company.
We expect the rate at which we will incur losses to be significantly higher in future periods as we: ● design, develop, and deploy our autonomous vehicle software products and tools on industrial vehicle platforms with OEM partners and end customers. ● seek to achieve and commercialize deployments of level 4 autonomy for industrial vehicles; ● seek to expand our commercial deployments, on a nationwide basis in the United States and internationally; ● expand our design, development, maintenance, and repair capabilities; ● respond to competition in the autonomous driving market and from traditional industrial solution providers; ● respond to evolving regulatory developments in the nascent autonomous industrial vehicle and industrial automation markets; ● increase our sales and marketing activities; and ● increase our general and administrative functions to support our growing operations and for being a public reporting company. 18 Because we will incur the costs and expenses from these efforts before we receive any substantial revenue, our losses in future periods will be significant.
On August 24, 2023, we received a notification letter from The Nasdaq Stock Market advising that, for 30 consecutive business days preceding the notification letter, the Company did not meet the minimum $1.00 per share bid price requirement for continued inclusion on The Nasdaq Capital Market pursuant to Nasdaq Marketplace Listing Rule 5550(a)(2).
On February 6, 2025, we received a notification letter from The Nasdaq Stock Market advising that, for 30 consecutive business days preceding the notification letter, the Company did not meet the minimum $1.00 per share bid price requirement for continued inclusion on The Nasdaq Capital Market pursuant to Nasdaq Marketplace Listing Rule 5550(a)(2).
Risks Related to Our Financial Position and Need for Additional Capital Losses for the foreseeable future. We incurred net losses of $22.8 million and $19.2 million for the years ended December 31, 2023, and 2022, respectively.
Risks Related to Our Financial Position and Need for Additional Capital Losses for the foreseeable future. We incurred net losses of $29.3 million and $22.8 million for the years ended December 31, 2024, and 2023, respectively.
In addition, the Company had accumulated deficits of approximately $160.0 million and $135.7 million as of December 31, 2023 and December 31, 2022, respectively, and net cash used in operating activities was approximately $19.5 million and $16.3 million for the year ended December 31, 2023 and 2022, respectively.
In addition, the Company had accumulated deficits of approximately $189.3 million and $160.0 million as of December 31, 2024 and December 31, 2023, respectively, and net cash used in operating activities was approximately $9.5 million and $19.5 million for the year ended December 31, 2024 and 2023, respectively.
If our technology is determined to infringe a valid and enforceable patent, or if we wish to avoid potential intellectual property litigation on any alleged infringement, misappropriation or other violation of third party intellectual property rights, we may be required to do one or more of the following: (i) cease development, sales, or use of our products that incorporate or use the asserted intellectual property right; (ii) obtain a license from the owner of the asserted intellectual property right, which may be unavailable on commercially reasonable terms, or at all, or which may be non-exclusive, thereby giving our competitors and other third parties access to the same technologies licensed to us; (iii) pay substantial royalties or other damages; or (iv) redesign our technology or one or more aspects or systems of our autonomous industrial vehicles to avoid any infringement or allegations thereof.
These claims and any resulting lawsuits, if resolved adversely to us, could subject us to significant liability for damages, impose temporary or permanent injunctions against our products, technologies or business operations, or invalidate or render unenforceable our intellectual property. 24 If our technology is determined to infringe a valid and enforceable patent, or if we wish to avoid potential intellectual property litigation on any alleged infringement, misappropriation or other violation of third party intellectual property rights, we may be required to do one or more of the following: (i) cease development, sales, or use of our products that incorporate or use the asserted intellectual property right; (ii) obtain a license from the owner of the asserted intellectual property right, which may be unavailable on commercially reasonable terms, or at all, or which may be non-exclusive, thereby giving our competitors and other third parties access to the same technologies licensed to us; (iii) pay substantial royalties or other damages; or (iv) redesign our technology or one or more aspects or systems of our autonomous industrial vehicles to avoid any infringement or allegations thereof.
When our autonomy enabled industrial vehicles are in operation, the camera, LiDAR, and other sensing components of the vehicles will collect site and route view, mapping data, landscape images, and other LiDAR information, which may include personal information such as license plate numbers of other vehicles, facial features of pedestrians, appearance of individuals, GPS data, geolocation data, in order train the data analytics and artificial intelligence technology equipped in our industrial vehicles for the purpose of identifying different objects, and predicting potential issues that may arise during the operation of our integrated industrial vehicles.
When our autonomy enabled industrial vehicles are in operation, the camera, LiDAR, and other sensing components of the vehicles will collect site and route view, mapping data, landscape images, and other LiDAR information, which may include personal information such as license plate numbers of other vehicles, facial features of pedestrians, appearance of individuals, GPS data, geolocation data, in order train the data analytics and artificial intelligence technology equipped in our industrial vehicles for the purpose of identifying different objects, and predicting potential issues that may arise during the operation of our integrated industrial vehicles. 30 We plan to utilize systems and applications that are spread over the globe, requiring us to regularly move data across national borders.
Furthermore, non-compliance with data privacy laws and regulations, or a major breach of our network security and systems, could have serious negative consequences for our businesses and future prospects, including possible fines, penalties, and damages, reduced customer demand for our products, and harm to our reputation and brand, all of which may have a material and adverse impact on our business, financial condition, and operating results.
Furthermore, non-compliance with data privacy laws and regulations, or a major breach of our network security and systems, could have serious negative consequences for our businesses and future prospects, including possible fines, penalties, and damages, reduced customer demand for our products, and harm to our reputation and brand, all of which may have a material and adverse impact on our business, financial condition, and operating results. 31 We make public statements about our use and disclosure of personal information through our privacy policy, information provided on our website and press statements.
There can be no assurances that sufficient funds will be available to us when required or on acceptable terms, if at all. Accordingly, management has concluded that these plans do not alleviate substantial doubt about the Company’s ability to continue as a going concern.
There can be no assurances that sufficient funds will be available to us when required or on acceptable terms, if at all. Accordingly, management has concluded that these plans do not alleviate substantial doubt about the Company’s ability to continue as a going concern. Our failure to achieve or maintain profitability could negatively impact the value of our common stock.
We expect fluctuations in our financial results making it difficult to project future results. Our results of operations may fluctuate in the future due to a variety of factors, many of which are outside of our control. As a result, our past results may not be indicative of our future performance.
Our results of operations may fluctuate in the future due to a variety of factors, many of which are outside of our control. As a result, our past results may not be indicative of our future performance.
We have alliances and partnerships, through mutually beneficial non-binding memoranda of understanding or partnering arrangements with other companies in the industrial equipment, automation and automotive industries to help us in our efforts to continue to enhance our technology, commercialize our solutions, and drive market acceptance. 16 Collaboration with these third parties is subject to risks, some of which are outside our control.
We have alliances and partnerships, through mutually beneficial non-binding memoranda of understanding or partnering arrangements with other companies in the industrial equipment, automation and automotive industries to help us in our efforts to continue to enhance our technology, commercialize our solutions, and drive market acceptance.
The Company incurred net losses of approximately $22.8 million and $19.2 million for the year ended December 31, 2023 and 2022, respectively.
The Company incurred net losses of approximately $29.3 million and $22.8 million for the year ended December 31, 2024 and 2023, respectively.
None of the employment agreements and offer letters with our executive officers or other key personnel require them to continue to work for us for any specified period and, therefore, they could terminate their employment with us at any time.
We do not maintain key-man insurance for any member of our senior management team or any other employee. None of the employment agreements and offer letters with our executive officers or other key personnel require them to continue to work for us for any specified period and, therefore, they could terminate their employment with us at any time.
Any of the foregoing events may give rise to interruptions, breakdowns, system failures, technology platform failures or internet failures, which could cause the loss or corruption of data or malfunctions of software or hardware as well as adversely affect our ability to provide services.
Any of the foregoing events may give rise to interruptions, breakdowns, system failures, technology platform failures or internet failures, which could cause the loss or corruption of data or malfunctions of software or hardware as well as adversely affect our ability to provide services. 23 International trade policies, including protectionist trade policies, such as tariffs and sanctions, could adversely affect our financial performance.
Our failure to achieve or maintain profitability could negatively impact the value of our common stock. 19 We may be subject to risks associated with potential future acquisitions. Although we have no current acquisition plans, if appropriate opportunities arise, we may acquire additional assets, products, technology or businesses that are complementary to our existing business.
We may be subject to risks associated with potential future acquisitions. Although we have no current acquisition plans, if appropriate opportunities arise, we may acquire additional assets, products, technology or businesses that are complementary to our existing business.
Our ability to obtain the necessary financing to carry out our business plan is subject to a number of factors, including general market volatility, investor acceptance of our business plan, regulatory requirements and the successful development of our autonomous technology. These factors may make the timing, amount, terms, and conditions of such financing unattractive or unavailable to us.
Our ability to obtain the necessary financing to carry out our business plan is subject to a number of factors, including general market volatility, investor acceptance of our business plan, regulatory requirements and the successful development of our autonomous technology.
As of December 31, 2023, the Company’s unrestricted cash balance was $3.6 million, and its short-term investments balance was $4.6 million. As of December 31, 2022, the Company’s cash balance was approximately $10.5 million, and the short-term investments balance was $12.1 million.
As of December 31, 2024, the Company’s unrestricted cash balance was $23.6 million. As of December 31, 2023, the Company’s cash balance was approximately $3.6 million, and the short-term investments balance was $4.6 million.
In addition, as a result of the capital-intensive nature of our business, we can be expected to continue to sustain substantial operating expenses without generating sufficient revenue to cover expenditures. Any investment in our company is therefore highly speculative and could result in the loss of your entire investment.
In addition, as a result of the capital-intensive nature of our business, we can be expected to continue to sustain substantial operating expenses without generating sufficient revenue to cover expenditures.
For example, certain agreements with our partners grant our partner or us the right to terminate such agreements for cause or without cause. If any of our collaborations with third parties are terminated, it may delay or prevent our efforts to deploy our software products and tools on purpose-built autonomous industrial vehicles at scale.
If any of our collaborations with third parties are terminated, it may delay or prevent our efforts to deploy our software products and tools on purpose-built autonomous industrial vehicles at scale.
In addition, lawmakers or governmental agencies could pass laws or adopt regulations that limit the use of autonomous driving or industrial automation technology or increase liability associated with its use. Any of these events could adversely affect our brand, relationships with users, operating results, or financial condition.
In addition, lawmakers or governmental agencies could pass laws or adopt regulations that limit the use of autonomous driving or industrial automation technology or increase liability associated with its use.
We make public statements about our use and disclosure of personal information through our privacy policy, information provided on our website and press statements. Also, we enter into contracts with third parties (such as our partners and clients) that contain provisions regarding the collection, sharing, and processing of personal information.
Also, we enter into contracts with third parties (such as our partners and clients) that contain provisions regarding the collection, sharing, and processing of personal information.
We plan to utilize systems and applications that are spread over the globe, requiring us to regularly move data across national borders. As a result, we are subject to a variety of laws and regulations in the United States, and other foreign jurisdictions as well as contractual obligations, regarding data privacy, protection, and security.
As a result, we are subject to a variety of laws and regulations in the United States, and other foreign jurisdictions as well as contractual obligations, regarding data privacy, protection, and security.
Risks Related to Our Intellectual Property, Information Technology and Data Privacy We may become subject to litigation brought by third parties claiming infringement, misappropriation or other violation by us of their intellectual property rights.
The disclosure of this material weakness, even if quickly remediated, could reduce the market’s confidence in our financial statements and harm our enterprise value. Risks Related to Our Intellectual Property, Information Technology and Data Privacy We may become subject to litigation brought by third parties claiming infringement, misappropriation or other violation by us of their intellectual property rights.
To the extent any security incident results in unauthorized access or damage to or acquisition, use, corruption, loss, destruction, alteration or dissemination of our data, including intellectual property and personal information, or our products, or for it to be believed or reported that any of these occurred, it could disrupt our business, harm our reputation, compel us to comply with applicable data breach notification laws, subject us to time consuming, distracting and expensive litigation, regulatory investigation and oversight, mandatory corrective action, require us to verify the correctness of database contents, or otherwise subject us to liability under laws, regulations and contractual obligations, including those that protect the privacy and security of personal information.
While, we maintain information technology measures designed to protect us against intellectual property theft, data breaches, sabotage and other external or internal cyber-attacks or misappropriation, our systems and those of our service providers are potentially vulnerable to malware, ransomware, viruses, denial-of-service attacks, phishing attacks, social engineering, computer hacking, unauthorized access, exploitation of bugs, defects and vulnerabilities, breakdowns, damage, interruptions, system malfunctions, power outages, terrorism, acts of vandalism, security breaches, security incidents, inadvertent or intentional actions by employees or other third parties, and other cyber-attacks. 29 To the extent any security incident results in unauthorized access or damage to or acquisition, use, corruption, loss, destruction, alteration or dissemination of our data, including intellectual property and personal information, or our products, or for it to be believed or reported that any of these occurred, it could disrupt our business, harm our reputation, compel us to comply with applicable data breach notification laws, subject us to time consuming, distracting and expensive litigation, regulatory investigation and oversight, mandatory corrective action, require us to verify the correctness of database contents, or otherwise subject us to liability under laws, regulations and contractual obligations, including those that protect the privacy and security of personal information.
Our future business depends in large part on our ability to continue to develop and successfully commercialize our suite of software products and tools.
Any investment in our company is therefore highly speculative and could result in the loss of your entire investment. 16 Our future business depends in large part on our ability to continue to develop and successfully commercialize our suite of software products and tools.
We expect that in the future we may receive notices that claim we or our collaborators have misappropriated or misused other parties’ intellectual property rights, particularly as the number of competitors in our market grows. 22 To defend ourselves against any intellectual property claims brought by third parties, whether with or without merits, can be time-consuming and could result in substantial costs and a diversion of our resources.
To defend ourselves against any intellectual property claims brought by third parties, whether with or without merits, can be time-consuming and could result in substantial costs and a diversion of our resources.
Maintaining such confidence may be particularly complicated by certain factors including those that are largely outside of our control, such as our limited operating history at scale, user unfamiliarity with our solutions, any delays in scaling manufacturing, delivery, and service operations to meet demand, competition and uncertainty regarding the future of autonomous vehicles, and our performance compared with market expectations . 21 Catastrophic events, such as pandemics and epidemics, or outbreak of an infectious disease, such as COVID-19 and subsequent variants, natural disasters, terrorist activities, political unrest, and other manmade problems such as war could have a material adverse impact on our business, results of operations, financial condition and cash flows or liquidity.
Maintaining such confidence may be particularly complicated by certain factors including those that are largely outside of our control, such as our limited operating history at scale, user unfamiliarity with our solutions, any delays in scaling manufacturing, delivery, and service operations to meet demand, competition and uncertainty regarding the future of autonomous vehicles, and our performance compared with market expectations .
If our autonomous driving software fails to perform as expected our ability to market, sell or lease our autonomous driving software could be harmed.
Any of these events could adversely affect our brand, relationships with users, operating results, or financial condition. 22 If our autonomous driving software fails to perform as expected our ability to market, sell or lease our autonomous driving software could be harmed.
We anticipate that we will encounter, risks and uncertainties frequently experienced by growing companies in rapidly changing industries, such as the risks and uncertainties described in this Annual Report. 17 If our assumptions regarding these risks and uncertainties and our future revenue growth are incorrect or change, or if we do not address these risks successfully, our operating and financial results could differ materially from our expectations, and our business could suffer.
If our assumptions regarding these risks and uncertainties and our future revenue growth are incorrect or change, or if we do not address these risks successfully, our operating and financial results could differ materially from our expectations, and our business could suffer. We expect fluctuations in our financial results making it difficult to project future results.
In particular, we expect to incur substantial and potentially increasing research and development (“R&D”) costs as we continue to develop and enhance EAS and other technology and products for commercialization.
In addition, we may find that these efforts are more expensive than we currently anticipate or that these efforts may not result in revenue, which would further increase our losses. In particular, we expect to incur substantial and potentially increasing research and development (“R&D”) costs as we continue to develop and enhance EAS and other technology and products for commercialization.
Congress, the federal courts, and the USPTO, the laws and regulations governing patents could change in unpredictable ways that could weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future. 24 Our patent applications may not issue as patents, which may have a material adverse effect on our ability to prevent others from commercially exploiting products similar to ours.
Depending on decisions by the U.S. Congress, the federal courts, and the USPTO, the laws and regulations governing patents could change in unpredictable ways that could weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future.
The Company was given until August 19, 2024 to regain compliance with Nasdaq’s $1 minimum bid price per share requirement. While we intend to regain compliance with the minimum bid price rule, there can be no assurance that we will be able to maintain continued compliance with this rule or the other listing requirements of The Nasdaq Capital Market.
On February 18, 2025, the Company effected a reverse stock split of its common stock and the Company’s common stock has traded above $1.00 since the effectuation of the reverse stock split. 32 While we intend to regain compliance with the minimum bid price rule, there can be no assurance that we will be able to maintain continued compliance with this rule or the other listing requirements of The Nasdaq Capital Market.
We may raise these additional funds through the issuance of equity, equity related, or debt securities.
These factors may make the timing, amount, terms, and conditions of such financing unattractive or unavailable to us. 20 We may raise these additional funds through the issuance of equity, equity related, or debt securities.
Risks Related to Our Business Operations Our success depends largely on the continued services of our senior management team, technical engineers, and certain key employees. We rely on our executive officers and key employees in the areas of business strategy, research and development, marketing, sales, services, and general and administrative functions.
We rely on our executive officers and key employees in the areas of business strategy, research and development, marketing, sales, services, and general and administrative functions. From time to time, there may be changes in our executive management team or key employees resulting from the hiring or departure of executives or key employees, which could disrupt our business.
Broad market and industry fluctuations, as well as general economic, political, regulatory and market conditions, may also negatively impact the market price of our common stock. In addition, technology stocks have historically experienced high levels of volatility. In the past, companies who have experienced volatility in the market price of their securities have been subject to securities class action litigation.
In addition, technology stocks have historically experienced high levels of volatility. In the past, companies who have experienced volatility in the market price of their securities have been subject to securities class action litigation. We may be the target of this type of litigation in the future, which could result in substantial expenses and divert our management’s attention.
Removed
Because we will incur the costs and expenses from these efforts before we receive any substantial revenue, our losses in future periods will be significant. In addition, we may find that these efforts are more expensive than we currently anticipate or that these efforts may not result in revenue, which would further increase our losses.
Added
Collaboration with these third parties is subject to risks, some of which are outside our control. For example, certain agreements with our partners grant our partner or us the right to terminate such agreements for cause or without cause.
Removed
From time to time, there may be changes in our executive management team or key employees resulting from the hiring or departure of executives or key employees, which could disrupt our business. We do not maintain key-man insurance for any member of our senior management team or any other employee.
Added
We anticipate that we will encounter, risks and uncertainties frequently experienced by growing companies in rapidly changing industries, such as the risks and uncertainties described in this Annual Report.
Removed
These claims and any resulting lawsuits, if resolved adversely to us, could subject us to significant liability for damages, impose temporary or permanent injunctions against our products, technologies or business operations, or invalidate or render unenforceable our intellectual property.
Added
Any of these and other factors, or the cumulative effect of some of these factors, may cause our results of operations to vary significantly.
Removed
While, we maintain information technology measures designed to protect us against intellectual property theft, data breaches, sabotage and other external or internal cyber-attacks or misappropriation, our systems and those of our service providers are potentially vulnerable to malware, ransomware, viruses, denial-of-service attacks, phishing attacks, social engineering, computer hacking, unauthorized access, exploitation of bugs, defects and vulnerabilities, breakdowns, damage, interruptions, system malfunctions, power outages, terrorism, acts of vandalism, security breaches, security incidents, inadvertent or intentional actions by employees or other third parties, and other cyber-attacks.
Added
Moreover, the costs of identifying and consummating acquisitions may be significant. 21 Risks Related to Our Business Operations Our success depends largely on the continued services of our senior management team, technical engineers, and certain key employees.
Removed
If we fail to meet any of the continued listing standards of The Nasdaq Capital Market, our common stock will be delisted from The Nasdaq Capital Market. These continued listing standards include specifically enumerated criteria, such as a $1.00 minimum closing bid price.
Added
Catastrophic events, such as pandemics and epidemics, or outbreak of an infectious disease, such as COVID-19 and subsequent variants, natural disasters, terrorist activities, political unrest, and other manmade problems such as war could have a material adverse impact on our business, results of operations, financial condition and cash flows or liquidity.
Removed
To demonstrate compliance with this requirement, the closing bid price of our common stock needs to be at least $1.00 per share for a minimum of 10 consecutive business days before February 20, 2024. On February 21, 2024, Nasdaq granted the Company an additional 180-day extension to continue its listing on the Nasdaq Capital Market.
Added
Due to the interconnectedness of the global economy, policy changes in one area of the world can have an immediate and material adverse impact on markets around the world.
Removed
We may be the target of this type of litigation in the future, which could result in substantial expenses and divert our management’s attention. 31 Our executive officers, directors and principal stockholders, if they choose to act together, have the ability and will continue to have the ability to control or significantly influence all matters submitted to stockholders for approval.
Added
Changes in international trade policies, including: (i) changes to existing trade agreements; (ii) greater restrictions on free trade generally; and (iii) significant increases in customs duties and tariffs on goods imported into the United States and reciprocal actions by other countries, can adversely affect our financial condition and operating results.
Removed
Our executive officers, directors and principal stockholders (including entities affiliated with Benchmark), beneficially own approximately 23.38% of our common stock. See Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters .
Added
On March 3, 2025, the President of the United States announced the imposition of new tariffs on imports from Mexico and Canada, to take effect on March 4, 2025. Effective at 12.01 a.m. ET on March 4, 2025, all goods arriving at U.S. ports and originating from Canada or Mexico are subject to 25 percent tariffs.
Removed
Such persons acting together, will have the ability to control or significantly influence all matters submitted to our stockholders for approval, as well as our management and business affairs.
Added
Certain Canadian energy resources are subject to a lower 10 percent tariff. Effective February 4, 2025, all goods presented for entry at U.S. ports and originating from China, including Hong Kong, are subject to a 10 percent tariff on Chinese imports.
Removed
This concentration of ownership may have the effect of delaying, deferring or preventing a change in control, impeding a merger, consolidation, takeover or other business combination involving us, or discouraging a potential acquiror from making a tender offer or otherwise attempting to obtain control of our business, even if such a transaction would benefit other stockholders.
Added
The impact of these potential tariffs on our business and financial condition, if any, is subject to a number of factors that are not yet known, including any countermeasures that the target countries may take in response to such tariffs.
Added
In light of these uncertainties, we can provide no assurance that any mitigating actions that may become available to us, such as our ability to pass along some or all of the costs of any tariffs to some or all of our customers, will be successful.
Added
In addition to potential increases in customs duties and tariffs in the United States and other countries, the United States-Mexico-Canada Agreement ("USMCA") is subject to renewal in 2026. There can be no assurance that any newly negotiated terms in the USMCA will not adversely affect our business and the business of our customers.
Added
It remains unclear what specific actions the current U.S. administration may take to resolve trade-related issues with China and other countries. Any of the above factors could impact our supply chain, as well as our operations, and adversely affect our financial condition and operating results.
Added
We have a material weakness in our internal control over financial reporting, and our inability to remediate this weakness or otherwise implement and maintain effective internal control over financial reporting, or the inability of our independent registered public accounting firm to provide an unqualified report thereon, could have a material adverse effect on us.
Added
If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results. As a result, our stakeholders could lose confidence in our financial reporting, which could adversely affect the results of our business and our enterprise value.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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None of our directors, officers or affiliates are involved in a proceeding adverse to our business or have a material interest adverse to our business. Item 4. Mine Safety Disclosures Not Applicable. 34 PART II
None of our directors, officers or affiliates are involved in a proceeding adverse to our business or have a material interest adverse to our business. Item 4. Mine Safety Disclosures Not Applicable. 36 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Issuer Purchases of Equity Securities The Company did not repurchase any of its equity securities during its fiscal year ended December 31, 2023. Item 6. [Reserved]
Issuer Purchases of Equity Securities The Company did not repurchase any of its equity securities during its fiscal year ended December 31, 2024. Item 6. [Reserved]
Holders of Record As of December 31, 2023, we had 58 shareholders of record. Dividend Policy We have not declared or paid cash dividends on our common stock and have no present intention of paying any cash dividends on our common stock.
Holders of Record As of December 31, 2024, we had 64 shareholders of record. Dividend Policy We have not declared or paid cash dividends on our common stock and have no present intention of paying any cash dividends on our common stock.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Item 6. [Reserved] 35 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 35 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 41 Item 8. Financial Statements and Supplementary Data F-1 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 42 Item 9A. Controls and Procedures 42 Item 9B.
Item 6. [Reserved] 37 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 37 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 44 Item 8. Financial Statements and Supplementary Data 44 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 45 Item 9A. Controls and Procedures 45 Item 9B.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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These challenges include labor shortages, lagging technological advancements from incumbent vehicle manufacturers, and high upfront investment commitment. 35 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 challenges include labor shortages, lagging technological advancements from incumbent vehicle manufacturers, and high upfront investment commitment. 37 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.
The following discussion and analysis summarizes the significant factors affecting our results of operations and financial condition as of and during the years ended December 31, 2023 and 2022 and should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report.
The following discussion and analysis summarizes the significant factors affecting our results of operations and financial condition as of and during the years ended December 31, 2024 and 2023 and should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report.
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. 37 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.
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. 39 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.
First, we enter into fixed-price NRE contracts related to trial projects that consist of several independent phases and includes design, data gathering, hardware installation on an industrial vehicle, customer-specific configuration of the DriveMod software, and demonstrations. The determination of the contract price is based on labor and hardware costs estimated to achieve the required milestones specified in the contract.
We enter into fixed-price NRE contracts related to trial projects that consist of several independent phases and include design, data gathering, hardware installation on an industrial vehicle, customer-specific configuration of the DriveMod software, and demonstrations. The determination of the contract price is based on labor and hardware costs estimated to achieve the required milestones specified in the contract.
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 140,000 shares of its common stock, exercisable at a price per share of $9.373 and expiring on October 19, 2026.
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 (1) shares of its common stock, exercisable at a price per share of $140,625 (1) and expiring on October 19, 2026.
We target scaled deployments to begin in 2024. 36 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 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.
As of December 31, 2023, the Company had $6.9 million of common stock remaining available for sale under the ATM Sales Agreement. On December 8, 2023, the Company entered into a Placement Agent Agreement with Aegis Capital Corp.
As of December 31, 2024, the Company had $0 of common stock remaining available for sale under the ATM Sales Agreement. On December 8, 2023, the Company entered into a Placement Agent Agreement with Aegis Capital Corp.
Additionally, in connection with the Private Placement offering completed on April 29, 2022, the Company issued warrants to purchase 6,451,613 shares of its common stock, exercisable at a price per share of $2.98 and expiring on April 29, 2027.
Additionally, in connection with the Private Placement offering completed on April 29, 2022, the Company issued warrants to purchase 426 (1) shares of its common stock, exercisable at a price per share of $40,650 (1) and expiring on April 29, 2027.
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. 38 Results of Operations Revenue We currently derive revenue from two sources.
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.
The increase consists of additional investment maturities of $29.5 million, which were offset by purchases of short-term investments of approximately $21.5 million and approximately $1.6 million in purchases of R&D-related hardware equipment, acquisition of intangible asset, capitalization of software and disposal of assets.
The decrease consists of smaller investment maturities of $12.2 million, which were offset by purchases of short-term investments of approximately $7.6 million and approximately $1.7 million in purchases of R&D-related hardware equipment, acquisition of intangible asset, capitalization of software and disposal of assets.
(“Aegis”), pursuant to which Aegis acted as the Company’s placement agent, on a reasonable best efforts basis, in connection with the sale by the Company of an aggregate of 33,333,333 shares of common stock in a public offering, which included: (i) 11,466,733 shares of Common Stock, and (ii) pre-funded warrants to purchase 21,866,600 shares of Common Stock.
(“Aegis”), pursuant to which Aegis acted as the Company’s placement agent, on a reasonable best efforts basis, in connection with the sale by the Company of an aggregate of 2,222 (1) shares of common stock in a public offering, which included: (i) 764 (1) shares of common stock, and (ii) pre-funded warrants to purchase 1,458 (1) shares of common stock.
For the year ended as of December 31, 2023, a total of 3,731,524 shares of common stock were sold through Virtu Americas LLC under the ATM Sales Agreement for net proceeds of $1,747,468 after payment of commission fees of $36,897 and other related expenses of $60,465.
The Company pays Virtu Americas LLC up to 3.0% of the gross proceeds as a commission. As of December 31, 2024, a total of 4,524 (1) , shares of common stock were sold through Virtu Americas LLC under the ATM Sales Agreement for net proceeds of $8,597,957 after payment of commission fees of $175,468 and other related expenses of $60,465.
We expect annual R&D expenditures in the foreseeable future to exceed that of 2023. We also had limited paid deployments in 2023 that offset some of the ongoing R&D costs of continually developing EAS.
We also had limited paid deployments in 2024 that offset some of the ongoing R&D costs of continually developing EAS. We target scaled deployments to begin in 2025.
Short-term investments consist of placements in U.S. government securities with original maturities between three to nine months. As of December 31, 2023, the Company had unrestricted cash of approximately $3.6 million and short-term investments of $4.6 million. As of December 31, 2022, the Company had unrestricted cash of $10.5 million and short-term investments of approximately $12.1 million .
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 nine months. As of December 31, 2024, the Company had unrestricted cash of approximately $23.6 million.
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 recognizes stock-based compensation cost and reverses previously recognized costs for unvested awards in the period forfeitures occur, if any.
Investing activities Net cash provided by investing activities for the year ended December 31, 2023 was approximately $6.4 million, an increase of approximately $19.7 million compared to net cash used in investing activities of approximately $13.3 million for the year ended December 31, 2022.
Investing activities Net cash provided by investing activities for the year ended December 31, 2024 was $2.9 million, a decrease of approximately $3.4 million or 54% compared to $6.4 million for the year ended December 31, 2023.
All other research and development costs are expensed as incurred. Research and development expense for the year ended December 31, 2023 increased by $3.2 million or 34% to $12.7 million from $9.5 million for the year ended December 31, 2022.
All other research and development costs are expensed as incurred. Research and development expense for the year ended December 31, 2024 decreased by $1.4 million or 11.5% to $11.3 million from $12.7 million for the year ended December 31, 2023. The decrease is primarily attributable the capitalization of costs related to capitalized software and customer contract.
These consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets and liabilities that may result in the Company not being able to continue as a going concern. 40 Cash Flows Operating activities Net cash used in operating activities for the year ended December 31, 2023 was $19.5 million, an increase of approximately $3.2 million or 20% compared to $16.3 million for the year ended December 31, 2022.
These consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets and liabilities that may result in the Company not being able to continue as a going concern.
General and administrative expenses increased by approximately $0.9 million or 9% to $10.9 million for the year ended December 31, 2023 from $10.0 million for the year ended December 31, 2022.
General and Administrative General, and administrative expense consist primarily of personnel costs, facilities expenses, depreciation and amortization, travel, and advertising costs. General and administrative expenses increased by approximately $0.5 million or 4.7% to $11.4 million for the year ended December 31, 2024 from $10.9 million for the year ended December 31, 2023.
During 2022, the Company recognized $0.26 million of revenue, of which $0.25 million was associated with NRE contracts and the remaining $0.01 million related to sales of Infinitracker devices. 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 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. During 2024, the Company reported cost of revenue of $0.5 million consisting primarily of deployment costs, related to personnel costs, travel expenses and associated hardware costs to specific customers.
RaaS is a subscription model that allows customers to use robots/vehicles without purchasing the hardware assets upfront. We will seek to achieve sustained revenue 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.
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. 38 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.
Second, we derive revenue from EAS subscriptions. Revenue from these subscriptions is recognized monthly over the service contract life, beginning at the time that a customer acknowledges acceptance of the service. During 2023, the Company recognized $1.49 million of revenue, of which $1.42 million was associated with NRE contracts and the remaining $0.07 million related to revenue from EAS subscriptions.
During 2024, the Company recognized $0.4 million of revenue, substantially all related to EAS subscriptions and hardware revenue. During 2023, the Company recognized $1.5 million of revenue, of which $1.4 million was associated with NRE contracts and the remaining $0.1 million related to revenue from EAS subscriptions.
We have not yet derived any significant recurring revenues from EAS but began marketing EAS to customers in 2022 with our first, paid commercial deployment commencing in the first quarter of 2023. We expect EAS to continually be developed and enhanced according to evolving customer needs, which will take place concurrently while other completed features of EAS are commercialized.
We expect EAS to continually be developed and enhanced according to evolving customer needs, which will take place concurrently while other completed features of EAS are commercialized. We expect annual R&D expenditures in the foreseeable future to exceed that of 2024.
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. 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.
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.
Financing activities Cash provided by financing activities for the year ended December 31, 2023 was $6.1 million, of which $6.1 million relate to the proceeds from the sale of common stock.
See Note 7, Capital Structure for details. 43 Financing activities Net cash provided by financing activities for the year ended December 31, 2024 was $26.6 million, an increase of approximately $20.5 million compared to $6.1 million for the year ended December 31, 2023.
The increase was attributed to an increase in personnel related costs, including provisions for non-cash stock-based compensation expense, as the Company increased staff to support public company responsibilities, an increase in marketing and advertising expenses, an increase in legal and professional fees associated with public filings and increases in other general and administrative expenses. 39 Interest income, net Interest income increased by $93.8 thousand to $137.9 thousand for the year ended December 31, 2023 from $44.1 thousand for the year ended December 31, 2022.
The increase primarily relates to additional executive bonuses offset by a decreases in insurance, professional fees and other general and administrative expenses. 41 Interest income (Expenses), net Interest income (expense) decreased by $1.3 million to ($1.1 million) for the year ended December 31, 2024 from $137.9 thousand for the year ended December 31, 2023.
Removed
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.
Added
RaaS is a subscription model that allows customers to use robots/vehicles without purchasing the hardware assets upfront.
Removed
During 2022, the Company reported cost of revenue of $0.2 million consisting primarily of fully burdened internal engineering development resources and hardware costs incurred for the completion of the initial phases of NRE contracts.
Added
The Company accounts for warrants in accordance with ASC 480, Distinguishing Liabilities from Equity , depending on the specific terms of the warrant agreement.
Removed
The increase is attributable to the increase in personnel engaged in the research and development of our AV technology in 2023 compared to headcount levels in 2022, including provisions for non-cash stock-based compensation expense, and external R&D contractors.
Added
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.
Removed
The Company plans to continue to expand its level of engineering and other R&D personnel to support its research and development efforts and expects research and development costs to increase over time. General and Administrative General, and administrative expense consist primarily of personnel costs, facilities expenses, depreciation and amortization, travel, and advertising costs.
Added
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.
Removed
Interest income consists primarily of interest earned of $149.9 thousand from the Company’s interest-bearing bank accounts, offset by interest expense of $12.0 thousand representing amortization of the present value interest on the adoption of lease accounting guidelines under ASC 842, Leases , on right-of-use assets and operating liabilities.
Added
(1) All information has been retroactively adjusted to reflect the 1-for-100 reverse stock split effected on July 3, 2024 and the 1-for-150 reverse stock split effected on February 18, 2025. See Note 7, Capital Structure for details. 40 Results of Operations Revenue We currently derive revenue from four sources.
Removed
Other Income Other income increased by $276.7 thousand to $396.8 thousand for the year ended December 31, 2023 from $120.1 thousand for the year ended December 31, 2022. Other income consists primarily of realized gains earned on the Company’s short-term investments. Liquidity and Capital Resources The Company’s principal source of liquidity is its cash and current maturities of short-term investments.
Added
In addition, we derive revenue from EAS subscriptions with relative add-on offerings such as hardware revenue and other revenue (i.e., deployment/set up costs). Revenue from these subscriptions and add-ons are recognized monthly over the service contract life, beginning at the time that a customer acknowledges acceptance of the service.
Removed
On April 29, 2022, the Company received net proceeds of approximately $18.1 million from the sale of common stock and exercise of pre-funded warrants in a private placement offering.
Added
Interest income consists primarily of interest earned of $111.7 thousand from the Company’s interest-bearing bank accounts, offset by interest expense of $1.3 million related to the Notes issued in November 2024.
Removed
The Company pays Virtu Americas LLC up to 3.0% of the gross proceeds as a commission.
Added
Other Income (Expenses), net Other income decreased by $5.7 million to $5.3 million for the year ended December 31, 2024 from $396.8 thousand for the year ended December 31, 2023.
Removed
The public offering closed on December 12, 2023. The Company received gross proceeds of approximately $5 million before deducting transaction related expenses payable by the Company. All commissions, qualified legal, accounting, registration and other direct costs of $0.5 million related to the public offering were offset against the gross proceeds.
Added
Other income (expense), net consists primarily of fair value measurement of $5.4 million for the warrant liability, realized gains earned on the Company’s short-term investments of $113 thousand and interest earned of $40.4 thousand related to the office lease offset by the impairment charge of $118.8 thousand related to expired international patents.
Removed
The increase is primarily attributed to the level of increases in personnel and professional services related to the Company’s research and development activities, as well as increases in general and administrative personnel-related costs and professional services as the Company continues to grow, both of which led to the increase in the Company’s net loss for the period.
Added
As of December 31, 2023, the Company had unrestricted cash of approximately $3.6 million and short-term investments of $4.6 million.
Removed
Cash provided by financing activities for the year ended December 31, 2022 was $18.2 million, which consisted of proceeds from the April 2022 private placement offering of $18.1 million and $114.2 thousand related to stock option exercises.
Added
The Pre-Funded Warrants had a nominal exercise price of $0.00001. Each share of common stock was sold at an offering price of $2,250 (1) , and each Pre-Funded Warrant was sold at an offering price of $2,249.85 (1) .
Added
The Company received net proceeds of approximately $4.5 million, after deducting the estimated offering expenses payable by the Company, including the placement agent fees. On April 23, 2024, the Company entered into an underwritten Agreement with Aegis Capital Corp.
Added
(“Aegis”), pursuant to which Aegis acted as the Company’s underwriter on a firm commitment basis in connection with the sale by the Company of an aggregate of 3,333 (1) shares of common stock in a public offering, which included: (i) 1,320 (1) shares of common stock, and (ii) pre-funded warrants to purchase 2,013 (1) shares of common stock.
Added
The Pre-Funded Warrants had a nominal exercise price of $0.0015 (2) . Each share of common stock was sold at an offering price of $1,500 (1) , and each Pre-Funded Warrant was sold at an offering price of $1,499.85 (1) .
Added
The Pre-Funded Warrants are classified as a component of permanent stockholders’ equity within additional paid-in capital and were recorded at the issuance date concluding the purchase price approximated the fair value. The offering closed on April 25, 2024.
Added
On May 3 2024, the Company closed on the sale of an additional 136 (1) shares of common stock, upon exercise by the underwriter of the over-allotment option. The Company received net proceeds of approximately $4.6 million, after deducting the estimated offering expenses payable by the Company, including the placement agent fees.
Added
(1) All information has been retroactively adjusted to reflect the 1-for-100 reverse stock split effected on July 3, 2024 and the 1-for-150 reverse stock split effected on February 18, 2025.
Added
See Note 7, Capital Structure for details. 42 On November 12, 2024, the Company entered into a securities purchase agreement with certain investors pursuant to which we sold, in a private placement, senior notes with an aggregate principal amount of $4,375,000 (the “Notes”), and received proceeds before expenses of $3,500,000.
Added
As consideration for entering into the agreement, we issued a total of 2,701 (2) shares of common stock of the Company to the Purchasers on November 13, 2024. The principal amount of the Notes were repaid on December 23, 2024.
Added
On November 12, 2024, the Company implemented a cost reduction plan in order to reduce its average monthly cash burn from approximately $1.8 million per month to approximately $1 million per month for 90 days. This included reducing staff from approximately 80 people to approximately 60 people, temporarily suspending certain non-essential operations and reducing or eliminating all discretionary expenses.
Added
With the additional capital raised in December 2024, the Company has resumed normal operations.
Added
On December 20, 2024, the Company entered into a securities purchase agreement for the sale and issuance of (i) 20,507 (2) units at a public offering price per Unit of $241.50 (2) with each Unit consisting of one share of common stock, par value $0.00001 per share, one Series A warrant to purchase one share of Common Stock at an exercise price of $301.875 (2) per share and one Series B warrant to purchase one share of Common Stock at an exercise price of $301.875 (2) and (ii) 62,309 (2) pre-funded units at a public offering price of $241.485 (2) per Pre-Funded Unit, with each Pre-Funded Unit consisting of one pre-funded warrant exercisable for one share of Common Stock at an exercise price of $0.015 (2) per share, one Series A Warrant and one Series B Warrant.
Added
The net proceeds to the Company from the Offering were approximately $18.2 million, after deducting placement agent’s fees and the payment of other offering expenses associated with the offering that were payable by the Company.
Added
On December 30, 2024, the “Company entered into a securities purchase agreement pursuant to which the Company agreed to sell and issue, in a registered direct offering, 44,333 (2) shares of its common stock, par value $0.015 (2) per share at a purchase price of $90 (2) per share and 55,667 (2) pre-funded warrants to purchase shares of Common Stock, at a purchase price of $89.985 (2) per Pre-Funded Warrant.
Added
The Company received net proceeds of approximately $8.1 million from the Offering, after deducting the estimated offering expenses payable by the Company, including the placement agent fees.
Added
Cash Flows Operating activities Net cash used in operating activities for the year ended December 31, 2024 was $9.5 million, a decrease of approximately $10 million or 51% compared to $19.5 million for the year ended December 31, 2023.
Added
The decrease is primarily attributed to increase costs for customer deployment, an increase in inventory related to the DriveMod Kits, an increase in lease payments due to the lease extension and the fair value remeasurement of the warranty liabilities.
Added
(2) All information has been retroactively adjusted to reflect 1-for-150 reverse stock split effected on February 18, 2025.
Added
The increase is due to the following net proceeds: December 31, 2024 December 31, 2023 ATM, from May 2023 to July 2024 $ 6,789,427 $ 1,747,468 Placement agent agreement, December 8, 2023 - 4,474,988 Underwritten agreement, April 23, 2024 4,634,720 - Senior notes, November 12, 2024 3,072,200 - Securities purchase agreement, December 20, 2024 18,292,500 - Registered direct offering, December 30, 2024 8,068,622 - Total financings $ 40,857,469 $ 6,222,456 The increase in cash from financing activities from the above transactions were offset by the repayment of the senior notes in the amount of $4,375,000 and the portion of the proceeds allocated to the warrant liabilities for the securities purchase agreement on December 20, 2024.

Other CYN 10-K year-over-year comparisons