Cyngn Clears All Outstanding Cashless Warrants from December Capital Raise

Rhea-AI Summary

Cyngn Inc. (NASDAQ: CYN) has announced the complete exercise of all outstanding Series B cashless warrants, which were issued during a public offering that closed on December 23, 2024. The original offering included the sale of 3,076,006 common shares and 9,346,354 Pre-Funded Warrants, along with Series A and Series B Warrants.

Following stockholder approval on January 30, 2025, the exercise price for both Series A and B Warrants was adjusted to $0.322, with the underlying shares increasing to 77,639,749. The Series B Warrants' cashless exercise provision allowed for up to 232,919,249 shares. As of February 11, 2025, all Series B Warrants, previously held by ten institutional investors, have been exercised and removed from Cyngn's capital structure. The company now has 262,773,516 shares of common stock outstanding.

Positive

• Complete elimination of Series B Warrants from capital structure, simplifying the company's equity structure

Negative

• Significant share dilution with outstanding shares increasing to 262,773,516
• Substantial warrant conversion at a low exercise price of $0.322 per share

Insights

Financial Analyst

The complete exercise of Cyngn's Series B cashless warrants marks a pivotal moment in the company's capital structure evolution, though with significant implications for shareholders. The transaction has resulted in substantial dilution, expanding the share count to 262.7 million from approximately 33.4 million before the December offering - a dilution of nearly 687%.

The clearing of these warrants from the capital structure carries both positive and negative implications. On the positive side, the simplified capital structure enhances transparency and could improve the company's ability to attract future institutional investment. The removal of these complex instruments eliminates potential overhang and uncertainty about future dilution from these specific warrants.

However, the rapid exercise of these warrants by institutional investors, occurring within just weeks of the shareholder approval, suggests a strategic move to quickly monetize their positions rather than maintaining longer-term exposure to potential upside. This pattern is often observed in micro-cap financing arrangements where institutional investors seek to manage risk through immediate exercise rather than holding warrants as longer-term options.

The massive dilution impact raises questions about the company's financing strategy and its ability to raise capital through more traditional means. While the clean-up of these warrants provides greater clarity on the capital structure, the significant increase in outstanding shares may present challenges for future equity raises and could impact stock liquidity dynamics.

Looking ahead, Cyngn will need to demonstrate that this dilution was worthwhile through operational execution and revenue growth. The cleaner capital structure could facilitate future strategic initiatives, but the company must now work to create value across a much larger share base.

MENLO PARK, Calif., Feb. 12, 2025 /PRNewswire/ -- Today, Cyngn Inc. (NASDAQ: CYN) announced that all outstanding Series B cashless warrants have been fully exercised. These warrants were originally issued in connection with a public offering that closed on December 23, 2024. As part of that transaction, the Company entered into a securities purchase agreement (the "Purchase Agreement") for the sale of 3,076,006 shares of its common stock, par value $0.00001 per share ("Common Stock"), and 9,346,354 Pre-Funded Warrants to purchase shares of Common Stock (the "Pre-Funded Warrants") in lieu of shares of Common Stock. Under the Purchase Agreement, Cyngn also issued Series A Warrants (the "Series A Warrants") and Series B Warrants (the "Series B Warrants").

On January 30, 2025 at a special meeting of stockholders, Cyngn's stockholders approved a proposal to authorize, in compliance with Nasdaq listing rule 5635(d), the issuance of both the Series A and Series B Warrants, the shares of Common Stock underlying those Warrants, and certain provisions of the Warrants. After the stockholders' approval, the Series A Warrants and Series B Warrants exercise price was adjusted to $0.322 and the number of shares underlying the Warrants increased to up to 77,639,749 shares of Common Stock. The Series B Warrants also included an alternative cashless exercise provision which resulted in an increase in the number of shares issuable under the Series B Warrants to an aggregate of up to approximately 232,919,249 shares. Ten institutional investors previously held all of the Series B Warrants. As of February 11, 2025, the last of these Series B Warrants were exercised and eliminated from Cyngn's capital structure. Upon completion of the exercises of the Series B Warrants, the company had 262,773,516 shares of common stock outstanding. 

About Cyngn

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

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

Cyngn's flagship product, its Enterprise Autonomy Suite, includes DriveMod (autonomous vehicle system), Cyngn Insight (customer-facing suite of AV fleet management, teleoperation, and analytics tools), and Cyngn Evolve (internal toolkit that enables Cyngn to leverage data from the field for artificial intelligence, simulation, and modeling). For all terms referenced within, please refer to the Company's annual report on Form 10-K with the SEC filed on March 7, 2024.

Where to find Cyngn:

• Website: https://cyngn.com
• X: https://x.com/cyngn
• LinkedIn: https://www.linkedin.com/company/cyngn
• YouTube: https://www.youtube.com/@cyngnhq

Investor Contact:
Donald Alvarez, CFO
investors@cyngn.com  

Media Contact:
Luke Renner, Head of Marketing
media@cyngn.com  

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Any statement that is not historical in nature is a forward-looking statement and may be identified by the use of words and phrases such as "expects," "anticipates," "believes," "will," "will likely result," "will continue," "plans to," "potential," "promising," and similar expressions. These statements are based on management's current expectations and beliefs and are subject to a number of risks, uncertainties and assumptions that could cause actual results to differ materially from those described in the forward-looking statements, including the risk factors described from time to time in the Company's reports to the Securities and Exchange Commission (SEC), including, without limitation the risk factors discussed in the Company's annual report on Form 10-K filed with the SEC on March 7, 2024. Readers are cautioned that it is not possible to predict or identify all the risks, uncertainties and other factors that may affect future results. No forward-looking statement can be guaranteed, and actual results may differ materially from those projected. Cyngn undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise.

 

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SOURCE Cyngn

FAQ

How many shares of common stock does Cyngn (CYN) have outstanding after the Series B warrant exercise?

After the Series B warrant exercise completion, Cyngn has 262,773,516 shares of common stock outstanding as of February 11, 2025.

What was the exercise price of CYN's Series A and B warrants after stockholder approval?

Following stockholder approval on January 30, 2025, the exercise price for both Series A and Series B warrants was adjusted to $0.322.

How many shares were initially offered in CYN's December 2024 public offering?

The December 2024 public offering included 3,076,006 common shares and 9,346,354 Pre-Funded Warrants.

What was the maximum number of shares issuable under CYN's Series B warrants?

The Series B warrants' cashless exercise provision allowed for the issuance of up to approximately 232,919,249 shares.