UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission file number: 001-40932

CYNGN INC.

(Exact name of registrant as specified in its charter)

Delaware		46-2007094
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1344 Terra Bella
Mountain View, CA 94043

(Address of principal executive offices) (Zip Code)

(650) 924-5905

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common stock, $0.00001		CYN		Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 18, 2025, the issuer had 7,974,380 shares of common stock, par value $0.00001 per share, outstanding.

EXPLANATORY NOTE

As previously announced in the Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on November 7, 2025, Cyngn Inc. (“we,” “us,” “our,” the “Company” and “Cyngn”) determined that the Company’s previously issued consolidated financial statements and other financial data for the fiscal year ended December 31, 2024 contained in its Annual Report on Form 10-K (the “Affected Period”), as well as the previously issued unaudited financial statements for the first and second quarters of 2025 included in the Company’s Quarterly Report on Form 10-Q, should no longer be relied upon. The misstatements are related to accounting for warrant liabilities with respect to the Company’s issuance of warrants pursuant to the terms of that certain Securities Purchaser Agreement dated December 20, 2024. As a result of this misstatement, the Company filed Amendment No. 1 to its Annual Report on Form 10-K for the fiscal year ended December 31, 2024 with the SEC on November 14, 2025 (the “Form 10-K/A”) to restate certain financial information for the Affected Period. All restated financial information is included in the Form 10-K/A. The Company does not intend to amend any other reports previously filed with the SEC.

This quarterly report on Form 10-Q for the nine months ended September 30, 2025 includes financial statements that amend and restate the Company’s unaudited financial statements as of and for the three and six-month periods ended March 31, 2025 and June 20, 2025. Therefore, the previously filed Form 10-Qs for those prior periods will not be amended through separate filings.

Please refer to Note 15 “Restatement of Previously Issued Consolidated Financial Statements” and Note 16 “Restatement of Previously Issued Interim Financial Statements – Unaudited” in the notes to the consolidated financial statements in this Form 10-Q for a discussion of the restatement and the impact on the specific accounts in such unaudited financial statements.

CYNGN INC.

TABLE OF CONTENTS

		Page No.
PART I FINANCIAL INFORMATION		1
ITEM 1.	FINANCIAL STATEMENTS	1
	Condensed Consolidated Balance Sheets as of September 30, 2025 (unaudited) and December 31, 2024	1
	Condensed Consolidated Statements of Operations for the Three and Nine Months ended September 30, 2025 and 2024 (unaudited)	2
	Condensed Consolidated Statements of Stockholders’ (Deficit) Equity for the Three and Nine Months ended September 30, 2025 and 2024 (unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2025 and 2024 (unaudited)	4
	Notes to Condensed Consolidated Financial Statements (unaudited)	5
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	37
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	46
ITEM 4.	CONTROLS AND PROCEDURES	46
PART II OTHER INFORMATION		47
ITEM 1.	LEGAL PROCEEDINGS	47
ITEM 1A.	RISK FACTORS	47
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	47
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	47
ITEM 4.	MINE SAFETY DISCLOSURES	47
ITEM 5.	OTHER INFORMATION	47
ITEM 6.	EXHIBITS	47
SIGNATURES		48

PART 1 — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CYNGN INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	(Unaudited) September 30, 2025			December 31, 2024 (Restated)
ASSETS
CURRENT ASSETS
Cash	$	4,820,464		$	23,617,733
Short-term investments		30,054,492			–
Prepaid expenses and other current assets		4,205,419			1,965,222
TOTAL CURRENT ASSETS		39,080,375			25,582,955

Property and equipment, net		3,006,886			2,319,402
Right of use asset, net		6,190,809			297,918
Intangible assets, net		470,781			1,895,074
Security Deposit		518,584			–
TOTAL ASSETS	$	49,267,435		$	30,095,349

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES
Accounts payable	$	360,416		$	247,778
Accrued expenses and other current liabilities		3,514,449			2,874,216
Current operating lease liability		36,966			317,344
TOTAL CURRENT LIABILITIES		3,911,831			3,439,338

Non-current operating lease liability		6,676,231			–
Warrant liability		–			27,703,927
TOTAL LIABILITIES		10,588,062			31,143,265

Commitments and contingencies (Note 12)

STOCKHOLDERS’ (DEFICIT) EQUITY
Common stock, Par $0.00001; 400,000,000 and 200,000,000 shares authorized as of September 30, 2025 and December 31, 2024; 7,039,266 and 199,110 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively		70			2
Additional paid-in capital		249,831,101			192,305,280
Accumulated deficit		(211,151,798	)		(193,353,198	)
TOTAL STOCKHOLDERS’ (DEFICIT) EQUITY		38,679,373			(1,047,916	)
TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY	$	49,267,435		$	30,095,349

The accompanying notes are an integral part of these condensed consolidated financial statements.

CYNGN INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2025			2024			2025			2024

REVENUE	$	69,973		$	47,584		$	150,851		$	61,762
COSTS AND EXPENSES
Cost of revenue		50,816			157,251			79,574			285,949
Research and development		5,254,953			2,795,583			9,331,987			9,149,357
General and administrative		3,181,204			2,602,952			9,873,188			7,913,222
TOTAL COSTS AND EXPENSES		8,486,973			5,555,786			19,284,749			17,348,528
LOSS FROM OPERATIONS		(8,417,000	)		(5,508,202	)		(19,133,898	)		(17,286,766	)

OTHER INCOME (EXPENSE), NET
Interest income (expense), net		(252,497	)		46,336			(375,670	)		45,994
Change in fair value of warrant liability		‒			‒			1,136,677			‒
Other income (expense), net		230,856			34,467			574,291			24,342
TOTAL OTHER INCOME (EXPENSE), NET		(21,641	)		80,803			1,335,298			70,336

NET LOSS	$	(8,438,641	)	$	(5,427,399	)	$	(17,798,600	)	$	(17,216,430	)

Net loss per share attributable to common stockholders, basic and diluted	$	(1.20	)	$	(408.30	)	$	(5.20	)	$	(1,924.23	)

Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted		7,039,266			13,293			3,424,032			8,947

The accompanying notes are an integral part of these condensed consolidated financial statements.

CYNGN INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY

(Unaudited)

	Preferred Stock				Common Stock				Additional Paid-in		Accumulated			Total Stockholders’
Three Months Ended September 30, 2025	Shares		Amount		Shares		Amount		Capital		Deficit			Equity
Balance as of June 30, 2025 (Restated)		–		–		7,039,266	$	70	$	249,476,245	$	(202,713,157	)	$	46,763,158
Stock-based compensation		–		–		–		–		354,856		–			354,856
Net loss		–		–		–		–		–		(8,438,641	)		(8,438,641	)
Balance as of September 30, 2025		–	$	–		7,039,266	$	70	$	249,831,101	$	(211,151,798	)	$	38,679,373

Preferred Stock

Common Stock

Additional
Paid-in

Accumulated

Total
Stockholders’

Three Months Ended September 30, 2024

Amount

Capital

Deficit

Equity

Balance as of June 30, 2024

–

11,880

–

181,509,479

(171,806,650

)

9,702,829

Issuance of at-the-market common stock, net of issuance costs

–

1,710

–

1,772,283

–

1,772,283

Exercise of stock options and vesting of restricted stock units

–

(345

)

–

(345

)

Issuance of common stock in connection with the public offering

–

Exercise of pre-funded warrants in connection with the public offering

–

Stock-based compensation

–

601,791

–

601,791

Net loss

–

(5,427,399

)

(5,427,399

)

Balance as of September 30, 2024

–

13,591

–

183,883,208

(177,234,049

)

6,649,159

	Preferred Stock				Common Stock				Additional Paid-in		Accumulated			Total Stockholders’
Nine Months Ended September 30, 2025	Shares		Amount		Shares		Amount		Capital		Deficit			Equity
Balance as of December 31, 2024 (Restated)		–		–		199,110	$	2	$	192,305,280	$	(193,353,198	)	$	(1,047,916	)
Exercise of stock options and vesting of restricted stock units		–		–		15		–		–		–			–
Reclassification of Series A warrants to equity in connection with the public offering		–		–		–		–		7,634,427		–			7,634,427
Exercise of Series B warrants in connection with the public offering, net of issuance costs		–		–		1,552,796		16		18,931,781		–			18,931,797
Issuance of common stock in connection with the public offering		–		–		5,287,345		52		29,611,626		–			29,611,678
Stock-based compensation		–		–		–		–		1,347,987		–			1,347,987
Net loss		–		–		–		–		–		(17,798,600	)		(17,798,600	)
Balance as of September 30, 2025		–	$	–		7,039,266	$	70	$	249,831,101	$	(211,151,798	)	$	38,679,373

	Preferred Stock				Common Stock				Additional Paid-in			Accumulated			Total Stockholders’
Nine Months Ended September 30, 2024	Shares		Amount		Shares		Amount		Capital			Deficit			Equity
Balance as of December 31, 2023		–		–		5,147	$	–	$	170,652,808		$	(160,017,619	)	$	10,635,189
Issuance of at-the-market common stock, net of issuance costs		–		–		4,275		–		6,789,427			–			6,789,427
Exercise of stock options and vesting of restricted stock units		–		–		9		–		(597	)		–			(597	)
Issuance of common stock and pre-funded warrants in connection with the public offering		–		–		1,456		–		4,569,556			–			4,569,556
Exercise of pre-funded warrants in connection with the public offering		–		–		2,704		–		548			–			548
Stock-based compensation		–		–		–		–		1,871,466			–			1,871,466
Net loss		–		–		–		–		–			(17,216,430	)		(17,216,430	)
Balance as of September 30, 2024		–	$	–		13,591	$	–	$	183,883,208		$	(177,234,049	)	$	6,649,159

The accompanying notes are an integral part of these condensed financial statements.

CYNGN INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended September 30,
	2025			2024
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(17,798,600	)	$	(17,216,430	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		894,312			692,848
Stock-based compensation		1,347,987			1,871,466
Realized gain on short-term investments		(545,094	)		(105,414	)
Loss on disposed assets		11,429			–
Patent impairment		–			118,831
Change in fair value of warrant liability		(1,136,677	)		–
Change in estimate of capitalized software		2,590,491			–
Changes in operating assets and liabilities:
Prepaid expenses, operating lease right-of-use assets, and other assets		(2,758,782	)		(345,122	)
Accounts payable		112,638			(6,475	)
Accrued expenses, lease liabilities, and other current liabilities		446,754			(559,715	)
NET CASH USED IN OPERATING ACTIVITIES		(16,835,542	)		(15,550,011	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(872,369	)		(739,947	)
Acquisition of intangible asset		(1,190,613	)		(540,756	)
Purchase of short-term investments		(62,710,899	)		(6,755,408	)
Proceeds from maturity of short-term investments		33,201,501			10,610,000
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES		(31,572,380	)		2,573,889

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from at-the-market equity financing, net of issuance costs		–			6,789,427
Proceeds from public issuance of common stock and pre-funded warrants, net of issuance costs		29,611,678			4,570,110
Issuance costs from public issuance of common stock and pre-funded warrants and exercise of pre-funded warrants		(1,025	)		–
Issuance costs for stock dividend and restricted stock units		–			(597	)
NET CASH PROVIDED BY FINANCING ACTIVITIES		29,610,653			11,358,940

Net increase in cash and cash equivalents and restricted cash		(18,797,269	)		(1,617,182	)
Cash and cash equivalents and restricted cash, beginning of year		23,617,733			3,591,623
Cash and cash equivalents and restricted cash, end of year	$	4,820,464		$	1,974,441

SUPPLEMENTAL DISCLOSURE OF CASH FLOW:
Cash paid during the period for interest and taxes	$	–		$	–

SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:
Recognition of operating lease right-of-use assets and operating lease liabilities	$	274,659		$	2,037,052
Acquisition of right-of-use asset in exchange for new operating lease obligation	$	6,589,332		$	–
Acquisition of property and equipment included in accounts payable and accrued expenses	$	30,261		$	10,997

The accompanying notes are an integral part of these condensed consolidated financial statements.

CYNGN INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Description of Business

Cyngn Inc., together with its subsidiary (collectively, “Cyngn” or the “Company”), was incorporated in Delaware in 2013. Our wholly owned subsidiary, Cyngn Singapore PTE. LTD., is a Singaporean limited company organized in 2015. The Company is headquartered in Mountain View, CA.

Cyngn develops and deploys scalable, differentiated autonomous vehicle technology for industrial organizations. Our full-stack autonomous driving software, (“DriveMod”), can be integrated onto vehicles manufactured by Original Equipment Manufacturers (“OEM”) either via retrofit of existing vehicles or by integration directly into vehicle assembly. The Enterprise Autonomy Suite (“EAS”) is designed to be compatible with sensors and components from leading hardware technology providers and integrate our proprietary Autonomous Vehicle (“AV”) software to produce differentiated autonomous vehicles.

The Company has been operating autonomous vehicles in production environments and in 2023 began licensing EAS commercially. Built and tested in difficult and diverse real-world environments, DriveMod, the fleet management system and our proprietary Software Development Kit (“DriveMod Kit”) combine to create a full-stack advanced autonomy solution designed to be modular, extendable, and safe. The Company operates in one business segment.

On June 25, 2024, the Company’s stockholders voted to authorize the Company’s Board of Directors to effect a reverse stock split of the outstanding shares of common stock within a range of 1-for-5 to 1-for-100. On June 25, 2024, the Company’s Board of Directors determined to effect the reverse stock split of the common stock at a 1-for-100 ratio, which reverse split became effective in the market on July 5, 2024. On January 30, 2025, the Company’s stockholders voted to authorize the Company’s Board of Directors to effect a reverse stock split of the outstanding shares of common stock within a range of 1-for-5 to 1-for-150. On January 30, 2025, the Company’s Board of Directors determined to effect the reverse stock split of the common stock at a 1-for-150 ratio, which reverse split became effective in the market on February 18, 2025.

All share and per share amounts and exercise prices of stock options and warrants in the accompanying condensed consolidated financial statements and notes to the condensed consolidated financial statements have been retroactively adjusted to reflect the reverse stock splits for all periods presented.

Liquidity

The Company has incurred losses from operations since inception. The Company incurred net losses of approximately $17.8 million and $17.2 million for the nine months ended September 30, 2025 and 2024, respectively. Accumulated deficit amounted to approximately $211.2 million and $193.4 million as of September 30, 2025 and December 31, 2024, respectively. Net cash used in operating activities was approximately $16.8 million and $15.6 million for the nine months ended September 30, 2025 and 2024, respectively.

The Company’s liquidity is based on its ability to increase its operating cash flow position, obtain capital financing from equity interest investors and borrow money to fund its general operations, research and development activities, and capital expenditures. The Company’s ability to continue as a going concern is dependent on management’s ability to successfully execute its business plan, which includes increasing revenue while controlling operating costs and expenses and obtaining funds from outside sources to generate positive financing cash flows. As of September 30, 2025, the Company’s unrestricted cash balance was approximately $4.8 million and short-term investments of approximately $30.1 million. As of December 31, 2024, the Company’s cash balance was approximately $23.6 million.

Based on cash flow projections from operating, investing and financing activities and the existing balance of cash and short-term investments, management is of the opinion that the Company has sufficient funds for sustainable operations, and it will be able to meet its payment obligations from operations and related commitments for the 12 months following the date these condensed consolidated financial statements were issued.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements as of and for the three months ended September 30, 2025 and 2024 have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and pursuant to applicable rules and regulations of the Securities and Exchange Commission (“SEC”). These financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, which was filed with the SEC on March 6, 2025.

The accompanying unaudited condensed consolidated financial statements have been prepared on a consistent basis with the audited consolidated financial statements for the fiscal years ended December 31, 2024, and 2023, and include all adjustments, consisting of only normal recurring adjustments, necessary to fairly state the information set forth herein. There have been no changes to the Company’s significant accounting policies described in its Annual Report on Form 10-K for the fiscal year ended December 31, 2024 that have had a material impact on the consolidated financial statements and the related notes.

The results reported for the interim period presented are not necessarily indicative of results that may be expected for any subsequent quarter or for the full year ending December 31, 2025. These unaudited condensed consolidated financial statements include all adjustments and accruals that are necessary for a fair statement of all interim periods reported herein.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Cyngn Inc. and its wholly owned subsidiary. Intercompany accounts and transactions have been eliminated upon consolidation.

Foreign Currency Translation

The functional and reporting currency for Cyngn is the U.S. dollar. Monetary assets and liabilities denominated in currencies other than U.S. dollar are translated into the U.S. dollar at period end rates, income and expenses are translated at the weighted average exchange rates for the period and equity is translated at the historical exchange rates. Foreign currency translation adjustments and transactional gains and losses are immaterial to the condensed consolidated financial statements.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the balance sheet date, as well as reported amounts of revenue and expenses during the reporting period. The Company’s significant estimates and judgments include but are not limited to internal-use software and developed software to be sold, leased or marketed, warrants and share-based compensation. Management bases its estimates on historical experience and on various other assumptions believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash, which is placed with high-credit-quality financial institutions and at times exceeds federally insured limits.

Cash maintained with domestic financial institutions generally exceed the Federal Deposit Insurance Corporation insurable limit. To date, the Company has not experienced any losses on its deposits of cash. Cyngn invests in U.S. Treasury securities and carries these at amortized cost and recognizes gains and losses when realized.

Concentration of Supplier Risk

The Company generally utilizes suppliers for outside development and engineering support. The Company does not believe that there is any significant supplier concentration risk as of September 30, 2025 and December 31, 2024.

Cash and Short-term Investments

The Company considers its bank accounts and all highly liquid investments that are both readily convertible to cash with minimal risk of changes in value due to changes in interest rates, to be cash. As of September 30, 2025 and December 31, 2024, the Company had $4.8 million of cash and $30.1 million in short-term investments and $23.6 million of cash, respectively.

The Company considers short-term investments to include marketable U.S. government securities that it intends to hold until maturity and redeem within one year. The Company treated its U.S. government treasury bill placements as held-to-maturity securities in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification Topic (“ASC”) 320, “Investments – Debt and Equity Securities”, and recorded these securities at amortized cost on the accompanying condensed consolidated balance sheet as of September 30, 2025 and December 31, 2024.

Accounts Receivable

Accounts receivables are recorded at the invoiced amount and do not bear interest. The Company provides for probable uncollectible amounts based upon its assessment of the current status of the individual receivables and after using reasonable collection efforts. The allowance for credit losses was zero as of September 30, 2025 and December 31, 2024. In addition, the Company utilizes current and historical collection data as well as assesses current economic conditions in order to determine expected trade credit losses on a prospective basis. No credit losses were recorded as of September 30, 2025 and December 31, 2024.

Fair Value Measurements

The accounting guidance under ASC Topic 820, Fair Value Measurement, defines fair value, establishes a consistent framework for measuring fair value, and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as an exit price representing the amount that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants. As such, fair value is considered a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.

The Company uses the following fair value hierarchy prescribed by U.S. GAAP, which prioritizes the inputs used to measure fair value as follows:

Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2—Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Assets and liabilities are considered to be fair valued on a recurring basis if fair value is measured regularly. However, if the fair value measurement of an instrument does not necessarily result in a change in the amount recorded on the condensed consolidated balance sheets, assets and liabilities are considered to be fair valued on a nonrecurring basis. This typically occurs when accounting guidance requires assets and liabilities to be recorded at the lower of cost or fair value, or on certain nonfinancial assets and liabilities. Nonfinancial assets and liabilities that are measured at fair value on a nonrecurring basis include certain long-lived assets, intangible assets, and share-based compensation measured at fair value upon initial recognition.

The carrying amounts of the Company’s cash and accounts receivable are reasonable estimates of their fair values due to their short-term nature. The fair values of the Company’s share-based compensation and underwriter warrants were based on observable inputs and assumptions used in Black-Scholes valuation models derived from independent external valuations.

Property and Equipment

Property and equipment is stated at cost less accumulated depreciation. Construction work in progress includes production costs and costs of materials used in the development of the Company’s autonomous driving software. Assets are held as construction work in progress until placed into service, at which date depreciation commences over the estimated useful lives of the respective assets. Depreciation is recorded on a straight-line basis over each asset’s estimated useful life. Repair and maintenance costs are expensed as incurred.

Property and Equipment		Useful life
Automobiles (DMV-registered)		5 years
Machinery, tools and equipment		5 years
Computer and equipment		5 years
Internal-use software		3 to 5 years
Furniture and fixtures		7 years
Leasehold improvements		Shorter of 3 years or lease term

Operating Leases

The Company accounts for leases in accordance with ASC Topic 842 (“ASC 842”), Leases. All contracts are evaluated to determine whether or not they represent a lease. A lease conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Leases are classified as finance or operating in accordance with the guidance in ASC 842. The Company does not hold any finance leases. The Company recognized a right-of-use asset and lease liability in the condensed consolidated balance sheets under ASC 842 on the office space lease in Mountain View, California that commenced in May 2025 and the previous office space lease in Menlo Park, California that ended in May 2025. Lease expense will be recognized on a straight-line basis over the remaining term of the lease. Operating leases are recognized on the balance sheet as right-of-use assets, and operating lease liabilities.

Costs to Develop Software

The Company incurs costs related to internally developed software. Based on the nature of the software, the Company capitalizes software costs under the following guidance.

Internal-Use Software costs

The Company determined when to capitalize its internal-use software after planning and design efforts are successfully completed. Management has implicitly authorized funding and the software is expected to be completed and used as intended. The Company determines the amount of internal software costs to be capitalized based on the amount of time spent by the developers on projects in the application stage of development. There is judgment involved in estimating time allocated to a particular project in the application stage. Costs associated with building or significantly enhancing the internally built software platform for internal use are capitalized, while costs associated with planning new developments and maintaining the internally built software platforms are expensed as incurred. Capitalized costs include certain payroll and stock compensation costs, as well as subscription server and consulting costs.

Internal-use software is classified as property and equipment and is amortized on a straight-line basis over their estimated useful life of three to five years. There is judgment involved in the determination of the useful life. Amortization of the software asset will begin when the software is substantially complete and ready for its intended use. No amortization has begun for the internal use software, as the projects are still in the application development phase. Management evaluates the useful lives of these assets on a quarterly basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. No impairment charges were associated with the Company’s internal-use software for the three and nine months ended September 30, 2025 and 2024.

Costs to Develop Software to be Sold, Leased or Otherwise Marketed

The Company accounts for research costs of computer software to be sold, leased or otherwise marketed as expense until technological feasibility has been established for the product. Once technological feasibility is established, certain payroll and stock compensation, occupancy, and professional service costs that are incurred to develop functionality for the Company’s software and internally built software platforms, as well as certain upgrades and enhancements that are expected to result in enhanced functionality are capitalized. Judgment is required in determining when technological feasibility of a product is established. Management has determined that technological feasibility is established when a working model is complete. After technological feasibility is established, judgement is required to determine the amount of payroll and stock-based compensation costs to be capitalized on the remaining development efforts. These costs will continue to be capitalized until such time as when the product or enhancement is available for general release to customers.

Computer software to be sold, leased or otherwise marketed is classified as an intangible asset. Capitalized software development costs are amortized using the greater of (a) the amount computed using the ratio that current gross revenue for a product bear to total of current and anticipated future gross revenue for that product or (b) the straight-line method, beginning upon commercial release of the product, and continuing over the remaining estimated economic life of the product, not to exceed three years to five years and recorded as cost of revenue. Amortization will begin when the product or enhancement is available for general release to customers. No amortization has begun for externally sold software, as the software enhancement is still in development. Management evaluates the useful lives of these assets on a quarterly basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. No impairment charges were associated with the Company’s sold, leased or otherwise marketed software for the three and nine months ended September 30, 2024.

During the three months ended September 30, 2025, management completed a review of the Company’s capitalized software development projects. Based on this review, management determined that projects previously capitalized as developed software no longer met the criteria for capitalization under ASC 985-20, External-Use Software, resulting from new technical development issues that did not exist and could not have been reasonably anticipated in prior periods.

As a result, beginning in the third quarter of fiscal 2025, the Company revised its estimate regarding the point at which technological feasibility is achieved for software development activities. This change in estimate was made to reflect management’s current expectations about the timing and certainty of future technological milestones.

The change in estimate was accounted for prospectively in accordance with ASC 250, Accounting Changes and Error Corrections, and did not require restatement of prior-period financial statements. For the three months ended September 30, 2025, this change resulted in an increase to research and development expense of approximately $2.6 million, with a corresponding decrease in capitalized software costs of $2.6 million.

Long-Lived Assets and Finite Lived Intangibles

The Company has finite-lived intangible assets consisting of patents and trademarks. These assets are amortized on a straight-line basis over their estimated remaining economic lives. The patents and trademarks are amortized over 15 years.

The Company reviews its long-lived assets and finite-lived intangibles for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The events and circumstances the Company monitors and considers include significant decreases in the market price of similar assets, significant adverse changes to the extent and manner in which the asset is used, an adverse change in legal factors or business climate, an accumulation of costs that exceed the estimated cost to acquire or develop a similar asset, and continuing losses that exceed forecasted costs. The Company assesses the recoverability of these assets by comparing the carrying amount of such assets or asset group to the future undiscounted cash flow it expects the assets or asset group to generate. The Company recognizes an impairment loss if the sum of the expected long-term undiscounted cash flows that the long-lived asset is expected to generate is less than the carrying amount of the long-lived asset being evaluated. An impairment charge would then be recognized equal to the amount by which the carrying amount exceeds the fair value of the asset.

The Company also identified that the long-lived asset “Patents”, which have international and U.S. based patents, as the asset group. The Company evaluated its patents and identified expired international patent applications (“expired assets”) for the year ended December 31, 2024. The Company determined there were no further plans to put resources toward these international patent applications. The group of expired patents carrying value was set to its salvage value which is zero given no future cash flows.

For the three and nine months ended September 30, 2024, the Company determined the existence of an impairment associated with the Company’s intangible asset “Patents” and accordingly recorded an impairment charge of $0 and $118,831, respectively (see Note 6. Intangible Assets). For the three and nine months ended September 30, 2025, there were no impairment charges.

Income Taxes

The Company accounts for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis.

A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. Due to the Company’s lack of earnings history, the net deferred tax assets have been fully offset by a valuation allowance as of September 30, 2025 and December 31, 2024 (see Note 11. Income Taxes).

There are no uncertain tax positions that would require recognition in the condensed consolidated financial statements. If the Company were to incur an income tax liability in the future, interest on any income tax liability would be reported as interest expense and penalties on any income tax would be reported as income taxes. Management’s conclusions regarding uncertain tax positions may be subject to review and adjustment at a later date based upon on ongoing analysis of or changes in tax laws, regulations and interpretations thereof as well as other factors.

Common Stock Warrants

The Company issued to its lead underwriter in the Company’s IPO warrants to purchase up to 9 shares of the Company’s common stock. In addition, the Company issued 426 common stock warrants as a part of the private placement offering. The Company accounts for warrants in accordance with ASC 480, “Distinguishing Liabilities from Equity”. The Company determined the fair value of the warrants using the Black-Scholes pricing model and treated the warrants as equity instruments in consideration of the cashless settlement provisions in the warrant agreements.

The Company also applied the guidance in ASC 340-10-S99-1, Other Assets and Deferred Costs, that states specific incremental costs directly attributable to a proposed or actual offering of equity securities may properly be deferred and charged against the gross proceeds of the offering. The Company treated the valuation of the warrants as directly attributable to the issuance of an equity contract, and accordingly, classified the warrants as additional paid-in capital.

The Company issued Series A warrants and Series B warrants in connection with securities purchase agreement on December 20, 2024. The Company accounts for warrants in accordance with ASC 480, Distinguishing Liabilities from Equity, depending on the specific terms of the warrant agreement. The estimated fair value of the Company’s warrant agreements has been determined to be Level 3 measurement, as certain inputs used to determine the fair value of these agreements are unobservable. The Company determined the fair value of the warrants using the Monte Carlo pricing model and treated the valuation as a liability in consideration of the variable number of the issuer’s equity shares in the warrant agreements. The resulting warrant liabilities are re-measured at each balance sheet date until their exercise or expiration, and any change in fair value is recognized in the Company’s consolidated statements of operations under other income (expense). After shareholder approval on January 30, 2025, the strike price and the number of equity shares are now fixed. Therefore, in accordance with ASC 815-40-35-8, Derivatives and Hedging Reclassification of Contracts, the Series A warrants were re-measured utilizing the Black Scholes model and reclassified into equity. The Series A warrants are included in equity in the condensed consolidated balance sheet as of September 30, 2025. The Series B warrants were re-measured utilizing the Black Scholes model immediately before exercise and were fully exercised in February 2025.

Stock-based Compensation

The Company recognizes the cost of share-based awards granted to employees and directors based on the estimated grant-date fair value of the awards. Cost is recognized on a straight-line basis over the service period, which is generally the vesting period of the award. The Company recognizes stock-based compensation cost and reverses previously recognized costs for unvested awards in the period forfeitures occur, if any. The Company determines the fair value of stock options using the Black-Scholes option pricing model, which is impacted by the fair value of common stock, expected price volatility of common stock, expected term, risk-free interest rates, and expected dividend yield (see Note 9. Stock-based Compensation Expense).

Net Loss Per Share Attributable to Common Stockholders

The Company computes loss per share attributable to common shareholders by dividing net loss attributable to common shareholders by the weighted-average number of common shares outstanding. Diluted net loss per share reflects the potential dilution that could occur if securities or other contracts to issue shares were exercised into shares. In calculating diluted net loss per share, the numerator is adjusted for the change in the fair value of the shares (only if dilutive) and the denominator is increased to include the number of potentially dilutive common shares assumed to be outstanding (see Note 8. Net Loss per Share Attributable to Common Stockholders).

Research and Development Expense

Research and development expenses consists primarily of outsourced engineering services, internal engineering and development expenses, materials, labor and stock-based compensation of Company personnel involved in the development of the Company’s products and services, and allocated lease costs based on the approximate square footage area used in research and development activities. Research and development costs are expensed as incurred.

Selling, General, and Administrative Expense

Selling, general, and administrative expense consist primarily of personnel costs, facilities expenses, depreciation and amortization, travel, and advertising costs. Advertising costs are expensed as incurred in accordance with ASC 720-35, “Other Expense – Advertising Costs”, other than trade show expenses which are deferred until occurrence of the future event. Advertising costs for the three months ended September 30, 2025 and 2024 were $120,892 and $44,346, respectively. Advertising costs for the nine months ended September 30, 2025 and 2024 were $333,327 and $175,345, respectively.

Commitments

The Company recognizes a liability with regard to loss contingencies when it believes it is probable a liability has occurred and the amount can be reasonably estimated. If some amount within a range of loss appears at the time to be a better estimate than any other amount within the range, the Company accrues that amount. When no amount within the range is a better estimate than any other amount the Company accrues the minimum amount in the range. There have been no such liabilities recorded by the Company as of September 30, 2025 and December 31, 2024.

Segment Reporting

The Company operates as one operating segment. The Company’s chief operating decision maker is the executive management team, its Chief Executive Officer and Chief Financial Officer. The executive management team manages operations and business as one operating segment for the purposes of allocating resources, making operating decisions and evaluating financial performance.

The one operating segment generates revenues from EAS subscriptions with relative add-on offerings such as hardware revenue and other revenue (i.e., deployment/set up costs) and fixed-price NRE contracts related to customer-specific configuration that consist of several independent phases and include design, data gathering, hardware installation on an industrial vehicle, customer-specific configuration of the DriveMod software, and demonstrations.

For the Company’s one segment, the executive management team use revenue and net loss to allocate resources, both reported on the condensed Consolidated Statement of Operations as Revenue and Net loss. The executive management team also uses revenue and net loss, along with non-financial inputs and qualitative information, to evaluate the Company’s performance, establish compensation, monitor budget versus actual results, and decide the level of investment in various operating activities and other capital allocation activities. The measure of segment assets is reported on the condensed Consolidated Balance Sheet as Total assets.

Revenue Recognition

Under ASC 606, “Revenue from Contracts with Customers”, the Company determines revenue recognition through the following steps:

●

Identifying the contract, or contracts, with the customer;

●

Identifying the performance obligations in the contract;

●

Determining the transaction price;

●

Allocating the transaction price to performance obligations in the contract; and

●

Recognizing revenue when, or as, the Company satisfies performance obligations by transferring the promised goods or services.

Nature of Products and Services and Revenue Recognition from (a) subscription of our Enterprise Autonomy Service (“EAS”), (b) nonrecurring engineering services under fixed fee arrangements (“NRE services”), (c) product sales of hardware to customers and distributors, and (d) other are recognized as follows:

Subscription

Subscription revenue primarily consists of the sale of SaaS offerings. Through the SaaS offerings and related support services, customers are granted access to a hosted software application over the contract period, generally ranging from one year to five years, without a contractual right to possession of the software.

SaaS and related support services: Revenues from the sale of hosted software applications and related support services are generally recognized ratably over the contractual period that the services are delivered, beginning on the date the service is made available to customers. Revenue is recognized ratably because the customer simultaneously receives and consumes the benefits of the services throughout the contract period. Contracts are generally fixed price the Company’s standard payment terms vary by customer and the products or services offered.

Revenue is measured based on considerations specified in a contract with a customer. Customer contracts for software subscriptions are generally represented by a sales contract or purchase order with contract durations typically ranging from three to five years.

For the three months ended September 30, 2025 and 2024, subscription revenue was $35,527 and $6,892, respectively, and for the nine months ended September 30, 2025 and 2024 was $65,372 and $11,162, respectively.

Non-Recurring Engineering (“NRE”)

The Company enters into Non-Recurring Engineering (“NRE”) contracts that are principally comprised of engineering services related to customer-specific configuration of the DriveMod. Generally, with respect to these NRE contracts, i) the determination of the contract price is based on labor and hardware costs estimated to achieve the required milestones specified in the contract; ii) payment under these arrangements are comprised of upfront payments due upon execution of the agreements as well as payments due upon the achievement of milestones specified in each arrangement; and iii) contain mutual termination clauses without penalty. The Company recognizes revenue from NRE contracts that are fully funded by customers and the sale of its products when promised goods or engineering services are transferred to customers. Each of the Company’s NRE arrangements are comprised of multi-phase deliverables recognized at a point in time upon completion and acceptance from the customer of each phase of the arrangement. The Company recognizes revenue in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

For the three and nine months ended September 30, 2025 and 2024, NRE revenue was $0.

Hardware

Hardware Revenue generally consists of sale or lease of industrial vehicles modified with a proprietary autonomous hardware kit, known as a DriveMod Kit. Hardware revenue is recognized over the term of the contract because the hardware is not distinct from the related software and therefore represents a single performance obligation. For customers that lease the hardware, revenue is recognized over time as the customer simultaneously receives and consumes the benefits provided by the hardware. Customer contracts for product sales of hardware are generally represented by a sales contract or purchase order.

For the three months ended September 30, 2025 and 2024, hardware revenue was $23,271 and $7,622, respectively, and for the nine months ended September 30, 2025 and 2024 was $43,787 and $15,450, respectively.

Royalty

Royalty revenue primarily consists of the licensing of the proprietary software that operates and is integrated into the DriveMod Kit. In these arrangements, the software is not distinct from the hardware, as it does not have standalone functionality without the underlying hardware and is highly interrelated with the operation of the hardware. As such, the Company accounts for the software and hardware as a single combined performance obligation and royalty revenue is recognized in the period in which the underlying products, DriveMod Kits, are sold.

For the three months ended September 30, 2025 and 2024, royalty revenue was $0, and for the nine months ended September 30, 2025 and 2024 was $25,200 and $0, respectively.

Other

Other revenues generally consist of fees associated with the sale of distinct professional services, either in support of deploying hardware and subscription support. Professional service offerings are typically sold as part of an arrangement for products or services included within subscription revenue. Professional services associated with subscription revenue generally relate to standard implementation, configuration, installation or training services applied to SaaS deployment models. Professional service revenue is recognized over time as the services are performed, as the customer simultaneously receives and consumes the benefit of these services. Professional service contracts are offered at either a fixed or a variable price and may be invoiced in advance or arrears of the services being provided.

The Company’s standard payment terms vary by customer and the products or services offered. Contract terms for other revenue arrangements are generally short-term, with stated contract terms that are less than one year.

The Company collects and remits taxes assessed by different governmental authorities that are both imposed on and concurrent with a revenue-producing transaction between the Company and the Company’s customers. These taxes may include, but are not limited to, sales, use, value-added, and some excise taxes. The Company reports the collection of these taxes on a net basis (excluded from revenues). Shipping and handling fees billed to customers are included in net sales, while costs of shipping and handling are included in cost of revenue.

For the three months ended September 30, 2025 and 2024, other revenue was $11,175 and $33,069, respectively, and for the nine months ended September 30, 2025 and 2024 was $16,492 and $35,150, respectively.

Arrangements with Multiple Performance Obligations

When a contract involves multiple performance obligations, the Company accounts for individual products and services separately if the customer can benefit from the product or service on its own or with other resources that are readily available to the customer and the product or service is separately identifiable from other promises in the arrangement. The consideration is allocated between separate performance obligations in proportion to their estimated stand-alone selling price. The transactions to which the Company had to estimate stand-alone selling prices and allocate the arrangement consideration to multiple performance obligations were immaterial.

The Company’s contracts may include standard warranty or service level provisions that state promised goods and services will perform and operate in all material respects as defined in the respective agreements. The Company has determined that these represent assurance-type warranties, and the Company has not incurred any material costs as a result of such commitments.

Cost to Obtain and Fulfill a Contract.

The Company incurs certain costs to obtain contracts, principally third-party fulfillment fees, which the Company capitalizes when the liability has been incurred if they are (i) incremental costs of obtaining a contract, (ii) expected to be recovered and (iii) have an expected amortization period that is greater than one year (as the Company has elected the practical expedient to expense any costs to obtain a contract when the liability is incurred if the amortization period of such costs would be one year or less).

Material Rights

The Company’s contracts with customers may include renewal or other options at stated prices. Determining whether these options provide the customer with a material right and therefore need to be accounted for as separate performance obligations requires judgment. The price of each option must be assessed to determine whether it is reflective of the stand-alone selling price or is reflective of a discount that the customer only received as a result of its prior purchase (a material right).

Other Policies, Judgments and Practical Expedients

Contract balances. Contract assets and liabilities represent the differences in the timing of revenue recognition from the receipt of cash from the Company’s customers and billings. Contract assets reflect revenue recognized and performance obligations satisfied in advance of customer billing. Contract liabilities relate to payments received in advance of the satisfaction of performance under the contract. Receivable represents right to consideration that is unconditional. Such rights are considered unconditional if only the passage of time is required before payment of that consideration is due.

Remaining performance obligations. Revenue allocated to remaining performance obligations represents the transaction price allocated to the performance obligations that are unsatisfied, or partially unsatisfied. It includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods and does not include contracts where the customer is not committed. The customer is not considered committed where they are able to terminate for convenience without payment of a substantive penalty under the contract. The Company has elected the optional exemption, which allows for the exclusion of the amounts for remaining performance obligations that are part of contracts with an original expected duration of one year or less.

Significant financing component. In certain arrangements, the Company receives payment from a customer either before or after the performance obligation has been satisfied. The Company’s contracts with customer prepayment terms do not include a significant financing component because the primary purpose is not to receive or provide financing from or to the customers.

Contract modifications. The Company may modify contracts to offer customers additional products or services. Each of the additional products and services are generally considered distinct from those products or services transferred to the customer before the modification. The Company evaluates whether the contract price for the additional products and services reflects the stand-alone selling price as adjusted for facts and circumstances applicable to that contract. In these cases, the Company accounts for the additional products or services as a separate contract. In other cases where the pricing in the modification does not reflect the stand-alone selling price as adjusted for facts and circumstances applicable to that contract, the Company accounts on a prospective basis where the remaining goods and services are distinct from the original items and on a cumulative catch-up basis when the remaining goods and services are not distinct from the original items.

Principal vs. Agent Considerations

Judgment is required in determining whether we are the principal or agent in transactions with dealers, OEMs and end-users. We evaluate the presentation of revenue on a gross or net basis based on whether we control the service provided to the end-user and are the principal (i.e., “gross”), or we arrange for other parties to provide the service to the end-user and are an agent (i.e., “net”). This determination also impacts the presentation of incentives provided to dealers and OEMs and discounts and promotions offered to end-users to the extent they are not customers.

In dealer transactions where our role is to provide the hardware to the dealer, we do not control and are not primarily responsible for the good or service provided by the dealer to end-users. In these transactions, hardware revenue is recorded on a net basis.

In dealer and OEM transactions where our role is to provide the software subscription to the end-user, we are primarily responsible for the services and present the respective subscription revenue on a gross basis. Payments to dealers in exchange for their services are recorded as cost of revenue.

Judgments and estimates. Accounting for contracts recognized over time involves the use of various techniques to estimate total contract revenue and costs. Due to uncertainties inherent in the estimation process, it is possible that estimates of costs to complete a performance obligation will be revised in the near term. The Company reviews and updates its contract-related estimates regularly, and records adjustments as needed. For those performance obligations for which revenue is recognized using a cost-to-cost input method and residual method, changes in total estimated costs, and related progress towards complete satisfaction of the performance obligation, are recognized on a cumulative catch-up basis in the period in which the revisions to the estimates are made.

Concentration of Credit Risk

The following table sets forth the percentages of total revenue for customers that represents 10% or more of the respective amounts for the three months ended September 30, 2025 and 2024, respectively.

	2025			2024
Customer A		*			60.6	%
Customer B		28.5	%		*
Customer C		47.9	%		28.9	%
Customer D		15.0	%		*
Customer E		*			10.5	%

Below 10%

The following table sets forth the percentages of total revenue for customers that represents 10% or more of the respective amounts for the nine months ended September 30, 2025 and 2024, respectively.

	2025			2024
Customer A		*			46.7	%
Customer B		13.2	%		*
Customer C		34.2	%		23.4	%
Customer D		16.7	%		*
Customer E		20.8	%		81.2	%
Customer F		13.7	%		26.7	%

Below 10%

There was $