MENLO PARK, Calif., May 31, 2024 /PRNewswire/ -- Cyngn Inc. (the "Company" or "Cyngn") (Nasdaq: CYN) issued a letter from the CEO —
Dear Cyngn Shareholders:
As most of you are aware, our annual shareholder meeting is scheduled for June 25, 2024 and proxy materials containing several critical matters requiring shareholder approval have been distributed. The matter I wanted to talk to you about today is granting discretionary authority to our Board of Directors to affect a reverse stock split.
We consider the reverse stock split a last measure to regain compliance with Nasdaq's $1 minimum bid price requirement before the late August deadline. We have postponed this as long as possible but now we need to act, and so we're asking for you to allow us to do that.
While achieving the minimum bid price requirement organically is preferred, despite our best efforts, achievement of many commercial milestones and significant progress in 2024, to date, we have not been able to achieve this. Therefore, my recommendation to the Board of Directors and to you, the shareholders of Cyngn, is that we enable the option of the reverse stock split as a potential remedy for regaining the minimum bid compliance before the deadline.
Voting to authorize this option is of vital importance. My responsibility as CEO is to do what is in the best interest of the company's stakeholders, including its shareholders, employees and customers. To survive and prosper, the company needs access to capital to fund operations until it is cash flow positive. Few sources of capital are willing to provide financing to the company if it is no longer on a major national exchange. Down-listing to an over-the-counter exchange where market making and trading volumes are significantly lower would put the company and its stakeholders at significant risk.
Also included for vote in the proxy is a proposal to amend our articles of incorporation to increase the number of shares of authorized common stock from 200,000,000 to 400,000,000. This will only be effected in the event that we regain compliance with the minimum bid price organically as we would need these additional authorized shares to further fund the company until it is cash flow positive.This increase will not be necessary if the company executes a reverse split, which will result in a reduction of the outstanding shares. This measure is not intended to be used in addition to the reverse split, but rather in the event one is not used.
Thanks for your support and understanding.
Sincerely,
Lior Tal