UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

 Washington, D.C. 20549

 FORM 10-K

 (Mark One)

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

 For the fiscal year ended December 31,
 2023

 or

 TRANSITION
REPORT UNDER 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.)

 1015 O'Brien Dr., Menlo Park, CA

 94025

 (Address of principal executive offices)

 (Zip Code)

 Registrant's Telephone number, including
area code: (650) 924-5905

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

 Title of Class

 Trading Symbol(s)

 Name of each exchange on which registered

 Common Stock, Par Value $0.00001

 CYN

 Nasdaq Stock Market LLC

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

 Title of Each Class

 Name of Each Exchange On Which Registered

 N/A

 N/A

 Indicate by check mark if the registered is a
well-known seasoned issuer, as defined in Rule 405 the Securities Act.

 Yes No

 Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Act.

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 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 last 90 days.

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 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).

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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.

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 Accelerated filer

 Non-accelerated filer

 Smaller reporting company

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 If an emerging growth company, indicate by a 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
has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
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of an error to previously issued financial statements.

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executive officers during the relevant recovery period pursuant to §240.10D-1(b).

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

 The aggregate market value of the voting and
non-voting common equity held by non-affiliates as of June 30, 2023 (the last business day of the registrant's most recently completed
second fiscal quarter), computed by reference to the closing price for the common stock on such date ($1.1636), as reported on the Nasdaq
Capital Market, was $ 19,432,847.

 The number of shares of Common Stock, $0.00001
par value, outstanding on February 29, 2024 was 82,287,127 shares.

 DOCUMENTS INCORPORATED BY REFERENCE

 None.

 Page

 Item 1.

 Business

 Item 1A.

 Risk Factors

 Item 1B.

 Unresolved Staff Comments

 Item 1C.

 Cybersecurity

 Item 2.

 Properties

 Item 3.

 Legal Proceedings

 Item 4.

 Mine Safety Disclosures

 Item 5.

 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Item 6.

 [Reserved]

 Item 7.

 Management's Discussion and Analysis of Financial Condition and Results of Operations

 Item 7A.

 Quantitative and Qualitative Disclosures About Market Risk

 Item 8.

 Financial Statements and Supplementary Data

 Item 9.

 Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

 Item 9A.

 Controls and Procedures

 Item 9B.

 Other Information

 Item 9C.

 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

 Item 10.

 Directors, Executive Officers and Corporate Governance

 Item 11.

 Executive Compensation

 Item 12.

 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 Item 13.

 Certain Relationships and Related Transactions, and Director Independence

 Item 14.

 Principal Accountant Fees and Services

 Item 15.

 Exhibit and Financial Statement Schedules

 Item 16.

 Form 10-K Summary

 i

 FORWARD-LOOKING STATEMENTS

 This Annual Report on Form
10-K contains forward-looking statements. These statements are based on our management's beliefs and assumptions and on information
currently available to our management. The forward-looking statements are contained principally under the headings "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of Operations," and "Business."
Forward-looking statements include statements concerning:

 our possible or assumed future
results of operations;

 our business strategies;

 our ability to attract and retain
customers;

 our ability to sell additional
products and services to customers;

 our cash needs and financing
plans;

 our competitive position;

 our industry environment;

 our potential growth opportunities;

 expected technological advances
by us or by third parties and our ability to integrate and commercialize them;

 the effects of wars, such as
the wars in Ukraine and the Middle East, natural disasters and pandemics, such as the Covid-19 pandemic;

 the effects of future regulation; and

 the effects of competition.

 All statements in this Annual
Report that are not historical facts are forward-looking statements. We may, in some cases, use terms such as "anticipates,"
"believes," "could," "estimates," "expects," "intends," "may,"
"plans," "potential," "predicts," "projects," "should," "will,"
"would" or similar expressions that convey uncertainty of future events or outcomes to identify forward-looking statements.

 The outcome of the events
described in these forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause
our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed
or implied by the forward-looking statements. These important factors include our financial performance and the other important factors
we discuss in greater detail in "Risk Factors." You should read these factors and the other cautionary statements made in
this Annual Report as applying to all related forward-looking statements wherever they appear in this Annual Report. Given these
factors, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent
our management's beliefs and assumptions only as of the date on which the statements are made. We undertake no obligation to publicly
update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by
law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

 Unless the context requires
otherwise, references in this Annual Report on Form 10-K to "we," "us," "our," and Cyngn refer to
CYNGN Inc. and its consolidated subsidiaries.

 ii

 PART 1

 Item 1. Business

 Company Overview

 Cyngn Inc. is an autonomous
vehicle ("AV") technology company that is focused on addressing industrial uses for autonomous vehicles. We believe that technological
innovation is needed to enable adoption of autonomous industrial vehicles that will address the substantial industry challenges that exist
today. These challenges include labor shortages, high labor costs and work safety.

 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.

 Autonomous driving has common
technological building blocks that remain similar across vehicles and applications. By tapping into these building blocks, DriveMod is
designed to deliver autonomy to new vehicles via streamlined hardware/software integration. This vehicle-agnostic approach enables
DriveMod to expand to new vehicles and novel operational design domains ("ODD"). In short, nearly every industrial vehicle,
regardless of use case, can move autonomously using our technology.

 Our approach accomplishes
several primary value propositions:

 1.
 Provide autonomous capabilities to industrial vehicles built
by established manufacturers that are already trusted by customers.

 2.
 Generate continual customer value by leveraging the synergistic
relationship of autonomous vehicles and data.

 3.
 Develop consistent autonomous vehicle operation and user interfaces
for diverse vehicle fleets.

 4.
 Complement the core competencies of existing industry players
by introducing the leading-edge technologies of Artificial Intelligence ("AI") & Machine Learning ("ML"),
cloud/connectivity, sensor fusion, high- definition mapping, and real-time dynamic path planning & decision-making.

 We believe our market positioning
as a technology partner to vehicle manufacturers creates a synergy with incumbent suppliers that already have established sales, distribution,
and service/maintenance channels. By focusing on industrial use cases and partnering with the incumbent OEMs in these markets, we believe
we can source and execute revenue-generating opportunities more quickly.

 Our long-term vision
is for EAS to become a universal autonomous driving solution with minimal marginal cost for companies to adopt new vehicles and expand
their autonomous fleets across new deployments. We have already deployed DriveMod software on more than 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 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. 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. Our patent
portfolio expanded with 16 new U.S. patent grants in 2023, bringing the total grants to 19.

 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. According to Research Nester, they forecast
the global industry 5.0 market to experience remarkable CAGR growth from 2022 - 2030 led by industrial internet of things, artificial
intelligence with the alliance of humans and collaborative robots.

 As automation proliferates,
these industries will gradually shift to service-based models that will decrease upfront capital expenditures and create new revenue
streams while unlocking new value in the supply chain. Our AV technology is uniquely positioned to capitalize upon these changes by offering
a universal autonomy solution that can deliver self-driving capabilities and data insights to nearly every industrial vehicle on
the market.

 Automation has long played
a role in industrial sectors. The larger industrial automation market has grown significantly by riding the wave of new technology and
innovation experienced during Industry 4.0. This consists of a wide range of technology solutions that provide varying levels of automation
for critical software control systems and industrial equipment. These components are essential to the operations and growth of global
markets such as manufacturing, distribution, transportation, construction, and mining. However, Industry 4.0 has its limitations in industrial
autonomy. 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.

 Figure 1: Illustration of the progression from
Industry 1.0 to Industry 5.0.

 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. For our purposes, we can think of MTE to include all material handling equipment
directly related to material transit (this includes conveying equipment, monorail, hoists, storage & retrieval, and industrial vehicles).
According to a Grand View Research report, the material handling equipment market was valued at $213.4 billion in 2021. They expect the
CAGR from 2022 to 2030 of 5.7% to be driven by increased worker safety awareness, rising requirements for managing bulk materials and
further adoption of Industry 4.0 initiatives with the use of IoT. Further with the rising need for reducing downtime and focus on improving
supply chain efficiency, self-driving industrial vehicles play an important role to achieve these objectives as manufacturing transitions
to Industry 5.0. Our belief is that these strong growth indicators will drive increased need for more advanced technology that will address
gaps in the current capabilities of automated MTE solutions.

 Historically, MTE automation
has been heavily weighted in solutions related to storage/retrieval systems and conveyors because more rigid and repetitive environments
are better suited for the limited capability of existing automation solutions. By contrast, industrial vehicles in the MTE category are
largely still driven manually. A March 2023 report released by MHI and Deloitte finds that 74% of supply chain leaders are increasing
their supply chain technology and innovation investments with 90% saying they are planning to spend more than $1 million, an 24% increase
from 2022 levels. Thirty-six percent plan to spend more than $10 million, up 19% from the prior year. This investment includes solutions
for improved supply chain transparency and sustainability, according to the 2023 MHI Annual Industry Report, "The Responsible Supply
Chain: Transparency, Sustainability, and the Case for Business."

 The World Industrial Truck
Shipment statistics reported that 1.42 million industrial EV vehicles were shipped in 2022 worldwide. However, fewer than 1% of material
handling vehicles shipped every year are automated, presenting a significant opportunity to automate industrial vehicles. The cost to
operate a non-autonomous material transport vehicle is reported to have an annual salary of $47,244 for warehouse drivers in the
U.S. based on Indeed.com, a career and jobsite provider. Although the wages are lower in Europe, Asia and rest of the world, there are
more industrial vehicles outside the Americas, or about 83% of vehicle units, thereby an even greater total available market internationally
than domestically. The global installed base of industrial EV vehicles with a 3-year life span or less is about 3.75 million vehicles.
With a fully loaded, global weighted average annual labor cost of $47,674 with an assumed, on average, 1.5 work shift operations, our
current market potential opportunity exceeds $268 billion.

 Automating industrial vehicles will address the
following challenges:

 Labor shortages —
The hiring and retention of qualified workers is a critical concern for the markets that material transport vehicles operate within. In
fact, Deloitte's 2020 and 2022 Material Handling Industry Report showed that over 50% of the 1,000 supply chain and manufacturing
leaders surveyed rated hiring and employee retention as their biggest challenge (source: MHI Deloitte Industry Report).

 Difficulty in scaling — The
traditional approaches to vehicle automation make scaling vehicle automation solutions difficult due to strains caused by service lifecycle
management and issues with dynamic deployability. Industrial automation customers are forced to coordinate operational components from
a variety of different vendors and lack a unifying architecture that allows the technology to scale effectively within and across sites.
Significant costs are also associated with expanding the scope of existing automation solutions as they are tightly coupled to specific
vehicles and often require an overhaul of the site infrastructure to overcome shortcomings in the automation technology. This can be especially
true in niche environments like mines, where the deployability challenges are compounded by unique sites that require heterogeneous fleets.
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.

 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. 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.

 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. 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.

 To combat these challenges,
we have built an Enterprise Autonomy Suite for industrial vehicles that leverages advanced in-vehicle autonomous driving technology
and incorporates leading supporting technologies like data analytics, fleet management, cloud, and connectivity. EAS provides a differentiated
solution that we believe will drive pervasive adoption of industrial autonomy and create value for customers at every stage of their automation
growth.

 Business Model: The Enterprise Autonomy Suite
for Industrial Vehicles

 A number of business models
have been developed to support industrial autonomy where software is the enabling technology that's transforming supply chain logistics
under Industry 4.0 and 5.0. Software as a Service (SaaS) is the initial working business model for the company but this is not entirely
accurate as vehicle hardware plays an integrated role in automating materials handling. Autonomy requires both the movement of "bits"
(or software) and the movement of "atoms" (or hardware). 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. 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. 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.

 Our unique value proposition
stems from the concept that the growth of industrial autonomy requires an approach that deploys applied AV solutions within a system of
supportive resources rather than a technology feature that is tuned to a specific industrial vehicle.

 Some companies manufacture
standard industrial vehicles then integrate industrial automation software for rigid tasks. Others develop new vehicle platforms to enable
more advanced automation capabilities, limiting the AV technology to a narrow use case. We developed advanced autonomous vehicle
software, DriveMod, for industrial vehicles. DriveMod is a component of EAS that is operationally expansive, vehicle agnostic, and compatible
with indoor and outdoor environments. EAS centers around DriveMod's on-vehicle AV software and is supported by our Cyngn Insight
and Cyngn Evolve technology and tools.

 Figure 2: The core components that make up
our EAS product offering.

 Our approach drives value at every stage of
a company's autonomy journey

 EAS provides extensible industrial
autonomy solutions that can include data-driven actionable insights, partial autonomy to augment existing workflows and support human
drivers, and fully autonomous vehicle mobility. By offering flexible data and autonomous services through subscription-based business
models, we assuage the industry's existing challenge of all-or-nothing adoption for autonomous vehicles. Installing DriveMod
onto any vehicle unlocks a collection of valuable product offerings that customers can activate over the air, creating lower barriers
to entry and enabling customers to benefit from novel data insights while adopting industrial AVs at their own pace. Our solutions also
do not require infrastructure investments to enable autonomous vehicle operation.

 EAS galvanizes the relationship between AVs
and data

 Our EAS combines core autonomous
vehicle technology with a suite of tools and products that strengthen the ties between industrial business operations and the positive
network effects that underpin the relationship between data and AVs. DriveMod uses data from advanced sensors to navigate AVs, creating
a de facto mechanism for rich data collection. Vehicles equipped with DriveMod provide the means for us to collect data then organize,
analyze, and expose customers to novel insights. This makes the data collected during vehicle operation a new type of asset that adopters
of AV technology can take advantage of. Data can be stored in cloud or on-premise servers, according to customer requirements. We
intend to have our customers own the data collected at their facilities and for Cyngn to have the rights to use that data for certain
purposes, such as testing simulation and development. These data assets present a new opportunity to reveal previously unknown insights
about day-to-day operational processes that impact safety, efficiency, vehicle maintenance, and growth.

 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.

 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. 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.

 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. Autonomous vehicles can be relied upon to fill the voids that commonly create human resource issues like executing repetitive
tasks, working during undesirable hours, and operating in uncomfortable or hazardous environments.

 Furthermore, existing employees
can be exposed to cutting-edge technology and develop new valuable career development opportunities. For instance, a manufacturing
community in Wisconsin successfully retrained their employees to be skilled in AMR maintenance after AMRs were introduced to replace traditional
conveyors, according to the article "Are Autonomous Mobile Robots at the Tipping Point" by AutomationWorld.

 We Designed for Scale

 EAS provides a powerful solution
to scalability issues, especially for dynamic deployability and service lifecycle management. 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. 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. DriveMod is capable of perceiving more than 100 dynamic objects
per second and then using that perception information to navigate autonomously. This capability has been proven via road testing in difficult
driving settings like urban streets. In contrast, the industrial settings of our target market rarely encounter 100 dynamic actors per
minute, let alone per second. Scalability is further strengthened by EAS creating common interfaces and experiences that unify customer
data and AV operations within and across sites. Thus, proliferating our solutions with customers will be achieved by iteratively adding
onto an existing EAS, which minimizes the marginal cost associated with expanding AV operations. Additionally, the deployment of EAS allows
for all of the on-going administration, services, and vendors associated with managing the lifecycle of the system to
be integrated.

 Figure 4: Illustration of DriveMod's ability
to utilize key subsystems across multiple environments and vehicle platforms

(left: off-road utility vehicle; right: indoor material handling vehicle).

 Our Products

 EAS is a suite of technology
and tools that consists of three complementary categories: DriveMod, Cyngn Insight, and Cyngn Evolve.

 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. The modularity of DriveMod allows our AV technology to
be compatible across vehicle platforms as well as indoor and outdoor environments. DriveMod can be retrofitted to existing vehicle assets
or integrated into a manufacturing partner's vehicles at assembly, providing accessible options for our customers to integrate leading-edge technology
whether their AV adoption strategies are evolutionary or revolutionary.

 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 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.

 Figure 5: Overview of Cyngn's autonomous
vehicle technology (DriveMod)

 DriveMod's flexibility
combines with our network of manufacturing and service partners to support customers at different stages of autonomous technology integration.
This allows customers to grow the complexity and scope of their industrial autonomy deployments as their business transforms while continually
capturing returns throughout their transition to full autonomy. EAS will also grant customers access to over-the-air software upgrades,
ad hoc customer support, and flexible consumption based on usage and scale of operations. By lessening both the commercial and technical
burdens of traditional vehicle automation and industrial robotics investments, industrial AVs can become universally available to the
market, even reaching small and medium-sized businesses that may otherwise struggle to adopt Industry 4.0 and 5.0 technology.

 Cyngn Insight: Intelligent Control Center

 Cyngn Insight is the customer-facing tool
suite for managing AV fleets and aggregating data to extract business insights. Analytics dashboards surface data about the system's
status, vehicle telemetry, and performance metrics. Cyngn Insight also provides tools to switch between autonomous, manual, and remote
operation when required. This flexibility allows customers to use the autonomous capabilities of the system in a way that is tailored
to their own operational environment. Customers can choose when to operate their DriveMod-powered vehicles autonomously and when
to have human operators operate the vehicles manually or remotely based on their own business needs. When combined, these capabilities
and tools make up the Cyngn Insight intelligent control center that enables flexible fleet management from any location.

 Cyngn Insight's tool
suite includes configurable cloud dashboards that aggregate diverse data streams at several levels of granularity (i.e., site, fleet,
vehicle, module, and component). We can collect data during "open loop" vehicle operation, meaning that the vehicles can be
operated manually while still collecting the rich data enabled by the advanced on-vehicle sensors and computers. Data can be used
for predictive maintenance, operational improvements, educating employees on digital transformation and more.

 Cyngn Evolve: Data Optimization Tools

 Cyngn Evolve is our internal
tool suite that underpins the relationship between AVs and data. Through a unifying cloud-based data infrastructure, our proprietary
data tools strengthen the positive network effects derived from the valuable new data created by AVs. Cyngn Evolve and its data pipelines
facilitate AI/ML training and deployment, manage data sets, and support driving simulation and grading to test and validate new DriveMod
releases, using both real-world and simulated data.

 Figure 6: The Cyngn "AnyDrive" simulation
is part of the Cyngn Evolve toolchain. The simulation environment creates a digital version of the physical world. This allows for customer
data sets to be leveraged and augmented to achieve testing and validation prior to releasing new AV features.

 As AV technology expertise
matures globally, there may be opportunities to monetize the sophisticated AV-centric tools of Cyngn Evolve. Currently, we believe
that AV development is confined to small groups of experts. Therefore, Cyngn Evolve is currently an internal EAS tool that we use to advance
DriveMod and Cyngn Insight, our customer-facing EAS products.

 Corporate Strategy

 360 Sales and Marketing

 We are building a go-to-market ecosystem
that we believe to be highly leveraged by using our partners as the foundation of our growth strategy. We plan to utilize these relationships
to generate and cultivate customer demand, acquire new customers, and deliver additional services to our customers.

 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. 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.

 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.

 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. 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.

 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. 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.

 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). Sustained revenue growth is expected to come largely from recurring subscription revenues that enable companies
to tap into an ever-expanding suite of AV and AI capabilities as organizations transition into full industrial autonomy.

 Industrial operations are
extremely rich with data. However, we believe this data is still being put to limited use, especially as it pertains to equipment transport
and autonomy performance. EAS creates a foundation for extracting new and valuable enterprise data insights by the nature of the advanced
sensors, electronic control units, and connectivity that supports DriveMod's functionality. We can monetize the data insights in
a variety of ways by offering configurable cloud dashboards for fleet/asset management, operational performance data, and predictive analytics
to customers. In parallel, exposing this fleet and vehicle data could be a boon for our OEM partners as they evolve to optimize their
product roadmaps and better integrate our technology to serve the future needs of industrial autonomy.

 DriveMod Customization and Non-Recurring Engineering
("NRE")

 DriveMod's capability
as an AV software stack will continue to expand in several dimensions—most notably, in the number of vehicles that DriveMod can
operate autonomously and the maneuvers that a DriveMod-powered vehicle can execute. Targeting DriveMod to operate new vehicle types autonomously
as well as the expansion of autonomous maneuvers that can be executed by DriveMod are both customizations that may generate revenues from
OEMs or end customers through NRE contracts. New customizations yield project-based revenues that are assessed based on the scope
of the deployment. This revenue stream is substantiated by the commercial contract that was entered into with an end customer for deploying
DriveMod on electric forklifts.

 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. We follow a named account coverage approach. After establishing a customer relationship with an OEM, we seek to
embed our technology into their product roadmap and expand our services to their many clients. 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.

 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"). 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. After an initial win for
a first AV deployment with a customer, we can expand within the site to additional vehicle platforms, then expand the use of similar vehicles
to other sites operated by the customer and finally repeat across new vehicles and sites.

 Partner instead of compete — technology

 The scaling of Industrial
Autonomy will benefit from an ecosystem made up of different enabling technologies and services, such as hardware manufacturing, connectivity,
Internet of Things ("IoT"), and digital integration. 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.
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.

 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. With Cyngn Insight, EAS integrates analytics,
visual dashboards, connectivity, cloud services, and other traditional software systems that allow customers to interact with and extract
insights out of our advanced AV technology.

 Mapping & localization

 Our proprietary system design
abstracts mapping and localization data so that DriveMod can use a variety of high-accuracy solutions to create the optimal mapping
and localization system for the given environment. Our mapping and localization system distills sensor data into contextually rich representations
of the physical world and extracts common insights like required stops and navigation boundaries. These common insights help to create
consistent AV operation across diverse sites, enabling our AVs to navigate both indoor and outdoor.

 Perception

 Granular, efficient perception
forms the basis of advanced AVs. Perception is one of the most complex subsystems, requiring specialized data infrastructure and engineering
expertise in AI/ML and high-performance computing. We have built a modular sensor fusion pipeline that runs on a low compute footprint
and creates the flexibility to customize our perception stack according to application requirements. Our perception architecture streamlines
DriveMod deployments on new vehicles. Our approach addresses common industry challenges like integrating different sensor modalities and
accounting for different sensor mounting positions. We have now integrated DriveMod into more than ten different vehicle platforms, utilizing
various combinations of Light Detecting and Ranging ("LiDAR"), camera, radar, ultrasonic, and positioning sensors.

 Path planning

 Our system's ability
to react and adjust to real-time changes creates a more efficient workflow than basic automation solutions that can only stop/go
along a rigid path and require constant human hand-holding. The Cyngn path planning system provides thousands of trajectory candidates
per second, enabling more complex paths to be navigated that may include advanced behavior like carefully nudging around obstacles or
negotiating intersections.

 Decision making

 The Cyngn decision engine
holds the logic and decision-making rules that govern driving behavior. 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.

 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.
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. 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.

 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.

 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. These competitors
include traditional industrial vehicle manufacturers (such as Crown Equipment's automated forklifts or Toyota Materials Handling)
robotics providers (such Locus Robotics for stock picking AMRs or SeeGrid for pallet and tow AMRs), and software companies (such as Brain
Corp for floor scrubbers or Oxbotica for people and goods transport), as well as large corporate competitors that provide a broad range
of software, service, and logistics solutions across many markets. 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. Many of our competitors either have technical
or strategic barriers that limit their product offerings to specific deployment environments, operations protocols, or vehicle form factors.
It is our belief that it will take a substantial period of time to develop features that satisfy the dynamic needs of industry customers.
Additionally, larger corporate competitors are likely to encounter roadblocks due to competitive overlap with end customers, limiting
their ability to address the needs of the broader industrial 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.

 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).

 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. As the autonomous industrial vehicle regulatory environment continues to develop,
it will be imperative not only to comply with applicable standards but to be an active participant in the development of new standards.
Outside of government standards, third party organizations, industrial workplace advocates, and industry groups have and will continue
to impose self-regulatory standards. In certain cases, these standards may be contractually applicable to our systems, products,
and operations. Thus, we expect and prepare to comply with various standards, including Occupational Safety and Health Administration
("OSHA"), International Organization for Standardization ("ISO"), International Electrotechnical Commission ("IEC"),
or American National Standards Institute ("ANSI") on a case-by-case basis.

 U.S. and international regulations
related to data privacy are also of great importance to our company's products, operations, and culture. Like the autonomous vehicle
regulatory environment, the regulatory framework for data privacy, protection, and security worldwide is continuously evolving and developing.
As a result, interpretation and implementation standards and enforcement practices are likely to remain fluid for the foreseeable future.
As our company expands its operations, the collection, use, and protection of any and all data assets will be internally scrutinized to
ensure compliance with this changing landscape.

 Decreasing the environmental
impact of industrial vehicles is a high priority. Research has shown that equipment utilization rate, configuration, and operational consistency
have a strong effect on the emissions released by industrial vehicle equipment (Source: Journal of the Air & Waste Management Association). A
key focus of Cyngn's EAS will be working to minimize the environmental impact of industrial vehicles through new data insights that
can contribute to more sustainable practices. Our historic vehicle platforms have primarily been electric vehicles ("EV").
While electric drivetrains are not a requirement for DriveMod's technology, EVs are often an application requirement since the vehicles
operate alongside humans in enclosed spaces.

 Intellectual Property

 Our ability to drive impact
and growth within the autonomous industrial vehicle market largely depends on our ability to obtain, maintain, and protect our intellectual
property and all other property rights related to our products and technology. To accomplish this, we utilize a combination of patents,
trademarks, copyrights, and trade secrets as well as employee and third-party non-disclosure agreements, licenses, and other contractual
obligations. In addition to protecting our intellectual property and other assets, our success also depends on our ability to develop
our technology and operate without infringing, misappropriating, or otherwise violating the intellectual property and property rights
of third parties, customers, and partners.

 Our software stack has over
30 subsystems, including those designed for perception, mapping & localization, decision making, planning, and control. 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.

 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. We seek to make the movement of goods in warehouse settings safer, faster, cheaper while reducing greenhouse
gas emissions through greater operating efficiencies.

 Human Capital Resources

 Our team is composed of energetic,
motivated and highly experienced visionaries. They include machine vision, AI, and autonomous software engineers from the greatest universities
in the world. 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. We believe these values encourage
innovation and a team-oriented culture. Our employees have access to a wide range of training, different career paths, and, most
importantly, challenging and purposeful work. Our culture is also built on diversity, inclusion, camaraderie, and celebration. We organize
regular team building activities and public recognition forums to celebrate our diversity and invest in strong relationships.

 In addition to a positive
culture and career development, we offer a robust benefits package. This package includes a flexible vacation policy, access to a 401(k)
plan, premier health plan options and numerous voluntary benefits for employees and their dependents.

 Corporate History

 The Company was incorporated
in the State of Delaware on February 1, 2013, under the original name Cyanogen, Inc. or Cyanogen. The Company started as a venture funded
company with offices in Seattle and Palo Alto, aimed at commercializing CyanogenMod, direct to consumers and through collaborations with
mobile phone manufacturers. CyanogenMod was an open-source operating system for mobile devices, based on the Android mobile platform.
Cyanogen released multiple versions of its mobile operating system and collaborated with an ecosystem of companies including mobile phone
OEMs, content providers and leading technology partners from 2013 to 2015.

 In 2016 the Company's
management and board of directors, determined to pivot its product focus and commercial direction from the mobile device and telecom space
to industrial and commercial autonomous driving with the hiring of Lior Tal in June 2016 to serve as the company's chief operating
officer. Mr. Tal, a seasoned executive of startup firms where prior to joining the company, co-founded Snaptu which later was acquired
by Facebook (currently known as Meta Platforms, Inc.), as well as held various leadership roles at Actimize, DiskSites and Odigo; all
of these companies which were also later acquired. Mr. Tal was promoted to chief executive officer in October 2016 and continues to serve
in this role along with chairman of the board. In May 2017, the Company changed its name to Cyngn Inc.

 Available Information

 Our principal business address
is 1015 O'Brien Dr., Menlo Park, CA 94025. We maintain our corporate website at  (this website address
is not intended to function as a hyperlink and the information contained on our website is not intended to be a part of this Annual
Report). We make available free of charge on  our annual, quarterly, and current reports, and amendments
to those reports if any, as soon as reasonably practical after we electronically file such material with, or furnish it to, the SEC. We
may from time to time provide important disclosures to investors by posting them in the Investor Relations section of our website.

 Our common stock is quoted
on the Nasdaq under the symbol "CYN". We file annual, quarterly, and current reports, proxy statements and other information
with the U.S. 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

 Item 1A. Risk Factors

 Risks Related to Our Technology, Business,
and Industry

 Autonomous driving is an emerging technology
and involves significant risks and uncertainties.

 We develop and deploy a suite
of autonomous driving software products that are compatible with existing sensors and hardware to enable autonomous driving on industrial
vehicle platforms manufactured and designed by OEMs and other third-party industrial vehicle suppliers. Our autonomous driving technology
is highly dependent on internally developed software, as well as on partnerships with third parties such as industrial OEMs and other
suppliers.

 We partner with OEMs that
are seeking to manufacture purpose-built industrial vehicles capable of incorporating our autonomous driving technology. The collaborative
partnerships are established through mutually beneficial, non-binding memorandums of understanding or partnership agreements for
the purpose of joint go-to-market efforts. In addition to OEMs, we depend on other third parties to produce hardware components,
and, in some cases adjacent software solutions, that support our core suite of autonomous driving software products and tools. The timely
development and performance of our autonomous driving programs is dependent on the materials, cooperation, and quality delivered by these
partners. Further, we do not control the initial design of the industrial vehicles we work with and therefore have limited influence
over the production and design of systems for braking, gear shifting, and steering. There can be no assurance that these systems and supporting
technologies can be developed and validated at the high reliability standard required for deployment of autonomous industrial vehicles
using our technology in a cost-effective and timely manner. 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. Although we believe that our algorithms, data analysis and processing, and artificial intelligence technology are promising,
we cannot assure you that our technology will achieve the necessary reliability for scaled commercialization of autonomous industrial
vehicles. For example, we are still improving our technology in terms of handling edge cases, unique environments, and discrete objects.
There can be no assurance that our data analytics and artificial intelligence could predict every single potential issue that may arise
during the operation of an autonomous industrial vehicle utilizing our autonomous vehicle technology. Furthermore, the release and adoption
of EAS and our other technologies and products may not be successful and may take longer than anticipated. 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.

 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 we fail to address any
or all of these risks and challenges, our business may be materially and adversely affected. There are also a number of additional challenges
to the execution and adoption of autonomous vehicle technology in industrial markets, many of which are not within our control, including
market acceptance of autonomous driving, governmental licensing requirements, concerns regarding data security and privacy, actual and
threatened litigation (whether or not a judgment is rendered against us), and the general perception that an autonomous vehicle is not
safe because there is no human driver. There can be no assurance that the market will accept our technology, in which case our future
business, results of operations and financial condition could be adversely affected.

 The autonomous industrial
vehicle industry is in its early stages and is rapidly evolving. Our autonomous driving technology has not yet been commercialized at
scale. We cannot assure you that we will be able to adjust to changing market or regulatory conditions quickly or cost-effectively. If
we fail to do so, our business, results of operations, and financial condition will be adversely affected.

 Our business model has yet to be tested
and any failure to commercialize our strategic plans would have an adverse effect on our operating results and business.

 Investors should be aware
of the difficulties normally encountered by a relatively new enterprise that is beginning to scale its business, many of which are beyond
our control, including unknown future challenges and opportunities, substantial risks and expenses in the course of entering new markets
and undertaking marketing activities. The likelihood of our success must be considered in light of these risks, expenses, complications,
delays, and the competitive environment in which we operate. There is, therefore, substantial uncertainty that our business plan will
prove successful, and we may not be able to generate significant revenue, raise additional capital, or operate profitably. We will continue
to encounter risks and difficulties frequently experienced by early commercial stage companies, including securing market acceptance for
our product and service offerings, scaling up our infrastructure and headcount. We may encounter unforeseen expenses, difficulties, or
delays in connection with our growth. 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.

 Our future business depends
in large part on our ability to continue to develop and successfully commercialize our suite of software products and tools. 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. Continued enhancement of our autonomous
driving technology is and will be subject to risks, including with respect to:

 our ability to continue to enhance
our data analytics and software technology;

 designing, developing, and securing
necessary components on acceptable terms and in a timely manner;

 our ability to attract and retain
customers;

 our ability to pay for research
and development costs;

 our ability to attract, recruit,
hire, and train skilled employees;

 our ability to fund the development
and commercialization of our technology; and

 our ability to enter into strategic
relationships with key members in the industrial vehicles and industrial automation industries and component suppliers.

 We operate in a highly competitive market
and will face competition from both established competitors and new market entrants.

 The market for autonomous
industrial vehicles and industrial automation solutions is highly competitive. Many companies are seeking to develop autonomous driving
and delivery solutions. Competition in these markets is based primarily on technology, innovation, quality, safety, reputation, and price.
Our future success will depend on our ability to further develop and protect our technology in a timely manner and to stay ahead of existing
and new competitors. Our competitors in this market are working towards commercializing autonomous driving technology and may have substantial
financial, marketing, research and development, and other resources.

 In addition, we also face
competition from traditional industrial vehicle and solution companies. Traditional vehicle and solution providers operating with human
drivers are still the predominant operators in the market. Because of the long history of such traditional companies serving our potential
customers and industries, there may be many constituencies in the market that would resist a shift towards autonomous industrial vehicles,
which could include lobbying and marketing campaigns, particularly because our technology will displace machine operators and drivers.

 In addition, the market leaders
in our target industries, such as Industrial Material Handling, may start, or have already started, pursuing large scale deployment of
autonomous industrial vehicle technology on their own. These companies may have more operational and financial resources than we do. We
cannot guarantee that we will be able to effectively compete with them.

 We may also face competition
from component suppliers and other technology and industrial solution companies if they decide to expand vertically and develop their
own autonomous industrial vehicles, some of whom have significantly greater resources than we do. We do not know how close these competitors
are to commercializing autonomous driving systems.

 Many established and new market
participants have entered or have announced plans to enter the autonomous industrial vehicle market. Most of these participants have significantly
greater financial, manufacturing, marketing, and other resources than we do and may be able to devote greater resources to the design,
development, manufacturing, distribution, promotion, sale, and support of their products. 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. 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.

 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. 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, such agreements may contain certain exclusivity provisions which, if triggered, could preclude us from working with
other businesses with superior technology or with whom we may prefer to partner with for other reasons. We could experience delays to
the extent our partners do not meet agreed upon timelines or experience capacity constraints. We could also experience disagreement in
budget or funding for joint development projects. There is also a risk of other potential disputes with partners in the future, including
with respect to intellectual property rights. Our ability to successfully commercialize could also be adversely affected by perceptions
about the quality of our or our partners' vehicles or products.

 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. 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. Our potential profitability is dependent upon a number of factors, many of which are beyond our control. If we are
unable to achieve and sustain profitability, the value of our business and common stock may significantly decrease.

 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.

 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. 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. 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. Our R&D program may not produce successful results, and our new products
may not achieve market acceptance, create additional revenue, or become profitable.

 We have a limited operating history, which
makes it difficult to forecast our future results of operations.

 We were founded in 2013. As
a result of our limited operating history, our ability to accurately forecast our future results of operations is limited and subject
to a number of uncertainties, including our ability to plan for and model future growth. Our historical performance should not be considered
indicative of our future performance. Further, in future periods, our revenue growth could fluctuate for a number of reasons, including
shifts in our offering and revenue mix, slowing demand for our offering, increasing competition, decreased effectiveness of our sales
and marketing organization, and our sales and marketing efforts to acquire new customers, failure to retain existing customers, changing
technology, a decrease in the growth of our overall market, or our failure, for any reason, to continue to take advantage of growth opportunities.
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.

 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.

 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. 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.

 Any of these and other factors,
or the cumulative effect of some of these factors, may cause our results of operations to vary significantly. If our quarterly results
of operations fall below the expectations of investors and securities analysts who follow our stock, the price of our common stock could
decline substantially, and we could face costly lawsuits, including securities class action suits.

 We may need to raise additional funds and
these funds may not be available to us on attractive terms when we need them, or at all.

 The commercialization of autonomous
vehicles is capital intensive. This includes autonomous industrial vehicles outfitted with our technology and purpose-built autonomous
industrial vehicles manufactured by OEMs we intend to partner with. To date, we have financed our operations primarily through the issuance
of equity securities in private and public placements. We may need to raise additional capital to continue to fund our commercialization
activities, sales and marketing efforts, enhancement of our technology and to improve our liquidity position. 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.

 We may raise these additional
funds through the issuance of equity, equity related, or debt securities. To the extent that we raise additional financing by issuing
equity securities or convertible debt securities, our stockholders may experience substantial dilution, and to the extent we engage in
debt financing, we may become subject to restrictive covenants that could limit our flexibility in conducting future business activities.
Financial institutions may request credit enhancement such as third-party guarantee and pledge of equity interest in order to extend
loans to us. We cannot be certain that additional funds will be available to us on attractive terms when required, or at all. If we cannot
raise additional funds when we need them, our financial condition, results of operations, business, and prospects could be materially
adversely affected.

 We have incurred significant losses, have
limited cash on hand and there is substantial doubt as to our ability to continue as a going concern.

 The Company incurred net losses
of approximately $22.8 million and $19.2 million for the year ended December 31, 2023 and 2022, 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. 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. Based on cash flow projections from operating and financing activities and the existing balance
of cash and short-term investments, management is of the opinion that the Company has insufficient funds for sustainable operations, and
it may not be able to meet its payment obligations from operations and related commitments, if the Company is not able to complete the
required funding transactions to allow the Company to continue as a going concern. Based on these factors, the Company has substantial
doubt that it will continue as a going concern for the 12 months following the issuance date of the financial statements included elsewhere
in this report.

 The Company's plan to
alleviate the going concern issue is to increase revenue while controlling operating costs and expenses and obtaining funds from outside
sources of financing to generate positive financing cash flows. While management is optimistic about its ability to raise substantial
funds to continue as a going concern for one year following the financial statement issuance date, there can be no assurance that any
such measures will be successful. We currently do not generate substantial revenue from product sales. Accordingly, we expect to rely
primarily on equity and/or debt financings to fund our continued operations. The Company's ability to raise additional funds will
depend, in part, on the success of our product development activities, and other events or conditions that may affect the share value
or prospects, as well as factors related to financial, economic and market conditions, many of which are beyond our control. 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 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. Any future acquisitions and the subsequent integration of new assets and businesses would require significant
attention from our management and could result in a diversion of resources from our existing business, which in turn could have an adverse
effect on our operations, and consequently our results of operations and financial condition. 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.

 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. 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. 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. The loss of one or more of our executive officers or key employees could have a serious adverse effect on our business.

 To execute our growth plan,
we must attract and retain highly qualified personnel. Competition for these personnel is intense in the technology industry, especially
for engineers with high levels of experience in artificial intelligence and designing and developing autonomous driving related algorithms.
Furthermore, it can be difficult to recruit personnel from other geographies to relocate to our California location. We may also need
to recruit highly qualified technical engineers internationally and therefore subject us to the compliance of relevant immigration laws
and regulations. We have, from time to time, experienced, and we expect to continue to experience, difficulty in hiring and retaining
employees with appropriate qualifications. Many of the companies with which we compete for experienced personnel have greater resources
than we have and can offer more attractive compensation packages for new employees. If we hire employees from competitors or other companies,
their former employers may attempt to assert that these employees or our company have breached their legal obligations, resulting in a
diversion of our time and resources and potentially in litigation. In addition, job candidates and existing employees often consider the
value of the share incentive awards they receive in connection with their employment. If the perceived value of our share awards declines,
it may adversely affect our ability to recruit and retain highly skilled employees. If we fail to attract new personnel on a timely basis
or fail to retain and motivate our current personnel, we may not be able to commercialize and then expand our solutions and services in
a timely manner and our business and future growth prospects could be adversely affected.

 If we fail to manage our growth effectively,
we may be unable to execute our business plan, maintain high levels of service, or adequately address competitive challenges.

 We expect to invest in our
growth for the foreseeable future. Any growth in our business is expected to place a significant strain on not only our managerial, administrative,
operational, and financial resources, but also our infrastructure. We plan to continue to expand our operations in the future. Our success
will depend in part on our ability to manage this growth effectively and execute our business plan. To manage the expected growth of our
operations and personnel, we will need to continue to improve our operational, financial, and management controls and our reporting systems
and procedures.

 We rely heavily on information
technology ("IT") systems to manage critical business functions. To manage our growth effectively, we must continue to improve
and expand our infrastructure, including our IT, financial, and administrative systems and controls. In particular, we may need to significantly
expand our IT infrastructure as the amount of data we store and transmit increases over time, which will require that we both utilize
existing IT products and adopt new technology. 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. Our productivity and the quality of
our solutions may be adversely affected if we do not integrate and train our new employees quickly and effectively or if we fail to appropriately
coordinate across our executive, research and development, technology, service development, analytics, finance, human resources, marketing,
sales, operations, and customer support teams. As we continue to grow, we will incur additional expenses, and our growth may continue
to place a strain on our resources, infrastructure, and ability to maintain the quality of our solutions. If we do not adapt to meet these
evolving challenges, or if the current and future members of our management team do not effectively manage our growth, the quality of
our solutions may suffer and our corporate culture may be harmed. Failure to manage our future growth effectively could cause our business
to suffer, which, in turn, could have an adverse impact on our business, financial condition, and operating results.

 We may be subject to product liability or
warranty claims that could result in significant direct or indirect costs, including reputational harm, increased insurance premiums or
the need to self-insure, which could adversely affect our business and operating results.

 Our technology is used for
autonomous driving, which presents the risk of significant injury, including fatalities. We may be subject to claims if one of our or
a customer's industrial vehicles is involved in an accident and persons are injured or purport to be injured or if property is damaged.
Any insurance that we carry may not be sufficient or it may not apply to all situations. If we experience such an event or multiple events,
our insurance premiums could increase significantly or insurance may not be available to us at all. Further, if insurance is not available
on commercially reasonable terms, or at all, we might need to self-insure. 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.

 If our autonomous driving software fails
to perform as expected our ability to market, sell or lease our autonomous driving software could be harmed.

 Our autonomous industrial
vehicle software products and tools as well as the vehicles, sensors, and hardware they utilize and are deployed on may contain defects
in design and manufacture that may cause them not to perform as expected or require repair. For example, our autonomous vehicle software
will require modification and updates over the life of the vehicle it is deployed on. Software products are inherently complex and often
contain defects and errors when first introduced. There can be no assurance that we will be able to detect and fix any defects in the
industrial vehicles' hardware or software prior to commencing user sales or during the life of the vehicle. Autonomous industrial
vehicles utilizing our suite of products and tools may not perform consistent with users' expectations or consistent with other
vehicles that may become available. Any product defects or any other failure of our software, supportive hardware, or deployment vehicle
platform or to perform as expected could harm our reputation, result in adverse publicity, lost revenue, delivery delays, product recalls,
product liability claims, and significant warranty and other expenses, and could have a material adverse impact on our business, financial
condition, operating results, and prospects.

 If we are unable to establish and maintain
confidence in our long-term business prospects among users, securities and industry analysts, and within our industries, or are subject
to negative publicity, then our financial condition, operating results, business prospects, and access to capital may suffer materially.

 Users may be less likely to
purchase or use our technology and the industrial vehicles it is deployed on if they are not convinced that our business will succeed
or that our service and support and other operations will continue in the long term. Similarly, suppliers and other third parties will
be less likely to invest time and resources in developing business relationships with us if they are not convinced that our business will
succeed. Accordingly, in order to build and maintain our business, we must maintain confidence among users, suppliers, securities and
industry analysts, and other parties in our long-term financial viability and business prospects. 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.

 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.

 Our business is vulnerable
to damage or interruption from pandemics and epidemics, or outbreak of an infectious disease, such as COVID-19 and subsequent variants,
natural disasters, terrorist attacks, political unrest, acts of war (such as the ongoing conflicts between Russia and Ukraine, and Israel
and Palestine).

 The recent inflation in the
United States, foreign and domestic government sanctions imposed on Russia as a result of its invasion of Ukraine, and the conflicts in
Israel and Palestine has caused or may continue to result in extreme volatility and disruptions in the capital and credit markets, which
may adversely affect investor's confidence and, in turn may affect our ability to raise additional capital.

 The occurrence of an
epidemic or a pandemic, such as the COVID-19 pandemic, has had and may continue to have an adverse effect on our operating results. The
extent to which epidemics and pandemics impact our financial condition or results of operations will depend on many factors outside of
our control and whether there is a material impact on the businesses or productivity of our customers, employees, suppliers and other
partners.

 Other considerations related
to the ongoing conflicts between Russia and Ukraine, and Israel and Palestine that may affect the Company include possible cyberattacks
and potential disruptions in the banking systems and capital market, as well as supply chain and increased costs and expenditures on domestic
and internationally-sourced materials and services. As an example, we engage third-party software development engineers who reside in
Russia. Due to the ongoing conflict, we may experience an interruption in the services provided by these parties.

 We are also vulnerable to
natural disasters and other calamities. Although we have servers that are hosted in an offsite location, our backup system does not capture
data on a real-time basis, and we may be unable to recover certain data in the event of a server failure. We cannot assure you that
any backup systems will be adequate to protect us from the effects of fire, floods, typhoons, earthquakes, power loss, telecommunications
failures, break-ins, war, riots, terrorist attacks or similar events. 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.

 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 industry in which our
business operates is characterized by a large number of patents, some of which may be of questionable scope, validity or enforceability,
and some of which may appear to overlap with other issued patents. As a result, there is a significant amount of uncertainty in the industry
regarding patent protection and infringement. In recent years, there has been significant litigation globally involving patents and other
intellectual property rights. Third parties may in the future assert, that we have infringed, misappropriated or otherwise violated their
intellectual property rights. As we face increasing competition and as a public company, the possibility of intellectual property rights
claims against us grows. Such claims and litigation may involve one or more of our competitors focused on using their patents and other
intellectual property to obtain competitive advantage, or patent holding companies or other adverse intellectual property rights holders
who have no relevant product revenue, and therefore our own pending patents and other intellectual property rights may provide little
or no deterrence to these rights holders in bringing intellectual property rights claims against us. There may be intellectual property
rights held by others, including issued or pending patents and trademarks, that cover significant aspects of our technologies or business
methods, and we cannot assure that we are not infringing or violating, and have not infringed or violated, any third-party intellectual
property rights or that we will not be held to have done so or be accused of doing so in the future. In addition, because patent applications
can take many years until the patents issue, there may be applications now pending of which we are unaware, which may later result in
issued patents that our products may infringe. 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.

 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. 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.

 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. The aforementioned options sometimes may not be commercially
feasible. Additionally, in our ordinary course of business, we agree to indemnify our customers, partners, and other commercial counterparties
for any infringement arising out of their use of our intellectual property, along with providing standard indemnification provisions,
so we may face liability to our users, business partners or third parties for indemnification or other remedies in the event that they
are sued for infringement.

 We may also in the future
license third party technology or other intellectual property, and we may face claims that our use of such in-licensed technology
or other intellectual property infringes, misappropriates or otherwise violates the intellectual property rights of others. In such cases,
we will seek indemnification from our licensors. However, our rights to indemnification may be unavailable or insufficient to cover our
costs and losses.

 We also may not be successful
in any attempt to redesign our technology to avoid any alleged infringement. A successful claim of infringement against us, or our failure
or inability to develop and implement non-infringing technology, or license the infringed technology on acceptable terms and
on a timely basis, could materially adversely affect our business and results of operations. Furthermore, such lawsuits, regardless of
their success, would likely be time-consuming and expensive to resolve and would divert management's time and attention from
our business, which could seriously harm our business. Also, such lawsuits, regardless of their success, could seriously harm our reputation
with users and in the industry at large.

 Our business may be adversely affected if
we are unable to adequately establish, maintain, protect, and enforce our intellectual property and proprietary rights or prevent third
parties from making unauthorized use of our technology and other intellectual property rights.

 Our intellectual property
is an essential asset of our business. Failure to adequately protect our intellectual property rights could result in our competitors
offering similar products, potentially resulting in the loss of our competitive advantage, and a decrease in our revenue which would adversely
affect our business prospects, financial condition, and operating results. Our success depends, at least in part, on our ability to protect
our core technology and intellectual property. We rely on a combination of intellectual property rights, such as patents, trademarks,
copyrights, and trade secrets (including know-how), in addition to employee and third-party nondisclosure agreements, intellectual
property licenses, and other contractual rights, to establish, maintain, protect, and enforce our rights in our technology, proprietary
information, and processes. Intellectual property laws and our procedures and restrictions provide only limited protection and any
of our intellectual property rights may be challenged, invalidated, circumvented, infringed or misappropriated. If we fail to protect
our intellectual property rights adequately, we may lose an important advantage in the markets in which we compete. While we take measures
to protect our intellectual property, such efforts may be insufficient or ineffective, and any of our intellectual property rights may
be challenged, which could result in them being narrowed in scope or declared invalid or unenforceable. Other parties may also independently
develop technologies that are substantially similar or superior to ours. We also may be forced to bring claims against third parties,
or defend claims that they may bring against us, to determine the ownership of what we regard as our intellectual property. 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.

 Litigation may be necessary
in the future to enforce our intellectual property rights and to protect our trade secrets. Our efforts to enforce our intellectual property
rights may be met with defenses, counterclaims, and countersuits attacking the validity and enforceability of our intellectual property.
Any litigation initiated by us concerning the violation by third parties of our intellectual property rights is likely to be expensive
and time-consuming and could lead to the invalidation of, or render unenforceable, our intellectual property, or could otherwise
have negative consequences for us. Furthermore, it could result in a court or governmental agency invalidating or rendering unenforceable
our patents or other intellectual property rights upon which the suit is based. We will not be able to protect our intellectual property
if we are unable to enforce our rights or if we do not detect unauthorized use of our intellectual property. Our inability to protect
our proprietary technology against unauthorized copying or use, as well as any costly litigation or diversion of our management's
attention and resources, could delay the introduction and implementation of new technologies, result in our substituting inferior or more
costly technologies into our products or injure our reputation. Moreover, policing unauthorized use of our technologies, trade secrets,
and intellectual property may be difficult, expensive, and time-consuming, particularly in foreign countries where the laws may not be
as protective of intellectual property rights as those in the United States and where mechanisms for enforcement of intellectual property
rights may be weak. If we fail to meaningfully establish, maintain, protect, and enforce our intellectual property and proprietary rights,
our business, operating results, and financial condition could be adversely affected.

 Changes in U.S. patent law could diminish
the value of patents in general, thereby impairing our ability to protect our products.

 There are a number of recent
changes to the patent laws that may have a significant impact on our ability to protect our technology and enforce our intellectual property
rights. For example, the Leahy-Smith America Invents Act (the "AIA") enacted in September 2011, resulted in significant
changes in patent legislation. An important change introduced by the AIA is that, as of March 16, 2013, the United States transitioned
from a "first-to-invent" to a "first-to-file" system for deciding which party should be granted
a patent when two or more patent applications are filed by different parties claiming the same invention. Under a "first-to-file" system,
assuming the other requirements for patentability are met, the first inventor to file a patent application generally will be entitled
to a patent on the invention regardless of whether another inventor had made the invention earlier. A third party that files a patent
application in the United States Patent and Trademark Office ("USPTO") after that date but before us could therefore be awarded
a patent covering an invention of ours even if we made the invention before it was made by the third party. Circumstances could prevent
us from promptly filing patent applications on our inventions.

 The AIA also includes a number
of significant changes that affect the way patent applications will be prosecuted and also may affect patent litigation. These include
allowing third party submission of prior art to the USPTO during patent prosecution and additional procedures to attack the validity of
a patent by USPTO administered post-grant proceedings, including post-grant review, inter partes review, and
derivation proceedings. Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in United States
federal courts necessary to invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding sufficient
for the USPTO to hold a claim invalid even though the same evidence would be insufficient to invalidate the claim if first presented in
a district court action. Accordingly, a third party may attempt to use the USPTO procedures to invalidate our patent claims that would
not have been invalidated if first challenged by the third party as a defendant in a district court action. The AIA and its implementation
could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our
issued patents, all of which could have a material adverse effect on our business, financial condition, results of operations, and prospects.

 Further, the standards applied
by the USPTO and foreign patent offices in granting patents are not always applied uniformly or predictably. For example, there is no
uniform worldwide policy regarding patentable subject matter or the scope of claims allowable for business methods. 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. Supreme
Court has ruled on several patent cases in recent years, such as Impression Products, Inc. v. Lexmark International, Inc., Association
for Molecular Pathology v. Myriad Genetics, Inc., Mayo Collaborative Services v. Prometheus Laboratories, Inc. and Alice Corporation Pty.
Ltd. v. CLS Bank International, either narrowing the scope of patent protection available in certain circumstances or weakening the rights
of patent owners in certain situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future,
this combination of events has created uncertainty with respect to the value of patents, once obtained.

 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.

 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.

 We cannot be certain that
we are the first inventor of the subject matter to which we have filed a particular patent application, or if we are the first party to
file such a patent application. If another party has filed a patent application to the same subject matter as we have, we may not be entitled
to the protection sought by the patent application. Further, the scope of protection of issued patent claims is often difficult to determine.
As a result, we cannot be certain that the patent applications that we file will issue, or that our issued patents will be broad enough
to protect our proprietary rights or otherwise afford protection against competitors with similar technology. In addition, the issuance
of a patent is not conclusive as to its inventorship, scope, validity or enforceability. Our competitors may challenge or seek to invalidate
our issued patents, or design around our issued patents, which may adversely affect our business, prospects, financial condition or operating
results. Also, the costs associated with enforcing patents, confidentiality and invention agreements, or other intellectual property rights
may make aggressive enforcement impracticable.

 We may not be able to protect our intellectual
property rights throughout the world.

 Filing, prosecuting, maintaining,
defending, and enforcing patents and other intellectual property rights on our product candidates in all countries throughout the world
would be prohibitively expensive, and our intellectual property rights in some countries outside the United States can be less extensive
than those in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same
extent as federal and state laws in the United States. Consequently, we may not be able to prevent third parties from practicing our inventions
in all countries outside the United States, or from selling or importing products made using our inventions in and into the United States
or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patent protection or other intellectual
property rights to develop their own products and may export otherwise infringing, misappropriating, or violating products to territories
where we have patent or other intellectual property protection, but enforcement rights are not as strong as those in the United States.
These products may compete with our product candidates, and our patents or other intellectual property rights may not be effective or
sufficient to prevent them from competing.

 Many companies have encountered
significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of some countries
do not favor the enforcement of patents and other intellectual property rights, which could make it difficult for us to stop the infringement,
misappropriation, or other violation of our intellectual property rights generally. Proceedings to enforce our intellectual property rights
in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could
put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing, and could provoke
third parties to assert claims against us. We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded,
if any, may not be commercially meaningful.

 Many countries, including
European Union countries, India, Japan, and China, have compulsory licensing laws under which a patent owner may be compelled under specified
circumstances to grant licenses to third parties. In addition, many countries limit the enforceability of patents against government agencies
or government contractors. In those countries, we may have limited remedies if patents are infringed or if we are compelled to grant a
license to a third party, which could materially diminish the value of those patents. This could limit our potential revenue opportunities.
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.

 In addition to patented technology, we rely
on our unpatented proprietary technology, trade secrets, processes, and know-how.

 We rely on proprietary information
(such as trade secrets, know-how, and confidential information) to protect intellectual property that may not be patentable,
or that we believe is best protected by means that do not require public disclosure. We generally seek to protect this proprietary information
by entering into confidentiality agreements, or consulting, services, or employment agreements that contain non-disclosure and non-use provisions
with our employees, consultants, contractors, scientific advisors, and third parties. However, we cannot guarantee that we have entered
into such agreements with each party that has or may have had access to our trade secrets or proprietary information and, even if entered
into, these agreements may be breached or may otherwise fail to prevent disclosure, third-party infringement or misappropriation
of our proprietary information, may be limited as to their term and may not provide an adequate remedy in the event of unauthorized disclosure
or use of proprietary information. We have limited control over the protection of trade secrets used by our third-party manufacturers
and suppliers and could lose future trade secret protection if any unauthorized disclosure of such information occurs. In addition, our
proprietary information may otherwise become known or be independently developed by our competitors or other third parties. To the extent
that our employees, consultants, contractors, and other third parties use intellectual property owned by others in their work for us,
disputes may arise as to the rights in related or resulting know-how and inventions. Costly and time-consuming litigation
could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain protection for our
proprietary information could adversely affect our competitive business position. Furthermore, laws regarding trade secret rights in certain
markets where we operate may afford little or no protection to our trade secrets. If any of our trade secrets were to be lawfully obtained
or independently developed by a competitor or other third party, we would have no right to prevent them from using that trade secret to
compete with us. If any of our trade secrets were to be disclosed (whether lawfully or otherwise) to or independently developed by a competitor
or other third party, it could have a material adverse effect on our business, operating results, and financial condition.

 We also rely on physical and
electronic security measures to protect our proprietary information, but we cannot guarantee that these security measures provide adequate
protection for such proprietary information or will never be breached. There is a risk that third parties may obtain unauthorized access
to and improperly utilize or disclose our proprietary information, which would harm our competitive advantages. We may not be able to
detect or prevent the unauthorized access to or use of our information by third parties, and we may not be able to take appropriate and
timely steps to mitigate the damages (or the damages may not be capable of being mitigated or remedied).

 We utilize open-source software, which may
pose particular risks to our proprietary software, technologies, products, and services in a manner that could harm our business.

 We use open-source software
in our products and services and anticipate using open-source software in the future. We utilize a distribution of the open-source Linux
system, and tools such as ROS (open-source publish-subscribe tool) in the technical stack. Professional open-source license
scanning systems such as WhiteSource and ScanCode are used in both places. Both Continuous Integration and Continuous Deployment ("CI/CD")
level open-source scan and overall system opensource scan is performed to protect the systems and our intellectual property. In the
event that our scanning and open-source check protocols fail, the Company could be negatively affected Some open-source software
licenses require those who distribute open-source software as part of their own software products to publicly disclose all or part
of the source code to such software product or to make available any modifications or derivative works of the open-source code on
unfavorable terms or at no cost. This could result in our proprietary software being made available in the source code form and/or licensed
to others under open-source licenses, which could allow our competitors or other third parties to use our proprietary software freely
without spending the development effort, and which could lead to a loss of the competitive advantage of our proprietary technologies and,
as a result, sales of our products and services. The terms of many open-source licenses to which we are subject have not been interpreted
by U.S. or foreign courts, and there is a risk that open-source software licenses could be construed in a manner that imposes unanticipated
conditions or restrictions on our ability to provide or distribute our products or services or retain our ownership of our proprietary
intellectual property. Additionally, we could face claims from third parties claiming ownership of, or demanding release of, the open-source software
or derivative works that we developed using such software, which could include our proprietary source code, or otherwise seeking to enforce
the terms of, or alleging breach of, the applicable open-source license. These claims could result in litigation and could require
us to make our proprietary software source code freely available, purchase a costly license, or cease offering the implicated products
or services unless and until we can re-engineer them to avoid breach of the applicable open-source software licenses or
potential infringement. This re-engineering process could require us to expend significant additional research and development
resources, and we cannot guarantee that we will be successful.

 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. There is typically no support available for open-source software,
and we cannot ensure that the authors of such open-source software will implement or push updates to address security risks or will not
abandon further development and maintenance. Many of the risks associated with the use of open-source software, such as the lack
of warranties or assurances of title, non-infringement, or performance, cannot be eliminated, and could, if not properly addressed,
negatively affect our business. We have processes to help alleviate these risks, including a review process for screening requests from
our developers for the use of open-source software, but we cannot be sure that all open-source software is identified or submitted
for approval prior to use in our products and services. Any of these risks could be difficult to eliminate or manage, and, if not addressed,
could adversely affect our ownership of proprietary intellectual property, the security of our vehicles, or our business, results of operations,
and financial condition.

 Unauthorized control or manipulation of
systems in autonomous industrial vehicles may cause them to operate improperly or not at all, or compromise their safety and data
security, which could result in loss of confidence in us and our products, cancellation of contracts with future OEM or supplier partners.

 There have been reports of
vehicles of certain automotive OEMs being "hacked" to grant access to and operation of the vehicles to unauthorized persons.
Our autonomous vehicle software products and tools as well as the vehicles they are deployed on contain or will contain complex IT systems
and are designed with built-in data connectivity. We are in the process of and will continue implementing security measures intended
to prevent unauthorized access to our information technology networks and systems. However, hackers may attempt to gain unauthorized access
to modify, alter, and use such networks and systems to gain control of, or to change the functionality of the autonomous industrial vehicles'
running our software, user interface and performance characteristics, or to gain access to data stored in or generated by our products.
As techniques used to obtain unauthorized access to or sabotage systems change frequently and may not be known until launched against
us or our third-party service providers, there can be no assurance that we will be able to anticipate, or implement adequate measures
to protect against, these attacks. Any such security incidents could result in unexpected control of or changes to the vehicles'
functionality and safe operation and could result in legal claims or proceedings and negative publicity, which would negatively affect
our brand and harm our business, prospects, financial condition, and operating results.

 Our information
technology systems or data, or those of our service providers or customers or users could be subject to cyber-attacks or other security
incidents, which could result in data breaches, intellectual property theft, claims, litigation, regulatory investigations, significant
liability, reputational damage and other adverse consequences.

 We
continue to expand our information technology systems as our operations grow, such as product data management, procurement, inventory
management, production planning and execution, sales, service and logistics, financial, tax and regulatory compliance systems. This includes
the implementation of new internally developed systems and the deployment of such systems in the U.S. and abroad. 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.

 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. 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. Our ability to monitor our service providers' security measures is limited, and, in any event, malicious
third parties may be able to circumvent those security measures.

 Further,
the implementation, maintenance, segregation and improvement of these systems require significant management time, support and cost, and
there are inherent risks associated with developing, improving and expanding our core systems as well as implementing new systems and
updating current systems, including disruptions to the related areas of business operation. These risks may affect our ability to manage
our data and inventory, procure parts or supplies or manufacture, sell, deliver and service products, adequately protect our intellectual
property or achieve and maintain compliance with, or realize available benefits under, tax laws and other applicable regulations.

 Moreover,
if we do not successfully implement, maintain or expand these systems as planned, our operations may be disrupted, our ability to accurately
and/or timely report our financial results could be impaired and deficiencies may arise in our internal control over financial reporting,
which may impact our ability to certify our financial results. Moreover, our proprietary information, including intellectual property
and personal information, could be compromised or misappropriated and our reputation may be adversely affected. If these systems or their
functionality do not operate as we expect them to, we may be required to expend significant resources to make corrections or find alternative
sources for performing these functions.

 The costs to comply with, or our actual
or perceived failure to comply with, changing U.S. and foreign laws related to data privacy, security and protection, could adversely
affect our financial condition, operating results, and our reputation.

 In operating our business
and providing services and solutions to clients, we collect, use, store, transmit, and otherwise process employee, partner, and customer
data, including personal data, in and across multiple jurisdictions. We use the electronic systems within the autonomous industrial vehicles
that log information about each industrial vehicle's use in order to aid us in vehicle diagnostics, repair, and maintenance, as
well as to help us collect data regarding operators' use patterns and preference in order to help us customize and optimize the
driving and operating experiences. The integrated autonomous industrial vehicles leveraging our software products and tools may also collect
personal information of drivers, operators and passengers, such as a voice command of a person, in order to aid the manual operation of
our 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.

 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. Some of these laws and regulations require obtaining data subjects' consent to the collection
and use of their data, honoring data subjects' request to delete their data or limit the processing of their data, providing notifications
in the event of a data breach, and setting up the proper legal mechanisms for cross-border data transfers. Some customers may refuse
to provide consent to our collection and use of their personal information, or may restrict our use of such personal information, and
in some cases it is not feasible to obtain consent from data subjects in the general public whose personal information may be captured
by our autonomous industrial vehicles, all of which may hinder our ability to train our data analytics and artificial intelligence technology,
and may harm the competitiveness of our technology. In many cases, these laws and regulations apply not only to the collection and processing
of personal information from third parties with whom we do not have any contractual relationship, but also to the sharing or transfer
of information between or among us, our subsidiaries and other third parties with which we have commercial relationships, such as our
service providers, partners, and customers. The regulatory framework for data privacy, protection, and security worldwide is continuously
evolving and developing and, as a result, interpretation and implementation standards and enforcement practices are likely to remain uncertain
for the foreseeable future. In particular, some of these laws and regulations may require us to store certain categories of data collected
from individuals residing in a jurisdiction only on servers physically located in such jurisdiction, and may further require us to conduct
security assessments and/or adopt other cross-border data transfer mechanisms in order to transfer such data outside of such jurisdiction.
With the continuously evolving and rapidly changing privacy regulatory regime, our ability to freely transfer data among our affiliates
and with our partners in different jurisdictions may be impeded, or we may need to incur significant costs in order to comply with such
requirements. 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. General Data Protection Regulation (the "GDPR"), which became effective in May 2018,
greatly increased the European Commission's jurisdictional reach of its laws and added a broad array of requirements for handling
personal data with respect to EU data subjects. EU member states are tasked under the GDPR to enact, and have enacted, certain implementing
legislation that adds to and/or further interprets the GDPR requirements and potentially extends our obligations and potential liability
for failing to meet such obligations. The GDPR, together with national legislation, regulations and guidelines of the EU member states
and the United Kingdom governing the processing of personal data, impose strict obligations and restrictions on the ability to collect,
use, retain, protect, disclose, transfer, and otherwise process personal data with respect to EU and UK data subjects. In particular,
the GDPR includes obligations and restrictions concerning the consent and rights of individuals to whom the personal data relates, the
transfer of personal data out of the European Economic Area or the United Kingdom, security breach notifications and the security and
confidentiality of personal data. Among other stringent requirements, the GDPR restricts transfers of data outside of the EU to third
countries deemed to lack adequate privacy protections (such as the U.S.), unless an appropriate safeguard specified by the GDPR is implemented.
A July 16, 2020 decision of the Court of Justice of the European Union invalidated a key mechanism for lawful data transfer to the
U.S. and called into question the viability of its primary alternative. As such, the ability of companies to lawfully transfer personal
data from the EU to the U.S. is presently uncertain. Other countries have enacted or are considering enacting similar cross-border data
transfer rules or data localization requirements. These developments could limit our ability to launch our products in the EU and other
foreign markets. The GDPR authorizes fines for certain violations of up to 4% of global annual revenue or 20 million, whichever
is greater. Such fines are in addition to any civil litigation claims by data subjects. Much remains unknown with respect to how to interpret
and implement the GDPR and guidance on implementation and compliance practices is often updated or otherwise revised. Given the breadth
and depth of changes in data protection obligations, including classification of data and our commitment to a range of administrative,
technical and physical controls to protect data and enable data transfers outside of the EU and the United Kingdom, our compliance with
the GDPR's requirements will continue to require time, resources and review of the technology and systems we use to satisfy the
GDPR's requirements, including as EU member states enact their legislation. Further, while the United Kingdom enacted the Data Protection
Act 2018 in May 2018 that supplements the GDPR, and has publicly announced that it will continue to regulate the protection of personal
data in the same way post-Brexit, Brexit has created uncertainty with regard to the future of regulation of data protection in the United
Kingdom.

 The U.S. federal government
and various states and governmental agencies also have adopted or are considering adopting various laws, regulations, and standards regarding
the collection, use, retention, security, disclosure, transfer, and other processing of sensitive and personal information. In addition,
many states in which we operate have laws that protect the privacy and security of sensitive and personal information. Certain state laws
may be more stringent or broader in scope, or offer greater individual rights, with respect to sensitive and personal information than
federal, international, or other state laws, and such laws may differ from each other, which may complicate compliance efforts. State
laws are changing rapidly and there is discussion in Congress of a new federal data protection and privacy law to which we would become
subject if it is enacted. All of these evolving compliance and operational requirements impose significant costs that are likely to increase
over time, may require us to modify our data processing practices and policies, and may divert resources from other initiatives and projects.
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.

 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. Although we endeavor to comply with our public statements and documentation as well as
our contractual and other privacy-related obligations, we may at times fail to do so or be alleged to have failed to do so. The publication
of our privacy policy and other statements that provide promises and assurances about data privacy and security can subject us to potential
government or legal action if they are found to be deceptive, unfair or misrepresentative of our actual practices. In addition, from time
to time, concerns may be expressed about whether our products and services compromise the privacy of clients and others. 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.

 Furthermore, enforcement actions
and investigations by regulatory authorities related to data security incidents and privacy violations continue to increase. Non-compliance could
result in proceedings against us by data protection authorities, governmental entities or others, including class action privacy litigation
in certain jurisdictions, which would subject us to significant fines, penalties, judgments, and negative publicity, and may otherwise
affect our financial condition, operating results, and our reputation. Given the complexity of operationalizing the GDPR and other data
privacy and security laws and regulations to which we are subject, the maturity level of proposed compliance frameworks and the relative
lack of guidance in the interpretation of the numerous requirements of the GDPR and other data privacy and security laws and regulations
to which we are subject, we may not be able to respond quickly or effectively to regulatory, legislative, and other developments, and
these changes may in turn impair our ability to offer our existing or planned products and services and/or increase our cost of doing
business. In addition, if our practices are not consistent or viewed as not consistent with legal and regulatory requirements, including
changes in laws, regulations, and standards or new interpretations or applications of existing laws, regulations and standards, we may
become subject to audits, inquiries, whistleblower complaints, adverse media coverage, investigations, loss of export privileges, or severe
criminal or civil sanctions, all of which may affect our financial condition, operating results, and our reputation. Unauthorized access
or disclosure of personal or other sensitive or confidential data of Company (including data about third parties which the Company possesses),
whether through systems failure, employee negligence, fraud, or misappropriation, by the Company, our service providers or other parties
with whom we do business (if they fail to meet the standards we impose, or if their systems on which our data is stored experience any
data breaches or security incidents) could also subject us to significant litigation, monetary damages, regulatory enforcement actions,
fines, and criminal prosecution in one or more jurisdictions.

 Risks Related to our Common Stock

 There is a limited
market for our common stock that may make it more difficult to dispose of your stock.

 Our common stock is currently
listed on the Nasdaq Capital Market under the symbol "CYN". There is a limited trading market for our common stock. Accordingly,
there can be no assurance as to the liquidity of any markets that may develop for our common stock, the ability of holders of our common
stock to sell shares of our common stock, or the prices at which holders may be able to sell their common stock.

 We are not in compliance with The Nasdaq
Capital Market $1.00 minimum bid price requirement and failure to maintain compliance with this standard could result in delisting and
adversely affect the market price and liquidity of our common stock.

 Our common stock is currently
traded on The Nasdaq Capital Market under the symbol "CYN". 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. 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).
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. 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. If we were unable to meet these requirements, we would receive another
delisting notice from the Nasdaq Capital Market for failure to comply with one or more of the continued listing requirements. 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.

 Future sales of our common stock in the
public market could cause the market price of our common stock to decline.

 Sales of a substantial number
of shares of our common stock in the public market, or the perception that these sales might occur, could depress the market price of
our common stock and could impair our ability to raise capital through the sale of additional equity securities. Many of our existing
equity holders have substantial unrecognized gains on the value of the equity they hold based upon the price of our initial public offering,
and therefore, they may take steps to sell their shares or otherwise secure the unrecognized gains on those shares. We are unable to predict
the timing of or the effect that such sales may have on the prevailing market price of our common stock.

 Our stock price may be volatile, and the
value of our common stock may decline.

 Prior to our initial public
offering in October 2021, there was no public market for our common stock and our common stock is not actively traded. The
lack of an active market for our common stock may impair investors' ability to sell their shares at the time they wish to sell them
or at a price that they consider reasonable, may reduce the market value of their shares and may result in significant price and volume
fluctuations. 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.

 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. 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.

 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.

 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. 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. 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.

 Future securities issuances could result
in significant dilution to our stockholders and impair the market price of our common stock.

 Future issuances of shares
of our common stock could depress the market price of our common stock and result in dilution to existing holders of our common stock.
Also, to the extent outstanding options and warrants to purchase our shares of our common stock are exercised or options or other equity-based
awards are issued or become vested, there will be further dilution. The amount of dilution could be substantial depending upon the size
of the issuances or exercises. Furthermore, we may issue additional equity securities that could have rights senior to those of our common
stock.

 We anticipate that we will need to raise
additional capital, and our issuance of additional capital stock in connection with financings, acquisitions, investments, our equity
incentive plans or otherwise will dilute all other stockholders.

 We expect to issue additional
capital stock in the future that will result in dilution to all other stockholders. We expect to grant equity awards to employees, directors
and consultants under our equity incentive plans. We may also raise capital through equity financings in the future. As part of our business
strategy, we may acquire or make investments in companies, products or technologies and issue equity securities to pay for any such acquisition
or investment. We may not be able to obtain additional capital if and when needed on terms acceptable to us, or at all. Further, if we
do raise additional capital, it may cause stockholders to experience significant dilution of their ownership interests and the per share
value of our common stock to decline.

 We do not intend to pay cash dividends for
the foreseeable future and, as a result, your ability to achieve a return on your investment will depend on appreciation in the price
of our common stock.

 We have never declared or
paid any cash dividends on our capital stock, and, subject to the discretionary dividend policy described in the section entitled "Dividend
Policy" of this Annual Report, we do not intend to pay any cash dividends in the foreseeable future. On September 29, 2023, our
board of directors declared a one-time special dividend of 10% on our issued and outstanding shares of our common stock to holders of
record on October 23, 2023. Any determination to pay dividends in the future will be at the discretion of our board of directors.
Accordingly, you may need to rely on sales of our common stock after price appreciation, which may never occur, as the only way to realize
any future gains on your investment.

 We are an "emerging growth company,"
and we cannot be certain if the reduced reporting and disclosure requirements applicable to emerging growth companies will make our common
stock less attractive to investors.

 We are an "emerging-growth company,"
as defined in the JOBS Act, and we have elected to take advantage of certain exemptions from various reporting requirements that are applicable
to other public companies that are not "emerging growth companies," including the auditor attestation requirements of Section
404 of the Sarbanes-Oxley Act, or Section 404, reduced disclosure obligations regarding executive compensation in our periodic reports
and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder
approval of any golden parachute payments not previously approved. Pursuant to Section 107 of the Jumpstart Our Business Startups ("JOBS")
Act, as an emerging growth company, we have elected to use the extended transition period for complying with new or revised accounting
standards until those standards would otherwise apply to private companies. As a result, our consolidated financial statements will not
be comparable to the financial statements of issuers who are required to comply with the effective dates for new or revised accounting
standards that are applicable to public companies, which may make our common stock less attractive to investors. 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.

 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.

 We cannot predict if investors
will find our common stock less attractive as a result of choosing to rely on these exemptions. For example, if we do not adopt a new
or revised accounting standard, our future results of operations will not be as comparable to the results of operations of certain other
companies in our industry that adopted such standards. If some investors find our common stock less attractive as a result, there may
be a less active trading market for our common stock, and our stock price may be more volatile.

 Anti-takeover provisions in our charter
documents may discourage our acquisition by a third party, which could limit our stockholders' opportunity to sell their shares,
at a premium.

 Our amended and restated certificate
of incorporation includes provisions that could limit the ability of others to acquire control of our company. These provisions could
have the effect of depriving our stockholders of an opportunity to sell their shares at a premium over prevailing market prices by discouraging
third parties from seeking to obtain control in a tender offer or similar transaction. Among other things, the charter documents will
provide:

 certain amendments to our bylaws
that will require the approval of two-thirds of the combined vote of our then-outstanding shares of our common stock; and

 our board of directors has the
authority, without further action by our stockholders, to issue preferred stock in one or more series and to fix their designations,
powers, preferences, privileges, and relative participating, optional, or special rights, and the qualifications, limitations, or restrictions,
including dividend rights, conversion rights, voting rights, terms.

 Our amended and restated certificate of
incorporation designates the Court of Chancery of the State of Delaware and federal court within the State of Delaware as the exclusive
forum for certain types of actions and proceedings that our stockholders may initiate, which could limit a stockholder's ability
to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

 Our amended and restated certificate
of incorporation provides that, subject to limited exceptions, the Court of Chancery of the State of Delaware will be exclusive forums
for any:

 derivative action or proceeding
brought on our behalf;

 action asserting a claim of
breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders;

 action asserting a claim against
us, our directors or officers or employees arising pursuant to any provision of the DGCL, our amended and restated certificate of incorporation
or amended and restated bylaws; or

 other action asserting a claim
against us, our directors or officers or employees that is governed by the internal affairs doctrine.

 This choice of forum provision
does not apply to actions brought to enforce a duty or liability created under the Exchange Act. Our amended and restated certificate
of incorporation to be in effect after this offering also provides that the federal district courts of the United States are the exclusive
forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. We intend for this provision to
apply to any complaints asserting a cause of action under the Securities Act despite the fact that Section 22 of the Securities Act creates
concurrent jurisdiction for the federal and state courts over all actions brought to enforce any duty or liability created by the Securities
Act or the rules and regulations promulgated thereunder. There is uncertainty as to whether a court would enforce such a provision with
respect to claims under the Securities Act, and our stockholders will not be deemed to have waived our compliance with the federal securities
laws and the rules and regulations thereunder. 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.

 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. Alternatively,
if a court were to find these provisions of our amended and restated certificate of incorporation inapplicable to, or unenforceable in
respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such
matters in other jurisdictions, which could adversely affect our business and financial condition.

 Item 1B. Unresolved Staff Comments

 None.

 Item 1C. Cybersecurity

 Risk management and strategy

 We recognize the critical
importance of developing, implementing, and maintaining robust cybersecurity measures to safeguard our information systems and protect
the confidentiality, integrity, and availability of our data.

 Managing Material Risks & Integrated Overall
Risk Management

 We have strategically integrated
cybersecurity risk management into our broader risk management framework to promote a company-wide culture of cybersecurity risk management.
This integration ensures that cybersecurity considerations are an integral part of our decision-making processes at every level. Our management
team works closely with our IT department to continuously evaluate and address cybersecurity risks in alignment with our business objectives
and operational needs.

 Oversee Third-party Risk

 Because we are aware of the
risks associated with third-party service providers, we have implemented stringent processes to oversee and manage these risks. We conduct
thorough security assessments of all third-party providers before engagement and maintain ongoing monitoring to ensure compliance with
our cybersecurity standards. The monitoring includes annual assessments of the SOC reports of our providers and implementing complementary
controls. This approach is designed to mitigate risks related to data breaches or other security incidents originating from third-parties.

 Risks from Cybersecurity Threats

 We have not encountered cybersecurity
challenges that have materially impaired our operations or financial standing.

 Item 2. Properties

 Our corporate headquarters
is located in Menlo Park, California and acts as the main operational facility for our vehicle engineering, software engineering and business
units. We lease our corporate headquarters which contains approximately 16,400 square feet. We believe that our office space is adequate
for our current needs and, should we need additional space, we believe we will be able to obtain additional space on commercially reasonable
terms.

 Item 3. Legal Proceedings

 We are not a party to any
pending legal proceeding, nor is our property the subject of a pending legal proceeding, that is not in the ordinary course of business
or otherwise material to the financial condition of our business. 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.

 Item 5. Market for Registrant's Common
Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Information with Respect to our Common Stock

 Our common stock is traded
on The Nasdaq Capital Market, LLC, or Nasdaq, and began trading under the symbol "CYN" on October 20, 2021.

 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. We currently intend to retain all available funds and future
earnings, if any, to fund the development and expansion of our business, and we do not anticipate paying any cash dividends in the foreseeable
future. On September 29, 2023, our board of directors declared a one-time special stock dividend of 10% on our issued and outstanding
shares of our common stock to holders of record on October 23, 2023. Any future determination regarding the declaration and payment
of dividends, if any, will be at the discretion of our board of directors and will depend on then-existing conditions, including our financial
condition, operating results, contractual restrictions, capital requirements, business prospects and other factors our board of directors
may deem relevant.

 Recent Sales of Unregistered Securities

 None.

 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]

 Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations

 The objective of this Management's
Discussion and Analysis is to allow investors to view the Company from management's perspective, considering items that would have
a material impact on future operations. The following discussion and analysis 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. This discussion contains
forward-looking statements based upon current plans, expectations and beliefs that involve risks and uncertainties. Our actual results
and the timing of certain events could differ materially from those anticipated in or implied by these forward-looking statements as a
result of several factors, including those discussed in the section captioned "Risk Factors" included under Part I, Item 1A
and elsewhere in this Annual Report. See also the section captioned "Forward-Looking Statements" in this Annual Report.

 Overview

 We are an autonomous vehicle
technology company that is focused on addressing industrial uses for autonomous vehicles. We believe that technological innovation is
needed to enable adoption of autonomous industrial vehicles that will address the substantial industry challenges that exist today. These
challenges include labor shortages, lagging technological advancements from incumbent vehicle manufacturers, and high upfront investment
commitment.

 Industrial sites are typically
rigid environments with consistent standards as opposed to city streets that have more variable environmental and situational conditions
and diverse regulations. These differences in operational design domains will be major factors that make proliferation of industrial AVs
in private settings achievable with less time and resources than AVs on public roadways. Namely, safety and infrastructure challenges
are cited as roadblocks that have delayed AVs from operating on public roadways at scale. Our focus on industrial AVs simplifies these
challenges because industrial facilities (especially those belonging to a single end customer that operates similarly at different
sites) share much more in common than different cities do. Furthermore, our end customers own their infrastructure and can make changes
more easily than governments can on public roadways.

 With these challenges in mind, we are developing an Enterprise Autonomy
Suite ("EAS") that leverages advanced in-vehicle autonomous driving technology and incorporates leading supporting technologies
like data analytics, asset tracking, fleet management, cloud, and connectivity. EAS provides a differentiated solution that we believe
will drive pervasive proliferation of industrial autonomy and create value for customers at every stage of their journey towards full
automation and the adoption of Industry 4.0.

 EAS is a suite of technologies
and tools that we divide into three complementary categories:

 1.

 DriveMod, our modular industrial vehicle autonomous driving software;

 2.

 Cyngn Insight, our customer-facing tool suite for monitoring and managing AV
fleets (including remotely operating vehicles) and generating/aggregating/analyzing data (including the IoT gateway device); and

 3.

 Cyngn Evolve, our internal tool suite and infrastructure that facilitates artificial
intelligence AI and machine learning ("ML") training to continuously enhance our algorithms and models and provides a simulation
framework (both record/rerun and synthetic scenario creation) to ensure that data collected in the field can be applied to validating
new releases.

 Legacy automation providers
manufacture specialized industrial vehicles with integrated robotics software for rigid tasks, limiting automation to narrow uses. Unlike
these specialized vehicles, EAS can be compatible with the existing vehicle assets in addition to new vehicles that have been purpose
built for autonomy by vehicle manufacturers. EAS is operationally expansive, vehicle agnostic, and compatible with indoor and outdoor
environments. By offering flexible autonomous services, we aim to remove barriers to industry adoption.

 We understand that scaling
of autonomy solutions will require an ecosystem made up of different technologies and services that are enablers for AVs. Our approach
is to forge strategic collaborations with complementary technology providers that accelerate AV development and deployment, provide access
to new markets, and create new capabilities. Our focus on designing DriveMod to be modular will combine with our experience deploying
AV technology on diverse industrial vehicle form factors, which will be difficult for competitors to replicate.

 We expect our technology to
generate revenue through two main methods: deployment and EAS subscriptions. Deploying our EAS requires us and our integration partners
to work with a new client to map the facility, gather data, and install our AV technology within their fleet and site. We anticipate that
new deployments will yield project-based revenues based on the scope of the deployment. After deployment, we expect to generate revenues
by offering EAS through a Software as a Service ("SaaS") model, which can be considered the AV software component of Robotics
as a Service ("RaaS").

 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.

 Although both the components and the combined solutions of EAS are
still under development, we have EAS licenses with paying customers and have piloted EAS for paid customer trial and pilot deployments.
We 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 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 target scaled deployments to begin in 2024.

 Our go-to-market strategy is to acquire new customers that use
industrial vehicles in their mission-critical and daily operations by (a) leveraging the relationships and existing customers of
our network of strategic partners, (b) bringing AV capabilities to industrial vehicles as a software service provider, and (c) executing
a robust in-house sales and marketing effort to nurture a pipeline of industrial organizations. Our focus is on acquiring new customers
who are either looking (a) to embed our technology into their vehicle product roadmaps or (b) to apply autonomy to existing fleets with
our vehicle retrofits. In turn, our customers are any organizations that could utilize our EAS solution, including OEMs that supply industrial
vehicles, end customers that operate their own industrial vehicles, or service providers that operate industrial vehicles for end customers.

 As OEMs and leading industrial
vehicle users seek to increase productivity, reinforce safer working environments, and scale their operations, we believe we are uniquely
positioned to deliver a dynamic autonomy solution via our EAS to a wide variety of industrial uses. Our long-term vision is for EAS
to become a universal autonomous driving solution with minimal marginal cost for companies to adopt new vehicles and expand their autonomous
fleets across new deployments. We have already deployed DriveMod software on more than 10 different vehicle form factors that range from
stockchasers and forklifts to 14-seat shuttles and 5-meter-long cargo vehicles demonstrating the extensibility of our AV building
blocks.

 Our strategy upon establishing
a customer relationship with an OEM, is to seek to embed our technology into their vehicle roadmap and expand our services to their many
clients. Once we solidify an initial AV deployment with a customer, we intend to seek to expand within the site to additional vehicle
platforms and/or expand the use of similar vehicles to other sites operated by the customer. This "land and expand" strategy
can repeat iteratively across new vehicles and sites and is at the heart of why we believe industrial AVs that operate in geo-fenced,
constrained environments are poised to create value.

 Critical Accounting Policies and Estimates
and Judgements

 Our consolidated financial statements are prepared in accordance with
accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates
and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the consolidated
financial statements, and the reported amounts of revenues and expenses during the reporting period. We continually evaluate our estimates
and judgments. We base our estimates and judgments on historical experience and other factors that we believe to be reasonable under the
circumstances. Materially different results can occur as circumstances change and additional information becomes known. Besides the estimates
identified below that are considered critical, we make many other accounting estimates in preparing our consolidated financial statements
and related disclosures. All estimates, whether or not deemed critical, affect reported amounts of assets, liabilities, revenues and expenses,
as well as disclosures of contingent liabilities. These estimates and judgments are also based on historical experience and other factors
that are believed to be reasonable under the circumstances. Materially different results can occur as circumstances change and additional
information becomes known, even for estimates and judgments that are not deemed critical.

 The Company considers costs to develop software, warrants and share-based
compensation to be critical accounting estimates and believes the associated assumptions and estimates to have the greatest potential
impact on our consolidated financial statements.

 Costs to Develop Software

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

 Internal-Use Software

 The Company capitalizes certain costs related to internal-use software,
primarily consisting of direct labor and third-party vendor costs associated with creating the software. Software development projects
generally include three stages: the preliminary project stage (all costs are expensed as incurred), the application development stage
(certain costs are capitalized and certain costs are expensed as incurred) and the post-implementation/operation stage (all costs are
expensed as incurred). Costs capitalized in the application development stage include costs related to the design and implementation of
the selected software components, software build and configuration infrastructure, and software interfaces. Capitalization of costs requires
judgment in determining when a project has reached the application development stage, the proportion of time spent in the application
development stage, and the period over which the Company expects to benefit from the use of that software. Once the software is placed
in service, these costs are amortized on the straight-line method over the estimated useful life of the software, which is generally three
to five years. There is judgment involved in the determination of the useful life. Internal-use software is classified as property and
equipment in accordance with ASC 350, Intangibles – Goodwill and Other.

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

 The Company accounts for research costs of computer software to be
sold, leased or otherwise marketed as expense until technological feasibility has been established for the product. Once technological
feasibility is established, all software costs are capitalized until the product is available for general release to customers. Judgment
is required in determining when technological feasibility of a product is established. We have determined that technological feasibility
for our software products is reached shortly after a working prototype is complete and meets or exceeds design specifications including
functions, features, and technical performance requirements. After technological feasibility is established, judgment 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 in accordance with ASC 985, Software.

 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. 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. The Company accounts for warrants in accordance with ASC 480, Distinguishing Liabilities from
Equity, depending on the specific terms of the warrant agreement. The Company determined the fair value of the warrants using
the Black-Scholes pricing model and treated the valuation as equity instruments in consideration of the cashless settlement provisions
in the warrant agreements.

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

 Stock-based Compensation

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

 Results of Operations

 Revenue

 We currently derive revenue
from two sources. 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. The purpose of these fully funded projects is to exhibit the feasibility of the Company's technology
offering to the customer on additional vehicle types and provide a level of confidence to encourage the customer to enter into a multi-year,
commercial arrangement with the Company in the future. Revenue on these multi-phase contracts is generally recognized at the point in
time when the performance obligations of each independent phase have been completed and customer acceptance has been acknowledged. Contracts
often allow mutual termination without penalty. To the extent our actual costs vary from the fixed fee, we will generate more or less
profit or could incur a loss.

 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
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.

 During 2023, the company reported cost of revenue of $1.2 million consisting
primarily of fully burdened internal engineering development resources and hardware costs incurred for the completion of the final phases
of NRE contracts. 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.

 Research and Development

 Research and development expense consists primarily of outsourced engineering
services, internal engineering and development expenses, materials, labor and stock-based compensation related to development of the Company's
products and services. Research and development costs incurred during NRE projects are capitalized and expensed when the associated NRE
revenue is recognized. 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. 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. 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.

 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. 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.

 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. 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.

 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. 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. 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.

 On May 31, 2023, the Company entered into an ATM Sales Agreement with
Virtu Americas LLC (the "ATM Sales Agreement"), under which the Company may, from time to time, sell shares of the Company's
common stock at market prices by methods deemed to be an "at-the-market offering" as defined in Rule 415 promulgated under
the Securities Act of 1933, as amended. The ATM Sales Agreement and related prospectus are limited to sales of up to $8.8 million of shares
of the Company's common stock. The ATM Sales Agreement expires at the earliest of 5 years after the date of the agreement or exhaustion
of the aggregate limit available under the ATM Sales Agreement. The Company pays Virtu Americas LLC up to 3.0% of the gross proceeds as
a commission. 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. 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. ("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. 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.

 The Company's liquidity
is based on its ability to enhance its operating cash flow position, obtain capital financing from equity interest investors and borrow
funds to fund its general operations, research and development activities and capital expenditures. 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 of financing to generate positive financing cash
flows.

 Based on cash flow projections from operating and financing activities
and the existing balance of cash and short-term investments, management is of the opinion that the Company has insufficient funds for
sustainable operations, and it may not be able to meet its payment obligations from operations and related commitments, if the Company
is not able to complete the required funding transactions to allow the Company to continue as a going concern, for the next year. Based
on these factors, the Company has substantial doubt that it will be able to continue as a going concern for the 12 months following the
date that these interim financial statements were issued. 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.

 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. 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.

 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. 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.

 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. 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.

 Emerging Growth Company Status

 We are an "emerging-growth
company", as defined in the JOBS Act, and, for as long as we continue to be an emerging growth company, we may choose to take advantage
of exemptions from various reporting requirements applicable to other public companies but not to emerging growth companies, including,
but not limited to, not being required to have our independent registered public accounting firm audit our internal control over financial
reporting under Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic
reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and
stockholder approval of any golden parachute payments not previously approved. As an emerging growth company we can also delay adopting
new or revised accounting standards until such time as those standards apply to private companies. We intend to avail ourselves of these
options. Once adopted, we must continue to report on that basis until we no longer qualify as an emerging growth company.

 We will cease to be an emerging
growth company upon the earliest of: (i) the end of the fiscal year following the fifth anniversary of the initial public offering; (ii)
the first fiscal year after our annual gross revenue are $1.07 billion or more; (iii) the date on which we have, during the previous
three-year period, issued more than $1.0 billion in non-convertible debt securities; or (iv) the end of any fiscal year
in which the market value of our common stock held by non-affiliates exceeded $700 million as of the end of the second quarter
of that fiscal year. We cannot predict if investors will find our common stock less attractive if we choose to rely on these exemptions.
If, as a result of our decision to reduce future disclosure, investors find our common shares less attractive, there may be a less active
trading market for our common shares and the price of our common shares may be more volatile.

 We are also a "smaller
reporting company", meaning that the market value of our stock held by non-affiliates plus the aggregate amount of gross proceeds
to us as a result of the IPO is less than $700 million and our annual revenue was less than $100 million during the most recently
completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates
is less than $250 million or (ii) our annual revenue was less than $100 million during the most recently completed fiscal
year and the market value of our stock held by non-affiliates is less than $700 million. If we are a smaller reporting company at
the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are
available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent
fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting
companies have reduced disclosure obligations regarding executive compensation.

 Item 7A. Quantitative and Qualitative Disclosures
About Market Risk

 As a "Smaller Reporting
Company", this Item and the related disclosure is not required.

 Item 8. Financial Statements and Supplementary Data

 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM

 To the Stockholders and Board of Directors of

 Cyngn Inc.

 Opinion on the Financial Statements

 We have audited the accompanying consolidated
balance sheets of Cyngn Inc. (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of operations,
stockholders' equity and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively
referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects,
the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each
of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States
of America.

 Explanatory Paragraph – Going Concern

 The accompanying financial statements have been
prepared assuming that the Company will continue as a going concern. As more fully described in Note 1, the Company has incurred significant
losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt
about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described
in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 Basis for Opinion

 These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and
are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules
and regulations of the Securities and Exchange Commission and the PCAOB.

 We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's
internal control over financial reporting. Accordingly, we express no such opinion.

 Our audits included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 /s/ Marcum LLP

 Marcum LLP

 We have served as the Company's auditor since 2021.

 San Francisco, California

March 7, 2024

 PCAOB ID NUMBER 688

 F- 1

 CONSOLIDATED BALANCE SHEETS

 2023

 2022

 Assets

 Current assets

 Cash

 $

 3,591,623

 $

 10,536,273

 Restricted cash

 -

 50,000

 Short-term investments

 4,561,928

 12,064,337

 Prepaid expenses and other current assets

 1,316,426

 1,126,137

 Total current assets

 9,469,977

 23,776,747

 Property and equipment, net

 1,486,672

 884,000

 Right-of-use asset, net

 992,292

 371,189

 Intangible assets, net

 1,084,415

 473,076

 Total Assets

 $

 13,033,356

 $

 25,505,012

 Liabilities and Stockholders' Equity

 Current liabilities

 Accounts payable

 $

 196,963

 $

 155,943

 Accrued expenses and other current liabilities

 1,201,142

 854,920

 Current operating lease liability

 682,718

 376,622

 Total current liabilities

 2,080,823

 1,387,485

 Non-current operating lease liability

 317,344

 -

 Total liabilities

 2,398,167

 1,387,485

 Commitments and contingencies (Note 12)

 Stockholders' Equity

 Common stock, Par $ 0.00001; 200,000,000 shares authorized, 64,773,756
and 33,684,864 shares issued and outstanding as of December 31, 2023 and 2022, respectively

 Additional paid-in capital

 170,652,160

 159,847,229

 Accumulated deficit

 ( 160,017,619

)

 ( 135,730,039

)

 Total stockholders' equity

 10,635,189

 24,117,527

 Total Liabilities and Stockholders' Equity

 $

 13,033,356

 $

 25,505,012

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

 F- 2

 CONSOLIDATED STATEMENTS OF OPERATIONS

 Year Ended December 31,

 2023

 2022

 Revenue

 $
 1,489,317

 $
 262,000

 Costs and expenses:

 Cost of revenue

 1,222,321

 186,823

 Research and development

 12,719,983

 9,481,329

 General and administrative

 10,892,955

 9,994,575

 Total costs and expenses

 24,835,259

 19,662,727

 Loss from operations

 ( 23,345,942
)

 ( 19,400,727
)

 Other income, net

 Interest income

 137,887

 44,100

 Other income

 396,825

 120,118

 Total other income, net

 534,712

 164,218

 Net loss

 $
)

 $
)

 Net loss per share attributable to common stockholders, basic and diluted

 $
 ( 0.57
)

 $
 ( 0.55
)

 Weighted-average shares used in computing net loss per share attributable
to common stockholders, basic and diluted

 39,987,864

 34,947,710

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

 F- 3

 CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
EQUITY

 Convertible

Preferred Stock

 Common Stock

 Additional

Paid in

 Accumulated

 Total

Stockholders'

 Shares

 Shares

 Capital

 Deficit

 Equity

 Balance as of December 30, 2021

 -

 -

 26,487,680

 $

 $

 138,740,827

 $

 ( 116,493,530

)

 $

 22,247,562

 Exercise of stock options

 -

 -

 717,041

 114,162

 -

 114,169

 Issuance of common stock in connection with issued RSUs

 -

 -

 28,530

 -

 -

 -

 -

 Issuance of common stock and pre-funded warrants in connection with the private placement offering, net of offering costs of $ 1,857,700

 -

 -

 3,790,322

 11,989,471

 -

 11,989,509

 Issuance of common stock upon exercise of pre-funded warrants

 -

 -

 2,661,291

 2,635

 -

 2,662

 Issuance of common warrants at fair value in connection with the private placement

 -

 -

 6,132,436

 -

 6,132,436

 Stock-based compensation

 -

 -

 2,867,698

 -

 2,867,698

 Net loss

 -

 -

 -

)

)

 Balance as of December 31, 2022

 -

 $

 -

 33,684,864

 $

 $

 159,847,229

 $

 ( 135,730,039

)

 $

 24,117,527

 Exercise of stock options

 -

 -

 172,492

 8,526

 -

 8,528

 Issuance of common stock and pre-funded warrants in connection with the public offering, net of offering costs of $ 618,965

 -

 -

 22,966,733

 4,380,745

 -

 4,380,975

 Issuance of common stock at-the-market equity financing, net of offering costs of $ 97,362

 -

 -

 3,731,524

 1,747,431

 -

 1,747,468

 Stock dividend, net of offering costs of $ 16,182

 4,218,143

 1,460,126

 ( 1,476,350

)

 ( 16,182

)

 Stock-based compensation

 -

 -

 3,208,103

 -

 3,208,103

 Net loss

 -

 -

 -

)

)

 Balance as of December 31, 2023

 -

 $

 -

 64,773,756

 $

 $

 170,652,160

 $

 ( 160,017,619

)

 $

 10,635,189

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

 F- 4

 CONSOLIDATED STATEMENTS OF CASH FLOWS

 Year Ended December 31,

 2023

 2022

 Cash flows from operating activities

 Net loss

 $
)

 $
)

 Adjustments to reconcile net loss to net cash used in operating activities:

 Depreciation and amortization

 961,281

 604,871

 Stock-based compensation

 3,208,103

 2,867,698

 Realized gain on short-term investments

 ( 443,392
)

 ( 90,216
)

 Changes in operating assets and liabilities:

 Prepaid expenses and other current assets

 ( 1,403,049
)

 ( 1,425,126
)

 Accounts payable

 41,020

 43,672

 Accrued expenses and other current liabilities

 969,662

 936,387

 Net cash used in operating activities

 ( 19,477,605
)

 ( 16,299,223
)

 Cash flows from investing activities

 Purchase of property and equipment

 ( 1,045,822
)

 ( 918,318
)

 Acquisition of intangible assets

 ( 718,711
)

 ( 456,822
)

 Purchase of short-term investments

 ( 21,573,199
)

 ( 27,000,000
)

 Proceeds from maturities of short-term investments

 29,519,000

 15,025,879

 Disposal of assets

 180,898

 -

 Net cash provided by (used in) investing activities

 6,362,166

 ( 13,349,261
)

 Cash flows from financing activities

 Proceeds from at-the-market equity financing, net of issuance costs

 1,747,468

 -

 Proceeds from public issuance of common stock and pre-funded warrants, net of offering costs

 4,380,975

 18,121,945

 Proceeds from exercise of pre-funded warrants

 -

 2,662

 Issuance costs for stock dividend

 ( 16,182
)

 -

 Proceeds from exercise of stock options

 8,528

 114,169

 Net cash provided by financing activities

 6,120,789

 18,238,776

 Net decrease in cash and cash equivalents and restricted cash

 ( 6,994,650
)

 ( 11,409,708
)

 Cash and cash equivalents and restricted cash, beginning of year

 10,586,273

 21,995,981

 Cash and cash equivalents and restricted cash, end of year

 $
 3,591,623

 $
 10,586,273

 Supplemental disclosure of cash flow:

 Cash paid during the year for income taxes

 $
 -

 $
 -

 Supplemental disclosure of non-cash activities:

 Recognition of operating lease right-of-use asset and operating lease liabilities

 $
 1,212,760

 $
 842,292

 Stock dividend

 $
 1,460,126

 $

 -

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

 F- 5

 Notes to Consolidated Financial Statements

 1. Description of Business

 Cyngn Inc., together with its subsidiaries (collectively,
"Cyngn" or the "Company"), was incorporated in Delaware in 2013. The wholly owned subsidiaries are Cyngn Singapore
PTE. LTD., a Singaporean limited company organized in 2015 and Cyngn Philippines, Inc., a Philippine corporation incorporated in 2018
and dissolved as of December 31, 2023. The Company is headquartered in Menlo Park, 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.

 Liquidity and Going Concern

 The Company has incurred losses from operations since inception. The
Company incurred net losses of approximately $ 22.8 million and $ 19.2 million for the years ended December 31, 2023 and 2022, respectively.
Accumulated deficit amounted to approximately $ 160.0 million and $ 135.7 million as of December 31, 2023 and December 31, 2022, respectively.
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.

 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 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.

 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 insufficient
funds for sustainable operations, and it may not be able to meet its payment obligations from operations and related commitments, if the
Company is not able to complete the required funding transactions to allow the Company to continue as a going concern. Based on these
factors, the Company has substantial doubt that it will continue as a going concern for the 12 months following the date these financial
statements were issued. 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.

 The Company's plan to alleviate the going
concern issue is to increase revenue while controlling operating costs and expenses and obtaining funds from outside sources of financing
to generate positive financing cash flows. While management is optimistic about its ability to raise substantial funds to continue as
a going concern for one year following the financial statement issuance date, there can be no assurance that any such measures will be
successful. We currently do not generate substantial revenue from product sales. Accordingly, we expect to rely primarily on equity and/or
debt financings to fund our continued operations. The Company's ability to raise additional funds will depend, in part, on the success
of our product development activities, and other events or conditions that may affect the share value or prospects, as well as factors
related to financial, economic and market conditions, many of which are beyond our control. 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.

 F- 6

 2. Summary of Significant Accounting Policies

 Basis of Presentation

 The accompanying consolidated financial statements
as of and for the years ended December 31, 2023 and 2022 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"). The consolidated financial statements include all normal adjustments necessary for a fair presentation of the Company's
financial position at December 31, 2023 and 2022, and operating results and cash flows for the periods presented.

 Principles of Consolidation

 The consolidated financial statements include the accounts of Cyngn
Inc. and its wholly owned subsidiaries, including the dissolved subsidiary Cyngn Philippines, Inc. The Company investigated economic viability
in the Philippines and determined it cost more to operate the subsidiary than any profit it could generate. Consequently, the subsidiary
was shut-down, which had minimal impact on our consolidated financial statements. 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 consolidated
financial statements.

 Use of Estimates

 The preparation of 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 December
31, 2023 and December 31, 2022.

 F- 7

 Cash, Restricted 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 December 31, 2023 and December 31, 2022, the Company had approximately $ 3.6 million and $ 10.5 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 consolidated balance sheets as of December 31, 2023 and December 31, 2022.

 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 doubtful accounts was zero as of December
31, 2023 and December 31, 2022.

 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 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.

 F- 8

 Property and Equipment

 Property and equipment is stated at cost less
accumulated depreciation and amortization. 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

 Internal-use software

 3 to 5 years

 Computer and equipment

 5 years

 Furniture and fixtures

 7 years

 Leasehold improvements

 Shorter of 3 years or lease term

 Vehicles

 5 years

 Operating Lease

 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 consolidated balance sheets under ASC 842 on the office space lease that was amended
and renewed until 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 is 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 year ended December 31, 2023.

 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.

 F- 9

 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 year ended December 31, 2023.

 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.

 On April 1, 2022, the Company entered into an
agreement for exclusive rights to certain hardware and software products and the rights to subsequently sell the software products and
accompanying services. The Company paid a purchase price of $ 100,000 for these rights. The Company evaluated if substantially all of the
assets acquired are concentrated in a single identifiable asset or group of similar identifiable assets to determine if the transaction
should be accounted for as an asset acquisition. Since the only substantive assets acquired pertained to rights to intellectual property,
the entire purchase price was allocated to intellectual property and accounted for as intangible assets with a useful life of 15 years.
In accordance with ASC 805-50, "Business Combination", the agreement was treated a s an asset acquisition rather than
a business combination.

 The Company reviews its long-lived assets and finite-lived intangibles
for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The events and circumstances
the Company monitors and considers include significant decreases in the market price of similar assets, significant adverse changes to
the extent and manner in which the asset is used, an adverse change in legal factors or business climate, an accumulation of costs that
exceed the estimated cost to acquire or develop a similar asset, and continuing losses that exceed forecasted costs. The Company assesses
the recoverability of these assets by comparing the carrying amount of such assets or asset group to the future undiscounted cash flow
it expects the assets or asset group to generate. The Company recognizes an impairment loss if the sum of the expected long-term undiscounted
cash flows that the long-lived asset is expected to generate is less than the carrying amount of the long-lived asset being evaluated.
An impairment charge would then be recognized equal to the amount by which the carrying amount exceeds the fair value of the asset. For
the year ended December 31, 2023 the Company determined the existence of an impairment associated with the Company's intangible
asset "Right to intellectual property" and accordingly recorded an impairment charge of $ 30,000. No impairment charge was
associated with the Company's intangible assets for the year ended December 31, 2022. (See Note 7. Intangible Assets).

 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 December 31, 2023 and December 31, 2022 (see Note 11.
Income Taxes).

 F- 10

 There are no uncertain tax positions that would
require recognition in the 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 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 140,000 shares of the Company's common stock. In addition, the Company issued 6,451,613 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.

 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 years ended December 31, 2023 and 2022 were $ 413,170 and $ 194,566,
respectively.

 F- 11

 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 December 31, 2023 and December 31, 2022.

 Segment Reporting

 The Company's chief operating decision maker,
its Chief Executive Officer, manages operations and business as one operating segment for the purposes of allocating resources, making
operating decisions and evaluating financial performance.

 Revenue Recognition

 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.

 For NRE contracts revenue, 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,
by following a five-step process which includes i) identify the contract with a customer; ii) identify the performance obligations in
the contract; iii) determine the transaction price; iv) allocate the transaction price to performance obligations in the contract and;
v) recognize revenue when or as the Company satisfies a performance obligation.

 The following table sets forth the percentages of total revenue
for customers that represents 10 % or more of the respective amounts for the periods shown.

 2023

 2022

 Customer A

 36.9
 %

 95.4
 %

 Customer B

 58.4
 %

 *

 *
 Below 10 %

 There were no accounts receivable from these customers
at December 31, 2023 and December 31, 2022.

 For the years ending December 31, 2023 and December 31, 2022, NRE revenue
was $ 1.5 million and $0.2 million, respectively. All other revenue streams for the years ended December 31, 2023 and 2022 are not material.

 Cost of Revenue

 Cost of revenue consists primarily of direct labor
and related fringe benefits for internal engineering resources, and deployment related travel costs incurred for the completion of the
contracts and hardware costs.

 Recent Accounting Standards

 In June 2016, the FASB issued Accounting Standards
Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,
which provides new guidance regarding the measurement and recognition of credit loss impairment for certain financial assets. The Company
adopted this standard in the first quarter of 2023 and there was no impact on our consolidated financial statements upon adoption. As
a result of this standard, 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. The adoption of this standard did not result in any material
impact to our allowance for doubtful accounts balance as of December 31, 2023. In addition, the Company evaluated their debt securities
for credit losses. Because the Company's sole investments of held-to-maturity debt securities are short-term U.S. Treasury bills,
no provision for credit losses on such securities was deemed necessary.

 In December 2023, the FASB issued ASU 2023-09,
 Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to enhance the transparency and decision usefulness of income
tax disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024 on a prospective basis and early adoption
is permitted. The Company is currently evaluating the potential effect of this accounting standard update on its consolidated financial
statements and related disclosures.

 F- 12

 3. Revenue and Contracts with Customers

 Contract Balances

 Timing differences between revenue recognized, billings, and customer
payments result in contract assets and liabilities. Contract assets represent revenue recognized in excess of customer billings. Contract
liabilities represent payments received from customers in advance of satisfying performance obligations. The Company had no contract assets
and no liabilities as of December 31, 2023 and December 31, 2022.

 Deferred Contract Costs

 The Company defers costs associated with fulfilling its contracts if
those costs meet all of the following criteria: (i) the costs relate directly to a contract, (ii) the costs generate or enhance resources
of the Company that will be used in satisfying performance obligations in the future, and (iii) the costs are expected to be recovered.
Costs are recognized over the life of the contract or when the respective milestone has been completed as cost of revenue. The Company
had deferred contract costs totaling $ 0 and $ 114,654 as of December 31, 2023 and December 31, 2022, respectively. Deferred contract costs
are included in prepaid and other current assets in the consolidated balance sheets.

 4. Balance Sheet Components

 Financial Instruments

 The Company's short-term investments consisted of U.S. government
treasury bills, which are accounted for as held-to-maturity ("HTM") securities. HTM securities are carried at amortized cost
and, as a result, are not remeasured to fair value on a recurring basis. As of December 31, 2023 and December 31, 2022, the amortized
cost of the Company's U.S. government treasury bills totaled $ 4.6 million and $ 12.1 million, respectively, which approximated their
fair value based on Level 1 inputs. All of the Company's short-term investments will mature within one year of December 31, 2023.
The Company does not expect a credit loss for its short-term investments.

 Prepaid expenses and other current assets

 Prepaid expenses and other current assets are comprised of the following:

 2023

 2022

 Inventory, net

 $
 -

 $
 66,780

 Prepaid Expenses

 385,474

 706,452

 Security Deposits

 155,729

 141,961

 Tax Receivables

 765,697

 -

 Receivables and current assets

 9,526

 210,944

 Total prepaid and expenses and other current assets

 $
 1,316,426

 $
 1,126,137

 F- 13

 Property and Equipment, Net

 Property and equipment is comprised of the following:

 2023

 2022

 Vehicles

 $
 616,947

 $
 397,816

 Furniture and fixtures

 178,491

 176,402

 Computer and equipment

 517,181

 380,457

 Capitalized software

 342,136

 -

 Leasehold improvements

 458,406

 93,120

 Construction work in progress

 208,848

 359,289

 Property and equipment, gross

 2,322,009

 1,407,084

 Less: accumulated depreciation and amortization

 ( 835,337
)

 ( 523,084
)

 Total property and equipment, net

 $
 1,486,672

 $
 884,000

 Depreciation and amortization expense for the
years ended December 31, 2023 and 2022 was $ 312,253 and $ 137,105, respectively.

 Accounts Payable

 Accounts payable includes independent director
fees payable of $ 41,250 and $ 0 as of December 31, 2023 and 2022, respectively.

 Accrued Expenses and Other Current Liabilities

 Accrued expenses and other current liabilities
are comprised of the following:

 2023

 2022

 Credit card payable

 $
 1,103

 $
 5,194

 Accrued expenses

 214,286

 283,118

 Accrued payroll

 985,753

 566,608

 Total accrued expenses and other current liabilities

 $
 1,201,142

 $
 854,920

 5. Operating Lease

 The Company leases its office space in Menlo Park,
California, under an operating lease agreement dated August 18, 2017, that was originally signed for a term of five years. The lease has
been amended and extended several times since the original signing and currently expires in May 2025. Monthly payments are approximately
$ 60,000. The lease includes common area maintenance costs that are paid separately from rent based on actual costs incurred.

 The Company's future lease payments under the non-cancellable
lease as of December 31, 2023, which are presented as lease liabilities on the Company's consolidated balance sheet, are as follows:

 For the years ended December 31,

 Operating

Lease

 2024

 $

 722,641

 2025

 301,100

 Total lease payments

 1,023,741

 Less: imputed interest

 ( 31,449

)

 Present value of lease liability

 $

 992,292

 2023

 2022

 Weighted-average remaining lease term (in years)

 1.42

 0.67

 Weighted -average discount rate

 3.05
 %

 4.40
 %

 Lease expense was $ 601,913 and $ 517,296 for the
years ended December 31, 2023 and 2022, respectively. The amortization of the operating lease right-of-use assets, which is included
in the lease expense, totaled $ 591,656 and $ 453,103 for the years ended December 31, 2023 and 2022, respectively. The weighted average
discount rate is based on the incremental borrowing rate that is utilized to present value the remaining lease payments over the lease
term.

 F- 14

 7. Intangible Assets, Net

 The gross carrying amount and accumulated amortization
of separately identifiable intangible assets are as follows:

 As of December 31, 2023

 Gross
 Carrying

 Accumulated
 Amortization

 Fair Market Value Adjustment

 Impairment

 Net
 Carrying

 Developed software

 $
 542,692

 $
 -

 $
 -

 $
 -

 $
 542,691

 Patents

 539,840

 ( 20,117
)

 -

 -

 519,723

 Trademark

 45,000

 ( 23,000
)

 -

 -

 22,000

 Rights to intellectual property

 100,000

 ( 20,000
)

 ( 50,000
)

 ( 30,000
)

 -

 Total intangible assets

 $
 1,227,532

 $
 ( 63,117
)

 $
 ( 50,000
)

 $
 ( 30,000
)

 $
 1,084,415

 As of December 31, 2022

 Gross
 Carrying

 Accumulated
 Amortization

 Net
 Carrying

 Developed software

 $
 -

 $
 -

 $
 -

 Patents

 363,821

 ( 11,856
)

 351,965

 Trademark

 45,000

 ( 20,000
)

 25,000

 Rights to intellectual property

 100,000

 ( 3,889
)

 96,111

 Total intangible assets

 $
 508,821

 $
 ( 35,745
)

 $
 473,076

 Amortization expense for each of the years ended
December 31, 2023 and 2022 was $ 27,372 and $ 14,662, respectively. There was no amortization expense for the developed software for the
years ended December 31, 2023 and 2022.

 ASC 360, Property, Plant, and Equipment, defines a multi-step
process to test long-lived assets, including intangible assets, for recoverability that if failed would indicate impairment. First, the
Company must consider whether indicators of impairment of long-lived assets are present. The Company determined the Triggering Events
in conjunction with preparation of its financial statements for the year ended December 31, 2023 provided such indication.

 Next, the Company must review the long-lived assets
to define asset group(s) that would reflect the lowest level of assets to which discrete cash flows are identifiable, and test these asset
groups for impairment.

 In performing this review, the Company identified
that the long-lived asset "Rights to intellectual property", all of which relate to the Infinitracker, should be classified
as abandoned (the "Abandoned Asset") with the Company determining that it no longer has plans to provide support and sale
of the product. The Abandoned Asset's carrying value was set to its salvage value which is zero given no future cash flows. In addition,
the Company abandoned the use of the associated inventory and recorded a loss of $ 66,690 to impair the inventory to $ 0.

 For the year ended December 31, 2023, the Company recorded a fair market
value adjustment of $ 50,000 and a $ 30,000 impairment charge under amortization expense on its consolidated statement of operations to
adjust the Abandoned Asset to its salvage value of zero.

 It was determined for all remaining long-lived assets (excluding the
Abandoned Asset) that there were no triggering events, and therefore, no further impairment charges to long-lived assets were necessary
as of December 31, 2023.

 Estimated amortization expense for all intangible
assets subject to amortization in future years is expected to be:

 Years ended December 31,

 Amortization

 2024

 $
 22,209

 2025

 22,441

 2026

 22,441

 2027

 22,441

 2028

 22,441

 Thereafter

 972,442

 Total

 $
 1,084,415

 F- 15

 7. Capital Structure

 Common Stock

 As of December 31, 2023 and December 31, 2022,
the Company is authorized to issue 200,000,000 and 100,000,000, respectively, shares of common stock with a par value of $ 0.00001 per
share. As of December 31, 2023 and December 31, 2022, the Company had 64,773,756 and 33,684,864 shares of common stock issued and outstanding,
respectively. Holders of common stock have no preemptive, conversion or subscription rights and there are no redemption or sinking fund
provisions applicable to the common stock. The rights, preferences and privileges of the holders of common stock are subject to, and may
be adversely affected by, the rights of the holders of shares of any series of preferred stock that the Company may designate in the future.

 Convertible Preferred Stock

 In October 2021, the Company amended its Certificate
of Incorporation and revised the number of preferred stock shares authorized for issuance to 10,000,000 shares at a par value
of $ 0.00001. As of December 31, 2023 and December 31, 2022, there were no shares of preferred stock issued and outstanding.

 Common Stock Offering

 On December 8, 2023, the Company entered into a Placement
Agent Agreement with Aegis Capital Corp. ("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. The Pre-Funded Warrants had a nominal exercise price of $ 0.00001. Each share of common stock was sold at an offering
price of $ 0.15, and each Pre-Funded Warrant was sold at an offering price of $ 0.14999.

 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.
The Company is using the net proceeds to fund its cash needs.

 At the Market Equity Financing

 On May 31, 2023, the Company entered into an ATM
Sales Agreement with Virtu Americas LLC (the "ATM Sales Agreement"), under which the Company may, from time to time, sell
shares of the Company's common stock at market prices by methods deemed to be an "at-the-market offering" as defined
in Rule 415 promulgated under the Securities Act of 1933, as amended. The ATM Sales Agreement and related prospectus
is limited to sales of up to an aggregate maximum $ 8.8 million of shares of the Company's common stock. The Company pays Virtu
Americas LLC up to 3.0 % of the gross proceeds as a commission. For the years 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.

 Private Placement Offering

 On April 28, 2022, the Company entered into a Securities Purchase Agreement
(the "Purchase Agreement") with certain accredited and institutional investors for a private placement offering ("Private
Placement") of the Company's common stock (the "Common Stock") and pre-funded warrants (the "Pre-Funded
Warrants") and warrants exercisable for Common Stock (the "Common Stock Warrants"). Pursuant to the Purchase Agreement,
the Company sold (i) 3,790,322 shares of its Common Stock together with Common Stock Warrants to purchase up to 3,790,322 shares of Common
Stock, and (ii) 2,661,291 Pre-Funded Warrants with each Pre-Funded Warrant exercisable for one share of Common Stock, together with Common
Stock Warrants to purchase up to 2,661,291 shares of Common Stock. The Common Stock Warrants totaled 6,451,613. The Company allocated
the proceeds between the Common Stock, Pre-Funded Warrants, and Common Stock Warrants on a relative fair value basis and recorded the
amount allocated to the Common Stock Warrants within additional paid-in capital on the accompanying consolidated balance sheet as the
Common Stock Warrants met all the criteria for equity classification. As the Common Stock Warrants were equity classified, they do not
require subsequent remeasurement after the issuance (see below).

 F- 16

 The Pre-Funded Warrants were exercised in full in May 2022 at a nominal
exercise price of $ 0.001. Each share of Common Stock and accompanying Common Stock Warrant were sold together at a combined offering
price of $ 3.10, and each Pre-Funded Warrant and accompanying Common Stock Warrant were sold together at a combined offering price of $ 3.09.

 The Common Stock Warrants have an exercise price of $ 2.98 per share
(subject to adjustment as set forth in the warrant), are exercisable upon issuance and will expire five years from the date of issuance.
The Common Stock Warrants contain standard adjustments to the exercise price including for stock splits, stock dividends, rights offerings
and pro rata distributions. As a result of the stock dividend in October 2023, the exercise price was adjusted to $ 2.71. There were no
Common Stock Warrants exercised as of December 31, 2023 (see below).

 The Private Placement closed on April 29, 2022.
The Company received gross proceeds of approximately $ 20 million before deducting transaction related expenses payable by the Company.
All qualified legal, accounting, registration and other direct costs related to the Private Placement were offset against the gross proceeds.
The Company is using the net proceeds to fund its cash needs.

 Common Stock Warrants

 The following warrants were outstanding as of
December 31, 2023, all of which contain standard anti-dilution protections in the event of subsequent rights offerings, stock splits,
stock dividends or other extraordinary dividends, or other similar changes in the Company's common stock or capital structure, and
none of which have any participating rights for any losses:

 Securities into which warrants are convertible

 Warrants

outstanding

 Exercise

Price

 Expiration

Date

 Fair

value

 Common stock (Initial Public Offering)

 140,000

 $

 9.375

 October 2026

 $

 170,397

 Common stock (Private Placement)

 7,096,776

 $

 2.71

 April 2027

 6,745,681

 Total

 7,236,776

 $

 6,916,078

 The Company accounts for warrants in accordance
with ASC 480, Distinguishing Liabilities from Equity, depending on the specific terms of the warrant agreement. The Company determined
the fair value of the warrants using the Black-Scholes pricing model and treated the valuation as equity instruments in consideration
of the cashless settlement provisions in the warrant agreements. The warrants are not marked-to-market each reporting period, and thus
there is no impact to earnings. Any future exercises of the warrants will be recorded as cash received and recorded in cash, with a corresponding
increase to common stock and additional paid-in capital in stockholders' equity.

 The Company used the following assumptions:

 Initial
 Public
 Offering
 Warrants

 Private
 Placement
 Warrants

 Fair value of underlying securities

 $
 2.88

 $
 1.37

 Expected volatility

 51.0
 %

 45.0
 %

 Expected term (in years)

 5.0

 5.0

 Risk-free interest rate

 1.13
 %

 2.92
 %

 F- 17

 8. Net Loss Per Share Attributable to Common Stockholders

 The Company declared a 10 % stock dividend that
was distributed on October 30, 2023 to shareholders of record on October 23, 2023. In accordance with ASC 260, basic and diluted earnings
per shares amounts, and weighted-average shares outstanding have been restated for all periods presented to reflect the effect of these
stock dividends. The following table summarizes the computation of basic and diluted loss per share:

 Years Ended

 2023

 2022

 Net loss attributable to common stockholders

 $
)

 $
)

 Basic and diluted weighted average common shares outstanding

 39,987,864

 34,947,710

 Loss per share:

 Basic and diluted

 $
 ( 0.57
)

 $
 ( 0.55
)

 Basic loss per share is based upon the weighted
average number of shares of common stock outstanding during the period. Diluted loss per share would include the effect of unvested restricted
stock awards and the convertible preferred stock; however, such items were not considered in the calculation of the diluted weighted average
common shares outstanding since they would be anti-dilutive.

 9. Stock-based Compensation Expense

 Stock-Based Compensation

 The Company uses stock-based compensation, including
restricted stock units, to provide long-term performance incentives for its employees and board directors. The Company measures employee
and director stock-based compensation awards based on the award's estimated fair value on the date of grant. Forfeitures are recognized
as they occur. Expense associated with these awards is recognized using the straight-line attribution method over the requisite service
period for stock options, restricted stock units ("RSUs") and restricted stock and is reported in our consolidated statements
of stockholders' equity.

 The fair value of the Company's stock options is estimated using
the Black-Scholes option-pricing model. The resulting fair value is recognized on a straight-line basis over the period during which an
employee is required to provide service in exchange for the award. The Company has elected to recognize forfeitures as they occur. Stock
options generally vest over four years and have a contractual term of ten years.

 Determining the grant date fair value of options
requires management to make assumptions and judgments. These estimates involve inherent uncertainties and if different assumptions had
been used, stock-based compensation expense could have been materially different from the amounts recorded.

 The assumptions and estimates for valuing stock
options are as follows:

 Fair value per share of Company's
common stock. Because there was no public market for Cyngn's common stock prior to the IPO, its Board of Directors, with the
assistance of a third-party valuation specialist, determined the common stock fair value at the time of the grant of stock options by
considering a number of objective and subjective factors, including its actual operating and financial performance, market conditions
and performance of comparable publicly traded companies, developments and milestones in the company, and the likelihood of achieving
a liquidity event among other factors. Since the Company's common stock began publicly trading on the Nasdaq, the value of its
common stock underlying stock options or RSUs have been valued based on prevailing market prices.

 Expected
 volatility. Because the Company's common stock had no publicly traded history prior
 to the IPO, it estimated the expected volatility using a combination of its stock price volatility
 and the stock price volatility of peer companies, for a period equal to the expected term
 of the options.

 Expected term. The expected
term of employee stock options represents the weighted-average period that the stock options are expected to remain outstanding. The
Company estimates the expected term of options granted based upon the "simplified method" provided under Staff Accounting
Bulletin, Topic 14, or SAB Topic 14.

 Risk-free interest rate.
 The risk-free interest rate is based on the U.S. Treasury yield curve in effect during the period the options were granted corresponding
to the expected term of the awards.

 Estimated dividend yield.
 The estimated dividend yield is zero, as the Company does not currently intend to declare dividends in the foreseeable future.

 F- 18

 Equity Incentive Plans

 In February 2013, the Company's Board of
Directors adopted the 2013 Equity Incentive Plan ("2013 Plan"). The 2013 Plan authorizes the award of stock options, stock
appreciation rights, restricted stock awards, stock appreciation rights, RSUs, performance awards, and other stock or cash awards.

 In October 2021, the Company's Board of
Directors adopted the Cyngn Inc. 2021 Equity Incentive Plan (the "2021 Plan"). The 2021 Plan replaces the 2013 Plan. However,
awards outstanding under the 2013 Plan will continue to be governed by their existing terms.

 In November 7, 2023, the shareholders of the Company
approved an amendment to the Company's 2021 Equity Incentive Plan to increase the number of shares authorized for issuance by 5,000,000
shares of common stock and to allow an annual increase to the 2021 Plan equal to the least of (i) 5 % of the outstanding common stock on
a fully diluted basis as of the end of the Company's immediately preceding fiscal year, (ii) 1,500,000 shares, or (iii) a lesser
amount as determined by the Board. As of December 31, 2023, a total of 17,000,000 shares of common stock were reserved under the 2021
Plan.

 As of December 31, 2023 and December 31, 2022,
approximately 0.7 million shares, which does not include the shares aforementioned as these were not registered until January 2024, and
 3.6 million shares of common stock were reserved and available for issuance under the 2021 Plan, respectively.

 Options issued under the Plans generally vest
based on continuous service provided by the option holder over a four-year period. Compensation expense related to these options is recognized
on a straight-line basis over the four-year period based upon the fair value at the grant date.

 The following table summarizes information about
the Company's stock options outstanding as well as stock options vested and exercisable as of December 31, 2023, and activity during
the year then ended:

 Shares

 Weighted-

average

exercise
 price

 Weighted-

average remaining
 contractual
 term
 (years)

 Aggregate
 intrinsic
 value

 Outstanding as of December 31, 2022

 14,715,110

 $
 1.23

 7.84

 $
 2,571,013

 Granted

 4,519,000

 0.67

 Exercised

 ( 25,750
)

 0.33

 16,403

 Cancelled/forfeited

 ( 1,705,107
)

 1.66

 Outstanding as of December 31, 2023

 17,503,253

 $
 1.04

 7.37

 $

 Vested and expected to vest at December 31, 2023

 17,503,253

 $
 1.04

 7.37

 $

 Vested and exercisable at December 31, 2023

 8,531,483

 $
 0.96

 5.67

 $

 The following table summarizes information about
the Company's RSUs as of December 31, 2023, and activity during the year then ended:

 Shares

 Weighted-
 average
 grant date
 fair value

 Unvested shares at December 31, 2022

 216,036

 $
 5.52

 RSUs granted

 108,000

 1.05

 RSUs vested

 ( 146,742
)

 5.52

 RSUs forfeited

 -

 -

 Unvested Shares at December 31, 2023

 177,294

 $
 2.80

 The fair value of a stock option is estimated
using the Black-Scholes option-pricing model that takes into account as of the grant date the exercise price and expected life of the
option, the current price of the underlying stock and its expected volatility, expected dividends on the stock, and the risk-free interest
rate for the expected term of the option. The Company has used the simplified method in calculating the expected term of all option grants
based on the vesting period and contractual term. Compensation costs related to share-based payment transactions are recognized in the
financial statements upon satisfaction of the requisite service or vesting requirements.

 The weighted average per share grant-date fair
value of options granted during the nine months December 31, 2023 and 2022 was $ 0.55 and $ 0.74, respectively.

 The following weighted average assumptions were
used in estimating the grant date fair values in December 31, 2023 and 2022:

 2023

 2022

 Fair value of common stock

 $
 1.02

 $
 1.76

 Expected term (in years)

 6.02

 6.05

 Risk-free rate

 3.63
 %

 2.6
 %

 Expected volatility

 52.74
 %

 40.3
 %

 Dividend yield

 %

 %

 We recorded stock-based compensation expense from stock options and
RSUs of approximately $ 3,208,103 and $ 2,867,698, during the years ended December 31, 2023 and 2022, respectively.

 As of December 31, 2023, total stock-based compensation
cost related to outstanding unvested stock options that are expected to vest was approximately $ 7.3 million. This unrecognized stock-based
compensation cost is expected to be recognized over a weighted-average period of approximately 2.9 years. Income tax benefits recognized
from stock-based compensation expense recognized for the nine months ended December 31, 2023 were immaterial due to cumulative losses
and valuation allowances.

 F- 19

 10. Retirement Savings Plan

 Effective November 17, 2017, the Company established
the Cyngn Inc. 401(k) Plan for the exclusive benefit of all eligible employees and their beneficiaries with the intention to provide a
measure of retirement security for the future. This plan is subject to the provisions of the Employee Retirement Income Security Act of
1974 (ERISA) and qualifies under Section 401(k) of the Internal Revenue Code. The Company did not offer and has not provided a company
match for its 401(k) Plan.

 11. Income Taxes

 Domestic and international pre-tax loss consists of the following:

 2023

 2022

 United States

 ( 22,812,381
)

 ( 19,236,289
)

 International

 1,150

 ( 220
)

 Loss before income taxes

 ( 22,811,231
)

)

 For the years ended December 31, 2023 and 2022, income tax expense
attributable to operations is immaterial.

 Income tax expense differed from the amount computed
by applying the federal statutory income tax rate of 21 % to pretax income for the years ended December 31, 2023 and 2022 as a result
of the following:

 2023

 2022

 Federal tax at statutory rate

 $
 ( 4,790,600
)

 $
 ( 4,039,453
)

 State income taxes

 ( 815,249
)

 ( 415,015
)

 Stock based compensation

 276,371

 204,047

 Foreign taxes

 -

 -

 Tax credits

 ( 1,071,338
)

 ( 673,881
)

 Nondeductible items

 ( 142,058
)

 22,081

 Valuation allowance

 5,517,860

 4,516,446

 Deferred true up

 1,320,182

 -

 Rate change

 ( 247,773
)

 369,874

 Other items

 ( 47,395
)

 15,901

 Total

 $
 -

 $
 -

 Deferred income taxes reflect the net tax effects
of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts for income
tax purposes. Significant components of our deferred tax assets and liabilities as of December 31, 2023 and 2022 are as following:

 2023

 2022

 Deferred tax assets:

 Net operating loss carryforwards

 $
 32,935,845

 $
 30,186,203

 Research and development credits

 5,938,775

 4,867,437

 Intangibles

 1,192,900

 1,303,262

 Fixed assets

 67,200

 61,295

 Stock based compensation

 410,323

 654,860

 Accruals and reserves

 146,482

 69,486

 Lease liability

 245,790

 87,233

 Capitalized research costs

 3,905,973

 1,969,682

 Other

 6,876

 1,496

 Gross deferred tax assets

 44,850,164

 39,200,954

 Valuation allowance

 ( 44,606,284
)

 ( 39,088,423
)

 Total deferred tax assets

 243,880

 112,531

 Deferred tax liabilities:

 Right of use asset

 ( 243,880
)

 ( 85,975
)

 Deferred project costs

 -

 ( 26,556
)

 Total deferred tax liabilities

 ( 243,880
)

 ( 112,531
)

 Net deferred tax assets

 $
 -

 -

 F- 20

 Management regularly assesses the ability to
realize deferred tax assets recorded based upon the weight of available evidence, including such factors as recent earnings history and
expected future taxable income on a jurisdiction by jurisdiction basis. In the event that the Company changes its determination as to
the amount of realizable deferred tax assets, the Company will adjust its valuation allowance with a corresponding impact to the provision
for income taxes in the period in which such determination is made. The Company's management believes that, based on a number of
factors, it is more likely than not, that all or some portion of the deferred tax assets will not be realized; and accordingly, for the
year ended December 31, 2023, the Company has provided a valuation allowance against the Company's U.S. net deferred tax assets.
The net change in the valuation allowance for the years ended December 31, 2023 and 2022 was an increase of $ 5,517,861 and $ 4,516,446,
respectively.

 As of December 31, 2023, the Company had net operating
loss carryforwards for federal and state income tax purposes of approximately $ 119,789,248 and $ 116,634,520, respectively, which will
begin to expire in 2034 with $ 84,452,051 of our federal net operating loss carryforward lasting indefinitely.

 As of December 31, 2023, the Company had federal
and state research credit carryforwards of approximately $ 5,870,310 and $ 3,308,423, respectively. The federal research credit carryforwards
will begin to expire in 2033 while the California research credits carry forward have an indefinite life.

 The Internal Revenue Code of 1986, as amended,
imposes restrictions on the utilization of net operating losses in the event of an "ownership change" of a corporation. Accordingly,
a company's ability to use net operating losses may be limited as prescribed under Internal Revenue Code Section 382 ("IRC
Section 382"). Events which may cause limitations in the amount of the net operating losses that the Company may use in any one
year include, but are not limited to, a cumulative ownership change of more than 50 % over a three-year period. Utilization of the federal
and state net operating losses may be subject to substantial annual limitation due to the ownership change limitations provided by the
IRC Section 382 and similar state provisions.

 Effective for tax years beginning after December
31, 2021, the Tax Cuts and Jobs Act of 2017 eliminates the option to deduct research and development expenditures currently and requires
taxpayers to amortize such costs over a period of five or fifteen years. While it is possible that Congress may modify, defer, or repeal
such provision, we have no assurance that the provision will be modified, deferred or repealed. This legislation has accelerated the utilization
of our net operating losses in the U.S., but it has not impacted our current tax obligations.

 In response to the
COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act, or the CARES Act, and the Consolidated Appropriations Act, 2021
were passed into law and provide additional economic stimulus to address the impact of the COVID-19 pandemic, including among other items,
several U.S. income tax provisions related to, among other things, net operating loss carrybacks, alternative minimum tax credits, modifications
to interest expense limitations, and an option to defer payroll tax payments for a limited period. In 2023, we assessed our eligibility
to claim a refund of employer taxes available under the Employee Retention Credit provisions of the
CARES Act. For the years ended December 31, 2023, we calculated eligible credits of approximately $ 763,624 provided by the CARES Act,
which have been recognized as offsets to salaries costs in operating expenses. As of December 31, 2023, the aggregate eligible credit
amount has been accrued as a receivable on our consolidated balance sheets.

 The following table reflects changes in gross
unrecognized tax benefits:

 2023

 2022

 Balance at beginning of year

 $
 2,086,044

 $
 1,797,238

 Increase in balance related to tax positions taken during the current year

 459,145

 288,806

 Increase in balance related to tax positions taken during prior years

 -

 -

 Decrease in balance related to prior year tax positions

 -

 -

 Decrease in balance related to settlement with tax authorities

 -

 -

 Balance at end of year

 $
 2,545,189

 $
 2,086,044

 As of December 31, 2023, $ 2,545,189 of the total
unrecognized tax benefits, if recognized, would have an impact on the Company's effective tax rate. The Company estimates that there will
be no material changes in its uncertain tax positions in the next 12 months. The Company's has not recorded any interest or penalties
related to its unrecognized tax benefits for 2023 or 2022.

 The Company files income tax returns in the U.S. federal and various
state jurisdictions with varying statutes of limitations. The Company is generally no longer subject to tax examinations for years prior
to 2020 for federal purposes and 2019 for state purposes, except in certain limited circumstances.

 However, due to the fact that the Company had
loss and credits carried forward in some jurisdictions, certain items attributable to technically closed years are still subject to adjustment
by the relevant taxing authority through an adjustment to tax attributes carried forward to open years.

 F- 21

 12. Commitments and Contingencies

 Legal Proceedings

 The Company is subject to legal and regulatory
actions that arise from time to time. The assessment as to whether a loss is probable or reasonably possible, and as to whether such loss
or a range of such loss is estimable, often involves significant judgment about future events, and the outcome of litigation is inherently
uncertain. There is no material pending or threatened litigation against the Company that remains outstanding as of December 31, 2023
and December 31, 2022.

 Nasdaq Compliance

 On August 24, 2023, the Company
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). To demonstrate compliance with this requirement, the closing bid price of the
Company's 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.
The Company was given until August 19, 2024 to regain compliance with Nasdaq's $ 1 minimum bid price per share requirement.

 13. Risks and Uncertainties

 The Company's business operations, operating
results, and financial condition are vulnerable to certain risks and uncertainties including:

 Inflation and its related impact
on costs and expenditures on domestic and foreign-sourced materials and services;

 Rising interest rates and its impact on the equity markets, investment
valuations, and interest rate-sensitive calculations such as discount rate assumptions used in cash flow projections and going concern
assessments;

 Effects of the Russia-Ukraine
conflict such as possible cyberattacks and potential disruptions in the banking systems and capital markets and the supply chain; and

 Other factors beyond its control
such as natural disasters, terrorism, civil unrest, infectious diseases and pandemics including COVID-19 and its variants.

 The Company is unable to predict and quantify
at this time the extent of the related potential adverse effects but continuously monitors these risks and uncertainties on its future
operations and financial performance.

 14. Subsequent Events

 Subsequent to year-end through the date of this
report, the Company has sold 1,978,807 additional shares under the ATM Sales Agreement, for net proceeds of $ 477,734 after payment
of commission and fees of $ 9,750.

 F- 22

 Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure

 There were no disagreements
related to accounting principles or practices, financial statement disclosure, internal controls or auditing scope or procedure during
the two fiscal years and their respective interim periods.

 Item 9A. Controls and Procedures

 Management's Report on Disclosure
Controls and Procedures

 Our management, under the
supervision and with the participation of our Principal Executive Officer (our Chief Executive Officer) and Principal Financial Officer
(our Chief Financial Officer), has evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2023, the
end of our fiscal year covered by this report. The term "disclosure controls and procedures," as defined in Rules 13a-15(e)
and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company
that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange
Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's
rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information
required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to
the company's management, including its principal executive and principal financial officers, or person performing similar functions,
as appropriate to allow timely decisions regarding required disclosure.

 Management recognizes that
any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their
objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Based on the evaluation of our disclosure controls and procedures as of December 31, 2023, our Chief Executive Officer and Chief Financial
Officer have concluded that, as of such date, our disclosure controls and procedures are effective.

 Management's Report on Internal Control
over Financial Reporting

 Our management is responsible for establishing and maintaining adequate
internal control over financial reporting. Responsibility on estimates and judgments by management are required to assess the expected
benefits and related costs of control procedures. The objectives of internal control include providing management with reasonable, but
not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed
in accordance with management's authorization and recorded properly to permit the preparation of consolidated financial statements
in conformity with accounting principles generally accepted in the United States. Our management assessed the effectiveness of our internal
control over financial reporting as of December 31, 2023. In making this assessment, our management used the criteria set forth in the
report entitled " Internal Control — Integrated Framework " published by the Committee of Sponsoring Organizations
of the Treadway Commission (2013 framework). Our management has concluded that, as of December 31, 2023, our internal control over financial
reporting is effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with US generally accepted accounting principles. Our management reviewed the results of
their assessment with our Board of Directors.

 Inherent Limitations on Effectiveness of
Controls

 Internal control over financial
reporting has inherent limitations which include but is not limited to the use of independent professionals for advice and guidance, interpretation
of existing and/or changing rules and principles, segregation of management duties, scale of organization, and personnel factors. Internal
control over financial reporting is a process which involves human diligence and compliance and is subject to lapses in judgment and breakdowns
resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management
override. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements on a
timely basis, however these inherent limitations are known features of the financial reporting process and it is possible to design into
the process safeguards to reduce, though not eliminate, this risk. Therefore, even those systems determined to be effective can provide
only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.

 Changes in Internal Control over Financial
Reporting

 There has been no change in
our internal control over financial reporting during the quarter ended December 31, 2023 that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.

 Item 9B. Other Information

 Rule 10b5-1 Trading Arrangement

 During the three months ended
December 31, 2023, no director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule
10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.

 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent
Inspections

 Not applicable.

 Item 10. Directors, Executive Officers and
Corporate Governance

 The following table sets forth
the names and ages of our directors and executive officers. Our Board of Directors is currently comprised of five members. Our Board is
divided into three classes of directors, each serving a staggered three-year term. At each annual meeting of stockholders, a class of
directors is elected for a three-year term to succeed the class whose term is then expiring. Executive officers serve at the discretion
of the Board of Directors and are appointed by the Board of Directors.

 Name

 Age

 Position

 Class of

 Chief Executive Officer, Chairman of the Board of Directors and Director

 I

 Chief Financial Officer and Director

 I

 Ben Landen

 Vice President of Business Development

 -

 Karen Macleod

 II

 Colleen Cunningham

 III

 James McDonnell

 II

 The principal occupations
and business experience for the past five years (and, in some instances, for prior years) of each of our directors and executive officers
are as follows:

 Mr. Tal has served as
the Company's Chief Executive Officer and a Chairman of the Board since October 2016. From June 2016 to October 2016, Mr. Tal
served as the Company's Chief Operating Officer. Prior to joining the Company, Mr. Tal was the director of international growth
and partnerships at Facebook where he worked from April 2011 to June 2016. Mr. Tal co-founded Snaptu (acquired by Facebook)
in September 2007 and was the vice president of business development until May 2011. During his time at Snaptu, Mr. Tal helped grow
the user base from launch to tens of millions of users. Prior to co-founding Snaptu, Mr. Tal was a partner at Barzam, Tal, Lerer
Attorneys-at-Law & Patent attorneys from March 2004 to August 2007. Mr. Tal has also held leadership roles at Actimize (acquired
by NICE), DiskSites (acquired by EMC), and Odigo (acquired by Comverse). Mr. Tal holds a law degree from Tel Aviv University and
an LLB in law and a BA in Business Management from Reichman University.

 Mr. Tal's executive
and technology industry experience qualify him to serve on our board of directors.

 Mr. Alvarez has served
as the Company's Chief Financial Officer since June 2021 and a Director since August 2022. Prior to joining the Company, Mr. Alvarez
was the vice president of finance of the International Council of Shopping Centers from 2017 to August 2020. During his time at the International
Council of Shopping Centers, Mr. Alvarez helped improve internal controls, increase productivity and reduce cost. Mr. Alvarez
was active in renegotiating merchant credit card fees. He also implemented a company-wide, annual budget process and deployment of a new
budgeting software tool. From 2015 to 2017, Mr. Alvarez was vice president of finance of QuVa Pharma, Inc. ("QuVa"),
where he helped create an accounting and finance department. From 2011 to 2014, Mr. Alvarez was the national managing partner, COO
and CFO of Tatum, a Randstand Company ("Tatum"). During his time with Tatum, Mr. Alvarez oversaw a business turnaround
that significantly improved Tatum's financial performance. Mr. Alvarez has held several other senior financial and operational
roles in both private and public companies, including CFO of Broadband Discovery Systems, Inc., CFO of Fatbrain.com, CFO of Shop.com,
and Regional Managing Director of Resources Global Professionals. Mr. Alvarez began his career in the audit and assurance practice
of Deloitte where he spent seven years. Mr. Alvarez holds a BS in Business Administration from California State University, East
Bay.

 Mr. Alvarez's financial
expertise and significant audit and reporting knowledge qualify him to serve on the Company's board of directors.

 Ben Landen

 Mr. Landen has served
as the Company's Vice President of Business Development since May 2021, including responsibilities in Sales and Marketing. Prior
to that, Mr. Landen served as the Company's Senior Director of Product & Partnerships from September 2019 to May 2021.
From May 2017 to September 2019, Mr. Landen was the head of product & business development at DeepScale (acquired by Tesla),
a venture-backed startup that developed AI perception solutions for autonomous vehicles. From August 2015 to April 2017, Mr. Landen
was a senior business manager of Maxim Integrated, where he managed a $100 million automotive semiconductor product line and supervised
a team of product managers. Mr. Landen was a business manager from September 2013 to August 2015 and an associate business manager
from August 2010 to September 2013. Mr. Landen holds an MBA from UC Berkeley's Haas School of Business and a BS in Electrical
Engineering from California Polytechnic University, San Luis Obispo.

 Non-Executive Directors

 Karen Macleod

 Ms. Macleod was the founder
and chief executive officer of The Arete Group, LLC from 2015 to 2021. She was president of Tatum, Randstand Holdings NV Company from
2011 to 2014. Ms. Macleod was president of Resources Connection, Inc. North America from 2004 to 2009 and previously served in other
capacities after joining the firm in 1996. She was a senior manager at Deloitte from 1985 to 1994. Ms. Macleod has served
on the board of directors at Lakeland Hills YMCA since 2020, chair of the finance committee since 2022 and member of the executive committee
in 2023. She has also served on the board of directors and member of the audit committee of the FWA of New York from 2018 to 2021,
the Track Group Inc. since 2016, Overland Solutions from 2006 to 2013, and Resource Connection, Inc. from 1998 to 2009.

 Ms. Macleod prior board experience
and particularly her role serving on audit committees qualify her to serve on the Company's board of directors.

 Colleen Cunningham

 Ms. Cunningham has served
as a member of the Company's board of directors since September 2021. Ms. Cunningham was senior vice president and corporate controller
of Zoetis, Inc. from 2012 to 2018. Prior to that, she was the global managing director of Resources Connection, Inc. from 2007
to 2012. Ms. Cunningham was president and chief executive officer of Financial Executives International from 2003 to 2007. She
was chief financial officer at Havas Advertising, North America from 2001 to 2003. Ms. Cunningham served at AT&T as chief
accountant at AT&T, Inc. from 1999 to 2001, division manager of accounting policy and external reporting from 1995 to 1999, and assistant
controller from 1988 to 1995 of AT&T Capital Corporation. She was senior auditor at Touche Ross/Coopers & Lybrand from
1984 to 1988. Ms. Cunningham has served as a board of director and treasurer of Northstar Pet Rescue since 2017. She
served as a member of the US Chamber of Commerce financial reporting committee from 2015 to 2018, a member of the FEI committee on corporate
reporting from 2012 to 2018, and a member of international issues conference committee of AICPA. She served as a member of
the advisory board to the accounting department of Pennsylvania State University from 2005 to 2018. Ms. Cunningham served as a board of
director and chair of the Ethics Resource Center finance committee from 2005 to 2009. She served as a member of both the international
accounting standards board standing advisory committee and the Financial Accounting Standards Board (FASB) advisory committee from 2003
to 2007. Ms. Cunningham holds an MBA in management from New York University's Stern School of Business and a BA in economics
from Rutgers University.

 Ms. Cunningham's prior
management experience and expertise in corporate reporting, governance and accounting issues qualify her to serve on the Company's
board of directors.

 James McDonnell

 Mr. McDonnell has served
as a member of the Company's board of directors since September 2021. Mr. McDonnell is currently the Senior Vice President
of Sales & Marketing for Vispero, since 2017. Mr. McDonnell was vice president of sales at Honeywell from 2013 to 2017. Mr. McDonnell
served on the board of Asetek from 2014-2019. Mr. McDonnell was senior vice president of sales & marketing at Intermec from 2010
to 2013. Prior to this, Mr. McDonnell was a senior vice president and served in many executive sales and marketing roles at Hewlett-Packard from
1983 to 2009. Mr. McDonnell began his career at the General Electric Company from 1977 to 1983. Mr. McDonnell holds a BS degree
in Electrical engineering from Villanova University.

 Mr. McDonnell's
prior experiences in sales & marketing leadership within various technology companies and his experience in industrial markets qualify
him to serve on the Company's board of directors.

 Board Composition

 Our board currently consists
of five directors, Lior Tal, Donald Alvarez, Karen Macleod, Colleen Cunningham and James McDonnell. Ms. Macleod, Ms. Cunningham and Mr. McDonnell
are "independent directors" within the meaning of the Listing Rules (the "Nasdaq Listing Rules")
of the Nasdaq Stock Market ("Nasdaq").

 Family Relationships

 No family relationships exist
between any of our officers or directors.

 Role of Board of Directors in Risk Oversight
Process

 The board of directors has
extensive involvement in the oversight of risk management related to us and our business and accomplishes this oversight through the regular
reporting by the Audit Committee. The purpose of the Audit Committee is to assist the board of directors in fulfilling its fiduciary oversight
responsibilities relating to (1) the integrity of the Company's financial statements, (2) the effectiveness of the Company's
internal control over financial reporting, (3) the Company's compliance with legal and regulatory requirements, and (4) the independent
auditor's qualifications and independence. Through its regular meetings with management, including the finance, legal and internal
audit functions, the Audit Committee reviews and discusses all significant areas of our business and summarizes for the board of directors
all areas of risk and the appropriate mitigating factors. In addition, our board of directors receives periodic detailed operating performance
reviews from management.

 Director Independence

 The Board evaluates the independence
of each nominee for election as a director of our Company in accordance with the Nasdaq Listing Rules. Pursuant to these rules, a majority
of our Board must be "independent directors" within the meaning of the Nasdaq Listing Rules, and all directors who sit on
our Audit Committee, Nominating and Corporate Governance Committee and Compensation Committee must also be independent directors.

 Committees of the Board of Directors

 Our board of directors has
established an audit committee, a compensation committee, and a nominating and corporate governance committee. The composition and responsibilities
of each of the committees of our board of directors are described below. Members serve on these committees until their resignation or
until otherwise determined by our board of directors. Our board of directors may establish other committees as it deems necessary or appropriate
from time to time.

 Audit Committee

 The members of our Audit Committee
are Karen Macleod, Colleen Cunningham and James McDonnell, with Ms. Cunningham serving as the Chairperson. Each of Ms. Macleod, Ms.
Cunningham and Mr. McDonnell, is independent under the rules and regulations of the SEC and the listing standards of the Nasdaq Stock
Market applicable to audit committee members. Our board of directors has determined that each of Ms. Macleod and Ms. Cunningham qualify
as an audit committee financial expert within the meaning of SEC regulations and meet the financial sophistication requirements of the
Nasdaq Stock Market.

 Our Audit Committee has the
responsibility for, among other things, (i) selecting, retaining and overseeing our independent registered public accounting firm, (ii)
obtaining and reviewing a report by independent auditors that describe the accounting firm's internal quality control, and any materials
issues or relationships that may impact the auditors, (iii) reviewing and discussing with the independent auditors standards and responsibilities,
strategy, scope and timing of audits, any significant risks, and results, (iv) ensuring the integrity of the Company's financial
statements, (v) reviewing and discussing with the Company's independent auditors any other matters required to be discussed
by PCAOB Auditing Standard No. 1301, (v1) reviewing, approving and overseeing any transaction between the Company and any related person
and any other potential conflict of interest situations, (vii) overseeing the Company's internal audit department, (v) reviewing,
approving and overseeing related party transactions, and (viii) establishing and overseeing procedures for the receipt, retention
and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and the confidential,
anonymous submission by Company employees of concerns regarding questionable accounting or auditing matters.

 Compensation Committee

 The members of our Compensation
Committee are Ms. Macleod, Ms. Cunningham and Mr. McDonnell, with Ms. Macleod serving as the Chairperson. Our Compensation Committee
has the responsibility for, among other things, (i) reviewing and approving the chief executive officer's compensation based on
an evaluation in light of corporate goals and objectives, (ii) reviewing and recommending to the Board the compensation of all other executive
officers, (iii) reviewing and recommending to the Board incentive compensation plans and equity plans, (iv) reviewing and discussing with
management the Company's Compensation Discussion and Analysis and related information to be included in the annual report on Form
10-K and proxy statements, and (v) reviewing and recommending to the Board for approval procedures relating to Say on Pay Votes.

 Nominating and Corporate Governance Committee

 The members of our Nominating
and Corporate Governance Committee are Ms. Macleod, Ms. Cunningham and Mr. McDonnell, with Mr. McDonnell serving as the Chairperson.
Our Nominating and Corporate Governance Committee has the responsibility relating to assisting the Board in, among other things, (i) identifying
and screening individuals qualified to become members of our board of directors, consistent with criteria approved by our board of directors,
(ii) recommending to the Board the approval of nominees for director, (ii) developing and recommending to our board of directors
a set of corporate governance guidelines, and (iv) overseeing the evaluation of our board of director.

 Code of Business Conduct and Ethics

 Our board of directors has
adopted a Code of Business Conduct and Ethics (the "Code"). The Code applies to all of our directors, officers and employees.
We have made the Code available on our website  We intend to disclose future
amendments to, or waivers of, our Code, as and to the extent required by SEC regulations, at the same location on our website identified
above or in public filings.

 Board Diversity

 Each year, our nominating
and corporate governance committee will review, with the board of directors, the appropriate characteristics, skills and experience required
for the board of directors as a whole and its individual members. In evaluating the suitability of individual candidates, our nominating
and corporate governance committee will consider factors including, without limitation, an individual's character, integrity, judgment,
potential conflicts of interest, other commitments and diversity. While we have no formal policy regarding board diversity for our board
of directors as a whole nor for each individual member, the nominating and corporate governance committee does consider such factors as
gender, race, ethnicity, experience and area of expertise, as well as other individual attributes that contribute to the total diversity
of viewpoints and experience represented on the board of directors.

 On August 6, 2021, the Securities
and Exchange Commission ("SEC") approved The Nasdaq Stock Market LLC's ("Nasdaq") proposal to adopt listing
rules for Nasdaq-listed companies related to board diversity. The new Rule 5605(f) (Diverse Board Representation) requires Nasdaq-listed
companies, subject to certain exceptions, (1) to have at least one director who self-identifies as a female, and (2) to have
at least one director who self-identifies as Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native, Native
Hawaiian or Pacific Islander, two or more races or ethnicities, or as LGBTQ+, or (3) to explain why the reporting company does not
have at least two directors on its board who self-identify in the categories listed above. In addition, Rule 5606 (Board Diversity Disclosure)
requires each Nasdaq-listed company, again subject to certain exceptions, to provide statistical information about such company's
Board of Directors, in a proposed uniform format, related to each director's self-identified gender, race, and self-identification
as LGBTQ+.

 The Company believes that
it is presently in compliance with the diversity requirements imposed by the Nasdaq listing rules.

 Involvement in Certain Legal Proceedings

 Our directors and executive
officers have not been involved in any of the following events during the past ten years:

 1.
 any bankruptcy petition filed
by or against such person or any business of which such person was a general partner or executive officer either at the time of the bankruptcy
or within two years prior to that time;

 2.
 any conviction in a criminal
proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

 3.
 being subject to any order,
judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily
enjoining him from or otherwise limiting his involvement in any type of business, securities or banking activities or to be associated
with any person practicing in banking or securities activities;

 4.
 being found by a court of competent
jurisdiction in a civil action, the SEC or the Commodity Futures Trading Commission to have violated a Federal or state securities or
commodities law, and the judgment has not been reversed, suspended, or vacated;

 5.
 being subject of, or a party
to, any Federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed, suspended or vacated,
relating to an alleged violation of any Federal or state securities or commodities law or regulation, any law or regulation respecting
financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any
business entity; or

 6.
 being subject of or party to
any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization, any registered entity
or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated
with a member.

 Item
11. Executive Compensation

 The
following table provides information regarding the compensation earned by or paid to our named executive officers with respect to the
years ended December 31, 2023 and 2022.

 Summary
Compensation Table

 Name
 and Principal Position

 Fiscal
 Year

 Salary

 ($)

 Bonus

 ($)

 Stock
 Awards ($)

 Award
 ($)

 Non-Equity

 Incentive
 Plan

 Non-Qualified

 Deferred
 Earnings
 ($)

 All
 Other
 ($)

 Total

 ($)

 2023

 $
 500,000

 $
 300,000

 $
 228,456

 $
 1,028,456

 CEO

 2022

 500,000

 $
 300,000

 $
 -

 1,152,831

 $
 -

 $
 -

 $
 -

 1,952,831

 2023

 $
 300,000

 $
 60,000

 48,096

 $
 408,096

 CFO

 2022

 300,000

 -

 -

 300,096

 -

 -

 -

 600,096

 Ben Landen

 2023

 $
 250,000

 $
 50,000

 24,800

 $
 324,800

 VP
 of Business Development

 2022

 250,000

 -

 -

 80,982

 -

 -

 330,982

 Executive
Employment Agreements

 Lior
Tal

 On January 1, 2022, we entered
into an employment agreement (the "Employment Agreement") with our Chief Executive Officer, Lior Tal, which agreement superseded
and replaced the offer letter entered into by and between the Company and Mr. Tal on April 17, 2016.

 Pursuant to the Employment
Agreement, as compensation for his services as Chief Executive Officer of the Company, Mr. Tal will receive: (1) a salary of $500,000
per annum (the "Base Salary") and commensurate benefits; (2) eligibility, subject to Mr. Tal's continued employment
with the Company, to earn an annual performance based bonus in the target of 60% of his Base Salary; (3) eligibility, also subject to
Mr. Tal's continued employment with the Company, to participate in the Company's 2013 Equity Incentive Plan, the Company 2021
Incentive Plan, or any successor plan, subject to the terms of such plan; and (4) entitlement, also subject to Mr. Tal's continued
employment with the Company, to reimbursement for all reasonable and necessary out-of-pocket business, entertainment, and travel expenses
incurred by Mr. Tal in connection with the performance of Mr. Tal's duties as the Company's Chief Executive Officer and the
Company's expense reimbursement policies and procedures.

 In the event the Company terminates
Mr. Tal's employment without Cause (as defined in the Employment Agreement) or if Mr. Tal resigns for Good Reason (as defined in
the Employment Agreement) other than during the Protection Period (as defined below), and provided Mr. Tal complies with certain other
conditions outlined in the Employment Agreement, the Company will pay Mr. Tal severance, as outlined in the Employment Agreement, comprising
of: (a) the continued payment of his base salary for the first twelve months following the termination date, payable in accordance with
the Company's standard payroll procedures; (b) a lump sum payment equal to the pro-rated amount of Mr. Tal's target annual
bonus for the year of termination; (c) reimbursement of Mr. Tal for medical, vision and dental coverage under Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended or comparable state law ("COBRA") for the first twelve months after the termination
date; and (d) acceleration of the vesting of each of the Mr. Tal's then-outstanding time-based equity awards as to 25% of the then-unvested
shares subject to each such award, effective as of the termination date.

 In addition, pursuant to the
Employment Agreement, if immediately prior to, on or within 12 months after a Change of Control (the "Protection Period"),
the Company terminates Mr. Tal's employment without Cause (as defined in the Employment Agreement), or if Mr. Tal resigns for Good
Reason (as defined in the Employment Agreement) during the Protection Period, the Company will pay Mr. Tal severance, as outlined in the
Employment Agreement, comprising of: (a) a lump sum payment equal to eighteen months of Mr. Tal's base salary as in effect on the
date of his termination; (b) a lump sum payment equal to 150% of Mr. Tal's target annual bonus as in effect on the date of his termination,
payable on the 60th day following the termination date; (c) reimbursement to Mr. Tal for medical, vision and dental coverage under COBRA
for the first eighteen months after the termination date; and (d) acceleration of the vesting of each of the Mr. Tal's then-outstanding
time-based equity awards in full, effective as of the termination date.

 Mr. Tal's receipt of
any severance payments or benefits will be subject to Mr. Tal's continuing to comply with the terms of that certain Confidential
Information Agreement and the provisions of the Employment Agreement.

 Ben
Landen

 On
September 19, 2019, we entered into an immediately effective offer letter with Mr. Ben Landen. Pursuant to Mr. Landen's
offer letter, he will serve as our Senior Director of Business and Corporate Development. Mr. Landen's offer letter shall
continue until terminated by either the Company or Mr. Landen. Pursuant to Mr. Landen's offer letter, he will receive
(i) an annual base salary of $220,000, and (ii) an option to purchase 150,000 shares of the Company's common stock at an exercise
price of $0.23 per share, which is based on the Board of Directors-approved fair market valuation as of March 31, 2019, as
determined by an independent financial consultant. The option shall vest and become exercisable over a four-year period with 25%
vesting on the one-year anniversary of Mr. Landen's employment start date and the balance vesting equally after each
additional one-month period for continuous service completed over the following 36 months, subject to and in accordance with
the terms of the Company's 2013 Stock Incentive Plan. Mr. Landen's options expire in November, 2029. The offer letter
contains customary provisions relating to vacation, benefits, and non-compete. Subsequent to Mr. Landen's offer letter on December
24, 2021, his annual base salary was increased to $250,000.

 Donald
Alvarez

 On
May 28, 2021, we entered into an offer letter with Mr. Donald Alvarez, effective June 1, 2021. Pursuant to Mr. Alvarez's
offer letter, he serves as our Chief Financial Officer. Mr. Alvarez's offer letter shall continue until terminated by either
the Company or Mr. Alvarez. Pursuant to Mr. Alvarez's offer letter, he will receive (i) an annual base salary of $250,000
for his first year of employment, which annual base salary will increase to $300,000 upon the completion by the Company of an initial
public offering, and (ii) a stock option to purchase 400,000 shares of the Company's common stock at an exercise price of
$2.88 per share, which option shall vest and become exercisable over a four-year period with 25% vesting on the one-year anniversary
of Mr. Alvarez's employment start date and the balance vesting equally after each additional one-month period for continuous
service completed over the following 36 months, subject to and in accordance with the terms of the Company's 2013 Stock Incentive
Plan. Mr. Alvarez's options will expire in June 2031. The offer letter contains customary provisions relating to vacation,
benefits, and non-compete.

 Severance and Change of Control Agreements

 We have entered into a Severance
and Change of Control Agreements (the "Severance Agreement") with Ben Landen, our Vice-President of Business Development.
The Severance Agreement provides for a lump sum payment to the officer if the Company terminates the officer's employment without
Cause (as defined in the Severance Agreement), or if the officer terminates its employment for Good Reason (as defined in the Severance
Agreement) or in the case of a Change of Control (as defined in the Severance Agreement) of the Company. The term, Change of Control,
includes the acquisition of Common Stock of the Company resulting in one person or company owning more than 50% of the outstanding shares,
a merger, consolidation or similar transaction resulting in the transfer of ownership of more than fifty percent (50%) of the Company's
outstanding Common Stock, or a liquidation or dissolution of the Company or sale of substantially all of the Company's assets.

 In the event that, other than
during a Change of Control Period (as defined below), the Company terminates the officer's employment without Cause (as defined
in the Severance Agreement), or if the officer terminates his employment for Good Reason (as defined in the Severance Agreement), or in
the event of a qualifying termination within sixty days before or six months following the consummation of a Change of Control (as such
events are defined in the Severance Agreement) (the "Change of Control Period"), then the Company shall pay the officer a
lump sum amount equal to (i) six months of the officer's then current base salary, plus (ii) the annual bonus the officer is eligible
to receive for the calendar year in which the officer's termination occurs assuming Company performance is achieved at target (100%
for both Company and personal performance) and pro-rated based on the officer's termination date, which will be payable within the
period of time set forth in the Severance Agreement following the termination of employment, and (iii) 6 months of COBRA premium payments
based on the coverages in effect as of the date of the officer's termination of employment. All of the officer's severance
benefits are subject to his execution of a release in a form reasonably acceptable to the Company.

 Outstanding
Equity Awards at Fiscal Year-End

 The
following table discloses information regarding outstanding equity awards granted or accrued as of December 31, 2023, for our named
executive officers.

 Outstanding
 Equity Awards

 Awards

 Stock
 Awards

 Name

 Number
 of
 Securities
 Underlying
 Unexercised
 Options (#)
 Vested

 Number
 of
 Securities
 Underlying
 Unexercised
 Options (#)
 Unvested

 Exercise
 Price ($)

 Expiration
 Date

 Number
 of
 Shares or
 Units of Stock
 that have not
 Vested (#)

 Market Value

 of Shares or
 Units of Stock
 that have not
 Vested ($)

 Lior
 Tal (Chief Executive Officer)

 3,378,004

 —

 $
 0.13

 4/5/27; 3/22/28

 —

 —

 1,987,000

 —

 $
 0.22

 5/30/28

 —

 —

 883,333

 716,667

 $
 2.88

 7/25/31

 —

 —

 613,437

 1,651,563

 $
 0.9775

 11/7/32

 —

 —

 19,000

 893,000

 $
 0.2505

 11/6/33

 Donald
 Alvarez Chief Financial Officer)

 250,000

 150,000

 $
 2.88

 7/25/31

 —

 —

 128,645

 346,355

 $
 0.9775

 11/7/32

 4,000

 188,000

 $
 0.2505

 11/6/33

 Ben
 Landen (Vice President of Business Development)

 150,000

 -

 $
 0.23

 11/4/29

 —

 —

 60,416

 39,584

 $
 2.88

 7/25/31

 21,875

 28,125

 $
 1.45

 3/21/32

 69,875

 188,125

 $
 0.9775

 11/7/32

 —

 —

 2,062

 96,937

 $
 0.2505

 11/6/33

of Directors

 Each
of our independent directors receives annual cash compensation of $35,000. In addition, the chairperson of the Audit Committee, Compensation
Committee and Nominating and Governance Committee receives an annual compensation of $20,000, $15,000 and $10,000, respectively; and
the lead independent director receives an annual cash compensation of $15,000. Each independent director receives (i) an initial award
of $270,000 in restricted stock units of the Company to which shall be awarded on May 1 st of each fiscal year and which will
vest monthly over three (3) years, and (ii) an annual award of $180,000 in restricted stock units of the Company, which shall be granted
on May 1 st of each fiscal year and which will vest in its entirety one (1) year from the grant date.

 The
following table sets forth the summary compensation information (described above) for each of our non-employee directors for the fiscal
year ended December 31, 2023:

 DIRECTOR
 COMPENSATION

 Name

 Fees

 Earned

 or
 Paid in
 Cash
 ($)

 Stock

 Awards
 ($)

 Awards
 ($)

 Non-Equity

 Incentive
 Plan
 ($)

 Nonqualified

 Deferred
 Compensation Earnings
 ($)

 All
 Other
 ($)

 Total

 ($)

 Karen
 Macleod

 50,000

 47,399

 -

 -

 -

 -

 97,399

 Colleen
 Cunningham

 55,000

 47,399

 -

 -

 -

 -

 102,399

 James
 McDonnell

 60,000

 47,399

 -

 -

 -

 -

 107,399

 Item
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 The
following table sets forth certain information with respect to the beneficial ownership of our voting securities as of February 29, 2024
by (i) any person or group beneficially owning more than 10% of any class of voting securities; (ii) our directors, and; (iii) each of
our named executive officers; and (iv) all executive officers and directors as a group as of the date of February 29, 2024. The information
presented below regarding beneficial ownership of our voting securities has been presented in accordance with the rules of the Securities
and Exchange Commission and is not necessarily indicative of ownership for any other purpose. Under these rules, a person is deemed to
be a "beneficial owner" of a security if that person has or shares the power to vote or direct the voting of the security
or the power to dispose or direct the disposition of the security. A person is deemed to own beneficially any security as to which such
person has the right to acquire sole or shared voting or investment power within 60 days through the conversion or exercise of any convertible
security, warrant, option or other right. More than one person may be deemed to be a beneficial owner of the same securities. Unless
otherwise indicated, the address of all listed stockholders is c/o Cyngn Inc., 1015 O'Brien Drive, Menlo Park, CA 94025.

 Name of
 Beneficial Owner

 Common

 Stock
 Beneficially
 Owned

 Percentage
 of
 Common
 Stock (1)

 Directors
 and Officers:

 Lior Tal (2)

 7,262,191

 8.16
 %

 Donald Alvarez (3)

 471,562

 0.57
 %

 Ben Landen (4)

 350,478

 0.42
 %

 Karen Macleod (5)

 90,541

 0.11
 %

 Colleen Cunningham (6)

 79,297

 0.10
 %

 James McDonnell (7)

 79,297

 0.10
 %

 All Executive Officers and Directors as a Group
 (6 persons)

 8,333,366

 9.46
 %

 Beneficial owners of more
 than 10%:

 Entities affiliated with Benchmark (8)

 10,162,667

 12.35
 %

 (1)
 We
 have based our calculation of the percentage of beneficial ownership on 82,287,127 shares
 of common stock outstanding on February 29, 2024. We have deemed shares of common stock subject
 to stock options that are currently exercisable or exercisable within 60 days of February
 29, 2024 to be outstanding and to be beneficially owned by the person holding the stock option
 for the purpose of computing the percentage ownership of that person. We did not deem these
 shares outstanding, however, for the purpose of computing the percentage ownership of any
 other person.

 (2)

 Includes
 550,000 shares of common stock held directly and 6,712,191 shares of common stock issuable
 upon the exercise of stock options that are exercisable within 60 days of February 29, 2024.

 (3)

 Represents
 shares of common stock underlying 471,562 options to purchase shares of common stock of the
 Company which are vested and currently exercisable and shares underlying options which will
 become exercisable within 60 days of February 29, 2024.

 (4)

 Includes
 44,000 shares of common stock held directly and 306,478 options to purchase shares of common
 stock of the Company which are vested and currently exercisable and shares underlying options
 which will become exercisable within 60 days of February 29, 2024.

 (5)

 Represents
 shares of common stock underlying 90,541 options to purchase shares of common stock of the
 Company which are vested and currently exercisable and shares underlying options which will
 become exercisable within 60 days of February 29, 2024.

 (6)

 Represents
 shares of common stock underlying 79,297 options to purchase shares of common stock of the
 Company which are vested and currently exercisable and shares underlying options which will
 become exercisable within 60 days of February 29, 2024.

 (7)

 Represents
 shares of common stock underlying 79,297 options to purchase shares of common stock of the
 Company which are vested and currently exercisable and shares underlying options which will
 become exercisable within 60 days of February 29, 2024.

 (8)
 Based
 solely on a Schedule 13G filed with the SEC on February 13, 2024 by entities and individuals
 affiliated with Benchmark. Represents 10,162,667 shares, of which 263,483 are directly owned
 by Benchmark Capital Partners VI, L.P. ("BCP VI"), 16,478 are directly owned
 by Benchmark Founders' Fund VI, L.P. ("BFF VI"), 10,815 are directly
 owned by Benchmark Founders' Fund VI-B, L.P. ("BFF VI-B"), 28,403
 are held in nominee form for the benefit of persons associated with Benchmark Capital Management
 Co. VI, L.L.C. ("BCMC VI"), 7,823,167 are directly owned by Benchmark Capital
 Partners VII, L.P. ("BCP VII"), 868,833 are directly owned by Benchmark
 Founders' Fund VII, L.P. ("BFF VII") and 1,151,488 are directly owned
 by Benchmark Founders' Fund VII-B, L.P. ("BFF VII-B"). BCMC VI
 is the general partner of BCP VI, BFF VI and BFF VI-B, and BCMC VII is the general partner
 of BCP VII, BFF VII and BFF VII-B. Matthew R. Cohler ("Cohler"), a member of
 BCMC VI and BCMC VII, may be deemed to have shared power to dispose of the shares held directly
 by these entities. BCMC VI, the general partner of BCP VI, BFF VI and BFF VI-B, may be deemed
 to have sole power to vote and sole power to dispose of shares of the Company directly owned
 by BCP VI, BFF VI and BFF VI-B. BCMC VII, the general partner of BCP VII, BFF VII and BFF
 VII-B, may be deemed to have sole power to vote and sole power to dispose of shares of the
 Company directly owned by BCP VII, BFF VII and BFF VII-B. Alexandre Balkanski ("Balkanski"),
 Matthew R. Cohler ("Cohler"), Bruce W. Dunlevie ("Dunlevie"), Peter
 Fenton ("Fenton"), J. William Gurley ("Gurley"), Keven R. Harvey
 ("Harvey"), Robert C. Kagle ("Kagle") and Mitchell H. Lasky ("Lasky")
 are members of BCMC VI and may be deemed to have shared power to vote and shared power to
 dispose of shares of the Company directly owned by BCP VI, BFF VI and BFF VI-B. Cohler, Dunlevie,
 Fenton, Gurley, Harvey and Lasky are members of BCMC VII and may be deemed to have shared
 power to vote and shared power to dispose of shares of the Company directly owned by BCP
 VII, BFF VII and BFF VII-B. The principal business address for each of these entities and
 individuals is 2965 Woodside Road, Woodside, California 94062. Mr. Lasky previously served
 as a director of the Company through August 9, 2022.

 Securities
Authorized for Issuance under Equity Compensation Plans

 In
October 2021, our Board of Directors adopted the Cyngn Inc. 2021 Equity Incentive Plan (the "2021 Plan") and the 2021 Plan
was submitted to our stockholders for approval. Our 2021 Plan became effective immediately on adoption. Our 2021 Plan replaces our 2013
Plan. However, awards outstanding under our 2013 Plan will continue to be governed by their existing terms. Our 2021 Plan has the features
described below.

 Share
Reserve. The number of shares of our common stock available for issuance under our 2021 Plan is 8,500,000 plus up to 8,500,000 shares
common stock that are reserved and not yet issued or subject to awards granted under the 2013 Plan or that have subsequently forfeited,
expire or lapse unexercised or unsettled. There will also be an annual increase to be added as of the first day of the Company's
fiscal year equal to the least of (i) 5% of the outstanding Common Stock on a fully diluted basis as of the end of the Company's
immediately preceding fiscal year, (ii) 2,500,000 shares, and (iii) a lesser amount determined by the Board; provided,
however, that any shares from any such increases in previous years that are not actually issued shall continue to be available for issuance
under the Plan.

 Notwithstanding
any other provisions in the 2021 Plan, we may cancel any award, require reimbursement of any award by a participant, and effect any other
right of recoupment of equity or other compensation provided under the 2021 Plan in accordance with any Company policies that may be
adopted and/or modified from time to time (the "Clawback Policy"). In addition, a participant may be required to repay to
us previously paid compensation, whether provided pursuant to the 2021 Plan or an award agreement, in accordance with the Clawback Policy.

 As
of December 31, 2023 and 2022, the number of shares of common stock were reserved and available for issuance under the 2021 Plan is 661,280
and 3,583,173, respectively.

 Plan Category

 Number of

 securities to be
 issued upon
 exercise of
 outstanding
 options, warrants
 and rights

 (a)

 Weighted-

 average exercise
 price of
 outstanding
 options,
 warrants
 and rights
 (b)

 Number of

 securities remaining
 available for future
 issuance under equity
 compensation plans

 (excluding securities
 reflected in column
 (a)

 Equity
 compensation plans approved by security holders

 17,503,253

 $
 1.04

 Equity
 compensation plans not approved by security holders

 —

 $
 —

 $
 —

 December
 31, 2023 Total

 17,503,253

 $

 Item
13. Certain Relationships and Related Transactions, and Director Independence

 Other
than as set forth below and compensation arrangements, including employment, and indemnification arrangements, discussed, there have
been no transactions since the beginning of our last fiscal year, in which the amount involved in the transaction exceeded or will exceed
the lesser of $120,000 or one percent of the average of our total assets as at the year-end for the last two completed fiscal years,
and to which any of our directors, executive officers or beneficial holders of more than 5% of our capital stock, or any immediate family
member of, or person sharing the household with, any of these individuals, had or will have a direct or indirect material interest.

 Amended
and Restated Investor Rights Agreement

 We
are parties to that certain second amended and restated investor rights agreement dated December 24, 2014, entered into with our certain
of our stockholders, including an entity with which a former director is affiliated. These stockholders are entitled to rights with respect
to the registration of their shares following our initial public offering.

 Indemnification
Agreements

 On
October 29, 2021, the Board of Directors entered into indemnification agreements with each of its directors and executive officers (the
"D&O Indemnification Agreements"). The D&O Indemnification Agreements provide that the Corporation will indemnify
each of its directors, executive officers, and such other key employees against any and all expenses incurred by that director or executive
officer because of his or her status as one of the Corporation's directors or executive officers, to the fullest extent permitted
by Delaware law and the Corporation's amended and restated certificate of incorporation. In addition, the D&O Indemnification
Agreements provide that, to the fullest extent permitted by Delaware law, the Corporation will advance all expenses incurred by its directors,
executive officers, and other key employees in connection with a legal proceeding involving his or her status as a director, executive
officer, or key employee.

 Limitation
of Liability and Indemnification of Officers and Directors

 Our
certificate of incorporation, as amended and restated, limits the liability of directors to the maximum extent permitted by Delaware
General Corporation Law (the "DGCL"). The DGCL provides that directors of a corporation will not be personally liable for
monetary damages for breach of their fiduciary duties as directors.

 Our
bylaws provide that we will indemnify our directors and officers to the fullest extent permitted by law, and may indemnify employees
and other agents. Our bylaws also provide that we are obligated to advance expenses incurred by a director or officer in advance of the
final disposition of any action or proceeding.

 Our
bylaws, subject to the provisions of the DGCL contain provisions which allow the corporation to indemnify any person against liabilities
and other expenses incurred as the result of defending or administering any pending or anticipated legal issue in connection with service
to us if it is determined that person acted in good faith and in a manner which he or she reasonably believed was in the best interest
of the corporation. Insofar as indemnification for liabilities arising under the Securities Act of 1933 as amended, or the Securities
Act, may be permitted to our directors, officers and controlling persons, we have been advised that in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

 The
limitation of liability and indemnification provisions in our bylaws may discourage stockholders from bringing a lawsuit against directors
for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against directors and officers, even
though an action, if successful, might provide a benefit to us and our stockholders. Our results of operations and financial condition
may be harmed to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification
provisions.

 At
present, there is no pending litigation or proceeding involving any of our directors or officers as to which indemnification is required
or permitted, and we are not aware of any threatened litigation or proceeding that may result in a claim for indemnification.

 Policies
and Procedures for Related Party Transactions

 We
have adopted a formal, written related party transactions policy that provides that transactions with directors, officers and holders
of five percent or more of our voting securities and their affiliates, each a related party must be approved by our audit committee.
Pursuant to this policy, the audit committee will have the primary responsibility for reviewing and approving or disapproving "related
party transactions," which are transactions between us and related persons in which the aggregate amount involved exceeds or may
be expected to exceed the lesser of (i) $120,000 or (ii) one percent of the average of our total assets for the last two completed
fiscal years, and in which a related person has or will have a direct or indirect material interest. For purposes of this policy, a related
person will be defined as a director, executive officer, nominee for director, or greater than 5% beneficial owner of our common stock,
in each case since the beginning of the most recently completed year, and their immediate family members.

Independence

 The
Board evaluates the independence of each nominee for election as a director of our Company in accordance with the Nasdaq Listing Rules.
Pursuant to these rules, a majority of our Board must be "independent directors" within the meaning of the Nasdaq Listing
Rules, and all directors who sit on our Audit Committee, Nominating and Corporate Governance Committee and Compensation Committee must
also be independent directors.

 Our
board currently consists of five directors, Lior Tal, Donald Alvarez, Karen Macleod, Colleen Cunningham and James McDonnell. Ms. Macleod,
Ms. Cunningham and Mr. McDonnell are "independent directors" within the meaning of the Listing Rules (the "Nasdaq
Listing Rules") of the Nasdaq Stock Market ("Nasdaq").

 Item
14. Principal Accountant Fees and Services

 The
following table summarizes the fees billed by Marcum LLP for the fiscal years ended December 31, 2023 and 2022, inclusive of out-of-pocket
expenses. All fees described below were pre-approved by the audit committee.

 Year
 Ended

 Fee
 Category

 2023

 2022

 Audit fees (1)

 $
 230,000

 $
 230,000

 Audit-related fees (2)

 128,800

 38,011

 Total
 fees

 $
 358,800

 $
 268,011

 (1)
 Audit
 fees consist of fees for professional services rendered in connection with the annual audit
 of our consolidated financial statements, the review of our quarterly condensed consolidated
 financial statements and consultations on accounting matters directly related to the audit.

 (2)
 Audit-related
 fees consist of fees for professional services rendered in connection with the submission
 of our Registration Statements on Form S-3 and Form S-1 and engagement administration.

 PART
IV

 Item
15. Exhibits, Financial Statement Schedules

 a)
 Financial
 Statements

 1)
 Financial
 statements for our Company are listed in the index under Item 8 of this document.

 2)
 All
 financial statement schedules are omitted because they are not applicable, not material or
 the required information is shown in the financial statements or notes thereto.

 b)
 Exhibits

 Exhibit

 Number

 Description

 3.1

 Fourth
 Amended and Restated Certificate of Incorporation of Registrant incorporated by reference to Exhibit 3.1 to the Company's Amendment
 to the Registration Statement on Form S-1 (No. 333-259278) filed with the SEC on October 15, 2021.

 3.2

 Certificate
 of Amendment to the Fourth Amended and Restated Certificate of Incorporation of Registrant incorporated by reference to Exhibit 3.2
 to the Company's Amendment to the Registration Statement on Form S-1 (No. 333-259278) filed with the SEC on October 15, 2021.

 3.3

 Second
 Certificate of Amendment to the Fourth Amended and Restated Certificate of Incorporation of Registrant incorporated by reference
 to Exhibit 3.3 to the Company's Amendment to the Registration Statement on Form S-1 (No. 333-259278) filed with the SEC on
 October 15, 2021.

 3.4

 Third
 Certificate of Amendment to the Fourth Amended and Restated Certificate of Incorporation of Registrant incorporated by reference
 to Exhibit 3.4 to the Company's Amendment to the Registration Statement on Form S-1 (No. 333-259278) filed with the SEC on
 October 15, 2021.

 3.5

 Fourth
 Certificate of Amendment to the Fourth Amended and Restated Certificate of Incorporation of Registrant incorporated by reference
 to Exhibit 3.5 to the Company's Amendment to the Registration Statement on Form S-1 (No. 333-259278) filed with the SEC on
 October 15, 2021.

 3.6

 Fifth
 Amended and Restated Certificate of Incorporation of Registrant incorporated by reference to Exhibit 3.6 to the Company's Quarterly
 Report on Form 10-Q filed with the SEC on November 19, 2021.

 3.7

 Certificate
 of Amendment to the Fifth Amended and Restated Certificate of Incorporation of the Registrant, incorporated by reference to Exhibit
 3.8 to the Company's Amendment to the Registration Statement on Form S-1 (No. 333-275530) filed with the SEC on November 28,
 2023.

 3.8

 Amended
 and Restated Bylaws of Registrant, incorporated by reference to Exhibit 3.8 to the Company's Amendment to the Registration
 Statement on Form S-1 (No. 333-259278) filed with the SEC on October 15, 2021.

 4.1

 Description
 of Registrant's Securities (filed as Exhibit 4.1 to the Company's Annual Report on Form 10-K for year ended December
 31, 2021)

 10.1

 Offer
 Letter between the Company and Ben Landen dated as of September 18, 2019 incorporated by reference to Exhibit 10.2 to the Company's
 Amendment to the Registration Statement on Form S-1 (No. 333-259278) filed with the SEC on October 15, 2021.

 10.2

 Offer
 Letter between the Company and Donald Alvarez dated as of May 28, 2021 incorporated by reference to Exhibit 10.3 to the Company's
 Amendment to the Registration Statement on Form S-1 (No. 333-259278) filed with the SEC on October 15, 2021.

 10.3

 2013
 Equity Incentive Plan incorporated by reference to Exhibit 10.4 to the Company's Amendment to the Registration Statement on
 Form S-1 (No. 333-259278) filed with the SEC on October 15, 2021.

 10.4

 2021
 Incentive Plan incorporated by reference to Exhibit 10.5 to the Company's Amendment to the Registration Statement on Form S-1
 (No. 333-259278) filed with the SEC on October 15, 2021.

 10.5

 Amendment
 to 2021 Equity Incentive Plan incorporated by reference to Exhibit 4.2 to the Company's Registration Statement on Form S-8
 filed with the SEC on January 31, 2024.

 10.6

 Second
 Amended and Restated Investors' Rights Agreement dated as of December 24, 2014 incorporated by reference to Exhibit 10.6 to
 the Company's Amendment to the Registration Statement on Form S-1 (No. 333-259278) filed with the SEC on October 15, 2021.

 10.7

 Form
 of Indemnification Agreement to be entered into with the Registrant and each of its officers and directors incorporated by reference
 to Exhibit 10.7 to the Company's Amendment to the Registration Statement on Form S-1 (No. 333-259278) filed with the SEC on
 October 15, 2021.

 10.8

 Employment
 Agreement by and between Cyngn Inc. and Lior Tal dated as of January 1, 2022 incorporated by reference to Exhibit 10.1 to the Company's
 Current Report on Form 8-K filed with the SEC on January 6, 2022.

 10.9

 Engagement
 Letter dated April 27, 2022 incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with
 the SEC on April 29, 2022.

 10.10

 Form
 of Securities Purchase Agreement incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed
 with the SEC on April 29, 2022.

 10.11

 Form
 of Warrant incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed with the SEC on April
 29, 2022.

 10.12

 Form
 of Registration Rights Agreement incorporated by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K filed
 with the SEC on April 29, 2022.

 10.13

 Form
 of Pre-Funded Warrants incorporated by reference to Exhibit 10.5 to the Company's Current Report on Form 8-K filed with the
 SEC on April 29, 2022.

 10.14

 ATM
 Sales Agreement by and between the Company and Virtu Americas LLC, dated May 31, 2023 incorporated by reference to Exhibit 1.2 to
 the Company's Registration Statement on Form S-3 filed with the SEC on May 31, 2023

 10.15

 Placement
 Agent Agreement between the Company and Aegis Capital Corp. dated December 8, 2023 incorporated by reference to Exhibit 10.1 to the
 Company's Current Report on Form 8-K filed with the SEC on December 11, 2023

 10.16

 Form
 of Pre-funded Warrant incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the
 SEC on December 11, 2023

 10.17*

 Form of Severance and Change of Control Agreement

 21.1 *

 List of Subsidiaries of the Registrant

 23.1*

 Consent of Marcum LLP

 31.1*

 Certification
 of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act, as amended.

 31.2*

 Certification
 of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act, as amended.

 32.1**

 Certification
 of Principal Executive Officer and Principal Financial Officer pursuant to Rules 13a-14(b) or 15d-14(b) of the Securities Exchange
 Act, as amended, and 18 U.S.C. Section 1350.

 97*

 Cyngn Inc. Clawback Policy, effective November 7, 2023

 101.INS

 Document.

 101.SCH

 Extension Schema Document.

 101.CAL

 Extension Calculation Linkbase Document.

 101.DEF

 Extension Definition Linkbase Document.

 101.LAB

 Extension Label Linkbase Document.

 101.PRE

 Extension Presentation Linkbase Document.

 Cover Page Interactive

 *
 Filed
 herewith.

 **
 Furnished
 herewith.

 Item
16. Form 10-K Summary

 None.

 SIGNATURES

 In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

 CYNGN INC.

 By:

 /s/

 Chief Executive Officer
 and Chairman of the Board

 (Principal Executive Officer)

 Date:

 March 7, 2024

 In
accordance with the Exchange Act, this Report has been signed below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.

 Signature

 Title

 Date

 /s/

 Chief Executive Officer
 and Director

 March

 (Principal Executive
 Officer)

 /s/

 Chief Financial Officer
 and Director

 March

 (Principal Financial
 Officer)

 /s/
 Karen Macleod

 March

 Karen Macleod

 /s/
 Colleen Cunningham

 March

 Colleen Cunningham

 /s/
 James McDonnell

 March

 James McDonnell

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