GREENWICH, CT – Presto Automation Inc. (NASDAQ:PRST), a provider of prepackaged software solutions, announced today that it has entered into a Common Stock Purchase Agreement with Triton Funds LP, enabling the company to sell up to $25 million in shares. The agreement, effective as of Wednesday, provides Presto with additional liquidity as it navigates through a challenging financial period.
Under the terms of the agreement, Presto has the discretion to offer shares to Triton until December 31, 2024, or until the $25 million cap is reached. The sale price for these shares will be set at 80% of the lowest trading price of Presto's common stock in the five days preceding each sale. The maximum number of shares that can be sold under this agreement is limited to 4.9% of Presto's current outstanding shares, which is approximately 7.79 million shares.
This financing arrangement comes at a critical time for Presto, as the company is under pressure to raise funds to avoid defaulting on its obligations. As previously reported on July 19, 2024, Presto is required to secure $2 million by each of the upcoming deadlines on August 1, August 15, and August 29, totaling $6 million, to prevent its senior secured lender from exercising remedies, including potential foreclosure. Furthermore, an additional $32 million must be raised by August 29, 2024, to facilitate loan restructuring negotiations.
Presto's fundraising efforts have been led by board director Krishna Gupta, with Remus Capital reportedly committing $10 million, although no evidence of these funds has been provided to the board. The company acknowledges that securing the necessary investment is highly unlikely, and there is a significant risk that shareholders could lose their entire investment.
Adding to Presto's challenges, a key brand owner has warned its franchisees, who represent the majority of Presto's installed base, about potential legal issues related to the use of drive-through AI technology. This follows a withdrawn class action lawsuit alleging that such technology violated privacy laws. Consequently, two franchisees have paused further installations of Presto's technology.
The new financing arrangement is also expected to violate Nasdaq's Listing Rule 5635(d), which may lead to the delisting of Presto's stock from the Nasdaq exchange around August 8, 2024.
In other recent news, Presto Automation Inc. reported Q3 2024 revenue of $4.5 million and an adjusted EBITDA loss of $12.2 million. The company issued a subordinated convertible note to Remus Capital Series B II, L.P. with a principal of $1,650,000, convertible into 20,625,000 shares of common stock, and extended its forbearance agreement with Metropolitan Partners Group Administration, LLC.
Additionally, Presto is undergoing a strategic shift towards Voice AI technology and discontinuing its Touch pay-at-table business. The company successfully piloted a Spanish language feature and projects its Q4 2024 revenue to be between $1.6 million and $1.9 million.
InvestingPro Insights
In light of Presto Automation Inc.'s recent financial developments, real-time data from InvestingPro offers a clearer picture of the company's market standing. As of the last twelve months leading up to Q3 2024, Presto's market capitalization stands at a modest $11.42 million. This is particularly telling as the company grapples with significant revenue decline, marked by a -34.78% change in the same period. Gross profit margins remain low at 15.51%, underscoring the challenges ahead for the company.
InvestingPro Tips highlight key concerns for investors: Presto operates with a significant debt burden and is quickly burning through cash, which aligns with the urgency in their recent fundraising efforts. Analysts are anticipating a sales decline in the current year, and the stock has experienced high price volatility. With the company's price having fallen significantly over the last year, these insights may inform investor decisions, especially in the context of the new stock purchase agreement with Triton Funds LP.
For those considering deeper analysis, InvestingPro offers additional tips on Presto, which may further guide investment strategies. Use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, and unlock a wealth of expert insights and real-time data to inform your investment decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.