Presto Automation Inc. (NASDAQ:PRST), a Delaware-incorporated prepackaged software services company, has entered into a material definitive agreement by issuing a subordinated convertible note to Remus Capital Series B II, L.P., an entity affiliated with board member Krishna Gupta. The note, issued on Monday, July 19, 2024, carries a principal of $1,650,000 and is convertible into 20,625,000 shares of common stock at $0.08 per share.
The note accrues interest at 7.5% per annum, which can escalate to 12% in the event of default. The conversion is subject to adjustments for stock splits or similar events. Additionally, the note will convert automatically prior to certain corporate transactions, including a Restructuring Transaction or a Change of Control with a financial investor. However, the total number of shares issuable is capped at 20% of the company's outstanding shares, in compliance with Nasdaq rules.
In connection with the note, Presto Automation Inc. has also entered into a Registration Rights Agreement, obligating the company to file a registration statement with the SEC within 90 days for the resale of the shares issuable upon conversion of the note.
Furthermore, the company has amended its existing Cooperation Agreement with Metropolitan Partners Group Administration, LLC and other lenders, extending the forbearance termination date to potentially September 15, 2024, subject to certain conditions, including additional capital raises. The amendment includes a commitment to pay $375,000 and $210,000 in accrued interest and reimbursement of expenses by August 9, 2024.
During a Special Meeting on July 16, 2024, stockholders approved several proposals, including a reverse stock split, issuance of shares in excess of 20% of outstanding common stock for various agreements, and issuance of shares to Triton Funds, LP.
In other recent news, Presto Automation Inc. has been notified of non-compliance with Nasdaq's minimum bid price requirement, which could potentially lead to a delisting of its common stock and warrants. The company plans to request a hearing before a Nasdaq Hearings Panel to halt the delisting process temporarily. Furthermore, the firm's board has proposed a reverse stock split as a measure to regain compliance with the bid price requirement.
In terms of financial results, Presto reported Q3 2024 revenue of $4.5 million and an adjusted EBITDA loss of $12.2 million. The company completed a $3 million financing round and secured an extension of forbearance on existing defaults from its principal senior secured lender.
Presto is undergoing a strategic shift towards Voice AI and discontinuing its Touch pay-at-table business. The company has successfully piloted a Spanish language feature and plans to expand its Voice AI technology. For Q4 2024, Presto projects its revenue to be between $1.6 million and $1.9 million. These are the recent developments for Presto Automation Inc.
InvestingPro Insights
Presto Automation Inc.'s recent financial maneuvers, including the issuance of a convertible note, highlight its efforts to secure funding and manage its significant debt burden. The company's market capitalization currently stands at a modest $10.64 million, reflecting the challenges it faces in a competitive market. With a negative adjusted price-to-earnings (P/E) ratio over the last twelve months as of Q3 2024, the company's financial performance indicates that it is not generating profits and is quickly burning through cash, as evidenced by the significant negative operating income margin of -301.67%.
Investors should note that Presto Automation Inc. has been experiencing a downward trend in its stock price, with a one-week total price return of -14.36% and a staggering one-year total price return of -97.98%. This is consistent with the InvestingPro Tip that the stock has taken a big hit, particularly over the last week and month. Moreover, the company's revenue has declined by 34.78% over the last twelve months as of Q3 2024, aligning with analysts' expectations of a sales decline in the current year.
As the company navigates through its financial challenges, potential investors may consider these metrics and InvestingPro Tips when evaluating the stock's future prospects. For those looking for more in-depth analysis and additional tips, there are 17 more InvestingPro Tips available, which can be accessed with a subscription. To enhance your investment research, use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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