Presto Automation Inc., an AI and automation technology provider to the restaurant industry, has closed a financing led by its existing investors, including Remus Capital, a fund controlled by the Company’s Chairman, Krishna K. Gupta, and other investors, involving the sale of $6.0 million of convertible subordinated notes. One of the existing investors is also exchanging 3.0 million shares of the Company’s common stock which was purchased on November 21, 2023 for $3.0 million of Notes.
“This capital injection is a strong signal of my commitment to Presto and its shareholders - we have tremendous belief in the Company’s prospects in its rapidly-growing market and our continuing efforts to enhance shareholder value,” said Gupta.
“On the commercial side, our Presto AI Voice product serving the drive-thru restaurant market is enjoying significant momentum. Over a period of 2 months, we have more than doubled our total number of live stores on the Presto Voice technology to 145 as of February 1, 2024, including 54 locations that use the most advanced version of our AI technology. Restaurant operators are embracing our solution in part due to the California $20/hour minimum wage mandate which is taking effect on April 1."
In addition, Presto recently entered into an amendment to its Cooperation Agreement with Hi Auto Ltd., which supplies the AI technology used at 347 Checkers corporate and franchised locations. Commencing on May 1, 2024, the Company and Hi Auto will each be permitted to compete for the Checkers relationship, including franchised locations.
Presto also announced that its Chief Executive Officer, Xavier Casanova, has resigned effective immediately.
In other news, on February 8, Presto received a court order representing the favorable verdict received from the Singapore Court of Appeal in the final hearing of its case against XAC Automation Corp (5490.TWO) on January 16. The favorable verdict dismissed XAC’s appeal and upheld the award of $11.1 million previously made to the company adding an additional $32,000 award for costs associated with the appeal. XAC has no further recourse to set aside the award. Domesticating the award in Taiwan may take between several months to more than a year.
The Notes are convertible into 36 million shares of common stock at an initial conversion price of $0.25 per share and carry an interest rate of 7.5% per annum on a pay-in-kind basis. The issuance of the Notes triggered antidilution adjustments associated with the Company’s previous financing rounds.
The Company projects that the net proceeds from the offering, together with its other cash resources and projected revenue, are sufficient to sustain operations through the end of February 2024. The Company is required to raise at least an additional $6.0 million in gross proceeds on or before March 8, 2024 pursuant to the terms of the Forbearance Agreement it entered into with its lenders in order to receive additional forbearance.