By RTN Staff - 2.16.2024
Presto Automation, a provider of AI and automation technology for the restaurant industry, has announced the completion of a financing round, securing $6.0 million through the sale of convertible subordinated notes. This financing was led by existing investors, including Remus Capital, and involved the exchange of 3.0 million shares of common stock for $3.0 million of notes. Chardan served as the placement agent for this offering.
In a company statement, Krishna K. Gupta, Chairman of Presto and a principal investor through Remus Capital, expressed strong confidence in the company’s future and its position in a rapidly growing market. This sentiment is underscored by notable progress of Presto’s AI Voice product, which has seen its deployment more than double in two months, reaching 145 live stores, including 54 utilizing the most advanced AI technology. This growth is partly attributed to the new minimum wage mandate in California, which has driven restaurant operators to adopt Presto’s solutions for cost efficiency.
In a notable corporate development, Presto announced the immediate resignation of its CEO, Xavier Casanova, with plans to name a replacement soon. Despite this change, the company’s board remains confident in the executive management team’s ability to capitalize on commercial opportunities.
Presto also shared news of a legal victory in Singapore, where it secured a favorable verdict against XAC Automation Corp, affirming an $11.1 million award and an additional SGD 50,000 for appeal costs. The company is exploring ways to enforce or monetize this award more swiftly.
Furthermore, Presto has amended its Cooperation Agreement with Hi Auto Ltd., which supplies AI technology to Checkers restaurants. Starting May 1, 2024, both companies will independently vie for the Checkers account, including franchise locations.
The newly issued notes, convertible into 36 million shares of common stock at $0.25 per share, carry a 7.5% annual interest rate on a pay-in-kind basis. This financing has triggered antidilution adjustments related to previous financing rounds.
Presto’s financial projections indicate that the net proceeds from this offering, alongside other resources, should sustain operations in the near term. However, the company must secure an additional $6 million next month to meet the terms of a Forbearance Agreement with its lenders.
Matthew MacDonald has joined Presto’s Board of Directors, bringing experience from his roles at Erithmitic Inc., Cottage Avenue, and Great Canadian Heli-Skiing. MacDonald’s involvement with Ventoux Acquisition Holdings, which facilitated Presto’s merger with Ventoux CCM Acquisition Corp, highlights his deep connection to the company.
Founded at M.I.T. in 2008, Presto Automation specializes in AI and automation solutions for the restaurant industry, aiming to reduce labor costs, boost staff productivity, increase revenue, and improve guest experiences. Its products, including the Presto Voice AI solution and Presto Touch pay-at-table tablets, serve a wide range of clients from quick-service to casual dining chains. The company went public in a business combination with Ventoux CCM Acquisition Corp., a publicly traded special purpose acquisition company, in September 2022.
Despite facing financial challenges, including a decline in revenues and an increase in operational losses as reported in its Q2 FY23 financial results, Presto continues to innovate and expand. The company’s partnership with Del Taco represents a significant revenue opportunity, and its recent financing efforts demonstrate a commitment to stabilizing and growing the business amidst a challenging economic landscape.
