UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including
area code: (
Not Applicable
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The Stock Market LLC | ||||
| The Stock Market LLC |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company
If
an emerging growth company, indicate by 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.
Explanatory Note
Item 2.02 Results of Operations and Financial Condition.
The Company discovered that the calculation of stock-based compensation expense for the three months ended September 30, 2022 associated with earnout shares allocable to the persons that were equityholders of the Company prior to its previously announced business combination was incorrect as reported in the Original Press Release. The Company has made an adjustment to such expense by revising the expense of $6,250 thousand, as presented in the Original Press Release, to $178 thousand, reflected in the tables below.
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(in thousands, except share and per share amounts)
| Three Months Ended September 30, | ||||||||
| 2022 | 2021 | |||||||
| Revenue | ||||||||
| Platform | $ | 4,820 | $ | 4,537 | ||||
| Transaction | 2,959 | 2,692 | ||||||
| Total revenue | 7,779 | 7,229 | ||||||
| Cost of revenue | ||||||||
| Platform | 4,292 | 4,022 | ||||||
| Transaction | 2,644 | 2,334 | ||||||
| Depreciation and impairment | 291 | 466 | ||||||
| Total cost of revenue | 7,227 | 6,822 | ||||||
| Gross profit | 552 | 407 | ||||||
| Operating expenses: | ||||||||
| Research and development(1) | 6,388 | 4,001 | ||||||
| Sales and marketing(1) | 2,399 | 1,174 | ||||||
| General and administrative(1) | 5,924 | 1,974 | ||||||
| Loss on infrequent product repairs | — | 435 | ||||||
| Total operating expenses | 14,711 | 7,584 | ||||||
| Loss from operations | (14,159 | ) | (7,177 | ) | ||||
| Change in fair value of warrants and convertible promissory notes | 59,822 | (13,574 | ) | |||||
| Interest expense | (3,376 | ) | (1,388 | ) | ||||
| Loss on early extinguishment of debt | (7,758 | ) | — | |||||
| Other financing and financial instrument (costs) income, net | (1,768 | ) | — | |||||
| Other income, net | 2,028 | 2,630 | ||||||
| Total other income (expense), net | 48,948 | (12,332 | ) | |||||
| Income (loss) before provision for income taxes | 34,789 | (19,509 | ) | |||||
| Provision for income taxes | — | — | ||||||
| Net income (loss) and comprehensive income (loss) | $ | 34,789 | $ | (19,509 | ) | |||
| Net income (loss) per share attributable to common stockholders, basic | $ | 1.18 | $ | (0.72 | ) | |||
| Net income (loss) per share attributable to common stockholders, diluted | $ | 0.86 | $ | (0.72 | ) | |||
| Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, basic | 29,521,505 | 27,137,792 | ||||||
| Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, diluted | 40,366,902 | 27,137,792 | ||||||
| (1) | Includes stock-based compensation expense as follows (in thousands) |
| Three Months Ended September 30, | ||||||||
| 2022 | 2021 | |||||||
| Research and development | $ | 183 | $ | 105 | ||||
| Sales and marketing | 113 | 99 | ||||||
| General and administrative | 2,057 | 275 | ||||||
| Total* | $ | 2,353 | $ | 479 | ||||
| * | For the three months ended September 30, 2022, such amount reflects $178 of stock compensation expense related to earn out shares attributable to option and RSU holders. |
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CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands, except share and par value)
| As of September 30, 2022 | As of June 30, 2022 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 59,249 | $ | 3,017 | ||||
| Accounts receivable, net of allowance for doubtful accounts of $126 and $353 as of September 30, 2022 and June 30, 2022, respectively | 2,063 | 1,518 | ||||||
| Inventories | 484 | 869 | ||||||
| Deferred costs, current | 6,662 | 8,443 | ||||||
| Prepaid expenses and other current assets | 1,001 | 707 | ||||||
| Total current assets | 69,459 | 14,554 | ||||||
| Deferred costs, net of current portion | 1,157 | 2,842 | ||||||
| Deferred transaction costs | — | 5,765 | ||||||
| Property and equipment, net | 1,691 | 1,975 | ||||||
| Intangible assets, net | 5,630 | 4,226 | ||||||
| Goodwill | 1,156 | 1,156 | ||||||
| Other long-term assets | 766 | 18 | ||||||
| Total assets | $ | 79,859 | $ | 30,536 | ||||
| Liabilities and Stockholders’ Equity (Deficit) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 4,612 | $ | 5,916 | ||||
| Accrued liabilities | 7,282 | 6,215 | ||||||
| Financing obligations, current | 7,216 | 8,840 | ||||||
| Term loans, current | — | 25,443 | ||||||
| Convertible promissory notes and embedded warrants, current | — | 89,663 | ||||||
| Deferred revenue, current | 6,640 | 10,532 | ||||||
| Total current liabilities | 25,750 | 146,609 | ||||||
| Term loans, noncurrent | 49,424 | — | ||||||
| PPP loans | — | 2,000 | ||||||
| Warrant liabilities | 1,999 | 4,149 | ||||||
| Deferred revenue, net of current portion | 699 | 237 | ||||||
| Other long-term liabilities | 820 | — | ||||||
| Total liabilities | 78,692 | 152,995 | ||||||
| Stockholders’ equity (deficit): | ||||||||
| Preferred stock, $0.0001 par value–1,500,000 shares authorized as of September 30, 2022 and June 30, 2022, respectively; no shares issued and outstanding as of September 30, 2022 and June 30, 2022, respectively | — | — | ||||||
| Common stock, $0.0001 par value–180,000,000 shares authorized as of September 30, 2022 and June 30, 2022, respectively; 50,639,837 and 27,574,417 shares issued and outstanding as of September 30, 2022 and June 30, 2022, respectively | 5 | 3 | ||||||
| Additional paid-in capital | 167,156 | 78,321 | ||||||
| Accumulated deficit | (165,994 | ) | (200,783 | ) | ||||
| Total stockholders’ equity (deficit) | 1,167 | (122,459 | ) | |||||
| Total liabilities and stockholders’ equity (deficit) | $ | 79,859 | $ | 30,536 | ||||
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
| Three Months Ended September 30, | ||||||||
| 2022 | 2021 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net income (loss) | $ | 34,789 | $ | (19,509 | ) | |||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
| Depreciation, amortization and impairment | 462 | 535 | ||||||
| Stock-based compensation | 2,175 | 479 | ||||||
| Earnout share stock-based compensation | 178 | — | ||||||
| Noncash expense attributable to fair value liabilities assumed in Merger | 34 | — | ||||||
| Change in fair value of liability classified warrants | (11,551 | ) | 1,457 | |||||
| Change in fair value of warrants and convertible promissory notes | (48,271 | ) | 12,117 | |||||
| Amortization of debt discount and debt issuance costs | 1,371 | 88 | ||||||
| Loss on debt extinguishment | 7,758 | — | ||||||
| Paid-in-kind interest expense | 281 | — | ||||||
| Share and warrant cost on termination of convertible note agreement | 2,412 | — | ||||||
| Forgiveness of PPP Loan | (2,000 | ) | (2,599 | ) | ||||
| Change in fair value of unvested founder shares liability | (1,175 | ) | — | |||||
| Noncash lease expense | 76 | — | ||||||
| Loss on disposal off property and equipment | 14 | — | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | (545 | ) | (502 | ) | ||||
| Inventories | 385 | 132 | ||||||
| Deferred costs | 3,466 | 2,828 | ||||||
| Prepaid expenses and other current assets | 260 | 352 | ||||||
| Other long-term assets | — | (83 | ) | |||||
| Accounts payable | 1,678 | (2,363 | ) | |||||
| Vendor financing facility | — | (3,722 | ) | |||||
| Accrued liabilities | 477 | (1,485 | ) | |||||
| Deferred revenue | (3,430 | ) | (3,139 | ) | ||||
| Net cash used in operating activities | (11,156 | ) | (15,414 | ) | ||||
| Cash Flows from Investing Activities | ||||||||
| Purchase of property and equipment | (47 | ) | (76 | ) | ||||
| Payments relating to capitalized software | (1,327 | ) | (373 | ) | ||||
| Net cash used in investing activities | (1,374 | ) | (449 | ) | ||||
| Cash Flows from Financing Activities | ||||||||
| Proceeds from the exercise of common stock options | 36 | 19 | ||||||
| Proceeds from the issuance of term loans | 60,250 | — | ||||||
| Payment of debt issuance costs | (1,094 | ) | — | |||||
| Repayment of term loans | (32,980 | ) | — | |||||
| Payment of penalties and other costs on extinguishment of debt | (5,734 | ) | — | |||||
| Proceeds from issuance of convertible promissory notes and embedded warrants | — | 500 | ||||||
| Principal payments of financing obligations | (886 | ) | (186 | ) | ||||
| Proceeds from the issuance of common stock | 1,000 | — | ||||||
| Contributions from Merger and PIPE financing, net of transaction costs and other payments | 49,840 | — | ||||||
| Payments of deferred transaction costs | (1,670 | ) | — | |||||
| Net cash provided by financing activities | 68,762 | 333 | ||||||
| Net increase (decrease) in cash and cash equivalents | 56,232 | (15,530 | ) | |||||
| Cash and cash equivalents at beginning of period | 3,017 | 36,909 | ||||||
| Cash and cash equivalents at end of period | $ | 59,249 | $ | 21,379 | ||||
| Supplemental Disclosure of Non-Cash Investing and Financing Activities | ||||||||
| Capitalization of stock-based compensation expense to capitalized software | $ | 221 | $ | 6 | ||||
| Capital contribution from shareholder in conjunction with Credit Agreement | 2,779 | — | ||||||
| Issuance of warrants in conjunction with Credit Agreement | 2,076 | — | ||||||
| Issuance of warrants in conjunction with Lago Term Loan | 843 | — | ||||||
| Convertible note conversion to common stock | 41,392 | — | ||||||
| Reclassification of warrants from liabilities to equity | 830 | — | ||||||
| Recognition of liability classified warrants upon Merger | 9,388 | — | ||||||
| Recognition of Unvested Founder Shares liability | 1,588 | — | ||||||
| Forgiveness of PPP Loan | (2,000 | ) | (2,599 | ) | ||||
| Transaction costs recorded in accounts payable and accrued liabilities | 220 | 551 | ||||||
| Right of use asset in exchange for operating lease liability | 308 | — | ||||||
4
RECONCILIATION FROM GAAP TO NON-GAAP RESULTS
(in thousands, except per share data, unaudited)
The following table provides a reconciliation of net income (loss) to Adjusted EBITDA for each of the periods presented:
| Three Months Ended September 30, | ||||||||
| (in thousands) | 2022 | 2021 | ||||||
| Net income (loss) | $ | 34,789 | $ | (19,509 | ) | |||
| Interest expense | 3,376 | 1,388 | ||||||
| Other income, net | (2,028 | ) | (2,630 | ) | ||||
| Depreciation and amortization | 433 | 535 | ||||||
| Stock-based compensation expense | 2,175 | 479 | ||||||
| Earnout stock-based compensation expense | 178 | — | ||||||
| Change in fair value of warrants and convertible promissory notes | (59,822 | ) | 13,574 | |||||
| Loss on debt extinguishment | 7,758 | — | ||||||
| Other financing and financial instrument (costs) income, net | 1,768 | — | ||||||
| Deferred compensation and bonuses earned upon closing of the Merger | 2,232 | — | ||||||
| Public relations fee due upon closing of the Merger | 250 | — | ||||||
| Loss on infrequent product repairs | — | 435 | ||||||
| Hardware repair expense related to COVID | — | 373 | ||||||
| Adjusted EBITDA | $ | (8,891 | ) | $ | (5,355 | ) | ||
This Amendment is being furnished solely to make the above corrections. All other information included in the Original Form 8-K is unchanged.
The information contained in this Item 2.02 is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| PRESTO AUTOMATION INC. | |||
| By: | /s/ Ashish Gupta | ||
| Name: | Ashish Gupta | ||
| Title: | Chief Financial Officer | ||
Dated: November 18, 2022
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