0001822145false0001822145us-gaap:CommonStockMember2023-02-142023-02-140001822145prst:WarrantsEachWholeWarrantExercisableForOneShareOfCommonStockMember2023-02-142023-02-1400018221452023-02-142023-02-14

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): February 14, 2023

Presto Automation Inc.

(Exact name of registrant as specified in its charter)

Delaware

    

001-39830

    

84-2968594

(State or other jurisdiction
of incorporation)

 

(Commission File Number)

 

(IRS Employer
Identification No.)

985 Industrial Road

San Carlos, CA 94070

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (650) 817-9012

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

Class A common stock, par value $0.0001 per share

 

PRST

 

The Nasdaq Stock Market LLC

Warrants, each whole warrant exercisable for one share of common stock

 

PRSTW

 

The Nasdaq 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.

Item 2.02 Results of Operations and Financial Condition.

On February 14, 2023, Presto Automation Inc. (the “Company”) issued a press release announcing the Company’s financial results for the quarter ended December 31, 2022.

A copy of the Company’s press release is attached hereto as Exhibit 99.1 and is hereby incorporated by reference in this Item 2.02. The information and exhibit 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.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit
Number

    

Description

99.1

 

Press Release, dated February 14, 2023

104

 

Cover Page Interactive Data File (embedded with the Inline XBRL document)

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: February 14, 2023

Exhibit 99.1

Presto Automation Inc. Announces Second Quarter Fiscal 2023 Financial Results

Continues momentum with Presto Voice™ A.I. platform by adding Del Taco Restaurants as second drive-thru enterprise customer

SAN CARLOS, CA - February 14, 2023 - Presto Automation (“Presto” or the “Company”) (NASDAQ: PRST), a provider in the labor automation technology industry, today announced financial results for the second quarter 2023 ended December 31, 2022.

“It has been exciting to see artificial intelligence gain mainstream recognition with the emergence of chatGPT and large language models (LLMs).  One of our early investors was Sam Altman,  CEO of OpenAI.  We have been leveraging GPT-3 in some of our AI solutions for a while now,” Mr. Suri said. “We are pleased to announce that Presto has continued to expand our drive-thru Voice A.I. solution with the signing of Del Taco, a deal that offers a $10M ARR opportunity.  We are also continuing to scale Presto Voice AI, with approximately 300 drive-thru locations now implemented, and customer cash collections grew 50% quarter over quarter.  Presto voice AI products are also installed in pilots in QSR chains with 15,000 drive-thrus, which represents a $200M ARR opportunity.”

Second Quarter 2023 Financial Highlights

For the second quarter of fiscal 2023, compared to the second quarter of fiscal 2022:

Total Revenue: Total revenue was $7.4 million down 4% compared to $7.7 million for 2022.
ARR: ARR was $29 million, a decrease of 4% year-over-year. ARR would have been $32 million but for the accounting treatment related to a specific customer contract that precluded the recognition of certain revenues related to the contract.
Net Loss: Net loss improved to $(17) million, compared to $(24) million for 2022.
Adjusted EBITDA*: Adjusted EBITDA loss was $(10) million for 2023, compared to $(5) million for 2022.

Second Quarter 2023 Business Highlights

Signed Del Taco as second enterprise customer Voice A.I. for drive-thru.
Initiated expense rationalization program in effort to reduce overall operating expenses.

*Adjusted EBITDA is a non-GAAP financial measure defined under “Non-GAAP Financial Measures,” and is reconciled to net income, the closest comparable GAAP measure, at the end of this release.

Financial Outlook Update

For the fiscal year ending June 30, 2023:

oThe Company expects reported ARR to be between $28 - $30 million.


Second Quarter 2023 Conference Call

Presto Automation will host a conference call today at 4:30 PM ET to review the Company’s financial results for the quarter ended December 31, 2022. The call will be accessible by telephone at 877-407-0792 (domestic) or 201-689-8555 (international) using passcode 13736036. The call will also be available live via webcast on the Company’s investor relations website here or directly here.  A telephone replay of the conference will be available at 844-512-2921 with access code 13736036 and will be available until 11:59 PM ET on Tuesday, February 28, 2023.  An archive of the webcast will also be available shortly after the call and will remain available for 90 days.  

Non-GAAP Financial Measures

This press release includes Adjusted EBITDA, which is a financial measure that is not calculated in accordance with Generally Accepted Accounting Principles in the United States (“GAAP”). We believe Adjusted EBITDA is useful for comparing our financial performance to other companies and from period to period by excluding the impact of certain items that do not reflect our core operating performance, thereby providing consistency and direct comparability with our past financial performance and between fiscal periods.

Adjusted EBITDA is defined as net loss, adjusted to exclude interest, other income (expense), net loss on debt extinguishment, income taxes, depreciation and amortization expense, stock-based compensation expense, fair value adjustments on warrant liabilities and convertible promissory notes, merger related ancillary costs, and hardware repair expenses related to COVID and COVID-related expenses due to damage from liquid ingress.

We include this non-GAAP measure because it used by management to evaluate our core operating performance and trends and to make strategic decisions regarding the allocation of capital and new investments. A reconciliation of Adjusted EBITDA to its most comparable GAAP financial measure is included below under “Reconciliation from GAAP to Non-GAAP Results” at the end of this release.

In addition, we use Annual Revenue Run-Rate, or ARR, as a key business metric to evaluate our business, identify trends, formulate business plans and make strategic decisions. We calculate ARR by annualizing quarterly revenue at the end of the fiscal quarter. Our calculation of ARR may differ from similarly titled metrics presented by other companies, and the amount of revenue we recognize over any 12-month period may differ significantly from the ARR at the beginning of that period.

About Presto

Presto overlays next-generation digital solutions onto the physical world. Our enterprise-grade touch, vision, and voice technologies help hospitality businesses thrive while delighting guests. With over 250,000 systems shipped, we are one of the largest labor automation technology providers in the industry.  Founded by a number of MIT students in 2008, Presto is headquartered in Silicon Valley, California with customers, including some top 20 restaurant chains, in the U.S.


Forward Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Statements that refer to projections , forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Forward-looking statements are typically identified by words such as “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “continue,” “could,” “may,” “might,” “possible,” “potential,” “predict,” “should,” “would” and other similar words and expressions, but the absence of these words does not mean that a statement is not forward-looking. The forward-looking statements are based on management’s current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. The forward-looking statements speak only as of the date of this press release or as of the date they are made. Except as otherwise required by applicable law, Presto disclaims any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this press release. Presto cautions you that these forward-looking statements are subject to numerous risks and uncertainties, most of which are difficult to predict and many of which are beyond the control of Presto. In addition, Presto cautions you that the forward-looking statements contained in this press release are subject to the following risks and uncertainties: our ability to manage our growth effectively, to sustain our recent revenue growth or attract new customers; the limited operating history with our new Vision and Voice products in a new and developing market; our ability to achieve revenue growth while our expenses increase; continued adverse impacts from COVID-19  (including as a result of global supply chain shortages); the loss of any of our three largest customers or a reduction in their business with us; our ability to improve and enhance the functionality, performance, reliability, design, security, or scalability of our platform to respond to customers’ evolving needs; our ability to protect the security of our customers’’ information; changing privacy laws, regulations and standards, and our ability to comply with contractual obligations and laws related to data privacy and security; unfavorable conditions in the restaurant industry or the global economy, including with respect to food, labor, and occupancy costs; the availability of capital or financing on acceptable terms, if at all; financial covenants and other restrictions on our actions contained in our financing agreements that may limit our operational flexibility; the length and unpredictability of our sales cycles and the amount of investments required in sales efforts; material weaknesses in our internal control over financial reporting and, our ability to remediate these deficiencies; our ability to continue as a going concern; our ability to receive additional financing in a timely manner; shortages, price increases, changes, delays or discontinuations of hardware; our ability to maintain relationships with our payment processors; our relies on computer hardware, licensed software and services rendered by third parties; U.S. laws and regulations (including with respect to payment transaction processing), many of which are unsettled and still developing, and our or our customers’ ability to comply with such laws and regulations; significant changes in U.S. and international trade policies that restrict imports or increase tariffs; any requirements to collect additional sales taxes or be subject to other tax liabilities that may increase the costs to our customers; our ability to adequately protect our intellectual property rights; claims by third parties of intellectual property infringement; our use of open-source software in our platform; and other economic, business, competitive and/or regulatory factors affecting Presto’s business generally as set forth in our filings with the Securities and Exchange Commission.


PRESTO AUTOMATION INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(unaudited)

(in thousands, except per share and per share amounts)

Three Months Ended December 31,

Six Months Ended December 31,

2022

2021

2022

2021

Revenue

    

    

    

    

    

    

    

    

 

Platform

$

4,131

$

5,134

$

8,529

$

9,671

Transaction

3,221

2,562

6,180

5,254

Total revenue

7,352

7,696

14,709

14,925

Cost of revenue:

Platform

4,219

3,793

8,208

7,815

Transaction

2,833

2,230

5,477

4,564

Depreciation and impairment

291

461

582

927

Total cost of revenue

7,343

6,484

14,267

13,306

Gross profit

9

1,212

442

1,619

Operating expenses:

Research and development (1)

5,112

3,805

11,381

7,806

Sales and marketing (1)

2,227

1,651

4,626

2,825

General and administrative (1)

6,276

2,158

12,200

4,132

Loss on infrequent product repairs

28

463

Total operating expenses

13,615

7,642

28,207

15,226

Loss from operations

(13,606)

(6,430)

(27,765)

(13,607)

Change in fair value of warrants and convertible promissory notes

(378)

(16,196)

59,444

(29,770)

Interest expense

(3,030)

(868)

(6,406)

(2,256)

Loss on early extinguishment of debt

(337)

(8,095)

Other financing and financial instrument (costs) income, net

(1,768)

Other income, net

327

11

2,355

2,641

Total other income (expense), net

(3,418)

(17,053)

45,530

(29,385)

Income (loss) before provision for income taxes

(17,024)

(23,483)

17,765

(42,992)

Provision for income taxes

5

24

5

24

Net income (loss) and comprehensive income (loss)

$

(17,029)

$

(23,507)

$

17,760

$

(43,016)

Net income (loss) per share attributable to common stockholders:

Basic

$

(0.33)

$

(0.86)

$

0.44

$

(1.58)

Diluted

$

(0.33)

$

(0.86)

$

0.35

$

(1.58)

Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, basic

50,998,941

27,211,309

40,475,200

27,157,425

Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, diluted

50,998,941

27,211,309

50,775,172

27,157,425

(1)Includes stock-based compensation expense as follows (in thousands)


Three Months Ended December 31,

Six Months Ended December 31,

2022

2021

2022

2021

Research and development

    

$

555

    

$

145

    

$

732

    

$

250

 

Sales and marketing

224

114

336

213

General and administrative

1,749

210

3,808

485

Total*

$

2,528

$

469

$

4,876

$

948

*For the three and six months ended December 31, 2022, such amount reflects $1,696 and $1,874, respectively, of stock-based compensation expense related to earn out


PRESTO AUTOMATION INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(in thousands, except share and par value)

    

December 31,

    

June 30,

 

2022

2022

ASSETS

Current assets:

Cash and cash equivalents

$

38,211

$

3,017

Accounts receivable, net

2,572

1,518

Inventories

649

869

Deferred costs, current

4,780

8,443

Prepaid expenses and other current assets

2,265

707

Total current assets

48,477

14,554

Deferred costs, net of current portion

436

2,842

Investment in non-affiliate

2,000

Deferred transaction costs

5,765

Property and equipment, net

1,489

1,975

Intangible assets, net

6,942

4,226

Goodwill

1,156

1,156

Other long-term assets

674

18

Total assets

$

61,174

$

30,536

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities:

Accounts payable

$

2,982

$

5,916

Accrued liabilities

4,356

6,215

Financing obligations, current

6,786

8,840

Term loans, current

25,443

Convertible promissory notes and embedded warrants, current

89,663

Deferred revenue, current

3,533

10,532

Total current liabilities

17,657

146,609

Term loans, noncurrent

52,022

PPP loans

2,000

Warrant liabilities

2,362

4,149

Deferred revenue, net of current portion

609

237

Other long-term liabilities

748

Total liabilities

$

73,398

$

152,995

Stockholders’ deficit:

Preferred stock, $0.0001 par value–1,500,000 shares authorized as of December 31, 2022 and June 30, 2022, respectively; no shares issued and outstanding as of December 31, 2022 and June 30, 2022, respectively

Common stock, $0.0001 par value–180,000,000 shares authorized as of December 31, 2022 and June 30, 2022, respectively; 51,231,608 and 27,974,439 shares issued and outstanding as of December 31, 2022 and June 30, 2022, respectively

5

3

Additional paid-in capital

170,794

78,321

Accumulated deficit

(183,023)

(200,783)

Total stockholders’ deficit

(12,224)

(122,459)

Total liabilities and stockholders’ deficit

$

61,174

$

30,536


PRESTO AUTOMATION INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)

Six Months Ended December 31,

2022

2021

Cash Flows from Operating Activities

    

    

    

    

 

Net income (loss)

$

17,760

$

(43,016)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation, amortization and impairment

845

1,053

Stock-based compensation

3,002

954

Earnout share stock-based compensation expense to option and RSU holders

1,874

Contra-revenue associated with warrant agreement

615

Noncash expense attributable to fairvalue liabilities assumed in Merger

34

Change in fair value of liability classified warrants

(11,188)

2,768

Change in fair value of warrants and convertible promissory notes

(48,271)

26,909

Amortization of debt discount and debt issuance costs

1,884

175

Loss on extinguishment of debt and financing obligations

8,095

Paid-in-kind interest expense

2,366

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

(1,160)

Noncash lease expense

168

Loss on disposal of property and equipment

14

Changes in operating assets and liabilities:

Accounts receivable, net

(1,054)

(459)

Inventories

219

(321)

Deferred costs

6,308

5,958

Prepaid expenses and other current assets

(1,155)

599

Other long-term assets

(83)

Accounts payable

1,388

(4,777)

Vendor financing facility

(6,792)

Accrued liabilities

(2,090)

(2,656)

Deferred revenue

(6,627)

(7,305)

Other long-term liabilities

(699)

Net cash used in operating activities

(26,561)

(30,291)

Cash Flows from Investing Activities

Purchase of property and equipment

(171)

(109)

Payments relating to capitalized software

(2,459)

(787)

Investment in non-affiliate

(2,000)

Net cash used in investing activities

(4,630)

(896)

Cash Flows from Financing Activities

Proceeds from the exercise of common stock options

60

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

(6,144)

Proceeds from issuance of convertible promissory notes and embedded warrants

500

Proceeds from issuance of financing obligations

439

Principal payments of financing obligations

(2,657)

(978)

Proceeds from issuance of common stock

1,000

58

Contributions from Merger and PIPE financing, net of transaction costs and other payments

49,840

Payment of deferred transaction costs

(1,890)

(105)

Net cash provided (used in) by financing activities

66,385

(86)

Net increase in cash and cash equivalents

35,194

(31,273)

Cash and cash equivalents at beginning of year

3,017

36,909

Cash and cash equivalents at end of year

$

38,211

$

5,636


    

Six Months Ended December 31,

2022

    

2021

Supplemental Disclosure of Non-Cash Investing and Financing Activities

Capitalization of stock-based compensation expense to capitalized software

$

459

$

9

Issuance of warrants

853

Capital contribution from shareholder in conjunction with Credit Agreement

2,779

Issuance of warrants in conjunction with Senior Term Loan

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

3,720

Right of use asset in exchange for operating lease liability

308


PRESTO AUTOMATION INC.

Reconciliation from GAAP to Non-GAAP Results

(In thousands, except per share data, unaudited)

Three Months Ended

Six Months Ended

December 31,

December 31,

2022

2021

2022

2021

Adjusted EBITDA

    

    

    

    

    

    

    

    

 

Net income (loss)

(17,029)

(23,507)

17,760

(43,016)

Interest expense

3,030

868

6,406

2,256

Other income, net

(327)

(11)

(2,355)

(2,641)

Depreciation and amortization

412

518

845

1,053

Provision for Income taxes

5

24

5

24

Stock-based compensation expense

827

475

3,002

954

Earnout stock-based compensation expense

1,696

1,874

Change in fair value of warrants and convertible promissory notes

378

16,196

(59,444)

29,770

Loss on extinguishment of debt and financial obligations

337

8,095

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

28

463

Contra-revenue associated with warrant agreement

409

615

Hardware repair expense related to COVID

737

1,110

Adjusted EBITDA

$

(10,262)

$

(4,672)

$

(18,947)

$

(10,027)

Investors:

Chris Whitcomb, VP Investor Relations

investor@presto.com

Media:

Christopher Cast & Brian Ruby

media@presto.com