Presto Automation, the maker of an AI voice system for drive-thrus, is asking shareholders to approve a reverse stock split as it looks to avoid a delisting from the Nasdaq stock exchange.
The proposal would reduce the number of Presto’s outstanding shares, thereby making them more valuable.
It is part of an effort by interim CEO Gee Lefevre to get the company back on track financially after taking the reins in February.
Late last year, Presto fell out of compliance with Nasdaq rules after its share price stood below $1 for 30 consecutive business days. It was given a deadline of June 25 to get the price back up.
Presto shares have declined in price by 97% over the past year and on Wednesday afternoon were trading for less than 10 cents.
The company has been struggling with capital shortages as it shifts its business model from tabletop ordering tablets to AI. It has also issued a lot of stock over the past year, which has diluted its value, Lefevre said.
“It’s an awful lot of shares issued for a company that is still at the beginning of its journey,” he said, adding that his goal is to “professionalize” the business.
Companies often use reverse stock splits to boost their share price or meet stock market requirements. Presto did not reveal the ratio of its proposed split, noting in an SEC filing this week that it will be determined by the board.
In addition to raising its stock price, Presto said it expects the split to attract more interest from investors who avoid very low-priced stocks.
Despite its financial issues, San Carlos, California-based Presto has made progress recently, launching an improved version of its AI and announcing a deal with 400-unit Taco John’s. Lefevre said there are more such deals in the pipeline.
“I would like to think that the commercial and technological momentum of the company is not currently showing in the share price,” he said.
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