What changed in this filing

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Item 1. Business

2021-03-29 compared with 2020-03-17 · 400 added, 411 removed, 21 unchanged (97% of the section changed)

SenesTech, Inc.

(“SenesTech,”

(referred to in this report as “SenesTech,”

the “Company,”

“we”

“our,”

“us”

and the “Company”) has developed and is seeking to commercialize a global, proprietary technology

for managing animal pest populations, initially rat populations, through fertility control.

Although there are myriad tools available

to control rat populations, most rely on some form of lethal method to achieve effectiveness.

Each of these solutions is inherently

limited by rat species’

resilience and survival mechanisms as well as their extraordinary rate of reproduction.

ContraPest ®

our initial product, is unique in the pest control industry in attacking the reproductive systems of both male and female rats,

resulting in a sustained reduction of the rat population.

or “us”)

has developed and is commercializing a global, proprietary technology for managing animal pest populations, initially rat populations,

through fertility control.

there are myriad tools available to control rat populations, most rely on some form of lethal method to achieve effectiveness.

Each of these solutions is inherently limited by rat species’

resilience and survival mechanisms as well as their extraordinary

rate of reproduction.

ContraPest®, our initial product, is unique in the pest control industry in attacking the reproductive

systems of both male and female rats, which our field data shows results in a sustained reduction of the rat population.

Rats have plagued humanity throughout history.

They pose significant

threats to the health and food security of many communities.

In addition, rodents cause significant product loss and damage through

consumption and contamination.

Rats also cause significant damage to critical infrastructure by burrowing beneath foundations and

gnawing on electrical wiring, insulation, fire proofing systems, electronics and computer equipment.

threats to the environment, and to the health and food security of many communities.

In addition, rodents cause extensive product

loss and damage through consumption and contamination.

Rats also cause significant damage to critical infrastructure by burrowing

beneath foundations and gnawing on electrical wiring, insulation, fire proofing systems, electronics and computer equipment.

The most prevalent solution to rat infestations is the use of

2 unchanged sentences

exposure and bioaccumulation of rodenticides in the environment, as well as concerns about rodenticides that have no antidotes.

The pest management industry and Pest Management Professionals (PMPs) are being asked for new solutions that are both effective

and less toxic.

Our goal is to provide customers with not only a solution to combat their most difficult rat problems, but also

offer a non-lethal option to serve customers that are looking to decrease or remove the amount of rodenticide used in their pest

control programs.

ContraPest is a liquid bait containing the active ingredients

4-vinylcyclohexene diepoxide (VCD) and triptolide.

ContraPest limits reproduction of male and female rats beginning with the first

breeding cycle following consumption.

ContraPest is being marketed for use in controlling Norway and roof rat populations.

SenesTech began the registration process with the United States

Environmental Protection Agency (EPA) for ContraPest on August 23, 2015.

On August 2, 2016, the EPA granted an unconditional registration

for ContraPest as a Restricted Use Product (RUP), due to the need for applicator expertise for deployment.

On October 18, 2018,

the EPA approved the removal of the RUP designation.

We believe ContraPest is the first and only non-lethal, fertility control

product approved by the EPA for the management of rat populations.

In addition to the EPA registration, ContraPest must obtain

registration from the various state regulatory agencies prior to selling in each state.

received registration for ContraPest in all 50 states and the District of Columbia, 47 of which have approved the removal of the

RUP designation.

We expect to continue to pursue regulatory approvals and amendments

to the existing U.S.

registration for ContraPest, and if ContraPest begins to generate sufficient revenue, regulatory approvals

for additional jurisdictions beyond the United States.

The Company also continues to research and develop enhancements to ContraPest that

align with our target verticals and other potential fertility control options for additional species.

The pest management industry and Pest Management Professionals (“PMPs”) are being asked for new solutions that are

both effective and less toxic.

Our goal is to provide customers with not only a solution to combat their most difficult rat problems,

but also offer an effective, non-lethal option to serve customers that are looking to decrease or remove the amount of rodenticide

used in their pest control programs.

is a liquid bait containing the active ingredients 4-vinylcyclohexene diepoxide (“VCD”) and triptolide.

limits reproduction of male and female rats beginning with the first breeding cycle following consumption.

ContraPest is being

marketed for use in controlling Norway and roof rat populations.

began the registration process with the United States Environmental Protection Agency (the “EPA”) for ContraPest on

August 23, 2015.

On August 2, 2016, the EPA granted an unconditional registration for ContraPest as a Restricted Use Product (“RUP”),

due to the need for applicator expertise for deployment.

On October 18, 2018, the EPA approved the removal of the RUP designation.

We believe ContraPest is the first and only non-lethal, fertility control product approved by the EPA for the management of rodent

addition to the EPA registration of ContraPest in the United States, ContraPest must obtain registration from the various state

regulatory agencies prior to selling in each state.

We have received registration for ContraPest in all 50 states and the District

of Columbia, 47 of which have approved the removal of the RUP designation.

expect to continue to pursue regulatory approvals and amendments to the existing U.S.

registration for ContraPest to broaden the

marketability and use of ContraPest, and if ContraPest begins to generate sufficient revenue, regulatory approvals for additional

jurisdictions beyond the United States.

In certain cases, our EPA and state registrations require completion of testing and certifications

even though we have received approval for the product or its labelling.

We continue to seek to comply with these requirements.

Company also continues to research and develop enhancements to ContraPest that align with our target verticals and other potential

fertility control options for additional species.

We were formed in July 2004 and incorporated in the state of

The Company subsequently reincorporated in the state of Delaware in November 2015.

Current Challenges in Pest Control Methodologies

Our corporate headquarters and manufacturing

site are in Phoenix, Arizona.

On December 8, 2016, we went public and are currently traded on Nasdaq under the symbol SNES.

February 4, 2020, we amended our amended and restated certificate of incorporation to effect a 1-for-20 reverse split of our issued

and outstanding shares of our common stock.

The accompanying condensed financial statements and notes thereto give retrospective

effect to the reverse stock split for all periods presented.

All issued and outstanding common stock, options and warrants exercisable

for common stock, restricted stock units, preferred stock conversions to common stock and per share amounts contained in our condensed

financial statements have been retrospectively adjusted.

Challenges in Pest Control Methodologies

Lethal rodenticides are often at the forefront of pest management

however, they do not provide consistent, sustained results.

One reason is because rats reproduce at an extremely rapid

A single pair of rats in the wild can, under ideal breeding conditions, contribute over 15,000 progenies in their average lifespan of 12 months.

This rapid rate of reproduction can be seen in the population rebound that typically follows the initial

decline in rodent populations that are exposed to lethal rodenticides.

After the initial decline in the infestation, surviving

rodents have plentiful food and harborage creating conditions in which rats can quickly reproduce.

This means that PMPs typically

need to visit a site often to combat not only the initial infestation, but also subsequent population spikes.

Rat behavior also has a profound effect on pest control.

have shown that successful bait uptake is influenced by rodent behavior and how they interact with their environment.

these behaviors are thought to be inherited as rats have evolved with humans and control campaigns, while others are conditioned

through adverse effects learned in their environment.

Neophobia, bait shyness and bait aversion are all behavioral traits that

affect bait uptake.

When rats avoid new objects in their environment, this is due to neophobia.

Newly placed bait stations often

result in neophobia.

Rats sample all food, whether it is newly found or has been there for their lifetime.

This sampling behavior

enables rats to associate good and bad reactions from food.

If the food they sample causes them to fall ill, they will then avoid

this food forever.

This is known as bait aversion.

In addition, rats that survive the initial exposure to a rodenticide may be

genetically resistant to the pesticide’s effects.

Their offspring will carry this resistant trait to future generations

diminishing the long-term efficacy of the rodenticide.

Because of this, conventional rodenticide producers are continually challenged

to develop new, more lethal chemicals to control future rat populations.

Rodenticides have significant drawbacks, in that they persist

in the environment for long periods of time and are indiscriminate in their effects.

Consequently, there is growing concern about

the adverse effects that rodenticides may have on children and pets, as well as on species that prey on rats, including birds

of prey and large cats.

As a result, PMPs will need to include a wide variety of alternative solutions that minimize these concerns.

Integrated Pest Management and Fertility Control

The most effective, long-term way to manage rats is by using

a combination of tools that work together to magnify the efficacy of the pest management protocol;

integrated pest management

(IPM) is based upon this concept.

An effective IPM program needs to reduce the existing rat population but also prevent that population

from rebounding either through reproduction or through invasion by rodents in adjacent areas.

In addition, an IPM program should

focus on reducing the factors that make a particular location attractive to rats, such as abundant food and shelter.

agencies and industry experts recognize that fertility control is or can be an essential component of a safe and sustainable IPM

ContraPest is an innovative fertility control technology that

targets the reproductive capabilities of both sexes in rat populations, inducing egg loss in female rats and impairing sperm development

Targeting both males and females with fertility control allows us to drive populations down and to sustain that population

Its effectiveness has been demonstrated in numerous internal and third-party studies.

Using a proprietary bait delivery method, ContraPest is dispensed

in a highly palatable liquid formulation that promotes sustained consumption by rat communities, helping to both reduce and keep

populations down.

Rats require 10% of their body weight in water per day, making ContraPest an attractive bait to add to pest

management programs.

The high fat content and sweet taste leads to repeated consumption even when other sought-after food sources

In both field and laboratory settings, ContraPest was chosen by rats even in the presence of abundant water sources

and plentiful food choices including animal feed, trash and other options.

Consumption of ContraPest does not cause illness in

rats, and therefore, it does not change behavior or result in bait aversion.

We believe ContraPest can establish a new paradigm in rodent

Adding ContraPest to an IPM program allows PMPs to bring the rodent population down initially and keep it at a manageable

level by minimizing reproduction and thereby limiting population rebounds.

Continued maintenance baiting of ContraPest at lower

population levels dramatically reduces the risk of future population spikes, allowing PMPs to be more focused on eliminating the

causes of future invasions through exclusion and sanitation initiatives.

ContraPest’s delivery system is designed to minimize

handler exposure and is dispensed inside tamper-resistant bait stations, minimizing risks to non-target species.

The following

graph shows the difference in population response between uses of conventional rodenticides and ContraPest.

ContraPest can also be used as a standalone, non-lethal solution

which allows for a decreased reliance on lethal rodenticides, where requested by the customer.

Other Applications

While our proprietary technology is effective on rodent species,

there is a scientific basis to believe that our technology can be applied to other mammalian species.

We have developed preliminary

data with feral dogs, feral pigs, wallabies, mice and brushtail possums.

While this data indicates potential for the continued

development of fertility control technology in general, we are not pursuing these opportunities at this time.

We believe that

the size of the rat control market is sufficient for our near-term focus.

We remain open to the potential to license our technology

to other strategic partners to explore its applicability to other mammalian species.

Business Strategy

Our goal is to be a leader in the pest management industry;

utilizing fertility control technologies to limit the adverse effects caused by rodent infestations, educate PMP’s and the

general public on alternatives or enhancements to lethal rodenticides and to develop additional product lines to address the needs

of our customers.

programs but are rarely expected to immediately be 100% effective in removing all rats.

Rat behavior, genetic resistance and reproduction

can affect pest control programs and often negatively impact actual results.

Studies have shown that successful bait uptake is

influenced by rodent behavior and their interaction with their environment.

Some of these behaviors are thought to be inherited

as rats have evolved with humans and control campaigns, while others are conditioned through adverse effects learned in their environment.

In addition, rats that survive the initial exposure to a rodenticide

may be genetically resistant to the effects and will pass that resistance onto their offspring who will carry this resistant trait

to future generations.

Because of this, conventional rodenticide producers are continually challenged to develop new, more lethal

chemicals to control future rat populations.

Rats can reproduce multiple times throughout the year, producing

approximately 6 litters a year with 12 pups each.

This rapid reproduction rate can cause populations to rebound quickly after implementing

a lethal control program.

This means that PMPs typically need to visit a site often to combat not only the initial infestation,

but also subsequent population spikes, or rebounds.

Rodenticides also have significant drawbacks, in that they persist

in tissue and the environment and are indiscriminate in their effects.

Consequently, there is growing concern about the adverse

effects that rodenticides may have on children and pets due to accidental exposure, as well as on species that prey on rats, including

birds of prey and large cats, due to the persistence of the rodenticide in the rat tissue.

As a result, PMPs will need to include

a wide variety of controls and alternative solutions that minimize these concerns.

Pest Management and Fertility Control

most effective, long-term way to manage rats is by using a combination of tools that work together to magnify the efficacy of

the pest management protocol;

integrated pest management (IPM) is based upon this concept.

An effective IPM program needs to reduce

the existing rat population but also prevent that population from rebounding either through reproduction or through invasion by

rodents in adjacent areas.

In addition, an IPM program should focus on reducing the factors that make a particular location attractive

to rats, such as abundant food and shelter.

Regulatory agencies and industry experts recognize that fertility control is or can

be an essential component of a safe and sustainable IPM program.

is an innovative fertility control technology that targets the reproductive capabilities of both sexes in rat populations, inducing

egg loss in female rats and impairing sperm development in males.

Targeting both males and females with fertility control allows

us to drive populations down and to sustain that population reduction.

Its effectiveness has been demonstrated in numerous internal

and third-party studies.

a proprietary bait delivery method, ContraPest is dispensed in a highly palatable liquid formulation that promotes sustained consumption

by rat communities, helping to both reduce and keep populations down.

Rats require 10% of their body weight in water per day,

making ContraPest an attractive bait to add to pest management programs.

The high fat content and sweet taste leads to repeated

consumption even when other sought-after food sources are present.

In both field and laboratory settings, ContraPest was chosen

by rats even in the presence of abundant water sources and plentiful food choices including animal feed, trash and other options.

Consumption of ContraPest does not cause illness in rats, and therefore, it does not change behavior or result in bait aversion.

believe ContraPest can establish a new paradigm in rodent control.

Adding ContraPest to an IPM program allows PMPs to bring the

rodent population down initially and keep it at a manageable level by minimizing reproduction and thereby limiting population

Continued maintenance baiting of ContraPest at lower population levels dramatically reduces the risk of future population

spikes, allowing PMPs to be more focused on eliminating the causes of future invasions through exclusion and sanitation initiatives.

ContraPest’s delivery system is designed to minimize handler exposure and is dispensed inside tamper-resistant bait stations,

minimizing risks to non-target species.

following graphs illustrate the incremental benefit of adding ContraPest to integrated pest management with conventional rodenticides.

The data is derived from three programs we began in late 2019 to demonstrate the effectiveness of ContraPest to potential end-users

and our study of the results through monitoring rat activity by camera.

The data presented show the incremental benefit of ContraPest

deployment beyond that achieved through rodenticides.

Ongoing monitoring of the program locations has indicated that there has

been no rebound in the rodent population from the current low levels.

Company studies)

can also be used as a standalone, non-lethal solution which allows for a decreased reliance on lethal rodenticides, where requested

by the customer.

our proprietary technology is effective on rodent species, there is a scientific basis to believe that our technology can be applied

to other mammalian species.

We have developed preliminary data with feral dogs, feral pigs, wallabies, mice and brushtail possums.

While this data indicates potential for the continued development of fertility control technology in general, we are not pursuing

these opportunities at this time.

We believe that the size of the rat control market is sufficient for our near-term focus.

remain open to the potential to license our technology to other strategic partners to explore its applicability to other mammalian

goal is to be a leader in the pest management industry;

utilizing fertility control technologies to limit the adverse effects

caused by rodent infestations, educate PMP’s and the general public on alternatives or enhancements to lethal rodenticides

and to develop additional product lines to address the needs of our customers.

Key elements of our strategy are:

Work to maximize market acceptance for, and generate sales of, our products;

Explore strategic partnerships to enable us to penetrate additional target markets and geographical

Manage the infrastructure for sales, marketing and distribution of ContraPest and any other

product candidates for which we may receive regulatory approval;

Seek additional regulatory approvals for ContraPest and, if we believe there is commercial

viability, for our other product candidates;

Further develop our manufacturing processes to contain costs while being able to scale to

meet future demand of ContraPest and any other product candidates for which we receive regulatory approval;

Continue product development of ContraPest and advance our research and development activities

and, as our operating budget permits, advance the research and development programs for other product candidates;

Maintain and protect our intellectual property portfolio;

Add operational, financial and management information systems and personnel, including personnel

to support our product development and commercialization efforts and operations as a public company.

Marketing and Sales Approach

The pest control industry is highly competitive with a

number of large competitors developing and marketing pest control products, particularly rodenticides, and services.

fertility control in general and ContraPest specifically may be considered a disruptive technology, we expect that initial

adoption will be slow as we build a robust set of case studies to demonstrate efficacy and cost efficiency, identify lead

users and expand within market segments.

In order to enhance the likelihood of success, we have currently targeted a few key

market segments with the highest likelihood to add ContraPest into their IPM programs.

These include agribusiness (grain and

protein production and food storage facilities), animal care facilities (zoos and sanctuaries), national retailers and

municipalities and government agencies.

In the United States, ContraPest is most commonly deployed and

serviced by a licensed PMP, although some customers have in house pest management service personnel.

In some circumstances, customers

of pest management services will direct these PMPs to use certain products in the provision of their service.

Initially, our marketing

strategy involved sales to and through large distributors of pest control products.

In 2019, we substantially modified this strategy

to create two different sources of pull-through-demand:

to maximize market acceptance for, and generate sales of, our products, including by conducting field demonstrations at potential

lead customers;

strategic partnerships to enable us to penetrate additional target markets and geographical locations;

the infrastructure for sales, marketing and distribution of ContraPest and any other product candidates for which we may receive

regulatory approval;

additional regulatory approvals for ContraPest, including to more fully expand the market and use for ContraPest and, if we

believe there is commercial viability, for our other product candidates;

develop our manufacturing processes to contain costs while being able to scale to meet future demand of ContraPest and any

other product candidates for which we receive regulatory approval;

product development of ContraPest and advance our research and development activities and, as our operating budget permits,

advance the research and development programs for other product candidates;

and protect our intellectual property portfolio;

operational, financial and management information systems and personnel, including personnel to support our product development

and commercialization efforts and operations as a public company.

and Sales Approach

pest control industry is highly competitive with a number of large competitors developing and marketing pest control products,

particularly rodenticides, and services.

Because fertility control in general and ContraPest specifically may be considered a

disruptive technology, we have encountered resistance to initial adoption.

We continue to build a robust set of case studies to

demonstrate efficacy and cost efficiency, identify lead users and expand within market segments.

In order to enhance the likelihood

of success, we have currently targeted a few key market segments with the highest likelihood to add ContraPest into their IPM

These include agribusiness (egg hen farms, grain and protein production and grain storage, transport and sales facilities),

municipalities and government agencies, D2C (direct to consumer) residential, zoos and sanctuaries, and commercial accounts.

the United States, ContraPest is most commonly deployed and serviced by a licensed PMP, although some customers have in house

pest management service personnel.

In some circumstances, customers of pest management services will direct these PMPs to use

certain products in the provision of their service.

Initially, our marketing strategy involved sales to and through large distributors

of pest control products.

In 2019, we substantially modified this strategy to create two different sources of pull-through-demand:

sales to PMPs and marketing and sales directly to end-user customers.

believe that by making end users aware of the existence and benefits of ContraPest, we are more likely to create demand through

PMPs that would otherwise simply continue to use their existing rodenticide-based IPM models.

We currently market ContraPest both

to pest management companies and directly to target segments, using a direct to PMP sales channel;

indirectly through distributor

We believe that by making end users aware of the existence

and benefits of ContraPest, we are more likely to create demand through PMPs that would otherwise simply continue to use their

existing rodenticide-based IPM models.

We currently market ContraPest both to pest management companies and directly to target

segments, using a direct to PMP sales channel;

indirectly through distributor sales;

and through our own direct sales force.

In addition, in the fourth quarter of 2019, we added a new e-Commerce tool to enable

customers in each of our target segments to buy directly from us.

Finally, we have been pursuing strategic relationships with large

pest management companies and key end-user organizations in our target segments for the distribution and sale of ContraPest.

In each of our target segments we have identified potential

lead customers with whom we are working on large scale projects to demonstrate the efficacy of ContraPest in real world situations.

We provide significant product support to these customers to make sure that we are not only achieving desired results, but also

obtaining the data to support sales in the related market vertical.

We believe that successful field trials with these influential

end users will help drive significant subsequent sales to other participants in the relevant market.

Pricing and Value

Our pricing strategy takes into account the cost of goods sold,

the cost of competitive products and the value of our product to the end user.

We believe ContraPest will be perceived as a significant

value as a complement to existing pest control products or as a non-lethal stand-alone solution for managing rat infestations

and, as such, should command a premium price.

Our experience is that potential customers understand the advantages of ContraPest

and become enthusiastic about its use.

We plan to continue to use promotional efforts to support the value message and to justify

our product’s premium price, built around the following proposed advantages:

ContraPest as a proven technology with a targeted delivery for maximum efficacy.

Our proprietary gravity feeding system optimizes consumption.

ContraPest can be used as an anchor for an IPM program, or as

a stand-alone solution to decrease reliance on lethal control options.

ContraPest is designed, formulated and dispensed in a manner

that minimizes the exposure hazard for handlers and non-targeted species such as wildlife, livestock and pets.

Over time, as the pest population decreases, the quantity deployed and consequently cost

of ContraPest will decrease, bringing the long-term cost of ContraPest in line with other elements of integrated pest management.

We also focus on specific advantages for the individual customer

and expect to position our product as having the following additional general advantages:

Savings by reducing loss or contamination of food and product inventories;

Savings by reducing damage to infrastructure and major production equipment;

Creation of a more predictable cost model based on prevention versus treatment of spikes

in population seen with rebound effect;

Reduction in disease vectors;

Public relations and risk reduction advantages when reducing usage of lethal rodenticides and traps.

Raw Materials and Manufacturing Process

ContraPest contains two active ingredients, VCD, an industrial

chemical, and triptolide, a plant derived chemical.

ContraPest also contains several other inactive, Generally Recognized as Safe

(GRAS), ingredients.

Currently, we source VCD from standard industrial chemical supply providers.

Triptolide is derived from the

Thunder God Vine, Tripterygium wilfordii, which is commonly cultivated and harvested wild in southeastern China and other Asian

Triptolide is available from a variety of sources, but the process to purify triptolide for use in ContraPest is expensive.

addition, in the fourth quarter of 2019, we added a new e-Commerce tool to enable customers in each of our target segments to

buy directly from us.

Finally, we have been pursuing strategic relationships with large pest management companies and key end-user

organizations in our target segments for the distribution and sale of ContraPest.

each of our target segments we have identified potential lead customers with whom we are working on large scale projects to demonstrate

the efficacy of ContraPest in real world situations.

We provide significant product support to these customers to make sure that

we are not only achieving desired results, but also obtaining the data to support sales in the related market vertical.

that successful field trials with these influential end users will help drive significant subsequent sales to other participants

in the relevant market.

are also focused on expanding regulatory approvals for ContraPest to make the product more user friendly and available for use

in an increased number of applications.

These include alternative delivery methods and expansion of the label to additional applications

and/or species.

pricing strategy takes into account the cost of goods sold, the cost of competitive products and the value of our product to the

We believe ContraPest will be perceived as a significant value as a complement to existing pest control products or

as a non-lethal stand-alone solution for managing rat infestations and, as such, should command a premium price.

Our experience

is that once potential customers understand the advantages of ContraPest, they recognize that the benefits of long term sustained

rodent reduction dramatically offsets the cost of the product.

We plan to continue to use promotional efforts to support the value

message and to justify our product’s premium price, built around the following proposed advantages:

targeted delivery for maximum efficacy.

proprietary gravity feeding system optimizes consumption.

can be used as an anchor or enhancement for an IPM program, or as a stand-alone solution to decrease reliance on lethal control

is designed, formulated and dispensed in a manner that minimizes the exposure hazard for handlers and non-targeted species

such as wildlife, livestock and pets.

time, as the pest population decreases, the quantity deployed and consequently cost of ContraPest will decrease, bringing

the long-term cost of ContraPest in line with other elements of integrated pest management.

also focus on specific advantages for the individual customer and expect to position our product as having the following additional

general advantages:

by reducing loss or contamination of food and product inventories;

by reducing damage to infrastructure and major production equipment;

in labor and servicing costs due to dramatically reduced rodent populations;

of a more predictable cost model based on prevention versus treatment of spikes in population seen with rebound effect;

in disease vectors;

relations and risk reduction advantages when reducing usage of lethal rodenticides and traps.

Materials and Manufacturing Process

contains two active ingredients, VCD, an industrial chemical, and triptolide, a plant derived chemical.

ContraPest also contains

several other inactive, Generally Recognized as Safe (GRAS), ingredients.

Currently, we source VCD from standard industrial chemical

supply providers.

Triptolide is derived from the Thunder God Vine, Tripterygium wilfordii, which is commonly cultivated and harvested

wild in southeastern China and other Asian countries.

Triptolide is available from a variety of sources, but the process to purify

triptolide for use in ContraPest is expensive.

Thus, we are investigating other, less costly sources of triptolide.

Our manufacturing process involves the incorporation of our

two active ingredients, in low concentrations, into several inactive ingredients.

Once incorporated, the entire product goes through

a micro-encapsulation process in order to stabilize the final formulation.

This process allows ContraPest to be delivered to rats

in a palatable, non-lethal and effective manner.

Currently, we have production scale capability in our facilities

in Arizona to manufacture ContraPest.

Our internal production capabilities allow us to meet our current and anticipated demand

during 2020 for ContraPest.

Scientific Background Regarding our Product

ContraPest is a liquid bait containing the active ingredients

VCD and triptolide.

When consumed, ContraPest targets reproduction, limiting fertility in male and female rats beginning with

the first breeding cycle following consumption.

The female rat is born with a finite number of eggs, or oocytes.

manufacturing process involves the incorporation of our two active ingredients, in low concentrations, into several inactive ingredients.

Once incorporated, the entire product goes through a micro-encapsulation process in order to stabilize the final formulation.

This process allows ContraPest to be delivered to rats in a palatable, non-lethal and effective manner.

we have production scale capability in our facilities in Arizona to manufacture ContraPest.

Our internal production capabilities

allow us to meet our current and anticipated demand during 2020 for ContraPest.

Background Regarding our Product

is a liquid bait containing the active ingredients VCD and triptolide.

When consumed, ContraPest targets reproduction, limiting

fertility in male and female rats beginning with the first breeding cycle following consumption.

female rat is born with a finite number of eggs, or oocytes.

She remains fertile and will reproduce until the day she dies.

Within the ovary, eggs develop within structures called follicles.

the ovary, eggs develop within structures called follicles.

The non-regenerating and least mature follicles are called primordial.

The primordial follicles mature through primary, secondary

and antral stages and ultimately ovulate.

Once the primordial follicles have become depleted, ovarian failure occurs, which terminates

reproductive capability.

VCD causes specific loss of small ovarian follicles (both primordial

and primary).

Because oocytes do not regenerate, repeated dosing causes loss of these follicles and leads to ovarian failure.

Triptolide causes specific loss of growing follicles (secondary and antral).

Female rats treated with triptolide ovulate fewer

eggs because the follicles stop growing.

In males, triptolide exerts a significant suppression of male fertility by preventing

sperm maturation and impairing the movement of sperm.

The safety and efficacy of VCD and triptolide in fertility

control are supported by considerable evidence.

Because they induce follicle loss, both VCD and triptolide are considered ovotoxic,

but they do not affect hormonal function and so are not endocrine disruptors.

Studies show that VCD and triptolide do not persist

within the bodies of rats and therefore do not bioaccumulate within the environment.

VCD is so rapidly metabolized by ovarian

tissue that the plasma half-life of VCD is 14.2 minutes.

Triptolide has a plasma half-life of 21.7 minutes and is inactivated

by liver enzymes.

Less than 1% of VCD remains within rat tissues because metabolites of VCD, primarily tetrol and glutathione,

are eliminated in urine and have no ovotoxic effects.

There is no measurable accumulation of triptolide within rat internal organs.

The speed with which VCD is metabolized makes it “an ideal fertility control agent (Sobinoff et al.

The primordial follicles mature through primary, secondary and antral stages and ultimately ovulate.

Once the primordial follicles

have become depleted, ovarian failure occurs, which terminates reproductive capability.

causes specific loss of small ovarian follicles (both primordial and primary).

Because oocytes do not regenerate, repeated dosing

causes loss of these follicles and leads to ovarian failure.

Triptolide causes specific loss of growing follicles (secondary and

Female rats treated with triptolide ovulate fewer eggs because the follicles stop growing.

In males, triptolide exerts

a significant suppression of male fertility by preventing sperm maturation and impairing the movement of sperm.

safety and efficacy of VCD and triptolide in fertility control are supported by considerable evidence.

Because they induce follicle

loss, both VCD and triptolide are considered ovotoxic, but they do not affect hormonal function and so are not endocrine disruptors.

Studies show that VCD and triptolide do not persist within the bodies of rats and therefore do not bioaccumulate within the environment.

VCD is so rapidly metabolized by ovarian tissue that the plasma half-life of VCD is 14.2 minutes.

Triptolide has a plasma half-life

of 21.7 minutes and is inactivated by liver enzymes.

Less than 1% of VCD remains within rat tissues because metabolites of VCD,

primarily tetrol and glutathione, are eliminated in urine and have no ovotoxic effects.

There is no measurable accumulation of

triptolide within rat internal organs.

The speed with which VCD is metabolized makes it “an ideal fertility control agent

(Sobinoff et al.

2008),”

its tendency to bioaccumulate negligible.

Other Potential Products

We have developed a pipeline of potential additional fertility

control and animal health products, with diverse applications, as outlined in the following chart below.

As we currently focus

on the commercialization of ContraPest, and only minimal progress is expected on new product development during the coming year.

In addition, we have begun work on new formulations of ContraPest

and makes its tendency to bioaccumulate negligible.

is a contraceptive.

The average duration of infertility ranges from 77 to over 180 days (2 to 6 months) but averages 119 days

4.6 days, N=61;

Dyer and Mayer 2014;

Shuster unpubl.

SenesTech data).

Both in the lab and in the

field, ContraPest consumption has documented effects on fertility reduction and therefore in reducing rat populations.

Potential Products

have developed a pipeline of potential additional fertility control and animal health products, with diverse applications, as

outlined in the following chart below.

As we currently focus on the commercialization of ContraPest, only minimal progress is

expected on new product development during the coming year.

addition, we have begun work on new formulations of ContraPest –

particularly solid and semi-solid variants.

Although solid bait is not essential to our near-term plans, the non-liquid

formulations may expand the potential uses of ContraPest as well as pave the way for future sales through retail stores.

is to attempt to accelerate the reformulation process through partnerships with others in the industry that will be able to give

us access to proven technologies, thus reducing potential development time as well as shorten the EPA approval process.

Product Candidate/Area

Development Status

Primary Target

Feral animal fertility control

Population management

Feral dogs and hogs

Non-surgical spay and neutering

Companion animal health

Companion dogs and cats

Laboratory and initial pilot study

Food production and safety

Animal cancer treatment

Companion animal health

Companion dogs

Currently, we are unaware of any other non-lethal

fertility control products that target rats.

However, there are other tools in IPM that may be used to control rat populations.

Although solid

bait is not essential to our near-term plans, the non-liquid formulations may expand the potential uses of ContraPest as well

as pave the way for future sales through retail stores.

Our plan is to attempt to accelerate the reformulation process through

partnerships with others in the industry that will be able to give us access to proven technologies, thus reducing potential development

Candidate/Area

animal fertility control

dogs and hogs

spay and neutering

animal health

dogs and cats

and initial pilot study

production and safety

cancer treatment

animal health

we are unaware of any other non-lethal fertility control products that target rats.

However, there are other tools in IPM that

may be used to control rat populations.

These include:

Sanitation -- a beginning component in the IPM program that addresses conditions that attract rodents in the first place (e.g., designated trash location with routine pickup or decluttering areas of attraction);

Exclusion -- a preventative strategy of sealing up areas of a building where pests are likely to enter, in turn, denying pests access to the facility;

Mechanical measures -- used initially through devices to trap and monitor rodents, which is low risk and least harmful to the environment;

Biological controls -- the introduction of predators to manage rodents;

Chemical measures -- the deployment of agents that poison or repel rodents.

Our principal competitors are traditional PMPs

that do not use our products in their IPM.

Government Regulation and Product Approval

Federal, state and local government authorities in the United

States regulate, among other things, the testing, manufacturing, quality control, approval, labeling, packaging, storage, record-keeping,

distribution and marketing of the products we develop.

Our rat fertility control product must be approved by the EPA Office of

Pesticide Programs before they can be legally marketed and sold in the United States.

The process for obtaining regulatory approval

and compliance with appropriate federal, state and local regulations is rigorous and requires the expenditure of substantial time

and financial resources.

United States Review and Approval Processes

In the United States, the EPA regulates the sale, distribution

and use of any pesticide under the Federal Insecticide, Fungicide and Rodenticide Act, or FIFRA.

The EPA’s definition of

a pesticide includes “any substance or mixture of substances intended for preventing, destroying, repelling, or mitigating

any pest.”

FIFRA defines a pest as “any insect, rodent, nematode, fungus, or weed.”

To register a new product

with the EPA, all active ingredients within the product must be registered with the EPA.

The EPA granted registration for ContraPest effective

August 2, 2016.

This initial EPA approval labeled ContraPest as a restricted-use product, due to the need for applicator expertise

for deployment.

On October 18, 2018, the EPA removed the Restricted Use designation, meaning that we can sell ContraPest to consumers

who do not have applicator expertise.

ContraPest is currently limited by EPA requirements to indoor use and to use within one

foot of manmade structures.

We intend to diligently pursue additional related regulatory approvals from the EPA to support our

product evolution, including seeking approval for full outdoor use, alternative formulations and for additional rodent species.

This may entail the need to complete and submit to EPA additional

studies, principally related to the effects on other animals and fish if ingested or if the product enters the water supply.

In addition to the EPA registration of ContraPest

in the United States, we must obtain registration from the various state regulatory agencies prior to selling in each state.

date, we have received registration for ContraPest in all 50 states and the District of Columbia, 47 of which have approved the

removal of the Restricted Use designation.

In addition to product registration, the EPA

also approves all labeling (the container label, instructional inserts, and the Safety Data Sheet (SDS)) of ContraPest.

-- a beginning component in the IPM program that addresses conditions that attract rodents in the first place (e.g., designated

trash location with routine pickup or decluttering areas of attraction);

-- a preventative strategy of sealing up areas of a building where pests are likely to enter, in turn, denying pests access

to the facility;

measures -- used initially through devices to trap and monitor rodents, which is low risk and least harmful to the environment;

controls -- the introduction of predators to manage rodents;

measures -- the deployment of agents that poison or repel rodents.

principal competition is the substitution of other tools that PMPs use in their IPM.

Regulation and Product Approval

state and local government authorities in the United States regulate, among other things, the testing, manufacturing, quality

control, approval, labeling, packaging, storage, record-keeping, distribution and marketing of the products we develop.

fertility control product must be approved by the EPA Office of Pesticide Programs before they can be legally marketed and sold

in the United States.

The process for obtaining regulatory approval and compliance with appropriate federal, state and local regulations

is rigorous and requires the expenditure of substantial time and financial resources.

States Review and Approval Processes

the United States, the EPA regulates the sale, distribution and use of any pesticide under the Federal Insecticide, Fungicide

and Rodenticide Act, or FIFRA.

The EPA’s definition of a pesticide includes “any substance or mixture of substances

intended for preventing, destroying, repelling, or mitigating any pest.”

FIFRA defines a pest as “any insect, rodent,

nematode, fungus, or weed.”

To register a new product with the EPA, all active ingredients within the product must be registered

with the EPA.

EPA granted registration for ContraPest effective August 2, 2016.

This initial EPA approval labeled ContraPest as a restricted-use

product, due to the need for applicator expertise for deployment.

On October 18, 2018, the EPA removed the Restricted Use designation,

meaning that we can sell ContraPest to consumers who do not have applicator expertise.

ContraPest is currently limited by EPA

requirements to indoor use and to use within one foot of manmade structures.

We intend to diligently pursue additional related

regulatory approvals from the EPA to support our product evolution, including seeking approval for full outdoor use, alternative

formulations and for additional rodent species.

This may entail the need to complete and submit to EPA additional studies, principally

related to the effects on other animals and fish if ingested or if the product enters the water supply.

addition to the EPA registration of ContraPest in the United States, we must obtain registration from the various state regulatory

agencies prior to selling in each state.

To date, we have received registration for ContraPest in all 50 states and the District

of Columbia, 47 of which have approved the removal of the Restricted Use designation.

addition to product registration, the EPA also approves all labeling (the container label, instructional inserts, and the Safety

Data Sheet (SDS)) of ContraPest.

Generally, states accept the EPA approved label as is.

ContraPest’s labeling was submitted to states at initial registration

and is resubmitted during state scheduled reregistration or for any significant labeling change requiring EPA approval.

In certain cases, our EPA and state registrations

require completion of testing and certifications even after we have received approval for the product or its labelling.

to seek to comply with these requirements.

International Review and Approval Processes

We are researching potential international markets and will

evaluate the regulatory landscapes of each prospective market.

Country-specific regulatory laws have provisions that include requirements

for certain labeling, safety, efficacy and manufacturers’

quality control procedures to assure the consistency of the product,

as well as company records and reports.

Some specific in-country studies will be required for particular countries, but others

will generally accept an EPA or EU compliant dossier.

As of December 31, 2019, we had 34 full-time and four

part-time employees.

Within our workforce, 9 employees are engaged in research and development and 29 in sales, business

development, finance, regulatory, human resources, facilities, information technology and general management and

administration.

None of our employees are represented by labor unions or covered

by collective bargaining agreements.

Intellectual Property and Other Proprietary Rights

Maintaining a strong position in the rodenticide

market requires constant innovation along with a healthy research program to evolve product lines to remain competitive and relevant

to the needs of the changing global marketplace.

We seek to protect our proprietary data and trade secrets with attention to data

exchanges among employees, consultants, collaborators and research and trade partners.

Patent Filings

Our intellectual property portfolio supporting ContraPest consists

of nine international patent filings (in the United States, Europe, Canada, Brazil, Russia, Japan, Mexico, South Korea, and Australia)

addressing the ContraPest compound.

Claims directed toward the compound include composition-of-matter involving a diterpenoid epoxide

or salts thereof in combination with an organic diepoxide, use claims for inducing follicle depletion and for reducing the reproductive

capability of a mammalian animal or non-human mammalian population.

Issued claims will have a patent term extending to 2033 or

longer based on patent term determinations in each of the filing countries.

The novelty of ContraPest extends to its method of

field distribution and has required innovation to perfect the dosing of our product to rodents.

ContraPest’s labeling was submitted

to states at initial registration and is resubmitted during state scheduled reregistration or for any significant labeling change

requiring EPA approval.

In certain cases, our EPA and state registrations require completion

of testing and certifications even after we have received approval for the product or its labelling.

We continue to seek to comply

with these requirements.

International

Review and Approval Processes

are researching potential international markets and will evaluate the regulatory landscapes of each prospective market.

Country-specific

regulatory laws have provisions that include requirements for certain labeling, safety, efficacy and manufacturers’

control procedures to assure the consistency of the product, as well as company records and reports.

Some specific in-country

studies will be required for particular countries, but others will generally accept an EPA or EU compliant dossier.

of December 31, 2020, we had 29 full-time employees.

Within our workforce, 7 employees are engaged in research and development

and 22 in sales, business development, finance, regulatory, human resources, facilities, information technology and general management

and administration.

of our employees are represented by labor unions or covered by collective bargaining agreements.

Property and Other Proprietary Rights

a strong position in the rodenticide market requires constant innovation along with a healthy research program to evolve product

lines to remain competitive and relevant to the needs of the changing global marketplace.

We seek to protect our proprietary data

and trade secrets with attention to data exchanges among employees, consultants, collaborators and research and trade partners.

intellectual property portfolio supporting ContraPest consists of nine international patent filings (in the United States, Europe,

Canada, Brazil, Russia, Japan, Mexico, South Korea, and Australia) addressing the ContraPest compound.

Claims directed toward

the compound include composition-of-matter involving a diterpenoid epoxide or salts thereof in combination with an organic diepoxide,

use claims for inducing follicle depletion and for reducing the reproductive capability of a mammalian animal or non-human mammalian

Issued claims will have a patent term extending to 2033 or longer based on patent term determinations in each of the

filing countries.

The novelty of ContraPest extends to its method of field distribution and has required innovation to perfect

the dosing of our product to rodents.

We have filed U.S.

and international

patent applications covering our novel bait station device to effectively and efficiently deliver our rodent bait at individual

bait sites that would, if issued, offer patent term protection through at least 2036.

License Agreements

We have an exclusive patent license with the University of

Arizona for background intellectual property that we plan to employ for future product development in the domestic animal fertility

control market.

The patent claims in the United States, Australia and New Zealand cover the use of 4-vinylcyclohexene diepoxide

to deplete ovarian follicles in individual mammals and mammal populations.

The license agreement, signed in 2005, will terminate

with the last-to-expire patent claims, which have a term extending to 2026.

Trade Secrets and Trademarks

Beyond our patent right holdings, we broaden our

intellectual property position with trademark, trade secret, know-how and continuous scientific discovery to accompany our product

development efforts.

We protect these proprietary assets with a combination of confidentiality terms in all commercial agreements

or stand-alone confidentiality agreements along with rights-ownership agreements and structured information transfer understandings

prior to beginning any collaborative projects.

We own and maintain the ContraPest trademark and intend to register new trademarks

for products from our evolving rodenticide product line and for products for mammalian species beyond rodentia.

We have exclusive use status with the EPA for the data sets

we have developed and submitted to the EPA as part of our application for ContraPest.

The exclusive use status applies to new

active ingredients and the final formulation of the ContraPest product for a period of 10 years.

For five years after the 10-year

period of exclusivity, if another applicant or the EPA Administrator chooses to rely on one or more data sets that we submitted

in support of an application submitted by another applicant, the new applicant must make a binding offer to compensate us and

certify to the EPA that it has done so.

If we and the offeror cannot reach agreement on the terms of the compensation for the

use of such data sets, FIFRA requires resolution by binding arbitration.

The EPA rules do not describe how the compensation should

be determined, and there is publicly available information about some, but not all, binding arbitration decisions.

Where You Can Find Additional Information

We electronically file with the Securities and Exchange Commission

(“SEC”) our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments

to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934.

We make available

on our website at www.senestech.com, free of charge, copies of these reports, as soon as reasonably practicable after electronically

filing such reports with, or furnishing them to, the Securities and Exchange Commission.

The information contained in, or that

can be accessed through, our website is not part of, and is not incorporated into, this Annual Report on Form 10-K.

and international patent applications covering our novel bait station

device to effectively and efficiently deliver our rodent bait at individual bait sites that would, if issued, offer patent term

protection through at least 2036.

have an exclusive patent license with the University of Arizona for background intellectual property that we plan to employ for

future product development in the domestic animal fertility control market.

The patent claims in the United States, Australia

and New Zealand cover the use of 4-vinylcyclohexene diepoxide to deplete ovarian follicles in individual mammals and mammal populations.

The license agreement, signed in 2005, will terminate with the last-to-expire patent claims, which have a term extending to 2026.

Secrets and Trademarks

our patent right holdings, we broaden our intellectual property position with trademark, trade secret, know-how and continuous

scientific discovery to accompany our product development efforts.

We protect these proprietary assets with a combination of confidentiality

terms in all commercial agreements or stand-alone confidentiality agreements along with rights-ownership agreements and structured

information transfer understandings prior to beginning any collaborative projects.

We own and maintain the ContraPest trademark

and intend to register new trademarks for products from our evolving rodenticide product line and for products for mammalian species

beyond rodentia.

have exclusive use status with the EPA for the data sets we have developed and submitted to the EPA as part of our application

for ContraPest.

The exclusive use status applies to new active ingredients and the final formulation of the ContraPest product

for a period of 10 years.

For five years after the 10-year period of exclusivity, if another applicant or the EPA Administrator

chooses to rely on one or more data sets that we submitted in support of an application submitted by another applicant, the new

applicant must make a binding offer to compensate us and certify to the EPA that it has done so.

If we and the offeror cannot

reach agreement on the terms of the compensation for the use of such data sets, FIFRA requires resolution by binding arbitration.

The EPA rules do not describe how the compensation should be determined, and there is publicly available information about some,

but not all, binding arbitration decisions.

You Can Find Additional Information

electronically file with the Securities and Exchange Commission (“SEC”) our Annual Reports on Form 10-K, Quarterly

Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a)

or 15(d) of the Securities Exchange Act of 1934.

We make available on our website at www.senestech.com, free of charge, copies

of these reports, as soon as reasonably practicable after electronically filing such reports with, or furnishing them to, the

Securities and Exchange Commission.

The information contained in, or that can be accessed through, our website is not part of,

and is not incorporated into, this Annual Report on Form 10-K.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business