What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2021-03-29 compared with 2020-03-17 · 415 added, 483 removed, 33 unchanged (96% of the section changed)

Market for Registrant’s

Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

Our common stock is traded on the NASDAQ Capital Market under

the symbol “SNES.”

Our common stock was initially listed for trading on the NASDAQ Capital Market on December 8, 2016.

As of March 16, 2020, there were approximately 618 holders

of record of our common stock.

Because many shares of our common stock are held by brokers and other institutions on behalf of

stockholders, we are unable to determine the total number of beneficial owners represented by these holders of record.

We have never declared or paid any cash dividends on our common

We currently intend to retain all available funds and any future earnings to support our operations and finance the growth

and development of our business.

We do not intend to pay cash dividends on our common stock for the foreseeable future.

determination related to our dividend policy will be made at the discretion of our board of directors and will depend upon, among

other factors, our results of operations, financial condition, capital requirements, contractual restrictions, business prospects

and other factors our board of directors may deem relevant.

Recent Sales of Unregistered Securities

Purchases of Equity Securities by the Company

We withhold (repurchase) shares of common stock in connection

with the vesting of restricted shares to satisfy required tax withholding obligations when they occur.

There were no purchases

of our equity securities during the three months ended December 31, 2019.

Selected Financial Data.

Not applicable.

Management’s Discussion and Analysis of

Financial Condition and Results of Operations.

The following Management’s Discussion

and Analysis of Financial Condition and Results of Operations should be read in conjunction with our condensed consolidated financial

statements and related notes.

Some statements and information contained in this Management’s Discussion and Analysis of Financial

Condition and Results of Operations, notes to our condensed consolidated financial statements and elsewhere in this report are

not historical facts but are 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”).

In some cases, readers can identify forward- looking statements by terms such as “may,”

“will,”

“should,”

“expect,”

“plan,”

“intend,”

“forecast,”

“anticipate,”

“believe,”

“estimate,”

“predict,”

“potential,”

“continue,”

or the negative of these terms

or other comparable terminology, which when used are meant to signify the statement as forward-looking.

See “Cautionary Note

Regarding Forward-Looking Statements”

immediately prior to Item 1 of Part I, “Business.”

Since our inception, we have sustained significant operating

losses in the course of our research and development and commercialization activities and expect such losses to continue for the

We have generated limited revenue to date from product sales, research grants and licensing fees received under our

former license agreement with Neogen.

In 2017, we began to prepare and launch commercialization of our first product, ContraPest.

We have primarily funded our operations to date through the sale of equity securities, including convertible preferred stock,

Common Stock and warrants to purchase Common Stock.

See “Description of Capital Stock”

elsewhere in this filing for

a description of our public equity sales.

We have also raised capital through debt financing, consisting primarily of convertible

and, to a lesser extent, payments received in connection with product sales, research grants and licensing fees.

Through December 31, 2019, we had received net proceeds of

$67.2 million from our sales of common stock, preferred stock and issuance of convertible and other promissory notes and an aggregate

of $1.7 million from research grants and licensing fees and an aggregate of $0.6 million in product sales.

At December 31, 2019,

we had an accumulated deficit of $95.9 million and cash and cash equivalents of $1.9 million.

We have incurred significant operating losses every year since

our inception.

Our net losses were $10.0 million and $12.2 million for the years ended December 31, 2019 and 2018 respectively.

We expect to continue to incur significant expenses and generate operating losses for at least the next 12 months.

We have historically utilized, and intend to continue to

utilize, various forms of stock-based awards in order to hire, retain and motivate talented employees, consultants and

directors and encourage them to devote their best efforts to our business and financial success.

In addition, we believe that

our ability to grant stock-based awards is a valuable and necessary compensation tool that aligns the long-term financial

interests of our employees, consultants and directors with the financial interests of our stockholders.

As a result, a

significant portion of our operating expenses includes stock-based compensation expense.

Stock-based compensation expense has

been, and will continue to be for the foreseeable future, a significant recurring expense in our business and an important

for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

common stock is traded on the NASDAQ Capital Market under the symbol “SNES.”

Our common stock was initially listed

for trading on the NASDAQ Capital Market on December 8, 2016.

As of March 29, 2021, there were approximately 703 holders of

record of our common stock.

Because many shares of our common stock are held by brokers and other institutions on behalf of stockholders,

we are unable to determine the total number of beneficial owners represented by these holders of record.

have never declared or paid any cash dividends on our common stock.

We currently intend to retain all available funds and any

future earnings to support our operations and finance the growth and development of our business.

We do not intend to pay cash

dividends on our common stock for the foreseeable future.

Any future determination related to our dividend policy will be made

at the discretion of our board of directors and will depend upon, among other factors, our results of operations, financial condition,

capital requirements, contractual restrictions, business prospects and other factors our board of directors may deem relevant.

Sales of Unregistered Securities

of Equity Securities by the Company

withhold shares of common stock in connection with the vesting of restricted stock units to satisfy required tax withholding obligations

when they occur.

There were no purchases of our equity securities during the twelve months ended December 31, 2020.

Financial Data.

for Item 6, Selected Financial Data, has been omitted pursuant to SEC modernization rules that are effective as of the filing

date of this report.

Management’s

Discussion and Analysis of Financial Condition and Results of Operations.

should read the following discussion and analysis of our financial condition and results of operations in conjunction with the

consolidated financial statements and the notes thereto included elsewhere in this Annual Report on Form 10-K.

In addition to

historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates,

beliefs and expectations that involve risks and uncertainties.

Our actual results and the timing of events could differ materially

from those discussed in the forward-looking statements.

Factors that could cause or contribute to these differences include those

discussed below and elsewhere in this Annual Report on Form 10-K, particularly in the sections of this report titled “Risk

Factors”

and “Cautionary Note Regarding Forward-Looking Statements.”

our inception, we have sustained significant operating losses in the course of our research and development activities and commercialization

efforts and expect such losses to continue for the near future.

We have generated limited revenue to date from product sales,

research grants and licensing fees received under a former license.

We have primarily funded our operations to date through the

sale of equity securities, including convertible preferred stock, common stock and warrants to purchase common stock;

financing, consisting primarily of convertible notes.

December 31, 2020, we had received net proceeds of $75.7 million from our sales of common stock, preferred stock and issuance

of convertible and other promissory notes and an aggregate of $1.7 million from research grants and licensing fees and an aggregate

of $0.9 million in product sales.

At December 31, 2020, we had an accumulated deficit of $104.2 million and cash and cash equivalents

of $3.6 million.

April 15, 2020, the Company also received cash proceeds of $645,700 from the Paycheck Protection Program (or “PPP”)

of the Coronavirus Aid, Relief, and Economic Security Act.

We used the proceeds from the PPP Loan to retain employees, maintain

payroll and make lease, interest and utility payments.

addition, we entered into a security private placement agreement on February 2, 2021, which resulted in gross proceeds to the

Company of approximately $10.00 million, before deducting fees payable to the placement agent and other estimated offering expenses

payable by us.

have incurred significant operating losses every year since our inception.

Our net losses were $8.4 million and $10.0 million

for the years ended December 31, 2020 and 2019, respectively.

We expect to continue to incur significant expenses and generate

operating losses for at least the next 12 months.

have historically utilized, and intend to continue to utilize, various forms of stock-based awards in order to hire, retain and

motivate talented employees, consultants and directors and encourage them to devote their best efforts to our business and financial

In addition, we believe that our ability to grant stock-based awards is a valuable and necessary compensation tool that

aligns the long-term financial interests of our employees, consultants and directors with the financial interests of our stockholders.

As a result, a significant portion of our operating expenses includes stock-based compensation expense.

Stock-based compensation

expense has been, and will continue to be for the foreseeable future, a significant recurring expense in our business and an important

part of our compensation strategy.

Specifically, our stock-based compensation expense for the year ended December 31, 2019

and December 31, 2018 was $0.9 million and $3.4 million, respectively, which represented 8.5% and 30.0%, respectively, of our

total operating expenses for those periods.

Components of our Results of Operations

Net sales are comprised primarily of sales, net of discounts

and promotions, of ContraPest and related components, to our distributors and customers.

Operating Expenses

Research and Development Expenses

Research and development expenses consist primarily of costs

incurred in connection with the research and development of ContraPest and our other product candidates, which include:

● Employee related expenses,

including salaries, related benefits, travel and stock-based compensation expense for employees engaged in research and development

● Expenses incurred in

connection with the development of our product candidates;

● Facilities, depreciation

and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance and supplies.

We expense research and development costs as incurred.

We continue to investigate other applications of our core technology

to other product candidates, which includes laboratory tests and academic collaborations.

We also continue to develop our supply

chain, particularly identifying and improving our sourcing of triptolide, a key active ingredient for our product candidates.

At this time, we cannot reasonably estimate the costs for further development of ContraPest or the cost associated with the development

of any of our other product candidates.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist primarily

of salaries and related costs, including stock-based compensation, for personnel in executive, finance, sales, marketing and administrative

Selling, general and administrative expenses also include direct and allocated facility-related costs as well as professional

fees for legal, consulting, accounting and audit services.

Specifically, our stock-based compensation expense for the year ended December 31, 2020 and

December 31, 2019 was $0.6 million and $0.9 million, respectively, which represented 8.1% and 8.5%, respectively, of our total

operating expenses for those periods.

of our Results of Operations

revenue is comprised entirely of grant funding provided by the City of Phoenix, Arizona for jobs created in the City of Phoenix,

Arizona during the year ended December 31, 2020.

are comprised primarily of sales, net of discounts and promotions, of ContraPest and related components, to our distributors and

customers, as well as consulting and implementation services provided in conjunction with ContraPest deployments.

of sales consist primarily of cost of products sold, including scrap and reserves for obsolescence.

We continue to focus on improving

2 unchanged sentences

Steps have included relocating to more cost-efficient space, organizational

restructuring, and improving our manufacturing and supply processes.

We expect to see the benefit of these steps in the coming

quarters.”

We plan to continue to hire employees to support our commercialization

of ContraPest and further development of our product candidates and anticipate that we will continue to utilize various forms

of stock-based compensation awards in order to attract and retain qualified employees.

As a result, we anticipate that stock-based

compensation expense will continue to represent a significant portion of our selling, general and administrative expenses for

the foreseeable future.

Interest Income

Interest income consists primarily of interest income earned

on cash and cash equivalents.

Interest Expense

Interest expense consists primarily of interest accrued on our

finance lease and note commitments.

Other Income (Expense), Net

Other income (expense), net, consists primarily of recognized

change in value of short-term investments and income (expense) related to the year-over-year fair market value adjustment of our

derivative warrant.

Deferred tax assets and liabilities are determined based on

differences between the financial statement and tax basis of assets and liabilities, as well as a consideration of net operating

loss and credit carry forwards, using enacted tax rates in effect for the period in which the differences are expected to impact

taxable income.

A valuation allowance is established, when necessary, to reduce deferred tax assets to the amount that is more

likely than not to be realized.

The Company’s effective tax rate for the years ended December 31, 2019 and December 31,

2018 has been affected by the valuation allowance on the Company’s deferred tax assets.

Since our inception, we have not recorded any U.S.

or state income tax benefits for the net losses we have incurred in each year or for our earned research and development tax credits,

due to our uncertainty of realizing a benefit from those items.

At December 31, 2019, the Company has federal and state net operating

loss carryforwards of approximately $61.3 million and $47.8 million, respectively, not considering the IRC Section 382 annual

limitation discussed below.

The federal loss carryforwards begin to expire in 2023, unless previously utilized.

restructuring, and improving our manufacturing and supply processes and reducing staffing.

We expect to realize the benefits from

these steps in the coming quarters.

and Development Expenses

and development expenses consist primarily of costs incurred in connection with the research and development of ContraPest and

our other product candidates, which costs include:

related expenses, including salaries, related benefits, travel and stock-based compensation expense for employees engaged

in research and development functions;

incurred in connection with the development of our product candidates;

depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance

and supplies.

expense research and development costs as incurred.

continue to investigate other applications of our core technology to other product candidates, which includes laboratory tests

and academic collaborations.

We also continue to develop our supply chain, particularly identifying and improving our sourcing

of triptolide, a key active ingredient for our product candidates.

At this time, we cannot reasonably estimate the costs for further

development of ContraPest or the cost associated with the development of any of our other product candidates.

General and Administrative Expenses

general and administrative expenses consist primarily of salaries and related costs, including stock-based compensation, for personnel

in executive, finance, sales, marketing and administrative functions.

Selling, general and administrative expenses also include

direct and allocated facility-related costs as well as professional fees for legal, consulting, accounting and audit services.

plan to continue to utilize various forms of stock-based compensation awards in order to attract and retain qualified employees.

As a result, we anticipate that stock-based compensation expense will continue to represent a significant portion of our selling,

general and administrative expenses for the foreseeable future.

income consists primarily of interest income earned on cash and cash equivalents.

expense consists primarily of interest accrued on our finance lease and note commitments.

Income (Expense), Net

income (expense), net, consists primarily of recognized change in value of short-term investments, income (expense) related to

the year-over-year fair market value adjustment of our derivative warrant and any recognized gains or losses related to the sale

of fixed assets.

tax assets and liabilities are determined based on differences between the financial statement and tax basis of assets and liabilities,

as well as a consideration of net operating loss and credit carry forwards, using enacted tax rates in effect for the period in

which the differences are expected to impact taxable income.

A valuation allowance is established, when necessary, to reduce deferred

tax assets to the amount that is more likely than not to be realized.

The Company’s effective tax rate for the years ended

December 31, 2020 and December 31, 2019 has been affected by the valuation allowance on the Company’s deferred tax assets.

our inception, we have not recorded any U.S.

federal or state income tax benefits for the net losses we have incurred in each

year or for our earned research and development tax credits, due to our uncertainty of realizing a benefit from those items.

December 31, 2020, the Company has federal and state net operating loss carryforwards of approximately $69.5 million and $56.1

million, respectively, not considering the IRC Section 382 annual limitation discussed below.

The federal loss carryforwards begin

to expire in 2029, unless previously utilized.

In addition, the Company has approximately $25.1 million of the total $69.5 million

of net operating losses that do not expire, as these losses were generated after the law change introduced as part of the Tax

Cuts and Jobs Act.

Additionally,

12 unchanged sentences

net operating losses could be limited

Comparison of the Years December 31, 2019 to 2018

The following table summarizes our results of operations for

the years ended December 31, 2019 and 2018:

SENESTECH, INC.

STATEMENTS OF

OPERATIONS AND COMPREHENSIVE LOSS

(In thousands,

except shares and per share data)

For the Years Ended

Cost of sales

of the Years December 31, 2020 to 2019

following table summarizes our results of operations for the years ended December 31, 2020 and 2019:

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

thousands, except shares and per share data)

and development

general and administrative

operating expenses

Research and development

Selling, general and administrative

Total operating expenses

Net operating loss

Other income (expense):

Interest income

Interest expense

operating loss

income (expense):

income (expense)

other income (expense)

Total other income (expense)

Net loss and comprehensive loss

Warrant revaluation

Deemed dividend-warrant price protection-revaluation adjustment

Net loss attributable to common shareholders

Loss per share attributable to common shareholders, basic and diluted

Weighted average common shares outstanding - basic and fully diluted

Net sales, shown net of sales discounts and promotions, were

$143,000 for the year ended December 31, 2019, compared to $297,000 for year ended December 31, 2018.

Net sales decreased by $154,000

in 2019 due to the receipt of an initial stocking order in the fourth quarter of 2018 from a customer that did not re-order in

2019 and our shift to pull through sales strategy directed at end users.

This strategy has shown significant initial promise however,

we have experienced an increase in lead to conversion time resulting in a longer sales process.

Cost of Goods Sold

Cost of goods sold was $101,000, or 70.6% of net

sales, for the year ended December 31, 2019, compared to $241,000, or 81.1% of net sales for year ended December 31, 2017.

decrease in cost of goods sold of $130,000 in 2019 primarily due to lower sales volume and reduced scrap expense associated with

manufacturing scale up activities that were experienced during 2018.

The decrease as a percentage

of sales was a result of continued process improvement and efficiencies.

Gross profit for the year ended December 31, 2018 was $42,000

or 29.4% of net sales, compared to a gross profit of $56,000 or 18.9% of net sales, for the year ended December 31, 2018.

increase in gross profit was a direct result of a decrease in scrap in 2019.

loss and comprehensive loss

dividend-warrant price protection-revaluation adjustment

loss attributable to common shareholders

average common shares outstanding - basic and fully diluted

loss per common share - basic and fully diluted

revenue for the year ended December 31, 2020 was $24,000 compared to $0 in 2019 as the grant was earned for jobs created in the

City of Phoenix, Arizona during the 12 months ended December 31, 2020.

shown net of sales discounts and promotions, were $258,000 for the year ended December 31, 2020, compared to $143,000 for year

ended December 31, 2019.

Sales increased by $115,000 in 2020 due, in part, to our implementation of an internet sales capability,

augmenting our existing pull through sales strategy, where demand from the consumer market encourages, or pulls, resellers and

pest management professionals to offer our products, as well as billings of $18,500 for customer product implementation services.

These initiatives have shown initial promise.

However, we believe the benefit has been offset by reduced sales, reflecting continued

reduced spending by customers due to the COVID-19 pandemic.

of sales was $281,000 or 108.9% of net sales for the year ended December 31, 2020, compared to $101,000 or 70.6% of net sales

for the year ended December 31, 2019.

The increase in cost of goods sold of $180,000 in 2020 is primarily due to a reserve for

obsolete product delivery system supplies of $119,000 and higher sales volume, offset by reduced scrap expense and continued process

improvement and efficiencies.

Without the reserve for delivery system supplies, cost of sales for the year ended December 31,

2020 would have been $162,000 or 62.8% of net sales, reflecting the impact of reduced scrap expense and continued process improvement

and efficiencies.

We anticipate cost of goods sold as a percentage of sales will improve in the future due to manufacturing efficiencies

as a result of scale-up activities.

profit for the year ended December 31, 2020 was $1,000 or less than 1% of net sales, compared to a gross profit of $42,000 or

29.4% of net sales, for the year ended December 31, 2019.

The decrease in gross profit was primarily due to a reserve for obsolete

product delivery system supplies of $119,000.

Gross profit for the year ended December 31, 2020 would have been $120,000 or 42.6%

of net sales without this reserve, reflecting the impact of reduced scrap expense and continued process improvement and efficiencies.,

and Development Expenses

research and development expenses:

(in thousands)

Direct research and development expenses:

Personnel related (including stock-based compensation)

related (including stock-based compensation)

research and development expenses

and development expenses were $1.5 million for the year ended December 31, 2020, compared to $1.9 million for the year ended December

The $414,000 decrease in research and development expenses was primarily due to a decrease of $203,000 in personnel-related

costs, including stock-based compensation expense, due to the classification of certain field support employees to sales and marketing,

a decrease in facility related expenses of $94,000 and a decrease in other research and development expenses of $117,000.

our continued focus on commercialization of ContraPest, we determined that certain field support employees previously classified

as research and development are now refocused on sales and marketing efforts and thus, reclassified as such.

Facility-related

Total research and development expenses

Research and development expenses were $1.9 million for the

year ended December 31, 2019, compared to $2.4 million for the year ended December 31, 2018.

The $496,000 decrease in research

and development expenses was primarily due to a decrease of $741,000 in personnel-related costs, including stock-based compensation

expense, due to the classification of certain field support employees to sales and marketing offset by an increase in facility

related expenses of $27,000 and other research and development expenses of $218,000.

With more focus on commercialization of ContraPest,

we determined that these certain field support employees previously classified as research and development are now refocused on

sales and marketing efforts and thus, reclassified as such.

Facility-related expense increased $27,000 due primarily to

facility lease payment escalation and additional rent associated with moving into our new facility in Phoenix, AZ.

The increase in other research and development expenses of

$218,000 was primarily due to increased consulting expenses related to certain product testing and development expenses offset

by a reclass of other expenses related to certain field support employees to sales and marketing as described above.

We also continue to develop our supply chain, particularly

identifying and improving our sourcing key ingredients for our product candidates.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $8.4 million

for the year ended December 31, 2019, compared to $9.5 million for the year ended December 31, 2018.

The decrease of $1.1 million

in selling, general and administrative expenses was primarily due to lower stock compensation expenses of $2.5 million associated

with inducement warrants issued in June 2018 and option grants fully vesting and resulting in lower stock compensation expense,

offset by increased salary and wages of $1.1 million associated with the reclassification of certain field support employees,

an increase of $126,000 in professional services expense and a $123,000 expense for a reserve for potential bad debt expenses.

The increase in professional services expenses was primarily due to increased legal and Board of Directors related expenses.

Interest Income/Expense Net

We recorded $3,000 of interest income, net for the year ended

December 31, 2019, as opposed to interest expense, net of $49,000 for the year ended December 31, 2018.

The decrease in interest

expense, net of $52,000 was the result of decreased debt in the form of notes payable and leases due primarily to maturing debt

obligations during 2019.

Other Income (Expense), Net

We recorded $266,000 of other income, net for the year ended

December 31, 2019, compared to $21,000 of other income for the year ended December 31, 2018.

The $245,000 net increase in other

income was primarily due to the reversal of a previously recorded litigation reserve of $269,000, offset by lower income recognized

for year-over-year fair market value adjustment of our derivative warrant during 2019.

Liquidity and Capital Resources

Since our inception, we have sustained significant operating

losses in the course of our research and development activities and commercialization efforts and expect such losses to continue

for the near future.

We have generated limited revenue to date from product sales, research grants and licensing fees received

under our former license agreement with Neogen.

In 2017, we began full scale marketing of our first product, ContraPest.

funded our operations to date through the sale of equity securities, including convertible preferred stock, Common Stock and warrants

to purchase Common Stock, debt financing, consisting primarily of convertible notes;

and, to a lesser extent, payments received

in connection with product sales, research grants and licensing fees.

Through December 31, 2019, we had received net proceeds of

$67.2 million from our sales of common stock, preferred stock and warrant exercises and issuance of convertible and other promissory

notes, and an aggregate of $1.7 million from licensing fees and an aggregate of $0.6 million from product sales.

At December 31,

2019, we had an accumulated deficit of $95.9 million and cash and cash equivalents of $1.9 million.

Our ultimate success depends upon the outcome of a combination

of factors, including:

(i) successful commercialization of ContraPest and maintaining and obtaining regulatory approval of our

products and product candidates;

(ii) market acceptance, commercial viability and profitability of ContraPest and other products;

(iii) the ability to market our products and establish an effective sales force and marketing infrastructure to generate significant

expenses decreased $94,000 due primarily to the cancellation of a facility lease of 1,954 square feet of research and development

space in Flagstaff, Arizona at December 31, 2019 and reduced allocation of facility expenses to research and development with

the renewal of only a portion of the Flagstaff facilities in December 2019, offset by rent expense at the new manufacturing facility

in Phoenix, Arizona, as discussed in Note 13 - Commitments and Contingencies.

year over year decrease in other research and development expenses of $117,000 was primarily due to increased consulting expenses

related to certain product testing and development expenses offset by lower depreciation expense allocation due to sale of certain

fixed assets and certain assets becoming fully depreciated during the year ended December 31, 2020, and a reclass of other expenses

related to certain field support employees to sales and marketing as described above.

also continue to develop our supply chain, particularly identifying and improving our sourcing key ingredients for our product

General and Administrative Expenses

general and administrative expenses were $6.4 million for the year ended December 31, 2020, compared to $8.4 million for the year

ended December 31, 2019.

The decrease of $2.0 million in selling, general and administrative expenses was primarily due to a reduction

of $1.4 million in net salary costs, including stock compensation expenses, $309,000 reduction in travel related expenses, $190,000

reduction in professional services and a reduction in marketing costs of $150,000.

salaries and wages were lower due primarily to a decrease in salaries and wages of $645,000 due to a provision for severance expense

booked in December of 2019 for the termination of certain executive service contracts, a reduction of stock compensation expenses

of $228,000 related to option grants fully vesting and resulting in lower stock compensation expense and the impact of temporary

salary reductions by management to control expenses during the COVID-19 pandemic during 2020, offset by increased salaries and

wages due to the reclassification of certain field support employees to sales and marketing, as noted above.

The decrease in travel

expenses of $309,000 for the year ended December 31, 2020, as compared to the same period in 2019, was a direct result of COVID-19

travel restrictions put in place in March 2020.

The reduction in professional services expense was due to termination of an outside

sales force contract, reduced utilization of field study consultants and lower Board of Director compensation expense as a result

of voluntary reductions in compensation to control costs during the COVID-19 pandemic.

In addition, the pandemic restricted

access to trade shows and other marketing activities during the year ended December 31, 2020 resulting in lower marketing expenses

than the same period in 2019.

Income/Expense Net

recorded $25,000 of interest expense, net for the year ended December 31, 2020, as opposed to interest income, net of $3,000 for

the year ended December 31, 2019.

The increase in interest expense, net of $28,000 was a result of decreased interest income as

a result of significantly lower interest rates during the year ended December 31, 2020, offset by reduced interest expense as

a result of finance leases and promissory notes that expired during the year ended December 31, 2020.

Income (Expense), Net

recorded $21,000 of other income, net for the year ended December 31, 2020, compared to $266,000 of other income for the year

ended December 31, 2019.

The $245,000 net decrease in other income was primarily due to the reversal of a previously recorded

litigation reserve of $269,000 in the year ended December 31, 2019, offset by higher income recognized for gains on sale of certain

fixed assets during the year ended December 31, 2020.

and Capital Resources

our inception, we have sustained significant operating losses in the course of our research and development activities and commercialization

efforts and expect such losses to continue for the near future.

We have generated limited revenue to date from product sales,

research grants and licensing fees received under a former license.

We have primarily funded our operations to date through the

sale of equity securities, including convertible preferred stock, common stock and warrants to purchase common stock;

financing, consisting primarily of convertible notes.

December 31, 2020, we had received net proceeds of $75.7 million from our sales of common stock, preferred stock and warrant exercises

and issuance of convertible and other promissory notes, and an aggregate of $1.7 million from licensing fees and an aggregate

of $0.9 million from product sales.

At December 31, 2020, we had an accumulated deficit of $104.2 million and cash and cash equivalents

of $3.6 million.

discussed in Note 8 - Borrowings, of our Notes to Condensed Financial Statements, on April 15, 2020, the Company also received

cash proceeds of $645,700 from the Paycheck Protection Program (or “PPP”) of the Coronavirus Aid, Relief, and Economic

Security Act.

We are using the proceeds from the PPP Loan to retain employees, maintain payroll and make lease, interest and utility

addition, as described in Note 14 - Subsequent Events, we entered into a security private placement agreement on February 2, 2021,

which resulted in gross proceeds to the Company of approximately $10.00 million, before deducting fees payable to the placement

agent and other estimated offering expenses payable by us.

ultimate success depends upon the outcome of a combination of factors, including:

(i) successful commercialization of ContraPest

and maintaining and obtaining regulatory approval of our products and product candidates;

(ii) market acceptance, commercial viability

and profitability of ContraPest and other products;

(iii) the ability to market our products and establish an effective sales

force and marketing infrastructure to generate significant revenue;

(iv) the success of our research and development;

(v) the ability to retain and attract key personnel to develop, operate

and grow our business;

and (vi) our ability to meet our working capital needs.

Based upon our current operating plan, we expect

that cash and cash equivalents at December 31, 2019, in combination with anticipated revenue and additional sales of our equity

securities, will be sufficient to fund our current operations for at least the next six months.

We have taken and will continue

to take actions to reduce our operating expenses and to concentrate our resources toward the successful commercialization of ContraPest

in the United States.

However, if anticipated revenue targets and margin targets are not achieved and we are unable to raise necessary

capital through the sale of our securities, we may be required to take other measures that could impair our ability to be successful

and operate as a going concern.

In any event, we will require additional capital in order to fund our operating losses and research

and development activities until we become profitable.

We may never achieve profitability or generate positive cash flows, and

unless and until we do, we will continue to need to raise capital through equity or debt financing.

If such equity or debt financing

is not available at adequate levels or on acceptable terms, we may need to delay, limit or terminate commercialization and development

efforts or discontinue operations.

Additional Funding Requirements

We expect our expenses to continue or increase

in connection with our ongoing activities, particularly as we market and focus on sales of ContraPest, and as we advance field

studies of our product candidates in development.

ability to retain and attract key personnel to develop, operate and grow our business;

and (vi) our ability to meet our working

capital needs.

upon our current operating plan, we expect that cash and cash equivalents at December 31, 2020, in combination with the security

private placement on February 2, 2021, anticipated revenue and any additional sales of our equity securities, will be sufficient

to fund our current operations for at least the next 12 months.

We have taken and will continue to take actions to reduce our

operating expenses and to concentrate our resources toward the successful commercialization of ContraPest in the United States.

However, if anticipated revenue targets and margin targets are not achieved or expenses are more than we have budgeted, we may

need to raise additional financing before that time.

If we need more financing and we are unable to raise necessary capital through

the sale of our securities, we may be required to take other measures that could impair our ability to be successful and operate

as a going concern.

In any event, we may require additional capital in order to fund our operating losses and research and development

activities before we become profitable and may opportunistically raise capital.

We may never achieve profitability or generate

positive cash flows, and unless and until we do, we will continue to need to raise capital through equity or debt financing.

such equity or debt financing is not available at adequate levels or on acceptable terms, we may need to delay, limit or terminate

commercialization and development efforts or discontinue operations.

Funding Requirements

expect our expenses to continue or increase in connection with our ongoing activities, particularly as we focus on marketing and

sales of ContraPest.

Further, the COVID-19 pandemic will likely delay completion of field studies and achievement of sales, which

will further increase our need for financing.

In addition, we will continue to incur costs associated with operating as a public

In particular, we expect to incur substantial and increased

expenses as we:

● Work to maximize market

acceptance for, and generate sales of, our products;

● Manage the infrastructure for the sales, marketing

and distribution of ContraPest and any other product candidates for which we may receive regulatory approval;

● Continue the development

of ContraPest and our other product candidates, including engaging in any necessary field studies;

● Seek additional regulatory

approvals for ContraPest and our other product candidates;

● Scale up manufacturing processes and quantities 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 advance the research and development programs for other product candidates;

● Maintain, expand 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.

The following

table summarizes our sources and uses of cash for each of the years presented:

Cash used in operating activities

Cash used in investing activities

Cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

Operating Activities .

During the year ended December 31, 2019, operating activities

used $8.1 million of cash, primarily resulting from our net loss of $10.0 million, changes in our operating assets and liabilities

of $0.5 million and non-cash charges of $1.4 million.

Our net loss was primarily attributed to research and development activities

and our selling, general and administrative expenses, as we generated limited product sales and no research grant and licensing

revenue during the year.

Net cash used by changes in our operating assets and liabilities for the year ended December 31, 2019

consisted primarily of a $547,000 increase in accrued expenses and accounts payable, a decrease in prepaid expenses and deposits

of $85,000 and a decrease in inventories of $81,000 offset by a decrease in deferred rent of $16,000 and a net increase in accounts

receivable and deposits of $139,000.

During the year ended December 31, 2018, operating activities

used $9.1 million of cash, primarily resulting from our net loss of $11.9 million and changes in our operating assets and liabilities

of $1.0 million, partially offset by non-cash charges of $3.8 million.

Our net loss was primarily attributed to research and development

activities and our selling, general and administrative expenses, as we generated limited product sales and no research grant and

licensing revenue during the period.

Net cash used by changes in our operating assets and liabilities for the year ended December

31, 2018 consisted primarily of a $29,000 decrease in accrued expenses and accounts payable, an increase in inventories of $721,000,

a net increase in accounts receivable and deposits of $113,000 and an increase in prepaid expenses of $172,000

Investing Activities

During the year ended December 31, 2019, we used $71,000 of

cash in investing activities, which consisted entirely of the purchases of property and equipment.

During the year ended December 31, 2018, we generated $5.0

million of cash in investing activities, which consisted of $5 million in the sale of short term, highly liquid investments and

$185,000 generated from the sale of equipment, offset by $239,000 used in the purchases of property and equipment.

Financing Activities

During the year ended December 31, 2019, net cash provided by

financing activities was $5.1 million as a result of $3.6 million in net proceeds from the issuance of common stock, $1.8 million

in proceeds from warrant exercises, partially offset by $220,000 of repayments related to notes payable and $55,000 of payments

for employee withholding taxes related to share-based awards.

During the year ended December 31, 2018, net cash provided by

financing activities was $6.9 million as a result of $5.1 million in proceeds from the issuance of common stock, net, $2.2 million

in proceeds from warrant exercises and $9,000 in proceeds from issuances of notes, offset by $293,000 of repayments of related

to notes payable and notes payable, related party, $71,000 in repayments of finance lease obligations and $58,000 of payments for

employee withholding taxes related to share-based awards.

Recent Developments

Our common stock is listed on the Nasdaq Capital Market.

order to maintain that listing, we must satisfy minimum financial and other continued listing requirements and standards.

On November 12, 2019, we received an initial

deficiency letter from the listing qualifications staff of The Nasdaq Stock Market (“Nasdaq”) providing notification

that the bid price for our Common Stock had closed below $1.00 per share for the previous 30 consecutive business days and that

as a result our Common Stock no longer met the minimum bid price requirement for listing on The Nasdaq Capital Market.

provided with an initial compliance period of 180 calendar days, or until May 11, 2020, to regain compliance with the minimum

bid price requirement.

We implemented a 1-for-20 reverse stock split on February 4, 2020.

On February 20, 2020 we received notification

from Nasdaq that we had regained compliance with the minimum bid price requirement.

We have also in the past received minimum bid

deficiency notices.

We cannot provide any assurance that our stock price will maintain

the minimum bid price requirements of Nasdaq or that we will be able to satisfy any other continued listing requirement of the

Nasdaq Stock Market.

In the event that our common stock is not eligible for quotation on another market or exchange, trading of

our common stock could be conducted in the over-the-counter market or on an electronic bulletin board established for unlisted

securities such as the Pink Sheets or the OTC Bulletin Board.

In such event, it could become more difficult to dispose of, or

obtain accurate price quotations for, our common stock, and there would likely be a reduction in our coverage by security analysts

and the news media, which could cause the price of our common stock to decline further.

In addition, it may be difficult for us

to raise additional capital if we are not listed on a major exchange.

Critical Accounting Policies and Significant Judgments and

Our financial statements are prepared in accordance with generally

accepted accounting principles in the United States, or U.S.

The preparation of our financial statements and related disclosures

requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, costs and expenses,

and the disclosure of contingent assets and liabilities in our financial statements.

We base our estimates on historical experience,

known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which

form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other

We evaluate our estimates and assumptions on an ongoing basis.

Our actual results may differ from these estimates under

different assumptions or conditions.

While our significant accounting policies are described in

more detail in Note 1 —

Summary of Significant Accounting Policies to our financial statements included elsewhere in this

Annual Report on Form 10-K, we believe that the following accounting policies are those most critical to the judgments and estimates

used in the preparation of our financial statements.

Revenue Recognition

Effective January 1, 2018, the Company adopted ASC 606

Revenue from Contracts with Customers.

Under ASC 606, the Company recognizes revenue from the commercial sales

of products, licensing agreements and contracts to perform pilot studies by applying the following steps:

(1) identify the

contract with a customer;

particular, we expect to incur substantial and increased expenses as we:

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

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

receive regulatory approval;

the development of ContraPest and our other product candidates, including engaging in any necessary field studies;

additional regulatory approvals for ContraPest and our other product candidates;

up manufacturing processes and quantities 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 advance the research and development

programs for other product candidates;

expand 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;

our expenses to expand regulatory approvals for ContraPest, with an effort to make the product more user friendly and available

for use in an increased number of applications.

believe we may need additional financing to fund these continuing and additional expenses.

following table summarizes our sources and uses of cash for each of the years presented:

used in operating activities

used in investing activities

provided by financing activities

increase (decrease) in cash and cash equivalents

the year ended December 31, 2020, operating activities used $7.1 million of cash, primarily resulting from our net loss of $7.9

million, changes in our operating assets and liabilities of $0.1 million offset by non-cash charges of $0.9 million.

was primarily attributed to research and development activities and our selling, general and administrative expenses, as we generated

limited product sales and no research grant and licensing revenue during the year.

Net cash used by changes in our operating assets

and liabilities for the year ended December 31, 2020 consisted primarily of a $524,000 decrease in accrued expenses and accounts

payable offset by a decrease in prepaid expenses of $79,000, a decrease in inventories of $235,000 and a net increase in accounts

receivable and other assets of $127,000.

the year ended December 31, 2019, operating activities used $8.1 million of cash, primarily resulting from our net loss of $10.0

million, changes in our operating assets and liabilities of $0.5 million and non-cash charges of $1.4 million.

Our net loss was

primarily attributed to research and development activities and our selling, general and administrative expenses, as we generated

limited product sales and no research grant and licensing revenue during the year.

Net cash used by changes in our operating assets

and liabilities for the year ended December 31, 2019 consisted primarily of a $547,000 increase in accrued expenses and accounts

payable, a decrease in prepaid expenses and deposits of $85,000 and a decrease in inventories of $81,000 offset by a decrease

in deferred rent of $16,000 and a net increase in accounts receivable and deposits of $139,000.

the year ended December 31, 2020, we used $67,000 of cash in investing activities, which consisted of $114,000 for the purchases

of property and equipment, offset by $47,000 of cash received on the sales of property and equipment.

the year ended December 31, 2019, we used $71,000 of cash in investing activities, which consisted entirely of the purchases of

property and equipment.

the year ended December 31, 2020, net cash provided by financing activities was $8.9 million as a result of $5.7 million in net

proceeds from the issuance of common stock, $2.6 million in proceeds from warrant exercises and $646,000 from the issuance of

notes payable, partially offset by $135,000 of repayments related to notes payable and finance lease obligations.

the year ended December 31, 2019, net cash provided by financing activities was $5.1 million as a result of $3.6 million in net

proceeds from the issuance of common stock, $1.8 million in proceeds from warrant exercises, partially offset by $220,000 of repayments

related to notes payable and $55,000 of payments for employee withholding taxes related to share-based awards.

Accounting Policies and Significant Judgments and Estimates

financial statements are prepared in accordance with generally accepted accounting principles in the United States, or U.S.

The preparation of our financial statements and related disclosures requires us to make estimates and judgments that affect the

reported amounts of assets, liabilities, revenue, costs and expenses, and the disclosure of contingent assets and liabilities

in our financial statements.

We base our estimates on historical experience, known trends and events and various other factors

that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying

values of assets and liabilities that are not readily apparent from other sources.

We evaluate our estimates and assumptions on

an ongoing basis.

Our actual results may differ from these estimates under different assumptions or conditions.

our significant accounting policies are described in more detail in Note 1 —

Summary of Significant Accounting Policies

to our financial statements included elsewhere in this Annual Report on Form 10-K, we believe that the following accounting policies

are those most critical to the judgments and estimates used in the preparation of our financial statements.

January 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) 606 —

Revenue from Contracts

with Customers (“ASC 606”) .

Under ASC 606, the Company recognizes revenue from the commercial sales of

products, licensing agreements and contracts to perform pilot studies by applying the following steps:

(1) identify the contract

with a customer;

(2) identify the performance obligations in the contract;

(3) determine the transaction price;

allocate the transaction price to each performance obligation in the contract;

and (5) recognize revenue when each

performance obligation is satisfied.

For the comparative periods, revenue has not been adjusted and continues to be reported

under ASC 605 —

Revenue Recognition.

(4) allocate the

transaction price to each performance obligation in the contract;

and (5) recognize revenue when each performance obligation is

For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 —

Recognition (“ASC 605”) .

Under ASC 605, revenue is recognized when the following criteria are met:

persuasive evidence of an arrangement exists;

(2) the performance of service has been rendered to a customer or delivery

has occurred;

(2) the performance of service has been rendered to a customer or delivery has occurred;

(3) the amount of the fee to be paid by a customer is fixed and determinable;

and (4) the collectability of the

fee is reasonably assured.

The performance obligations identified by the Company under Accounting Standards Codification

(“ASC”) Topic 606, Revenue From Contracts With Customers, are straightforward and similar to the unit of account

and (4) the collectability of the fee is reasonably

The performance obligations identified by the Company under ASC 606 are straightforward and similar to the unit of account

and performance obligation determination under ASC Topic 605, Revenue Recognition .

There was no impact on the

Company’s financial statements as a result of adopting ASC 606 for the years ended December 31, 2019 and 2019,

respectively.

Stock-Based Compensation

We recognize compensation costs related to stock options granted

to employees based on the estimated fair value of the awards on the date of grant, net of estimated forfeitures, in accordance

with ASC Topic 718 —

Stock Compensation (“ASC 718”).

We estimate the grant date fair value of the awards,

and the resulting stock-based compensation expense, using the Black-Scholes option pricing model.

The grant date fair value of

stock-based awards is expensed on a straight-line basis over the vesting period of the respective award.

We account for stock-based

compensation arrangements with non-employees using a fair value approach.

The fair value of these stock options is measured using

the Black-Scholes option-pricing model reflecting the same assumptions as applied to employee options in each of the reported

periods, other than the expected life, which is assumed to be the remaining contractual life of the option.

The fair value of

the stock options granted to non-employees is re-measured as the stock options vest and is recognized in the statements of operations

and comprehensive loss during the period the related services are rendered.

We recorded stock-based compensation expense of approximately

$0.9 million and $3.4 million for the years ended December 31, 2019 and 2018 respectively.

We expect to continue to grant stock

options and other equity-based awards in the future, and to the extent that we do, our stock-based compensation expense recognized

in future periods will likely remain significant.

The Black-Scholes option pricing model requires the use of

highly subjective and complex assumptions, which determine the fair value of stock-based awards.

If we had made different assumptions,

our stock-based compensation expense, net loss and loss per share of common stock could have been significantly different.

assumptions are as follows:

● Expected term .

The expected term represents

the period that the stock-based awards are expected to be outstanding.

Our historical share option exercise experience does not

provide a reasonable basis upon which to estimate an expected term because of a lack of sufficient data.

Therefore, we estimate

the expected term by using the simplified method, which calculates the expected term as the average of the time-to-vesting and

the contractual life of the options.

● Expected volatility .

Expected volatility is

derived from the average historical volatilities of publicly traded companies within our industry that we consider to be comparable

to our business over a period approximately equal to the expected term.

We intend to continue to consistently apply this process

using the same or similar public companies until a sufficient amount of historical information regarding the volatility of our

own common stock price becomes available, or unless circumstances change such that the identified companies are no longer similar

to us, in which case, more suitable companies whose share prices are publicly available would be utilized in the calculation.

● Risk-free interest rate .

The risk-free interest

rate is based on the U.S.

Treasury yield in effect at the time of grant for zero coupon U.S.

Treasury notes with maturities approximately

equal to the expected term.

● Expected dividend .

The expected dividend is

assumed to be zero as we have never paid dividends and have no current plans to pay any dividends on our common stock.

● Expected forfeitures .

We use historical data

to estimate pre-vesting option forfeitures and record stock-based compensation expense only for those awards that are expected

To the extent actual forfeitures differ from the estimates, the difference will be recorded as a cumulative adjustment

in the period that the estimates are revised.

Significant Factors, Assumptions and Methodologies Used in

Determining Fair Value of Our Common Stock

As noted above, we are required to estimate the

fair value of the common stock underlying our stock-based awards when performing the fair value calculations using the Black-Scholes

Company recognizes revenue when product is shipped at a fixed selling price on payment terms of 30 to 120 days from invoicing.

The Company recognizes other revenue earned from pilot studies, consulting and implementation services upon the performance of

specific services under the respective service contract.

Company derives revenue primarily from commercial sales of products, net of discounts and promotions, as well as consulting and

implementation services provided in conjunction with our product deployments.

recognize compensation costs related to stock options granted to employees based on the estimated fair value of the awards on

the date of grant, net of estimated forfeitures, in accordance with ASC Topic 718 —

Stock Compensation .

We estimate the grant date fair value of the awards, and the resulting stock-based compensation expense, using the Black-Scholes

option-pricing model.

The assumptions underlying these valuations represent management’s

best estimates, which involve inherent uncertainties and the application of management’s judgment.

If we had made different

assumptions than those used, the amount of our stock-based compensation expense, net income and net income per share amounts could

have been significantly different.

The fair value per share of our common stock for purposes of determining stock-based compensation

expense is the closing price of our common stock as reported on the applicable grant date.

The compensation cost that has been

included in the statements of operations and comprehensive loss for all stock-based compensation arrangements is as follows:

(in thousands)

Selling, general and administrative expenses

Research and development expense

Total stock-based compensation expense

The intrinsic value of stock options outstanding as of December

31, 2019 is $0.

Emerging Growth Company Status

The Jumpstart Our Business Startups Act of 2012, or the JOBS

Act, permits an “emerging growth company”

such as us to take advantage of an extended transition period to comply

with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private

The grant date fair value of stock-based awards is expensed on a straight-line basis over the vesting period

of the respective award.

recorded stock-based compensation expense of approximately $645,000 and $873,000 for the years ended December 31, 2020 and 2019,

respectively.

We expect to continue to grant stock options and other equity-based awards, such as restricted stock units, in the

future and to continue to recognize stock-based compensation expense in future periods.

Black-Scholes option-pricing model requires the use of highly subjective and complex assumptions, which determine the fair value

of stock-based awards.

If we had made different assumptions, our stock-based compensation expense, net loss and loss per share

of common stock could have been significantly different.

Our assumptions are as follows:

The expected term represents the period that the stock-based awards are expected to be outstanding.

Our historical

share option exercise experience does not provide a reasonable basis upon which to estimate an expected term because of a

lack of sufficient data.

Therefore, we estimate the expected term by using the simplified method, which calculates the expected

term as the average of the time-to-vesting and the contractual life of the options.

Expected volatility is derived from the average historical volatilities of publicly traded companies within

our industry that we consider to be comparable to our business over a period approximately equal to the expected term.

intend to continue to consistently apply this process using the same or similar public companies unless circumstances change

such that the identified companies are no longer similar to us, in which case, more suitable companies whose share prices

are publicly available would be utilized in the calculation.

interest rate .

The risk-free interest rate is based on the U.S.

Treasury yield in effect at the time of grant for zero

Treasury notes with maturities approximately equal to the expected term.

The expected dividend is assumed to be zero as we have never paid dividends and have no current plans to pay

any dividends on our common stock.

forfeitures .

We use historical data to estimate pre-vesting option forfeitures and record stock-based compensation

expense only for those awards that are expected to vest.

To the extent actual forfeitures differ from the estimates, the difference

will be recorded as a cumulative adjustment in the period that the estimates are revised.

Factors, Assumptions and Methodologies Used in Determining Fair Value of Our Common Stock

noted above, we are required to estimate the fair value of the common stock underlying our stock-based awards when performing

the fair value calculations using the Black-Scholes option-pricing model.

In the absence of an active market for our common stock,

we utilized methodologies in accordance with the framework of the American Institute of Certified Public Accountants’

Practice Aid, Valuation of Privately-Held Company Equity Securities Issued as Compensation , to estimate the fair value

of our common stock.

In addition, we have conducted periodic assessments of the valuation of our common stock.

assumptions underlying these valuations represent management’s best estimates, which involve inherent uncertainties and

the application of management’s judgment.

The fair value per share of our common stock for purposes of determining stock-based

compensation expense is the closing price of our common stock as reported on the applicable grant date.

The compensation cost

that has been included in the statements of operations and comprehensive loss for all stock-based compensation arrangements is

general and administrative expenses

and development expense

stock-based compensation expense

intrinsic value of stock options outstanding as of December 31, 2020 is $0.

Growth Company Status

Jumpstart Our Business Startups Act of 2012, or the JOBS Act, permits an “emerging growth company”

such as us to take

advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until

those standards would otherwise apply to private companies.

We have irrevocably elected to “opt out”

of this provision and, as a result, we intend to comply with new

or revised accounting standards when they are required to be adopted by public companies that are not emerging growth companies.

Off-Balance Sheet Arrangements

Quantitative and Qualitative Disclosures about

Not applicable.

of this provision

and, as a result, we intend to comply with new or revised accounting standards when they are required to be adopted by public

companies that are not emerging growth companies.

Sheet Arrangements

and Qualitative Disclosures about Market Risk.

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 5. Market for Registrant’s Common Equity