What changed in this filing

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Item 1. Financial Statements

2022-11-14 compared with 2022-08-12 · 580 added, 492 removed, 559 unchanged (66% of the section changed)

Financial Statements

BALANCE SHEETS

thousands, except shares and per share data)

SENESTECH, INC.

CONDENSED BALANCE SHEETS

(In thousands, except shares and per share

September 30,

Current assets:

9 unchanged sentences

Accrued expenses

Preferred stock, $ 0.001 par value, 20,000 shares authorized, 12,213 and 0 shares issued and Outstanding at September 30, 2022 and December 31, 2021, respectively

Deferred Revenue

4 unchanged sentences

Stockholders’ equity:

Common stock, $ 0.001 par value, 100,000,000 shares authorized, 12,212,950 and 12,207,283 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

Common stock, $ 0.001 par value, 100,000,000 shares authorized, 12,212,950 and 12,207,283 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

Additional paid-in capital

2 unchanged sentences

Total liabilities and stockholders’ equity

accompanying notes to financial statements.

STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)

thousands, except shares and per share data)

For The Three Months Ended

June 30, 2021 and 2022

See accompanying notes to financial statements

SENESTECH, INC.

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE

INCOME/(LOSS)

(In thousands, except shares and per share

For the Three Months

For the Six Months

Ended June 30,

For the Nine Months

Ended September 30,

Cost of sales

8 unchanged sentences

Payroll Protection Program loan forgiveness

Other income (expense)

Total other income

2 unchanged sentences

Net loss per common share - basic and fully diluted

accompanying notes to financial statements.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

thousands, except shares and per share data)

For The Three Months Ended June 30, 2021 and 2022

See accompanying notes to financial statements.

SENESTECH, INC.

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’

EQUITY (DEFICIT)

(In thousands, except shares and per share

For The Three Months Ended September 30, 2021 and 2022

Stockholders’

Balance, March 31, 2021

Balance, June 30, 2021

$ ( 107,761 )

1 unchanged sentence

Issuance of common stock upon exercise of warrants, net

Issuance of common stock for service

Payments for employee withholding taxes related to share based awards

Net loss for the three months ended June 30, 2021

Balance, June 30, 2021

Net loss for the three months ended September 30, 2021

Balance, September 30, 2021

$ ( 110,014 )

Balance, March 31, 2022

Balance, June 30, 2022

$ ( 117,409 )

Stock-based compensation

Issuance of common stock for service

Net loss for the three months ended June 30, 2022

Balance, June 30, 2022

Net loss for the three months ended September 30, 2022

Balance, September 30, 2022

$ ( 120,055 )

For The Six Months Ended June 30, 2021 and 2022

Balance, December 31, 2020

5 unchanged sentences

Payments for employee withholding taxes related to share based awards

Net loss for the six months ended June 30, 2021

Balance, June 30, 2021

Net loss for the nine months ended September 30, 2021

Balance, September 30, 2021

$ ( 110,014 )

3 unchanged sentences

Issuance of common stock for service

Net loss for the six months ended June 30, 2022

Balance, June 30, 2022

Net loss for the nine months ended September 30, 2022

Balance, September 30, 2022

$ ( 120,055 )

accompanying notes to financial statements.

STATEMENTS OF CASH FLOWS

For the Six Months

Ended June 30,

See accompanying notes to financial statements.

SENESTECH, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)

For the Nine Months

Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES

32 unchanged sentences

Income taxes paid

accompanying notes to financial statements.

See accompanying notes to financial statements.

SENESTECH, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

1 - Organization and Description of Business

(referred to in this report as “SenesTech,” the “Company,” “we,” “us”, or “our”)

was formed in July 2004 and incorporated in the state of Nevada.

Note 1 - Organization and Description of Business

SenesTech, Inc.

(referred to in this report as

“SenesTech,” the “Company,” “we,” “us”, or “our”) was formed in July 2004

and incorporated in the state of Nevada.

We subsequently reincorporated in the state of Delaware in November 2015.

Our corporate headquarters is in Phoenix, Arizona.

We have developed and are 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.

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

Our corporate headquarters

is in Phoenix, Arizona.

We have developed and are commercializing a proprietary technology for managing animal pest populations, initially

rat populations, through fertility control.

We have developed and are commercializing a

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.

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 affecting the reproductive systems

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

have plagued humanity throughout history.

Rats have plagued humanity throughout history.

They pose significant threats to the health and food security of many communities.

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

most prevalent solution to rat infestations is the use of increasingly powerful rodenticides.

Although these solutions provide short

term results, there are growing concerns about secondary 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 highly effective

solution to combat their 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.

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.

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

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.

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.

The most prevalent solution to rat infestations

is the use of increasingly powerful rodenticides.

Although these solutions provide short term results, there are growing concerns about

secondary 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 by their customers and their communities

for new solutions that are both effective and less toxic.

Our goal is to provide customers with not only a highly effective 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, a botanically derived compound.

ContraPest limits reproduction

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

ContraPest is currently being marketed for use

in controlling Norway and roof rat populations.

We 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.

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

June 2022, we received EPA registration and approval our new Elevate Bait System with ContraPest.

This innovative bait system provides

a unique and effective delivery system designed to target roof rats in elevated spaces.

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,

48 of which have approved the removal of the RUP 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 the states at the initial registration and is resubmitted during state scheduled reregistration or for any significant labeling

change requiring EPA approval.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

1 - Organization and Description of Business – (continued)

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 additional testing and certifications even

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

We continue to seek to comply with these requirements.

also continue to research and develop enhancements to ContraPest that align with our target verticals and other potential fertility control

options for additional species and alternate delivery systems.

financial statements as of June 30, 2022, December 31, 2021 and June 30, 2021 were prepared under the assumption that we would continue

as a going concern, the report of our independent registered public accounting firm that accompanies our financial statements for the

years ended December 31, 2021 and December 31, 2020 contains a going concern qualification in which such firm expressed substantial doubt

about our ability to continue as a going concern, based on the financial statements at that time.

Specifically, as noted above, we have

incurred operating losses since our inception, and we expect to continue to incur significant expenses and operating losses for the foreseeable

These prior losses and expected future losses have had, and will continue to have, an adverse effect on our financial condition.

If we encounter continued issues or delays in the commercialization of ContraPest, our prior losses and expected future losses could

have an adverse effect on our financial condition and negatively impact our ability to fund continued operations, obtain additional financing

in the future and continue as a going concern.

There are no assurances that such financing, if necessary, will be available to us at

all or will be available in sufficient amounts or on reasonable terms.

Our financial statements do not include any adjustments that may

result from the outcome of this uncertainty.

If we are unable to generate additional funds in the future through additional financings,

sales of our products, licensing fees, royalty payments or from other sources or transactions, we will exhaust our resources and will

be unable to continue operations.

and Capital Resources

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 near future.

We have generated limited revenue to date from product sales, research grants

and licensing fees received under our former license agreement.

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 Note 10 for a description

of our public equity sales.

have also raised capital through debt financing, consisting primarily of convertible notes and government loan programs, and, to a lesser

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

June 30, 2022, we received net proceeds of $ 89.6 million from our sales of common stock, preferred stock and warrant exercises and issuance

of convertible and other promissory notes, an aggregate of $ 1.7 million from licensing fees and an aggregate of $ 2.0 million in net product

As of June 30, 2022, we had an accumulated deficit of $ 117.4 million and cash and cash equivalents of $ 5.0 million.

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

(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;

We believe ContraPest is the first and only

fertility control product designed to be non-lethal, registered with the EPA, for the management of rat populations.

In 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, 49 of which have approved the removal of

the RUP designation.

In the first quarter of 2022, we received approval

for and began marketing an additional dispenser format for ContraPest, the Elevate® Bait System with ContraPest.

This system provides

an additional delivery method particularly appropriate for roof rat populations.

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.

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.

We also continue to research and develop enhancements

to ContraPest that align with our target verticals and other potential fertility control options for additional species, such as mice.

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.

We recently filed and received approval

patent application covering our liquid delivery system, which is used in our EVO bait station.

The patent will expire in 2038.

We also 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 2025.

Recent Developments

Nasdaq Listing Extension

As previously disclosed, on March 2, 2022, we

received a letter from the listing qualifications staff (the “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

our common stock no longer met the minimum bid price requirement for continued listing under Nasdaq Listing Rule 5550(a)(2) (the “Rule”).

We were provided a period of 180 calendar days, or until August 29, 2022, in which to regain compliance with the Rule.

On August 31, 2022, we received notice from Nasdaq

indicating that, while we have not regained compliance with the Rule, the Staff has determined that we are eligible for an additional

180 calendar day period, or until February 27, 2023, to regain compliance.

The Staff’s determination was based on (i) our meeting

the continued listing requirement for market value of publicly held shares and all other applicable requirements for initial listing

on the Nasdaq Capital Market, with the exception of the bid price requirement, and (ii) our providing written notice to Nasdaq of our

intent to cure the deficiency during this second compliance period by effecting a reverse stock split, if necessary.

If at any time during

this second 180-day period the closing bid price of our common stock is at least $ 1.00 per share for a minimum of 10 consecutive business

days, the Staff will provide written confirmation of compliance.

If compliance cannot be demonstrated by February 27, 2023, the Staff

will provide written notification to us that our common stock will be delisted.

At that time, we may appeal the Staff’s determination

to a Nasdaq hearings panel.

There can be no assurance that we will regain compliance with the Rule or maintain compliance with other

Nasdaq continued listing requirements.

Going Concern

Our financial statements as of September 30,

2022, December 31, 2021 and September 30, 2021 were prepared under the assumption that we would continue as a going concern, the report

of our independent registered public accounting firm that accompanies our financial statements for the years ended December 31, 2021

and December 31, 2020 contains a going concern qualification in which such firm expressed substantial doubt about our ability to continue

as a going concern, based on the financial statements at that time.

Specifically, as noted above, we have incurred operating losses since

our inception, and we expect to continue to incur significant expenses and operating losses for the foreseeable future.

These prior losses

and expected future losses have had, and will continue to have, an adverse effect on our financial condition.

If we encounter continued

issues or delays in the commercialization of ContraPest, our expected future losses could have an adverse effect on our financial condition

and negatively impact our ability to fund continued operations, obtain additional financing in the future and continue as a going concern.

There are no assurances that such financing, if necessary, will be available to us at all or will be available in sufficient amounts

or on reasonable terms.

Our financial statements do not include any adjustments that may result from the outcome of this uncertainty.

If we are unable to generate additional funds in the future through additional financings, sales of our products, licensing fees, royalty

payments or from other sources or transactions, we will exhaust our resources and will be unable to continue operations.

Liquidity and Capital Resources

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 near future.

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

former license agreement.

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 Note 10 for a description of our public equity sales.

We have also raised capital through debt financing,

consisting primarily of convertible notes and government loan programs, and, to a lesser extent, payments received in connection with

product sales, research grants and licensing fees.

Through September 30, 2022, we received net proceeds

of $ 89.6 million from our sales of common stock, preferred stock and warrant exercises and issuance of convertible and other promissory

notes, an aggregate of $ 2.0 million from licensing fees and an aggregate of $ 2.3 million in net product sales.

As of September 30, 2022,

we had an accumulated deficit of $ 120.1 million and cash and cash equivalents of $ 2.8 million.

Our ultimate success depends upon the outcome

of a combination of factors, including the following:

(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

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

(iv) the success of our research and development;

(v) the ability to retain

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

(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.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

1 - Organization and Description of Business – (continued)

upon our current operating plan, we expect that cash and cash equivalents at June 30, 2022, in combination with anticipated revenue and

any additional sales of our equity securities, will be sufficient to fund our current operations for at least the next six to nine months.

We have evaluated and will continue to evaluate our operating expenses and will 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, including within the next

six to nine months, 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

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.

of Presentation

accompanying unaudited condensed financial statements have been prepared pursuant to the rules and regulations of the Securities and

Exchange Commission (“SEC”) for interim financial reporting.

Certain information and footnote disclosures normally included

in the annual financial statements prepared in accordance with the U.S.

Based upon our current operating plan, we expect

that cash and cash equivalents at September 30, 2022, in combination with anticipated revenue and any additional sales of our equity

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

We have evaluated and will continue

to evaluate our operating expenses and will concentrate our resources toward the successful commercialization of ContraPest in the United

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, including within the next three to six months, 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.

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.

Basis of Presentation

Our accompanying unaudited condensed financial

statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for

interim financial reporting.

Certain information and footnote disclosures normally included in the annual financial statements prepared

in accordance with the U.S.

generally accepted accounting principles (“U.S.

have been condensed or omitted pursuant to such rules and regulations.

In our opinion, the unaudited condensed financial statements include

all material adjustments, all of which are of a normal and recurring nature, necessary to present fairly our financial position as of

June 30, 2022, our operating results for the three months and six months ended June 30, 2022 and 2021, and our cash flows for the six

months ended June 30, 2022 and 2021.

The accompanying financial information as of December 31, 2021 is derived from audited financial

Interim results are not necessarily indicative of results for a full year.

The information included in this Quarterly Report

on Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC

on March 29, 2022.

All amounts shown in these financial statements and accompanying notes are in thousands, except percentages and per

share and share amounts.

2 - Summary of Significant Accounting Policies

preparation of financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the

reported amounts and classification of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial

statements and reported amounts of revenues and expenses during the reporting period.

The significant estimates in our financial statements

include the valuation of preferred stock, if issued, common stock and related warrants, and other stock-based awards.

Actual results

could differ from such estimates.

GAAP”) have been condensed or omitted pursuant

to such rules and regulations.

In our opinion, the unaudited condensed financial statements include all material adjustments, all of

which are of a normal and recurring nature, necessary to present fairly our financial position as of September 30, 2022, our operating

results for the three months and nine months ended September 30, 2022 and 2021, and our cash flows for the nine months ended September

30, 2022 and 2021.

The accompanying financial information as of December 31, 2021 is derived from audited financial statements.

results are not necessarily indicative of results for a full year.

The information included in this Quarterly Report on Form 10-Q should

be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 29, 2022.

All amounts shown in these financial statements and accompanying notes are in thousands, except percentages and per share and share amounts.

Note 2 - Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity

GAAP requires management to make estimates and assumptions that affect the reported amounts and classification of assets and

liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues

and expenses during the reporting period.

The significant estimates in our financial statements include the valuation of preferred stock,

if issued, common stock and related warrants, and other stock-based awards.

Actual results could differ from such estimates.

Reclassifications

prior year amounts have been reclassified to conform to the current period presentation.

These reclassifications had no material impact

on net earnings, financial position or cash flows.

and Cash Equivalents

consider money market fund investments to be cash equivalents.

We had cash equivalents in the form of money market fund investment of

$ 4,095 and $ 8,793 at June 30, 2022 and December 31, 2021, respectively, included in cash as reported.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

2 - Summary of Significant Accounting Policies – (continued)

Receivable-Trade

receivable-trade consist primarily of receivables from customers.

We provide an allowance for doubtful trade receivables equal to the

estimated uncollectible amounts.

That estimate is based on historical collection experience, current economic and market conditions and

a review of the current status of each customer’s trade accounts receivable.

We had allowance for doubtful trade receivables at

June 30, 2022 of $ 12 .

We did not have any allowance for doubtful trade receivables at December 31, 2021.

are stated at the lower of cost or market value, using the first-in, first-out convention.

Inventories consist of raw materials, work

in progress and finished goods.

Raw materials are stocked to reduce the risk of impact on manufacturing for potential supply interruptions

due to the COVID-19 pandemic, supply chain issues or long lead times on certain ingredients.

Certain prior year amounts have been reclassified

to conform to the current period presentation.

These reclassifications had no material impact on net earnings, financial position or

Cash and Cash Equivalents

We consider money market fund investments to

be cash equivalents.

We had cash equivalents in the form of money market fund investment of $ 2.1 and $ 8.8 at September 30, 2022 and December

31, 2021, respectively, included in cash as reported.

Accounts Receivable-Trade

Accounts receivable-trade consist primarily of

receivables from customers.

We provide an allowance for doubtful trade receivables equal to the estimated uncollectible amounts.

estimate is based on historical collection experience, current economic and market conditions and a review of the current status of each

customer’s trade accounts receivable.

We had allowance for doubtful trade receivables at September 30, 2022 of $ 5 .

We did not have

any allowance for doubtful trade receivables at December 31, 2021.

Inventories are stated at the lower of

cost or market value, using the first-in, first-out convention.

Inventories consist of raw materials, work in progress and finished goods.

Raw materials are stocked to reduce the risk of impact on manufacturing for potential supply interruptions due to the COVID-19 pandemic,

supply chain issues or long lead times on certain ingredients.

of inventory were:

September 30,

Raw materials

4 unchanged sentences

Total Net Inventory

expenses consist primarily of payments made for director and officer insurance, director compensation, rent, legal and inventory purchase

deposits and seminar/trade show fees to be expensed in the current year.

and Equipment

and equipment are stated at cost less accumulated depreciation.

Equipment held under finance leases are stated at the present value of

minimum lease payments less accumulated amortization.

on property and equipment is computed using the straight-line method over the estimated useful lives of the respective assets.

of leasehold improvements is amortized over the life of the improvement or the term of the lease, whichever is shorter.

Equipment held

under finance leases is amortized over the shorter of the lease term or estimated useful life of the asset.

We incur repair and maintenance

costs on our major equipment, which are expensed as incurred.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

2 - Summary of Significant Accounting Policies – (continued)

of Long-Lived Assets

assets, such as property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying

amount of an asset may not be recoverable.

If circumstances require long- lived assets or asset groups to be tested for possible impairment,

we compare the undiscounted cash flows expected to be generated from the use of the asset or asset group to its carrying amount.

carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment charge is

recognized to the extent that the carrying amount exceeds its fair value.

Fair value is determined through various valuation techniques,

such as discounted cash flow models and the use of third-party independent appraisals.

We have not recorded an impairment of long-lived

assets since inception.

January 1, 2018, we adopted Accounting Standards Codification (“ASC”) 606 — Revenue from Contracts with Customers

(“ASC 606”) .

Under ASC 606, we recognize revenue from the commercial sales of products, licensing agreements and

contracts to perform pilot studies by applying the following steps:

Prepaid Expenses

Prepaid expenses consist primarily of payments

made for director and officer insurance, director compensation, rent, legal and inventory purchase deposits and seminar/trade show fees

to be expensed in the current year.

Property and Equipment

Property and equipment are stated at

cost less accumulated depreciation.

Equipment held under finance leases are stated at the present value of minimum lease payments less

accumulated amortization.

Depreciation on property and equipment is computed

using the straight-line method over the estimated useful lives of the respective assets.

The cost of leasehold improvements is amortized

over the life of the improvement or the term of the lease, whichever is shorter.

Equipment held under finance leases is amortized over

the shorter of the lease term or estimated useful life of the asset.

We incur repair and maintenance costs on our major equipment, which

are expensed as incurred.

Impairment of Long-Lived Assets

Long-lived assets, such as property and equipment,

are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

If circumstances require long-lived assets or asset groups to be tested for possible impairment, we compare the undiscounted cash flows

expected to be generated from the use of the asset or asset group to its carrying amount.

If the carrying amount of the long-lived asset

or asset group is not recoverable on an undiscounted cash flow basis, an impairment charge is recognized to the extent that the carrying

amount exceeds its fair value.

Fair value is determined through various valuation techniques, such as discounted cash flow models and

the use of third-party independent appraisals.

We have not recorded an impairment of long-lived assets since inception.

Revenue Recognition

Effective January 1, 2018, we adopted Accounting

Standards Codification (“ASC”) 606 — Revenue from Contracts with Customers (“ASC 606”) .

ASC 606, we recognize 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;

(4) allocate the transaction price to each performance obligation in

the contract;

and (5) recognize revenue when each performance obligation is satisfied.

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

We recognize other

revenue earned from pilot studies, consulting and implementation services upon the performance of specific services under the respective

service contract.

derive 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.

Deferred revenue represents payments that have

been received in advance of fulfillment of these orders.

(2) identify the performance obligations in the contract;

(3) determine

the transaction price;

(4) allocate the transaction price to each performance obligation in the contract;

and (5) recognize revenue when

each performance obligation is satisfied.

We recognize revenue when product is

shipped at a fixed selling price on payment terms of 30 to 120 days from invoicing.

We recognize other revenue earned from pilot studies,

consulting and implementation services upon the performance of specific services under the respective service contract.

We derive 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

Deferred revenue represents payments

that have been received in advance of fulfillment of these orders.

These product orders are anticipated to be fulfilled in future periods.

and Development

and development costs are expensed as incurred.

Research and development expenses primarily consist of salaries and benefits for research

and development employees, stock-based compensation, consulting fees, lab supplies, costs incurred related to conducting scientific trials

and field studies, regulatory compliance costs, as well as manufacturing costs associated with process improvement and other research.

Research and development expenses include an allocation of facilities related costs, including depreciation of equipment.

awards, consisting of stock options and restricted stock units expected to be settled in shares of our common stock, are recorded as

equity awards.

The grant date fair value of these awards is measured using the Black-Scholes option pricing model for stock options and

grant date market value for restricted stock units.

We expense the grant date fair value of stock options on a straight-line basis over

their respective vesting periods.

stock-based compensation expense recorded for the three and six months ended June 30, 2022 and 2021, was as follows:

Research and Development

Research and development costs are expensed as

Research and development expenses primarily consist of salaries and benefits for research and development employees, stock-based

compensation, consulting fees, lab supplies, costs incurred related to conducting scientific trials and field studies, regulatory compliance

costs, as well as manufacturing costs associated with process improvement and other research.

Research and development expenses include

an allocation of facilities related costs, including depreciation of equipment.

Stock-Based Compensation

Stock-based awards, consisting of stock options

and restricted stock units expected to be settled in shares of our common stock, are recorded as equity awards.

The grant date fair value

of these awards is measured using the Black-Scholes option pricing model for stock options and grant date market value for restricted

We expense the grant date fair value of stock options on a straight-line basis over their respective vesting periods.

The stock-based compensation expense recorded for the three and nine

months ended September 30, 2022 and 2021, was as follows:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Research and development

1 unchanged sentence

Total stock-based compensation expense

Note 11 for additional discussion on stock-based compensation.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

2 - Summary of Significant Accounting Policies – (continued)

account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities

for the expected future tax consequences of events that have been included in the financial statements.

Under this method, deferred tax

assets and liabilities are determined based on the differences between the financial statements and tax bases of assets and liabilities

and net operating loss carryforwards using enacted tax rates in effect for the year in which the differences are expected to reverse.

The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the period that includes the enactment date.

record net deferred tax assets to the extent we believe these assets will more likely than not be realized.

These deferred tax assets

are subject to periodic assessments as to recoverability and if it is determined that it is more likely than not that the benefits will

not be realized, valuation allowances are recorded which would increase the provision for income taxes.

In making such determination,

we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected

future taxable income, tax planning strategies and recent financial operations.

apply a more-likely-than-not recognition threshold for all tax uncertainties.

Only those benefits that have a greater than fifty percent

likelihood of being sustained upon examination by the taxing authorities are recognized.

Based on our evaluation, we have concluded there

are no significant uncertain tax positions requiring recognition in our financial statements.

recognize interest and/or penalties related to uncertain tax positions in income tax expense.

There are no uncertain tax positions as

of June 30, 2022 or December 31, 2021 and, as such, no interest or penalties were recorded in income tax expense.

Comprehensive

loss and comprehensive loss were the same for all periods presented;

therefore, a separate statement of comprehensive loss is not included

in the accompanying financial statements.

Per Share Attributable to Common Stockholders

loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the

weighted average number of common shares outstanding during the period.

Diluted loss per share attributable to common stockholders is

computed by dividing the loss attributable to common stockholders by the weighted average number of common shares and potentially dilutive

securities outstanding for the period determined using the treasury stock and if-converted methods.

For purposes of the computation of

diluted loss per share attributable to common stockholders, common stock purchase warrants, and common stock options are considered to

be potentially dilutive securities but have been excluded from the calculation of diluted loss per share attributable to common stockholders

because their effect would be anti-dilutive given the net loss reported for the three and six months ended June 30, 2022 and 2021.

basic and diluted loss per share attributable to common stockholders are the same for each period presented.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

2 - Summary of Significant Accounting Policies – (continued)

following table sets forth the outstanding potentially dilutive securities that have been excluded in the calculation of diluted loss

per share attributable to common stockholders (in common stock equivalent shares):

See Note 11 for additional discussion on stock-based compensation.

We account for income taxes under the asset and

liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events

that have been included in the financial statements.

Under this method, deferred tax assets and liabilities are determined based on the

differences between the financial statements and tax bases of assets and liabilities and net operating loss carryforwards using enacted

tax rates in effect for the year in which the differences are expected to reverse.

The effect of a change in tax rates on deferred tax

assets and liabilities is recognized in the period that includes the enactment date.

We record net deferred tax assets to the extent

we believe these assets will more likely than not be realized.

These deferred tax assets are subject to periodic assessments as to recoverability

and if it is determined that it is more likely than not that the benefits will not be realized, valuation allowances are recorded which

would increase the provision for income taxes.

In making such determination, we consider all available positive and negative evidence,

including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent

financial operations.

We apply a more-likely-than-not recognition threshold

for all tax uncertainties.

Only those benefits that have a greater than fifty percent likelihood of being sustained upon examination

by the taxing authorities are recognized.

Based on our evaluation, we have concluded there are no significant uncertain tax positions

requiring recognition in our financial statements.

We recognize interest and/or penalties related

to uncertain tax positions in income tax expense.

There are no uncertain tax positions as of September 30, 2022 or December 31, 2021

and, as such, no interest or penalties were recorded in income tax expense.

Comprehensive Loss

Net loss and comprehensive loss were the same

for all periods presented;

therefore, a separate statement of comprehensive loss is not included in the accompanying financial statements.

Loss Per Share Attributable to Common Stockholders

Basic loss per share attributable to common stockholders

is calculated by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding

during the period.

Diluted loss per share attributable to common stockholders is computed by dividing the loss attributable to common

stockholders by the weighted average number of common shares and potentially dilutive securities outstanding for the period determined

using the treasury stock and if-converted methods.

For purposes of the computation of diluted loss per share attributable to common stockholders,

common stock purchase warrants, and common stock options are considered to be potentially dilutive securities but have been excluded

from the calculation of diluted loss per share attributable to common stockholders because their effect would be anti-dilutive given

the net loss reported for the three and nine months ended September 30, 2022 and 2021.

Therefore, basic and diluted loss per share attributable

to common stockholders are the same for each period presented.

The following table sets forth the outstanding potentially dilutive

securities that have been excluded in the calculation of diluted loss per share attributable to common stockholders (in common stock

equivalent shares):

Nine Months Ended

September 30,

Common stock purchase warrants

Restricted stock units

Restrictive stock units

Common stock options

Standards Issued but Not Yet Adopted

have been no new accounting pronouncements not yet effective or adopted in the current year that we believe have a significant impact,

or potential significant impact, to our condensed consolidated financial statements.

3 - Fair Value Measurements

carrying amounts of our financial instruments, including accounts payable and accrued liabilities, approximate fair value due to their

short maturities.

The estimated fair value of our notes, not recorded at fair value, are recorded at cost or amortized cost which was

deemed to estimate fair value.

4 - Credit Risk

are potentially subject to concentrations of credit risk in our accounts receivable.

Credit risk with respect to receivables is limited

due to the number of companies comprising our customer base.

At June 30, 2022, we had $ 12 in potentially uncollectable accounts and recorded

a reserve for uncollectable accounts in that amount.

We did not have any potentially uncollectable accounts at December 31, 2021 and

therefore, did not record a reserve for uncollectable accounts at December 31, 2021.

We do not require collateral or other securities

to support its accounts receivable.

5 - Prepaid Expenses

expenses consisted of the following:

Accounting Standards Issued but Not Yet Adopted

There have been no new accounting pronouncements

not yet effective or adopted in the current year that we believe have a significant impact, or potential significant impact, to our condensed

consolidated financial statements.

Note 3 - Fair Value Measurements

The carrying amounts of our financial instruments, including accounts

payable and accrued liabilities, approximate fair value due to their short maturities.

The estimated fair value of our notes, not recorded at fair value,

are recorded at cost or amortized cost which was deemed to estimate fair value.

Note 4 - Credit Risk

We are potentially subject to concentrations

of credit risk in our accounts receivable.

Credit risk with respect to receivables is limited due to the number of companies comprising

our customer base.

At September 30, 2022, we had $ 5 in potentially uncollectable accounts and recorded a net reserve for uncollectable

accounts in that amount.

We did not have any potentially uncollectable accounts at December 31, 2021 and therefore, did not record a

reserve for uncollectable accounts at December 31, 2021.

We do not require collateral or other securities to support its accounts receivable.

Note 5 - Prepaid Expenses

Prepaid expenses consisted of the following:

September 30,

Director, officer and other insurance

4 unchanged sentences

Total prepaid expenses

NOTES TO CONDENSED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

6 - Property and Equipment

and equipment, net consisted of the following:

Note 6 - Property and Equipment

Property and equipment, net consisted of the following:

September 30,

Research and development equipment

5 unchanged sentences

* Shorter of lease term or estimated useful life

(1) In the three months ended and six months ended June 30, 2022, we received net proceeds of less than $ 2 in the sale of manufacturing, research and development equipment, resulting in gains on the sale of these assets of less than $ 2 .

In the three months ended and six months ended June 30, 2021, we received net proceeds of less than $ 1 in the sale of manufacturing, research and development equipment, resulting in gains on the sale of these assets of less than $ 1 .

and amortization expense was approximately $ 47 and $ 78 for the three months ended June 30, 2022 and 2021, respectively, and $ 113 and

$ 151 for the six months ended June 30, 2022 and 2021, respectively.

Depreciation and amortization expense was approximately

$ 35 and $ 78 for the three months ended September 30, 2022 and 2021, respectively, and $ 148 and $ 229 for the nine months ended September

30, 2022 and 2021, respectively.

Note 7 - Accrued Expenses

Accrued expenses

expenses consisted of the following:

consisted of the following:

September 30,

Compensation and related benefits

Legal services

Digital media

Product warranty

1 unchanged sentence

Total accrued expenses

8 - Borrowings

summary of our borrowings, including finance lease obligations, was as follows:

Note 8 – Borrowings

A summary of our borrowings, including finance lease obligations, was as follows:

September 30,

Short-term debt:

1 unchanged sentence

Other promissory notes

Lease Obligations

All finance lease and promissory note obligations, for manufacturing

equipment leased through ENGS Commercial Finance Co., were settled in full during the three months ended June 30, 2022.

June 18, 2021, we received notification from BMO Harris Bank National Association as the lender in a promissory note pursuant to the

Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”),

that a loan to us under this program in the amount of $ 646 was forgiven in full under the terms of the program.

The forgiveness of this

note and related interest was recorded as other income on the Condensed Statements of Operations and Comprehensive Loss for the quarter

ended June 30, 2021.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

9 - Common Stock Warrants and Common Stock Warrant Liability

table summarizes the common stock warrant activity as of June 30, 2022 by warrant type:

Finance Lease Obligations

All finance lease and promissory note obligations,

for manufacturing equipment leased through, were settled in full during the three months ended June 30, 2022.

On June 18, 2021, we received notification from

BMO Harris Bank National Association as the lender in a promissory note pursuant to the Paycheck Protection Program (the “PPP”)

under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), that a loan to us under this program in the

amount of $ 646 was forgiven in full under the terms of the program.

The forgiveness of this note and related interest was recorded as

other income on the Condensed Statements of Operations and Comprehensive Loss for the quarter ended June 30, 2021.

Note 9 - Common Stock Warrants and Common Stock Warrant Liability

The table summarizes the common stock warrant activity as of September

30, 2022 by warrant type:

September 30,

November 21, 2017

1 unchanged sentence

November 21, 2022

September 20, 2018

Warrant Reissue

December 20, 2023

August 13, 2018

Rights Offering Warrants

July 25, 2023

August 13, 2018

Dealer Manager Warrants

August 13, 2023

July 16, 2019

Dealer Manager Warrants

July 11, 2024

January 28, 2020

Registered Direct Offering

July 28, 2025

January 28, 2020

Dealer Manager Warrants

July 28, 2025

March 6, 2020

Dealer Manager Warrants

March 4, 2025

April 21, 2020

Dealer Manager Warrants

April 21, 2025

April 24, 2020

Registered Direct Offering

April 24, 2025

October 26, 2020

Private Warrant Inducement

April 27, 2026

October 26, 2020

Dealer Manager Warrants

April 27, 2026

February 2, 2021

Private Placement Agreement

August 2, 2026

February 2, 2021

Dealer Manager Warrants

August 2, 2026

March 23, 2021

Dealer Manager Warrants

March 23, 2026

(1) The initial exercise price of these warrants was $ 30.00 per share.

Pursuant to antidilution price adjustment protection contained within these warrants, the initial exercise price of these warrants was adjusted downward to $ 29.40 on July 24, 2018, the record date of the 2018 Rights Offering (defined herein) and downward to $ 19.00 per share on August 13, 2018.

These warrants were further adjusted downward from $ 19.00 to $ 7.13 and to $ 2.1122 on January 28, 2020 and March 4, 2020, respectively, in connection with separate Registered Direct Offerings.

These warrants were further adjusted downward from $ 2.1122 to $ 1.3659 on October 26, 2020 in connection with a Registered Direct Offering.

These warrants are subject to further adjustment pursuant to antidilution price adjustment protection.

SENESTECH, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

Note 9 - Common Stock Warrants and Common Stock Warrant Liability

– (continued)

(1) The initial exercise price of these warrants was $ 30.00 per

Pursuant to antidilution price adjustment protection contained within these warrants, the initial exercise price of these warrants

was adjusted downward to $ 29.40 on July 24, 2018, the record date of the 2018 Rights Offering (defined herein) and downward to $ 19.00

per share on August 13, 2018.

These warrants were further adjusted downward from $ 19.00 to $ 7.13 and to $ 2.1122 on January 28, 2020 and

March 4, 2020, respectively, in connection with separate Registered Direct Offerings.

These warrants were further adjusted downward from

$ 2.1122 to $ 1.3659 on October 26, 2020 in connection with a Registered Direct Offering.

These warrants are subject to further adjustment

pursuant to antidilution price adjustment protection.

Outstanding Warrants

As of June 30, 2022, we had 4,531,447 shares of

common stock issuable upon exercise of outstanding common stock warrants, at a weighted-average exercise price of $ 4.00 per share.

As of September 30, 2022, we had 4,531,447 shares

of common stock issuable upon exercise of outstanding common stock warrants, at a weighted-average exercise price of $ 4.00 per share.

On November 21, 2017, we issued a total of 232,875

61 unchanged sentences

17,088 of the November 8, 2017 warrants that were in the money at the time of exercise, were exercised for gross proceeds of $ 513 .

SENESTECH, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

Note 9 - Common Stock Warrants and Common Stock Warrant Liability

– (continued)

On August 13, 2018, in connection with a rights

16 unchanged sentences

dividend yield of 0 % and risk-free interest rate of 2.77 %.

Common Stock Warrant Issued to Underwriter

of Common Stock Offering

Common Stock Warrant Issued to Underwriter of Common Stock Offering

In July 2019, we issued to H.C.

9 unchanged sentences

dividend yield of 0 % and risk-free interest rate

Common Stock Warrants Issued in January

and March 2020 Private Placements

Common Stock Warrants Issued in January and March 2020 Private

In January and March 2020, in separate private

6 unchanged sentences

Terms used but not otherwise defined herein will have the meanings

given them in the warrants, attached as Exhibit 4.1 to our Current Report on Form 8-K filed with the SEC on January 28, 2020

and our Current Report on Form 8-K filed with the SEC on March 6, 2020.

given them in the warrants, attached as Exhibit 4.1 to our Current Report on Form 8-K filed with the SEC on January 28, 2020 and our Current

Report on Form 8-K filed with the SEC on March 6, 2020.

The warrants issued in January 2020 to purchase

14 unchanged sentences

dividend yield of 0 % and risk-free interest rate of 0.39 %.

SENESTECH, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

Note 9 - Common Stock Warrants and Common Stock Warrant Liability

– (continued)

For so long as the 2020 Warrants remain outstanding,

the exercise price and number of shares of common stock issuable upon exercise of the warrants are subject to adjustment as follows:

payment of a stock dividend or other distribution on a class or series of shares of common stock, not including shares issued under this

upon payment of a stock dividend or other distribution on a class or series of shares of common stock, not including shares issued under

this warrant;

(b) upon subdivision (by stock spilt, stock dividend, recapitalization, or otherwise) or combination (by reverse stock split

45 unchanged sentences

price or round up to the next whole share.

SENESTECH, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

Note 9 - Common Stock Warrants and Common Stock Warrant Liability

– (continued)

Except as otherwise provided in the 2020 Warrants

1 unchanged sentence

privileges of holders of our common stock, including any voting rights, unless and until they exercise such warrants.

Common Stock Warrants Issued in April 2020

Public Offering

Common Stock Warrants Issued in April 2020 Public Offering

On April 24, 2020, in connection with a previously

14 unchanged sentences

dividend yield of 0 % and risk-free interest rate of

Common Stock Warrants Issued to Placement

Agent in 2020 Registered Direct Offerings and Private Placement

Common Stock Warrants Issued to Placement Agent in 2020 Registered

Direct Offerings and Private Placement

In connection with the separate private placements

28 unchanged sentences

as the April 2020 Warrants described above, except that the placement agent warrant issued has an exercise price of $ 3.97 per share.

SENESTECH, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

Note 9 - Common Stock Warrants and Common Stock Warrant Liability

– (continued)

We estimated the fair value of the common stock

5 unchanged sentences

0 % and risk-free interest rate of 0.18 %.

Common Stock Warrants Issued in October

2020 Private Warrant Inducement

Common Stock Warrants Issued in October 2020 Private Warrant

In October 2020, in connection with an inducement

agreement with an existing accredited investor to exercise 1,700,680 outstanding warrants to purchase an equal number of shares of our

common stock, we issued new unregistered warrants to purchase up to an aggregate of 1,700,680 shares of common stock at an exercise price

of $ 1.725 per share.

The warrants issued were immediately exercisable with an exercise period of five and one-half years from the date

agreement with an existing accredited investor to exercise 1,700,680 outstanding warrants (“Original Warrants”) to purchase

an equal number of shares of our common stock, we issued new unregistered warrants to purchase up to an aggregate of 1,700,680 shares

of common stock at an exercise price of $ 1.725 per share.

The warrants issued were immediately exercisable with an exercise period of

five and one-half years from the date of issuance.

The Original Warrants were issued on March 6, 2020 and on April 24, 2020.

Pursuant to the Letter Agreement, the per share

exercise price of the Original Warrants were reduced from $ 2.88 and $ 3.05 , respectively, to $ 1.725 .

We estimated the fair value of the

common stock warrants, exercisable at $ 1.725 per share, to be $ 1,806 using a Black Scholes model based on the following significant inputs:

to the Letter Agreement, the per share exercise price of the Original Warrants were reduced from $ 2.88 and $ 3.05 , respectively, to $ 1.725 .

We estimated the fair value of the common stock warrants, exercisable at $ 1.725 per share, to be $ 1,806 using a Black Scholes model based

on the following significant inputs:

common stock price of $ 1.47 ;

comparable company volatility of 96.5 %;

remaining term five and one-half years ;

dividend yield of 0 % and

risk-free interest rate of 0.18 %.

Common Stock Warrants Issued to Placement

Agent in October 2020 Inducement Offering

remaining term five and one-half

dividend yield of 0 % and risk-free interest rate of 0.18 %.

Common Stock Warrants Issued to Placement Agent in October 2020

Inducement Offering

In connection with the private warrant inducement

in October 2020 of 1,700,680 shares of our common warrants, we issued to H.C.

Wainwright & Co., LLC, as placement agent, warrants

to purchase 85,034 shares of common stock.

These warrants have substantially similar terms as the 2020 Warrants described above, except

that the placement agent warrant issued in October 2020 has an exercise price of $ 2.156 per share.

in October 2020 of the Original Warrants, we issued to H.C.

Wainwright & Co., LLC, as placement agent, warrants to purchase 85,034

shares of common stock.

These warrants have substantially similar terms as the Original Warrants described above, except that the placement

agent warrant issued in October 2020 has an exercise price of $ 2.156 per share.

We estimated the fair value of these common stock

5 unchanged sentences

rate of 0.18 %.

Common Stock Warrants Issued in February

2021 Private Placement Agreement

Common Stock Warrants Issued in February 2021 Private Placement

In February 2021, in connection with a private

14 unchanged sentences

dividend yield of 0 % and risk-free interest rate of 0.18 %.

SENESTECH, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

Note 9 - Common Stock Warrants and Common Stock

Warrant Liability – (continued)

Common Stock Warrants Issued to Placement

Agent in February 2021 Private Placement Agreement

Common Stock Warrants Issued to Placement Agent in February 2021

Private Placement Agreement

In connection with the private placement in February

10 unchanged sentences

dividend yield of 0 % and risk-free interest rate of 0.18 %.

Common Stock Warrants Issued to Placement

Agent in March 2021 Registered Direct Offering

Common Stock Warrants Issued to Placement Agent in March 2021

Registered Direct Offering

On March 23, 2021, we consummated a registered

19 unchanged sentences

dividend yield of 0 % and risk-free interest rate of 0.31 %.

Deemed Dividend Adjustment-Warrant Modified

Terms Revaluation

Deemed Dividend Adjustment-Warrant Modified Terms Revaluation

On March 3, 2020, we issued an aggregate of 51,414

3 unchanged sentences

On October 26, 2020, in connection with the private

warrant inducement with an existing accredited investor to exercise 1,700,680 outstanding warrants (“Original Warrants”),

we agreed to modify the terms of the original warrants that were originally issued on March 6, 2020 and on April 24, 2020.

the agreement, the per share exercise price of the original warrants were reduced from $ 2.88 and $ 3.05 , respectively, to $ 1.725 .

warrant inducement with an existing accredited investor to exercise the Original Warrants, we agreed to modify the terms of the Original

Warrants that were originally issued on March 6, 2020 and on April 24, 2020.

Pursuant to the agreement, the per share exercise price of

the Original Warrants were reduced from $ 2.88 and $ 3.05 , respectively, to $ 1.725 .

Per recent proposed guidance of ASC 260, we determined

9 unchanged sentences

rate of 0.18 .

SENESTECH, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

Note 10 - Stockholders’ Deficit

Capital Stock

We organized under the laws of the state of Nevada

on July 27, 2004 and subsequently reincorporated under the laws of the state of Delaware on November 10, 2015.

In connection with the

reincorporation, as approved by the stockholders, we changed our authorized capital stock to consist of (i) 100 million shares of common

stock, $ .001 par value, and (ii) 2 million shares of preferred stock, $ 0.001 par value, designated as Series A convertible preferred stock.

In December 2015, we amended our Certificate of Incorporation to change our authorized capital stock to provide for 15 million authorized

shares of preferred stock of which 7,515,000 was designated as Series B convertible preferred stock, par value $ .001 per share.

We organized under the laws of the state of Nevada on July 27, 2004

and subsequently reincorporated under the laws of the state of Delaware on November 10, 2015.

In connection with the reincorporation,

as approved by the stockholders, we changed our authorized capital stock to consist of (i) 100 million shares of common stock, $.

value, and (ii) 2 million shares of preferred stock, $ 0.001 par value, designated as Series A convertible preferred stock.

2015, we amended our Certificate of Incorporation to change our authorized capital stock to provide for 15 million authorized shares of

preferred stock of which 7,515,000 was designated as Series B convertible preferred stock, par value $.

001 per share.

Prior to November 10, 2015, our authorized capital

stock consisted of 100 million shares of common stock, $ .001 par value, and 10 million shares of preferred stock, $ .001 par value.

We had 12,212,950 and 12,207,283 shares of common

stock issued and outstanding as of June 30, 2022 and December 31, 2021, respectively.

During the six months ended June 30, 2022, we

issued 5,667 shares of common stock as follows:

● an aggregate of 5,000 shares in

connection with a restricted stock grant that was issued and vested on February 25, 2022 for services.

● an aggregate of 667 shares in

connection with a restricted stock grant that vested on May 4, 2022 for services.

stock consisted of 100 million shares of common stock, $.

001 par value, and 10 million shares of preferred stock, $.

001 par value.

We had 12,212,950 and 12,207,283 shares of common stock issued and

outstanding as of September 30, 2022 and December 31, 2021, respectively.

During the nine months ended September 30, 2022, we issued 5,667 shares

of common stock as follows:

● an aggregate of 5,000 shares in connection with a restricted

stock grant that was issued and vested on February 25, 2022 for services.

● an aggregate of 667 shares in connection with a restricted

stock grant that vested on May 4, 2022 for services.

Preferred Stock

In September 2022, we created out of the authorized

but unissued preferred stock, a new series of preferred stock designated as 20,000 shares of “Series C Preferred Stock.” Each

share of Series C Preferred Stock has a par value of $ 0.001 per share.

We issued a common stock dividend of one one-thousandth of a share

of Series C Preferred Stock for each outstanding share of common stock, resulting in 12,213 shares issued to common stock shareholders

on September 6, 2022.

Series C Preferred Stock will be represented in

book-entry form.

Each share will entitle the holder to 1,000,000 votes per share and they are entitled only to vote on the Reverse Stock

Split and the Adjournment Proposal brought before any meeting of stockholders held to vote on the Reverse Stock Split.

The preferred stock

shareholders will not be entitled to receive dividends of any kind and these shares are not convertible for any other securities.

shares will automatically be redeemed by us immediately following the approval of the Reverse Stock Split.

Note 11 - Stock-Based Compensation

16 unchanged sentences

Certain stock option awards provide for accelerated vesting upon a change in control.

As of June 30, 2022, we had 2,457,600 shares of

common stock available for issuance under the 2018 Plan.

As of September 30, 2022, we had 1,213,406 shares of common stock available

for issuance under the Amended 2018 Plan.

Stock Options

2 unchanged sentences

The Black-Scholes valuation model requires us to make certain estimates and assumptions, including assumptions related to the expected

price volatility of our stock, the period during which the options will be outstanding, the rate of return on risk-free investments,

and the expected dividend yield for our stock.

SENESTECH, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

Note 11 - Stock-Based Compensation –

We did not issue any stock options in the three

months ended June 30, 2022.

price volatility of our stock, the period during which the options will be outstanding, the rate of return on risk-free investments, and

the expected dividend yield for our stock.

The weighted-average assumptions used in the Black-Scholes

option-pricing model used to calculate the fair value of options granted during the six months ended June 30, 2022 were as follows:

option-pricing model used to calculate the fair value of options granted during the nine months ended September 30, 2022 were as follows:

Expected volatility

2 unchanged sentences

Risk-free interest rate

The weighted average grant date fair value of

options granted during the six months ended June 30, 2022 was $ 0.444 per share, as per the table above.

The weighted average grant date fair value of options granted during

the nine months ended September 30, 2022 was $ 0.3014 per share.

Due to our limited operating history and lack

12 unchanged sentences

We have not paid and

do not intend to pay dividends.

The following table summarizes the stock option

activity, for both equity plans, for the periods indicated as follows:

do not intend to pay cash dividends on our common stock.

The following table summarizes the stock option activity, for both

equity plans, for the periods indicated as follows:

Outstanding at December 31, 2021

Outstanding at June 30, 2022

Exercisable at June 30, 2022

(1) The aggregate intrinsic value in the table was calculated based on the difference between the estimated fair market value of our stock and the exercise price of the underlying options.

The estimated stock values used in the calculation were $ 0.98 and $ 0.53 per share for the year ended December 31, 2021 and the six months ended June 30, 2022, respectively.

SENESTECH, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

Note 11 - Stock-Based Compensation – (continued)

Outstanding at September 30, 2022

Exercisable at September 30, 2022

(1) The aggregate intrinsic value in the table was calculated based

on the difference between the estimated fair market value of our stock and the exercise price of the underlying options.

The estimated

stock values used in the calculation were $ 0.98 and $ 0.3510 per share for the year ended December 31, 2021 and the nine months ended

September 30, 2022, respectively.

Restricted Stock Units

The following table summarizes restricted stock

unit activity for the six months ended June 30, 2022:

Weighted Average

Grant-Date Fair

Value Per Unit

The following table summarizes restricted stock unit activity for the

nine months ended September 30, 2022:

Outstanding as of December 31, 2021

Outstanding as of June 30, 2022

Outstanding as of September 30, 2022

The stock-based compensation expense was recorded as follows:

Three Months Ended

Six Months Ended

Research and development

3 unchanged sentences

and selling, general and administrative expense was based on the department and services performed by the employee or non-employee.

At June 30, 2022, the total compensation cost

related to restricted stock units and unvested options not yet recognized was $ 327 , which will be recognized over a weighted average period

of 31 months , assuming the employees and non-employee s complete their service period required for vesting.

At September 30, 2022, the total compensation

cost related to unvested options not yet recognized was $ 502 , which will be recognized over a weighted average period of 15 months , assuming

the employees and non-employee s complete their service period required for vesting.

Note 12 - Commitments and Contingencies

18 unchanged sentences

We do not believe that this litigation is likely to have a material effect on our operations.

SENESTECH, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

Note 12 - Commitments and Contingencies –

In addition to the matter described above, we

10 unchanged sentences

This lease expires on November 30, 2024.

We believe that our existing facilities are adequate

and meet our current needs for business, manufacturing and research.

Rent expense was $ 112 and $ 111 for the six months

ended June 30, 2022 and 2021, respectively.

We believe that our existing facilities are adequate and meet our current

needs for business, manufacturing and research.

Rent expense was $ 164 and $ 166 for the nine months

ended September 30, 2022 and 2021, respectively.

The future minimum lease payments under non-cancellable operating lease and future minimum

finance lease payments as of June 30, 2022 are follows:

finance lease payments as of September 30, 2022 are follows:

Years Ending December 31,

1 unchanged sentence

Note 13 - Subsequent Events

We have evaluated subsequent events from the balance

sheet date through August 12, 2022, the date at which the financial statements were issued, and determined that there were no items that

require adjustment to or disclosure in the financial statements.

Nasdaq Listing Extension

As previously disclosed, on March 2, 2022, we

received a letter from the listing qualifications staff (the “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

our common stock no longer met the minimum bid price requirement for continued listing under Nasdaq Listing Rule 5550(a)(2) (the “Rule”).

We were provided a period of 180 calendar days, or until August 29, 2022, in which to regain compliance with the Rule.

On August 31, 2022, we received notice from Nasdaq

indicating that, while we have not regained compliance with the Rule, the Staff has determined that we are eligible for an additional

180 calendar day period, or until February 27, 2023, to regain compliance.

The Staff’s determination was based on (i) our meeting

the continued listing requirement for market value of publicly held shares and all other applicable requirements for initial listing on

the Nasdaq Capital Market, with the exception of the bid price requirement, and (ii) our providing written notice to Nasdaq of our intent

to cure the deficiency during this second compliance period by effecting a reverse stock split, if necessary.

If at any time during this

second 180-day period the closing bid price of our common stock is at least $ 1.00 per share for a minimum of 10 consecutive business days,

the Staff will provide written confirmation of compliance.

If compliance cannot be demonstrated by February 27, 2023, the Staff will provide

written notification to us that our common stock will be delisted.

At that time, we may appeal the Staff’s determination to a Nasdaq

hearings panel.

There can be no assurance that we will regain compliance with the Rule or maintain compliance with other Nasdaq continued

listing requirements.

Reverse Stock Split

On October 12, 2022, our stockholders approved

a reverse stock split of our common stock, par value $ 0.001 per share, at a ratio of not less than 1-for-5 and not more than 1-for-20,

with the actual ratio to be determined by our board of directors (the “2022 Reverse Split”).

Our board of directors has not

yet chosen the ratio for, nor implemented, the 2022 Reverse Split, but expects to do so prior to the Offering (as hereafter defined).

The number of authorized shares of our common stock will remain unchanged at 100,000,000 shares after the 2022 Reverse Split.

Public Offering

On October 21, 2022, our board of directors approved

a public offering (the “Offering”) of shares of our common stock, par value $ 0.001 per share, together with Series A warrants

to purchase shares of our common stock (“Series A Warrants”) and Series B warrants to purchase shares of our common stock

(“Series B Warrants” and, together with Series A Warrants, “Series Warrants”) for aggregate gross proceeds of

up to $ 10 million.

Stock Based Compensation Plan Share Increase

On October 12, 2022, our stockholders approved

an amendment to the 2018 Plan to increase the number of shares of common stock available for issuance under the 2018 Plan by 3,000,000

As of October 12, 2022, we had 4,213,406 shares of common stock available for issuance under the Amended 2018 Plan.

We have evaluated subsequent events from the

balance sheet date through November 11, 2022 the date at which the financial statements were issued, and determined that there were

no additional items that require adjustment to or disclosure in the financial statements.

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-Q

Item 1. Financial Statements