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Item 1. Financial Statements

2023-05-11 compared with 2022-11-14 · 229 added, 1044 removed, 95 unchanged (93% of the section changed)

2 unchanged sentences

CONDENSED BALANCE SHEETS

(In thousands, except shares and per share

September 30,

(In thousands, except shares and per share data)

March 31, 2023 December 31, 2022

ASSETS (unaudited)

Current assets:

Accounts receivable trade, net

Cash and cash equivalents $ 2,748 $ 4,775

Accounts receivable, net 46 113

Prepaid expenses 450 378

Inventory, net 815 853

Total current assets 4,059 6,119

Right to use asset-operating leases

Right to use assets, operating leases 305 347

Property and equipment, net 259 294

Other noncurrent assets 22 22

Total assets $ 4,645 $ 6,782

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Short-term debt

Accounts payable $ 215 $ 540

Accrued expenses 584 560

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

Current portion of operating lease liability 184 180

Deferred revenue 33 44

Total current liabilities 1,016 1,324

Operating lease liability

Operating lease liability, less current portion 132 179

Total liabilities 1,148 1,503

Commitments and contingencies (See note 12)

Commitments and contingencies (see notes)

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 September 30, 2022 and December 31, 2021, respectively

Preferred stock, $ 0.001 par value, 10,000,000 shares authorized, none issued and outstanding

Common stock, $ 0.001 par value, 100,000,000 shares authorized, 2,107,339 and 809,648 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively

Additional paid-in capital 127,735 127,481

2 unchanged sentences

Total liabilities and stockholders’ equity $ 4,645 $ 6,782

See accompanying notes to financial statements

See accompanying notes to condensed 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 Nine Months

Ended September 30,

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except shares and per share data)

Three Months Ended March 31,

Revenues, net $ 233 $ 195

Cost of sales 141 105

Gross profit 92 90

Operating expenses:

2 unchanged sentences

Total operating expenses 2,137 2,423

Net operating loss

Loss from operations ( 2,045 ) ( 2,333 )

Other income (expense):

1 unchanged sentence

Interest expense — ( 1 )

Payroll Protection Program loan forgiveness

Other income (expense)

Total other income

Other income, net 8 1

Net loss and comprehensive loss $ ( 2,037 ) $ ( 2,332 )

Weighted average common shares outstanding - basic and fully diluted

Net loss per common share - basic and fully diluted

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, June 30, 2021

$ ( 107,761 )

Stock-based compensation

Issuance of common stock upon exercise of warrants, net

Net loss for the three months ended September 30, 2021

Balance, September 30, 2021

$ ( 110,014 )

Balance, June 30, 2022

$ ( 117,409 )

Stock-based compensation

Net loss for the three months ended September 30, 2022

Balance, September 30, 2022

$ ( 120,055 )

Balance, December 31, 2020

$ ( 104,240 )

Stock-based compensation

Issuance of common stock for service

Issuance of common stock, sold for cash, net

Issuance of common stock upon exercise of warrants

Payments for employee withholding taxes related to share based awards

Net loss for the nine months ended September 30, 2021

Balance, September 30, 2021

$ ( 110,014 )

Balance, December 31, 2021

$ ( 112,508 )

Stock-based compensation

Issuance of common stock for service

Net loss for the nine months ended September 30, 2022

Balance, September 30, 2022

$ ( 120,055 )

See accompanying notes to financial statements.

Weighted average shares outstanding - basic and fully diluted 1,538,514 610,450

Net loss per share - basic and fully diluted $ ( 1.32 ) $ ( 3.82 )

See accompanying notes to condensed financial statements.

SENESTECH, INC.

1 unchanged sentence

(In thousands)

For the Nine Months

Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

Net loss $ ( 2,037 ) $ ( 2,332 )

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

2 unchanged sentences

Bad debt expense ( 2 ) —

Paycheck Protection Program loan forgiveness

Paycheck Protection Program loan accrued interest forgiveness

Gain on sale of equipment

(Increase) decrease in current assets:

Accounts receivable – trade

Accounts receivable – other

Changes in operating assets and liabilities:

Accounts receivable 69 21

Other assets ( 1 ) —

Prepaid expenses 28 ( 29 )

Increase (decrease) in current liabilities:

Inventory 38 54

Accounts payable ( 325 ) ( 89 )

3 unchanged sentences

Cash flows from investing activities:

Cash received on sale of property and equipment

Purchase of property and equipment ( 1 ) ( 66 )

1 unchanged sentence

Cash flows from financing activities:

Proceeds from the issuance of common stock, net

Repayments of notes payable — ( 3 )

Repayments of finance lease obligations — ( 13 )

Proceeds from the exercise of warrants

Payment of employee withholding taxes related to share based awards ( 11 ) —

Net cash (used in) provided by financing activities

NET CHANGE IN CASH

CASH AT BEGINNING OF PERIOD

CASH AT END OF PERIOD

SUPPLEMENTAL INFORMATION:

Net cash used in financing activities ( 11 ) ( 16 )

Decrease in cash and cash equivalents ( 2,027 ) ( 2,111 )

Cash and cash equivalents, beginning of period 4,775 9,326

Cash and cash equivalents, end of period $ 2,748 $ 7,215

Supplemental disclosures of cash flow information:

Interest paid $ — $ 1

Income taxes paid $ — $ —

See accompanying notes to financial statements.

See accompanying notes to condensed financial statements.

SENESTECH, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

Note 1 - Organization and Description of Business

BASIS OF PRESENTATION

Nature 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 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.

Rats have plagued humanity throughout history.

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

In addition, rodents cause significant product loss

and damage through consumption and contamination.

Rats also cause significant damage to critical infrastructure by burrowing beneath

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

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.

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.

(referred to in this report as “SenesTech,” the “Company,” “we” or “us”) was incorporated in the state of Nevada in July 2004.

On November 12, 2015, the Company subsequently reincorporated in the state of Delaware.

Our corporate headquarters and manufacturing site are in Phoenix, Arizona.

We have developed and are commercializing a global, proprietary technology for managing animal pest populations, initially rat populations, through fertility control with our product known as ContraPest.

ContraPest is a liquid bait containing the active ingredients 4-vinylcyclohexene diepoxide 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.

In addition to the U.S.

Environmental Protection Agency registration of ContraPest, 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, 49 of which have approved the removal of the Restricted Use designation, as well as the District of Columbia and five major U.S.

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 condensed financial statements as of March 31, 2023 were prepared under the assumption that we would continue as a going concern.

The reports of our independent registered public accounting firm that accompanies our financial statements for each of the years ended December 31, 2022 and December 31, 2021 contain 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, 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.

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

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 a 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.

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.

As of March 31, 2023, we had an accumulated deficit of $ 124.2 million and cash and cash equivalents of $ 2.7 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 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;

(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 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.

Based upon our current operating plan, we expect that cash and cash equivalents at March 31, 2023, in combination with anticipated revenue and any additional sales of our equity securities (see Note 10), will be sufficient to fund our current operations for at least the next six months.

While we have evaluated and continue to evaluate our operating expenses and concentrate our resources toward the successful commercialization of ContraPest in the United States, additional financing will be needed before achieving anticipated revenue targets and margin targets If 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, additional capital is needed in order to fund our operating losses and research and development activities before 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.

Condensed Financial Statements

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.

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.

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 March 31, 2023, and our operating results and cash flows for the three-month periods ended March 31, 2023 and 2022.

The accompanying financial information as of December 31, 2022 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

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, 2022, filed with the SEC on March 17, 2023.

Recent Accounting Pronouncements

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 financial statements.

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.

The 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 inventory, common stock warrants, and stock-based awards, such as stock options and restricted stock units.

Actual results could differ from such estimates.

Reclassifications

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

Comprehensive Loss

We have no other comprehensive income items for the periods presented.

As a result, our net loss and comprehensive loss were the same for the periods presented and a separate statement of comprehensive loss is not included in the accompanying condensed financial statements.

BALANCE SHEET COMPONENTS

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,

Highly liquid investments with maturities of three months or less as of the date of acquisition are classified as cash equivalents, of which we had $ 2.7 million and $ 4.8 million as of March 31, 2023 and December 31, 2022, respectively, included within cash and cash equivalents in the condensed balance sheets.

Accounts Receivable, Net

Accounts receivable, net consist of the following (in thousands):

2023 December 31,

Accounts receivable $ 50 $ 119

Allowance for uncollectible accounts ( 4 ) ( 6 )

Accounts receivable, net $ 46 $ 113

The following is the activity in the allowance for uncollectible accounts (in thousands):

Three Months Ended

Balance as of beginning of period $ 6 $ —

Increase in provision — —

Amounts written off, less recoveries ( 2 ) —

Balance as of end of period $ 4 $ —

Inventory, net

Inventory, net consist of the following (in thousands):

2023 December 31,

Raw materials $ 771 $ 772

2 unchanged sentences

Total inventory 833 871

Reserve for obsolete

Total Net Inventory

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.

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.

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:

reserve for obsolescence ( 18 ) ( 18 )

Inventory, net $ 815 $ 853

The following is the activity in the reserve for obsolescence (in thousands):

Three Months Ended

Nine Months Ended

September 30,

Research and development

Selling, general and administrative

Total stock-based compensation expense

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

Restrictive stock units

Common stock options

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

Balance as of beginning of period $ 18 $ 29

Increase in reserve — —

Amounts relieved — ( 3 )

Balance as of end of period $ 18 $ 26

Prepaid Expenses

Prepaid expenses consist of the following (in thousands):

2023 December 31,

Software licenses $ 113 $ 157

Marketing programs and conferences 10 74

Inventory deposits

Insurance 93 61

Patents 24 39

Professional services 198 41

Engineering, software licenses and other

Total prepaid expenses $ 450 $ 378

Note 6 - Property and Equipment

Property and equipment, net consisted of the following:

September 30,

Property and Equipment, Net

Property and equipment, net consist of the following (in thousands):

2023 December 31,

Research and development equipment $ 1,563 $ 1,558

2 unchanged sentences

Leasehold improvements 119 119

Total in service 2,578 2,572

Accumulated depreciation and amortization ( 2,319 ) ( 2,283 )

Total in service, net 259 289

Construction in progress — 5

Less accumulated depreciation and amortization

* Shorter of lease term or estimated useful life

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

Property and equipment, net $ 259 $ 294

Accrued Expenses

consisted of the following:

September 30,

Compensation and related benefits

Accrued expenses consist of the following (in thousands):

2023 December 31,

Compensation, severance and related benefits $ 416 $ 497

Legal services 150 36

2 unchanged sentences

Total accrued expenses $ 584 $ 560

Note 8 – Borrowings

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

September 30,

Short-term debt:

Finance lease obligations

Other promissory notes

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

Common Stock Offering Warrants

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

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 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

detachable common stock warrants issued with the second public offering of 293,000 shares of our common stock at $ 20.00 per share.

common stock warrant is exercisable until five years from the date of grant.

Our common stock and detachable warrants exist independently

as separate securities.

As such, we estimated the fair value of the common stock warrants, exercisable at $ 30.00 per share, to be $ 661

using a lattice model based on the following significant inputs:

common stock price of $ 20.00 ;

comparable company volatility of 73.8 %;

remaining term five years ;

dividend yield of 0 % and risk-free interest rate of 1.87 %.

The initial exercise price of these warrants was

$ 30.00 per share, which adjusted downward to $ 29.40 on July 24, 2018, the record date of the 2018 Rights Offering, and downward to $ 19.00

per share on August 13, 2018, the date of the 2018 Rights Offering, pursuant to antidilution price adjustment protection contained within

these warrants.

The exercise price of the warrants was adjusted downward to $ 7.13 on January 28, 2020 in connection with a private placement

of common stock.

Per guidance of ASC 260 – Earnings Per Share (“ASC260”), we recorded a deemed dividend of $ 285 on the

143,501 unexercised warrants that contained this antidilution price adjustment protection provision and was calculated as the difference

between the fair value of the warrants immediately prior to downward exercise price adjustment and immediately after the adjustment using

a Black Scholes model based on the following significant inputs:

On January 28, 2020, common stock price of $ 7.90 ;

comparable company

volatility of 73.8 %;

remaining term 2.82 years;

dividend yield of 0 % and risk-free interest rate of 1.45 %.

The exercise price of the warrants was adjusted

downward to $ 2.1122 on March 4, 2020 in connection with a private placement of common stock.

Per guidance of ASC 260, we recorded a deemed

dividend of $ 129 on the 143,501 unexercised warrants that contained this antidilution price adjustment protection provision and was calculated

as the difference between the fair value of the warrants immediately prior to downward exercise price adjustment and immediately after

the adjustment using a Black Scholes model based on the following significant inputs:

On March 4, 2020, common stock price of $ 2.88 ;

company volatility of 74.5 %;

remaining term 2.71 years;

dividend yield of 0 % and risk-free interest rate of 0.68 %.

The exercise price of the warrants was adjusted

downward to $ 1.3659 on October 26, 2020 in connection with an inducement offering of common stock.

Per guidance of ASC 260, we recorded

a deemed dividend of $ 22 on the 143,501 unexercised warrants that contained this antidilution price adjustment protection provision and

was calculated as the difference between the fair value of the warrants immediately prior to downward exercise price adjustment and immediately

after the adjustment using a Black Scholes model based on the following significant inputs:

On October 26, 2020, common stock price of

comparable company volatility of 96.5 %;

remaining term 2.08 years;

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

On June 20, 2018, we entered into an agreement

with a holder of 56,696 of the November 2017 warrants to exercise its original warrant representing 56,696 shares of common stock for

cash at the $ 30.00 exercise price for gross proceeds of $ 1.7 million, and we issued to holder a new warrant to purchase 56,696 shares

of common stock at an exercise price of $ 36.40 per share.

The new warrant did not contain the antidilution price adjustment protection

that was contained within the exercised warrants.

In June 2018, we recorded stock compensation expense of $ 1,700 representing the fair

value of the of 56,696 inducement warrants issued.

We estimated the fair value of the common stock warrants, exercisable at $ 36.40 per

share, to be $ 1,700 using a Black Scholes model based on the following significant inputs:

common stock price of $ 42.20 ;

comparable company

volatility of 72.6 %;

remaining term five years ;

dividend yield of 0 % and risk-free interest rate of 2.8 %.

Also, in June 2018, an additional

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 .

On August 13, 2018, in connection with a rights

offering of 267,853 shares of our common stock (the “2018 Rights Offering”), we issued 267,853 warrants to purchase shares

of our common stock at an exercise price of $ 23.00 per share.

We estimated the fair value of the common stock warrants, exercisable at

$ 23.00 per share, to be $ 3,600 using a Monte Carlo model based on the following significant inputs:

common stock price of $ 18.80 ;

company volatility of 159.0 %;

remaining term five years ;

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

In connection with the closing of the 2018 Rights

Offering, we issued a warrant to purchase 13,393 shares of common stock to Maxim Partners LLC, an affiliate of the dealer-manager of the

2018 Rights Offering.

We estimated the fair value of the common stock warrants, exercisable at $ 34.50 per share, to be $ 169 using a using

a Monte Carlo model based on the following significant inputs:

common stock price of $ 18.80 ;

comparable company volatility of 159.0 %;

remaining term five years ;

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

Common Stock Warrant Issued to Underwriter of Common Stock Offering

In July 2019, we issued to H.C.

Co., as placement agent, a warrant to purchase 8,334 shares of common stock at an exercise price of $ 33.75 per share as consideration

for providing services in connection with a common stock offering in July 2019.

The warrant was fully vested and exercisable on the date

The common stock warrant is exercisable until five years from the date of grant.

We estimated the fair value of the common

stock warrants, exercisable at $ 33.75 per share, to be $ 127 using a lattice model based on the following significant inputs:

price of $ 26.80 ;

comparable company volatility of 133.3 %;

remaining term five years ;

dividend yield of 0 % and risk-free interest rate

Common Stock Warrants Issued in January and March 2020 Private

In January and March 2020, in separate private

placements concurrent with registered direct offerings (collectively, the “2020 Registered Direct Offerings”) of shares of

our common stock, we also issued warrants to purchase an aggregate of up to 353,872 shares of common stock to certain institutional and

accredited investors that participated in the 2020 Registered Direct Offerings (the “2020 Warrants”).

The warrants were issued

in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities

Act”) and Rule 506(b) of Regulation D promulgated thereunder.

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.

The warrants issued in January 2020 to purchase

177,500 shares of common stock have an exercise price of $ 9.00 per share, are exercisable after July 28, 2020 and will expire July 28,

We estimated the fair value of the common stock warrants, exercisable at $ 9.00 per share, to be $ 813 using a Black Scholes model

based on the following significant inputs:

common stock price of $ 7.90 ;

comparable company volatility of 73.8 %;

remaining term five years ;

dividend yield of 0 % and risk-free interest rate of 1.53 %.

The warrants issued in March 2020 to purchase

176,372 shares of common stock have an exercise price of $ 2.88 per share, are immediately exercisable and will expire September 8, 2025.

We estimated the fair value of the common stock warrants, exercisable at $ 2.88 per share, to be $ 242 using a Black Scholes model based

on the following significant inputs:

common stock price of $ 2.35 ;

comparable company volatility of 74.8 %;

remaining term five and one-half

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

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:

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

or otherwise) of shares of common stock;

or (c) upon the issuance of any shares of capital stock by reclassification of shares of the

common stock.

In the event that we declare or make any dividend

or other distribution of our assets to holders of our common stock, each 2020 Warrant holder will be entitled to participate in such distribution

to the same extent that such holder would have participated therein if the holder had held the number of shares of common stock acquirable

upon exercise of the 2020 Warrant.

In the event of a Fundamental Transaction, as

described in the 2020 Warrants and generally including the sale, transfer or other disposition of all or substantially all of our properties

our consolidation or merger with or into another person or reorganization;

a recapitalization, reorganization or reclassification

in which our common stock is converted into other securities, cash or property;

or any acquisition of our outstanding common stock that

results in any person or group becoming the beneficial owner of 50 % of the voting power represented by our outstanding common stock, then

the holders of the 2020 Warrants will be entitled to receive upon exercise of such warrants the kind and amount of securities, cash, assets

or other property that the holders would have received had they exercised the 2020 Warrants immediately prior to such Fundamental Transaction.

Subject to certain limitations, in the event of a Fundamental Transaction the 2020 Warrant holder may at its option require us or any

Successor Entity to purchase such warrant from the holder by paying to the holder an amount of cash equal to the Black Scholes Value of

the remaining unexercised portion of the 2020 Warrant on the date of the consummation of the Fundamental Transaction.

Any time that we grant, issue or sell any securities

pro rata to all of the record holders of our common stock (the “2020 Purchase Right”), each holder of 2020 Warrants will be

entitled to acquire the aggregate amount of securities that the holder could have acquired if the holder had held the number of shares

of common stock acquirable upon exercise of the applicable 2020 Warrant.

However, to the extent that an exercise of a 2020 Purchase Right

would exceed the Beneficial Ownership Limitation (defined below), then to such extent the 2020 Purchase Right will be held in abeyance

until such time, if ever, that complete exercise of the 2020 Purchase Right would not exceed the Beneficial Ownership Limitation.

After the Initial Exercisability Date, the 2020

Warrants will be exercisable, at the option of each holder, in whole or in part, by delivering to us a duly executed exercise notice accompanied

by payment in full for the number of shares of our common stock purchased upon such exercise.

If, at the time a holder exercises the 2020

Warrant (but not sooner than six months following the date of such warrant), a registration statement registering the issuance of the

shares of common stock underlying the 2020 Warrants under the Securities Act is not then effective or available, nor is any current prospectus

thereto available, and an exemption from registration under the Securities Act is not available for the issuance of such shares, then

in lieu of making the cash payment otherwise contemplated to be made to us upon such exercise in payment of the aggregate exercise price,

the holder may elect instead to receive upon such exercise (either in whole or in part) the number of shares of common stock determined

according to a formula set forth in the 2020 Warrant.

Limitations on Exercise .

A holder (together

with its affiliates) may not exercise any portion of the 2020 Warrants to the extent that the holder would own more than 4.99% of the

outstanding common stock after exercise (the “Beneficial Ownership Limitation”), except that upon at least 61 days’

prior notice from the holder to us, the holder may increase the Beneficial Ownership Limitation up to 9.99% of the number of shares of

our common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance

with the terms of the 2020 Warrants.

No fractional shares of common stock will be issued in connection with the exercise of a 2020 Warrant.

In lieu of fractional shares, we will either pay the holder an amount in cash equal to the fractional amount multiplied by the exercise

price or round up to the next whole share.

Except as otherwise provided in the 2020 Warrants

or by virtue of such holder’s ownership of shares of our common stock, the holders of the 2020 Warrants do not have the rights or

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

On April 24, 2020, in connection with a previously

announced public offering of 145,586 Class A Units and 1,428,722 Class B Units, we issued warrants to purchase 1,574,308 shares of common

stock to the participants in the public offering and have an exercise price of $ 3.05 per share (the “April 2020 Warrants”).

These warrants are immediately exercisable and will expire April 24, 2025 .

The common stock, Pre-Funded Warrants and Warrants

sold in this Public Offering were offered and sold pursuant to a registration statement on Form S-1 (File No.

333-236302) initially filed

with the SEC on February 7, 2020, as amended (“Registration Statement”), which was declared effective by the SEC on February

The Post-Effective Amendment No.

2 to the Registration Statement was declared effective by the SEC on April 21, 2020.

We estimated the fair value of the common stock

warrants, exercisable at $ 3.05 per share, to be $ 2,402 using a Black Scholes model based on the following significant inputs:

price of $ 2.40 ;

comparable company volatility of 87.9 %;

remaining term five years ;

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

In connection with the separate private placements

concurrent with registered direct offerings of shares of our common stock in January and March 2020, we issued to H.C.

Co., LLC, as placement agent, a warrant to purchase 13,228 shares of common stock and a warrant to purchase 13,313 shares of common stock.

The warrants were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and Rule 506(b)

of Regulation D promulgated thereunder.

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

the placement agent warrant issued in January 2020 has an exercise price of $ 10.00 per share, and the placement agent warrant issued in

March 2020 has an exercise price of $ 3.7563 per share.

We estimated the fair value of the common stock

warrants issued in January, with an exercise price of $ 10.00 per share, to be $ 58 using a Black Scholes model based on the following significant

common stock price of $ 7.90 ;

comparable company volatility of 73.8 %;

remaining term five years ;

dividend yield of 0 % and risk-free

interest rate of 1.53 %.

We estimated the fair value of the common stock

warrants issued in March, with an exercise price of $ 3.7563 per share, to be $ 17 using a Black Scholes model based on the following significant

common stock price of $ 2.35 ;

comparable company volatility of 74.8 %;

remaining term five and one-half years ;

dividend yield of

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

In connection with the public offering of 145,586

Class A Units and 1,428,722 Class B Units on April 24, 2020, we issued to H.C.

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

to purchase 118,073 shares of common stock.

The warrants were issued in reliance on the exemption from registration provided by Section

4(a)(2) of the Securities Act and Rule 506(b) of Regulation D promulgated thereunder.

These warrants have substantially similar terms

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

We estimated the fair value of the common stock

warrants issued in April, with an exercise price of $ 3.97 per share, to be $ 167 using a Black Scholes model based on the following significant

common stock price of $ 2.40 ;

comparable company volatility of 87.9 %;

remaining term five and one-half years ;

dividend yield of

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

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 (“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.

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

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 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

warrants, with an exercise price of $ 2.156 per share, to be $ 86 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 5.5 years;

dividend yield of 0 % and risk-free interest

rate of 0.18 %.

Common Stock Warrants Issued in February 2021 Private Placement

In February 2021, in connection with a private

placement agreement with certain institutional and accredited investors, we issued common stock warrants to purchase up to an aggregate

of 2,194,427 shares of common stock at an exercise price of $ 2.216 per share.

The warrants were exercisable immediately and have an exercise

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

The warrant holder may not exercise any portion of such holder’s warrants

to the extent that the holder, together with its affiliates, would beneficially own more than 4.99% (or, at the election of the holder,

9.99%) of our outstanding shares of common stock immediately after exercise, except that upon at least 61 days’ prior notice from

the holder to us, the holder may increase the beneficial ownership limitation to up to 9.99% of the number of shares of common stock outstanding

immediately after giving effect to the exercise.

We estimated the fair value of the common stock warrants, exercisable at $ 2.216 per share,

to be $ 3,052 using a Black Scholes model based on the following significant inputs:

common stock price of $ 1.93 ;

comparable company volatility

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 February 2021

Private Placement Agreement

In connection with the private placement in February

2021, we issued to H.C.

Wainwright & Co., LLC, as placement agent, warrants to purchase up to 329,164 shares of common stock with

an exercise price of $ 2.8481 per share.

The warrants are exercisable immediately and have an exercise period of five and one-half years

from the date of issuance.

We estimated the fair value of these common stock warrants, with an exercise price of $ 2.8481 per share, to

be $ 435 using a Black Scholes model based on the following significant inputs:

common stock price of $ 1.93 ;

comparable company volatility

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 March 2021

Registered Direct Offering

On March 23, 2021, we consummated a registered

direct offering with certain institutional investors and issued an aggregate of 1,975,000 shares of our common stock, par value $ 0.001

per share at a purchase price of $ 2.00 per share for gross proceeds to us of approximately $ 3.95 million, before deducting fees payable

to the placement agent and other estimated offering expenses payable by us.

The 1,975,000 shares of common stock sold in the offering

were offered and sold pursuant to a prospectus, dated August 24, 2018, and a prospectus supplement, dated March 22, 2021, in connection

with a takedown from our shelf registration statement on Form S-3 (File No.

In connection with the registered direct offering

in March 2021, we issued to H.C.

Wainwright & Co., LLC, as the placement agent, warrants to purchase up to 148,125 shares of common

The placement agent warrants will be exercisable commencing six months following the date of issuance, expire five years following

the date of sale and have an exercise price per share of $ 2.50 per share.

The placement agent warrants, and the shares of common stock

issuable upon exercise thereof, will be issued in reliance on the exemption from registration provided in Section 4(a)(2) under the Securities

Act of 1933, as amended, and Regulation D promulgated thereunder.

We estimated the fair value of these common stock warrants, with an

exercise price of $ 2.50 per share, to be $ 181 using a Black Scholes model based on the following significant inputs:

common stock price

comparable company volatility of 100.8 %;

remaining term five years ;

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

Deemed Dividend Adjustment-Warrant Modified Terms Revaluation

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

common shares in a cashless exercise of 56,625 warrants issued in December 2016 and November 2017.

Consideration for the exercise of these

warrants was the full settlement of an outstanding litigation reserve of $ 238 .

On October 26, 2020, in connection with the private

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

that this was an exchange of the existing 1,700,680 warrants that were affected and the difference between the fair value of the warrants

immediately prior to modification of terms and immediately after the adjustment was a cost of raising capital and was recorded as a reduction

The difference between the fair value of the warrants immediately prior to modification of terms and immediately after the

adjustment was calculated as $ 237 , using a Black Scholes model based on the following significant inputs:

On October 26, 2020:

stock price of $ 1.47 ;

comparable company volatility of 96.5 %;

remaining term 4.5 -4.8 years;

dividend yield of 0 % and risk-free interest

rate of 0.18 .

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, $.

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 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

On June12, 2018, our stockholders approved the

2018 Equity Incentive Plan (the “2018 Plan”) to replace our 2015 Equity Incentive Plan (the “2015 Plan”).

8, 2020, 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 800,000 shares from 50,000 to 850,000 .

In addition, up to 122,279 shares of our common stock previously reserved

for issuance under the 2015 Plan are available for issuance under the 2018 Plan to the extent such shares were available for issuance

under the 2015 Plan as of June 12, 2018 or thereafter cease to be subject to awards outstanding under the 2015 Plan, such as by expiration,

cancellation, or forfeiture of such awards.

On June 24, 2021, 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 shares.

Stock options are generally issued with a per

share exercise price equal to no less than fair market value of our common stock at the date of grant.

Options granted under the 2018

Plan generally vest immediately, or ratably over a two- to 36-month period coinciding with their respective service periods.

Options under

the 2018 Plan generally have a term of five years .

FAIR VALUE MEASUREMENTS

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

We have operating leases for our corporate headquarters and our manufacturing and research facility, which expire in 2024.

We were obligated under finance leases for certain research and computer equipment, of which the last arrangement expired in June 2022.

The components of lease cost are as follows (in thousands):

Three Months Ended

Operating lease cost $ 56 $ 56

Finance lease cost:

Amortization of right-of-use asset $ — $ 16

Interest on lease liability — 1

Total finance lease cost $ — $ 17

As of March 31, 2023, maturities of operating lease liabilities are follows (in thousands):

Total operating lease payments 335

Less imputed interest ( 19 )

Total operating lease liabilities $ 316

STOCK-BASED COMPENSATION

In 2018, our stockholders approved the adoption of the SenesTech, Inc.

2018 Equity Incentive Plan (the “2018 Plan”).

The 2018 Plan has since been amended and restated on certain occasions, most recently on October 12, 2022, when our stockholders approved an increase to the total number of authorized shares to 348,614 shares.

Stock options are generally issued with a per share exercise price equal to the fair market value of our common stock at the date of grant.

Options granted generally vest immediately, or ratably over a 12 - to 36 -month period coinciding with their respective service periods, with terms of generally five years .

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

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

for issuance under the Amended 2018 Plan.

As of March 31, 2023, we had 164,522 shares of common stock available for issuance under the 2018 Plan.

Stock Options

We measure the fair value of stock options with

service-based vesting criteria to employees, directors and consultants on the date of grant using the Black-Scholes option pricing model.

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.

The weighted-average assumptions used in the Black-Scholes

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

Expected dividend yield

Expected term (in years)

Risk-free interest rate

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

of company-specific historical or implied volatility, the expected volatility assumption was determined based on historical volatilities

from traded options of biotech companies of comparable size and stability, whose share prices are publicly available.

The expected term

of options granted to employees is calculated based on the mid-point between the vesting date and the end of the contractual term according

to the simplified method as described in SEC Staff Accounting Bulletin 110 because we do not have sufficient historical exercise data

to provide a reasonable basis upon which to estimate the expected term due to the limited period of time its awards have been outstanding.

For non-employee options, the expected term of options granted is the contractual term of the options.

The risk-free interest rate is

determined by reference to the implied yields of U.S.

Treasury securities with a remaining term equal to the expected term assumed at

the time of grant.

The expected dividend assumption is based on our history and expectation of dividend payouts.

We have not paid and

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 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.

The following table summarizes the stock option activity for the periods indicated as follows:

Number of Options Weighted

Share Weighted

Outstanding as of December 31, 2022 280,810 $ 17.00 3.9

Granted — — —

Exercised — — —

Forfeited ( 326 ) — —

Expired ( 36 ) — —

Outstanding as of March 31, 2023 280,448 (1)

Exercisable as of March 31, 2023 98,406 32.22 —

(1) - Includes options related to 99,000 shares that are inducement awards and not granted under the 2018 Plan.

Restricted Stock Units

The following table summarizes restricted stock unit activity for the

nine months ended September 30, 2022:

The following table summarizes restricted stock unit activity for the three months ended March 31, 2023:

Units Weighted

Outstanding as of December 31, 2022 18,799 $ 2.71

Outstanding as of September 30, 2022

The stock-based compensation expense was recorded as follows:

Vested ( 18,799 ) 2.71

Forfeited — —

Outstanding as of March 31, 2023 — —

The stock-based compensation expense was recorded as follows (in thousands):

Three Months Ended

2 unchanged sentences

Total stock-based compensation expense $ 166 $ 224

The allocation between research and development

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

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

The allocation between research and development and selling, general and administrative expense was based on the department and services performed by the employee or non-employee.

At March 31, 2023, the total compensation cost related to unvested options not yet recognized was $ 403,000 , which will be recognized over a weighted average period of 24 months, assuming the employees and non-employee s complete their service period required for vesting.

STOCKHOLDERS’ EQUITY

Activity in equity during the three-month periods ended March 31, 2023 and 2022 was as follows (dollars in thousands):

Common Stock Additional

Capital Accumulated

Deficit Total

Shares Amount

Balances as of December 31, 2022 809,648 $ 1 $ 127,481 $ ( 122,203 ) $ 5,279

Stock-based compensation — — 166 — 166

Issuance of common stock upon exercise of warrants 1,230,000 1 ( 1 ) — —

Issuance of common stock for service 54,466 — 100 — 100

Issuance of shares pursuant to the vesting of restricted stock units, net of shares withheld for taxes 13,225 — ( 11 ) — ( 11 )

Net loss — — — ( 2,037 ) ( 2,037 )

Balances as of March 31, 2023 2,107,339 $ 2 $ 127,735 $ ( 124,240 ) $ 3,497

Balances as of December 31, 2021 610,364 $ 1 $ 122,542 $ ( 112,508 ) $ 10,035

Stock-based compensation — — 221 — 221

Issuance of common stock for service 250 — 3 — 3

Net loss — — — ( 2,332 ) ( 2,332 )

Balances as of March 31, 2022 610,614 $ 1 $ 122,766 $ ( 114,840 ) $ 7,927

During the three months ended March 31, 2023, the following shares of common stock were issued:

• 1,230,000 shares pursuant to the exercise of previously outstanding prefunded warrants, which were issued in November 2022 with an exercise price of $ 3.50 per share;

• 54,466 restricted shares in exchange for marketing services to be performed through September 2023, with the total value of services to be recognized based on the stock price on date of issuance;

• 13,225 shares pursuant to the vesting of restricted stock units.

COMMON STOCK WARRANTS

The following table summarizes the common stock warrant activity for the three months ended March 31, 2023:

Shares Weighted

Share Weighted

Outstanding as of December 31, 2022 4,414,810 $ 6.58 3.0

Exercised ( 1,230,000 ) 3.50 —

Expired — — —

Outstanding as of March 31, 2023 3,184,810 7.78 2.8

During the three months ended March 31, 2023, prefunded warrants representing 1,230,000 shares of common stock were exercised.

Such prefunded warrants were issued in November 2022 with an exercise price of $ 3.50 per share.

LOSS PER SHARE

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 months ended March 31, 2023 and 2022.

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):

Three Months Ended

Common stock warrants $ 3,184,810 $ 226,572

Restricted stock units — 33

Common stock options 280,448 72,366

$ 3,465,258 $ 298,971

CONTINGENCIES

Legal Proceedings

In July 2020, Kennan E.

Kaeder, our former corporate

general counsel (the “Plaintiff”), commenced an action against us in the Superior Court of the State of California, for the

County of San Diego.

The complaint alleges, among other things, that we breached the Plaintiff’s employment contract with us, as

well as the implied covenant of good faith and fair dealing, by refusing to issue him the balance of stock options he claims we owe him.

Kaeder, our former corporate general counsel (the “Plaintiff”), commenced an action against us in the Superior Court of the State of California, for the County of San Diego.

The complaint alleges, among other things, that we breached the Plaintiff’s employment contract with us, as well as the implied covenant of good faith and fair dealing, by refusing to issue him the balance of stock options he claims we owe him.

In September 2021, the Plaintiff served us and also named the following individuals as defendants:

Loretta Mayer, Cheryl Dyer, Thomas

Loretta Mayer, Cheryl Dyer, Thomas C.

Chesterman, Kim Wolin, Grover Wickersham, Marc Dumont, Bob Ramsey, Matthew Szot, Julia Williams, and Bill Baker.

We do not believe

that all of the defendants have yet been served.

The Plaintiff alleges that such individuals agreed to knowingly and wrongfully withhold

the stock options owed to him and are knowingly in receipt of stolen property.

The Plaintiff seeks compensatory damages in excess of $ 500,000 ,

treble damages, and reasonable attorneys’ fees.

We do not believe the claims described above have merit and intend to aggressively

defend against these accusations.

We do not believe that all of the defendants have yet been served.

Furthermore, Loretta Mayer and Cheryl Dyer have separately settled with the Plaintiff.

The Plaintiff alleges that such individuals agreed to knowingly and wrongfully withhold the stock options owed to him and are knowingly in receipt of stolen property.

The Plaintiff seeks compensatory damages in excess of $ 500,000 , treble damages, and reasonable attorneys’ fees.

We do not believe the claims described above have merit and intend to aggressively defend against these accusations.

The Plaintiff has agreed to mediation to resolve the issues.

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

In addition to the matter described above, we

may be subject to other legal proceedings and claims arising from contracts or other matters from time to time in the ordinary course

Management is not aware of any other pending or threatened litigation where the ultimate disposition or resolution could

have a material adverse effect on our financial position, results of operations or liquidity.

Lease Commitments

On December 1, 2019, we entered into a lease for

our corporate headquarters in Phoenix, Arizona where we lease and occupy approximately 5,529 square feet of office space.

This lease expires

in November 2024.

On August 1, 2020, we entered into a lease for

our manufacturing and research facility in Phoenix, Arizona where we occupy approximately 5,105 square feet of manufacturing and warehouse

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 $ 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 September 30, 2022 are follows:

Years Ending December 31,

Total minimum lease payments

Note 13 - Subsequent Events

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.

SUBSEQUENT EVENTS

On April 12, 2023, we consummated a registered direct offering with certain institutional investors and issued an aggregate of 857,146 shares of our common stock for $ 1.75 per share for gross proceeds of $ 1.5 million, before deducting fees payable to the placement agent and other estimated offering expenses payable by us.

The shares were offered and sold pursuant to a prospectus, dated May 6, 2022, and a prospectus supplement, dated April 10, 2023, in connection with a takedown from our shelf registration statement on Form S-3 (File No.

In connection with the registered direct offering, the following warrants were issued:

• Series C warrants to the investors in the offering to purchase up to 857,146 shares of our common stock.

The Series C warrants are exercisable immediately with an exercise price of $ 1.62 per share, and expire five and one-half years from the date of issuance, or October 12, 2028.

• Placement agent warrants to purchase up to 64,286 shares of our common stock.

The placement agent warrants will be exercisable immediately upon issuance, with an exercise price per share of $ 2.1875 per share, and expire five years following the date of issuance, or April 10, 2028.

We have evaluated subsequent events from the balance sheet date through May 11, 2023, the date at which the condensed financial statements were issued, and determined that there were no additional items that require adjustment to or disclosure in the condensed 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