What changed in this filing

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Item 1. Financial Statements

2023-08-11 compared with 2023-05-11 · 118 added, 62 removed, 262 unchanged (41% of the section changed)

3 unchanged sentences

(In thousands, except shares and per share data)

March 31, 2023 December 31, 2022

2023 December 31, 2022

ASSETS (unaudited)

21 unchanged sentences

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

Common stock, $ 0.001 par value, 100,000,000 shares authorized, 2,964,485 and 809,648 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively

Additional paid-in capital 129,057 127,481

6 unchanged sentences

(In thousands, except shares and per share data)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

Revenues, net $ 305 $ 277 $ 538 $ 472

9 unchanged sentences

Interest expense — — — ( 1 )

Miscellaneous income — 2 — 2

Other income, net 7 3 15 4

6 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

17 unchanged sentences

Cash flows from financing activities:

Proceeds from the issuance of common stock, net 1,210 —

Repayments of notes payable — ( 5 )

1 unchanged sentence

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

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

Net cash provided by (used in) financing activities 1,199 ( 32 )

Decrease in cash and cash equivalents ( 2,579 ) ( 4,326 )

10 unchanged sentences

SenesTech, Inc.

(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.

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

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

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

7 unchanged sentences

Going Concern

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

Our condensed financial statements as of June 30, 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.

10 unchanged sentences

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.

As of June 30, 2023, we had an accumulated deficit of $ 126.2 million and cash and cash equivalents of $ 2.2 million.

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

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

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.

Based upon our current operating plan, we expect that cash and cash equivalents at June 30, 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 three months.

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.

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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.

In our opinion, the unaudited condensed financial statements include all material adjustments, all of which are of a normal and recurring nature, necessary to present fairly our financial position as of June 30, 2023, and our operating results and cash flows for the three- and six-month periods ended June 30, 2023 and 2022.

The accompanying financial information as of December 31, 2022 is derived from audited financial statements.

13 unchanged sentences

Cash and Cash Equivalents

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.

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 $ 2.2 million and $ 4.8 million as of June 30, 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):

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

2023 December 31,

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Accounts receivable, net $ 44 $ 113

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

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

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Balance as of beginning of period $ 4 $ — $ 6 $ —

3 unchanged sentences

Inventory, net

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

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

2023 December 31,

Raw materials $ 729 $ 772

Work in progress 6 —

Finished goods 54 99

2 unchanged sentences

Inventory, net $ 765 $ 853

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

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

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Balance as of beginning of period $ 18 $ 26 $ 18 $ 29

3 unchanged sentences

Prepaid Expenses

Prepaid expenses consist of the following (in thousands):

Prepaid expenses consisted of the following (in thousands):

2023 December 31,

Software licenses $ 113 $ 157

Marketing programs and conferences 10 74

Professional services $ 107 $ 41

Insurance 97 61

Software licenses 94 157

Patents 10 39

Professional services 198 41

Marketing programs and conferences 8 74

Total prepaid expenses $ 330 $ 378

Property and Equipment, Net

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

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

2023 December 31,

9 unchanged sentences

Accrued Expenses

Accrued expenses consist of the following (in thousands):

Accrued expenses consisted of the following (in thousands):

2023 December 31,

8 unchanged sentences

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):

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

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Operating lease cost $ 55 $ 56 $ 111 $ 112

3 unchanged sentences

Total finance lease cost $ — $ 11 $ — $ 28

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

As of June 30, 2023, maturities of operating lease liabilities were follows (in thousands):

Total operating lease payments 285

4 unchanged sentences

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.

The 2018 Plan has since been amended and restated on certain occasions, most recently on June 26, 2023, when our stockholders approved an increase to the total number of authorized shares to 848,614 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 .

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

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

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

As of June 30, 2023, we had 465,580 shares of common stock available for issuance under the 2018 Plan.

Stock Options

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

The following table presents the outstanding stock option activity:

Number of Options Weighted

Share Weighted

Three months ended June 30, 2023:

Outstanding as of March 31, 2023 280,448 $ 17.11 4.4

Granted 199,421 1.25 5.0

Exercised — — —

Forfeited ( 107 ) 39.64 —

Expired ( 336 ) 118.25 —

Outstanding as of June 30, 2023 479,426 (1)

Six months ended June 30, 2023:

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

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Expired ( 372 ) 680.87 —

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

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

Outstanding as of June 30, 2023 479,426 (1)

Exercisable as of June 30, 2023 139,583 29.16 3.8

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

The weighted average grant date fair value of options granted during the six months ended June 30, 2023 was $ 1.24 per share, based on the following assumptions used in the Black-Scholes option pricing model:

Expected volatility 128 %

Expected dividend yield —

Expected term (in years) 5

Risk-free interest rate 5.3 %

The expected volatility assumption is based on the calculated volatility of our common stock at the date of grant based on historical prices over the most recent period commensurate with the term of the award.

The expected dividend yield assumption is based on our history and expected dividend payouts:

we have not, and do not expect to, pay dividends.

The expected term assumption is the contractual term of the options for non-employees.

The risk-free interest rate assumption is determined using the U.S.

treasury yields for bonds with a maturity commensurate with the term of the award.

Restricted Stock Units

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

The following table presents the unvested restricted stock unit activity:

Units Weighted

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

Unvested balance as of December 31, 2022 18,799 $ 2.71

Vested ( 18,799 ) 2.71

Forfeited — —

Outstanding as of March 31, 2023 — —

Unvested balance as of June 30, 2023 — —

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

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Research and development $ 5 $ 3 $ 9 $ 4

Selling, general and administrative (1)

165 203 327 426

Total stock-based compensation expense $ 170 $ 206 $ 336 $ 430

(1) For the three and six month periods ended June 30, 2023, includes $ 56,000 related to stock issued in exchange for marketing services.

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.

At June 30, 2023, the total compensation cost related to unvested options not yet recognized was $ 469,000 , which will be recognized over a weighted average period of 1.6 years, assuming the employees and non-employees 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):

Activity in equity during the six month periods ended June 30, 2023 and 2022 was as follows (dollars in thousands):

Common Stock Additional

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

Stock-based compensation — — 113 — 113

Issuance of common stock, net of issuance costs 857,146 1 1,209 — 1,210

Net loss — — — ( 1,993 ) ( 1,993 )

Balances as of June 30, 2023 2,964,485 $ 3 $ 129,057 $ ( 126,233 ) $ 2,827

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

3 unchanged sentences

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:

Stock-based compensation — — 205 — 205

Issuance of common stock for service 34 — 1 — 1

Net loss — — — ( 2,569 ) ( 2,569 )

Balances as of June 30, 2022 610,648 $ 1 $ 122,972 $ ( 117,409 ) $ 5,564

During the six months ended June 30, 2023, the following shares of common stock were issued:

• 857,146 shares pursuant to a registered direct offering with certain institutional investors for $ 1.75 per share for gross proceeds of $ 1.5 million, before deducting issuance costs of $ 290,000 .

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.

• 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;

• 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 the 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:

The following table presents the common stock warrant activity:

Shares Weighted

1 unchanged sentence

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

Issued 921,432 1.66 5.3

Exercised ( 1,230,000 ) 3.50 —

Expired ( 2,835 ) 728.00 —

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.

Outstanding as of June 30, 2023 4,103,407 5.91 3.2

During the six months ended June 30, 2023:

• Series C warrants were issued to the investors in the offering discussed in Note 6 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 October 12, 2028.

We estimated the fair value of these warrants to be $ 1.1 million using a Black-Scholes model based on the following significant inputs:

common stock price of $ 1.38 per share;

volatility of 164 %;

term of 5.5 years;

dividend yield of — %;

and risk-free interest rate of 3.4 %;

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

The placement agent warrants are exercisable immediately upon issuance, with an exercise price per share of $ 2.1875 per share, and expire April 10, 2028.

We estimated the fair value of these warrants to be $ 82,000 using a Black-Scholes model based on the following significant inputs:

common stock price of $ 1.38 per share;

volatility of 165 %;

term of 5 years;

dividend yield of — %;and risk-free interest rate of 3.5 %;

• 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):

Basic loss per share 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 is computed by dividing the loss attributable to common stockholders by the weighted average number of common shares and potentially dilutive securities outstanding during the period determined using the treasury stock method.

Stock options, warrants and restricted stock units are considered to be potentially dilutive securities but have been excluded from the calculation of diluted loss per share because their effect would be anti-dilutive given the net losses reported for all periods presented.

Therefore, basic and diluted loss per share are the same for each period presented.

The following shares were excluded from the calculation of diluted net loss per share:

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Common stock warrants — — 166,661 —

Stock options 10,171 — 75,466 —

Restricted stock units — — — —

Common stock options 280,448 72,366

10,171 — 242,127 —

1 unchanged sentence

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.

In July 2020, 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 C.

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

In September 2021, the Plaintiff served us and also named 10 individuals as defendants, consisting of current and former directors and employees.

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.

Furthermore, two individually named defendants 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.

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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.

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.

On July 21, 2023, subject to stockholder approval, our board of directors approved an amendment to our amended and restated certificate of incorporation, as amended, to effect a reverse stock split (the “Reverse Stock Split”) of our issued and outstanding common stock by a ratio of not less than 1-for-2 and not more than 1-for-12.

The exact ratio of the Reverse Stock Split will be set within this range as determined by our board of directors in its sole discretion prior to the time of the Reverse Stock Split and will be publicly announced by us prior to the effective time.

A special meeting of stockholders is scheduled for August 18, 2023 to vote on such matter, among other items.

On July 21, 2023, our board of directors approved a public offering of shares of our common stock, together with Series D and Series E warrants to purchase shares of our common stock for aggregate gross proceeds of up to $ 7.5 million.

See Form S-1 filed with the SEC on July 21, 2023 (File No.

We have evaluated subsequent events from the balance sheet date through August 10, 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