What changed in this filing

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Item 1. Financial Statements

2023-11-09 compared with 2023-08-11 · 152 added, 59 removed, 321 unchanged (40% of the section changed)

3 unchanged sentences

(In thousands, except shares and per share data)

September 30,

2023 December 31, 2022

15 unchanged sentences

Current portion of operating lease liability 192 180

Current portion of note payable 9 —

Deferred revenue 15 44

1 unchanged sentence

Operating lease liability, less current portion 34 179

Note payable, less current portion 44 —

Total liabilities 1,112 1,503

2 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, 2,964,485 and 809,648 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively

Common stock, $ 0.001 par value, 100,000,000 shares authorized, 5,899,060 shares issued and 3,279,485 shares outstanding as of September 30, 2023 and 809,648 shares issued and outstanding as of December 31, 2022

Additional paid-in capital 130,933 127,481

6 unchanged sentences

(In thousands, except shares and per share data)

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

10 unchanged sentences

Interest expense — — — ( 1 )

Miscellaneous income — 2 — 2

Other income, net 7 3 15 4

Miscellaneous expense, net — ( 28 ) — ( 26 )

Other income (expense), net 4 ( 27 ) 19 ( 23 )

Net loss and comprehensive loss $ ( 1,947 ) $ ( 2,646 ) $ ( 5,977 ) $ ( 7,547 )

Weighted average shares outstanding - basic and fully diluted 2,860,874 610,635 2,208,162 610,543

Net loss per share - basic and fully diluted $ ( 0.70 ) $ ( 4.21 ) $ ( 1.83 ) $ ( 8.03 )

Weighted average shares outstanding - basic and diluted 4,176,592 610,648 3,037,790 610,578

Net loss per share - basic and diluted $ ( 0.47 ) $ ( 4.33 ) $ ( 1.97 ) $ ( 12.36 )

See accompanying notes to condensed financial statements.

2 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended

September 30,

Cash flows from operating activities:

4 unchanged sentences

Bad debt expense ( 4 ) 5

Loss on sale of property and equipment — 28

Changes in operating assets and liabilities:

Accounts receivable 34 ( 16 )

Other assets ( 2 ) —

Prepaid expenses ( 7 ) ( 174 )

Inventory 150 48

Other assets ( 3 ) —

Accounts payable ( 393 ) 142

4 unchanged sentences

Purchase of property and equipment ( 114 ) ( 167 )

Proceeds received from sale of property and equipment — 4

Net cash used in investing activities ( 114 ) ( 163 )

Cash flows from financing activities:

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

Repayments of notes payable — ( 5 )

Proceeds from issuances of common stock, net 2,998 —

Proceeds from (repayments of) notes payable, net 44 ( 5 )

Repayments of finance lease obligations — ( 27 )

4 unchanged sentences

Cash and cash equivalents, end of period $ 2,145 $ 2,792

Supplemental disclosures of cash flow information:

Interest paid $ — $ 1

Income taxes paid $ — $ —

Supplemental cash flow information is as follows:

Cash paid for interest $ — $ 1

Cash paid for income taxes — —

Non-cash investing and financing activities:

Note payable incurred for the purchase of certain equipment 10 —

See accompanying notes to condensed financial statements.

7 unchanged sentences

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 ® .

We have developed and are commercializing a global, proprietary technology for managing animal pest populations, initially rat populations, through fertility control.

Our first product is known as ContraPest ® .

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

4 unchanged sentences

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.

We are pursuing additional products including Evolve TM , a soft bait containing the active ingredient cottonseed oil.

Evolve limits reproduction of male and female rats after one to two breeding cycles following consumption.

Evolve is being developed as a minimum risk pesticide under the U.S.

Environmental Protection Agency Federal Insecticide, Fungicide, and Rodenticide Act, Section 25(b).

For further information see Note 10.

Going Concern

Our condensed financial statements as of June 30, 2023 were prepared under the assumption that we would continue as a going concern.

Our condensed financial statements as of September 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.

1 unchanged sentence

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.

If we encounter continued issues or delays in the commercialization of fertility control products, 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.

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

As of September 30, 2023, we had an accumulated deficit of $ 128.2 million and cash and cash equivalents of $ 2.1 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;

(i) successful commercialization of fertility control products and maintaining and obtaining regulatory approval of our products and product candidates;

(ii) market acceptance, commercial viability and profitability of fertility control products and other

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

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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 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.

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.

Based upon our current operating plan, we expect that cash and cash equivalents at September 30, 2023, 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 months.

While we have evaluated and continue to evaluate our operating expenses and concentrate our resources toward the successful commercialization of fertility control products 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.

7 unchanged sentences

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 June 30, 2023, and our operating results and cash flows for the three- and six-month periods ended June 30, 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 September 30, 2023, and our operating results and cash flows for the three- and nine-month periods ended September 30, 2023 and 2022.

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

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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.

Reclassification

To conform with the 2023 presentation, we have reclassified the Loss on sale of property and equipment of $ 28,000 and Proceeds received from sale of property and equipment of $ 4,000 from Purchases of property and equipment in the condensed statement of cash flows for the nine months ended September 30, 2022.

These reclassifications had no impact on our condensed statement of operations and comprehensive loss for the nine months ended September 30, 2022.

BALANCE SHEET COMPONENTS

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 $ 2.2 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.

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 $ 2.1 million and $ 4.8 million as of September 30, 2023 and December 31, 2022, respectively, included within cash and cash equivalents in the condensed balance sheets.

Accounts Receivable, Net

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

September 30,

2023 December 31,

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

5 unchanged sentences

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

September 30,

2023 December 31,

Raw materials $ 670 $ 772

Work in progress 5 —

Finished goods 46 99

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

5 unchanged sentences

Prepaid expenses consisted of the following (in thousands):

September 30,

2023 December 31,

Software licenses 138 157

Professional services 95 41

Insurance 44 61

Software licenses 94 157

Patents 17 39

3 unchanged sentences

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

September 30,

2023 December 31,

10 unchanged sentences

Accrued expenses consisted of the following (in thousands):

September 30,

2023 December 31,

4 unchanged sentences

Total accrued expenses $ 671 $ 560

In August 2023, we arranged financing for the purchase of certain equipment.

The note payable has an annual interest rate of 9.1 % with a term of 5 years and is secured by the underlying equipment.

As of September 30, 2023, future principal payments were as follows (in thousands):

Total principal payments 53

current portion of note payable ( 9 )

Note payable, less current portion $ 44

FAIR VALUE MEASUREMENTS

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

Note payable is recorded at amortized cost, which approximates fair value.

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

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

4 unchanged sentences

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

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

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

Total operating lease payments 236

Less imputed interest ( 14 )

imputed interest ( 10 )

Total operating lease liabilities $ 226

6 unchanged sentences

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

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

As of September 30, 2023, we had 496,330 shares of common stock available for issuance under the 2018 Plan.

Stock Options

2 unchanged sentences

Share Weighted

Three months ended June 30, 2023:

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

Three months ended September 30, 2023:

Outstanding as of June 30, 2023 479,426 $ 17.11 4.4

Granted — — —

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Expired — — —

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

Six months ended June 30, 2023:

Outstanding as of September 30, 2023 448,676 (1)

Nine months ended September 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 June 30, 2023 479,426 (1)

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

Outstanding as of September 30, 2023 448,676 (1)

Exercisable as of September 30, 2023 194,878 30.92 3.9

(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:

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

Expected volatility 128 %

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Forfeited — —

Unvested balance as of June 30, 2023 — —

Unvested balance as of September 30, 2023 — —

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

3 unchanged sentences

Total stock-based compensation expense $ 170 $ 140 $ 467 $ 570

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

(1) Includes $ 44,000 and $ 100,000 related to stock issued in exchange for marketing services for the three and nine month periods ended September 30, 2023, respectively.

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 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.

At September 30, 2023, the total compensation cost related to unvested options not yet recognized was $ 382,000 , which will be recognized over a weighted average period of 1.3 years, assuming the employees and non-employees complete their service period required for vesting.

STOCKHOLDERS’ EQUITY

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

On August 18, 2023, at a special meeting of stockholders, our stockholders 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.

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.

No shares have yet been issued pursuant to this filing.

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

Common Stock Additional

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

Stock-based compensation — — 88 — 88

Modification of terms related to certain warrants — — 657 657

Issuance of common stock upon exercise of warrants, net 315,000 — 1,131 — 1,131

Net loss — — — ( 1,947 ) ( 1,947 )

Balances as of September 31, 2023 3,279,485 3 $ 130,933 $ ( 128,180 ) $ 2,756

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

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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:

Stock-based compensation — — 139 — 139

Net loss — — — ( 2,646 ) ( 2,646 )

Balances as of September 30, 2022 610,648 1 $ 123,111 $ ( 120,055 ) $ 3,057

During the nine months ended September 30, 2023, the following shares of common stock were issued:

• 315,000 shares pursuant to the exercise of warrants.

A certain warrant holder was induced to exercise warrants related to 2,934,575 shares by reducing the exercise price to the then current market price of our common stock (the “Warrant Inducement”).

The original warrants had an exercise price of $ 3.165 per share and a weighted average remaining life of 2.3 years.

These warrants were exercised for $ 0.7202 per share for gross proceeds of $ 2.1 million, before deducting $ 326,000 of issuance costs and $ 657,000 related to the modification of the terms of the warrants to induce exercise.

Of the 2,934,575 shares issued, 2,619,575 shares are held in abeyance and not considered outstanding, at which time such shares will become outstanding.

The balance of the shares held in abeyance will be held in abeyance until notice from the stock holder that the balance, or portion thereof, may be issued in compliance with a beneficial ownership limitation provision in the warrants.

See Note 10 for a discussion of outstanding abeyance shares.

In connection with the Warrant Inducement transaction, new warrants to purchase 5,869,150 shares of our common stock were issued, which are discussed in Note 7.

• 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.

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 $ 1.54 per share.

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Expired ( 13,629 ) 527.05 —

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.

Outstanding as of September 30, 2023 7,173,917 2.00 4.9

During the nine months ended September 30, 2023:

• In August, warrants were issued to the investor in the Warrant Inducement transaction discussed in Note 6 to purchase up to 5,869,150 shares of our common stock.

These warrants are exercisable immediately with an exercise price of $ 0.7202 per share, and 3,012,006 expiring August 24, 2028 ( 5 -Year Warrants) and 2,857,144 expiring September 24, 2024 ( 13 -Month Warrants).

We estimated the fair value of the 5 -Year Warrants to be $ 1.5 million using a Black-Scholes model based on the following significant inputs:

common stock price of $ 0.682 per share;

volatility of 98 %;

term of 5 years;

dividend yield of 0 %;

and risk-free rate of 4.4 %.

The fair value of the 13 -Month Warrants was estimated to be $ 930,000 using the Black-Scholes model based on the following significant inputs:

common stock price of $ 0.682 per share;

volatility of 122 %;

term of 1.1 year;

dividend yield of 0 %;

and risk-free rate of 4.4 %.

• In August, placement agent warrants were issued to purchase up to 146,729 shares of our common stock.

The placement agent warrants are exercisable immediately upon issuance, with an exercise price per share of $ 0.9003 per share, and expire August 24, 2028.

We estimated the fair value of these warrants to be $ 72,000 using a Black-Scholes model based on the following significant inputs:

common stock price of $ 0.682 per share;

volatility of 98 %;

term of 5 years;

dividend yield of 0 %;and risk-free interest rate of 5.4 %.

• In August, warrants representing 2,934,575 shares of common stock were exercised for $ 0.7202 per share.

The terms of these warrants were modified in order to induce exercise.

See Warrant Inducement discussion in Note 6.

We recorded additional equity costs of $ 657,000 related to the warrant exercise transaction, which was calculated as the difference between the fair value of the warrants immediately prior to modification and immediately after modification using the Black-Scholes model based on the following significant inputs:

common stock price of $ 0.682 per share;

volatility of 96 %;

term of 2.3 years;

dividend yield of 0 %;

and risk-free rate of 5.0 %.

• In April, 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:

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;

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and risk-free interest rate of 3.4 %.

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

• In April, 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.

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dividend yield of 0 %;and risk-free interest rate of 3.5 %.

• Prefunded warrants representing 1,230,000 shares of common stock were exercised.

• In February, 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 $ 1.54 per share.

LOSS PER SHARE

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.

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, which includes prefunded warrants and shares held in abeyance from date of issuance.

Diluted loss per share is computed by dividing the loss attributable to common stockholders by the weighted average number of common shares used in the basic loss per share calculation plus 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.

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

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SUBSEQUENT EVENTS

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.

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

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.

In connection with the Warrant Inducement discussed in Note 6, of the 2,934,575 shares issued, 2,619,575 shares were held in abeyance and not considered outstanding until certain conditions are met, at which time such shares will become outstanding.

The balance of the shares in abeyance will be held in abeyance until notice from the stock holder that the balance, or potion thereof, may be issued in compliance with a beneficial ownership limitation provision in the warrants.

October 2023, the conditions were met and the stock holder provided notice to release 351,575 shares from abeyance which became outstanding.

As of November 9, 2023, there were 3,631,060 shares of common stock outstanding and 2,268,000 shares held in abeyance.

In November 2023, we launched our latest product, Evolve, a soft bait containing the active ingredient cottonseed oil.

Evolve limits reproduction of male and female rats after one to two breeding cycles following consumption.

Evolve is being marketed for use in controlling rat populations as a minimum risk pesticide under the U.S.

Environmental Protection Agency Federal Insecticide, Fungicide, and Rodenticide Act, Section 25(b).

We must obtain registration from the various state regulatory agencies that do not accept the federal exemption.

To date, we are authorized to sell Evolve in 12 states.

We have evaluated subsequent events from the balance sheet date through November 9, 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