What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2024-02-21 compared with 2023-03-17 · 91 added, 72 removed, 134 unchanged (55% of the section changed)

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

We have developed and are commercializing products for managing animal pest populations, initially rat populations, through fertility control.

We currently have two product lines of fertility control products:

ContraPest and Evolve.

As far back as we can trace, rats have been foe to mankind.

Posing threats to human and animal health, food security, and infrastructure around the world, we have spent centuries trying to solve the problem.

Rats carry or can spread at least 35 diseases, globally posing a dangerous risk to public health and safety and protein production.

Rats carry or can spread at least 35 diseases, globally posing a dangerous risk to public health and safety and agriculture.

Through consumption and contamination, rats destroy at least 20% of the global stored food supply every year.

Additionally, rats cause over $27 billion in damage to public and private infrastructure annually in the United States alone by burrowing beneath foundations and gnawing on electrical wiring, insulation, fire proofing systems, electronics and computer equipment.

Additionally, rats cause over $27 billion in damage to public and private infrastructure annually in the United States alone by burrowing beneath foundations, as well as gnawing on electrical wiring, insulation, fire proofing systems, electronics and computer equipment.

Over the centuries, the most prevalent response to rat infestations has been to try to eliminate them through the use of lethal tools such as traps and rodenticides.

However, there are growing concerns about secondary exposure and bioaccumulation of rodenticides through documentation of rats becoming resistant to their lethal effects or learning to avoid them altogether.

While some of these challenges are new, the efficacy of the response to rat infestations has always been limited by the rat’s extraordinary reproduction.

ContraPest®, our initial product, is novel liquid bait in the pest control industry.

ContraPest targets the reproductive systems of both male and female Norway and roof rats, which can lead to sustained reductions of the rat population.

ContraPest is a liquid bait containing the active ingredients 4-vinylcyclohexene diepoxide (“VCD”) and triptolide.

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

Accordingly, it offers a new tool used in coordination with rodenticides as part of an integrated pest management program, or an alternative to traditional rodenticides altogether.

It is an important option in the increasing number of jurisdictions that are restricting the use of second-generation anti-coagulant products.

The registration process with the United States Environmental Protection Agency (the “EPA”) for ContraPest began on August 23, 2015.

However, there are growing concerns about secondary exposure and bioaccumulation of rodenticides.

While some of these challenges are of recent concern, the efficacy of the response to rat infestations has always been limited by the rat’s extraordinary reproductive rate.

ContraPest®, our initial product, is a novel liquid bait in the pest control industry, containing the active ingredients 4-vinylcyclohexene diepoxide (“VCD”) and triptolide.

ContraPest targets the reproductive systems of both male and female Norway and roof rats beginning with the first breeding cycle following consumption, which can lead to sustained reductions of the rat population.

ContraPest is a highly palatable liquid formulation that reduces fertility in both male and female rats.

The high fat content and sweet taste of ContraPest promotes sustained consumption even when other sought-after food sources are present.

In both field and laboratory settings, consumption of ContraPest occurs even in the presence of abundant water sources and plentiful food choices, including animal feed, trash and other options.

Additionally, ContraPest does not cause illness in rats, and, therefore, it does not change behavior or result in bait aversion.

Accordingly, ContraPest offers a new tool used in coordination with rodenticides as part of an integrated pest management program.

Additionally, ContraPest can be successfully used as an alternative to traditional rodenticides altogether, an important option in the increasing number of jurisdictions that are restricting the use of second-generation anti-coagulant products.

The registration process with the EPA for ContraPest began 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.

3 unchanged sentences

We continue to actively seek to comply with these requirements.

On March 10, 2022, the EPA granted a sub-label for ContraPest allowing for an alternative delivery system in a hanging bait station designed to target roof rat habitats and infestations, currently marketed as Elevate Bait™.

We are continuously enhancing ContraPest to align with the unique needs and environments of our customers in our target verticals while simultaneously pursuing regulatory approvals and amendments to the existing U.S.

1 unchanged sentence

When regulatory and financial conditions permit, we will seek regulatory approval for additional jurisdictions beyond the United States.

Evolve, our second product, is a novel soft bait product in the pest control industry.

Evolve targets the reproductive systems of both male and female rats, which can lead to sustained reductions of the rat population.

Evolve is a soft bait

containing the active ingredient cottonseed oil.

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

Evolve has not been registered by the EPA.

Evolve qualifies for exemption from registration as a minimum risk pesticide under FIFRA Section 25(b).

All applicable requirements for registration, manufacturing, selling, or distributing into designated states and territories have been met.

There are 10 states that accept the federal exemption for pesticide registration with the respective state.

For those states that do not accept the federal exemption, we began the registration process for those states in October 2023.

To date, we are authorized to sell Evolve in 30 states.

We were incorporated in the state of Nevada in July 2004.

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

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

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

15 unchanged sentences

Resistance to traditional rodenticides creates challenges for rodent control programs.

Rats are hard-wired to survive and some rats may develop a genetic mutation making them resistant to certain rodenticides.

Rats, like all animals, are hard-wired to survive and some rats can be born with a genetic mutation making them resistant to certain rodenticides.

Studies show that resistance is increasing in rat species.

2 unchanged sentences

Rodenticides may affect other species within the food chain.

It has been reported that animals that prey on rats such as raptors and large cats, have significant levels of rodenticide present in their bodies due to persistence of the rodenticide in the rat tissue.

Additionally, there is growing concern about the rise in reported cases of adverse effects that rodenticides have on children and pets due to accidental, and direct exposure.

It has been reported that animals that prey on rats such as raptors, large cats, foxes, and other mammals of concern have significant levels of rodenticide present in their bodies due to persistence of the rodenticide in the rat tissue, which may also result in contamination of the food supply.

Additionally, there is growing concern about the rise in reported cases of adverse effects that rodenticides have on children and pets due to accidental, direct exposure.

In November 2022, the EPA released an update to its Endangered Species Act workplan which intends to expand the mitigation efforts for 90 species potentially affected by rodenticides.

4 unchanged sentences

Even though ContraPest is not a traditional rodenticide, these requirements (or a subset) may impact our registration in the future since it is classified in the rodenticide category with the EPA.

We will maintain close contact with the EPA as their final draft of this policy is due November 2023 with an intended final biological evaluation due November 2024.

We will maintain

close contact with the EPA as their final guidance with respect to this policy was released in December 2023 with an intended final biological evaluation due November 2024.

Integrated Pest Management and Fertility Control

2 unchanged sentences

An effective IPM program needs to reduce the existing rat population while preventing the population from rebounding.

Based on company field research, the addition of ContraPest to an IPM program has demonstrated improved efficacy of more than 90% with sustained population suppression.

Maintaining a ContraPest program reduces the reproduction and therefore the risk of future population spikes, known as the rebound effect.

Ongoing monitoring of the program locations has indicated that there has been no rebound in the rodent population from the current low levels.

ContraPest is a highly palatable liquid formulation that reduces fertility in both male and female rats.

Rats require 10% of their body weight in water per day.The high-fat content and sweet taste of ContraPest promotes sustained consumption even when other sought-after food sources are present.

In both field and laboratory settings, consumption of ContraPest occurs even in the presence of abundant water sources and plentiful food choices, including animal feed, trash and other options.

Additionally, ContraPest does not cause illness in rats, and therefore, it does not change behavior or result in bait aversion.

Based on company field research, the addition of a fertility control product to an IPM program has demonstrated improved efficacy of more than 90% with sustained population suppression.

Maintaining a fertility control program reduces the reproduction and therefore the risk of future population spikes, known in the industry as the rebound effect.

company studies)

6 unchanged sentences

Business Strategy

Our goal is for ContraPest fertility control to be a standard tool utilized in pest management in IPM programs across all verticals.

Our goal is for fertility control to be a standard tool utilized in pest management in IPM programs across all verticals.

We will achieve this through the following:

End User Awareness and Adoption.

Our focus is educating end users on the rapid reproduction rate of rats, drawing attention to the complex issue of gaining control of an infestation if you do not have control of rat fertility.

As more rodenticides come to market to address rat populations, attention will be drawn to the impact other rodenticides may have to other species due to bioaccumulation, and the benefit of ContraPest having a low potential for bioaccumulation.

Our focus is educating end users on the rapid reproduction rate of rats, which draws attention to the complex issue of gaining control of an infestation if you do not have control of rat fertility.

Tailored Value Propositions.

While the desire to achieve and maintain control of rat populations is universal among end users, each vertical has a specific pain point and therefore inherent value may be achieved through the use of ContraPest.

By working with our existing customers and conducting field research, we are understanding and leveraging these unique opportunities in our sales strategies across verticals.

Our value statements include, but are not limited to the following:

While the general desire to achieve and maintain control of rat populations is universal among end users, each vertical has a specific pain point which may be improved through the use of fertility control.

By working with our existing customers and conducting field research, we are understanding and leveraging unique opportunities in our sales strategies across verticals.

Our approaches include, but are not limited to the following:

• Product Development.

The needs of customers in each vertical vary due to environment and limitations, requiring ongoing innovation, exploration of additional species, and the pursuit of additional regulatory approvals for ContraPest both in the United States and globally.

• Strategic Partnerships.

3 unchanged sentences

Marketing and Sales Approach

ContraPest is differentiated in what is otherwise a very crowded rodenticide market.

ContraPest is differentiated in what is otherwise a very crowded pest control market.

It is the only product registered with the EPA that restricts fertility in both male and female rats and is designed to be non-lethal.

As first and second generation anti-coagulants come under increased scrutiny for bioaccumulation and impact on non-target species as they travel up the food chain, their use is being restricted or even banned in select areas across the United States and globally.

As first and second generation anti-coagulants come under increased scrutiny for non-target accidental consumption or for bioaccumulation with impact on non-target species as rodenticides travel up the food chain, their use is being restricted or even banned in select areas across the United States and globally.

These increasing restrictions and bans create an opportunity for ContraPest, as industry professionals are looking for effective tools to serve their customers and gain control of rat populations through nontraditional means.

Because the pest industry in the United States has demonstrated a reluctance to adopt new technologies, the marketing of ContraPest has primarily been aimed at end-user awareness, creating pull through demand with Pest Management Providers (“PMP”) by applying pressure for PMPs to use ContraPest as part of their IPM.

Like ContraPest, Evolve is also differentiated in the pest control market due to its unique approach to restrict fertility in rats as opposed to other lethal means.

In addition, Evolve meets the EPA’s FIFRA Section 25(b) minimum risk pesticide conditions.

Evolve is exempt from federal registration because it poses little to no risk to human health and the environment and is made from food ingredients, within tolerances of exemption for both food and nonfood applications, which allows it to be used in agricultural applications.

Because the pest industry in the United States has demonstrated a reluctance to adopt new technologies, the marketing of fertility control has primarily been aimed at end-user awareness, creating pull through demand with Pest Management Providers (“PMP”) by applying pressure for PMPs to use fertility control as part of their IPM.

Additionally, within our target verticals, agribusiness, commercial, distributors, e-commerce, pest management, municipalities, and zoos and sanctuaries, many large targets employ internal pest management teams as opposed to contracting with service providers.

For these reasons, the end-user is our primary target in order to grow market penetration for ContraPest.

For these reasons, the end-user is our primary target in order to grow market penetration for fertility control products.

While pain points and benefits are unique to each vertical, they have shared core value propositions.

• ContraPest is effective.

• Fertility control is effective.

Lab tests and field research demonstrate more than 90% reduction in rat populations when added to an IPM with sustained population suppression;

• Our proprietary, patent-protected formulation and gravity feeding system optimizes consumption and provides targeted delivery for maximum efficacy;

• ContraPest is specifically designed to minimize exposure hazard for handlers and non-targeted species such as wildlife, livestock, and pets;

• ContraPest can be used as an anchor or enhancement for an IPM program, or as a stand-alone solution to decrease reliance on lethal control options.

• Our proprietary formulations and feeding systems optimize consumption and provides targeted delivery for maximum efficacy;

• ContraPest and Evolve are specifically designed to minimize exposure hazard for handlers and non-targeted species such as wildlife, livestock, and pets, with Evolve being designated by the EPA as a minimum risk product;

• Fertility control can be used as an anchor or enhancement for an IPM program, and as a solution to decrease reliance on poisons or other lethal control options.

Three core sales channels drive revenue allowing SenesTech to reach a wider customer base and target different segments of the market.

• e-Commerce.

Because ContraPest is not a retail product, e-commerce provides a hub to push end-users for further education as well as providing 24/7 availability for purchasing products and managing subscriptions.

E-commerce provides a hub to push end-users for further education as well as providing 24/7 availability for purchasing products and managing subscriptions.

• Field Sales.

Field sales allows for personal interaction, consultation, and development of potential customers.

Field sales allow for personal interaction, consultation, and development of potential customers.

Field sales representatives, in charge of regional territories across the United States, focus in the larger account segments, attending trade shows and educational opportunities within target verticals.

2 unchanged sentences

Additionally, the logistics and marketing support offered through these partners reduces cost and effort required to expand our sales.

Our current focus is successful commercialization of ContraPest in the United States.

Aware of the global need for effective rat fertility control, we evaluate requests and inquiries for licensing and manufacturing ContraPest in other regions on a regular basis.

There is a sustained focus on building strategic partnerships now for future globalization of ContraPest.

Raw Materials and Manufacturing Process

3 unchanged sentences

Triptolide is derived from the Thunder god vine, Tripterygium wilfordii, which is commonly cultivated and harvested wild in southeastern China and other Asian countries.

Triptolide is available from a variety of sources, but the process to purify triptolide for use in ContraPest is expensive.

Triptolide is

available from a variety of sources, but the process to purify triptolide for use in ContraPest is expensive.

Thus, we are investigating other, less costly sources of triptolide.

2 unchanged sentences

This process allows ContraPest to be delivered to rats in a palatable, effective manner, and it is designed to be non-lethal.

Currently, we have production scale capability in our facilities in Arizona to manufacture ContraPest.

Our internal production capabilities allow us to meet our current and anticipated demand through 2023 for ContraPest.

Evolve contains one active ingredient, cottonseed oil, a plant-derived food product.

Evolve also contains several other inactive food ingredients.

Currently, we source cottonseed oil from standard food suppliers, and it is available from a variety of sources.

Our manufacturing process for Evolve involves the incorporation of our active ingredient, in low concentration, into several inactive ingredients.

Once incorporated, the entire product is packaged inside of a casing and cut to length for sale.

This process allows Evolve to be delivered to rats in a palatable, effective manner, and it is designed to be non-lethal.

Currently, we have production scale capability in our facilities in Arizona to manufacture ContraPest and Evolve.

Our internal production capabilities allow us to meet our current and anticipated demand through 2024.

Scientific Background Regarding our Product

4 unchanged sentences

Once the primordial follicles have become depleted, ovarian failure occurs, which terminates reproductive capability.

VCD causes specific loss of small ovarian follicles (both primordial and primary).

Triptolide causes specific loss of growing follicles (secondary and antral).

In males, triptolide exerts a significant suppression of male fertility by preventing sperm maturation and impairing the movement of sperm.

The safety and efficacy of VCD, triptolide, and ContraPest are supported by considerable evidence.

VCD and triptolide are rapidly metabolized by the rat, limiting the possibility of bioaccumulation or effect on non-target species.

Further, based on our toxicology studies, ContraPest should not cause rats to become ill, or change their behavior.

Furthermore, ContraPest is a contraceptive, not a sterilant, limiting fertility in male and female rats beginning with the first breeding cycle following consumption.

The active ingredients in our products cause specific loss of small ovarian follicles (both primordial and primary) and growing follicles (secondary and antral).

In males, the active ingredients in our products exert a significant suppression of male fertility by preventing sperm maturation and impairing the movement of sperm.

The safety and efficacy of our active ingredients and products are supported by considerable evidence.

The active ingredients are rapidly metabolized by the rat, limiting the possibility of bioaccumulation or effect on non-target species.

Further, based on laboratory and toxicology studies, ContraPest and Evolve should not cause rats to become ill or change their behavior.

Furthermore, ContraPest and Evolve are contraceptives, not sterilants, limiting fertility in male and female rats beginning with the first breeding cycle following consumption.

The average duration of infertility post consumption ranges from 42 to over 180 days.

Other Potential Products

We have begun work on new formulations of ContraPest – particularly solid and semi-solid variants.

Although solid bait is not essential to our near-term plans, the non-liquid formulations may expand the potential uses and applications of ContraPest.

Our plan is to accelerate the reformulation process through partnerships with others in the industry that will be able to give us access to proven technologies, thus reducing potential development time.

We have begun work on the application of ContraPest and Evolve on other species, such as mice, and expect to introduce an additional product during 2024.

Currently, we are unaware of any other non-lethal fertility control products targeting rats that are registered by the EPA.

There is a non-registered product being sold online that claims to control rodent reproduction.

We do not believe this to be a competitive product.

Our principal competition is the substitution of other tools that PMPs use in their IPM.

There are non-registered products being sold online that claim to control rodent reproduction.

We do not believe these to be competitive products.

Our principal competition are large corporations with greater resources that offer a wider range of products.

Generally, these are lethal pest control products largely consisting of rodenticide-based products and other tools that PMPs use in their IPM.

Government Regulation and Product Approval

2 unchanged sentences

United States Review and Approval Processes

In the United States, the EPA regulates the sale, distribution and use of any pesticide under the Federal Insecticide, Fungicide and Rodenticide Act (“FIFRA”).

In the United States, the EPA regulates the sale, distribution and use of any pesticide under FIFRA.

The EPA’s definition of a pesticide includes “any substance or mixture of substances intended for preventing, destroying, repelling, or mitigating any pest.” FIFRA defines a pest as “any insect, rodent, nematode, fungus, or weed.” To register a new product with the EPA, all active ingredients within the product must be registered with the EPA.

The EPA granted registration for ContraPest effective August 2, 2016.

The EPA granted registration for ContraPest effective August 2, 2016, and as of July 12, 2018, we have received registration for ContraPest in all 50 states, the District of Columbia, and five major U.S.

This initial EPA approval labeled ContraPest as a restricted-use product, due to the need for applicator expertise for deployment.

1 unchanged sentence

ContraPest is currently limited by EPA requirements to indoor use and to use within one foot of manmade structures.

We intend to diligently pursue additional related regulatory approvals from the EPA to support our product evolution, including

seeking approval for full outdoor use, alternative formulations and for additional rodent species.

We intend to diligently pursue additional related regulatory approvals from the EPA to support our product evolution, including seeking approval for full outdoor use, alternative formulations and for additional rodent species.

This may entail the need to complete and submit to EPA additional studies, principally related to the effects on other animals and fish if ingested or if the product enters the water supply.

6 unchanged sentences

We continue to seek to comply with these requirements.

The EPA has an exemption under FIFRA, Section 25(b) which exempts certain pesticides from federal registration based on six criteria for minimum risk.

Evolve qualifies from registration as a minimum risk pesticide under FIFRA, Section 25(b).

All applicable requirements for registration, manufacturing, selling, or distributing into designated sates and territories have been met.

Evolve has not been registered by the EPA but is in the process for registration in all 50 states, the District of Columbia, and five major U.S.

There are 10 states that accept the federal exemption for pesticide registration within the respective state.

For those states that do not accept the federal exemption, we began the registration process for those states in October 2023.

To date, we are authorized to sell Evolve in 30 states.

International Review and Approval Processes

2 unchanged sentences

Some specific in-country studies will be required for particular countries, but others will generally accept an EPA or EU compliant dossier.

As of December 31, 2022, we had 29 full-time employees and one part-time employee.

As of December 31, 2023, we had 25 full-time employees and no part-time employees.

Within our workforce, eight employees are engaged in research and development and 17 employees are engaged in sales, business development, finance, regulatory, human resources, facilities, information technology and general management and administration.

10 unchanged sentences

and international patent applications covering our novel bait station device to effectively and efficiently deliver our rodent bait at individual bait sites that would, if issued, offer patent term protection through at least 2036.

License Agreements

We 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 2026.

Trade Secrets and Trademarks

1 unchanged sentence

We protect these proprietary assets with a combination of confidentiality terms in all commercial agreements or stand-alone confidentiality agreements along with rights-ownership agreements and structured information transfer understandings prior to beginning any collaborative projects.

We own and maintain the ContraPest trademark and intend to register new trademarks for products from our evolving rodenticide product line and for products for mammalian species beyond rodentia.

We own and maintain the ContraPest trademark and have initiated registration for Evolve.

We intend to register new trademarks for products from our evolving rodenticide product line and for products for mammalian species beyond rodentia.

We have exclusive use status with the EPA for the data sets we have developed and submitted to the EPA as part of our application for ContraPest.

4 unchanged sentences

Where You Can Find Additional Information

We electronically file with the SEC our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934.

We make available on our website at www.senestech.com, free of charge, copies of these reports, as soon as reasonably practicable after electronically filing such reports with, or furnishing them to, the SEC.

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business