What changed in this filing

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Item 1. Financial Statements

2024-05-09 compared with 2023-11-09 · 47 added, 224 removed, 249 unchanged (52% of the section changed)

3 unchanged sentences

(In thousands, except shares and per share data)

September 30,

2024 December 31, 2023

18 unchanged sentences

Total current liabilities 715 786

Operating lease liability, less current portion 34 179

Note payable, less current portion 147 156

3 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, 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

Common stock, $ 0.001 par value, 100,000,000 shares authorized, 5,144,632 shares and 5,140,024 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

Additional paid-in capital 136,350 136,259

6 unchanged sentences

(In thousands, except shares and per share data)

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

2023 2022 2023 2022

Three Months Ended March 31,

Revenues, net $ 415 $ 233

9 unchanged sentences

Interest expense ( 4 ) —

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

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

Other income, net 11 8

Net loss and comprehensive loss $ ( 1,832 ) $ ( 2,037 )

5 unchanged sentences

(In thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities:

4 unchanged sentences

Bad debt expense — ( 2 )

Loss on sale of property and equipment — 28

Changes in operating assets and liabilities:

9 unchanged sentences

Purchase of property and equipment ( 2 ) ( 1 )

Proceeds received from sale of property and equipment — 4

Net cash used in investing activities ( 2 ) ( 1 )

Cash flows from financing activities:

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

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

Repayments of finance lease obligations — ( 27 )

Repayments of notes payable ( 8 ) —

Proceeds from the exercise of warrants 6 —

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

Net cash provided by (used in) financing activities 3,031 ( 32 )

Net cash used in financing activities ( 2 ) ( 11 )

Decrease in cash and cash equivalents ( 1,833 ) ( 2,027 )

4 unchanged sentences

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.

15 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.

In November 2023, we launched our latest product 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.

Evolve is considered 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.

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 33 states.

Going Concern

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

Our condensed financial statements as of March 31, 2024 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, 2023 and December 31, 2022 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 September 30, 2023, we had an accumulated deficit of $ 128.2 million and cash and cash equivalents of $ 2.1 million.

As of March 31, 2024, we had an accumulated deficit of $ 131.7 million and cash and cash equivalents of $ 3.6 million.

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

(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

(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 products;

(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 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.

Based upon our current operating plan, we expect that cash and cash equivalents at March 31, 2024, in combination with anticipated revenue and any additional sales of our equity securities, will be sufficient to fund our current operations for at least the next six 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.

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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 September 30, 2023, and our operating results and cash flows for the three- and nine-month periods ended September 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 March 31, 2024, and our operating results and cash flows for the three month periods ended March 31, 2024 and 2023.

The accompanying financial information as of December 31, 2023 is derived from audited financial statements.

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.

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, 2023, filed with the SEC on February 21, 2024.

Recent Accounting Pronouncements

5 unchanged sentences

Actual results could differ from such estimates.

Advertising Costs

Advertising costs are expensed as incurred and was $ 61,000 and $ 41,000 for the three months ended March 31, 2024 and 2023.

Comprehensive Loss

1 unchanged sentence

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 $ 2.1 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.

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 $ 3.6 million and $ 5.4 million as of March 31, 2024 and December 31, 2023, 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,

2024 December 31,

4 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Balance as of beginning of period $ 4 $ 6

4 unchanged sentences

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

September 30,

2024 December 31,

7 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Balance as of beginning of period $ 5 $ 18

4 unchanged sentences

Prepaid expenses consisted of the following (in thousands):

September 30,

2024 December 31,

2 unchanged sentences

Insurance 49 64

Patents 17 39

Marketing programs and conferences 6 74

Deposit on equipment purchase 25 —

Prepaid inventory 8 111

Total prepaid expenses $ 346 $ 388

1 unchanged sentence

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

September 30,

2024 December 31,

5 unchanged sentences

Accumulated depreciation and amortization ( 2,456 ) ( 2,419 )

Total in service, net 256 289

Construction in progress 57 5

Property and equipment, net $ 353 $ 388

1 unchanged sentence

Accrued expenses consisted of the following (in thousands):

September 30,

2024 December 31,

Compensation, severance and related benefits $ 285 $ 232

Legal services 135 36

Legal and consulting professional services 27 121

Product warranty 12 15

Personal property and franchise tax — 6

Total accrued expenses $ 391 $ 368

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):

Notes Payable

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

The notes payable for that certain equipment have an annual interest rate of 9.1 % with a term of five years and is secured by the underlying equipment.

As of March 31, 2024, future principal payments were as follows (in thousands):

Total principal payments 181

current portion of note payable ( 9 )

Note payable, less current portion $ 44

current portion of notes payable ( 34 )

Notes payable, less current portion $ 147

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.

Notes payable are 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.

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 were as follows (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Operating lease cost $ 56 $ 56

Finance lease cost:

Amortization of right-of-use asset $ — $ — $ — $ 27

Interest on lease liability — — — 1

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

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

As of March 31, 2024, maturities of operating lease liabilities were as follows (in thousands):

Total operating lease payments 164

3 unchanged sentences

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

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

2018 Equity Incentive Plan (the “2018 Plan”) which provides for the issuance of stock-based instruments, such as stock options or restricted stock units, to employees or consultants as deemed appropriate.

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 70,717 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.

Currently, we only have stock options outstanding under the 2018 Plan, which 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 generally of five years .

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

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

Stock Options

As of March 31, 2024, we had 42,049 shares of common stock available for issuance under the 2018 Plan.

The following table presents the outstanding stock option activity:

1 unchanged sentence

Share Weighted

Three months ended September 30, 2023:

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

Granted — — —

Exercised — — —

Forfeited ( 30,750 ) 5.25 —

Expired — — —

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

Nine months ended September 30, 2023:

Three months ended March 31, 2024:

Outstanding as of December 31, 2023 36,708 $ 119.70 4.0

Granted 199,421 1.25 5.0

Exercised — — —

Forfeited ( 41 ) 300.62 3.0

Expired ( 372 ) 680.87 —

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

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

Outstanding as of March 31, 2024 36,667 (1)

(1) Includes options related to 8,249 shares that are inducement awards and not granted under the 2018 Plan.

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 %

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 presents the unvested restricted stock unit activity:

Units Weighted

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

Vested ( 18,799 ) 2.71

Forfeited — —

Unvested balance as of September 30, 2023 — —

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Research and development $ 4 $ 4

Selling, general and administrative (1)

165 139 455 565

Total stock-based compensation expense $ 85 $ 166

(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.

(1) Includes $ 2,000 related to stock issued in exchange for marketing services for the three months ended March 31, 2023.

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, 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.

At March 31, 2024, the total compensation cost related to unvested options not yet recognized was $ 207,000 , which will be recognized over a weighted average period of 1.1 years, assuming the employees and non-employees complete their service period required for vesting.

STOCKHOLDERS’ EQUITY

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):

Activity in equity during the three month periods ended March 31, 2024 and 2023 was as follows (dollars in thousands):

Common Stock Additional

5 unchanged sentences

Issuance of common stock upon exercise of warrants 4,608 — 6 — 6

Issuance of common stock for service 13,225 — 100 — 100

Issuance of shares pursuant to the vesting of restricted stock units, net of shares withheld for taxes 54,466 — ( 11 ) — ( 11 )

Net loss — — — ( 1,832 ) ( 1,832 )

Balances as of March 31, 2024 5,144,632 $ 5 $ 136,350 $ ( 131,745 ) $ 4,610

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

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, 2022 67,472 $ — $ 127,482 $ ( 122,203 ) $ 5,279

Stock-based compensation — — 166 — 166

Issuance of common stock upon exercise of warrants 102,500 — — — —

Issuance of shares pursuant to the vesting of restricted stock units, net of shares withheld for taxes 1,102 — ( 11 ) — ( 11 )

Issuance of common stock for service 4,539 — 100 — 100

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Balances as of March 31, 2023 175,613 $ — $ 127,737 $ ( 124,240 ) $ 3,497

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

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.

• 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.

• 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

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Outstanding as of December 31, 2023 7,775,734 $ 2.95 3.4

Issued 6,937,311 0.88 4.9

Exercised ( 4,608 ) 1.30 —

Expired ( 13,629 ) 527.05 —

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:

common stock price of $ 1.38 per share;

volatility of 164 %;

term of 5.5 years;

dividend yield of 0 %;

and risk-free interest rate of 3.4 %.

• 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.

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

• 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.

Outstanding as of March 31, 2024 7,771,126 2.95 3.1

During the three months ended March 31, 2024, warrants representing 4,608 shares of common stock were exercised with an exercise price of $ 1.30 per share.

LOSS PER SHARE

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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.

Stock options and warrants 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.

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Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Common stock warrants — 265,401

Stock options — 23,371

Restricted stock units — — — —

259,380 — 3,320,332 10,170

CONTINGENCIES

Legal Proceedings

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 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, 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.

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.

SUBSEQUENT EVENTS

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.

We have evaluated subsequent events from the balance sheet date through May 9, 2024, 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