SenesTech, Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The following financial statements and report are included in Item 8: Report of Independent Registered Public Accounting Firm (PCAOB ID 2738 ) F -2 Balance Sheets as of December 31, 202 4 and 202 3 F -3 Statements of Operations and Comprehensive Loss for the years ended December 31, 202 4 and 202 3 F -4 Statements of Changes in Stockholders’ Equity for the years ended December 31, 202 4 and 202 3 F -5 Statements of Cash Flows for the years ended December 31, 202 4 and 202 3 F -6 Notes to Financial Statements F -7 F-1 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of SenesTech, Inc. Opinion on the Financial Statements We have audited the accompanying balance sheets of SenesTech, Inc. (the Company) as of December 31, 2024 and 2023, and the related statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2024, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company suffered a net loss from operations and has a net capital deficiency, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Going Concern Due to the recurring net loss for the year and net cash used in operating activities, the Company evaluated the need for a going concern. See discussion in Note 1. F-2 Table of Contents To evaluate the appropriateness of the lack of going concern, we examined and evaluated the financial information that was the initial cause along with management’s plans to mitigate the going concern and managements lack of disclosure on the going concern. /s/ M&K CPAS, PLLC We have served as the Company’s auditor since 2014. The Woodlands, TX March 12, 2025 F-3 Table of Contents SENESTECH, INC. BALANCE SHEETS (In thousands, except share and per share data amounts) As of December 31, 2024 2023 ASSETS Current assets: Cash and cash equivalents $ 1,307 $ 5,395 Accounts receivable, net 335 95 Prepaid expenses and other current assets 377 388 Inventory, net 794 795 Total current assets 2,813 6,673 Right to use assets, operating leases — 210 Property and equipment, net 407 388 Other noncurrent assets 58 22 Total assets $ 3,278 $ 7,293 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable 215 150 Accrued expenses 278 368 Current portion of operating lease liability — 217 Current portion of notes payable 56 33 Deferred revenue 12 18 Total current liabilities 561 786 Notes payable, less current portion 206 156 Total liabilities 767 942 Commitments and contingencies (see notes) Stockholders’ equity: 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, 1,035,893 and 514,003 shares issued and outstanding as of December 31, 2024 and 2023, respectively 1 1 Additional paid-in capital 138,607 136,263 Accumulated deficit ( 136,097 ) ( 129,913 ) Total stockholders’ equity 2,511 6,351 Total liabilities and stockholders’ equity $ 3,278 $ 7,293 See accompanying notes to the financial statements. F-4 Table of Contents SENESTECH, INC. STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (In thousands, except share and per share data) Years Ended December 31, 2024 2023 Revenues, net $ 1,857 $ 1,193 Cost of sales 853 654 Gross profit 1,004 539 Operating expenses: Research and development 1,712 1,228 Selling, general and administrative 5,541 7,043 Total operating expenses 7,253 8,271 Loss from operations ( 6,249 ) ( 7,732 ) Other income (expense): Interest income 56 26 Interest expense ( 22 ) ( 4 ) Miscellaneous income 31 — Other income, net 65 22 Net loss and comprehensive loss $ ( 6,184 ) $ ( 7,710 ) Weighted average shares outstanding — basic and diluted 697,974 66,986 Loss per share — basic and diluted $ ( 8.86 ) $ ( 115.10 ) See accompanying notes to the financial statements. F-5 Table of Contents SENESTECH, INC. STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (In thousands, except shares) Additional Paid-In Capital Accumulated Deficit Total Common Stock Shares Amount Balances as of December 31, 2022 6,748 $ — $ 127,482 $ ( 122,203 ) $ 5,279 Stock-based compensation — — 455 — 455 Net proceeds received for issuance of common stock and prefunding of warrants 52,173 — 5,407 — 5,407 Issuance of common stock upon exercise of warrants, net 454,444 1 2,830 — 2,831 Issuance of common stock for services 454 — 100 — 100 Issuance of shares pursuant to the vesting of restricted stock units, net of shares withheld for taxes 110 — ( 11 ) — ( 11 ) Issuance of common stock for fractional shares in the 12:1 reverse stock split 74 — — — — Net loss — — — ( 7,710 ) ( 7,710 ) Balances as of December 31, 2023 514,003 1 136,263 ( 129,913 ) 6,351 Stock-based compensation — — 326 — 326 Net proceeds received for issuance of common stock 15,051 — 38 — 38 Issuance of common stock upon exercise of warrants, net 505,962 — 1,980 — 1,980 Issuance of common stock for fractional shares in the 10:1 reverse stock split 877 — — — — Net loss — — — ( 6,184 ) ( 6,184 ) Balances as of December 31, 2024 1,035,893 $ 1 $ 138,607 $ ( 136,097 ) $ 2,511 See accompanying notes to the financial statements. F-6 Table of Contents SENESTECH, INC. STATEMENTS OF CASH FLOWS (In thousands) Years Ended December 31, 2024 2023 Cash flows from operating activities: Net loss $ ( 6,184 ) $ ( 7,710 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 156 135 Stock-based compensation 326 555 Gain on sale of equipment ( 28 ) — Bad debt expense 2 ( 2 ) Changes in operating assets and liabilities: Accounts receivable ( 242 ) 20 Prepaid expenses and other current assets 11 ( 10 ) Inventory 1 58 Other assets ( 44 ) ( 4 ) Accounts payable 65 ( 390 ) Accrued expenses ( 90 ) ( 192 ) Deferred revenue ( 6 ) ( 26 ) Net cash used in operating activities ( 6,033 ) ( 7,566 ) Cash flows from investing activities: Proceeds received on sale of property and equipment 28 — Purchase of property and equipment ( 84 ) ( 149 ) Net cash used in investing activities ( 56 ) ( 149 ) Cash flows from financing activities: Proceeds from the issuance of common stock, net 38 5,407 Proceeds from the exercise of warrants, net 1,980 2,831 Proceeds from the issuance of notes payable 25 114 Repayments of notes payable ( 42 ) ( 6 ) Payment of employee withholding taxes related to share based awards — ( 11 ) Net cash provided by financing activities 2,001 8,335 Increase (decrease) in cash and cash equivalents ( 4,088 ) 620 Cash and cash equivalents, beginning of year 5,395 4,775 Cash and cash equivalents, end of year $ 1,307 $ 5,395 Supplemental disclosures of cash flow information: Cash paid for: Interest paid $ 22 $ 4 Income taxes paid — — Non-cash investing and financing activities: Notes payable incurred for the purchase of certain equipment 90 81 See accompanying notes to the financial statements. F-7 Table of Contents SENESTECH, INC. NOTES TO THE FINANCIAL STATEMENTS NOTE 1: BASIS OF PRESENTATION Nature of Business 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 15, 2015, we subsequently reincorporated in the state of Delaware. Our corporate headquarters and manufacturing site are in Phoenix, Arizona. We have developed and are commercializing a global, proprietary technology for managing animal pest populations, initially rat and mouse populations, through fertility control. Our current products are known as ContraPest, Evolve and Evolve Mouse. Our initial product ContraPest is a liquid bait containing the active ingredients 4-vinylcyclohexene diepoxide and triptolide. ContraPest limits reproduction of male and female rats beginning with the first breeding cycle following consumption. ContraPest is being marketed for use in controlling Norway and roof rat populations. In addition to the EPA registration of ContraPest, we must obtain registration from the various state regulatory agencies prior to selling in each state. To date, we have received registration for ContraPest in all 50 states and the District of Columbia ( 49 states and the District of Columbia have approved the Restricted Use designation), as well as two major U.S. territories, Puerto Rico and The U.S. Virgin Islands. In January 2024, we launched Evolve, which is a soft bait containing the active ingredient, cottonseed oil. Evolve limits reproduction of male and female rats beginning with the first breeding cycles following consumption. Evolve is considered a minimum risk pesticide under the EPA Federal Insecticide, Fungicide, and Rodenticide Act (“FIFRA”), 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 48 states and two major U.S. territories, Puerto Rico and The U.S. Virgin Islands. In May 2024, we launched our latest product Evolve Mouse, a modified version of our soft bait technology containing the active ingredient cottonseed oil. Evolve Mouse limits reproduction of male and female mice after one to two breeding cycles following consumption. Evolve Mouse is also considered a minimum risk pesticide under the EPA’s FIFRA, 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 Mouse in 35 states. Reverse Stock Split In July 2024, we amended our Amended and Restated Certificate of Incorporation to effect a 1-for-10 reverse split of our issued and outstanding shares of common stock. The accompanying financial statements and notes thereto give retrospective effect to the reverse stock split for all periods presented. All issued and outstanding common stock, options and warrants exercisable for common stock, restricted stock units and per share amounts contained in our financial statements have been retrospectively adjusted. Going Concern Although our audited financial statements for the years ended December 31, 2024 and 2023 were prepared under the assumption that we would continue our operations as a going concern, the report of our independent registered public accounting firm that accompanies our financial statements for the years ended December 31, 2024 and 2023 contains a going concern qualification in which such firm expressed substantial doubt in our ability to continue as a going concern without additional capital from becoming available, based on the financial statements at that time. Specifically, as noted above, we have incurred operating losses since our inception, and we expect to continue to incur significant expenses and operating losses for the foreseeable future. These prior losses and expected future losses have had, and will continue to have, an adverse effect on our financial condition. If we encounter continued issues or delays in the commercialization of ContraPest, our prior losses and expected future losses could have an adverse effect on our financial condition and negatively impact our ability to fund continued operations, obtain additional financing in the future and continue as a going concern. There are no assurances that such financing, if necessary, will be available to us at all or will be available in sufficient amounts or on reasonable terms. Our financial statements do not include any adjustments that may result from the outcome of this uncertainty. If we are unable to generate additional funds in the future through financings, sales of our products, licensing fees, royalty payments or from other sources or transactions, we will exhaust our resources and will be unable to continue operations. F-8 Table of Contents SENESTECH, INC. NOTES TO THE FINANCIAL STATEMENTS, continued Need for Additional Capital Since our inception, we have sustained significant operating losses in the course of our research and development and commercialization activities and expect such losses to continue for the near future. We have generated limited revenue to date from product sales, research grants and licensing fees from a former license. We have primarily funded our operations to date through the sale of equity securities, including convertible preferred stock, common stock and warrants to purchase common stock; and debt financing, consisting primarily of convertible notes. As of December 31, 2024, we had an accumulated deficit of $ 136.1 million and cash and cash equivalents of $ 1.3 million. Our ultimate success depends upon the outcome of a combination of factors, including the following: (i) successful commercialization of ContraPest and Evolve and maintaining and obtaining regulatory approval of our products and product candidates; (ii) market acceptance, commercial viability and profitability of ContraPest, Evolve and other products; (iii) the ability to market our products and establish an effective sales force and marketing infrastructure to generate significant revenue; (iv) the success of our research and development; (v) the ability to retain and attract key personnel to develop, operate and grow our business; and (vi) our ability to meet our working capital needs. Based upon our current operating plan, we expect that cash and cash equivalents at December 31, 2024, in combination with anticipated revenue, will be sufficient to fund our current operations for at least the next three months. We have evaluated and will continue to evaluate our operating expenses and will concentrate our resources toward the successful commercialization of ContraPest and Evolve in the United States and globally. However, if anticipated revenue targets and margin targets are not achieved or expenses are more than we have budgeted, we may need to raise additional financing before that time. If we need more financing, including within the next three months, and we are unable to raise necessary capital through the sale of our securities, we may be required to take other measures that could impair our ability to be successful and operate as a going concern. In any event, we may require additional capital in order to fund our operating losses and research and development activities before we become profitable and may opportunistically raise capital. We may never achieve profitability or generate positive cash flows, and unless and until we do, we will continue to need to raise capital through equity or debt financing. If such equity or debt financing is not available at adequate levels or on acceptable terms, we may need to delay, limit or terminate commercialization and development efforts or discontinue operations. Use of Estimates The preparation of our financial statements and related disclosures in accordance with U.S. GAAP requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and the disclosure of contingent assets and liabilities in our financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different conditions. NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cash and Cash Equivalents Highly liquid investments with maturities of three months or less as the date of acquisition are classified as cash equivalents, of which we had $ 1.0 million and $ 4.2 million as of December 31, 2024 and 2023, respectively, included within Cash and cash equivalents in the balance sheets. Accounts Receivable Accounts receivable are recorded at invoiced amounts based on standard prices and do not bear interest. We provide an allowance for doubtful receivables equal to the estimated uncollectible amounts. That estimate is based on historical collection experience, current economic and market conditions and a review of the current status of each customer’s trade accounts receivable. Provisions for uncollectible accounts receivable are charged to Selling, general and administrative expense, with an offsetting credit to the allowance for uncollectible accounts. F-9 Table of Contents SENESTECH, INC. NOTES TO THE FINANCIAL STATEMENTS, continued Inventories Inventories consist of raw materials, work in progress and finished goods and are stated at the lower of cost or market value, using the first-in, first-out convention. Cost includes the acquired cost of raw materials, with work-in-progress and finished goods including the application of labor costs related to the manufacturing process. Raw materials are stocked to reduce the risk of impact on manufacturing for any potential supply interruptions or long lead times on certain ingredients. Reserves for obsolete inventory consist of reserves primarily related to obsolete product containers and delivery systems. Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Equipment held under finance leases are stated at the present value of minimum lease payments less accumulated amortization. Depreciation on property and equipment is computed using the straight-line method over the estimated useful lives of the respective assets as follows: Research and development equipment 5 years Office and computer equipment 3 years Autos 5 years Furniture and fixtures 7 years The cost of leasehold improvements is amortized over the life of the improvement or the term of the lease, whichever is shorter. Equipment held under finance leases are amortized over the shorter of the lease term or estimated useful life of the asset. The Company incurs maintenance costs on its major equipment. Repair and maintenance costs are expensed as incurred. Impairment of Long-Lived Assets Long-lived assets, such as property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require long-lived assets or asset groups to be tested for possible impairment, the Company compares the undiscounted cash flows expected to be generated from the use of the asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment charge is recognized to the extent that the carrying amount exceeds its fair value. Fair value is determined through various valuation techniques, such as discounted cash flow models and the use of third- party independent appraisals. We have not recorded an impairment of long-lived assets since our inception. Revenue Recognition In accordance with Accounting Standards Codification (“ASC”) 606 — Revenue from Contracts with Customers (“ASC 606”), we recognize revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. We derive revenue primarily from commercial sales of products, net of discounts and promotions, as well as consulting and implementation services provided in conjunction with our product deployments. We recognize revenue when product is shipped at a fixed selling price with payment terms of 30 to 120 days from invoicing. We recognize any other revenue earned from pilot studies, consulting and implementation services upon the performance of specific services under the respective service contract. Research and Development Research and development costs are expensed as incurred. Research and development expenses primarily consist of salaries and benefits for research and development employees, stock-based compensation, consulting fees, lab supplies, costs incurred related to conducting scientific trials and field studies, regulatory compliance costs, as well as manufacturing F-10 Table of Contents SENESTECH, INC. NOTES TO THE FINANCIAL STATEMENTS, continued costs associated with process improvement and other research. Research and development expenses include an allocation of facilities related costs, including depreciation of equipment. Stock-based Compensation Stock-based awards, consisting of stock options and restricted stock units expected to be settled in shares of our common stock, are recorded as equity awards. The grant date fair value of these awards is measured using the Black-Scholes option pricing model for stock options and grant date market value for restricted stock units. We expense the grant date fair value of our stock-based awards on a straight-line basis over their respective vesting periods. Advertising Costs Advertising costs are expensed as incurred and was $ 224,000 and $ 238,000 for the years ended December 31, 2024 and 2023, respectively. Income Taxes We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax bases of assets and liabilities and net operating loss carryforwards using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the period that includes the enactment date. We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. These deferred tax assets are subject to periodic assessments as to recoverability and if it is determined that it is more likely than not that the benefits will not be realized, valuation allowances are recorded which would increase the provision for income taxes. In making such determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. We currently maintain a full valuation allowance against its deferred tax assets. We apply a more-likely-than-not recognition threshold for all tax uncertainties. Only those benefits that have a greater than fifty percent likelihood of being sustained upon examination by the taxing authorities are recognized. Based on our evaluation, we have concluded there are no significant uncertain tax positions requiring recognition in our financial statements. We recognize interest and/or penalties related to uncertain tax positions in income tax expense. There are no uncertain tax positions as of December 31, 2024 or December 31, 2023 and as such, no interest or penalties were recorded in income tax expense. Comprehensive Loss We have no other comprehensive income items for the periods presented. As a result, our net loss and comprehensive loss were the same for all periods presented and a separate statement of comprehensive loss is not included in the accompanying financial statements. F-11 Table of Contents SENESTECH, INC. NOTES TO THE FINANCIAL STATEMENTS, continued NOTE 3: BALANCE SHEET COMPONENTS Accounts Receivable, Net Accounts receivable, net consist of the following (in thousands): As of December 31, 2024 2023 Accounts receivable $ 339 $ 99 Allowance for uncollectible accounts ( 4 ) ( 4 ) Accounts receivable, net $ 335 $ 95 The following is the activity in the allowance for uncollectible accounts (in thousands): Years Ended December 31, 2024 2023 Balance as of beginning of year $ 4 $ 6 Increase in provision — 2 Amounts written off, less recoveries — ( 4 ) Balance as of end of year $ 4 $ 4 Inventory, Net Inventory, net consist of the following (in thousands): As of December 31, 2024 2023 Raw materials $ 719 $ 747 Work in progress 1 — Finished goods 74 53 Total inventory 794 800 Reserve for obsolescence — ( 5 ) Inventory, net $ 794 $ 795 The following is the activity in the reserve for obsolescence (in thousands): Years Ended December 31, 2024 2023 Balance as of beginning of year $ 5 $ 18 Increase in reserve — — Amounts relieved ( 5 ) ( 13 ) Balance as of end of year $ — $ 5 F-12 Table of Contents SENESTECH, INC. NOTES TO THE FINANCIAL STATEMENTS, continued Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consist of the following (in thousands): As of December 31, 2024 2023 Equity offering costs $ 146 $ — Software licenses 112 152 Rent 38 — Insurance 27 64 Marketing programs and conferences 21 1 Professional services 18 30 Prepaid inventory — 111 Patents — 14 Other 15 16 Total prepaid and other current expenses $ 377 $ 388 Property and Equipment, Net Property and equipment, net consist of the following (in thousands): As of December 31, 2024 2023 Research and development equipment $ 1,826 $ 1,763 Office and computer equipment 494 808 Autos 54 54 Furniture and fixtures 46 41 Leasehold improvements 157 141 Total in service 2,577 2,807 Accumulated depreciation and amortization ( 2,242 ) ( 2,419 ) Total in service, net 335 388 Construction in progress 72 — Property and equipment, net $ 407 $ 388 Construction in progress consists of manufacturing equipment. The equipment is expected to be placed in service when we commence operations at our new manufacturing facility, which is expected in April 2025. Also see Note 5. During the years ended December 31, 2024 and 2023, depreciation and amortization expense was $ 156,000 and $ 135,000 , respectively. F-13 Table of Contents SENESTECH, INC. NOTES TO THE FINANCIAL STATEMENTS, continued Accrued Expenses Accrued expenses consist of the following (in thousands): As of December 31, 2024 2023 Compensation and related benefits $ 244 $ 232 Legal and other services 30 121 Product warranty and other 4 15 Total accrued expenses $ 278 $ 368 Notes Payable We have arranged financing for the purchase of certain equipment. These notes payable have a weighted average annual interest rate of 10.4 % with a term of five years and are secured by the underlying equipment. As of December 31, 2024, the future principal payments were as follows (in thousands): 2025 $ 57 2026 61 2027 68 2028 64 2029 12 Total principal payments 262 Less: current portion of notes payable ( 56 ) Notes payable, less current portion $ 206 NOTE 4: FAIR VALUE MEASUREMENTS The accounting guidance for fair value, among other things, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The framework for measuring fair value consists of a three-level valuation hierarchy that prioritizes the inputs to valuation techniques used to measure fair value based upon whether such inputs are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions made by the reporting entity. The three-level hierarchy for the inputs to valuation techniques is briefly summarized as follows: Level 1 — Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date; Level 2 — Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and Level 3 — Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data. An asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. F-14 Table of Contents SENESTECH, INC. NOTES TO THE FINANCIAL STATEMENTS, continued Assets and liabilities measured at fair value are based on one or more of the following three valuation techniques: A. Market approach: Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. B. Cost approach: Amount that would be required to replace the service capacity of an asset (replacement cost). C. Income approach: Techniques to convert future amounts to a single present amount based upon market expectations, including present value techniques, option-pricing and excess earnings models. Financial Instruments Not Carried at Fair Value The carrying amounts of our financial instruments, including accounts payable and accrued liabilities, approximate fair value due to their short maturities. The estimated fair value of the long-term debt, not recorded at fair value, are recorded at cost or amortized cost, which was deemed to estimate fair value. NOTE 5: LEASES We determine if an arrangement is a lease at inception and whether the arrangement is classified as an operating or finance lease. At commencement of the lease, we record a right-of-use (“ROU”) asset and lease liability in the balance sheet based on the present value of lease payments over the term of the arrangement. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. If the implicit rate is not readily determinable in the contract, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Contract terms may include options to extend or terminate the lease, and, when we deem it is reasonably certain that we will exercise that option, it is included in the ROU asset and liability. Operating leases reflect lease expense on a straight-line basis, while any finance leases result in the separate presentation of interest expense on the lease liability and amortization expense of the ROU asset. In August 2024, we entered into an operating lease for a new location for our corporate headquarters and manufacturing and research operations. The new operating lease commences in April 2025 and expires in 2035. The previous operating lease for our corporate headquarters expired in November 2024. However, our operating lease for our existing manufacturing and research operations was extended and now expires in May 2025. The components of lease cost are as follows (in thousands): Years Ended December 31, 2024 2023 Operating lease cost $ 285 $ 231 NOTE 6: STOCK-BASED COMPENSATION In 2018, our stockholders approved the adoption of the SenesTech, Inc. 2018 Equity Incentive Plan (the “2018 Plan”). The 2018 Plan has since been amended and restated on certain occasions, most recently on June 23, 2023, when our stockholders approved an increase to the total number of authorized shares to 207,071 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 three - to 36-month period coinciding with their respective service periods, with terms of up to ten years . Certain stock option awards provide for accelerated vesting upon a change in control. As of December 31, 2024, we had 60,228 shares of common stock available for issuance under the 2018 Plan. F-15 Table of Contents SENESTECH, INC. NOTES TO THE FINANCIAL STATEMENTS, continued Stock Options We measure the fair value of stock options with service-based vesting criteria to employees, directors and consultants on the date of grant using the Black-Scholes option pricing model. The Black-Scholes valuation model requires us to make certain estimates and assumptions, including assumptions related to the expected price volatility of our stock, the expected period during which the options will be outstanding, the rate of return on risk-free investments, and the expected dividend yield for our stock. Fair value of options granted is determined using the Black-Scholes option-pricing model with the following weighted average assumptions: 2024 2023 Risk-free interest rate 3.8 % 5.3 % Expected dividend yield — % — % Expected volatility 128 % 128.0 % Expected term (in years) 10.0 5.0 The weighted average fair value of options granted during the years ended December 31, 2024 and 2023 was $ 2.73 and $ 148.80 per share, respectively. The risk-free interest rate is estimated using treasury bill interest rates. The expected dividend yield is zero as we have not paid any dividends to date and do not expect to pay dividends in the future. Expected volatility is estimated based on the historical volatility of our common stock over the expected term as this represents our best estimate of future volatility. We use the “simplified method” to estimate expected term. Under the simplified method, an option’s expected term is calculated as the time until expiration. The stock option activity consists of the following: Number of Options Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value (1) Outstanding as of December 31, 2022 2,314 $ 2,040.00 3.9 $ — Granted 1,661 150.00 5.0 — Exercised — — — — Forfeited ( 328 ) — — — Expired ( 2 ) — — — Outstanding as of December 31, 2023 3,645 1,197.00 4.0 — Granted 144,204 2.83 9.6 — Exercised — — — — Forfeited ( 224 ) — — — Expired ( 9 ) — — — Outstanding as of December 31, 2024 147,616 27.13 9.5 — Exercisable as of December 31, 2024 20,634 (2) 124.42 8.8 — (1) Calculated based on the difference between the estimated fair value of our stock and the exercise price of the underlying option. The estimated stock values used in the calculation was $ 2.83 and $ 150.00 per share for the years ended December 31, 2024 and 2023, respectively. (2) Includes options related to 603 shares that are inducement awards and not granted under the 2018 Plan. As of December 31, 2024, the unrecognized stock-based compensation cost was $ 340,000 , which is expected to be recognized over a weighted average period of 1.7 years. F-16 Table of Contents SENESTECH, INC. NOTES TO THE FINANCIAL STATEMENTS, continued Restricted Stock Units The restricted stock unit activity consists of the following: Number of Units Weighted Average Grant Date Fair Value Per Unit Outstanding as of December 31, 2022 156 $ 325.20 Granted — — Vested ( 156 ) 325.20 Forfeited — — Outstanding as of December 31, 2023 — — Granted — — Vested — — Forfeited — — Outstanding as of December 31, 2024 — — The stock-based compensation expense was recorded as following (in thousands): Years Ended December 31, 2024 2023 Research and development $ 13 $ 17 General and administrative 313 538 (1) Total stock-based compensation expense $ 326 $ 555 (1) Includes $ 100,000 related to stock issued in exchange for marketing services. NOTE 7: INCOME TAXES Our losses before income taxes for the years ended December 31, 2024 and 2023 were generated entirely from U.S. operations. We have no current or deferred provision for income taxes from continuing operations for the years ended December 31, 2024 and 2023. The significant differences between the U.S. Federal statutory rate and our effective rate for financial reporting purposes are as follows: Years Ended December 31, 2024 2023 Federal statutory tax rate ( 21.0 ) % ( 21.0 ) % State taxes, net of federal tax benefit ( 3.8 ) ( 3.8 ) Change in valuation allowance 23.7 23.5 Return-to-provision and other 0.2 0.1 Stock-based compensation 0.9 1.2 Effective tax rate — % — % F-17 Table of Contents SENESTECH, INC. NOTES TO THE FINANCIAL STATEMENTS, continued Deferred income tax assets and liabilities consist of the following (in thousands): As of December 31, 2024 2023 Deferred income tax assets: Federal and state net operating loss carryovers $ 23,376 $ 22,167 Capitalized research costs 859 608 Stock-based compensation 283 260 Compensation accruals and other 45 59 Operating leases related to ROU assets — 54 Deferred revenue 3 4 Depreciation 13 11 Other — 2 Total deferred income tax assets 24,579 23,165 Valuation allowance for deferred income tax assets ( 24,579 ) ( 23,113 ) Deferred income tax assets, net of valuation allowance — 52 Deferred income tax liabilities: ROU assets — ( 52 ) Total deferred income tax liabilities — ( 52 ) Deferred income tax assets, net $ — $ — A valuation allowance has been recognized to offset the net deferred tax assets as realization of such deferred tax assets have not met the more likely than not threshold. As of December 31, 2024, we had federal and state net operating loss carryforwards of approximately $ 96.1 million and $ 83.0 million, respectively, not considering the Internal Revenue Code Section 382 annual limitation discussed below. The federal loss carryforwards begin to expire in 2029, unless previously utilized. In addition, we have approximately $ 51.6 million of the total $ 96.1 million of net operating losses that do not expire, as these losses were generated after the law change introduced as part of the Tax Cuts and Jobs Act. The state net operating losses expire if not utilized by 2044. Additionally, the utilization of the net operating loss carryforwards could be subject to an annual limitation under Section 382 and 383 of the Internal Revenue Code of 1986, and similar state tax provisions due to ownership change limitations that have occurred previously or that could occur in the future. These ownership changes limit the amount of net operating loss carryforwards and other deferred tax assets that can be utilized to offset future taxable income and tax, respectively. In general, an ownership change, as defined by Section 382 and 383, results from transactions increasing ownership of certain stockholders or public groups in the stock of the corporation by more than 50 percentage points over a three-year period. We have not conducted an analysis of an ownership change under Section 382. To the extent that a study is completed and an ownership change is deemed to occur, our net operating losses could be limited. We do no t have any unrecognized tax benefits at the beginning and end of the years ended December 31, 2024 and 2023, and do not expect a significant change in unrecognized tax benefits over the next 12 months. We file income tax returns in the United States and Arizona with general statutes of limitations of three and four years, respectively. Due to net operating losses incurred, our tax returns from inception to date are subject to examination by taxing authorities. Our policy is to recognize interest expense and penalties related to income tax matters as a component of income tax expense. As of December 31, 2024, we had no interest or penalties accrued related to uncertain tax positions. F-18 Table of Contents SENESTECH, INC. NOTES TO THE FINANCIAL STATEMENTS, continued NOTE 8: STOCKHOLDERS’ EQUITY Preferred Stock We are authorized to issue 10 million shares of preferred stock with a par value of $ 0.001 . Rights and any series designation would be established at time of issuance of preferred stock. As of December 31, 2024 and 2023 there was no preferred stock outstanding. Common Stock We are authorized to issue 100 million shares of common stock with a par value of $ 0.001 per share. Stockholders of common stock have unlimited voting rights and are entitled to receive the net assets of the Company upon dissolution, subject to the rights of the preferred stockholders, if any. We had the following common stock offerings in 2024 and 2023: April 2023 . We consummated a registered direct offering with certain institutional investors and issued an aggregate of 7,142 shares of our common stock at a purchase price of $ 210.00 per share and warrants to purchase up to an aggregate of 7,142 shares of common stock at a purchase price of $ 194.40 per share (“Series C” warrants), for gross proceeds of approximately $ 1.5 million, prior to deducting placement agent fees and offering expenses of $ 290,000 . In connection with this offering, we issued the placement agent warrants to purchase up to 534 share of common stock with an exercise price of $ 262.50 per share. The common stock and Series C warrants issued in this April 2023 offering were offered and sold pursuant to a shelf registration statement on Form S-3 (File No. 333-261227) initially filed with the SEC on November 19, 2021, as amended, which was declared effective by the SEC on May 6, 2022, and a prospectus supplement dated April 10, 2023. November 2023 . We consummated a private placement with certain institutional and accredited investors and issued an aggregate of 45,031 shares of our common stock at a purchase price of $ 13.00 per share, pre-funded warrants to purchase up to an aggregate of 339,585 shares of common stock at a purchase price of $ 13.00 per pre-funded warrant (“November 2023 Pre-Funded Warrants”) and associated warrants to purchase up to an aggregate of 769,228 shares of common stock at $ 13.00 per share (“Series D” and “Series E” warrants), for gross proceeds of approximately $ 5.0 million, prior to deducting placement agent fees and offering expenses of $ 800,000 . In connection with this offering, we issued the placement agent warrants to purchase up to 28,844 shares of common stock with an exercise price of $ 16.25 per share. All of the November 2023 Pre-Funded Warrants were exercised by December 31, 2023. The common stock, November 2023 Pre-Funded Warrants and Series D and Series E warrants issued in this November 2023 offering were offered and sold pursuant to a registration statement on Form S-1 (File No. 333-273370) initially filed with the SEC on July 21, 2023, as amended, which was declared effective by the SEC on November 27, 2023. June 2024 . We entered into an at-the-market offering arrangement with a sales agent, pursuant to which we may offer and sell, from time to time at our sole discretion, in transactions that are deemed to be “at the market” offerings under the Securities Act of 1933, as amended (the “Securities Act”), shares of our common stock for aggregate gross proceeds of up to $ 1.6 million (“ATM Facility”). The offer and sale of shares will be made pursuant to a previously filed shelf registration statement on Form S-3 (Registration no. 333-261227), originally filed with the SEC on November 19, 2021, amended on May 4, 2022, and declared effective by the SEC on May 6, 2022, and the related prospectus supplement related to the offering of shares dated June 20, 2024, and filed with the SEC on such date pursuant to Rule 424(b) under the Securities Act. Through December 31, 2024, we have sold 15,051 shares for gross proceeds of $ 44,000 under this ATM Facility. As of December 31, 2024, there are 300,138 shares of common stock reserved for potential issuance with available capacity of $ 1.5 million under this ATM Facility. See prepaid equity offering costs under Prepaid Expenses and Other Current Assets in Note 2 for costs related to the ATM Facility, which are ratably netted against proceeds received based on stock sales. F-19 Table of Contents SENESTECH, INC. NOTES TO THE FINANCIAL STATEMENTS, continued August 2024 . We issued 505,502 shares pursuant to the exercise of warrants. Certain warrant holders were induced to exercise warrants by reducing the exercise price to the then current market price of our common stock (the “Warrant Inducement”). The original warrants consisted of 48,911 shares issued August 24, 2023 with an exercise price of $ 86.40 per share and a weighted average remaining life of 2.1 years (the “August 2023 Original Warrants”) and 456,591 shares issued November 29, 2023 with an exercise price of $ 13.00 per share and a weighted average remaining life of 2.5 years (the “November 2023 Original Warrants”) (collectively, the “Original Warrants”). The Original Warrants were exercised for $ 4.60 per share for gross proceeds of $ 2.3 million, before deducting $ 340,000 of issuance costs. The difference between the fair value of the warrants immediately prior to modification and immediately after modification was treated as a transaction cost, which is netted against proceeds received, and was $ 386,000 using the Black-Scholes model based on the following significant inputs: • For the August 2023 Original Warrants: common stock price of $ 4.10 per share; volatility of 151 %; term of 2.1 years; dividend yield of 0 %; and risk-free rate of 3.9 %; and • For the November 2023 Original Warrants: common stock price of $ 4.10 per share; volatility of 140 %; term of 2.5 years; dividend yield of 0 %; and risk-free rate of 3.8 %. In connection with the Warrant Inducement transaction, new warrants to purchase 1,036,279 shares of our common stock were issued, which are discussed under Common Stock Warrants Issued in August 2024 Private Inducement in Note 9. F-20 Table of Contents SENESTECH, INC. NOTES TO THE FINANCIAL STATEMENTS, continued NOTE 9: COMMON STOCK WARRANTS The following is the activity for common stock warrants: F-21 Table of Contents SENESTECH, INC. NOTES TO THE FINANCIAL STATEMENTS, continued Issue Date Warrant Type Term Date Exercise Price Balance December 31, 2022 Issued Exercised Expired Balance December 31, 2023 Issued Exercised Expired Balance December 31, 2024 June 2018 Reissue December 2023 $ 87,360.00 24 — — ( 24 ) — — — — — August 2018 Rights Offering July 2023 55,200.00 84 — — ( 84 ) — — — — — August 2018 Dealer Manager August 2023 828.00 6 — — ( 6 ) — — — — — July 2019 Dealer Manager July 2024 81,000.00 3 — — — 3 — — ( 3 ) — January 2020 Registered Direct Offering July 2025 21,600.00 60 — — — 60 — — — 60 January 2020 Dealer Manager July 2025 24,000.00 4 — — — 4 — — — 4 March 2020 Dealer Manager March 2025 9,015.12 4 — — — 4 — — — 4 April 2020 Dealer Manager April 2025 9,528.00 47 — — — 47 — — — 47 April 2020 Registered Direct Offering April 2025 7,320.00 20 — — — 20 — — — 20 October 2020 Private Inducement November 2027 379.80 417 — ( 417 ) — — — — — — October 2020 Dealer Manager April 2026 5,174.40 34 — — — 34 — — — 34 February 2021 Private Placement Agreement August 2026 5,318.40 677 — — ( 137 ) 540 — — — 540 February 2021 Private Placement Agreement November 2027 379.80 229 — ( 229 ) — — — — — — February 2021 Dealer Manager August 2026 6,835.40 136 — — — 136 — — — 136 March 2021 Dealer Manager March 2026 6,000.00 60 — — — 60 — — — 60 November 2022 Pre-Funded Warrants February 2023 420.00 10,250 — ( 10,250 ) — — — — — — November 2022 Series A November 2027 379.80 11,905 — ( 11,905 ) — — — — — — November 2022 Series B December 2023 379.80 11,905 — ( 11,905 ) — — — — — — November 2022 Dealer Manager November 2027 525.00 892 — — — 892 — — — 892 April 2023 Series C October 2028 194.40 — 7,142 — — 7,142 — — — 7,142 April 2023 Dealer Manager April 2028 262.50 — 534 — — 534 — — — 534 August 2023 Private Inducement September 2024 86.42 — 23,810 — — 23,810 — ( 23,810 ) — — August 2023 Private Inducement August 2028 86.42 — 25,101 — — 25,101 — ( 25,101 ) — — August 2023 Dealer Manager August 2028 108.04 — 1,222 — — 1,222 — — — 1,222 November 2023 Pre-Funded Warrants December 2023 13.00 — 339,585 ( 339,585 ) — — — — — — November 2023 Series D November 2028 13.00 — 384,615 ( 3,000 ) — 381,615 — ( 230,589 ) — 151,026 November 2023 Series E May 2025 13.00 — 384,613 ( 77,153 ) — 307,460 — ( 226,462 ) — 80,998 November 2023 Dealer Manager November 2028 16.25 — 28,844 — — 28,844 — — — 28,844 August 2024 Series F-1 August 2029 4.35 — — — — — 571,318 — — 571,318 August 2024 Series F-2 February 2026 4.35 — — — — — 439,686 — — 439,686 August 2024 Dealer Manager August 2029 5.75 — — — — — 25,275 — — 25,275 36,757 1,195,466 ( 454,444 ) ( 251 ) 777,528 1,036,279 ( 505,962 ) ( 3 ) 1,307,842 F-22 Table of Contents SENESTECH, INC. NOTES TO THE FINANCIAL STATEMENTS, continued As of December 31, 2024, we had 1,307,842 shares of common stock issuable upon exercise of outstanding common stock warrants, at a weighted-average exercise price of $ 12.63 per share and expiring as follows: Weighted Average Exercise Price Shares Years Ending December 31: 2025 $ 37.90 81,133 2026 14.19 440,456 2027 525.00 892 2028 21.68 188,768 2029 4.41 596,593 12.63 1,307,842 Common Stock Warrants Issued in April 2023 Registered Direct Offering In April 2023, Series C warrants were issued to the investors to purchase up to 7,142 shares of our common stock. The Series C warrants are exercisable immediately with an exercise price of $ 194.40 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 $ 165.60 per share; volatility of 164 %; term of 5.5 years; dividend yield of 0 %; and risk-free interest rate of 3.4 %. In April 2023, placement agent warrants were issued to purchase up to 534 shares of our common stock. The placement agent warrants are exercisable immediately upon issuance, with an exercise price per share of $ 262.50 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 $ 165.60 per share; volatility of 165 %; term of 5 years; dividend yield of 0 %; and risk-free interest rate of 3.5 %. Common Stock Warrants Issued in August 2023 Private Inducement In August 2023, in connection with the Warrant Inducement Transaction, warrants were issued to the investor in the Warrant Inducement Transaction to purchase up to 48,911 shares of our common stock. These warrants are exercisable immediately with an exercise price of $ 86.42 per share, with 25,101 expiring August 2028 (“5-Year Warrants”) and 23,810 expiring September 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 $ 81.80 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 $ 81.80 per share; volatility of 122 %; term of 1.1 years; dividend yield of 0 %; and risk-free rate of 4.4 %. In August 2023, placement agent warrants were issued to purchase up to 1,222 shares of our common stock. The placement agent warrants are exercisable immediately upon issuance, with an exercise price of $ 108.04 per share and expire August 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 $ 81.80 per share; volatility of 98 %; term of 5 years; dividend yield of 0 %; and risk-free interest rate of 5.4 %. Common Stock Warrants Issued in November 2023 Common Stock Offering In November 2023, in connection with a registered direct offering with certain institutional and accredited investors, we issued common stock warrants as follows: • Pre-Funded Warrants to purchase up to an aggregate of 339,585 shares of common stock at an exercise price of $ 13.00 per share, which are exercisable immediately and terminate only when exercised in full. These warrants were exercised in full by December 31, 2023. We estimated the fair value of the Pre-Funded Warrants to be F-23 Table of Contents SENESTECH, INC. NOTES TO THE FINANCIAL STATEMENTS, continued $ 685,000 using a Black Scholes model based on the following significant inputs: common stock price of $ 9.30 per share; volatility of 262 %; remaining term of one month; dividend yield of 0 % and risk-free interest rate of 5.5 %. • Series D warrants to purchase up to an aggregate of 384,615 shares at an exercise price of $ 13.00 per share, which are exercisable immediately and expire November 2028.We estimated the fair value of the Series D warrants to be $ 2.6 million using a Black Scholes model based on the following significant inputs: common stock price of $ 9.30 per share; volatility of 103 %; remaining term of 5 years; dividend yield of 0 % and risk-free interest rate of 4.2 %. • Series E warrants to purchase up to an aggregate of 384,613 shares at an exercise price of $ 13.00 per share, which are exercisable immediately and expire May 2025. We estimated the fair value of the Series E warrants to be $ 1.8 million using a Black Scholes model based on the following significant inputs: common stock price of $ 9.30 per share; volatility of 128 %; remaining term of 1.5 years; dividend yield of 0 % and risk-free interest rate of 4.6 %. Common Stock Warrants Issued to Placement Agent in November 2023 Common Stock Offering In connection with the registered direct offering in November 2023, we issued to the placement agent warrants to purchase up to 28,844 shares of common stock at an exercise price of $ 16.25 per share. These warrants are exercisable in May 2024 and expire in November 2028. The placement agent warrants and the shares of common stock issuable upon exercise thereof, will be issued in reliance on the exemption from registration provided in Section 4(a)(2) under the Securities Act. We estimated the fair value of these warrants to be $ 189,000 using a Black Scholes model based on the following significant inputs: common stock price of $ 9.30 per share; volatility of 103 %; remaining term of 5 years; dividend yield of 0 %; and risk-free interest rate of 4.2 %. Common Stock Warrants Issued in August 2024 Private Inducement In August 2024, in connection with the Warrant Inducement transaction discussed in Note 8, warrants were issued to the investor in the Warrant Inducement Transaction to purchase up to 1,011,004 shares of our common stock. These warrants are immediately exercisable with an exercise price of $ 4.35 per share, with 571,318 expiring August 2029 (“Series F-1 Warrants”) and 439,686 expiring February 2026 (“Series F-2 Warrants”). For additional information, see Note 14. We estimated the fair value of the Series F-1 Warrants to be $ 1.9 million using a Black-Scholes model based on the following significant inputs: common stock price of $ 4.10 per share; volatility of 118 %; term of 5 years; dividend yield of 0 %; and risk-free rate of 3.6 %. The fair value of the Series F-2 Warrants was estimated to be $ 1.2 million using the Black-Scholes model based on the following significant inputs: common stock price of $ 4.10 per share; volatility of 153 %; term of 1.5 years; dividend yield of 0 %; and risk-free rate of 4.1 %. In August 2024, placement agent warrants were issued to purchase up to 25,275 shares of our common stock. The placement agent warrants are exercisable immediately upon issuance, with an exercise price of $ 5.75 per share, and expiring August 2029. We estimated the fair value of these warrants to be $ 83,000 using a Black-Scholes model based on the following significant inputs: common stock price of $ 4.10 per share; volatility of 118 %; term of 5 years; dividend yield of 0 %; and risk-free interest rate of 3.6 %. F-24 Table of Contents SENESTECH, INC. NOTES TO THE FINANCIAL STATEMENTS, continued NOTE 10: SEGMENT INFORMATION We operate in a single operating segment: the formulation, development, marketing and sale of fertility control products for use in managing pest populations. This single operating segment has been identified based on our internal management structure and reporting to our Chief Operating Decision Maker (“CODM”), our Chief Executive Officer. Our CODM evaluates segment performance on based on the revenues, gross profit and operating loss of the segment and uses internal financial statements to make decisions regarding resource allocation. Revenues, gross profit and operating loss used by the CODM are presented on our accompanying statement of operations. The measure of segment assets is represented as total assets presented on our accompanying balance sheets. There are no intersegment revenues, as all transactions are conducted within the one operating segment. We have not identified any reportable segments other than the single operating segment discussed. Significant Customers The percentage of revenue attributable to our distributors and end customers that represented 10% or more of revenue in at least one of the periods presented, was as follows: Years Ended December 31, 2024 2023 All distributors 34 % 9 % Distributor A 13 2 Distributor B 7 3 The following accounts represented at least 10% of total accounts receivable in at least one of the periods presented: As of December 31, 2024 2023 Distributor A 58 % — % Distributor B 20 % 13 % End customer A 2 % 19 % End customer B — % 13 % NOTE 11: 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, which includes prefunded warrants and any 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. Warrants and 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 years ended December 31, 2024 and 2023. Therefore, basic and diluted loss per share was the same for all periods presented. The following shares were excluded from the calculation of diluted loss per share: December 31, 2024 2023 Common stock warrants 249,053 675,501 Common stock options 73,533 — Total 322,586 675,501 F-25 Table of Contents SENESTECH, INC. NOTES TO THE FINANCIAL STATEMENTS, continued NOTE 12: CONTINGENCIES 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 alleged, 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 claimed that we owed him. In September 2021, the Plaintiff served us and also named 10 individuals as defendants, consisting of current and former directors and employees. The Plaintiff alleged that such individuals agreed to knowingly and wrongfully withhold the stock options owed to him and were knowingly in receipt of stolen property. In November 2023, this legal matter was settled for $ 185,000 . In December 2024, Liphatech Inc. (“Liphatech”) commenced an action against us in the United States District Court for the Eastern District of Wisconsin Division. The complaint alleges, among other things, breach of contract, misappropriation of trade secrets, unfair competition, and unjust enrichment. These claims are based on allegations that we misappropriated and utilized proprietary information and trade secrets of Liphatech. The complaint also alleges that we breached a non-disclosure agreement that we had entered into with Liphatech. The complaint seeks unspecified damages as well as injunctive relief. We believe we have strong defenses against these claims and intend to defend the case vigorously. The outcome of this legal matter is not known or probable at this time, therefore no amounts have been accrued for a settlement. In addition to the matters described above, we may be subject to other legal proceedings and claims arising from contracts or other matters from time to time in the ordinary course of business. Management is not aware of any other pending or threatened litigation where the ultimate disposition or resolution could have a material adverse effect on our financial position, results of operations or liquidity. NOTE 13: RELATED PARTY TRANSACTIONS Related party transactions are conducted in the normal course of business and, unless otherwise noted, are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties. In connection with consulting agreements in place a $ 4,200 cash payment was made during 2023 to the Kito Impact Foundation, of which the Chair of our board serves as chief executive officer. There were no related party transactions for 2024. NOTE 14: SUBSEQUENT EVENTS Since December 31, 2024, we have issued 365,319 shares of common stock pursuant to the ATM Financing for gross proceeds of $ 1.2 million. On March 11, 2025, we completed a warrant inducement transaction whereby we issued 374,718 shares of common stock pursuant to the exercise of certain warrants. Such warrants, which were originally issued in August 2024 with an original exercise price of $ 4.35 per share, were exercised at a reduced exercise price of $ 2.90 per share, for gross proceeds of $ 1.1 million. As consideration for the exercise of such existing warrants, we issued new short-term warrants to purchase up to an aggregate of 1,498,872 shares of common stock at an exercise price of $ 2.90 per share, which will be exercisable for 18 months beginning on the effective date of stockholder approval of the issuance of the shares of common stock. In addition, we issued placement agent warrants to purchase up to an aggregate of 18,736 shares of common stock at an exercise price of $ 3.625 per share, which will be exercisable for 18 months beginning on the effective date of stockholder approval of the issuance of the shares of common stock. Of the shares issued, 29,000 shares are held in abeyance and not considered outstanding. 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 provisions in the terms of the warrant. We have evaluated subsequent events from the balance sheet date through March 12, 2025, the date at which the financial statements were issued, and determined that there were no other items that require adjustment to or disclosure in the financial statements. F-26 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None.