SenesTech(SNES) - 2025 Q2 - Quarterly Report

PART I — FINANCIAL INFORMATION Item 1. Financial Statements Presents SenesTech, Inc.'s unaudited condensed financial statements, covering balance sheets, operations, and cash flows Condensed Balance Sheets Details the company's financial position at specific dates, outlining assets, liabilities, and stockholders' equity | Metric | June 30, 2025 (unaudited) (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :--------------------------------------- | :------------------------------- | | Cash and cash equivalents | $6,055 | $1,307 | | Total current assets | $7,474 | $2,813 | | Total assets | $10,365 | $3,278 | | Total current liabilities | $810 | $561 | | Total liabilities | $3,388 | $767 | | Total stockholders' equity | $6,977 | $2,511 | - Total assets increased significantly from $3,278 thousand at December 31, 2024, to $10,365 thousand at June 30, 2025, primarily due to a substantial increase in cash and cash equivalents[11] - Total stockholders' equity increased from $2,511 thousand at December 31, 2024, to $6,977 thousand at June 30, 2025, reflecting new equity issuances[11] Condensed Statements of Operations and Comprehensive Loss Presents the company's financial performance over periods, detailing revenues, expenses, gross profit, and net loss | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Revenues, net | $625 | $459 | $1,110 | $874 | | Cost of sales | $216 | $210 | $388 | $490 | | Gross profit | $409 | $249 | $722 | $384 | | Research and development | $427 | $467 | $845 | $837 | | Selling, general and administrative | $1,596 | $1,384 | $3,154 | $2,992 | | Total operating expenses | $2,023 | $1,851 | $3,999 | $3,829 | | Loss from operations | $(1,614) | $(1,602) | $(3,277) | $(3,445) | | Net loss and comprehensive loss | $(1,616) | $(1,584) | $(3,281) | $(3,416) | | Net loss per share - basic and diluted | $(0.87) | $(3.08) | $(2.08) | $(6.64) | - Net revenues increased by 36% for the three months ended June 30, 2025, and by 27% for the six months ended June 30, 2025, driven by Evolve product sales[13] - Gross profit increased by 64% for the three months ended June 30, 2025, and by 88% for the six months ended June 30, 2025, reflecting improved margins[13] Condensed Statements of Cash Flows Summarizes cash inflows and outflows from operating, investing, and financing activities over specific periods | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | | Net cash used in operating activities | $(2,707) | $(3,416) | | Net cash used in investing activities | $(83) | $(41) | | Net cash provided by financing activities | $7,538 | $14 | | Increase (decrease) in cash and cash equivalents | $4,748 | $(3,443) | | Cash and cash equivalents, end of period | $6,055 | $1,952 | - Net cash provided by financing activities significantly increased to $7,538 thousand for the six months ended June 30, 2025, from $14 thousand in the prior year, primarily due to proceeds from warrant exercises and common stock issuances[16] - Cash and cash equivalents at the end of the period increased to $6,055 thousand as of June 30, 2025, from $1,952 thousand in the prior year, driven by financing activities[16] Notes to Condensed Financial Statements Provides detailed explanations and disclosures supporting the condensed financial statements NOTE 1: BASIS OF PRESENTATION Describes the company's business, product lines, and financial statement basis, including going concern considerations - SenesTech, Inc. develops and commercializes fertility control products for animal pest populations, focusing on rats and mice with products like ContraPest, Evolve Rat, and Evolve Mouse[18] - Evolve Rat, launched in January 2024, is the current lead product, a soft bait exempt from federal registration and authorized for sale in 48 states and territories[19][20] - Evolve Mouse, launched in May 2024, is a variation of the soft bait formulation, also a minimum risk pesticide, authorized for sale in 37 states and territories[21] - The company has incurred significant operating losses since inception, with an accumulated deficit of $139.4 million as of June 30, 2025, raising substantial doubt about its ability to continue as a going concern[23][25] - Management expects current cash and anticipated revenue, combined with additional equity sales, to fund operations through at least the end of fiscal 2027[27] NOTE 2: BALANCE SHEET COMPONENTS Provides detailed breakdowns of key balance sheet accounts like cash, receivables, inventory, and liabilities Cash and Cash Equivalents (in thousands) | Date | Amount | | :--- | :----- | | June 30, 2025 | $6,055 | | December 31, 2024 | $1,307 | Accounts Receivable, Net (in thousands) | Date | Amount | | :--- | :----- | | June 30, 2025 | $470 | | December 31, 2024 | $335 | Allowance for Uncollectible Accounts (in thousands) | Period | 2025 | 2024 | | :--- | :--- | :--- | | Balance as of beginning of period | $4 | $4 | | Increase in provision (Six Months Ended June 30) | $6 | $2 | | Balance as of end of period (June 30) | $10 | $4 | Inventory, Net (in thousands) | Date | Amount | | :--- | :----- | | June 30, 2025 | $711 | | December 31, 2024 | $794 | Accrued Expenses (in thousands) | Date | Amount | | :--- | :----- | | June 30, 2025 | $564 | | December 31, 2024 | $278 | Notes Payable (in thousands) | Year | Principal Payments | | :--- | :----------------- | | 2025 | $28 | | 2026 | $61 | | 2027 | $68 | | 2028 | $65 | | 2029 | $12 | | Total principal payments | $234 | | Less: current portion | $(59) | | Notes payable, less current portion | $175 | NOTE 3: FAIR VALUE MEASUREMENTS Explains the fair value measurement of financial instruments, noting approximations due to short maturities - The carrying amounts of financial instruments like accounts payable and accrued liabilities approximate fair value due to their short maturities[40] NOTE 4: LEASES Details the company's operating lease arrangements, including costs and future liability maturities - In August 2024, the company entered into a new operating lease for its corporate headquarters and manufacturing/research operations, commencing April 2025 and expiring in 2035[42] Operating Lease Cost (in thousands) | Period | 2025 | 2024 | | :--- | :--- | :--- | | Three Months Ended June 30 | $101 | $57 | | Six Months Ended June 30 | $173 | $113 | Operating Lease Liability Maturities as of June 30, 2025 (in thousands) | Year | Amount | | :--- | :----- | | 2025 | $83 | | 2026 | $331 | | 2027 | $338 | | 2028 | $348 | | 2029 | $358 | | Thereafter | $2,245 | | Total operating lease payments | $3,703 | | Less: imputed interest | $(1,248) | | Total operating lease liability | $2,455 | NOTE 5: STOCK-BASED COMPENSATION Outlines the company's stock-based compensation plans, option activity, and related expenses - The 2018 Equity Incentive Plan was amended on July 11, 2024, increasing authorized shares to 207,071, with 32,182 shares available for issuance as of June 30, 2025[43] Stock Option Activity (Six Months Ended June 30, 2025) | Metric | Number of Options | Weighted Average Exercise Price Per Share | | :-------------------------------- | :---------------- | :---------------------------------------- | | Outstanding as of Dec 31, 2024 | 147,616 | $27.13 | | Granted | 28,057 | $3.09 | | Forfeited | (11) | $2,497.70 | | Outstanding as of June 30, 2025 | 175,662 | $23.14 | | Exercisable as of June 30, 2025 | 81,175 | $46.15 | Stock-Based Compensation Expense (in thousands) | Expense Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $3 | $4 | $6 | $8 | | Selling, general and administrative | $87 | $84 | $175 | $165 | | Total | $90 | $88 | $181 | $173 | - As of June 30, 2025, unrecognized stock-based compensation related to unvested options totaled $245,000, to be recognized over a weighted average period of 2.1 years[48] NOTE 6: STOCKHOLDERS' EQUITY Details changes in stockholders' equity, including stock issuances, warrant exercises, and net loss Stockholders' Equity Activity (Six Months Ended June 30, 2025, dollars in thousands) | Metric | Shares | Common Stock Amount | Additional Paid-In Capital | Accumulated Deficit | Total | | :------------------------------------ | :------- | :------------------ | :------------------------- | :------------------ | :---- | | Balances as of Dec 31, 2024 | 1,035,893 | $1 | $138,607 | $(136,097) | $2,511 | | Stock-based compensation | — | — | $181 | — | $181 | | Issuance of common stock, net | 854,660 | $1 | $2,705 | — | $2,706 | | Issuance of common stock upon exercise of warrants, net | 1,873,590 | $2 | $4,858 | — | $4,860 | | Net loss | — | — | — | $(3,281) | $(3,281) | | Balances as of June 30, 2025 | 3,764,143 | $4 | $146,351 | $(139,378) | $6,977 | - In June 2025, the company completed a warrant inducement transaction, issuing 1,458,872 shares of common stock from warrant exercises, generating gross proceeds of $4.5 million before costs[49] - In March 2025, another warrant inducement transaction resulted in the issuance of 374,718 shares of common stock, generating gross proceeds of $1.1 million before costs[51] - During the first half of 2025, 854,660 shares of common stock were sold under an At-The-Market (ATM) Facility for gross proceeds of $3.0 million[53] NOTE 7: COMMON STOCK WARRANTS Summarizes common stock warrant activity, including issuances, exercises, and fair value measurements Common Stock Warrant Activity (Six Months Ended June 30, 2025) | Metric | Shares | Weighted Average Exercise Price Per Share | Weighted Average Remaining Contractual Term (years) | | :-------------------------------- | :------- | :---------------------------------------- | :-------------------------------------------------- | | Outstanding as of Dec 31, 2024 | 1,307,842 | $12.63 | 3.4 | | Issued | 3,049,424 | $3.77 | 1.2 | | Exercised | (1,873,590) | $2.90 | — | | Expired | (81,073) | $21.95 | — | | Outstanding as of June 30, 2025 | 2,402,603 | $8.12 | 1.8 | - In connection with the June 2025 Warrant Inducement, new warrants to purchase 1,458,872 shares were issued at an exercise price of $4.15 per share, exercisable for 1.3 years, with an estimated fair value of $4.1 million[56] - In connection with the March 2025 Warrant Inducement, new warrants to purchase 1,498,872 shares were issued at an exercise price of $2.90 per share, exercisable for 1.5 years, with an estimated fair value of $1.5 million[58] NOTE 8: LOSS PER SHARE Explains basic and diluted loss per share, noting anti-dilutive securities due to net losses - Basic and diluted loss per share are the same for all periods presented because potentially dilutive securities were anti-dilutive due to net losses[60] Shares Excluded from Diluted Net Loss Per Share Calculation (in thousands) | Security Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Common stock warrants | — | — | — | — | | Stock options | — | 49 | — | 167 | NOTE 9: SEGMENT INFORMATION Identifies the company's single operating segment and details revenue and accounts receivable concentration - The company operates in a single operating segment: the formulation, development, marketing, and sale of fertility control products for pest populations[62] Percentage of Revenue Attributable to Major Customers | Customer | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Customer A | 30 % | 5 % | 30 % | 5 % | | Customer B | 5 % | 16 % | 6 % | 11 % | Percentage of Total Accounts Receivable Attributable to Major Customers | Customer | June 30, 2025 | December 31, 2024 | | :--------- | :------------ | :---------------- | | Customer A | 38 % | 30 % | | Customer B | 6 % | 20 % | | Customer C | 11 % | — % | NOTE 10: CONTINGENCIES Discloses information regarding legal proceedings, including a lawsuit filed against the company - Liphatech Inc. commenced an action against the company in December 2024, alleging breach of contract, misappropriation of trade secrets, unfair competition, and unjust enrichment[65] - The company believes it has strong defenses and is actively defending the case; the outcome is not known or probable, and no specific damages have been claimed or accrued[65] NOTE 11: SUBSEQUENT EVENTS Reports significant events occurring after the balance sheet date, including recent warrant inducement transactions - On August 5, 2025, the company completed a warrant inducement transaction, issuing 1,458,872 shares of common stock from existing warrant exercises, generating gross proceeds of $6.3 million[68] - This transaction involved issuing new warrants for 2,188,308 shares of common stock at an exercise price of $5.25 per share, expiring 15 months after the resale registration statement's effective date[68] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Provides management's perspective on the company's financial condition, operational results, liquidity, and future funding needs Forward-Looking Statements Highlights that the report contains forward-looking statements subject to risks and uncertainties regarding future financial performance - The report contains forward-looking statements regarding future operating results, financial position, business strategy, and objectives, which are subject to known and unknown risks and uncertainties[72][73] - Key forward-looking statements include expectations of continued significant expenses and operating losses, the need for additional financing, and the ability to achieve profitability or positive cash flows[72][74] Overview Summarizes the company's financial performance, accumulated deficit, cash position, and factors critical to long-term success - The company incurred a net loss of $1.6 million for the three months ended June 30, 2025, and expects continued losses, primarily funding operations through equity sales[78] - As of June 30, 2025, the company had an accumulated deficit of $139.4 million and cash and cash equivalents of $6.1 million[78] - Long-term success depends on successful commercialization, market acceptance, effective sales, R&D success, key personnel retention, and meeting working capital needs[79] - Current cash and anticipated revenue, combined with additional equity sales, are expected to fund operations through at least the end of fiscal 2027, but additional financing may be needed[80] Results of Operations Analyzes the company's financial results, including revenues, cost of sales, gross profit, and operating expenses | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | % Change (YoY) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | % Change (YoY) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :------------- | :-------------------------------------------- | :-------------------------------------------- | :------------- | | Revenues, net | $625 | $459 | 36% | $1,110 | $874 | 27% | | Cost of sales | $216 | $210 | 3% | $388 | $490 | (21)% | | Gross profit | $409 | $249 | 64% | $722 | $384 | 88% | | Research and development | $427 | $467 | (9)% | $845 | $837 | 1% | | Selling, general and administrative | $1,596 | $1,384 | 15% | $3,154 | $2,992 | 5% | | Loss from operations | $(1,614) | $(1,602) | 1% | $(3,277) | $(3,445) | (5)% | | Net loss | $(1,616) | $(1,584) | 2% | $(3,281) | $(3,416) | (4)% | - Revenue growth was primarily driven by the Evolve product line, which represented approximately 83% of Q2 2025 revenues (up from 58% in Q2 2024) and 81% of H1 2025 revenues (up from 41% in H1 2024), offsetting a decline in ContraPest sales[83][84][85] - Gross margin improved significantly to 65.4% in Q2 2025 (from 54.2% in Q2 2024) and 65.0% in H1 2025 (from 43.9% in H1 2024), mainly due to the shift in product mix towards lower-cost Evolve products[86][87][89][90] - Research and development expenses decreased by 9% in Q2 2025 due to cost containment, despite increased facility expenses from a new manufacturing site[91][92] - Selling, general and administrative expenses increased by 15% in Q2 2025 and 5% in H1 2025, primarily due to higher legal fees and franchise fees, partially offset by other cost containment efforts[93][94] - Other income (expense), net shifted from income in 2024 to expense in 2025, driven by higher interest expense from increased notes payable and lower interest income due to reduced cash balances[95][96] Liquidity and Capital Resources Discusses the company's ability to meet its financial obligations, its funding sources, and future capital requirements - The company has an accumulated deficit of $139.4 million and $6.1 million in cash and cash equivalents as of June 30, 2025, having primarily funded operations through equity sales[98] - Management expects current cash, anticipated revenue, and proceeds from the August 2025 warrant exercise to fund operations through at least the end of fiscal 2027[100] - Additional financing may be required sooner if revenue or margin targets are not met or expenses exceed projections, with a risk of delaying or discontinuing operations if capital is unavailable[101] - Future expenses are expected to increase due to marketing and sales focus, strategic partnerships, regulatory approvals, manufacturing process development, R&D, intellectual property maintenance, and public company operational costs[102][103][104] Sources and Uses of Cash (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :------------------------------------ | :----- | :----- | | Cash and cash equivalents, beginning of period | $1,307 | $5,395 | | Net cash used in operating activities | $(2,707) | $(3,416) | | Net cash used in investing activities | $(83) | $(41) | | Net cash provided by financing activities | $7,538 | $14 | | Increase (decrease) in cash and cash equivalents | $4,748 | $(3,443) | | Cash and cash equivalents, end of period | $6,055 | $1,952 | - Operating activities used $2.7 million in cash for H1 2025, primarily due to net loss, partially offset by non-cash charges and changes in operating assets/liabilities[107] - Financing activities provided $7.5 million in cash for H1 2025, mainly from warrant exercises ($4.9 million) and common stock issuances ($2.7 million)[110] - The August 5, 2025, warrant inducement transaction generated $6.3 million in gross proceeds, increasing cash and cash equivalents to approximately $11.2 million, which is believed to be sufficient through fiscal 2027[111][112][113] Critical Accounting Policies and Estimates States that there have been no material changes to the company's critical accounting policies and estimates - There have been no material changes to the company's critical accounting policies and estimates since the Annual Report on Form 10-K for the year ended December 31, 2024[114] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states that there are no applicable quantitative and qualitative disclosures about market risk for the company - The company has no applicable quantitative and qualitative disclosures about market risk[115] Item 4. Controls and Procedures Details the evaluation of disclosure controls and procedures and reports on any changes in internal control over financial reporting - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2025[116][118] - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[119] PART II — OTHER INFORMATION Item 1. Legal Proceedings This section refers to Note 10, Contingencies, for information regarding legal proceedings, indicating that the company may be involved in legal matters incidental to its normal course of business - Information regarding legal proceedings is detailed in Note 10, Contingencies, within the Notes to Condensed Financial Statements[122] Item 1A. Risk Factors This section states that there have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - No material changes to risk factors have occurred since the Annual Report on Form 10-K for the year ended December 31, 2024[123] Item 5. Other Information This section reports that no directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025 - No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025[124] Item 6. Exhibits This section lists the exhibits filed as part of the Form 10-Q, including various forms of common stock purchase warrants, inducement letters, and certifications - Exhibits include forms of Series H and I Common Stock Purchase Warrants, Placement Agent Warrants, Inducement Letters, and certifications from the CEO and CFO[125] SIGNATURES SIGNATURES This section contains the signatures of the company's authorized officers, Joel L. Fruendt and Thomas C. Chesterman, certifying the filing of the report - The report is signed by Joel L. Fruendt, President and Chief Executive Officer, and Thomas C. Chesterman, Executive Vice President, Chief Financial Officer, Treasurer, and Secretary, on August 7, 2025[130][131]