snes-20230930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number: 001-37941

SENESTECH, INC.

(Exact name of registrant as specified in its charter)


Delaware						20-2079805
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

23460 N 19th Ave, Suite 110
Phoenix, AZ						85027
(Address of principal executive offices)						(Zip Code)

(928) 779-4143

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value

SNES

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	x	Smaller reporting company	x
Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

The number of shares of common stock outstanding as of November 8, 2023: 3,631,060


	PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	1
	Condensed Balance Sheets	1
	Condensed Statements of Operations and Comprehensive Loss	2
	Condensed Statements of Cash Flows	3
	Notes to Condensed Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15





Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22
Item 4.	Controls and Procedures	22
	PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	23
Item 5.	Other Information	23
Item 6.	Exhibits	24
	SIGNATURES	25


	September 30, 2023		December 31, 2022
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	2,145	$	4,775
Accounts receivable, net	83		113
Prepaid expenses	385		378
Inventory, net	703		853
Total current assets	3,316		6,119
Right to use assets, operating leases	217		347
Property and equipment, net	313		294
Other noncurrent assets	22		22
Total assets	$	3,868	$	6,782
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	147	$	540
Accrued expenses	671		560
Current portion of operating lease liability	192		180
Current portion of note payable	9		—
Deferred revenue	15		44
Total current liabilities	1,034		1,324
Operating lease liability, less current portion	34		179
Note payable, less current portion	44		—
Total liabilities	1,112		1,503
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, 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	3		1
Additional paid-in capital	130,933		127,481
Accumulated deficit	(128,180)		(122,203)
Total stockholders’ equity	2,756		5,279
Total liabilities and stockholders’ equity	$	3,868	$	6,782


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenues, net	$	360	$	250	$	898	$	722
Cost of sales	184		128		488		374
Gross profit	176		122		410		348
Operating expenses:
Research and development	379		452		1,147		1,399
Selling, general and administrative	1,748		2,289		5,259		6,473
Total operating expenses	2,127		2,741		6,406		7,872
Loss from operations	(1,951)		(2,619)		(5,996)		(7,524)
Other income (expense):
Interest income	4		1		19		4
Interest expense	—		—		—		(1)
Miscellaneous expense, net	—		(28)		—		(26)
Other income (expense), net	4		(27)		19		(23)
Net loss and comprehensive loss	$	(1,947)	$	(2,646)	$	(5,977)	$	(7,547)
Weighted average shares outstanding - basic and diluted	4,176,592		610,648		3,037,790		610,578
Net loss per share - basic and diluted	$	(0.47)	$	(4.33)	$	(1.97)	$	(12.36)


	Nine Months Ended September 30,
	2023		2022
Cash flows from operating activities:
Net loss	$	(5,977)	$	(7,547)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	104		148
Stock-based compensation	467		570
Bad debt expense	(4)		5


Loss on sale of property and equipment	—		28
Changes in operating assets and liabilities:
Accounts receivable	34		(16)

Prepaid expenses	(7)		(174)
Inventory	150		48
Other assets	(3)		—
Accounts payable	(393)		142
Accrued expenses	111		409
Deferred revenue	(29)		48
Net cash used in operating activities	(5,547)		(6,339)

Cash flows from investing activities:
Purchase of property and equipment	(114)		(167)
Proceeds received from sale of property and equipment	—		4
Net cash used in investing activities	(114)		(163)

Cash flows from financing activities:
Proceeds from issuances of common stock, net	2,998		—
Proceeds from (repayments of) notes payable, net	44		(5)
Repayments of finance lease obligations	—		(27)

Payment of employee withholding taxes related to share based awards	(11)		—
Net cash provided by (used in) financing activities	3,031		(32)

Decrease in cash and cash equivalents	(2,630)		(6,534)
Cash and cash equivalents, beginning of period	4,775		9,326
Cash and cash equivalents, end of period	$	2,145	$	2,792

Supplemental cash flow information is as follows:
Cash paid for interest	$	—	$	1
Cash paid for income taxes	—		—
Non-cash investing and financing activities:
Note payable incurred for the purchase of certain equipment	10		—


	September 30, 2023		December 31, 2022
Accounts receivable	$	85	$	119
Allowance for uncollectible accounts	(2)		(6)
Accounts receivable, net	$	83	$	113


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Balance as of beginning of period	$	4	$	12	$	6	$	—
Increase in provision	2		—		2		12
Amounts written off, less recoveries	(4)		(7)		(6)		(7)
Balance as of end of period	$	2	$	5	$	2	$	5


	September 30, 2023		December 31, 2022
Raw materials	$	670	$	772
Work in progress	5		—
Finished goods	46		99
Total inventory	721		871
Less: reserve for obsolescence	(18)		(18)
Inventory, net	$	703	$	853


	September 30, 2023		December 31, 2022
Software licenses	138		157
Professional services	95		41
Insurance	44		61
Patents	17		39
Marketing programs and conferences	6		74
Other	85		6
Total prepaid expenses	$	385	$	378


	September 30, 2023		December 31, 2022
Research and development equipment	$	1,621	$	1,558
Office and computer equipment	808		800
Autos	54		54
Furniture and fixtures	41		41
Leasehold improvements	119		119
Total in service	2,643		2,572
Accumulated depreciation and amortization	(2,387)		(2,283)
Total in service, net	256		289
Construction in progress	57		5
Property and equipment, net	$	313	$	294


	September 30, 2023		December 31, 2022
Compensation, severance and related benefits	$	521	$	497
Legal services	135		36
Product warranty	15		18
Personal property and franchise tax	—		6
Other	—		3
Total accrued expenses	$	671	$	560


	Number of Options		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (years)
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)	10.34		4.2
Nine months ended September 30, 2023:
Outstanding as of December 31, 2022	280,810		17.00		3.9
Granted	199,421		1.25		5.0
Exercised	—		—		—
Forfeited	(31,183)		17.97		—
Expired	(372)		680.87		—
Outstanding as of September 30, 2023	448,676	(1)	10.34		4.2
Exercisable as of September 30, 2023	194,878		30.92		3.9


Expected volatility	128	%
Expected dividend yield	—
Expected term (in years)	5
Risk-free interest rate	5.3	%


	Number of Units	Weighted Average Grant-Date Fair Value Per Unit
Unvested balance as of December 31, 2022	18,799	$	2.71
Granted	—	—
Vested	(18,799)	2.71
Forfeited	—	—
Unvested balance as of September 30, 2023	—	—


	Shares	Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (years)
Outstanding as of December 31, 2022	4,414,810	$	6.58	3.0
Issued	6,937,311	0.88		4.9
Exercised	(4,164,575)	1.54		—
Expired	(13,629)	527.05		—
Outstanding as of September 30, 2023	7,173,917	2.00		4.9


2023	$	3
2024	9
2025	10
2026	11
2027	12
Thereafter	8
Total principal payments	53
Less: current portion of note payable	(9)
Note payable, less current portion	$	44


2023	$	50
2024	186

Total operating lease payments	236
Less: imputed interest	(10)
Total operating lease liabilities	$	226


	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Total

	Shares	Amount
2023
Balances as of December 31, 2022	809,648	$	1	$	127,481	$	(122,203)	$	5,279
Stock-based compensation	—	—		166		—		166
Issuance of common stock upon exercise of warrants	1,230,000	1		(1)		—		—
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	—	—		—		(2,037)		(2,037)
Balances as of March 31, 2023	2,107,339	2		127,735		(124,240)		3,497
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
2022
Balances as of December 31, 2021	610,364	1		$	122,542	$	(112,508)	$	10,035
Stock-based compensation	—	—		221		—		221
Issuance of common stock for service	250	—		3		—		3
Net loss	—	—		—		(2,332)		(2,332)
Balances as of March 31, 2022	610,614	1		122,766		(114,840)		7,927
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


	Three Months Ended September 30,				% Increase (Decrease)		Nine Months Ended September 30,				% Increase (Decrease)
	2023		2022				2023		2022
Revenues, net	$	360	$	250	44	%	$	898	$	722	24	%
Cost of sales	184		128		44	%	488		374		30	%
Gross profit	176		122		44	%	410		348		18	%
Operating expenses:
Research and development	379		452		(16)	%	1,147		1,399		(18)	%
Selling, general and administrative	1,748		2,289		(24)	%	5,259		6,473		(19)	%
Total operating expenses	2,127		2,741		(22)	%	6,406		7,872		(19)	%
Loss from operations	(1,951)		(2,619)		(26)	%	(5,996)		(7,524)		(20)	%
Other income (expense), net	4		(27)		(115)	%	19		(23)		(183)	%
Net loss	$	(1,947)	$	(2,646)	(26)	%	$	(5,977)	$	(7,547)	(21)	%

SEC Form 10-Q filed by SenesTech Inc.