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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
November 9, 2022
SenesTech, Inc.
(Exact name of registrant as specified in its charter)
| Delaware |
|
001-37941 |
|
20-2079805 |
(State or other jurisdiction
of incorporation) |
|
(Commission
File Number) |
|
(I.R.S. Employer
Identification No.) |
|
23460 N. 19th Avenue, Suite 110
Phoenix, AZ |
|
85027 |
| (Address of principal executive offices) |
|
(Zip Code) |
Registrant’s telephone number, including
area code: (928) 779-4143
| |
N/A |
|
| (Former name or former address, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b)
under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c)
under the Exchange Act (17 CFR 240.13e-4(c)) |
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
is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2
of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
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. ☐
Item 1.01.
Entry into a Material Definitive Agreement.
The disclosure provided in
Item 5.02 of this Current Report on Form 8-K relating to the Employment Agreement with Mr. Fruendt is hereby incorporated by reference
into this Item 1.01.
Item 2.02. Results of Operations and Financial Condition.
On November 14, 2022, we announced
our financial results for the third quarter ended September 30, 2022. A copy of our press release announcing these financial results and
certain other information is attached as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.
The information in this Item
2.02 (including Exhibit 99.1) is furnished pursuant to Item 2.02 and shall not be deemed to be “filed” for purposes of Section
18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or incorporated by reference
in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
We do not have, and expressly
disclaim, any obligation to release publicly any updates or any changes in our expectations or any changes in events, conditions, or circumstances
on which any forward-looking statement is based.
The text included with this
Current Report on Form 8-K is available on our website at www.senestech.com, although we reserve the right to discontinue the availability
at any time.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On November 14, 2022, we announced
the appointment of Joel Fruendt to replace Kenneth Siegel as our Chief Executive Officer. Mr. Siegel’s retirement as our Chief Executive
Officer will be effective November 15, 2022. Mr. Siegel has agreed to continue as an Executive Director of our company, in a consultative
role, and is expected to retire as a director on December 31, 2022. For the avoidance of doubt, Mr. Siegel’s role as Executive Director
shall not constitute an officer of our company.
On
November 14, 2022, Joel Fruendt was appointed as Chief Executive Officer of our company, effective as of November 15, 2022 (the
“Commencement Date”). Mr. Fruendt was also appointed as a member of our Board of Directors, effective as of
the Commencement Date.
Mr. Fruendt, age 61, previously
served as the President and Chief Executive Officer of Safe Reflections, Inc., a provider of colorfast, durable, reflective solutions
to the occupational safety and military training apparel markets, from 2020 to 2022. Mr. Fruendt held various management roles at Clarke
Environmental Inc., a pest control product and services company, from 2005 to 2020, including Vice President and General Manager and Vice
President and General Manager – Sales. From 2000 to 2005, Mr. Fruendt served as the Vice President – Sales at Moore Diversified
Products, a plastic conduit products and custom metal enclosures manufacturing company. From 1992 to 2000, Mr. Fruendt served as the Vice
President, GM – NSC Division with Waste Management Inc., a thermoplastic liner, geotextile, and geosynthetic construction products
manufacturing and installation company.
Mr. Fruendt has no family
relationship with any of the executive officers or directors of our company. There are no arrangements or understandings between Mr. Fruendt
and any other person pursuant to which he was elected as an officer or director of our company. Mr. Fruendt holds nine shares of our common
stock.
On
November 9, 2022, we entered into an employment letter agreement with Mr. Fruendt (the “Employment Agreement”)
to serve as our Chief Executive Officer, effective as of the Commencement Date. Under the terms of the Employment Agreement, Mr. Fruendt
will receive an annual base salary of $340,000 and will receive a stock option to purchase 3.5% of the outstanding shares of our common
stock (the “Option”), which will vest on a quarterly basis over a three-year period, and will be subject to
the terms and conditions of the Company’s 2018 Equity Incentive Plan, as amended (the “Plan”) and standard
form of option agreement. Mr. Fruendt will be eligible to receive an annual incentive bonus with a target value equal to 60% of his annual
base salary, subject to his achievement of performance objectives to be mutually agreed upon by Mr. Fruendt and our board of directors.
In addition, after each full year of employment with our company, subject to board approval, Mr. Fruendt will be eligible to receive additional
equity incentive grants consistent with timing for our other employees. Mr. Fruendt will also receive a one-time cash bonus of $20,000
and a one-time grant of restricted stock units (the “RSUs”) with an aggregate value of $50,000. The RSUs will
vest quarterly over a 12-month period. Mr. Fruendt will also be eligible to participate in the standard benefits, vacation, and expense
reimbursement plans offered to similarly situated employees, and will enter into our standard form of indemnification agreement applicable
to our directors and officers.
In the event Mr. Fruendt’s
termination by us without Cause or Mr. Fruendt resigns for Good Reason (as such terms are defined in his employment letter agreement),
Mr. Fruendt will be entitled to severance benefits equal to 12 months’ continuation of his then base salary. In addition, we will
reimburse Mr. Fruendt for COBRA premiums in effect on the date of termination for coverage in effect for him and, if applicable, his spouse
and dependent children on such date under our group health plan(s). Finally, the vesting of Mr. Fruendt’s Option will be accelerated
such that he will be deemed vested in those shares subject to the Option.
The description of the Employment
Agreement set forth above does not purport to be complete and is qualified in its entirety by the full text of the Employment Agreement,
a copy of which is attached hereto as Exhibit 10.24 and is incorporated herein by reference.
Item 7.01. Regulation FD Disclosure.
On
November 14, 2022, we issued a press release announcing the appointment of Mr. Fruendt
and retirement of Mr. Siegel. A copy of the press release is attached hereto as Exhibit 99.2 and is incorporated herein by reference.
The information in this Item
7.01 (including Exhibit 99.2) is furnished pursuant to Item 7.01 and shall not be deemed to be “filed” for purposes of Section
18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or incorporated by reference
in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: November 14, 2022 |
SENESTECH, INC. |
| |
|
|
| |
By: |
/s/ Thomas C. Chesterman |
| |
|
Thomas C. Chesterman |
| |
|
Chief Financial Officer |
3
Exhibit 10.24
SenesTech, Inc.
23460 N. 19th Avenue, Suite 110
Phoenix, AZ 85027
November 9, 2022
Joel Fruendt
Via Email
Re: Employment Terms
Dear Joel:
SenesTech, Inc. (the “Company”)
is pleased to offer you employment in the position of Chief Executive Officer on the terms of this letter agreement (the “Agreement”).
Your employment start date (“Start Date”) will be November 15, 2022.
1.
Duties and Responsibilities. As Chief Executive Officer, you will report to the Company’s Board of Directors (the “Board”).
You will also serve as a member of the Board subject to the terms and conditions of the Company’s Bylaws. You will work at our facility
located in Phoenix, Arizona. As a Company employee, you will be expected to abide by Company rules and policies as adopted from time to
time, applicable to all officers of the Company.
2.
Salary. Your salary will be $340,000 per year initially, less payroll deductions and withholdings, paid on the Company’s
normal payroll schedule (the “Base Salary”).
3.
Annual Bonus. Effective for the fiscal year that begins on January 1, 2023, and each year thereafter during your employment, you
will be eligible to receive an annual incentive bonus with a target value equal to sixty percent (60%) of your Base Salary (each such
bonus, an “Annual Bonus”). Whether you receive an Annual Bonus, and the actual amount of any such bonus, shall be determined
by the Board in its sole discretion, and shall be based upon achievement of performance objectives to be mutually agreed upon between
you and the Board (or duly authorized committee thereof) and other criteria to be determined by the Board. Each Annual Bonus shall be
paid within thirty (30) days after the Board’s determination that an Annual Bonus shall be awarded and those determinations are
generally made in the first quarter of the year following the applicable bonus year in connection with the completion of the Company’s
annual financial audit. You must be employed on the date that any Annual Bonus is paid in order to earn the Annual Bonus. Accordingly,
if your employment ends for any reason before the Annual Bonus is paid, then you will not have earned, and will not receive, any portion
of the Annual Bonus.
4. Equity Grants.
Subject to approval by the Board, at the first Board meeting following the Start Date, the Company will grant you an option to purchase
3.5% of the outstanding shares of the Company’s common stock (the “Option”). The Option is expected to be granted
within 30 days after your Start Date. The Option shall vest over a three-year period, with 1/12th of the shares subject to the Option
vesting each quarter subject to your continuous service. The Option shall be issued pursuant to the terms and conditions of the Company’s
Equity Incentive Plan (the “Plan”), at an exercise price equal to 100% of the fair market value of the Company’s
common stock on the date of grant, as provided in the Plan and consistent with the requirements for an exemption from the application
of Section 409A of the Internal Revenue Code (the “Code”), and shall be governed in all respects by the terms of the
Plan, the grant notices and the option agreements. In addition, after each full year of employment with the Company, you will be eligible
to receive additional equity incentive grants in the same general timeframes as other Company employees.
5.
Cash Sign-On Bonus. The Company will also pay you a one-time cash bonus of $20,000, which will be payable at the same time as receipt
of your first salary payment.
6.
Restricted Stock Unit Sign-On Bonus. The Company will also make a one-time grant to you of Restricted Stock Units (“RSUs”)
with an aggregate value of $50,000. The RSUs will vest quarterly over a 12-month period, with ¼ of the RSUs vesting each quarter.
The number of RSUs to be issued to you will be based on the fair market value of the Company’s common stock on the date of grant,
as provided in the Plan, and shall be governed in all respects by the terms of the Plan, the grant notices, and the RSU agreements.
7.
Relocation, Housing and Realtor Reimbursement. The Company will reimburse you for relocation expenses for your move to the Phoenix,
Arizona metropolitan area in the amount of up to $20,000, subject to your submission of evidence of relocation expenses in accordance
with the Company’s usual record-keeping requirements. In addition to such relocation expenses, the Company will reimburse you for
the cost of furnished housing in the Phoenix, Arizona metropolitan area in the amount of up to $2,250 per month. The furnished housing
reimbursement shall be for a maximum of six consecutive months beginning in January 2023, and shall be subject to your submission of evidence
of relocation expenses in accordance with the Company’s usual record-keeping requirements. Finally, the Company will reimburse you
for the cost of real estate commission fees you may incur in selling your current residence in Florida in the amount of up to $40,000,
subject to your submission of evidence of relocation expenses in accordance with the Company’s usual record-keeping requirements.
The real estate commission fee reimbursement shall be payable 75% in cash and 25% in RSUs. The RSUs will vest quarterly over a 12-month
period from the date of grant, with ¼ of the RSUs vesting each quarter. The number of RSUs to be issued to you for the real estate
commission fee reimbursement will be based on the fair market value of the Company’s common stock on the date of grant, as provided
in the Plan, and shall be governed in all respects by the terms of the Plan, the grant notices, and the RSU agreements.
8.
Benefits. During your employment, you will be eligible to participate in the standard benefits and vacation/paid time off plans
offered to similarly situated employees by the Company from time to time, subject to plan terms and generally applicable Company policies.
The Company and you will also enter into the Company’s standard form of Indemnification Agreement in the form attached as Exhibit
A.
9.
Business Expenses. The Company will reimburse you for reasonable out-of-pocket expenses incurred in the performance of your duties
for the Company in accordance with the Company’s rules and policies, and subject to any applicable taxes and withholdings.
10. Confidentiality.
In your work for the Company, you will be expected not to use or disclose any confidential information, including trade secrets, of
any former employer or other person to whom you have an obligation of confidentiality. Rather, you will be expected to use only that
information which is generally known and used by persons with training and experience comparable to your own, which is common
knowledge in the industry or otherwise legally in the public domain, or which is otherwise provided or developed by the Company. You
agree that you will not bring onto Company premises any unpublished documents or property belonging to any former employer or other
person to whom you have an obligation of confidentiality. You hereby represent that you have disclosed to the Company any contract
you have signed that may restrict your activities on behalf of the Company. In addition, as a condition of your employment, you are
required to execute the Company’s standard form of Employee Confidential Information and Inventions Assignment Agreement.
11.
At-Will Employment. You may terminate your employment with the Company at any time and for any reason whatsoever simply by notifying
the Company. Likewise, the Company may terminate your employment at any time, with or without cause or advance notice.
12.
Severance Benefits. If, at any time, the Company terminates your employment without Cause (as defined below), and other than as
a result of your death or disability, or you resign for Good Reason (as defined below), and provided such termination constitutes a “separation
from service” (as defined under Treasury Regulation Section 1.409A-1(h)) (a “Separation from Service”), then
you shall be entitled to receive the following severance benefits (the “Severance Benefits”):
(a) severance pay in the
form of continuation of your base salary in effect on the effective date of termination for the first twelve (12) months after the
date of such termination;
(b)
reimbursement by the Company of COBRA premiums in effect on the date of termination for the coverage in effect for you and, if applicable,
your spouse and dependent children on such date under the Company’s group health plan(s) during the first twelve (12) months after
the date of your termination (or, if shorter, until you are no longer entitled to COBRA continuation of coverage under the Company’s
group health plan(s)), provided that you timely (and properly) elect COBRA continuation coverage under the Company’s group health
plan(s) in accordance with Internal Revenue Code Section 4980B(f); and
(c)
vesting of the Option shall be accelerated such that you will be deemed vested in all of the shares subject to the Option.
In addition, you shall
receive (1) any accrued and unpaid Base Salary and accrued but unused vacation which shall be paid on the pay date immediately
following the date of termination of your employment in accordance with the Company’s standard payroll practices; and
(2) reimbursement for any unreimbursed business expenses properly incurred, subject to and paid in accordance with the
Company’s expense reimbursement policy; and (3) such other employee benefits, if any, to which you may be entitled under the
Company’s employee benefit plans as of the date of termination.
For purposes of this
Agreement, “Cause” for the Company (or any acquirer or successor in interest thereto) to terminate your
employment shall exist if any of the following occurs: (A) your conviction (including a guilty plea or plea of nolo contendere) of
any felony or any other crime involving fraud, dishonesty or moral turpitude; (B) your commission or attempted commission of or
participation in a fraud or intentional and material act of dishonesty or intentional and material misrepresentation made in
connection with the performance of your duties to the Company; (C) your intentional, material violation of any written and fully
executed contract or agreement between you and the Company, or your willful and material breach of any fiduciary duty you owe to the
Company or willful violation of any material policy of the Company; or (D) your willful conduct that constitutes gross
insubordination, incompetence or habitual neglect of duties (other than as a result of disability or death), provided, however,
that the action or conduct described in clause (C) above and this clause (D) will constitute “Cause” only if such action
or conduct continues after the Board has provided you with written notice describing in reasonable detail the facts and
circumstances on which the Company relies in determining “Cause” exists and thirty (30) days opportunity to cure the
same (provided that the Board is not obligated to provide such written notice and opportunity to cure if the action or conduct is
not reasonably susceptible to cure). The determination that a termination is for Cause shall be made by the Board in its sole, but
good faith, discretion. For purposes of this paragraph, no act or failure to act on your part shall be considered
“willful” unless it is done, or omitted to be done, by you in bad faith or without reasonable belief that your action or
omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or upon the advice of counsel for the Company shall conclusively be presumed to be done, or omitted to be
done, by you in good faith and in the best interests of the Company.
For purposes of this Agreement,
“Good Reason” for you to terminate your employment shall exist if any of the following events occur without your prior
written consent: (i) your assignment to materially reduced duties and responsibilities or a material adverse change in the reporting structure
applicable to you; (ii) a material reduction of your Base Salary, target bonus opportunity, equity incentives or in benefits; (iii) a
relocation of the geographical location at which you must perform services that increases your one-way commute by more than 50 miles;
or (iv) a material breach of this Agreement by the Company or a material breach by the Company of any other material provision of any
other written agreement between you and the Company; provided that you must (1) provide written notice to the Board within 90 days after
the first occurrence of the event giving rise to Good Reason setting forth the basis for your resignation, (2) allow the Company 30 days
from receipt of such written notice to cure such event, and (3) if such event is not reasonably cured within such 30-day period, your
resignation is effective not later than 90 days after the expiration of the cure period.
The Severance Benefits are
conditional upon (a) your continuing to comply with your obligations with respect to confidential information; and (b) your delivering
to the Company an effective, general release of claims in favor of the Company in a form reasonably acceptable to the Company within 60
days following your termination date. The salary continuation payments described in the above paragraph will be paid in substantially
equal installments on the Company’s regular payroll schedule subject to standard deductions and withholdings over the period following
termination; provided, however, that no payments will be made prior to the 60th day following your termination, and the
first payment shall include all portions of the payments that would have been paid during the 60-day period.
In no event shall you be obligated
to seek other employment or take any other action by way of mitigation of the amounts payable to you under any provisions of this Agreement
and no amounts payable to you under this Section 9 shall be reduced by compensation
you earn on account of employment with another employer.
13.
Section 409A. It is intended that this Agreement and all payments and benefits provided hereunder satisfy, to the greatest extent
possible, the exemptions from the application of Section 409A of the Internal Revenue Code (the “Code”) provided under
Treasury Regulations 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9), and this Agreement will be construed to the greatest extent possible
as consistent with those provisions. To the extent Code Section 409A is applicable to this Agreement and any such payments and benefits,
the parties intend that this Agreement and such payments and benefits comply with the deferral, payout and other limitations and restrictions
imposed under Code Section 409A. For purposes of Code Section 409A (including, without limitation, for purposes of Treasury Regulation
Section 1.409A-2(b)(2)(iii)), your right to receive installment payments under this Agreement shall be treated as a right to receive a
series of separate payments and, accordingly, each installment payment hereunder shall at all times be considered a separate and distinct
payment. With regard to any provision in this Agreement that provides for reimbursement of expenses or in-kind benefits, except for any
expense, reimbursement or in-kind benefit provided pursuant to this Agreement that does not constitute a “deferral of compensation,”
within the meaning of Treasury Regulation Section 1.409A-1(b), (x) the amount of expenses eligible for reimbursement, or in-kind benefits
provided, during any calendar year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any
other calendar year, (y) such reimbursements shall be made on or before the last day of the calendar year following the calendar year
in which the expense was incurred, and (z) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange
for another benefit. Notwithstanding any provision to the contrary in this Agreement, if you are deemed by the Company at the time of
your Separation from Service to be a “specified employee” for purposes of Code Section 409A(a)(2)(B)(i), to the extent delayed
commencement of any portion of the severance benefits to which you are entitled under this Agreement is required in order to avoid a prohibited
distribution under Code Section 409A(a)(2)(B)(i), such portion of your benefits shall not be provided to you prior to the earlier of (i)
the expiration of the six-month period measured from the date of your Separation from Service with the Company or (ii) the date of your
death. Upon the first business day following the expiration of the applicable Code Section 409A(a)(2)(B)(i) period, all payments deferred
pursuant to this paragraph shall be paid in a lump sum to you, and any remaining payments due under this Agreement shall be paid as otherwise
provided herein.
14.
Miscellaneous. This letter, together with your Employee Confidential Information and Inventions Assignment Agreement and your Indemnification
Agreement, forms the complete and exclusive statement of your employment agreement with the Company. It supersedes any other agreements
or promises made to you by anyone, whether oral or written. Changes in your employment terms, other than those changes expressly reserved
to the Company’s discretion in this letter, require a written modification signed by you and a member of the Board. This Agreement
and the terms of your employment with the Company shall be governed in all aspects by the laws of the State of Arizona.
[Remainder of page intentionally left blank]
Please sign and date this
letter, and return it to me if you wish to accept employment at the Company under the terms described above.
We look forward to your favorable
reply and to a productive and enjoyable work relationship.
Sincerely,
SenesTech, Inc.
| /s/ Jamie Bechtel |
|
11/9/2022 |
|
| Jamie Bechtel |
|
|
|
On behalf of the Board of Directors
Understood and Accepted:
| /s/ Joel Fruendt |
|
11/9/2022 |
|
| Joel Fruendt |
|
Date |
|
Exhibit A
Indemnification Agreement
(see attached)
Exhibit 99.1
SenesTech Announces Third Quarter 2022 Financial
Results
Product Sales up 57% year-over-year
PHOENIX, Ariz., November 14, 2022 SenesTech, Inc.
(NASDAQ: SNES, “SenesTech” or the “Company”), (www.senestech.com) the rodent fertility control experts and inventors
of the only EPA registered contraceptive for male and female rats, ContraPest®, today announced third quarter 2022 financial
results, with products sales increasing 57% compared to the third quarter of the prior year.
“We continue to make progress in the deployment of ContraPest
across a wide variety of industry verticals with particularly strong growth from our e-commerce platform,” commented Ken Siegel,
SenesTech’s Chief Executive Officer. “In just the first few weeks of the fourth quarter, we have received new large-scale
orders from municipalities, zoos and sanctuaries, and various agribusiness locations. These deployments, coupled with continued strong
growth in our e-commerce platform, positions us well to end 2022 on a strong trajectory.”
Sales growth during the quarter was led by strong increases in the
Company’s e-commerce platform, which made up more than 50% of the third quarter product sales, continued traction within zoos and
animal sanctuaries, and the launch of the novel and patent pending Elevate Bait System™ with ContraPest (“Elevate”)
as both new and existing customers add the system to their pest management programs. Sales, however, were impacted during the quarter
by the outbreak of the avian influenza, or bird flu, which has impacted poultry operators across the U.S. and thus delayed expected deployments
of Elevate with certain customers during the quarter. While the bird flu has impacted poultry farms, the Company has transitioned to other
agribusinesses and recently deployed ContraPest in its first pork protein production facility.
The Company’s e-commerce platform continues to be a key driver
of growth for SenesTech, with 173% year-over-year growth in product sales through the platform. The e-commerce growth is being driven
by its marketing initiatives, including the award-winning “Operation Rat Race” campaign, which is driving consistent increases
in traffic, as well as increased website functionality.
Elevate, the first product of its kind specifically designed to address
rat problems in above-ground locations, launched late in the second quarter and is ideally suited for the agribusiness segment, where
third quarter sales increased 27% compared to the third quarter of the prior year. The Company believes Elevate will help key agricultural
customers better meet their needs of addressing roof rats that reside above ground, especially in the rafters of barns, granaries and
storage and manufacturing facilities. The Elevate system, with its suspended bait station, is revolutionary within the pest control industry,
which typically utilizes traditional bait boxes to deliver pesticides and other products. The system is designed to permit easy drop in
and replacement of new 8-ounce bottles of ContraPest, reducing servicing time and cost.
Zoos and sanctuaries continued to be a strong contributor for ContraPest
with sales growth increasing 32% compared to the third quarter of the prior year. Currently, ContraPest has been deployed in more than
122 such locations, including two of the top zoos in the U.S., with another “top ten” zoo expected in the fourth quarter of
2022.
Orkin recently released their Top 50 Rattiest Cities List, naming the
cities with the highest number of new rodent treatments performed in the U.S. This list provides SenesTech with a fresh opportunity to
market to municipalities named among the rattiest cities in the U.S. While municipal deployments have been sporadic during the year, the
county of Santa Clara, California recently finished its independent study on the use of ContraPest with positive results and planned expansion
of deployments in the coming quarters. As part of this, surrounding cities, including San Jose in the Bay Area, are expected to deploy
ContraPest in the fourth quarter. Overall, California continues to lead geographically with nearly a third of all product sales occurring
in the state driven by tailwinds from the recently implemented Ecosystems Protection Act of 2021, which bans the use of commonly used
second-generation anticoagulant poisons under many circumstances.
The Company also separately announced the appointment of Joel Fruendt
as Chief Executive Officer, replacing Ken Siegel, who will remain as an executive director on the board of directors and is expected to
retire at the end of the year. Mr. Fruendt and Mr. Siegel will address interested parties on a conference call to discuss the quarter’s
results and the transition, information below.
“I believe that SenesTech has developed an effective, sustainable,
and earth-friendly tool for integrated pest management that focuses on fertility control as a method to reduce overall rodent populations.
The industry is in need of an IPM tool which reduces reliance on lethal chemicals and offers a sustainable solution, and ContraPest is
the answer,” said Mr. Fruendt.
Third Quarter 2022 Highlights
| ● | Revenue during Q3 2022 was approximately $250,000 compared to approximately
$183,000 in Q3 2021, an increase of 36%. Product sales, which exclude grant revenue, were up 57%. |
| ● | Gross profit during Q3 2022 was approximately $122,000 or 52% of total revenue,
compared to approximately $77,000, or 48% of total revenue, in Q3 2021. |
| ● | Net loss during Q3 2022 was $(2.6) million, compared with a net loss of $(2.3)
million for Q3 2021. |
| ● | Adjusted EBITDA loss, which is a non-GAAP measure of operating performance, for
Q3 2022 was $(2.5) million compared to $(2.0) million in Q3 2021. |
| ● | Cash at the end of September 2022 was approximately $2.8 million. |
Use of Non-GAAP Measure
Adjusted EBITDA is a non-GAAP measure. However, this measure is not
intended to be a substitute for those financial measures reported in accordance with GAAP. Adjusted EBITDA has been included because management
believes that, when considered together with the GAAP figures, it provides meaningful information related to our operating performance
and liquidity and can enhance an overall understanding of financial results and trends. Adjusted EBITDA may be calculated by us differently
than other companies that disclose measures with the same or similar term. See our attached financials for a reconciliation of this non-GAAP
measure to the nearest GAAP measure.
Conference Call Details
Date and Time: Monday, November
14, 2022, at 11:00 am ET
Call-in Information: Interested
parties can access the conference call by dialing (844) 308-3351 or (412) 317-5407.
Live Webcast Information: Interested
parties can access the conference call via a live Internet webcast, which is available in the Investor Relations section of the Company’s
website at http://senestech.investorroom.com/.
Replay: A teleconference replay of the call will be available
for seven days at (877) 344-7529 or (412) 317-0088, replay access code 9489792. A webcast replay will be available in the Investor Relations
section of the Company’s website at http://senestech.investorroom.com/ for 90 days or https://app.webinar.net/rV0emGvy2oN.
About SenesTech
We are “The Pest Control
Difference” for the 21st century. We are rodent fertility control specialists fueled by our passion to create a healthy environment
by virtually eliminating rodent pest populations. We keep an inescapable truth in mind. Two rats and their descendants can be responsible
for the birth of up to 15,000 pups after a year. We invented ContraPest, the only U.S. EPA registered contraceptive for male and female
rats. ContraPest fits seamlessly into all integrated pest management programs, greatly improving the overall goal of effective rat management.
We strive for clean cities, efficient businesses and happy households – with a product that was designed to be effective and sustainable
without killing rats. At SenesTech, we don’t just eliminate rats. We make a better world.
For more information visit https://senestech.com/ and https://contrapeststore.com.
Safe Harbor Statement
This press release contains “forward-looking statements”
within the meaning of federal securities laws, and we intend that such forward-looking statements be subject to the safe harbor created
thereby. Such forward-looking statements include, among others, our belief that we continue to make progress in the deployment of ContraPest
across a wide variety of industry verticals with particularly strong growth from our e-commerce platform; our belief that our deployments
of ContraPest, coupled with continued strong growth in our e-commerce platform, positions us well to end 2022 on a strong trajectory;
our belief that new and existing customers will add Elevate to their pest management programs; our belief that our e-commerce platform
continues to be a key driver of growth for us; our belief that Elevate is ideally suited for the agribusiness segment; our belief that
Elevate will help key agricultural customers better meet their needs of addressing roof rats that reside above ground, especially in the
rafters of barns, granaries and storage and manufacturing facilities; our belief that the Elevate system is revolutionary within the pest
control industry; our belief that Santa Clara, California has plans of expansion of ContraPest deployments in the coming quarters; our
belief that surrounding cities, including San Jose in the Bay Area, are expected to deploy ContraPest in the fourth quarter; our belief
that tailwinds from the recently implemented Ecosystems Protection Act of 2021 has driven product sales in California; and Mr. Freundt’s
belief that SenesTech has developed an effective, sustainable, and earth-friendly tool for integrated pest management that focuses on
fertility control as a method to reduce overall rodent populations and that the industry is in need of an IPM tool which reduces reliance
on lethal chemicals and offers a sustainable solution, and ContraPest is the answer. Forward-looking statements may describe future expectations,
plans, results or strategies and are often, but not always, made through the use of words such as “believe,” “may,”
“future,” “plan,” “will,” “should,” “expect,” “anticipate,” “eventually,”
“project,” “estimate,” “continuing,” “intend” and similar words or phrases. You are cautioned
that such statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those
reflected by such forward-looking statements. Such factors include, among others, the impacts and implications of the COVID-19 pandemic,
the successful commercialization of our products, market acceptance of our products, regulatory approval and regulation of our products
and other factors and risks identified from time to time in our filings with the Securities and Exchange Commission, including our Annual
Report on Form 10-K for the fiscal year ended December 31, 2021 and our Registration Statement on Form S-1, filed with the SEC on October
24, 2022. All forward-looking statements contained in this press release speak only as of the date on which they were made and are based
on management’s assumptions and estimates as of such date. Except as required by law, we do not undertake any obligation to publicly update
any forward-looking statements, whether as a result of the receipt of new information, the occurrence of future events or otherwise.
CONTACT:
Investors: Robert Blum, Joe Dorame, Joe Diaz, Lytham
Partners, LLC,
602-889-9700, senestech@lythampartners.com
Company: Tom Chesterman, Chief Financial Officer, SenesTech, Inc.,
928-779-4143
SENESTECH, INC.
BALANCE SHEETS
(In
thousands, except shares and per share data)
| | |
September 30, | | |
December 31, | |
| | |
2022 | | |
2021 | |
| | |
(Unaudited) | | |
| |
| ASSETS | |
| | |
| |
| Current assets: | |
| | |
| |
| Cash | |
$ | 2,792 | | |
$ | 9,326 | |
| Accounts receivable trade, net | |
| 89 | | |
| 77 | |
| Prepaid expenses | |
| 404 | | |
| 230 | |
| Inventory | |
| 952 | | |
| 1,001 | |
| Deposits | |
| 22 | | |
| 22 | |
| Total current assets | |
| 4,259 | | |
| 10,656 | |
| | |
| | | |
| | |
| Right to use asset-operating leases | |
| 389 | | |
| 511 | |
| Property and equipment, net | |
| 322 | | |
| 334 | |
| Total assets | |
$ | 4,970 | | |
$ | 11,501 | |
| | |
| | | |
| | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |
| | | |
| | |
| | |
| | | |
| | |
| Current liabilities: | |
| | | |
| | |
| Short-term debt | |
$ | - | | |
$ | 32 | |
| Accounts payable | |
| 476 | | |
| 333 | |
| Accrued expenses | |
| 987 | | |
| 578 | |
| Preferred stock, $0.001 par value, 20,000 shares authorized,
12,213 and 0 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively | |
| - | | |
| - | |
| Deferred Revenue | |
| 48 | | |
| - | |
| Total current liabilities | |
| 1,511 | | |
| 943 | |
| | |
| | | |
| | |
| Operating lease liability | |
| 402 | | |
| 523 | |
| Total liabilities | |
| 1,913 | | |
| 1,466 | |
| | |
| | | |
| | |
| Commitments and contingencies (See note 12) | |
| - | | |
| - | |
| | |
| | | |
| | |
| Stockholders’ equity: | |
| | | |
| | |
| Common stock, $0.001 par value, 100,000,000 shares authorized, 12,212,950 and 12,207,283 shares issued
and outstanding at September 30, 2022 and December 31, 2021, respectively | |
| 12 | | |
| 12 | |
| Additional paid-in capital | |
| 123,100 | | |
| 122,531 | |
| Accumulated deficit | |
| (120,055 | ) | |
| (112,508 | ) |
| Total stockholders’ equity | |
| 3,057 | | |
| 10,035 | |
| | |
| | | |
| | |
| Total liabilities and stockholders’ equity | |
$ | 4,970 | | |
$ | 11,501 | |
The accompanying notes are an integral part of these financial statements.
SENESTECH, INC.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except shares and per share data)
(Unaudited)
| | |
For the Three Months | | |
For the Nine Months | |
| | |
Ended
September 30, | | |
Ended
September 30, | |
| | |
2022 | | |
2021 | | |
2022 | | |
2021 | |
| | |
| | |
| | |
| | |
| |
| Grant revenue | |
| - | | |
| 24 | | |
| - | | |
| 24 | |
| Sales | |
$ | 250 | | |
$ | 159 | | |
$ | 722 | | |
$ | 407 | |
| | |
| | | |
| | | |
| | | |
| | |
| Cost of sales | |
| 128 | | |
| 106 | | |
| 374 | | |
| 275 | |
| Gross profit | |
| 122 | | |
| 77 | | |
| 348 | | |
| 156 | |
| | |
| | | |
| | | |
| | | |
| | |
| Operating expenses: | |
| | | |
| | | |
| | | |
| | |
| Research and development | |
| 452 | | |
| 514 | | |
| 1,399 | | |
| 1,424 | |
| Selling, general and administrative | |
| 2,289 | | |
| 1,816 | | |
| 6,473 | | |
| 5,173 | |
| Total operating expenses | |
| 2,741 | | |
| 2,330 | | |
| 7,872 | | |
| 6,597 | |
| | |
| | | |
| | | |
| | | |
| | |
| Net operating loss | |
| (2,619 | ) | |
| (2,253 | ) | |
| (7,524 | ) | |
| (6,441 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Other income (expense): | |
| | | |
| | | |
| | | |
| | |
| Interest income | |
| 1 | | |
| 2 | | |
| 4 | | |
| 5 | |
| Interest expense | |
| - | | |
| (2 | ) | |
| (1 | ) | |
| (10 | ) |
| Payroll Protection Program loan forgiveness | |
| - | | |
| - | | |
| - | | |
| 650 | |
| Other income | |
| (28 | ) | |
| - | | |
| (26 | ) | |
| 22 | |
| Total other income | |
| (27 | ) | |
| - | | |
| (23 | ) | |
| 667 | |
| | |
| | | |
| | | |
| | | |
| | |
| Net loss and comprehensive loss | |
$ | (2,646 | ) | |
$ | (2,253 | ) | |
$ | (7,547 | ) | |
$ | (5,774 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Weighted average common shares outstanding - basic and fully diluted | |
| 12,212,950 | | |
| 12,190,257 | | |
| 12,211,561 | | |
| 10,850,197 | |
| | |
| | | |
| | | |
| | | |
| | |
| Net loss per common share - basic and fully diluted | |
$ | (0.22 | ) | |
$ | (0.18 | ) | |
$ | (0.62 | ) | |
$ | (0.53 | ) |
The accompanying notes are an integral part of these financial
statements.
SenesTech Inc.
Itemized Reconciliation Between Net Loss and Non-GAAP Adjusted EBITDA
For the Three And Nine Months Ended September 30, 2022 and 2021
(Unaudited)
| | |
For the Three Months | | |
For the Nine Months | |
| | |
Ended
September 30, | | |
Ended
September 30, | |
| (in thousands) | |
2022 | | |
2021 | | |
2022 | | |
2021 | |
| Net Loss (As Reported, GAAP) | |
$ | (2,646 | ) | |
$ | (2,253 | ) | |
$ | (7,547 | ) | |
$ | (5,774 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Non-GAAP Adjustments: | |
| | | |
| | | |
| | | |
| | |
| Interest expense (income), net | |
| (1 | ) | |
| - | | |
| (3 | ) | |
| 5 | |
| Stock-based compensation | |
| 139 | | |
| 214 | | |
| 570 | | |
| 550 | |
| Paycheck Protection Program loan forgiveness | |
| - | | |
| - | | |
| - | | |
| (650 | ) |
| Reserve for future severance payments | |
| - | | |
| - | | |
| - | | |
| (39 | ) |
| (Gain) loss on sales of assets | |
| (28 | ) | |
| - | | |
| (26 | ) | |
| (1 | ) |
| Depreciation expense | |
| 35 | | |
| 78 | | |
| 148 | | |
| 229 | |
| Total of non-GAAP adjustments | |
| 145 | | |
| 292 | | |
| 689 | | |
| 94 | |
| | |
| | | |
| | | |
| | | |
| | |
| Adjusted EBITDA Loss (Non-GAAP) | |
$ | (2,501 | ) | |
$ | (1,961 | ) | |
$ | (6,858 | ) | |
$ | (5,680 | ) |
7
Exhibit 99.2
SenesTech Announces Appointment of Vector and
Pest Control Industry
Veteran
Joel Fruendt as Chief Executive Officer
PHOENIX, Ariz., November 14, 2022. SenesTech, Inc.
(NASDAQ: SNES, “SenesTech” or the “Company”), (www.senestech.com) the rodent fertility control experts and inventors
of the only EPA registered contraceptive for male and female rats, ContraPest®, today announced the appointment of Joel
Fruendt as SenesTech’s new Chief Executive Officer, succeeding Ken Siegel. Mr. Siegel, who is expected to retire at the end of the
year, will remain as an Executive Director, in a consultative role, through the transition period. This leadership transition is part
of SenesTech’s ongoing strategic plan to drive the commercialization of ContraPest, its flagship product.
Mr. Fruendt is a seasoned chief executive with over 15 years of leadership
experience in the vector and pest control industry where he was the Vice President and General Manager of Clarke Environmental Inc., a
leading vector and pest control products and services company. From Clarke, he brings extensive expertise in the development and manufacturing
of EPA registered chemical control products, commercialization and sales of those products, and leading large sales and service organizations.
Most recently he served as President and CEO of a global manufacturing company in the reflective technology and safety industry, where
he spearheaded their successful revenue and profit growth through innovation and efficiency initiatives.
Mr. Fruendt brings a passion and commitment to sustainable, effective
solutions to pest control challenges, and a direct connection to SenesTech’s industry partners.
“I believe that SenesTech has developed an effective, sustainable,
and earth-friendly tool for integrated pest management that focuses on fertility control as a method to reduce overall rodent populations,”
said Mr. Fruendt. “The industry is in need of an IPM tool which reduces reliance on lethal chemicals and offers a sustainable solution,
and ContraPest is the answer.”
“Over the past three and a half years, we have laid the groundwork
for the successful commercialization of ContraPest. We have completed necessary field work, we have improved the product’s performance
and delivery, we have initiated the needed awareness in the commercial end user market, and we have enhanced our relationships with pest
control partners,” said Mr. Siegel. “This is an ideal time for Joel to bring his unique skills and experience to further those
relationships and take ContraPest to the next level.”
“We
very much appreciate the contributions Ken has made. He created the foundation for growth, and set us on the right trajectory. With this
foundation, we felt comfortable in starting an extensive and thorough process to identify a new CEO to take us to the next stage,”
said Dr. Jamie Bechtel, SenesTech’s Board Chair. “Through that process, we had the opportunity to evaluate a strong
pool of applicants and impressive candidates emerged. However, individually and collectively, the Board came to a unanimous decision.
Joel Fruendt was selected as the next CEO for SenesTech for several reasons, including his leadership experience, his experience as a
sales executive, his extensive contacts in the pest control industry, and the importance he places on team building and cross-team collaboration.”
About SenesTech
We are “The Pest Control
Difference” for the 21st century. We are rodent fertility control specialists fueled by our passion to create a healthy environment
by virtually eliminating rodent pest populations. We keep an inescapable truth in mind. Two rats and their descendants can be responsible
for the birth of up to 15,000 pups after a year. We invented ContraPest, the only U.S. EPA registered contraceptive for male and female
rats. ContraPest fits seamlessly into all integrated pest management programs, greatly improving the overall goal of effective rat management.
We strive for clean cities, efficient businesses and happy households – with a product that was designed to be effective and sustainable
without killing rats. At SenesTech, we don’t just eliminate rats. We make a better world.
For more information visit https://senestech.com/ and https://contrapeststore.com.
Safe Harbor Statement
This press release contains “forward-looking statements”
within the meaning of federal securities laws, and we intend that such forward-looking statements be subject to the safe harbor created
thereby. Such forward-looking statements include, among others, our strategic plan to drive the commercialization of ContraPest; our belief
that Mr. Fruendt brings a passion and commitment to sustainable, effective solutions to pest control challenges, and a direct connection
to our industry partners; Mr. Fruendt’s belief that we have developed an effective, sustainable, and earth-friendly tool for integrated
pest management that focuses on fertility control as a method to reduce overall rodent populations; Mr. Fruendt’s belief that the
industry is in need of an IPM tool which reduces reliance on lethal chemicals and offers a sustainable solution, and ContraPest is the
answer; our belief that over the past three and a half years, we have laid the groundwork for the successful commercialization of ContraPest;
our belief that hiring Mr. Fruendt as our Chief Executive Officer will allow us to take ContraPest to the next level; and our belief that
Mr. Siegel created our foundation for growth and set us on the right trajectory. Forward-looking statements may describe future expectations,
plans, results or strategies and are often, but not always, made through the use of words such as “believe,” “may,”
“future,” “plan,” “will,” “should,” “expect,” “anticipate,” “eventually,”
“project,” “estimate,” “continuing,” “intend” and similar words or phrases. You are cautioned
that such statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those
reflected by such forward-looking statements. Such factors include, among others, the impacts and implications of the COVID-19 pandemic,
the successful commercialization of our products, market acceptance of our products, regulatory approval and regulation of our products
and other factors and risks identified from time to time in our filings with the Securities and Exchange Commission, including our Annual
Report on Form 10-K for the fiscal year ended December 31, 2021 and our Registration Statement on Form S-1, filed with the SEC on October
24, 2022. All forward-looking statements contained in this press release speak only as of the date on which they were made and are based
on management’s assumptions and estimates as of such date. Except as required by law, we do not undertake any obligation to publicly update
any forward-looking statements, whether as a result of the receipt of new information, the occurrence of future events or otherwise.
CONTACT:
Investors: Robert Blum, Joe Dorame, Joe Diaz, Lytham
Partners, LLC,
602-889-9700, senestech@lythampartners.com
Company: Tom Chesterman, Chief Financial Officer, SenesTech, Inc.,
928-779-4143