SenesTech, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022; balance-sheet figures are as of March 31, 2022. SenesTech develops and commercializes ContraPest, a fertility-control product for rat populations. Financial statement amounts below are in millions of dollars unless noted.
Key financial metrics
| Metric | Q1 2022 | Q1 2021 / comparison |
|---|---|---|
| Sales | $0.195 | $0.088; up $0.107, or about 122% |
| Gross profit and margin | $0.090; 46.2% | $0.038; 43.2% |
| Operating expenses | $2.423 | $1.877 |
| Operating loss | $(2.333) | $(1.839) |
| Net loss | $(2.332) | $(1.821) |
| Basic and diluted loss per share | $(0.19) | $(0.22) |
| Cash used in operations | $(2.029) | $(2.015) |
| Cash and cash equivalents | $7.215 | $9.326 at December 31, 2021 |
| Total assets / liabilities | $9.304 / $1.377 | $11.501 / $1.466 at December 31, 2021 |
| Current assets / current liabilities | $8.499 / $0.894 | At March 31, 2022 |
| Short-term debt | $0.016 | $0.032 at December 31, 2021 |
Material changes and operating performance
- Sales growth was attributed to internet sales initiatives, distributor and pest-management partnerships, and increased activity from the field sales team. Revenue remains limited relative to operating costs.
- Gross margin improved to 46.2% from 43.2%, primarily because of lower production scrap and manufacturing efficiencies. Management described a goal of achieving gross margins of 50% or higher.
- Operating expenses rose $0.546 million. SG&A increased $0.485 million, mainly from personnel and equity-award costs, professional services associated with marketing, and higher insurance premiums. R&D increased $0.061 million, including field/product-improvement work and regulatory compliance.
- Net loss widened by $0.511 million. Loss per share was lower than the prior-year figure despite the larger net loss, alongside a higher weighted-average share count: 12.21 million versus 8.14 million.
- Operating cash use was broadly unchanged year over year. Investing used $0.066 million; financing used $0.016 million. Unlike Q1 2021, when equity issuance and warrant exercises provided $13.6 million, Q1 2022 had no comparable financing proceeds. Cash declined $2.111 million during the quarter.
Outlook, risks and contingencies
- Management estimates that cash at March 31, together with anticipated revenue and any additional equity sales, would fund current operations for at least 9–12 months. This is conditional: lower-than-expected revenue or margins, or higher expenses, could require financing sooner. The company expects continued losses and may need additional capital; it warns that unavailable or unacceptable financing could force it to curtail commercialization or development, or discontinue operations.
- The filing notes the auditor’s going-concern qualification in the 2021 annual report and substantial doubt about the company’s ability to continue as a going concern. The Q1 statements do not include adjustments that could result from that uncertainty.
- COVID-19-related restrictions continued to delay some field studies and could affect sales, customer spending, public-sector purchasing, and supply availability. The company also cited commercialization, market acceptance, regulatory approvals, and execution of sales and marketing plans as key dependencies.
- A former general counsel seeks more than $0.5 million in compensatory damages, treble damages, and legal fees in a dispute over alleged unpaid stock options. SenesTech disputes the claims and says it intends to defend the case; management does not expect a material operational effect.
- At March 31, 2022, 4.53 million warrants and 1.48 million options were outstanding, in addition to 12.21 million common shares. Potential dilution is relevant; the filing excluded potential securities from diluted EPS as anti-dilutive due to the net loss.
- The company reported no material changes to the risk factors in its 2021 Form 10-K, no off-balance-sheet arrangements, and effective disclosure controls. It reported no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether sales growth converts into sustained commercial adoption and whether gross margin reaches management’s 50% goal.
- Actual cash burn, revenue and expense performance against the stated 9–12-month runway, and the timing, availability, and dilution impact of additional financing.
- Progress on delayed field studies, regulatory requirements, customer and distributor expansion, and supply of key ingredients.
- Developments in the former general counsel litigation and any change in management’s assessment of its potential impact.
- Potential dilution from outstanding warrants, options, and future equity financing; also compare per-share results with absolute losses and share-count changes.