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SNES: Update for 2020

03/24/2020

NASDAQ:SNES

SenesTech, Inc. (NASDAQ:SNES) announced annual financial results for 2019 and provided operational update

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The company reported approximately $140k in revenues, significantly lower than close to $300k the prior year which was due to a large order received from a customer. Management is working towards their goal to reduce the annual burn rate by about $1 million. They plan to accomplish this by reducing the total headcount down to 31 full- time employees and relocating functionality from Flagstaff, AZ to a more compact and cost-effective space in Phoenix, AZ. We think these steps will be implemented and its benefit realized in the coming quarters.

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SNES announced closing of two separate direct stock offerings in the beginning of 2020. Cash, including the net proceeds, at the end of 2019, was roughly $3.5 million. SenesTech plans to use the proceeds to fund its other research and development and for general corporate purposes.

(Source: Shutterstock)

SenesTech announced the common stock split earlier this month (February 4, 2020), every 20 shares of SNES would be combined into one share of the company’s common stock. The authorized shares were reduced from 28 million to approximately 1.4 million. The company added that the reverse stock split is intended to increase the per-share trading price of SNES common stock thereby removing the potential problem of delisting from the Nasdaq market. We have adjusted our estimates accordingly and revised our target price to $20 a share.

To accelerate growth in the domestic market, SenesTech has launched an online store (https://store.senestech.com) since mid-December 2019. While ContraPest is also available through national and regional distributors, the online offering allows the brand to reach the U.S. consumers. The e-commerce platform that launched in early March is available to consumers in 47 states.

Domestic expansion:

In Washington D.C., deployment of ContraPest has demonstrated a 77% reduction in the ratio of juveniles to adults. In San Francisco, the deployment in park settings has shown positive results and the customer has deployed at an additional site. In Los Angeles and poultry farms, the deployments are achieving high levels of consumption and making progress against the goals of demonstrating long term economic value. The firm anticipates deploying ContraPest in corporate campuses as well as in conservation areas.

(Source: Shutterstock)

International expansion:

SenesTech has begun its drive to expand in Southeast Asia by signing a distribution agreement with New Enterprises Ltd for the marketing and sales of ContraPest in Singapore, Malaysia and Indonesia. New Enterprises has agreed to cover the costs of regulatory approval, marketing and importing costs. Agricultural sector plays an important role in economic development of SE Asian countries. Rat infestation in SE Asia result in 10-20% reductions in rice yield. Chronic loss in rice production caused by rat infestation is estimated to be about 15-17% in Indonesia alone. According to a study1 conducted by National University of Singapore, estimated the cost of rodenticides and loss incurred by non-native rats to rice production to be about $2 billion in SE Asian countries. Therefore, expansion into Southeast Asian markets is crucial. Management has realized that there was a real need for curbing rat population in SE Asia. Expansion in the region could help maximize sales and drive repeat purchasing. SenesTech is making small waves by rethinking the approach to minimize rats as well as making it easy for consumers to purchase from their online store.

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1. https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0071255

 
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