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SNES: Financial and Business Update

·3 mins read


SNES (NASDAQ:SNES) announced on February 13, 2020 the preliminary unaudited revenues for the fourth quarter of 2019.

(Source: Shutterstock)

The company reported approximately $70k in revenues, slightly lower than our estimates. 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 “front office” functionality from Flagstaff, AZ to a more compact and less expensive space in Phoenix, AZ.

(Source: Shutterstock)

SNES announced a registered direct offering of 3.5 million shares of its common stock, at a purchase price of $0.40 per share with institutional investors in a January 24th news release. Proceeds from the offering are expected to total $1.4 million, before fees and other offering expenses. In a concurrent private placement, the company also issued unregistered warrants to purchase up to an aggregate of 3.5 million shares of common stock. Exercisable over the next six months, the warrants will each have an exercise price of $0.45 per share. The unregistered warrants will expire five and one-half years following the date of issuance. SenesTech plans to use the proceeds to fund its other research and development and for general corporate purposes. Cash at the end of 2019, on a pro forma adjusted basis was roughly $3 million.

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.

(Source: Shutterstock)

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

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