SenesTech, Inc. Aktie

Good afternoon, everyone, and welcome to the SenesTech Reports First Quarter Fiscal Year 2026 Financial Results Conference Call.

[Operator Instructions] Please note, today's event is being recorded. At this time, I'd like to turn the conference call over to Robert Blum with Lytham Partners. Please go ahead.

Thank you very much, Jamie, and thank you all for joining us today to discuss SenesTech's first quarter 2026 Financial Results is for the period ended March 31, 2026.

With us on the call today are Michael Edell, the company's newly appointed President and Chief Executive Officer; and Tom Chesterman, the company's Chief Financial Officer. At the conclusion of today's prepared remarks, we'll open the call for a question-and-answer session.

As mentioned, if you are listening through the webcast portal and would like to ask a question, you can submit your question through the Ask a Question feature in the webcast player. Before we begin with prepared remarks, we submit for the record the following statement.

Statements made by the management team of SenesTech during the course of this conference call may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended, and such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements describe future expectations, plans, results or strategies and are generally preceded by words such as may, future, plan or planned, will or should, expected, anticipates, draft, eventually or projected. Listeners are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events or results to differ materially from those projected in the forward-looking statements. including the risks that actual results may differ materially from those projected in the forward-looking statements as a result of various factors and other risks identified in the company's filings with the Securities and Exchange Commission.

All forward-looking statements contained during this conference call speak only of the date in which they were made and are based on management's assumptions and estimates as of such date. The company does 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.

With that said, let me turn the call over to Michael Edell, President and Chief Executive Officer. Michael, please proceed.

Thank you, Robert, and good afternoon to everyone joining us today. As this is my first earnings call with SenesTech Investors as President and Chief Executive Officer, I wanted to start by saying how excited I am to be formally joining the company. I accepted this role as CEO with SenesTech because my conviction in the products and markets is strong.

However, my conviction in our ability to dramatically scale this business is even stronger. The work now is to translate product strength into commercial execution at scale. That is the central priority of this management team. Although I have just been appointed CEO, I'm not coming into this business cold. I began working closely with SenesTech mid-2025, initially in a consulting capacity to evaluate the business and build a strategic plan focused on commercial growth.

In October, I became the Interim Chief Operating Officer to lead implementation of that strategic plan. Over the past several months, we have been taking a hard look at the business and making practical changes designed to create a more scalable, more accountable and more data-driven operating model. Those changes are not theoretical. We have streamlined operations. We have prioritized direct-to-consumer revenue as a core growth engine. We have moved the direct management of our Amazon account for the Evolve brand.

We have restructured B2B processes and the sales organization to improve discipline, pipeline visibility, forecasting accountability and focus. We have advanced work on packaging, digital marketing efforts, subscription, customer education and our own e-commerce platform.

The goal across all of these initiatives is quite simple: make the product easier to understand, easier to buy, easier to deploy and easily to reorder. The direct-to-consumer channel is central to that strategy.

During the first quarter, direct-to-consumer revenue increased 42% to a record $194,000 despite the disruption associated with moving the Amazon operations in-house. That is an important result because the Amazon transition was a deliberate strategic move. It was not just a channel change. It changed what we can see, what we can control and how quickly we can respond.

By managing Amazon directly, we gained better access to customer behavior, advanced advertising performance, subscription data, pricing visibility, media buying efficiency and just overall channel economics. We can learn faster, we could test faster, and we can improve conversion faster. We can test new products and new packaging more quickly, and that is the type of operating model that we need.

We consider Amazon as a key pillar to our sales strategy. There was a short-term disruption as we transition away from third-party e-commerce management and as existing third-party inventory continue to move through the channel. That was to be expected, but the early data after the transition are highly encouraging.

April was the first full month completing, following the completion of the Amazon transition, and e-commerce sales increased 163% to a record $146,000 compared with approximately $55,000 in April of 2025.

Amazon retail sales of the Evolve brand were approximately $96,000 in April, while sales through our own SenesTech website were approximately $50,000. We began taking control of advertising execution in mid-February, completed the broader transition in March, and the early trend is exactly the kind of signal that we want to see. We are now moving to improve our website sales platform as well, that being the second pillar in our strategy.

Product like Evolve is not a onetime novelty purchase. It is intended to be part of an ongoing rodent management program. That is why recurring revenue is so important to our strategy with subscription revenue being a core part of the new direct-to-consumer strategy. We are now seeing meaningful evidence that this was the right focus.

In just the first quarter, subscription revenue increased 44% to a new record at $56,000 compared with just 39,000 in the prior year period, and subscriber counts increased more than 50%. Then in April, subsequent to the quarter end, subscription-based revenue increased 198% year-over-year to approximately 36,000, another record. Subscription-based customers increased 109%.

Those are still early numbers, but they are important proof points. They indicate the product stickiness, the customer engagement and the potential to build a more predictable recurring revenue-based model.

Now we need to build on that. We are tracking weekly sales, new-to-brand sales, subscription metrics, conversion metrics, media ad buying performance and customer behavior. We have reactivated our Google advertising in April to begin collecting search data support online revenue.

We are continuing to redesign our e-commerce website at senestech.com with a focus on reducing friction, simplifying navigation, improving conversion and supporting subscription growth. We are also refreshing our packaging to improve shelf visibility and simplifying the consumer message. The updating packaging prominently features rat birth control messaging because we want the customers to immediately understand what makes this product different. We do not want ambiguity at the point of a decision. We want clarity.

The same principle applies to our B2B business, the third pillar to our commercial strategy. We believe there are large opportunities across pest management, agriculture, municipalities, distributor, commercial customers, national retailers and other professional channels. By capturing those opportunities requires focus and discipline. It is not enough to have a long list of prospects. We need a qualified pipeline clear ownership, better forecasting and a standardized sales process.

Over the past several months, we have restructured the entire B2B team and processes around those objectives. We are concentrating resources on the largest and highest impact opportunities within each vertical while providing accountability around pipeline and forecast accuracy.

Here again, we saw early proof in the quarter. B2B revenue increased 57% to $298,000 compared with approximately $190,000 in the first quarter of last year. We continue to see municipal deployment activity across major urban markets, including Chicago, Boston, Washington, D.C., New York and New York City. The previously announced 12-month New York City rat contraception pilot program is expected to conclude this month, and we look forward to those results.

We are also continuing to support distributors, pest management professionals, commercial customers and agricultural opportunities where the product can fit into a broader integrated pest management program. We will remain selective and disciplined, deemphasizing the smaller or longer-term opportunities, but we believe the B2B opportunity is significant.

In addition, the work that we are doing with our focus on direct-to-consumer will bring more brand awareness, which will support our continuing efforts in the B2B. We are already seeing an increase in inbound opportunities and leads from these efforts.

Product expansion is another part of building a broader commercial platform. We plan to expand the Evolve brand with additional woven control products that can broaden our offering and strengthen our position in the category. We are also advancing launch readiness around potential related products such as an attractant and repellant products.

Now the idea is not to dilute the mission. It is to strengthen the ecosystem around the core fertility control solutions that give customers more tools to deploy with a complete program. I would note again, full control over Amazon and our own e-commerce website now gives us a very efficient launch platform for these potential new products, which have not been in place historically.

We are also improving how field activity, sales support, regulatory and product development work together. The field and sales teams have been reintegrated, generating higher quality B2B opportunities to drive near-term revenues.

Internationally, we're putting more structure around opportunity vetting to focus on opportunities that could produce near-term revenues. We shipped initial stocking orders to New Zealand and Bermuda during the quarter, and we will continue to pursue international opportunities where the regulatory process can move efficiently with limited incremental cost. Where a market requires significant regulatory investment for long periods of time, we will generally require local partners to assist us or fund that process. That is a disciplined approach to expansion.

The first quarter also demonstrated the importance of operating discipline. Gross margin improved to a company record 68.6% compared with 64.5% in the prior year period. That reflects improved production efficiency and reduced reliance on discounted sales activity. We need to grow revenue, but we also need to protect the economics of the business as we grow. That is how we build a durable company, not just a bigger one.

But when I think about SenesTech's future, I think in very practical terms. We need to sell more products. We need to improve conversion. We need to focus on subscriptions for recurring revenue. We need to build, repeat, purchasing behavior. And we need to win larger B2B opportunities. We need to make Amazon, our own website at senestech.com, our distributors, the municipalities, pest management professionals and commercial customers working together as a coherent growth strategy. And we need to measure progress with real operating metrics, not anecdotes. That is the vision I want investors to understand. We are building a more scalable, data-driven recurring revenue business around a differentiated product in a market that needs better solutions for overall pest management.

We have a lot of work ahead of us, and I do not want to overstate early results. but I am very encouraged by what we are seeing. The record April e-commerce momentum, the record subscription growth, the B2B improvement, the record gross margins and the stronger operating infrastructure all point in the same direction.

SenesTech is entering a new phase defined by commercial focus, execution discipline and accountability. And my job is to drive that every single day.

With that, let me turn it over to Tom Chesterman to review the financials in more detail, and then I will come back with a few closing comments before turning over the call to your questions. Tom?

Thank you, Michael, and good afternoon, everyone. I will provide a brief review of our first quarter 2026 financial results and add context around the operating trends that Michael discussed as I can. Note that we will be filing our 10-Q later today for a more detailed look at our results to date.

Revenue for the first quarter was $493,000, an increase of 2% compared with $485,000 in the first quarter of 2025. This result should be viewed in the context of our transition from third-party management to direct management of Amazon sales for the Evolve brand. That transition was substantially completed in mid-March.

While it created short-term channel disruption, as Michael mentioned, it gives us greater control over customer data, advertising performance, pricing visibility, subscriptions and overall channel economics, which we believe will drive growth and profitability into the future.

Direct-to-consumer revenue increased 42% to a record $194,000 compared with $137,000 in the prior year period. Of that, subscription revenue increased 44% to a record $56,000 compared to approximately $39,000 last year, while subscriber counts have increased more than 57%, these metrics support our view that recurring revenue can be a larger component of the business over time.

Note that the year ago metrics exclude the third-party e-commerce revenue as we want to provide a clear understanding of the growth we are seeing. Third-party e-commerce revenue in the year ago period was $158,000. We expect that third-party e-commerce revenue has strong potential for growth, and we expect future announcements about expansion in this area.

B2B revenue increased 57% to $298,000 compared with $190,000 in the first quarter of 2025. We saw continued traction across distributor, municipal, professional and commercial channels. We're also improving process discipline in the B2B organization with a greater focus on standardized sales processes, pipeline validation, forecasting accuracy and larger dollar opportunities within the targeted verticals.

Subsequent to quarter end, April provided an encouraging early proof point for the e-commerce transition. E-commerce sales increased 163% year-over-year to approximately $146,000 and increased 47% compared to March. Amazon retail sales of Evolve products were approximately $96,000 and sales through the senestech.com website were approximately $50,000.

Subscription-based revenue also increased 198% year-over-year in April to approximately $36,000. While April was only one month, the early data supports the strategic rationale for direct management of our e-commerce channels.

Gross profit increased 8% to $338,000 compared with $313,000 in the prior year period. Gross margin improved to 68.6%, another company record compared with 64.5% in the first quarter of 2025. This margin improvement reflected improved production efficiency and a lower reliance on discounted sales activity. We view this as an important indicator of the underlying economics of the business as we scale. This becomes manifest when gross profit dollars are growing faster than top line revenue.

Operating expenses reflected, among other factors, severance costs, onetime legal costs and other extraordinary onetime items associated with the organizational transition and strategic restructuring currently underway.

First quarter 2026 results included approximately $443,000 of onetime expenses as mentioned above. On a pro forma basis, adjusting for these items, adjusted EBITDA loss, a non-GAAP measure, was $1.6 million compared with $1.5 million in the prior year period. Reconciliations on these non-GAAP measures are included in today's press release.

Turning to the balance sheet. We ended the first quarter with $6.8 million of cash and cash equivalents. Based on our current operating plan, we believe this provides operating runway into the third quarter of 2027. We remain focused on managing expenses carefully while supporting the commercial initiatives that we believe can drive higher quality revenue growth over time.

With that financial overview, I will turn the call back to Michael for closing remarks.

Thank you, Tom. I want to close by bringing the discussion back to the central point, which is our focus in driving revenues with product that we know works and how we can disrupt this category. We have a product we believe in.

We have a market that needs better options, and we have clear evidence that customers are engaging with Evolve through the direct-to-consumer channels, that subscription behavior is building, that Amazon become a more effective channel under our direct management and that B2B opportunities are beginning to move with more discipline.

But the company will not be defined by belief alone. It will be defined by execution. That means increasing revenue through channels where we can see the customer, understand performance and control the economics. It means improving conversion on Amazon and our own e-commerce website. It means increasing the number of subscription customers and retaining them.

It means using the website redesign, packaging refresh, paid media, social efforts and customer education to reduce friction. It means going after the largest and most attractive B2B opportunities with a validated pipeline and accountability to the sales process. It means supporting municipalities, pest management professionals, agricultural customers, distributors and commercial accounts with a clear value proposition and better field support. It means expanding the Evolve platform in ways that make sense for the customer and for the company's economics.

I'm very encouraged by the April data, but I view it as just the starting point. We need to convert early momentum into repeatable performance. We need to make every dollar of marketing, every customer interaction, every sales meeting and every product initiative contribute to growth. That is the standard I am setting for the organization.

SenesTech's mission is to create cleaner cities, more efficient businesses and healthier communities through effective and sustainable pest management solutions. That mission is powerful, but it must be matched with disciplined commercial execution.

As CEO, my commitment is to bring that discipline to this business every day. We will focus resources on the highest impact commercial opportunities, improve sales execution, build scalable operating processes and hold ourselves accountable to those metrics that matter.

Thank you to our employees, our customers, our partners and our shareholders for your continued support. We are very excited about the path ahead, and we are focused on turning the opportunity in front of us into measurable growth.

Robert, we're now ready to open the call for questions.

Very good. Thank you very much, Michael and Tom, for your prepared remarks there. [Operator Instructions] First one is, given the early results from April, is it fair to expect Q-over-Q quarter-over-quarter revenue growth and a reasonable chance at record revenue?

Thank you, Robert. I believe that from the results that we're already seeing and what we've talked about bringing in and direct control over our D2C efforts, I do believe that we can see reasonable growth quarter-over-quarter. And I do believe that we will continue to break records.

All right. Very good. Next question here is, are you seeing any expansion internationally, especially with the Hantavirus breakout?

Thank you, Robert. That's a very interesting question. I think the Hantavirus really points out the potential risks involved with rodent or rat infestations. Obviously, our position is one to where we think we have a solution that can take care of rodent infestations long term. Related to the international parts of our business, as I mentioned before, we really want to focus in international, on those countries that we can make an impact short term.

A lot of the regulatory requirements for certain parts of the world can take anywhere from two to three years to get through those processes. So, unless we have a partner in place that's going to support and bear some of those costs, we are going to focus only on those international opportunities that could bring in short-term, near-term revenues.

All right. Very good. Next question here, sort of broadly relating to the New York City test or trial there. What sort of announcements do you expect them to make relating to the results? Really anything more that you can add related to New York City?

There's nothing I can really speak to today on the New York City test or the trials at this point because we're getting prepared to announce some of the data and some of the results from the various areas that we've been testing.

I would say that longer term, these types of solutions and these types of pilot programs require those partnerships in a city like New York that are willing to not only implement these types of pilots, but do all of the necessary work that is necessary beyond just the Evolve products because it's all about the environment that an area is creating for pests like rats. So, we want to make sure that it's a unified approach and an approach that is one where we have buy-in from the partners that we're working on at a trial or a test like New York City.

Okay. Very good. Next question here is, can you please explain the rationale behind the direct-to-consumer focus?

Thank you. The direct-to-consumer focus, the company historically has led with B2B options. And I think what the company found and learned very, very quickly is the brand aware, without brand awareness, it's very hard to drive partner business if the consumers are not aware of the product. That is especially true in large brick-and-mortar retailers. So, implementing the changes that we are leading with D2C is going to create significant brand awareness. It's going to create significant success and exposure for the brand and the wins there, which then will carry over into the B2B efforts that we have going on right now.

All right. And sort of an extension of that, discuss sort of the reviews regarding Amazon, quality control, sort of the broader work that's being done to ensure customers sort of understand how the product is utilized.

That's a great question. And it's been one of the main focus for us in our online presence is to really educate the consumers on how the product works, how it's going to be impactful, how long is it going to take. It's not a matter of just simply putting our product out in the field. It really is a matter of deploying it in a manner that is going to be successful for the environment that it's being used in. So, education is a key part of that effort. I think historically we've not provided as much information, whereas now we're going to be providing significantly more information and trying to set the proper expectations for a long-term solution to solve this problem.

Okay. Next question here is, were these changes that are being discussed already sort of in effect under your prior role? Or did they become more of a priority once Joel Fruendt retired?

It really was an early priority as I had come in initially as a consulting effort to really help understand what was driving the business and what the strategic focus and strategic plan should be. We started to implement those changes very, very quickly. And a lot of those changes were started back in Q4 and really took final shape as we moved into Q1 of this year. That's why we've been able to see some of the incredible results of, that you're seeing right now just in Q1, very, very early, but pretty significant in terms of the results we're seeing.

Okay. Very good. Our next question here is SG&A remains high for the level of revenue this quarter, including the sort of onetime severance and legal that were discussed there. Is there a plan to optimize SG&A to better match the levels of the business?

That's a great question. And I'm going to let Tom take that question, so he can speak more specifically to the amount of onetime out of the norm costs that we were dealing with as we were in this quarter.

Yes. Thanks, Michael. I think it's important to view these as part of the investment we're making in this strategic transition. We're bringing in new personnel to cover, to have new skills, et cetera. We've taken out of the picture some litigation and other legal issues that were frankly just distracting to the business.

So yes, there was a bit of what I would call investment in the SG&A in Q1. The focus here is now that we've gotten those things kind of out of the way, we're able to provide a more streamlined SG&A. That's one of the reasons why we wanted to make sure that we put in as much detail about those onetime expenses to provide a more normalized view of what the burn rate would look as we move forward.

So yes, there is a plan to optimize SG&A. We needed to take these expenses in Q1 in order to make this transition and make it well and make it quickly. So we can then move on to all of the growth initiatives that Michael has been talking about.

All right. Our next question here. [Operator Instructions]. Michael and Tom, there's a follow-up here pertaining to Hantavirus. Has there been an uptick in incoming inquiries regarding the heightened Hantavirus awareness?

Yes. There's been a significant uptick in search for options looking to solve rodent and pest-related problems. we have seen an increase in uptick.

Okay. Very good. Next question here. Is there any update on sort of the brick-and-mortar, Home Depot, other brick-and-mortar companies moving from online to in-store?

That's a great question, Robert. What I will say about Home Depot and other brick-and-mortar retailers is something I mentioned early on. The large retailers are not in the business of promoting a product. They're in the business of selling product. And so what they look for in a brand is the brand awareness. And our people, our consumers is going to come into their store, understand that product, look for that product, ask for that product and then purchase that product in store.

I think historically, as I mentioned before, we didn't have the proper focus in creating brand awareness through our D2C and through Amazon, which is one of the main focuses that we have been talking about on this call and through this quarter. I do believe there is quite a bit of opportunity in the large brick-and-mortar retailers, but we have to demonstrate clearly to them that these consumers are looking for this type of product and can expand their revenues in that category.

Very good. Again, just a quick reminder, everyone. [Operator Instructions] Another question here. Has there been any thoughts on capital structure and valuing the company equity? Is there any update on when the company might get close to self-funding or being able to adjust the cap structure, so it's not purely equity funded?

Yes, Robert, thanks again. This is also a great question. I'll take the first part of this and then turn it over to Tom. What I'd like to emphasize is the fact that we are extremely focused on driving revenue. Revenue solves a lot of problems and the type of revenue such as recurring revenue, subscription and so on is even better. And the goal is to reduce the burn so that we're incrementally over time, moving closer and closer to that breakeven point. And so I think if we have a focus on revenue, it solves a lot of problems.

Tom, you could answer or chime in addition on this question.

Yes. I think the two points I would make. I mean, one is to echo Michael's point, which is to say that what we're trying to provide here is as much information about the vector we're following in terms of the revenue growth and the profitability growth that allows us to move towards that. As we look at the capital structure, though, the second part, we are already looking at other options besides equity.

We do use equipment financing for all of our capital equipment purchases, and we are getting closer and closer to the point at which the, we can utilize debt for more cash flow management purposes. And this, again, gets back to the quality of the revenue as much as predictable as it can get, that provides the cash flow information that the lenders need in order to provide debt financing as opposed to solely relying on the shareholders.

All right. Very good. And next question here is regarding subscriptions. I think you just touched a little bit on this, Michael, but really talk about why the subscriptions are an important part of the business going forward.

Thank you. That, again, is a great question, one we have been focused on. Since I got involved with the company as a consultant very early on, it became very clear to me that the product is a consumable product, that it is a repeatable product, and it was just absolutely perfect for establishing a recurring revenue. Recurring revenue and subscription business allows us to have a lower cost for customers.

So the customer acquisition on onetime purchases and bringing in new customers into the funnel is quite a bit more expensive than those customers that are on a regular subscription model or a subscription revenue. So we think it's going to be absolutely critical to our business to really focus and grow that.

The side result of that is that the happier subscriber customers that you have and the more stickiness you create creates a very, like a flywheel effect, and it's creating a lot of momentum for the business. And you can see that just through these results that we've been talking about on the D2C side of the business.

All right. This will be the last question, it appears. I'm showing no further questions after this in the queue. Congratulations on the quarter and the successful transition. Again, a follow-up on the Hantavirus. The company seems to have a generational marketing opportunity to enter the conversation to build awareness around the product. Have you considered a different approach towards marketing and social to capitalize as one of the only pure rodent plays in the market?

Great question. I will tell you this, the, historically, a lot of the efforts for social media and being able to market to these types of opportunities has not really been focused. We're bringing in new teams like we brought in teams to manage and as we're managing the Amazon efforts and as we're doing on our own website, you'll be seeing quite a bit over the next quarter of all of the new path, the new approach to the social media and social markets that we're going to be advertising on and posting to. So yes, we are going to be moving more in that direction to capitalize on those markets and those channels.

All right. Very good. Well, I'm showing no further questions. So with that, Michael, I will turn it back over to you for any closing remarks.

Yes. Thank you, Robert. Thank you, Tom. I want to thank everybody for participating and taking the time out of your day to listen to what we have to say. We're very excited about the future, and we look forward to more updates as time marches on. But have a great day, and thank you.

The conference has now concluded. We thank you for attending today's presentation. You may now disconnect your lines.

Good afternoon, and welcome to the SenesTech Reports Fourth Quarter and Fiscal Year 2025 Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Robert Blum with Lytham Partners. Please go ahead.

All right. Thank you very much, operator, and good afternoon, everyone. Welcome to SenesTech's year-end 2025 financial results conference call. Joining us today are Dr. Jamie Bechtel, Interim Executive Chair; and Tom Chesterman, Chief Financial Officer. Joel Fruendt, the company's President and CEO, was unable to join us today.

Earlier today, the company issued its financial results press release for the year ended December 31, 2025. As the operator indicated, at the conclusion of today's prepared remarks, we will open the call for a question-and-answer session. [Operator Instructions]

Before we begin, I'd like to remind everyone that today's call may include forward-looking statements within the meaning of federal securities laws. These statements are based on current expectations and involve risks and uncertainties that could cause actual results to differ materially from those described. Please refer to the company's SEC filings for a discussion of these risks. The company undertakes no obligation to update forward-looking statements, except as required by law.

All right. With that said, let me turn the call over to Dr. Jamie Bechtel. Jamie, please proceed.

Thanks, Robert. Thank you, operator. Thank you to everyone who's joining us today. I'm Dr. Jamie Bechtel, and I'm the Chair of SenesTech's Board. As we recently announced, Joel Fruendt is retiring following several years of leadership at SenesTech. On behalf of the Board, I want to thank Joel for his contributions and for helping position the company for the next phase of growth.

To support continuity during this transition, the Board created the role of Interim Executive Chair, and I was asked to step into that position to help ensure alignment between the Board and management while the CEO search is underway. The transition is planned and orderly, and the business continues to move forward without interruption. The Board has initiated a formal search process to identify the company's next CEO. Our focus is on finding the right leader to help scale the business and build on the progress that has been made.

In the meantime, the Board remains closely engaged with management and focused on execution. Our directors bring experience across areas such as e-commerce, international markets, finance, strategic growth, which we believe will be valuable as the company continues to expand. Importantly, the company's core strategy remains consistent. We are focused on delivering our current initiatives, scaling the areas where we are seeing traction and maintaining discipline in how we allocate resources. We will continue to keep shareholders informed as the leadership transition progresses.

With that, I'll turn the call over to our CFO, Tom Chesterman.

Thank you, Jamie. I'll begin with a summary of the year's performance and key developments before reviewing the financial results in more detail. Overall, 2025 reflected continued progress in expanding our commercial reach and strengthening our business model. For the year, revenue increased 20% to approximately $2.2 million compared with $1.86 million in 2024.

It's important to note that the fourth quarter included an approximately $200,000 temporary revenue impact associated with the company's transition to directly managing the Evolve Rat and Evolve Mouse on Amazon. Excluding that transition effect, full year revenue growth would have been closer to 30%. That transition represents an important step in our e-commerce strategy. Directly managing Amazon allows us to improve product presentation, optimize marketing performance using platform data and retain a greater portion of the revenue generated through that channel.

E-commerce continued to be our fastest-growing segment. For the year, e-commerce revenue increased 88%, driven by strong growth on Amazon and our direct-to-consumer website. Even with that temporary transition impact, e-commerce now represents more than 1/2 of our total revenue. And now that we have direct control of Amazon selling activity, we can better tailor the message and accelerate growth much, much further.

Beyond e-commerce, we continue to expand activity across several additional verticals. In municipal markets, interest in fertility control approaches continue to grow as cities evaluate alternatives to traditional rodent control methods. Programs such as the rat contraception initiatives in New York City, Chicago and elsewhere reflect this broader shift towards integrated pest management strategies.

The Chicago neighborhoods deploying Evolve continue to reorder and expand deployment. New York City will soon conclude their trial of Evolve, and we are already in discussions with potential deployment partners so as to be able to move quickly.

Internationally, we expanded our footprint during the year with regulatory approvals and new distribution relationships. Evolve received regulatory approval in New Zealand, and we shipped the initial stocking order to our exclusive partner, Evicom. We've expanded distribution activity in Belize through the Belize Raptor Center. And we have other areas with potential regulatory approval pending as well.

On the retail side, where decision-making is a longer process, we have made multiple presentations to some of the largest brick-and-mortar retailers about stocking Evolve on their shelves. I should point out that success on Amazon and the press around municipal deployment feeds well into the retail decision-making. We laid the groundwork last year. This is the year when we'll see the benefit of that work on the top line and the bottom line.

Finally, I should mention some of you have been concerned about our legal dispute with Liphatech. I'm pleased to say that this dispute has been resolved in a manner satisfactory to all involved. All litigation has been dismissed and cannot be reinstated.

Turning to the financial results in more detail. For 2025, gross margin improved to 62.5% compared with 54.1% in 2024. This reflects improved product mix and the growing contribution from e-commerce channels. The company reported a net loss of $6.4 million compared with $6.2 million in 2024.

The 2025 results include approximately $631,000 in one-time legal expenses, some of which associated with Liphatech, and $135,000 in non-cash operating lease expense. Excluding these items, the adjusted net loss for the year would have been approximately $5.6 million. Adjusted EBITDA loss for the year improved to $5.3 million compared to $5.8 million in 2024.

From a liquidity standpoint, the company ended the year with $8.6 million in cash and short-term investments, which we believe provides a solid operating runway as we continue executing our strategy.

As we look towards 2026, our focus remains on maintaining financial discipline while investing in areas where we are seeing traction, including e-commerce expansion, municipal adoption and continued validation of our technology. At the same time, we are managing operating expenses carefully and prioritizing investments that support measurable commercial progress. And importantly, we're also maintaining the flexibility for the company's next CEO to help shape that longer-term strategy.

With that, operator, we're ready to open the call for questions.

All right. Thank you very much, Jamie and Tom. We'll go ahead and begin the question-and-answer session. [Operator Instructions] First question here. Given that 2025 revenue growth would have been 30%, excluding the impact of transition to directly managing Amazon sales, should we expect similar growth rate in 2026 or could this be higher?

That's a great question. Yes, absolutely, it can be higher, and that is, in fact, what we're aiming for is we want to accelerate growth in the areas where we can and make sure that we maximize that growth as long as it remains profitable.

All right. Our next question here, what are likely to be the contributors to 2026 revenues? Amazon and D2C, pest management professionals networks, municipal orders or international expansion in New Zealand, Belize and beyond?

So it will definitely be a mixture of all of those. But let me walk through kind of how each of them looks as we're moving forward. I mentioned the e-commerce and Amazon, particularly. This is an area where, with Amazon, we were not managing it directly, we were using a third party. And so we were not really in full control of the message and the rate of spend.

As we begin taking over Amazon and also working on improving our own website, we know that further investment in the messaging and in the ad campaign will drive sustainable and increasing growth. So definitely, we expect to see a strong growth in that area.

Municipal certainly is an area of growth. There have been a number of successes in that area. All eyes are on New York right now, where we have a trial underway. We don't know exactly what their deployment plans will be. We'll see that when the request for proposals come out, but we do see that as a growth area.

Retail is an area where it's -- we have not yet seen the growth that we would hope. But when you see growth in that area, you see it's a very, very explosive area. And to give you an example, we've made multiple pitches to brick-and-mortar retailers. We've worked with them on their website. We've worked on trials. And at some point, one of them is going to say, all right, let's go ahead and send 1 pallet to 200 stores, 1 pallet each. That's a $2 million order. So the growth there can be very, very explosive in that segment.

International continues to look very good. There are a number of areas internationally where they have a similar need to improve their rodent management techniques, and they seek alternatives to traditional methods like Evolve, like ContraPest, et cetera. So we definitely do see some improvement there.

We've mentioned before, Australia is nearing the conclusion of the regulatory review. So we're expecting an answer from them shortly. There are other jurisdictions as well. So in closing, it really is a combination of a variety of shots on goal, as Joel used to put it.

Right. Very good. Our next question here is what kind of follow-up should we expect from the 2 field validations in urban areas? What level of revenue should we expect from these 2 areas?

Well, I'm not quite sure what the second one is that they're talking about. The one right now with the trial has all eyes on it is in New York. And as I mentioned, that trial will be concluded sometime in the spring. We don't know what their deployment will be, so we can't give you a good sense of how much revenue or how quickly.

In the other areas, such as Chicago, they've already begun the deployment in Chicago in a number of neighborhoods and areas. So that will expand as additional neighborhoods come on into the program.

All right. The next question here is why have all the social media accounts, Facebook, for example, been quiet since December of 2025? Talk about the marketing department employment there.

Yes. Jamie, actually, why don't you take this one?

Thanks, Tom. Robert, that's a great question. The marketing team is absolutely still in place. Over the past few months, we've been focused on strengthening our core commercial efforts, customer outreach, sales enablement, channel and partnership development rather than prioritizing social media. Social media will definitely pick back up as we roll out a couple of initiatives this year, but the team has actively been working on growth and brand positioning. So you'll see a more structured communication cadence as we launch our new milestones this year.

All right. Very good. Next question here. And I think, Tom, you've addressed this in your prepared remarks, but I'll see if there's anything to add on to it. What is the status of the court case of Liphatech versus SenesTech?

So that case has been settled. It's been settled as the lawyers put it to the satisfaction of all parties. The results were immaterial to our -- both financially and operationally. So at this point, we consider it a past issue.

Okay. And a bit of a follow-up on that. You guys mentioned in the prior quarter that you had incurred $100,000 of one-time legal costs due to the Liphatech IP infringement and NDA violations. It says here, I noticed that the one-time legal fees in this quarter came to $275,000. Let's see here, can you, I guess, expand upon and clarify this cost and whether it's expected to recur going forward?

So let me take the last part first. No, it should not recur now that we have successfully concluded that litigation issue. It's -- litigation is very expensive these days. And so it takes quite a bit to defend oneself from charges or allegations. So unfortunately, it did end up costing us quite a bit in terms of legal expense. But it was an investment well worth it given the positive outcome.

Okay. Following up on a question on legal fees. Could you provide more granularity and how much of those fees during this last year related to financing?

The legal fees which were expensed do not have anything to do -- are not classified as operating expense. Those would be part of the cost of the financing. So you would not see any legal cost of financing in the income statement.

Okay. Next question here is, what is the status of product registration in Australia?

Yes. As I mentioned, we with our partner, have submitted all the necessary information. The regulatory authorities have gone through it. They expect to be able to produce an answer to us as our partner says, in the spring. I don't have any more precise dates than that, but we are expecting a response from them. We're expecting a positive response.

Okay. Our next question here is how much revenue do you expect from Belgium during the coming 2 years?

We actually do not have any direct input or insight into Belgium. We have no partner that's in Belgium. So it really is more a matter of as we look at the European market and our distributors there, what are we selling to them? And whether it's in Belgium or somewhere else, I really don't have a whole lot of insight into that.

Okay. Next question. Can you break out the SG&A, which is up? How much is sales and how much of the G&A? And there will be a follow-up to that.

So the -- we are at the conclusion of this call scheduled to file our 10-K. So all of the detail of the SG&A and R&D expenses will be in the 10-K. So I would encourage you to -- our investors to look at that, read that. And if you have any questions on that, follow-up with us. We'd be glad to go into it as much as we need.

Next question here is what are the new international opportunities?

Well, unfortunately, I can't really comment on them until we have signed agreements in place. So I'm going to have to let you wait for our press releases. As we sign them, we will let our investors know.

Okay. Very good. Next question here is, how likely is it that Evolve Bait gets to brick-and-mortar during the first half of 2026?

So we are already in some of brick-and-mortar, but not much. I think that given the time frame in which they make their decisions that it may not be likely until at least the end of the second quarter, but it's more likely in the second half of the year for retail in a big way.

Okay. Our next question here is what municipalities besides New York City are evaluating Evolve?

Well, that's the biggest trial that's been out there. Baltimore concluded their study and has been deploying Evolve there. Chicago didn't. They went right past the study, at least in the neighborhoods, but they're -- the City of Chicago continues to be assessing fertility control. I don't know of -- there are I'm sure others that are doing trials that are not necessarily formal trials, but that would be a level of detail that I wouldn't have readily available right now.

All right. The next question here is on how is the agricultural sector working out?

It's working out quite well. There are -- we've talked about some of the successes in the past in the almond groves in the West. Those deployments go well. They're expanding those as well. We continue to work on some of the crop issues like sugarcane. We continue to see actually some expansion as well into poultry. That's another area of growth. And we're beginning to see actually some -- an interesting area, irrigation. It turns out that rats are very destructive to irrigation equipment. So we're seeing some progress in that area as well. So it's going well, very well.

All right. Another follow-up here, and I'm not sure if there's anything that could be added here, but how soon will you know about the trials in the New York City program? And what's the potential market for that?

Yes. Unfortunately, as I've mentioned, the trial will be ending this spring. I believe it's the middle of the second quarter. We don't know what they're going to be doing immediately after that. But we have begun discussions with some people that are expecting to bid on whatever comes out. These are large pest management organizations that would like to be able to respond to New York's requirements. So we've already begun those discussions as to how to best be flexible and nimble when the information does come out.

Okay. Our next question here. How has the e-commerce business been when it comes to Home Depot and Lowe's?

So these are areas where they're really almost trials before they make their decisions about their shelf placement. We are focusing, as has been mentioned before, our own e-commerce program on Amazon now and on our website. So these programs have not been a huge e-commerce per se push, but rather are ways of continuing the discussions with them. So at this point, they're nowhere near the size of what we're seeing in Amazon or on our own website.

Okay. Our next question here. Are there any new species you anticipate in 2026 or 2027, such as ground squirrels, gophers, et cetera?

Well, I'll let Jamie comment on this, but I will also kind of mention that from my perspective, I think the rodent market is the rat and mouse market has enough potential that we could be quite successful maximizing those opportunities. But Jamie, you're one of our lead scientific types. Any comment there?

I'll just add that the technology is really exciting because it's broadly applicable, especially to mammalian species. And while there's a lot of opportunity out there, I second Tom with the idea that we're going to remain very focused and deliver what's in front of us with extraordinary discipline.

All right. Thank you for that, both. Our next question here is, will evolverodentbirthcontrol.com be available in the future? Someone noticed that the site was down.

I will have to look into that to understand why it's down. I wasn't aware of that, but I'll look into that immediately. We own it. It should be up.

All right. Very good. Our next question here, what qualities is the Board looking for in the next CEO to improve profitability or the -- I'm sorry, the probability of successful commercialization?

Jamie, that sounds like a question for you.

It does, doesn't it, Tom? Robert, thanks for that. That's a great question. We're looking for a leader who can take the company through its next phase of growth. That means someone who has a strong commercial instinct, experience scaling a business, the ability to build and lead high-performance teams.

Just as important is operational discipline, someone who can translate strategy into consistent execution. The opportunity in front of us is significant, exciting and significant. So we want a CEO who can bring both that strategic vision and the day-to-day rigor necessary to capture that vision.

All right. A question here discussing cash runway implies, obviously, losses at its current revenue levels. Is there any reason why improvement should not be expected?

There's no reason why improvement should not be expected and sought after. But the attorneys tell us to be very conservative in how we disclose things in the 10-K and on the press releases about such matters. So we take the most conservative approach in terms of that disclosure. But yes, improvement should be expected.

Okay. Next question here is on inventory. Inventory grew 25% year-over-year, which is relatively high compared with the quarterly revenue. Is the current inventory reflecting anticipated demand from newly expanded locations or slower than expected inventory turnover?

It is the former. It's trying to make sure that we are ready for that surge demand I mentioned. If we do get a call from a retailer saying we want the pallets in every store, we want to make sure that we have that inventory available to fulfill.

All right. Next question here is, why was Joel not able to be on the call today?

Robert, thanks -- sorry, go ahead, Tom.

I was just going to say, Jamie, you probably should take this one.

That's exactly how aligned we are, Tom, and that's the answer to the question, right? We have a really strong leadership team in place. As I mentioned earlier, there's continuity in this transition, and we're all fully engaged in communicating progress and executing on the strategy. So while Joel wasn't on today's call, the team is completely aligned, and we're moving forward.

All right. The next question here is what other target markets will SenesTech focus on this year? Will there be increased focus on the agricultural sector, for instance?

Yes. To some extent, I've already answered that. It's going to be all of the markets that we've talked about before. We're going to be going after all of them. They each have a different strategic approach identified as to how we will address them, what the pacing will be. But there's -- these are the markets that we're focused on now, the specific verticals that we've talked about in past calls.

Until we have sufficiently hit our targets, our own internal targets and external targets in these markets, we don't think that there's a need to expand to other verticals. These are the ones that look like they have the highest potential in the shortest amount of time. And so that's why we've chosen them to focus on.

All right. Our next question here, I think you've addressed some of this, but have there been any new trials or deployments in major cities, specifically on the West Coast, San Francisco, Los Angeles, for instance?

Well, San Francisco has a trial ongoing. We've talked about it before. It's being done with a local pest management company there using some state funding. I'm not aware of any other West Coast formal trials, although there certainly are a number of the smaller municipalities that tend to look at it first before they make their decisions, but those are more informal.

We did have an interesting trial that we did produce some data on at the UC Irvine Housing project, where they have quite a bit of interest in looking at innovative ways of controlling pests. And so that trial did conclude quite successfully. We put out a press release on it earlier, but they were very pleased with the approach and have continued to deploy and expand in that. But I'm not aware of any others that are as formal as that.

Okay. Next question here is, does management attend any -- I guess, this would relate to industry conferences to showcase Evolve?

Well management doesn't necessarily, but the sales department certainly does. Sales is responsible for identifying those conferences and those meetings that have the highest potential for return. They tend to be very, very focused on that return. Is it really going to be something where we get a lot of orders? And these can be both professional organizations, but we also attend some of the, I'll call them, retail or other shows. For example, we were very recently at the Bradley Caldwell show, where they bring in all of their potential customers into one place and presents different companies like ourselves. We've also been to the ACE show. So we're at both kinds of shows. We're also at Pest World. We have had a booth there for a couple of years now. So yes, the answer is yes, we do.

Okay. Next question here. Will the new CEO have incentives built around the price of the company's stock?

I am sure that Jamie is ready to answer this one.

Robert, the short answer is yes. As with most public companies, the CEO's compensation structure, we expect a meaningful portion of that to be equity-based and aligned with long-term shareholder value. The Board's Compensation Committee will finalize the specific structure, of course, but alignment with stock performance will absolutely be a key component.

Okay. The next one, I'm not sure if there's a question in here, but maybe more of a comment. The top agricultural production state California would greatly benefit from expansion of the label for use in ground squirrels with ever-increasing regulations on pesticides, 25B products have incredible potential. So this circles back to expansion into adjacent species.

Yes, I would agree. It's very definitely -- California is not the only area that would benefit from an expansion. There are lots of different pest species that need some work, need better solutions. When we have -- again, when we've managed to demonstrate success in rat and mouse, we certainly would look at that.

I will tell you that there is an issue around ground squirrels. They're not considered the same kind of pest as rodents are. So they have a different regulatory approach that's required there. So there are a few complexities that would need to be worked out before we could really consider that kind of an expansion.

Okay. The next question here is, will you be expanding your sales team?

The short answer is yes, we will. We actually had the sales team in for a kind of a beginning of the year conference not that long ago. We're going to have another one coming up shortly where we're really focused on exactly what resources do we need to maximize the B2B sales effort and whether it be more people. And if so, where and what, how are they focused, what materials are needed, what -- again, all the resources that are necessary to really expand and drive the B2B growth to its maximum potential.

And Robert, before we move on, I just want to add to Tom's answer there that because we brought e-commerce in-house, not only are we going to see a bigger sales force, but we're going to see -- both in the B2C and the B2B profile, but we're going to see a higher ROI on that because we're going to be able to collaborate across those 2 verticals.

All right, fantastic. Our next question here. Can you clarify when the New Zealand order was shipped? And if it was in Q1, how much of the inventory did that eat up? And has it been replaced?

Yes, that shipment was in Q1. And yes, it's been replaced. I think that was all the questions.

I think you hit it there. Next question here is sales working with UC Davis regarding Kern County and other California counties being overrun by rats?

The short answer is, yes, we're focused on that in general. But that is also one of the areas where we think some additional resources might very well be useful. And so as they've been -- one of the things that came out of that sales meeting was looking specifically at different opportunities in California being not only a large market, but also a market which has taken the step to ban or limit the use of certain rodenticides. So there are definitely -- the problem now is fewer solutions, and so even more opportunity for rat birth control.

All right. Tom, a quick asking of clarification on the New Zealand order. Was that revenue recognized in Q1 or was that revenue recognized in Q4 for the New Zealand order?

Q1.

Q1, all right. And as a follow-up to that, how frequently do you expect follow-up orders from New Zealand and for how long?

Well, New Zealand has an initiative, which we've talked about before, to rid itself of predators and other pests, invasive pests. So -- and their target is I think 2050 to complete that. That is a massive, massive multi-billion-dollar undertaking. How exactly they're going to be going through that may change now with fertility control being added.

The -- I think the -- I know Evicom is working with the authorities in New Zealand to really focus on how to best now incorporate rat birth control with the other methods that have been used. So I don't have a forecast for you yet, but it's -- the opportunity there, the need there is tremendous.

All right. Coming back to California here with the question is, do you have any other distributors in California outside of ACE Hardware?

Well, ACE Hardware, we don't consider a distributor. We consider that a retail. But in terms of other distributors, yes, we do. As a matter of fact, with Agricom, Agri-Turf, a couple of the ones that have come across my desk recently. They're focused more in on the agricultural side, particularly poultry. So yes, we do have other distributors there. And of course 2 top distributors in the pest management industry, Veseris and Target Specialty, both of them have a solid presence in California.

All right. Very good. I am showing no further questions. So with that, I will turn it back over to you both for any closing remarks.

Great. Well, thank you all for joining us, and we certainly look forward to being able to update you as frequently as we can on our progress. This is -- as I said in my prepared remarks, last year was a year of preparation of setting the groundwork, setting the foundations. This year is undoubtedly going to be the most exciting year that we have. And you don't usually hear CFOs saying things like that, but I am truly excited for the potential in the coming year. So thank you very much.

Thanks, everybody.

Thank you. That concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect.

Good evening, and welcome to the SenesTech Reports Third Quarter Fiscal Year 2025 Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Robert Blum with Lytham Partners. Please go ahead.

All right. Thank you very much, operator. And as you just mentioned, thank you, everyone, for joining us to discuss SenesTech's third quarter 2025 financial results, and this is for the period ended September 30, 2025.

With us on the call today is Mr. Joel Fruendt, the company's Chief Executive Officer; Mr. Tom Chesterman, the company's Chief Financial Officer. At the conclusion of today's prepared remarks, we will open the call for a question-and-answer session. [Operator Instructions] Before we begin with prepared remarks, we submit for the record the following statement.

Statements made by the management team of SenesTech during the course of this conference call may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended, and such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements describe future expectations, plans, results or strategies and are generally preceded by words such as may, future, plan or planned, will or should, expected, anticipates, draft, eventually or projected. Listeners are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events or results to differ materially from those projected in the forward-looking statements, including the risks that actual results may differ materially from those projected in the forward-looking statements as a result of various factors and other risks identified in the company's filings with the Securities and Exchange Commission.

All forward-looking statements contained during this conference call speak only as of the date in which they were made and are based on management's assumptions and estimates as of such date. The company does 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.

With that said, let me turn the call over to Joel Fruendt, Chief Executive Officer of SenesTech. Joel, please proceed.

Thank you, Robert, and good afternoon, everyone. Thank you all for joining us today for our third quarter 2025 conference call. We once again had a very strong quarter with record quarterly revenues driven by the rapid adoption of our Evolve product line, which is showing growth across nearly every one of our key distribution channels and market verticals.

E-commerce continues to be our largest channel, representing more than 50% of our revenue, and was up 55% year-over-year. And as many of you saw, we had a very exciting announcement as our products are now available at lowes.com.

The intersection of our e-commerce and brick-and-mortar retail sales have the opportunity to be a significant growth driver for us moving forward, and Lowe's fits perfectly into that intersection. But as we have been communicating to you for the past year or so, our objective is clearly not to just grow at any cost.

We need to reach profitability and believe we have the pathway to do so in the near term. Yes, high-margin revenue growth will be the easiest pathway there, but efficiently managing our expenses will be an equal part of the equation, and we are doing just that.

During the quarter, we had a robust 43% increase in year-over-year sales. Gross margins continued in the 63% range and operating expenses were down 4% compared to last year and down 12% sequentially. And note that we had more than $100,000 of onetime legal expenses during the quarter that if removed, would have shown even further OpEx improvements.

Overall, our adjusted EBITDA loss, which closely tracks our cash utilization, was the best in our company's history at $1.2 million. This compares favorably to $1.4 million last year and the most recent sequential quarter. With the continued focus on high-margin revenue growth, operational efficiency and cost discipline, we are poised to achieve our profitability objectives.

Given the strong progress we continue to make, we feel very comfortable with the cash position we have, which at the end of September was more than $10 million. We will continue to execute and make incremental progress towards our profitability objectives, and we see a potential path to the future that may not require further equity offerings.

So that's the high-level overview of the quarter. Record revenues, strong gross margins, reduction in our operating expenses, all of those resulting in the best adjusted EBITDA in the company's history. And finally, a strong balance sheet, which will bridge us to profitability.

Okay. Let's transition to a few key activities that took place since we last spoke in August and some items we are working on, which we'll hopefully develop in the months to come. First off, as I mentioned a moment ago, our e-commerce business continues to show strong growth.

Amazon continues to lead the way here with double-digit monthly growth. We continue to focus on being efficient with our advertising spend, ensuring that we don't spend during seasonally slower times for deployment.

To that end, we slowed spend during late July and August, and we revamped our ad spend in early September. We had a highly successful Labor Day special that really boosted our sales in the month of September and should set the stage for a strong Q4 from Amazon as well.

Beyond Amazon, which represents about 50% of our e-commerce revenue, we also are seeing growth from our existing senestech.com websites as well as walmart.com, homedepot.com and tractorsupply.com.

And we had a big announcement about Lowes.com that has started carrying our Evolve Rat product. This expansion represents a major milestone in both consumer accessibility and retail distribution possibilities for the company.

Launching on Lowes.com is a key component of our planned expansion through the broader retail channels. As we have talked about in the past, many retailers start new products on their e-commerce platform to assess overall potential and then transition to having them placed in their brick-and-mortar locations.

We have a compelling case with Lowe's, Walmart, Home Depot and others that as the e-commerce side of the equation gains traction, we may then expand to in-store offerings in the future. We look forward to this being a large opportunity for us moving forward in the near future.

During the quarter, our retail sales were up 254% compared to the year ago period, driven by expanded adoption that more than doubled its coverage with our ACE Hardware customer and follow-on orders from Bradley Caldwell, a wholesaler serving over 8,000 retail locations in the Northeast.

Beyond e-commerce and retail, we continue to see adoption of our solutions within the municipal markets as well. During the third quarter, municipal revenue grew 139% year-over-year, driven by expanded deployments in New York City, Chicago and Baltimore, reflecting increased adoption in diverse urban settings.

In September, we announced that Evolve Rat Birth Control would be deployed in another of Chicago's special service areas, this time, SSA #48 or the Old Town area. The new initiative led by the Old Town Merchants & Residents Association is focused on improving sanitation and public health in one of Chicago's most historic and vibrant neighborhoods.

Planned deployments include strategic alleyways throughout the SSA, which spans key commercial and residential areas. SSA #33 or The Wicker Park Bucktown Special Service area of Chicago has expanded deployments in their area as well.

We are working with the other 53 SSAs as they seek to implement an Evolve program. On a recent visit to Wicker Park Bucktown, a customer remarked, we've now seen in a week the rat activity we used to see in a day. It's good to have such simple articulation of Evolve's efficacy.

These current programs continue to focus on controlled deployments in high-impact areas, laying the groundwork for potential large-scale expansion. And further, the overall awareness of these municipal deployments continue to have a positive impact on other channels such as retail, e-commerce and pest control distribution.

In New York City, our rat contraceptive pilot program is showing exceptional results. Our team has been in New York supporting the deployment, where they continue to note 100% consumption of Evolve. We are working with New York City for reorders to advance the trial. In addition, we are working with local distributors to arrange for long-term supply to the city.

While many of the headlines come from e-commerce channels such as Amazon, Home Depot, Walmart, Lowe's, et cetera, or our deployments in hardware retailers like ACE Hardware or municipal deployments in New York City or Chicago, the continued utilization of our solutions from pest management professionals or PMPs continue.

Representing nearly 20% of our third quarter revenues, PMP revenue was up 72% sequentially from the second quarter as a wide variety of PMP partners are leveraging the unique attributes of fertility control across a wide range of customer applications, including theme parks. One of these theme parks is internationally known and is now in their third monthly order cycle.

Our diverse distribution channel was clearly demonstrated during the quarter with near across-the-board growth from our various market verticals and distribution channels. With multiple shots on goal, each of which has shown stable growth and strong upside characteristics such as a large deployment of a major retailer or a large-scale deployment in municipal area, we feel very good about the future.

Before I turn to Tom to review the financials in more detail, with the growth we expect, we have taken important steps to make sure we are structurally ready to meet this growth. Last quarter, we took the important step to increase our production capacity to meet future demand. We have officially completed our move into our new larger facility in the Phoenix area with new automotive capabilities designed to increase efficiency.

So with that being said, let me turn the call over to Tom to review the financials in more detail and will then make a few closing comments before we turn it over to your questions. Tom?

Thank you, Joel. Let me take a moment to expand on the numbers in the press release and a few points that Joel mentioned in his earlier remarks.

On the revenue line, total revenue for the second (sic) [ third ] quarter was $690,000, which was an increase of 43% from Q3 of last year and up 10% sequentially. Breaking it down further, Evolve revenue increased 77% and accounted for 85% of our third quarter sales.

ContraPest decreased approximately 31% and accounted for 15% of our Q3 sales. While down from a year ago period, ContraPest was basically flat from Q2 as there are still a number of loyal ContraPest customers.

Looking at it from the vertical break in, e-commerce was clearly our largest contributor coming in at 54% of our overall Q3 sales. Overall, e-commerce was up 55% compared to our Q3 of last year and up 6% sequentially. As Joel mentioned, we dialed down unprofitable ad spend over the summer vacation period and re-ramped it up on Labor Day.

We continue to see Amazon growth at double digits monthly. Our second largest vertical is pest management professionals or PMPs, which accounted for 19% of our Q3 sales and was up 29% year-over-year and up 72% sequentially.

Municipal sales, while still a relatively small percentage of total sales, saw a 139% increase from the year ago quarter, driven by new deployments in Chicago and New York. Brick-and-mortar sales were up 254% year-over-year, driven by the expansion of ACE Hardware and Bradley Caldwell. Other contributors during Q3 were in the areas of agribusiness, commercial as well as zoos and sanctuaries.

One item to point out is that we had very nominal revenue during the quarter from international sales. The groundwork has been set, and we simply need to wait for progress in terms of approvals, et cetera. We have communicated previously that this is a process, and we believe we are making good progress.

Turning to gross margins and gross profits as a whole. For the third quarter, gross margins remained strong at 63%. The transition to the new facility will continue to show efficiencies and improvements in gross margins.

Looking at it from a gross profit dollar perspective, gross profit was $433,000 compared to $315,000. More broadly speaking, the higher gross margins of Evolve continue to be a key driver to our improved financial performance.

On the OpEx line, operating expenses were down 4% compared to last year and down 12% sequentially. As Joel mentioned, we had more than $100,000 of extraordinary expenses during the quarter that if removed, would have showed even further OpEx improvements.

We continue to focus on being as efficient as possible within our expense structure, focusing on profitable ad spend and the overall cost structure. The revenue growth, improved gross profit dollars and decreased OpEx resulted in our lowest adjusted EBITDA loss in the company's history as we focus on achieving our goal of profitability.

For the quarter, adjusted EBITDA loss was just $1.2 million and excluding the extraordinary items, would have been $1.1 million. Coinciding with the improved bottom line results is a balance sheet cash balance that has the ability to allow us to reach profitability without proactively raising any additional dilutive capital.

Clearly, the ramp of revenues is the biggest unknown, but at the current sequential pace of growth in gross margin and OpEx structure, there is clearly a path where we do not need to proactively raise additional dilutive capital.

I'll remind everyone that we do have additional capital potential if we need it, including 2.2 million short-term warrants outstanding at $5.25 per share, which, if exercised, would potentially bring in more than $11.4 million, and we have an ATM that is currently dormant.

Let me now turn the call back to Joel. Joel?

Thanks, Tom. The adoption of our Evolve rodent birth control solution continues to be a game-changing solution, which has significantly opened up the addressable market opportunity for us.

We have numerous shots on goal for continued steady sequential growth with outsized opportunities for what I would define as transformational growth that has the ability to quickly catapult us to profitability. We feel very good about our broad approach to expanding adoption of Evolve and the results to date are reaffirming our strategies.

With a large addressable global market that has shown regulatory tailwinds in our favor, a first-mover advantage in rodent birth control, a diverse and scalable go-to-market strategy that is producing results and a lean focused growth strategy which balances revenue growth with operational efficiencies, I couldn't be more excited about the position SenesTech is in today.

As always, I thank you all for your interest in SenesTech. With that, I'm happy to open up the call to questions. Robert, let me turn the call over to you to see if there are any questions in the webcast portal.

Great. Thank you very much, Joel, for your prepared remarks there. [Operator Instructions] All right. We have a few questions here, gentlemen. The first one is, will we see the company's products in Lowe's brick-and-mortar stores?

And I'd say the answer to that is we are in discussions with them. The first step was the e-commerce, and -- but we're also talking to them about doing a test deployment in about 100 stores. So stay tuned. I think the expectations of that would be sometime at the end of Q2.

Okay. Very good. Next question here is, do you have visibility on PMP-driven sales? What kind of growth are you expecting from this channel?

Well, PMP is certainly a key growth channel for us and one of our massive market verticals. We've had 20% -- account for 20% of our sales, which was up significantly over the last quarter and the year ago period.

So we see that growing at significant levels as we go along, as more of the customers, the pest control operators become aware of that birth control is indeed another part of an integrated pest management program. And we're starting to see that by the reorders that we're getting.

All right. Very good. A couple of questions here on e-commerce. I think you addressed some of this in your prepared remarks, but how much of the revenue of the $690,000 was from e-commerce?

Well, it accounted for 54% of our quarterly revenue. That has been consistent with some of the other quarters that we've had in the past.

All right. Expanding on e-commerce here. A question here is Evolve is priced much higher than other rat control products on Amazon. With your big margins, you have lots of room to cut price. Is that part of your sales strategy going forward?

Well, what we did is we've positioned Evolve kind of in the middle of the pricing pack with different rodenticides that are out there. We monitor that closely. And we think that when there's -- the time is right, and we may have to discount a little bit in order to gain some large orders, we're willing to do that. But we're really comfortable where our price point is now. And I think our double-digit growth on Amazon monthly is proof of that.

All right. Very good. Next question here. There's actually a number of international questions. I'll try to summarize a few of these. First off here, could you give just sort of basic general details on your progress in the international markets?

Yes. Great news from New Zealand. We got the official approval for New Zealand. New Zealand has a program where they want to limit out pests by 2050, rodents and a couple of other pests. We got the approval there. We have our distribution set up there.

So we're in the process of working on, okay, what does that order look like that we're shipping to New Zealand. And we have a number of those areas. We have now 18 exclusive distributors who are all working every day to get those country approvals. And it may take a little bit longer than what we would like.

Sometimes in countries, it takes a little bit longer than others. But we know that once we get approvals in the countries that the container load orders are going to follow there. And so we're really excited about that. We're being very patient. And at the same time, we're pressing forward. So we expect many more country approvals over the course of the next 3 months.

All right. Very good. I hope that, that addressed most of the questions that were on here internationally. [Operator Instructions] Next question pertains to the legal expense. Any additional color that can be provided on that?

Tom, do you want to take that? Okay. It looks like Tom is not on. We have some legal expense. We have -- go ahead.

I'm sorry, I had my mute on, sorry about that. Yes, as we've disclosed in our filings, we are being sued by Liphatech, a rodenticide manufacturer that we did some joint research with a while back. They claim we violated our nondisclosure agreement and infringed on their IP.

We can't really comment specifically on the litigation, but I will say this. I mean, their assertions are baseless. It's bordering on ridiculous.

And to some extent, I think the SenesTech and rodent birth control in general is beginning to scare the poison companies. They're now realizing that Evolve may hurt their business, and they're doing what they can to stop us. So I suppose that's a positive signal for our future in a strange way.

All right. Very good. Next question here is, could you give an estimate on how much revenue is expected from recent field trials that started in Somerville and Cambridge? Anything you can add on to that?

Well, I think it's too early to project revenues. All I can say is this is that those trials are going very well and that they're looking for a long-term solution. And we're very confident that as we have the positive results from these trials, that the orders will follow.

It's very similar to the third monthly order in a row from one of the large theme parks. They try it out, they do their own internal work to make sure that it's something they want to use. And then once they realize that this is a way to end infestations, the orders will follow. And we think that there's going to be some really good things coming from both of those areas.

All right. Very good. Well, I am showing no additional questions here or topics. So I guess with that, Joel, I'll go ahead and turn it back over to you for any closing remarks.

Well, thanks, everyone, again for being on the SenesTech earnings call. We've been working hard. I think you can see by the results that a lot of our legwork is starting to pay off, and we're expecting even better things going forward. So thank you for your time and look forward to talking to you again after the post of the year.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good afternoon, and welcome to the SenesTech Second Quarter Fiscal Year 2025 Financial Results Conference Call. [Operator Instructions] Please note that this event is being recorded.

I would now like to turn the conference over to Robert Blum with Lytham Partners. Please go ahead.

All right. Thank you very much, operator, and thank you all for joining us today to discuss SenesTech's second quarter 2025 financial results, and this is for the period ended June 30, 2025. With us on the call today is Joel Fruendt, the company's Chief Executive Officer; and Tom Chesterman, the company's Chief Financial Officer.

At the conclusion of today's prepared remarks, we will open the call for a question-and-answer session. [Operator Instructions]

Before we begin with prepared remarks, we submit for the record the following statements. Statements made by the management team of SenesTech during the course of this conference call may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended, and such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements describe future expectations, plans, results or strategies and are generally preceded by words such as may, future, plan or planned, will or should, expected, anticipates, draft, eventually or projected. Listeners are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events or results to differ materially from those projected in the forward-looking statements, including the risks that actual results may differ materially from those projected in the forward-looking statements as a result of various factors and other risks identified in the company's filings with the Securities and Exchange Commission.

All forward-looking statements contained during this conference call speak only as of the date in which they were made and are based on management's assumptions and estimates as of such date. The company does 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.

With that said, let me turn the call over to Joel Fruendt, Chief Executive Officer. Joel, please proceed.

Thank you, Robert, and good afternoon, everyone. Thank you all for joining us today for our second quarter 2025 conference call. As you can see from the press release, we had yet another quarter of tremendous performance highlighted by record quarterly revenue and record gross profit margins and gross profit dollars, which led to another quarter of improved adjusted EBITDA.

The adoption of our Evolve Rodent Birth Control solution continues to be a game changer, which has significantly opened up the addressable market opportunity for SenesTech. We are seeing growth across all channels in our 6-channel strategy. During the quarter, Evolve sales were up an incredible 94% compared to the year ago second quarter and up 36% sequentially. Evolve now makes up 83% of our total quarterly revenue.

While revenue growth is key, we have also dramatically grown our gross profit dollar contributions, a key metric to us achieving cash flow breakeven. This improvement was due to higher inherent gross margins of our Evolve product line. During the quarter, gross profit margins were 65.4%, up from 54.2% in the year ago second quarter and compared to 64.5% in Q1. From a gross profit dollar perspective, we were up 64% compared to last year's Q2. As Evolve sales continue to grow and make up the majority of our overall sales mix, we expect to see continued long-term improvement in gross margins.

As we have talked about for some time, Evolve has opened the door to market verticals and distribution channels, which our earlier product ContraPest simply wasn't suited for. For instance, e-commerce sales, which include Amazon, walmart.com, tractorsupply.com and diypestcontrol.com as well as our own e-commerce sites are much more suited for the soft bait form factor of Evolve compared to the liquid solution of ContraPest.

E-commerce was up 78% compared to last year and up 18% sequentially, with Amazon clearly leading the way. Overall, e-commerce now represents more than 50% of our quarterly sales, and we don't see any reason for this to be slowing down anytime soon.

Another key market vertical more suited for Evolve that is showing rapid growth is brick-and-mortar retail. During the second quarter, we signed an agreement with Bradley Caldwell, a premier wholesale distributor serving over 8,000 farm ranch hardware and pet supply deals across the United States. This new partnership significantly expands our national distribution footprint and brings Evolve directly into the hands of rural retailers and independent dealers who serve America's agricultural communities.

While coming from a relatively small base, brick-and-mortar retail sales were up nearly 500% sequentially during the second quarter with sales of approximately $65,000. Beyond this order with Bradley Caldwell, we have been in discussions with the 2 largest home improvement chain in the U.S. about carrying Evolve.

I always want to caution that the process to carry products on retail store shelves tends to be lengthy, but as you can imagine, in order for even the small region of one of the large home improvement retailers could translate into transformational growth for SenesTech.

Another key market vertical, which has been a key factor in driving growth, has been the city and government verticals where we currently have numerous trials and deployments ongoing, including New York City, Chicago's Wicker Park Bucktown SSA, Baltimore, San Francisco, L.A. and the suburbs in Boston. Each of these is a bit unique in their status and approach. But it's fair to say that the results to date we have seen have been very strong in each location.

For instance, in Chicago's Wicker Park Bucktown SSA, or special service area, they started deployment in April with crews installing bait boxes with Evolve Rat in alleys behind several major thoroughfares in the neighborhoods. Since inception, they have seen great consumption and, more importantly, significantly reduced rat activity. As a Wicker Park resident noted, we now see the rat activity in a week that we used to see in a day.

Consequently, we have received multiple reorders as they expand the program. We are working with the other 54 SSAs as they seek to implement an Evolve program. In fact, we just received an order from another SSA that we will be announcing shortly.

And one small interesting note we have observed is that we have actually seen an uptick in the e-commerce orders from the area around Chicago's Wicker Park and Bucktown areas for Evolve, and the SSA has rolled out deployment. Neighbors are clearly excited at the opportunity to control the rat population without the toxins and poisons that pose a risk to many other animals, people and water supplies.

In New York, where they had begun deployment in April following the approval in September of last year by the City Council to launch a rat contraceptive pilot program, the Evolve consumption is 100% out in the field. Our team has been in New York supporting the deployment and expect to see continued progress in reorders placed to advance the trial. In addition, we are working with a local distributor to arrange for long-term supply to the city.

Between orders during the second quarter to support the trials as well as reorders from other key municipalities to -- and government-related sales grew more than 500% from the year ago second quarter. The numbers are still relatively small, but with potential full-scale deployment, you can see how the numbers get very big very quickly.

Another key distribution channel for which the introduction of the soft bait solution has expanded adoption has been international opportunities. Specifically, during the second quarter, we received a reorder of Evolve to support a Caribbean Island. We also are working through regulatory approvals in Australia and New Zealand, where additional launches are planned for later in 2025. We are expecting new and reorders in the coming months from numerous countries where distribution agreements have been signed. All told, we now have agreements with more than 15 countries to support Evolve's growth.

Another win that one of the world's largest amusement parks placed a multi-pallet order for deployment after having trialed the product for 9 months. This is very exciting news. The strong performance in many of our key market verticals, I always think it's important to highlight a few areas where the progress has been a little slower than expected, but plans are in place to accelerate adoption.

Last quarter, I talked about brick-and-mortar retail being one of those areas that was a bit slower than expected. As I just reported, we had a record retail quarter driven by the order from Bradley Caldwell for rural retail adoption. We continue to focus on big box opportunities and expect to have news for you in the coming quarter.

Another area where the opportunity remains significant, but not yet totally realized is within agricultural applications. The need within agriculture is huge, with nearly 20% of the world's food supply destroyed due to rats. With rodenticides become increasingly banned or restricted in multiple jurisdictions, such as organic farms, we believe it's only a matter of time before we break through in this important market vertical.

Recently, I have worked with a number of ag-related companies to conduct trials in their locations, including sugarcane fields, almond orchards and granaries. We expect that we will see the breakthrough moment when these large-scale operations will accept the very positive results of what full-scale deployment can mean for their operations to save money. I look forward to positive results in the quarters to come.

As I have stated over the past few quarters, SenesTech today has numerous shots on goal for what I would define as transformational growth, growth that has the ability to quickly catapult us beyond our revenue breakeven point, which, as a reminder, is around $1.5 million on a quarterly basis.

This could come from expanded deployment in one of the numerous cities we have trials going -- ongoing around the country. This could come from numerous brick-and-mortar locations we are in discussions with. This could come from many international countries where we have agreements signed, but wait approval for shipment. Or maybe, this comes from the integration of a large-scale pest management professional operator to integrate it into their service offerings.

At the same time, this is not all about home runs or bust. We have a growing e-commerce business, which represents more than 50% of our sales and is growing sequentially every month. More specifically, Amazon sales are growing at a 10% to 15% month-over-month rate. Traffic on walmart.com is also growing at a rapid pace, and we expect that to continue. We feel very good about our broad approach to expanding adoption of Evolve, and the results to date are reaffirming our strategies.

Let me now turn the call over to Tom to review the financials in more detail. I will then come back to provide some closing comments and address any questions that you might have. Tom?

Thank you, Joel. Let me take a moment to expand on the numbers in the press release and a few of the points that Joel mentioned in his earlier remarks.

On the revenue line, total revenue for the second quarter was $625,000, which was an increase of 36% from Q2 of last year and up 29% sequentially. Breaking it down further, Evolve revenue increased 94% and accounted for 83% of our second quarter sales. ContraPest decreased approximately 45% and accounted for 17% of our Q2 sales. While down from the year ago period, ContraPest was actually up 3% sequentially. There are still a number of loyal ContraPest customers and there are a couple of states where Evolve is not yet approved, and which ContraPest can address their rodent fertility needs.

Looking at it from a vertical breakdown. E-commerce is clearly our largest contributor coming in at 56% of our overall Q2 sales. Overall, e-commerce was up 78% compared to Q2 of last year and up 18% sequentially. Amazon is going well and is the predominant e-commerce channel right now.

Municipal sales, while still a relatively small percentage of total sales, saw a 538% increase from a year ago quarter, driven by new deployments in Chicago and New York.

Brick-and-mortar sales were more than $65,000 during Q2, driven by the large Bradley Caldwell order. In last year's Q2, we had virtually no retail sales.

We recognized about $20,000 in international sales during Q2 from a follow-on order in the Caribbean. As Joel mentioned, we have a few potential significant orders pending regulatory approval, which we expect will be key drivers for us later this year. Other contributors during Q2 were in the areas of agribusiness, commercial, pest management professionals as well as zoos and sanctuaries.

Turning to gross margins and gross profits as a whole. For the second quarter, gross margins were 65.4% compared to 54.2% in Q2 of last year. Looking at it sequentially, gross margins also improved compared to 64.5% in Q1. So you can see we are continually improving our gross margins.

Looking at it from a gross profit dollar perspective. Gross profit was $409,000 compared to $249,000 in last year's Q2, up 64%. It was also up sequentially. The driver here is Evolve, which has higher margins than ContraPest.

As I mentioned last quarter, we are also increasing production capacity to meet future demand. We have officially completed our move into our new larger facility in the Phoenix area to meet growing demand for Evolve product with new automated capabilities to drive improvements in gross margins.

On the OpEx line, operating expenses were up slightly from Q2 of last year, primarily due to what I would define as onetime expenses during the quarter. Excluding the one-off charges, our cost control initiatives are bringing down our operating expenses as we pursue our goal of a reduced cash burn of $1 million per quarter.

All told, the higher gross margins and operating efficiencies gained on the manufacturing are expected to move our cash flow breakeven level to a little over $1.5 million per quarter. We continue to move closer to that inflection point that many companies and investors are looking for. There is still execution work to be done, but the pathway is clear.

Transitioning our balance sheet is in the best position it has ever been. We ended the quarter with $6.1 million in cash following a successful $4.5 million in warrant exercises that occurred during the quarter as well as utilization of our ATM facility for which we raised gross proceeds of $3 million during the second quarter. Further, we closed on additional financing of $6.3 million on August 5 through a warrant exercise inducement, providing an operating runway now through the end of 2027 and beyond based on the recent quarterly results.

This concludes a series of transactions designed to fully fund our growth plans and our path to profitability. Any further fundraising is likely to be limited to occasional opportunistic ATM open market issuances.

We ended the quarter with approximately 3.8 million shares outstanding. The August 2025 warrant exercise would then add an additional 1.5 million shares to that, bringing the shares outstanding to approximately 5.3 million shares. As a result of the warrant inducement transaction that closed earlier this week, there are now 2.2 million short-term warrants outstanding at $5.25 per share, which, if exercised, would bring in more than $11 million.

With that, let me turn the call back to Joel. Joel?

Thanks, Tom. Before I turn it over to any questions, I think it's important to take a step back to recognize everything that we have accomplished over the past year or so to put us in the position that we are in today.

It was only 1.5 years ago that we launched our Evolve Rat product, which was then followed up by our Evolve Mouse solution. Since that time, Evolve sales have grown at an accelerated rate, including 94% year-over-year growth during this quarter.

Evolve has changed the game for us by opening doors to key market verticals domestically and internationally. We are increasingly building a defensible market position built on science, regulatory trusts, IP protection and category leadership. Just as we have shown to date, it is my expectation that we will continue to see adoption expand across our key market verticals and distribution channels, each of which can significantly transform this business.

With a large addressable global market that has shown regulatory tailwinds in our favor, a first-mover advantage in rodent birth control, a diverse and scalable go-to-market strategy that is producing results and a lean focused growth strategy, which balances revenue growth with operational efficiencies to move the business towards breakeven, I couldn't be more excited about the position SenesTech is in today.

Please know that we are working hard every day on behalf of our shareholders and really the public at large to suppress rodent populations in a sustainable manner.

As always, I thank you all for your interest in SenesTech. With that, I'm happy to open the call to questions. Robert, let me turn the call over to you to see if there are any questions in the webcast portal.

All right. Very good. Thank you, Joel and Tom for the prepared remarks there. We've got a series of questions here. I'll try to maybe lump them into buckets where appropriate.

Starting off here, should we expect incremental improvements to gross margins in the coming quarters?

I think you can -- yes, it's Joel. I think you can look at -- that we expect margins to stay consistent where they're at, and we may be able to see some improvement in the coming quarters as well.

All right. Next question here. Is there room to accelerate e-commerce growth with additional digital marketing spend?

Yes, and that certainly is in the plans, and what we are looking at is that, okay, how can we accelerate not only in e-commerce, but across all of our channels and what are those things that will give us a good bang for the buck. And so we're really excited about being able to lay out those plans and do that acceleration.

Okay. Next question here. Should we expect higher volumes from cities like New York City, Chicago, Boston, Baltimore, L.A. County and San Francisco where the product has been launched?

Well, as you can see across not only the city and government verticals but others, it usually starts out with a test, a trial, and then they see the results. And once they see the results, then you start to see the increased flow of orders and revenues building. And certainly, we believe that across the cities and government agencies is that you're going to be seeing -- you're seeing continued growth as these trials prove out that Evolve is the product that they want to use, and that will give them another tool in their toolbox.

So we're expecting good things out of the trials and moving forward with implementation into their regular pest management practices.

All right. Great. Next question, what is the potential capacity in terms of dollars of the expanded manufacturing facility?

Well, right now, we have the capacity to do with the one shift we're running and the line we're running on to do roughly 1 million pounds, which translates roughly to $10 million in revenue.

But we're not standing still on that. We're looking to put in place not only, okay, how can we put in additional shifts, but also additional lines when we had the facility built and organized for us. We have the capacity put in at least 3 different manufacturing lines. And so we're in the process of taking a look at all those options and what makes the most sense for us, not only short term, but also long term.

All right. I believe Tom addressed this question's prepared remarks though. What is the new basic share count as of today?

Well, yes, I did cover it, but let me be specific. As of today, I just checked, we have 4,724,340 shares outstanding.

All right. Very specific there. There are a few questions regarding the recent capital raise. I'll try to maybe summarize here. Are you planning to do more in the future? If yes, can you provide some clearance on why you would need to do any additional capital raises?

Joel, do you want to take that?

Tom? Tom, would you...

Yes. So one of the things that's really been holding our stock back for years now really is a financing overhang. We did not have enough cash to confidently bridge to cash flow profitability. So starting at the beginning of this year, we initiated a plan to use warrant transactions to get more than a few months runway.

We now have that. We have the cash in hand to convince even the most skeptical that we can bridge to cash flow profitability. And as I mentioned earlier in the call, we have now concluded that program, and so I don't anticipate further financings like that in the near future, perhaps not ever.

All right. Very good. Next question here. Would a New York City full-scale expansion require a big capital investment?

I can answer that. It's -- a full-scale New York would not require a significant capital investment right away, but what we would do is we would plan on expanding, as I just mentioned before, and to increase our capacity that way. And our -- the capital -- the CapEx that we would need in order to do that to add additional lines is somewhere in the $300,000 to $400,000 range.

All right. Next question here pertains to sort of just breakeven and profitability. Talk -- and again, Tom, I think you addressed this, but talk a little bit about the breakeven point, both from a cost and a revenue standpoint. And when is the earliest we could flip to profitability?

Yes. If you look at it right now, when we did our OpEx reductions earlier this year to get our burn rate down, we have said before, and we're holding tight on this is that our revenue level in order to get to cash flow breakeven is somewhere in that $6.5 million revenue line. And we think we can get to that line somewhere in the second part of 2026.

All right. Very good. Next question here, talking about the need to, I believe, higher additional folks to sort of meet some of your growth expectations here. Do you need to hire additional people?

Yes. We have been hiring some people. And as we look forward, we're hiring salespeople. We're also putting on manufacturers reps, right, that will handle us with a lot of the retail accounts trying to do this in the most logical and cost-effective way that we possibly can.

Manufacturers reps have existing contacts with a lot of the big box retailers and agriculture retailers. So we're putting in field salespeople that are company people. We're going to expand our field team that goes out and does these field trials. As you can see, we're getting a lot of requests for field trials and assistance. And so we want to make sure that we're properly staffed there. So that's in the plans as well.

So yes, as we continue to expand and grow in each of these vertical markets that we've realized and are on board with what we're trying to do, we're going to be able to support those across the board.

All right. Next question here. Are there any active trials that have not been announced?

Well, we have a lot of trials, small and large, that are out there. So I have to say there are active trials that have not been announced, but those could be a small scale. I mean, the large ones that have to do with the major cities, we have out there.

Certainly, we have trials that are going on in the agriculture industry, as I mentioned a little bit earlier that we've not announced on. But we certainly, as time goes on and as we have these trials and there -- we'll be relaying that information as we get the results.

All right. There's a few questions here pertaining to the ATM. Is there any, well, maybe more broadly, if there's any definition here, about what you would utilize the ATM for on a go-forward basis?

Tom?

Well, in short, we are not using it right now. It's not active. We have the capacity. But with the recent raises, we have enough cash for right now. So if in the future we find that the stock price surges, volume surges and there's an ability to bring down some capital, we might. But right now, we're seeing that more as a capacity and a potential as opposed to a plan.

All right. Very good. Next question here. How long before you are in store with Tractor Supply and end cap would be perfect?

We totally agree with that, and we hope to have some news on that in the coming months.

All right. Another question here. Can you specify how OpEx will be cut? How much will come out of SG&A versus R&D?

Well, we've already made the cuts that -- and we announced them last quarter. And they really were a mixture of things where we've in-sourced some marketing activities, where we've cut down on some of the R&D towards additional species, for example, things like that. So it really was not specifically either SG&A or R&D.

As we move forward, we -- there are -- we continue to look at every expense, but we don't have any specific plans to further reduce OpEx. In fact, there may be some areas, as Joel mentioned, such as in sales, where we may want to increase a little bit of investment as our financials allow.

And if I can add to that, Robert, it's -- when we start looking at things, we have requests all the time for other animals and under mammals and how can they -- how can we come up with solutions for them. But we just -- we said it's like, right now, we are focusing exclusively on Evolve, Evolve Rat, Evolve Mouse, and we're going to focus all of our efforts on that.

That doesn't mean that we won't expand into some of these other areas. In some adjacent areas, maybe, as we go on. But we felt it very important at this time to really put that focus on the products we have and getting them out into the marketplace and get our trials going. And so that was all part of the plan. And as we go along, we may add things. But right now, we're really focused on -- laser focused, I should say, on Evolve and making sure that we give it everything that is needed in the marketplace to succeed.

All right. And barring any last-minute questions, we'll leave this probably the last question. You spoke on this, but would you please clarify your statement about marketing through major brick-and-mortar retailers?

Well, I mean, I think what we're referring to there is that major brick-and-mortar retailers are interested in our product. We have some discussions that are ongoing. And as I mentioned, we hope to have some announcements on that in the coming couple of months.

All right. Very good. I am showing no additional questions here. I think we hopefully hit on everything. Joel, I will turn it back over to you for any closing remarks here.

Yes. We're very happy with the quarter. We're happy with the year-to-date progress, and we believe our very best months are ahead of us this year. So stay tuned. We've got a lot of things that are in process and other things that are upcoming. So appreciate all of your support and your interest in SenesTech.

The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect your lines at this time.