Q4 2023 SenesTech Inc Earnings Call
Operator: Good afternoon, and welcome to the Senestech Reports fourth quarter and fiscal year 2023 financial results conference. All participants will be in listen only.
Good afternoon, and welcome to the centers Tech reports fourth quarter and fiscal year 2023 financial results conference call. All participants will be in listen only mode should you need assistance. Please signal conference specialist by pressing the Starkey followed by zero.
Operator: If you need assistance, please signal a conference specialist by pressing the star 1 button, followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, press star then 1 on your telephone keypad. To withdraw from the question queue, please press star then 0.
After todays presentation, there will be an opportunity to ask questions to ask a question Press Star then one on your telephone keypad to withdraw from the question queue. Please press Star then two please note. This event is being recorded.
Operator: Please note that this event is being recorded. I'd now like to turn the conference over to Robert Bloom, who will, please go ahead. All right. Thank you very much, Anthony. And good afternoon, everyone.
I'll now like to turn the conference Robert Blum with Lytham partners. Please go ahead.
Alright, Thank you very much Anthony and good afternoon, everyone and thank you for joining us today as Anthony mentioned to discuss <unk> 2023 financial results for the period ended December 31, 2023 with us on the call today are Joel front, the company's Chief Executive Officer, and Tom Chesterman.
Robert Bloom: Thank you for joining us today, as Anthony mentioned, to discuss Senestech's 2023 financial results for the period ended December 31, 2023. With us on the call today are Joel Fruent, the company's Chief Executive Officer, and Tom Chesterman, Senestech's Chief Financial Officer. At the conclusion of today's prepared remarks, we'll open the call for a question and answer session. 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.
So north, Texas, Chief Financial Officer at the conclusion of today's prepared remarks, we will open the call for a question and answer session.
Before we begin with prepared remarks, we submit for the record. The following statement statements made by the management team of <unk>. During the course of this conference call may contain forward looking statements within the meaning of section 27, a of the Securities Act of 1933 as amended and section 21 E of the Securities Exchange Act of 1930.
Four 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.
Robert Bloom: 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 risk 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 Exchange Commission. All forward-looking statements contained in 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 Joel Fruent, Chief Executive Officer, Senestech. Joel, please proceed. Good afternoon, everyone.
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 Exchange Commission.
All forward looking statements contained during this conference call speak only as of the date on 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 the 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 Freeland, Chief Executive Officer, So NASDAQ Joel. Please proceed.
Good afternoon, everyone. Thank you all for joining us today for our year end conference call.
Joel Fruent: Thank you all for joining us today for our year-end conference. During 2023, we executed several key initiatives that will be the foundation to drive growth for Senestech into the future. Most notable was the development of Evolve, our all new soft bait fertility control product that was launched at the end of 2023. As a reminder, Evolve has similar efficacy to ContraPest.
During 2023, we executed several key initiatives that will be the foundation to drive growth for us and that's taking into the future. Most notable was the development of your ball of our all new soft baked fertility control product that was launched at the end of 2023.
As a reminder, evolve has similar efficacy to Contra pass.
Joel Fruent: However, Evolve has three distinct benefits to end users. It has a one-year shelf life that allows for extensive distribution opportunities. It comes in a solid form that is more familiar to technicians and consumers and easier to deploy, and it is offered at a competitive price to traditional rodenticides.
However, evolve has three distinct benefits to end users.
One year shelf life that allows for extensive distribution opportunities.
It comes in a solid form that is more familiar to technicians and consumers and easier to deploy.
And it's offered as they can.
Pellet price to traditional Rodenticides.
Joel Fruent: This has dramatically increased our reach in terms of markets and geography. It is evident from the initial response that Evolve is what retailers and distributors have been looking for from Senestech. One major proof point is our recent approval as a vendor for a leading network of hardware stores, a network comprising over 4,500 locations, just the first few weeks after Evolve's introduction.
This has dramatically increased our reach in terms of markets and geographies.
It is evident from the initial response that evolved as what retailers and distributors have been looking for from so that's that.
One major proof point is our recent approval as a vendor for a leading network of hardware stores network comprising over 4500 locations.
Just the first few weeks after evolves introductions.
Joel Fruent: They have become the first of many major retailers that will carry our products to target the do-it-yourselfer and broader consumer market. We expect more to come on board in the months to come. To penetrate the retail market quickly, we are in final negotiations with a manufacturers rep firm that specializes in retail relationships to represent us with these major national and regional retailers in hardware and home supply, industrial supply, and agricultural supply. Another major advancement has been an agreement with a global leader in irrigation solutions for sustainable open field agriculture. Open field agriculture presents unique challenges to rodent pest control. Poisons cannot be broadcast, and trapping is expensive and of limited efficacy.
They have become the first in many major retailers that will carry our products to target the do it yourself or and broader consumer market.
We expect more to come on board in the months to come.
Okay penetrate the retail market quickly.
We are in final negotiations with the manufacturer rep firm that specializes in retail relationships to represent us with these major national and regional retailers in hardware and home supply industrial supply and agricultural supply.
Another major advancement has been an agreement with a global leader in irrigation solutions for sustainable open field agriculture.
Open field agriculture presents unique challenges to road in pest control.
It cannot be broadcast trapping is expensive and have limited efficacy.
Joel Fruent: DeValve SoftBait, with its minimum risk, its reasonable cost, and its proven efficacy, provides a new tool for this widespread market. Our partner has selected one of their preferred customers for the initial deployment, a dairy and almond producer in California. Their stated goal is to ultimately expand their offering of Evolve to their customers across the globe as they learn more about Evolve's potential. Agriculture is a huge, underserved market. We have another potential customer in sugarcane production. They have over $10 million in annual losses to rat activity, destroying sections of their fields, and choose not to use poisons in their fields.
The valve South Bay with its minimum risk, it's reasonable cost and its proven efficacy.
The new tool for this widespread market.
Our partner has selected one of their preferred customers for the initial deployment of dairy and I'll make producer in California.
Their stated goal is to ultimately expand their offering of a ball to their customers across the globe as they learn more Bobby Bob's potential.
Agriculture is a huge underserved market, we have another potential customer in sugarcane production they have over $10 million in annual losses to rat activity, destroying sections of their fields and choose not to use poisons in their field.
Joel Fruent: They will start working with Evolve, broadcasting it throughout their fields, reducing the population significantly, and thus cutting down those economic losses. Also, in the agricultural space, we entered into an agreement with Poppy Enterprises, a distributor and pest management firm focused on the grain management market serving the Upper Midwest. Grain storage operations have unique challenges when it comes to rodent pest control.
They will start working with the ball broadcasting it throughout their fields, reducing the population significantly and that's cutting down those economic losses.
Also in the agricultural space, we entered into an agreement with Poppy enterprises, a distributor and pest management firm focused on the grain management market.
The upper Midwest.
Grain storage operations have unique challenges when it comes to erode in pest control.
Joel Fruent: Again, poisons are highly regulated and are tricky to use without contamination, and traps alone are expensive and time-consuming to maintain. The non-poison Evolve SoftBait provides a new tool for this widespread market, and in combination with some traps, will establish an effective non-poison IPM program. Another key proof point of how Evolve expands our market opportunity is the rapid number of new international distributors we have brought on board over the past few months for geographies outside the U.S., including Hong Kong, Macau, UAE, Singapore, Australia, New Zealand, and the Netherlands. Importantly, these agreements typically include initial orders and annual minimums for geographic exclusivity. In fact, our first pallet shipments have just arrived in Hong Kong and Singapore. The big question I know a lot of investors have been asking is what will all of this mean for sales and reducing our burn rate?
Again poisons are highly regulated and are tricky to use without contamination and trips alone are expensive and time consuming to maintain.
The non poison he bought South Bay provides a new tool for this widespread market and in combination with some travel will establish an effective non poison IPM program.
Another key proof point on how we evolve expands our market opportunity is the rapid number of new international distributors. We have brought on board over the past few months.
For geographies outside the U S, including Hong Kong, Macau, UAE, Singapore, Australia, New Zealand and the Netherlands.
Importantly, these agreements typically include initial orders and annual minimums for geographic exclusivity.
In fact, our first pellets shipments have just arrived in Hong Kong and Singapore.
Big question I know a lot of investors have been asking us what will all of this mean for sales and reducing our burn rate.
Joel Fruent: What it can report is that, as of mid-February, total revenues for Senestech have grown more than 80% compared to the same period in 2023. This is being driven by orders for EVAL, which represented more than 50% of year-to-date 2024 total revenue and includes international revenue for the first time in the company's history. It is increasingly clear that Evolve is a game-changing product for Senestech that will be a key driver of our sales growth in 2024. Transitioning the conversation a bit, we have laid out a few key imperatives to drive growth. One must offer the customers more choices, which Evolve clearly does; another way to sell better is to offer more choices.
What I can report is that in 2020 four as of mid February total revenues first domestic.
It's growing more than 80% compared to the same period in 2023.
This is being driven by orders for a ball, which represented more than 50% of year to date 2020 for total revenue.
It includes international revenue for the first time in the company's history.
It is increasingly clear that evolve as a game changing product person that stack that will be a key driver of our sales growth in 2024.
Transitioning the conversation a bit we have laid out a few key imperatives to drive growth.
One was to offer the customers more choices, which you Bob clearly does.
Another was to sell better in some cases this means improving the infrastructure we have.
Joel Fruent: In some cases, this means improving the infrastructure we have. In other instances, it means bringing in experts in areas where we need additional skills. The manufacturer's rep agency I mentioned is an example.
In other instances it means bringing in experts in areas, where we need additional skills.
And manufacturers Rep Agency I mentioned as an example.
Joel Fruent: In another example, we are exploring ways to increase our e-commerce capabilities and reach. To that end, we are in discussions to expand our e-commerce offerings with an industry-leading online distributor of pest control products, with an agreement expected soon. We want to be proactive in addressing this channel and believe that partnering with a dedicated online retailer will be an efficient way to boost revenue going forward. Due to the early success of Evolve for rat fertility control, it is becoming clear that there is a need to develop a product for the fertility control of mice.
In another example, we are exploring ways to increase our ecommerce capabilities and reach to that end. We are in discussions to expand our e-commerce offerings with.
With an industry, leading online distributor pest control products and the agreement expected soon.
We want to be proactive in addressing this channel and believe that partnering with a dedicated online retailer will be an efficient way to boost revenue going forward.
Due to the early success of evolved for Red fertility control is becoming clear that there is a need to develop a product for fertility control.
Yes.
Joel Fruent: We see this as a substantial opportunity that is equal in market size to the rat market. Our product development team has been hard at work and is currently enhancing the form factor and dosing of the unique soft bait contraceptive for mice and has indicated that a product should be ready to market by mid-2024. We brought Evolve for rats to market in less than a year.
We see this as a substantial opportunity that is equal in market size to the rat market.
Our product development team has been hard at work and is currently enhancing the form factor and dosing of the unique softbank contraceptive for mice and have indicated that our products should be ready to market by mid 2024.
We brought evolved for rats to market in less than a year now to follow that up with a unique mouse product required a major shift in strategy or sense of urgency.
Joel Fruent: And now to follow that up with a unique mouse product required a major shift in strategy, a sense of urgency, and improved utilization of resources. We have been up to the challenge. Again, I look forward to sharing more with you on our upcoming call. Looking back at 2023, we made some great progress in several areas, which I believe set the stage for future growth, namely our product development process and the launch of Evolve. We have also made significant improvements to many of the processes and procedures to drive efficiency across the organization. To give you more detail on that and on the financials, I will turn the call over to Tom. Tom?
And improved utilization of resources.
We have been up to the challenge.
Again, I look forward to sharing more with you on our upcoming calls.
Looking back at 2023, where we have made some great progress in several areas, which I believe set the stage for future growth.
Namely our product development process and the launch of the ball.
We also made significant improvements to many of the processes and procedures that drive efficiency across the organization.
To give you more detail on that in the financials, Let me turn the call over to Tom Tom.
Tom Chesterman: Thank you, Joel. As a reminder to our investors, the press release is available on our website in the investor relations section, as will be a recording of this presentation. Furthermore, we have just filed our 10K, so I'm just going to touch on some of the high points right now. Revenue during the year was $1.2 million, an increase of 17% compared to the $1 million in 2022. For the quarter, revenue was $295,000 compared to $297,000 in the year-ago fourth quarter.
Thank you Joel.
A reminder to our investors. The press release is available on our website in the Investor Relations section as we will be a recording of this presentation.
Further we have just filed our 10-K, so I'm just going to touch on some of the high points right now.
Revenue during the year was $1 2 million, an increase of 17% compared to the $1 million.
2022.
For the quarter revenue was 295000 compared to 297000 in the year ago fourth quarter.
Tom Chesterman: During the quarter, we saw a pullback in our e-commerce sales. To some extent, this was caused by customer distraction with the Evolve soft launch limited to key customers. As Joel mentioned, this needs to be an area of focus, and we can use the expertise of an industry-leading online distributor of pest control products to outsource our e-commerce capability. Gross profit during 2023 will be approximately $539,000 or 45% of total revenue compared to approximately $464,000 or 45% of total revenue last year. For the fourth quarter, gross profit was $129,000 or 44% of total revenue compared to $116,000 or 39% of total revenue in the year-ago fourth quarter. The gross profit margin excluded the impact of new product introductions and was 49%.
During the quarter, we saw a pullback in our ecommerce sales.
To some extent this was caused by customer distraction with you of all soft lunch limited too.
Two key customers.
As Joel mentioned this needs to be an area of focus and we can use the expertise and industry, leading online distributor of pest control products to them to outsource our e-commerce capabilities.
Gross profit during 2023 was approximately 539000 or 45% of total revenue compared to approximately 464000 or 45% of total revenue last year.
For the fourth quarter gross profit was 229000 or 44% of total revenue compared to 116000 or 39% of total revenue in the year ago fourth quarter.
The gross profit margin excluded the impact from new product introductions.
And what was.
It was 49% that's an increase of 10 points over the year.
Tom Chesterman: That's an increase of 10 points over the year. One important note I want to put out there is that due to the success of Evolve, we have had to expand our manufacturing capability. As a point of reference, we were initially manufacturing about 200 pounds per day of bulbs. Today we are at about a thousand pounds per day and plan to double again in the coming months to meet demand, and that's with a single shift. To this point, Evolve is offered in 6- and 12-pound pails; however, we are launching a new 3-pound pouch for the consumer market, which we plan to begin shipping in March.
One important note I want to put out there is that due to the success of it all we have had to expand our manufacturing capabilities as a point of reference we were initially manufacturing about 200 pounds per day of evolve today. We are at about 1000 pounds per day and plan to double again in the coming months to meet demand.
And that's with a single shift.
To this point evolve is offered in six and 12 town Pails. However, we are launching a new three pound pouch for the consumer market.
We plan to begin shipping.
In March.
Tom Chesterman: To account for the initial source of raw materials and finished goods, we have expanded our warehouse space in Phoenix. This may result in a dip in margins in the near term, but we would expect a ramp as capacity becomes more optimized. Ultimately, whereas Contra Fest brings in a gross margin of about 50%, Evolve has the potential to earn 60% or more. Operating expenses for the year were $8.2 million, a decrease of nearly $2 million compared to the $10 million in 2022.
To account for the initial source of raw materials and finished goods, we have expanded our warehouse space in Phoenix.
This may result in a dip in margins in the near term, but we would expect a ramp as capacity becomes more optimized ulf.
Ultimately, we're whereas contract first springs, and gross margin of about 50%. If all if has the potential to earn 60% one more.
Operating expenses for the year were $8 2 million.
Decrease of nearly $2 million compared to the $10 million in 2022.
We've made numerous changes in our operating structure, bringing opex for the year down from $10 million in 2022, and this resulted in a $1 6 million dollar improvement for the year in our adjusted EBITDA.
Tom Chesterman: We made numerous changes in our operating structure, bringing OPEX for the year down from $10 million in 2022, and this resulted in a $1.6 million improvement for the year in our adjusted EBITDA. The company remains committed to driving operational efficiencies with a goal of removing another million dollars out of annual operating expenses. The net loss during 2023 was $7.7 million compared to a net loss of $9.7 million in 2022, an improvement of $2 million. Adjusted EBITDA loss, which is a non-gap measure of operating performance.
The company remains committed to driving operational efficiencies with a goal of removing another million dollars out of annual operating expenses.
Net loss during 2023 was $7 7 million compared to a net loss of $9 7 million in 2022, an improvement of $2 million.
Adjusted EBITDA loss, which are non-GAAP measure of operating performance.
For 2023 was $6 9 million compared to $8 5 million in 2022 and improvement and one $1.5 million as I mentioned.
The quarterly adjusted EBITDA loss was the smallest in company history as we strive to achieve our goal of achieving positive operating cash flow as soon as possible in the coming quarters.
Tom Chesterman: 2023 was $6.9 million compared to $8.5 million in 2022, an improvement of $1.5 million, as I mentioned. The quarterly adjusted EBITDA loss was the smallest in company history as we strive to achieve our goal of achieving positive operating cash flow as soon as possible in the coming quarter. Cash cashed at the end of December 2023 was $5.4 million. We improve the balance sheet through a $5 million public offering of common stock and warrants in November of 2023, of which we saw $1 million, and Warren's exercise so far. We are optimistic that as we continue to execute our business plan, the remaining warrants will be a source of cash over the coming quarter. With that, operator, let me now turn it over to you for any questions. Anthony, we will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone key. If you're using a speakerphone, please pick up your handset before pressing the keys.
Cash at the end of December 2023 was $5 $4 million.
We improved the balance sheet through a $5 million public offering of common stock and warrants in November of 2023.
Which we saw $1 million.
In warrants exercised so far.
We are optimistic that as we continue to execute our business plan that the remaining warrants will be a source of cash over the coming quarters.
With that operator, let.
I will now turn it over for any questions.
Anthony.
We will now begin the question and answer session.
To ask a question you May press Star then one your telephone keypad.
Using a speakerphone please pick up your handset before pressing the keys.
To withdraw from the question queue. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Our first question will come from Amit Dayal with H C Wainwright.
I'll go ahead.
Thank you guys. Congratulations on all the progress you've made this year.
With respect to you know have good expectations with Tony brings more I know you commented the 80% you got so far are encouraging.
And Tony Kenney slow compared to go into any three.
Operator: To withdraw from the question queue, please press star then 2. At this time, we'll pause momentarily to assemble our questions. Our first question will come from Amit Dayal with HC Wayne. You may now go ahead. Thank you, guys. Congratulations on all the progress you've made this year.
Could this potentially accelerate.
Consumer offering just any color on how we should think about.
Modeling for 2024.
These distribution agreements now in place and you know this new I guess.
From a market. We won was who are coming into play for you.
Amit Dayal: With respect to growth expectations for 2024, I know you commented on 80% year-over-year growth so far in 2024 compared to 2023. Could this potentially accelerate with the consumer offering? Just any color on how we should think about modeling for 2024 with all of these distribution agreements now in place and this new consumer market for Evolve also coming into play for you? Yeah, great question. And I can expand on that. This is Joel.
Yeah, Great question and I can expand on that this is Joel.
One of the key things with our product is that we have to get the state a.
Registration state approvals. So right now we have 30 states that we can sell them in the United States, We expect to have all 50.
Sometime in the second quarter, hopefully by the end of the second quarter for sure. So we started out didn't were not able to sell everywhere. So that's one factor certainly.
Joel Fruent: You know, one of the key things with our product is that we have to get state registration and state approval. So right now, we have 30 states that we can sell in the United States. We expect to have all 50 sometime in the second quarter, hopefully by the end of the second quarter for sure.
Certainly the consumer market and the retail space is a huge opportunity that market is estimated at two.
250 to 300 million dollar.
Dollars for rodenticide products.
Joel Fruent: So we started out, and we're not able to sell everywhere, so that's one factor. Certainly, the consumer market and the retail space is a huge opportunity. That market is estimated at, you know, 250 to 300 million dollars for rodenticide products. So just being able to step into that marketplace is very significant in itself. So you can see that with those two things lining up and with our international expansion, you know, getting six exclusive distributors in the span of really 60 days here leads us to believe there are a lot of others that we'll follow in behind over the next six months. So you combine all those three things together, and yeah, there's a major upside to the fact that we now have a product that can go through distribution on a significant level. So we have distributors that we're working with domestically and, certainly, those internationally. So we have the product, we know its efficacy, and we have a lot of expertise that's out there now with the product. So we're really excited about the upside potential. Thank you for that, Joe.
So just being able to step into that marketplace is very significant in itself. So you can see that with those two things lining up and with our international expansion.
You know getting six exclusive distributors in the span of really 60 days here leads us to believe there are a lot of others that will will follow in behind over the next six months. So you combine all those three things together and yeah. There's a there's a major upside with the.
The fact that we now have a product that can be going through distribution on a significant level.
So we have distributors that were working with domestically.
And certainly those internationally. So we have the product we have we know its efficacy and we have a lot of expertise. That's out there now are with the products. So we're really excited about the upside potential.
Thank you for that Joe.
Joel Fruent: On the margins front, Tom commented about expecting a little bit of a dip in the near term as they sort of, you know, expand their presence in the market. But by the end of the fourth quarter, do you expect it to be higher? then 2023 or similar levels. Well, we certainly expect it to be higher than that, you know, as Tom had mentioned that the margins for Evolve are probably a thousand base points higher than what they are for ContraPest.
On the margins front, Tom commented about.
Expecting a little bit of a dip in the near term as you sort of.
Expand your presence in the market, but by the end of the fourth quarter do you expect to be higher.
Then.
So anything three or similar levels.
Well, we certainly expect it to be higher.
You know as Tom had mentioned that the margins.
Margins for Eval up R. R.
Probably 1000 basis points higher than than what they are for country past and we've got a we got a ramp it and get it up there and some of the startup costs, we've had but yeah, but by the fourth quarter, we expect to see margins that are closer to the 60% then to the 50.
Joel Fruent: And we've got to ramp it up and get it up there, and some of the startup costs we've had. But yeah, by the fourth quarter, we expect to see margins that are closer to 60% than to 50. Amit Dayal, Senestech.com, Yeah, so basically what we're doing is outsourcing some of the assistance that we need to really make it expand using some of their resources that they have that we just don't have in house right now. So they approached us with a proposal on how we could do e-commerce better. And we think that we can double our e-commerce business, but we've got to have the right resources behind it. And we think that they can provide the right resources so that we can grow the business on the e-commerce side as well. But this doesn't mean sort of any exclusivity with this entity, right? I mean, this is just a service provider for you guys more than any other sort of "exclusive." Okay, Thank you. That's all I have, Diaz.
Understood just one last one for me guys.
My comments about the e-commerce side of the distribution did I hear this correctly that you are sort of outsourcing it to a distributor.
Could just clarify you know how you are setting up the e-commerce effort going forward.
Yes, so basically what we're doing is we're outsourcing some of the the the assistance that we need to really make it expand using some of their resources that they have that we just don't have in house right now so they approached us with a.
Our proposal and how we could do the e-commerce better and you know we think that we can double our ecommerce business, but we got to have the right resources behind it and we think that they can.
Can provide the right resources. So that we can we can grow the business on the ecommerce side as well.
But this doesn't mean sort of any exclusivity does deteriorate I mean this is just a.
Service for lineups, we raised more than any.
The other sort of yeah. The exclusive okay understood absolutely. Thank you.
Joel Fruent: I appreciate it. Thank you. Again, if you have a question, please press star then 1. Anthony, this is Robert Bloom here.
That's all I appreciate it thank you so much.
Okay.
Again, if you have a question. Please press Star then one.
Hi, Anthony this is Robert Blum here I've got a few questions. While we wait to see if there are additional people that are are interested in queuing up here that I'd like to make sure get addressed.
Robert Bloom: I've got a few questions while we wait to see if there are additional people that are interested in queuing up here that I'd like to make sure get addressed. First question: there's been a flow of distribution agreements coming in, several of which have had annual minimums, but can we get some clarity on the size of these orders? Are the required minimums in sort of tens of thousands of dollars, hundreds of thousands? Any sort of average contract size or minimums that you could provide would be greatly appreciated.
First question here been a flow of distribution agreements coming in.
All of which have had annual minimums, but can we get some clarity on the size of these orders are the required minimums in sort of a tens of thousands of dollars or hundreds of thousands and.
And he sort of average contract size or minimums are that you could provide would be greatly appreciated.
Yes, so each of those agreements that we have.
Joel Fruent: Yes, so each of those agreements that we have, they represent different territories, different potentials. But typically, for us to get involved in an exclusive arrangement, we want to have a local source of product available sooner rather than later. And so our initial orders require a one pallet minimum order, which is about $10,000, roughly.
Representing a different territories different potentials.
But typically for us to get involved in an exclusive arrangement is we want a they have a local source of product available sooner rather than later and so our initial orders require a one pallet minimum order, which is about 10.
<unk> thousand dollars roughly.
Joel Fruent: And then we have annual minimums that we set up as well, and those start at $100,000. So really, what we're doing is we're wanting to put distributors in place that feel really strong about the product and about the market and are willing to bring the product in. So we're looking to do that in a number of different situations and really help them grow over time. All right, perfect. Next question here: it seems that several of these new contracts are contingent on regulatory approval. Has Senestech experienced any hurdles getting EVOLVE approved in any countries? If so, what is the plan to overcome those hurdles? Well, not really, no.
And then we have annual minimums that we set up as well as those started $100000. So really what we're doing is we're.
Wanting to put distributors in place that feel really strong about the product and about the market and are willing to bring the product in.
So we're looking.
Looking to do that in a number of different situations and really help them grow over time.
Alright perfect.
Next question here it seems that several of these new contracts are contingent on regulatory approval has NASDAQ experienced any hurdles getting evolve.
Approved in any countries.
If so what is the planned over overcome those hurdles.
Well not really no I think the initial.
Joel Fruent: I think the initial distribution that we've signed up, the distributors themselves are very familiar with the regulatory process in their countries and are confident that they can move that forward. The key is being able to partner with distributors who know how to navigate the regulatory environment. And they take the lead.
Distributions that we signed up.
The distributors themselves are very familiar with the regulatory process in their countries and are confident that they can move that up.
Forward so.
The key is being able to partner with our distributors, who know how to navigate the the regulation and they.
They take the lead we work with them on and getting the approvals and if there are a few countries out there that we've just put on the backburner because they have some really.
Joel Fruent: We work with them on getting the approvals, and there are a few countries out there that we've just put on the back burner because they have some really onerous regulatory processes, and initially, we've targeted the markets that we feel very comfortable getting the product approved and subsequently being used. All right, great. The next question we have here is, does Senestech have the manufacturing capacity today to fill these orders? If not, what does the manufacturing timeline over the next few quarters look like? Tom, why don't you take that one?
Onerous regulatory processes and.
Initially we targeted the markets that we feel very comfortable of getting the product approved and subsequently being used.
Alright, Great next question. We have here are the sonesta have the manufacturing capacity today to fill these orders.
Now what does the manufacturing timeline over the next few quarters look like.
Not much to take that one.
Tom Chesterman: Sure. Yes, we have the capacity. We were confident that the demand would be there for Evolve and would grow quickly, so we designed our processes to be very easily scalable.
Sure, Yes, yes, we have the capacity we were confident that the demand would be therefore evolve.
Would grow quickly so we design our processes to be very easily scalable. So we don't have a we don't have any any worries there.
Tom Chesterman: So we don't have any worries there. Okay, great. Two more questions here.
Okay, great two more questions here us enough Tech are raised a few million dollars through warrants recently and sort of as you hope to enter this rapid growth phase. This year and next does the company plan to raise capital by continuing to issue stock warrants or will there start adding.
Tom Chesterman: Senestech raised a few million dollars through warrants recently. And sort of, as you hope to enter this rapid growth phase this year and next, does the company plan to raise capital by continuing to issue stock warrants? Or will they start adding debt to the balance? Yeah, maybe I'll take that one too. It may be a bit early for cash flow-based debt, but we're already using asset-based financing for production equipment requirements. In addition, the financing we recently did had $5 million worth of short-term warrants, which have to be exercised in about a year, or they expire.
Debt to the balance sheet.
Yeah, maybe I'll take that one too.
Maybe a bit early for cash flow based debt, but we're already using asset based financing for our production equipment requirements.
In addition, the financing we recently did have $5 million worth of short term warrants, which have to be exercised in about a year or they expire.
Tom Chesterman: We have found that these short-term warrants are an excellent source of cash without having to do other deals. Okay, great, and final question here: Has any competition with Evolve entered the market involving the active ingredient? Anything you can discuss on that topic?
We have found that these short term warrants are an excellent source of cash without having to do other deals.
Okay, Great and final question here.
Any competition with evolve involving the active ingredient entered the market anything you can discuss on that topic.
Joel Fruent: No, we haven't seen anything, any companies, any other products enter the market. We have a patent pending on Evolve. ContraPest has issued patents around it, so we don't believe that there will be any competition in the near term for sure. All right, fantastic. That's the questions we have here on this side.
No we haven't seen anything any companies are any other products to enter the market, we have a patent pending any balls.
Proposed is.
Issued patents surround it so.
I believe that there'll be any competition in the near term for sure.
Alright fantastic that's our that's the questions we have here on this side anthem.
Joel Fruent: Anthony, operator, I'll turn it back over to you. This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks. Sure, thank you. Our goal for 2024 is really all about sales execution while remaining innovative through the introduction of new and innovative products to the market, such as the mouse product we talked about. My excitement level is as high as it has been since I joined the company. I believe we have the right mix of product offerings and team member enthusiasm to fully attack the large and growing rodent control market, a market that is desperately in need of innovation. And fertility control is that innovation, and Senestech is clearly leading the way.
Anthony Operator, I'll turn it back over to you.
This concludes our question and answer session.
I'd like to turn the conference back over to management for any closing remarks.
Sure. Thank you.
Our goal for 'twenty 'twenty four is really all about sales execution, while remaining innovative through the introduction of new and innovative products to market such as the most private we've talked about.
My excitement is as high as it has been since I joined the company I believe we have the right mix of product offerings and team member enthusiasm to fully attack the large and growing road building control market Mark.
That is desperately in need of innovation and fertility control is that innovation and so that's tech is clearly leading the way.
Joel Fruent: So we thank you for all your continued support. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
So we thank you for all your continued support.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.