Q2 2024 SenesTech Inc Earnings Call

Good afternoon and welcome to the Fences Tech Reports second quarter fiscal year 2024 results.

Speaker Change: All participants will be in a list of only modes. Do you need any assistance to a signal or conference specialist at Press in the Stake, Followed by Zero?

As of today's presentation, there will be an opportunity to ask questions. To ask a question, you will request staff in one of the attached phone. To withdraw your question, please request staff in two.

Operator: All participants will be in a listen-only mode. Should you need any assistance, please signal a conference specialist by pressing the star key, followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your touch-tone phone. To withdraw your question, please press star, then 2. Please note that this debate has been recorded. I would now like to turn the conference over to Mr. Robert Blum, Liz, and Partners. Please go ahead.

Speaker Change: Please note the subpoena is being recorded.

Speaker Change: I would now like to turn the conference over to Mr. Robert Blum, listen partners, please go ahead.

Robert Blum: All right. Thank you so much, Rachel. And thank you all for joining us today to discuss Senestech's second quarter 2024 financial results for the period ending June 30th, 2024. With us on the call today are Mr. Joel Fruendt, the company's Chief Executive Officer, and 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. If you dialed into the call through the traditional teleconference line, as the operator indicated, please press star, then one to ask a question.

Robert Blum: Alright, thank you so much, Rachel, and thank you all for joining us today to discuss some aspects.

Robert Blum: Second quarter, 2024 financial results.

Speaker Change: for the period ending June 30th, 2024.

Speaker Change: with us on the call today from 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.

Speaker Change: If you dialed into the call through the traditional teleconference line, as the operator indicated, please press star then 1 to ask a question.

Robert Blum: 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, and we will do our best to get to as many questions as possible.

Speaker Change: 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 and we will do our best to get to as many questions as possible. Before we begin with prepared remarks, we submit for the record the following statement.

Robert Blum: 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.

success-tector: Statements made by the management team of success-tector in the course of this conference call, may contain forward-looking statements within the meaning of Section 27A of the Securities Act 1933, is amended and Section 21E of the Securities Exchange Act 1934 is amended.

Speaker Change: and such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Robert Blum: 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 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 our filings with the Securities Exchange Commission.

Speaker Change: for looking statements, subscribe future expectations, plans, results or strategies, and are generally preceded by words such as May, Future, Plan, or Plan, Will, or Should, expected anticipates draft eventually or projected.

Speaker Change: 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.

Speaker Change: and including the rest that actually results me different material from those projected in the forward-looking statements as a result of various factors and other risks identified in our filing with the Security Exchange Commission.

Robert Blum: 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 Fruendt, Chief Executive Officer, Senestech. Joel, please proceed.

Speaker Change: 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.

Speaker Change: 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.

Speaker Change: With that said, let me turn the call over to Joel Fruendt, Chief Executive Officer, this is an Aztec, Joel, please proceed. Thank you, Robert, and good afternoon, everyone. I'm speaking with you all from the floor of the Ace Hardware Fallbuying Market.

Joel Fruendt: Thank you, Robert, and good afternoon, everyone. I'm speaking with you all from the floor of the Ace Hardware Fall Buying Market. Where we are exhibiting the involved product line to over 7,700 participants, representing over 5,000 stores, as well as over 400 buyers from Ace's Wholesale Business, who sell to over 700 non-Ace stores. So far, the response from buyers has been dramatic, exceeding our initial expectations. Some of the reactions we have received include such comments as, "This is a perfect alternative for my customer."

Speaker Change: where we are exhibiting the Evolve product line to over 7,700 participants representing over 5,000 stores, as well as over 400 buyers from ACE's wholesale business who sell to over 700 non-ACE stores.

Speaker Change: So far, the response from buyers has been dramatic, exceeding our initial expectations. Some of the reactions we have received include such comments as, This is a perfect alternative for my customers.

Joel Fruendt: I have a lot of demand for more Earth-friendly alternatives, and I am so happy that there are now alternatives to poison. I look forward to sharing more with you in future calls on the progress you are making with ACE. But let's get to the result.

Speaker Change: I have a lot of demand for more Earth-friendly alternatives.

Speaker Change: And I am so happy that there are now alternatives to poisons.

Speaker Change: I look forward to sharing more with you in future calls on the progress you are making with Ace. But let's get to the results.

Joel Fruendt: The second quarter results highlighted yet another quarter of record top line growth with 62 percent growth year-to-date versus the same period in 2023, as well as strong operational improvements across numerous key metrics, which have helped to reduce our cash firm as we look to achieve our near-term objective of profitability. Tom will touch more on the financial progress in a moment, but let me focus my discussion on our progress and accomplishments and what that means for the near future.

Speaker Change: The second quarter results highlighted yet another quarter of record top-line sales with 62% growth year-to-date versus the same period in 2023.

Speaker Change: as well as strong operational improvements across numerous key metrics, which have helped to reduce our cash burn as we look to achieve our near-term objective of profitability.

Speaker Change: Tom will touch more in the financial progress in a moment. Let me focus my discussion on our progress and accomplishments.

Joel Fruendt: First, on the product development side, we launched Evolve, a revolutionary fertility control product formulated for the control of rat pests, otherwise known as rat birth control, at the beginning of the year. EVOLVE is designated by the EPA as a minimum risk product exempt from federal registration requirements but still subject to state regulations. I'm pleased to report that Evola is now approved for sale in 44 states. This past quarter, we completed an efficacy trial of the product and an Arizona University, demonstrating efficacy and sustainability of Ebola.

Tom Chesterman: and what that means for the near future.

Tom Chesterman: First, on the product development side, we launched Eval, a revolutionary fragility control

Tom Chesterman: otherwise known as rat birth control at the beginning of the year. EVOLVE is designated by the EPA as a minimum risk product exempt from federal registration requirements but still subject to state regulations.

Tom Chesterman: I am pleased to report that he valve is now approved for sale in 44 states.

Tom Chesterman: This past quarter, we completed an efficacy trial of the product at an Arizona University, demonstrating the efficacy and sustainability of EVAL. This study was required by some of the states and international jurisdictions.

Speaker Change: The results are better than an expected show in a initial 61% reduction in liver size after just one breeding round and a 90% reduction over the course of 12 months.

Tom Chesterman: Remember, two rats or mice can become 15,000 in just one year. So this represents a substantial reduction in population.

Joel Fruendt: Some of our early customers are now conducting third-party field trials, including a trial in a Florida sugarcane field, a university trial in a large housing area, and a California DPR-funded study on sustainable alternatives to rodenticide use. Also, on the product development side, we launched Bob Mous. They product uses the same active ingredient, but specifically for mice.

Speaker Change: Some of our early customers are now conducting third-party field trials including a trial in the Florida sugarcane fields, a university trial in a large housing area, and a California DPR funded study on sustainable alternatives to rodenticide use.

Tom Chesterman: Also on the product development side we launched Evolve Mouse, a product using the same active ingredient but specifically for mice.

Joel Fruendt: It is currently available for sale in 32 states. However, as with the RAD product, some states require an efficacy trial, which will shortly be underway at an Arizona university. Having a mouse-specific product effectively doubles our obtainable market. Moving from product development to commercialization, we have pivoted our selling efforts to a distribution model, where we target larger orders and a lower cost of selling. The valve product line allows the shift in a way that contrapesca does not through a substantial shelf life, ease of use, and lower installed costs.

Tom Chesterman: It is currently available for sale in 32 states.

Tom Chesterman: As with the Rad product, some states require an efficacy trial, which will be shortly be underway at an Arizona University.

Tom Chesterman: Having a mouse-specific product effectively doubles our obtainable market.

Tom Chesterman: Moving from product development to commercialization, we have pivoted our selling efforts to a distribution model where we target larger orders and a lower cost of selling effort.

Tom Chesterman: The Evolve product line allows this shift in a way that ContraPest could not, through a substantial shelf life, ease of use, and lower installed costs.

Joel Fruendt: We are continuing to expand into the international market, which is also only possible with the. Let me walk you through our progress in these areas, which will build on our success in the second and third quarters. Starting with the International Front, we have active agreements in 11 countries, and for them, we are either in pivotal trials to gain full registration in those countries, with our distributors working extensively with government agencies, or are already on the market.

Tom Chesterman: We are continuing to expand into the international market, which is also only possible with the Evolve product line.

Tom Chesterman: Let me walk you through our progress in these areas, which will build on our success in the second and third quarters.

Tom Chesterman: Starting with the International Front, we have active agreements in 11 countries. And for them, we are either in pivotal trials to gain full registration in those countries, with our distributors working extensively with government agencies.

Joel Fruendt: To remind you, for international distribution agreements, we require enough front purchase and increasing annual sales in order to maintain exclusivity. Moving now to agribusiness, which is one of the largest markets we are pursuing, interest from ag companies is increased. Both through direct discussions with very large agricultural operations, as well as acting as distributor. We currently have four stocking national distributors in this area and are onboarding two more. We continue to sell directly to larger agricultural customers, especially in California. An example of this would be a large almond producer who has now expanded its deployment into additional groves. Next to discuss is pest management.

Tom Chesterman: or are actually on the market. To remind you, for our international distribution agreements, we require an upfront purchase and increasing annual sales in order to maintain exclusivity.

Tom Chesterman: Moving now to agribusiness, which is one of the largest markets we are pursuing, interest from ag companies is increasing.

Tom Chesterman: Both through direct discussions with very large agricultural operations, as well as ag distributors. We currently have four stocking national distributors in this area, and are onboarding two more.

Tom Chesterman: We continue to help directly to larger agricultural customers, especially in California.

Tom Chesterman: An example of this would be a large almond producer who now is expanded its deployment into additional growth.

Joel Fruendt: This is a rapidly changing vertical as we pivot from reliance on direct sales to test management focused distributors. We are live with three of the top five national multi-location distributors, and we are onboarding them, of course. We have four more we are pursuing and expect to onboard this quarter.

Speaker Change: Next to discuss is pest management.

Tom Chesterman: This is a rapidly changing vertical as we pivot from reliance on direct sales to pest management focused distributors.

Tom Chesterman: We are live with three of the top five national multi-location distributors and around boarding a fourth.

Tom Chesterman: We have four more we are pursuing and expect to onboard them this quarter.

Joel Fruendt: This market requires a distribution model, as our direct sales team works extensively with the industry's top distributors to rapidly expand scale and coverage. Retail is next for discussion and very much on my mind right now. This is a market that takes a while to penetrate as the buyers here have a long buying decision cycle. This is also an area we tackle alone.

Tom Chesterman: This market requires a distribution model, as our direct sales team works extensively with the industry's top distributors to rapidly expand scale and coverage.

Tom Chesterman: Retail is next for discussion and very much on my mind right about this is the market that takes a while to penetrate as the buyers here have long buying decision cycles.

Joel Fruendt: We need experts. We now have agreements with five sales agencies with over 50 reps in the field and are selling to 23 retail co-op and big box chains representing over 50,000 locations. These accounts include the largest of the retailers, warehouses, and big box operators, including the one whose buying show I am currently speaking from. Transitioning now to e-commerce, we currently have our own website, and we are live on Amazon, the largest online marketplace. I'm the plant.

Speaker Change: This is also an airy, this is also an airy, we tackle, this is also an airy, we tackle.

Tom Chesterman: We need experts. We now have agreements with five sales agencies.

Joel Fruendt: with over 50 reps in the field and selling to 23 retail co-op and big box chains representing over 50,000 locations. These accounts include the largest of the retailers, warehouses, and big box operators.

Speaker Change: including the one he's buying show I am currently speaking from.

Joel Fruendt: Transitioning now to e-commerce, we have our own website and we are live on Amazon, the largest online marketplace on the planet.

Joel Fruendt: We are also on the website DIYPestControl.com. Many of the retailers addressed above also have their own e-commerce platform and make their stocking decisions separately. So the same rep agencies selling to retail and industrial also sell to these third-party e-commerce platforms. We have agreements to onboard two of the largest this quarter, including TraktorSupply.com and Walmart.com, and a targeted six more. These efforts of the past quarter will turn into revenue this quarter and next. To summarize, we are in a daily position to see accelerating growth due to the initiatives we put in place throughout the first half of 2024, including the launch of Evolve for Rats with key online retailers, the launch of our new Evolve mouse solution, ramp-ups of the recently secured distribution agreement, new product packaging options, and perhaps most importantly, the potential adoption will be followed by some of the nation's largest brick-and-mortar retailers with Placement by one or two of these retailers could result in our immediate transition to profitability. Let me turn it over to Tom now for a discussion of the numbers. Tom said,

Joel Fruendt: We are also on DIYPestControl.com

Joel Fruendt: Many of the retailers addressed above also have their own e-commerce platform.

Speaker Change: and make their stocking decisions separately.

Joel Fruendt: So the same rep age as he's selling to retail in industrial also sell to these third party e-commerce platforms.

Joel Fruendt: We have agreements to onboard two of the largest this quarter.

Tom: including tractorsupply.com and Walmart.com and have targeted six more.

Tom: These efforts of the past quarter will turn into revenue this quarter and next.

Tom: To summarize, we are ideally positioned to see accelerating growth due to the initiatives we've put in place throughout the first half of 2024.

Tom: including the launch of Evolve for Rats with key online retailers, launch of our new Evolve mouse solution, ramp-ups of recently secured distribution agreements.

Tom: New Product Packing Options.

Tom: and perhaps most importantly...

Tom: The potential adoption will be followed by some of the nation's largest.

Tom: Rick and Mortar retailers, with whom we have recently engaged. Placement by one or two of these retailers could result in our immediate transition to profitability.

Joel Fruendt: Let me turn it over to Tom now for a discussion of the numbers. Tom?

Tom: Thank you, Joel. We'll be filing our 10 Q later today, but let me hit the financial highlights.

Tom: Revenues grew 50% for the quarter and 62% year-to-date. Revenues for the first six months of 2024 were $874,000 compared to $538,000 for the same period in 2023.

Tom Chesterman: This growth was driven by all product line, which was launched at the beginning of the year and is already 59% of total sales. The e-commerce channel, with both our own website and Amazon, and distribute your sales represents over 65% of sales. As Joel mentioned, we anticipate the growth of these two more cost efficient sales channels, as well as the retail channel, will fuel ever increasing growth for the next quarter. Cost of goods sold and gross margin have been steadily improving month over month since we launched EVOLVE. Gross margin for this quarter was 54%, up from 47% for the same period last year. In fact, June represented a record high gross margin for Senestech at 67%.

Tom Chesterman: This growth was driven by the evolved product line, which was launched the beginning of the year, and is already 59% of total sales.

Tom Chesterman: The e-commerce channel, with both our own website and Amazon, and distributor sales represented over 65% of sales.

Tom Chesterman: As Joel mentioned, we anticipate the growth of these two more cost-efficient sales channels, as well as the retail channel, will fuel ever-increasing growth for the next quarters.

Tom Chesterman: Cost of Goods Sold and Gross Margin have been steadily improving month over month since we launched Evolve.

Tom Chesterman: Gross margin for this quarter was 54% up from 47% for the same period last year.

Tom Chesterman: In fact, June represented a record high gross margin for Senestech at 67%.

Tom Chesterman: As we said in the past, our Evolve product line represents a lower cost and higher margin opportunity for Senestech, and it is proving this out. Furthermore, ever-improving manufacturing operations give us both pricing and margin flexibility. We are also increasing production capacities and meeting future demand. We have enough capacity to meet the current demand, including all of the demand Joel has discussed. However, our leases at our headquarters and our manufacturing facility are up at the end of the year.

Tom Chesterman: As we said in the past, our Evolve product line represents a lower cost and higher margin opportunity for Senestech, and it is proving this out.

Tom Chesterman: Every improving manufacturing operations give us both pricing and margin flexibility.

Tom Chesterman: We are also increasing production capacity to meet future demand. We have enough capacity to meet the current demand, including all of the demand Joel has discussed. However, our leases at our headquarters and our manufacturing facility are up at the end of the year.

Tom Chesterman: Anticipating that, and with a clear view of meeting future demand, we are in final negotiations for a newer, larger facility that will allow us to meet the next five or more years of increasing demand without dramatically increasing our facility costs. We continue to hold the line on OPEX as well. In fact, with growing revenues, solid gross profit, and disciplined operating expenses, we have cut our cash burn in half, our adjusted EBITDA, which is how we measure cash burn, historically was more than $1 million a month.

Tom Chesterman: Anticipating that, and with a clear view of meeting future demand, we are in final negotiations for a newer, larger facility that will allow us to meet the next five or more years of increasing demand without dramatically increasing our facility costs.

Speaker Change: We continue to hold the line on our backs as well.

Tom Chesterman: In fact, with growing revenues, solid gross profit, and disciplined operating expenses, we have cut our cash burn in half.

Speaker Change: are adjusted EBITDA for how we measure tax burden, historically was more than $1 million a month.

Tom Chesterman: In the first half of the year, our adjusted EBITDA was about $500,000 a month. With these trends, adding in the near-term potential Joel mentioned, we definitely see the potential for cash flow break-even next year. I would even go so far as to say early in the year, given the reaction at the Ace Show so far, the growth of potential e-commerce and the potential order sizes of the big box and warehouse retailers with whom we're in discussion.

Tom Chesterman: But the first half of the year, our adjusted EBITDA was about $500,000 a month.

Tom Chesterman: With these trends, adding in the near-term potential Joel mentioned, we definitely see the potential for cash flow break-even next year.

Tom Chesterman: I would even go so far as to say early in the year given the reaction at the Ace Show so far, the growth of potential e-commerce and the potential order sizes of the big box and warehouse retailers with whom we're in discussions.

Tom Chesterman: On the capital market side, we have put in place an ATM or at the market equity facility. This allows us to sell small amounts of stock over time, directly to the market, opportunistically, at times that do not disrupt the market. This is a lower cost way of raising capital, And one that does not involve crowdfunding.

Tom Chesterman: On the capital market side, we have put in place an ATM, or At-The-Market Equity Facility.

Tom Chesterman: This allows us to sell small amounts of stock over time directly to the market opportunistically at times that do not disrupt the market.

Tom Chesterman: This is a lower cost way of raising capital.

Tom Chesterman: In addition, we are currently negotiating a credit facility that will allow us to finance raw material inventory purchases. [inaudible] We have already begun using Catmore. Most of our manufacturing capacity investment this year has been using debt.

Tom Chesterman: and one that does not involve warrants.

Tom Chesterman: In addition, we are currently negotiating a credit facility that will allow us to finance raw material inventory purchases.

Tom Chesterman: at favorable rates.

Tom Chesterman: We have already begun using that more.

Tom Chesterman: As we'll be defiled in our 10Q. While the first half of the year has been great, the second half of the year promises to be even better, much better. Rachel, let's open the line for questions, please.

Tom Chesterman: Most of our manufacturing capacity investment this year has been using debt, as will be detailed in our 10-Q.

Tom Chesterman: Well, the first half of the year has been great.

Tom Chesterman: The second half of the year promises to be even better, much better.

Tom Chesterman: Rachel, let's open the line for questions, please.

Operator: Now they're getting the question and authorization. To ask the question, you may first start with one on the touch-tone phone. If you're using a speakerphone, please pick up the handset before pressing the key. To withdraw your question, please press star then 2. We'll just pause momentarily for any questions to register.

Operator: Well now they're getting the question and answers, so ask the question, you may first start in one on the touch-tone phone. If you're using the Spoken Phone, place the cup of handset before pressing the keys.

Operator: To withdraw your question, please press star then 2.

Robert Blum: Rachel, this is Robert here. While we wait to see if any questions come in via the traditional teleconference line, we have a couple of questions here offline that I wanted to go ahead and post to the company. The first one for Joel and Tom here is, could you comment on any recent large city orders? Yeah, certainly. I'll take that one.

Robert Blum: We'll just pause momentarily for any questions to register.

Speaker Change: All right.

Robert Blum: This is Robert here. While we wait to see if any questions come in via the traditional teleconference line, we have a couple of questions here offline that I wanted to go ahead and pose to the company.

Robert Blum: The first one for Joel and Tom here is could you comment on any recent large city orders?

Joel Fruendt: We recently received a large order for Evolve from Hartford, Connecticut. In the past, they had successfully deployed some contrapests, and they switched over. And we expect an order shortly from Newark, New Jersey, on some of the work that they have done on their request for proposals. And then furthermore, one of our distributors just placed a large order for a group from the Boston area and municipalities. So we can see the trend heading towards the big city.

Speaker Change: Yeah, certainly, I'll take that one.

Joel Fruendt: We recently received a large order for Evolve from Hartford, Connecticut.

Joel Fruendt: In the past, they had successfully deployed some contrapest.

Joel Fruendt: and they switched over.

Joel Fruendt: And we expect an order shortly from Newark, New Jersey, on some of the work that they have done on their request for proposal.

Joel Fruendt: And then furthermore, one of our distributors just placed a large order for a group of Boston-area municipalities. So we can see the trend heading with the big cities.

Joel Fruendt: Alright, great. The next question here is, can you elaborate on your advances in packing? So currently, we offer Evolve for rats in one and a half and three pound pouches, as well as six pound and twelve pound pails, and we also offer Evolve Mouse in one and a half pound and three pound pouches.

Joel Fruendt: Alright, great. Next question here is, can you elaborate on your advances in packaging?

Joel Fruendt: So currently we offer Evolve for rats in one and a half and three pound pouches as well as six pound and twelve pound pails and we also offer Evolve mouse in one and a half pound and three pound pouches.

Joel Fruendt: We're trying to transition more to pouches as opposed to cartons, so we're launching here in Asia and an economy-sized six pound pouch for each product. It offers a convenient larger size and represents an 87% reduction in plastic packaging, part of our overall sustainability and operational goal. All right, great, that's helpful. And I'll just remind everybody if you're on the teleconference line and would like that question, you can press star, then one. Again, if you are listening to the webcast feature, you can type your question in the Ask a Question box there.

Joel Fruendt: We're trying to transition more to pouches as opposed to pails, so we're launching here at the A-Show an economy-sized six-pound pouch for each product.

Joel Fruendt: It offers a convenient larger size and represents an 87% reduction in plastic packaging, part of our overall sustainability and operational goals.

Joel Fruendt: Next question here is, can you elaborate on one or two big orders that you mentioned that could take you to profitability? Let me just give an example of that. So think about where the house store is. So just use round numbers, save 500 stores, ordering one pallet per store, which our product is about $10,000 per pallet. That's $5 million that could be delivered and booked as revenue for a 2025 campaign. So very substantial.

Speaker Change: All right, great. That's helpful. And again, I'll just remind everybody, if you're on the teleconference line and would like to ask a question,

Speaker Change: You can press star then 1. Again, if you are listening through the webcast feature, you can type your question.

Joel Fruendt: and the ask a question box there. Next question here is, can you elaborate on one or two big orders that you mentioned that could take you to profitability?

Speaker Change: Chesterman, Joel Fruendt, Robert Blum,

Joel Fruendt: Let me just give an example of that. So thinking about warehouse stores.

Joel Fruendt: So just use round numbers, say 500 stores.

Joel Fruendt: Ordering one pallet per score, which our product is about $10,000 dollars per pallet. That's $5 million that could be delivered in books.

Joel Fruendt: as revenue for a 2025 campaign. So very substantial. Another example, if you take a big box retailer, say there's another 500 stores that order one case per month.

Joel Fruendt: Another example, if you take a big box retailer, say those other 500 stores that order one case per month, roughly $300 per case, that's an annual rate of over $4 million. So, as I mentioned earlier, we are pitching to 23 such potential customers.

Joel Fruendt: Ruffley $300 per case. That's an annual rate of over 4 million. So, as I mentioned earlier,

Joel Fruendt: Customers, Multi-Location Customers, and the total of those represents over 50,000 locations, so very substantial. All right, great. That's again, very helpful. The last question I have here for the moment is, why don't we see results from these retailers and other deals you have announced? Well, certainly, we all would like to see results immediately. Sometimes it takes a little bit longer; each of these buyers has their own specific processes and buying patterns.

Joel Fruendt: We are pitching to 23 such potential customers, multi-location customers, and the total of those represents over 50,000 locations, so very substantial.

Joel Fruendt: Alright, great. That's, again, I think very helpful. Last question I have here for the moment is, why don't we see results from these retailers and other deals you have announced?

Fruendt: Fruendt Fruendt Fruendt Fruendt Fruendt

Joel Fruendt: Well certainly we all would like to see results immediately. Sometimes it takes a little bit longer. Each of these buyers they have their own specific processes and buying patterns.

Joel Fruendt: So Ace, for example, agreed to put us in their purchasing system, but it was a complex process, and that took months to get everything the way that they wanted it. Costco, on the other hand, plans everything at least six months in advance, so we are pitching them for next spring sales and into later on in 2020-25. Walmart is a little bit different; they start with some of their stores, stock them with a small amount of product, and then expand their base on demand. Every product, every customer, and how they buy their products is different, which is why it is so important to work with these manufacturers' representative agencies. They know their buying patterns, they know when we have to be in front of them, and when we have to pursue placement in their stores.

Joel Fruendt: So Ace, for example, agreed to put us in their purchasing system, but it was a complex process, and that took months to get everything the way that they wanted it and we wanted it.

Joel Fruendt: Costco on the other hand they plan everything at least six months in advance so we are pitching them for next spring sales and into later on in 2025

Joel Fruendt: Walmart, a little bit different. They start with some of their stores, stock them with a small amount of product, and then expand their base on demand.

Joel Fruendt: Every customer and how they buy their products is different,

Joel Fruendt: These manufacturers rep agencies, they know their buying patterns, they know when we have to be in front of them and when we have to pursue placement in their stores.

Robert Blum: Okay, great. I am not showing any further questions here at this moment, so Joel, I'll turn it back over to you for any closing remarks. Thanks, Robert. Just to conclude, I'm very excited about the progress we've made. I think we're just starting to hit the point where a lot of the work we've done over the past nine months is really going to start taking hold across these different channels that we talked about. And we should have more really good news to report going into the balance of this year. So, thank you for your time.

Robert Blum: Okay, great. I am not showing any further questions here at this moment, so Joel, I'll turn it back over to you for any closing remarks.

Robert Blum: Thanks, Robert. Just to conclude, very excited about the progress we've made. I think we're just starting to hit the point where a lot of the work we've done over the past nine months

Robert Blum: is really going to start taking hold across these different channels that we talked about and we should have more really good news to report out going into the balance of this year. So thank you for your time.

Speaker Change: Thanks for watching, and don't forget to like, share, and subscribe to my channel.

Unnamed: [music] [inaudible]

Speaker Change: Thomas Chesterman, Robert Blum, Tucker Andersen, Joel Fruendt, Senestech Thomas Chesterman, Robert Blum, Tucker Andersen, Joel Fruendt, Senestech

Speaker Change: St. St. St. St. St. [inaudible]

Tom Chesterman: We'll be filing our 10 Q later today, but let me hit the financial highlights. Revenants grew 50% for the quarter and 62% year-to-date. Revenants for the first six months of 2024 were 874,000, compared to 538,000 for the same period in 2023.

Speaker Change: St. St. St. St. St. St. St. [inaudible]

Speaker Change: Dr. Robert Fruendt, Thomas Chesterman, Robert Blum, Tucker Andersen, Joel Fruendt, Senestech Dr. Robert Fruendt, Thomas Chesterman, Robert Blum, Tucker Andersen, Joel Fruendt, Senestech

Tom Chesterman: . . . . . . . . . . . .

Speaker Change: ?? ?? ?? ?? ??

Speaker Change: St. St. St. St. St. [inaudible]

Joel Fruendt: Thank you, Robert.

Joel Fruendt: The study was required by some states and international jurisdictions. The results were better than expected, showing an initial 61% reduction in leather size after just one breeding round and a 90% reduction over the course of 12 months. Remember, two rats or mice can become 15,000 in just one year, so this represents a substantial reduction in population.