SNES: Less food for rats from restaurant closures; an opportunity for SNES to expand

NASDAQ:SNES

Despite revenue showing close to 100% growth yoy, revenue numbers still remain small. Nevertheless, management remains optimistic that their efforts to build awareness is slowly but surely bearing fruit. The DTC campaign started in late March of this year is showing some encouraging signs that awareness is building which could help drive adoption. Management noted that they would be sharing results from test programs conducted in Washington D.C. as a part of this campaign and anticipate that it could help build awareness. There are several underserved areas in big cities and management believes deploying here could potentially help expand SenesTech, Inc.’s (NASDA:SNES) addressable market.

Despite management’s efforts, demand took a dip during the pandemic. Due to COVID-19 several private and public establishments have cut back on their spending. Further, target markets, including animal, food and commercial markets, for ContraPest have remained shut, albeit temporarily. Consequently, has revenues have been negatively impacted since March.

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Meanwhile. since pest control is categorized as an essential service, the company was able to deploy teams to key test sites. Of the several studies the company is conducting, the poultry studies showed a reduction of rat population between 44% and 87% in a six-month time frame. Similarly, the municipal study also demonstrated encouraging results, a reduction in rats between 55% – 88%.

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The strategy for deploying ContraPest has been to first determine foraging locations with a control bait and then to deploy ContraPest, which the rats eat, and reproduction ceases. This methodology works when rats’ pathways are known. Currently, there has been anecdotal evidence that rats are venturing out of their black holes looking for food sources since restaurants and food stores have remained closed due to the pandemic. Management has advised their clients that this might be the right opportunity to deploy ContraPest so the rat population can be trimmed before population rebound occurs.

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Given the current slump in consumption, management has remained diligent in continuously reviewing expenses and has made some strategic moves to weather the effects of this pandemic. Operationally, in order to keep burn rate at a minimum, management has reduced the base compensation by 25% for all C-suite employees as well as the Board. We are likely to see decrease in OpEx from Q2 going forward from these temporary measures adopted to trim costs. On a pro forma basis, the company had about $6.4M at the end of Q1. Management believes the capital is sufficient to run operations successfully “well into 2021”.

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