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SNES 2018 AR Wrap V3.Ai 2017 Annual Report We believe ContraPest® will establish a new paradigm in rodent control by offering a proven, non-lethal fertility-control solution. TO OUR SHAREHOLDERS BUILDING A COMPANY The building of a company is a complex process requiring vision, resilience, teamwork, enormous energy and a dedication to succeed. To transition to a commercial company, there are a number of things that have to be accomplished before the commencement of revenue. You’ve got to build the right team; you have to develop a commercial level EPA inspected manufacturing facility; you’ve got to develop the right marketing strategy including product definition, pricing, customer identification, and development of a value proposition in all market segments. In 2017, we took a quantum leap forward in completing the build-out of the necessary infrastructure – physical and personnel – to effectively market and sell our innovative ContraPest® technology for managing rodent populations through fertility control; and positioning SenesTech for long-term success. While 2017 was about setting the stage, 2018 will be about execution, customer acquisition, and revenue Dr. Lorea Mayer generation. Founder, Chief Execuve Officer and Chairman of From a marketing standpoint, we have adjusted our product the Board messaging and market outreach to attract new professional pest management (PMP) customers. ContraPest can be a highly effective solution whether as a fertility-control anchor to magnify the success of an Integrated Pest Management (IPM) program, or as a standalone, non-lethal solution for customers looking to reduce or eliminate the use of lethal methodologies. IPM is an ecosystem-based strategy that focuses on long-term prevention of pests and their damage through a combination of techniques, such as biological control, habitat manipulation, modification of environmental factors. Rodenticides, or poisons, are used only after monitoring indicates they are needed according to established guidelines and treatments are made with the goal of removing only the target organism. Pest control materials are selected and applied to minimize risk to the human health and non-target organisms in the environment. In this context, ContraPest is ideally suited as a complementary tool to supplement traditional pest control strategies as it addresses the problem where it starts: reproduction. This messaging has been well Dr. Cheryl Dyer received and we are beginning to gain traction with PMPs and Founder, Chief Research national pest control distributors alike. Officer KEY DISTRIBUTION AGREEMENTS During 2017, we established key distribution agreements with Univar and Target Specialty Products to create market access to many of the leading PMPs around the United States. In conjunction with providing this expanded distribution access, we have continued to develop relationships with key PMPs, who are now expanding their deployment ContraPest®, SenesTech’s flagship product, targets the reproductive capabilities of Norway and roof rats. The highly-palatable formulation promotes sustained consumption, reducing fertility in male and female rats, magnifying IPM success. of ContraPest. These early PMP relationships are Also consider some of the natural disasters we’ve just the tip of the iceberg for what we believe will be witnessed during the hurricane seasons of recent the opportunity for ContraPest, but they are also years. Be aware that as water levels rise, rats can crucial as the change leaders in an industry that has swim. They can swim up to 10 miles and when the been hesitant to change. In addition to establishing power is shut off, foods spoil and that becomes a these initial distributor, and PMP relationships, we banquet for them in addition to loss of sanitation are significantly expanding our marketing systems and spread of leptospirosis. campaigns to build a strong brand and to share how ContraPest can support IPM protocols, while There are other significant health risks, such as the also learning how we can best support them as they rat lungworm disease in tropical areas, island fight their toughest and persistent rodent ecology, not to mention the infrastructure damage infestations. Additionally, we continue to work with that they inflict. Rats are the most successful municipal and government customers to support mammalian species on earth because they can their transition from trial to commercial deployment. adapt to almost anything that nature, or humans, throw at them. They can breed their way out of Through these PMPs, we can see the successful many problems. results of ContraPest in a variety of customer types, such as housing units, hospitals, agriculture, We may not be able to solve each of these challenges, commercial, etc. but they are ones that we need to keep in mind as we grow and evolve. EVOLVING MARKET DEVELOPMENTS As we progress in the development of ContraPest As we head into 2018, we do so with great optimism. and future products, there are a number of external We believe that most of the heavy lifting has been factors that are driving change and potential done to position SenesTech for success in the opportunities in our market. coming years. We believe that 2018 will bring our first meaningful revenues and set the stage for There are a number of cities and counties in the U.S. consistent growth. I cannot adequately express my that have banned poison deployment altogether; appreciation to our loyal shareholders for their and we expect that number to grow. Continued support and patience as we have progressed across efforts in the California Legislature to ban the use of the continuum from a research and development lethal poisons statewide are gaining traction and stage company to a full-fledged commercial increased legislative support and Massachusetts is company. All of us at SenesTech are dedicated to close behind. Globally, New Zealand has made the growing your company and to dramatically commitment to be pest free by 2050 and in Europe, enhancing the value of your investment. where poisons have been used longer than in the United States, rodents are developing resistance to Best regards, the active ingredients as only the resistant individuals are selected to reproduce. The World Food Program has estimated their grain transit losses rising to over 33% due to rodent grain damage and consumption. Dr. Loretta Mayer Dr. Cheryl Dyer UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2017 OR □ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-37941 SENESTECH, INC. (Exact name of registrant as specified in its charter) Delaware 20-2079805 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 3140 N. Caden Court, Suite 1, Flagstaff, AZ 86004 (Address of principal executive offices, including zip code) Registrant’s telephone number, including area code: (928) 779-4143 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Stock, $0.001 par value The NASDAQ Stock Market LLC (NASDAQ Capital Market) Securities registered pursuant to Section 12(g) of the Act: NONE Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes □ No ☒ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act. Yes □ No ☒ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No □ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No □ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer,’’ ‘‘smaller reporting company’’ and ‘‘emerging growth company’’ in Rule 12b-2 of the Exchange Act.: Large accelerated filer □ Accelerated filer □ Non-accelerated filer □ Smaller reporting company ☒ Emerging growth company ☒ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes □ No ☒ The aggregate market value of the registrant’s common stock held by non-affiliates on June 30, 2017 (the last business day of the registrant’s most recently completed second fiscal quarter) as reported by The NASDAQ Capital Market on such date was approximately $42,913,510. There were 10,320,254 shares of the registrant’s common stock outstanding on June 30, 2017.
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