Micro Cap Ideas

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SenesTech - transcript from the Q4 2018 earnings call (link below).

A tiny company like SenesTech ($27 mil mkt cap) is going to trade mainly on news and potential. SNES is just starting to generate revenues so the growth rate will be extremely high, which should attract investors.

One thing I like about SNES is that unlike a traditional bio stock, they don't have to go thru the endless and expensive Phase 1,2,3 process with the FDA.


https://seekingalpha.com/article/4221518-senestech-snes-ceo-loretta-mayer-q3-2018-results-earnings-call-transcript?page=2


>>> As you saw in today’s press release, revenue for the quarter was $105,000, more than six times compared to last year’s third quarter and virtually tripled on a sequential basis what we generated in the second quarter of this year. As we mentioned in the press release, we view this past quarter as an inflection point of source. From our standpoint, it is tangible evidence of the successful initial deployment of ContraPest into key markets and it acts as a springboard for the future adoption growth of ContraPest.

During the quarter, we continued to expand our distribution channel, adding Geotech Supply Company and Agri-Turf Distributing of California. These distribution partners will strengthen our presence in California, which is certainly a key market. We also signed a distribution agreement with Forshaw, a distributor with excellent market presence in the major East Coast markets.

Going forward, revenue generation will be positively impacted by the removal of Restricted Use Only qualifier from the label on our ContraPest product by the U.S. Environmental Protection Agency, which occurred subsequent to the end of the quarter in October. This is important to overall market acceptance and growth as the RUP label required applicators with specific additional training and special licensing, in other words additional cost to pest management professionals to apply and manage the use of the product. With the removal of the RUP requirement, the market for ContraPest can be substantially broadened. We are now petitioning in the various state markets to recognize this EPA action.

Going forward, we will also benefit by offering a new bait delivery system, which was also launched in October that will seamlessly fit into the existing Bell Labs PROTECTA EVO Express system. The Bell Labs box has a large established customer base throughout the U.S. And again, we’ll make deployment easier and more cost effective for pest management professionals. The launch of the new bait delivery system is an important tactical milestone in a broader-based growth of our customer market in the coming years.

Costs of sales for the quarter were comparatively high at a $114,000 compared to revenue of a $105,000. There are a couple of offsetting factors that deserve some explanation here. On the one hand, we have continued to improve our manufacturing process, increasing our [ph] bait size, streamlining the quality control process et cetera.

This has the effect of dramatically improving our cost of goods sold, but most of this benefit will be captured in future quarters. Offsetting this in this quarter’s results is that we had unusually high scrap of ultimately unsalable product. This is perhaps an understandable result of scale-up and process improvement and is likely to -- unlikely to recur.

Gross profit has also been reduced by some of the customer acquisition cost that we have incurred. This past quarter, we’ve had a couple of promotion products to incent the adoption of ContraPest by new customers. We have been diligent in our controlled operating expenses as we continue to shift our resources from R&D to commercialization efforts with the goal of keeping stable overall expenses. Overall we had an adjusted EBITDA loss of $2 million compared to $1.9 million in the year ago quarter.

As most of you know, we recently completed a rights offering that yielded net proceeds to the company of approximately $5 million -- $5.1 million, putting us in a strong operating position for the next year. We are pleased that many of our shareholders participated in the offering to maintain their percentage holding in the company and to benefit from the opportunity as we continue to execute on our strategic business plan.

We completed the quarter with $7.2 million in cash and equivalents and minimal long-term debt of approximately $296,000. With that, let me turn the call over to Dr. Loretta Mayer, our Chairman and Chief Executive Officer for some further comments. Loretta?

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