SenesTech Inc.

11/13/2026 | Press release | Distributed by Public on 11/13/2026 15:03

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our condensed financial statements and related notes included in this Quarterly Report on Form 10-Q, as well as our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 13, 2026.
Forward-Looking Statements
The statements contained in this Quarterly Report on Form 10-Q that are not historical are forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements other than statements of historical fact contained in or incorporated herein by reference in this Quarterly Report on Form 10-Q, including statements regarding our future operating results, future financial position, cash runway, business strategy, objectives, goals, plans, prospects, markets, and plans and objectives for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as "anticipates," "believes," "estimates," "expects," "intends," "seeks," "suggests," "targets," "contemplates," "projects," "predicts," "may," "might," "plans," "will," "would," "should," "could," "can," "potential," "continue," "objective," "outlook" or the negative of those terms, or similar expressions intended to identify forward-looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q include, but are not limited to, statements regarding:
•our commercialization strategy strengthening our e-commerce business to build the Evolve brand, educate the market and establish credibility for a new category of pest management products; expanding our direct B2B operations through a professional sales organization focused on targeted vertical markets for both Evolve and ContraPest; and increasing our market opportunity through strategic partnerships, new products and value-added services;
•the development of our assessment and implementation services that leverage proprietary AI technology, field data, and professional expertise to help B2B customers evaluate pest populations, optimize product deployment, and measure treatment effectiveness, and our belief that these value-added services create incremental revenue opportunities, strengthen customer relationships, and further differentiate us in the marketplace by expanding our role beyond product sales to become a strategic pest management partner;
•our belief that Evolve® is novel in the pest control industry;
•our belief that Evolve Rat meets the United States Environmental Protection Agency's (the "EPA's") minimum risk pesticide conditions under 25(b) of the Federal Insecticide, Fungicide, and Rodenticide Act ("FIFRA") and is exempt from federal registration because it poses little to no risk to human health and the environment, and is formulated using acceptable food-based ingredients that are exempt from the requirement of tolerance under the FFDCA, supporting its use in agricultural applications;
•our ability to further develop our manufacturing processes to contain costs while being able to scale to meet future demand of fertility control products;
•our plan to continue to utilize stock-based awards to attract, retain and motivate key employees and directors;
•our expectation that our expenses may continue to increase in connection with our ongoing activities, particularly as we focus on marketing and sales of fertility control products, that we will continue to incur costs associated with operating as a public company, that consulting costs will moderate in the coming quarter, and that non-recurring costs associated with leadership transition and succession are not expected to recur;
•our ability to achieve market acceptance, commercial viability and profitability of our fertility control products and any other products;
•our ability to market our products and establish an effective sales force and marketing infrastructure to generate significant revenue;
•the success of our research and development;
•our ability to retain and attract key personnel to develop, operate and grow our business;
•our ability to maintain and protect our intellectual property portfolio;
•our ability to strengthen our e-commerce business, including through direct management of our Amazon and Shopify operations, and to drive recurring revenue through subscriptions and repeat purchases;
•our ability to expand our B2B business with a disciplined, vertical-market sales strategy targeting opportunities across commercial, government, pest management, agribusiness, retail, e-commerce, zoo and sanctuary, and international markets;
•our ability to raise additional capital, including through equity offerings under our existing ATM Facility, strategic partnerships, and other capital-raising transactions, and the extent to which any such financing could dilute your ownership interest;
•our ability to continue as a going concern;
•the effects of leadership transition and succession and of personnel transitions within the sales and marketing organizations;
•our belief that our cash and cash equivalents as of September 30, 2026, together with anticipated revenue and current operating expense levels, will be sufficient to fund our operations through the end of the third quarter of fiscal 2027, and our estimates or expectations related to our revenue, cash flow, expenses, capital requirements and need for additional financing; and
•our future financial performance, including our ability to fund our operations.
These forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and situations that are difficult to predict and that may cause our actual results, or those of our industry, actual results to be materially different from the future results that are expressed or implied by these statements. Accordingly, actual results may differ materially from those anticipated or expressed in such statements as a result of a variety of factors, including those discussed in Part I, Item 1A-"Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 13, 2026, as updated by Part II, Item 1A of this Quarterly Report on Form 10-Q, and those contained from time to time in our other filings with the SEC. Such factors include, among others, the following:
•the successful commercialization of our products;
•market acceptance of our products;
•our financial performance, including our ability to fund operations and continue as a going concern;
•our ability to raise additional capital on acceptable terms, or at all;
•the impact of personnel turnover within our sales and marketing organizations on our B2B sales;
•our ability to establish credibility for a new category of pest management products and to achieve broader commercial adoption of our products;
•the concentration of ownership of our common stock among a small number of stockholders, who are able to exert significant influence over matters requiring stockholder approval and may seek to influence our business strategies and operations
•maintaining and obtaining regulatory approval of our products and product candidates, including registration from the various state agencies in states that do not accept the federal exemption; and
•other factors and risks identified from time to time in our filings with the SEC, including this Quarterly Report on Form 10-Q.
All forward-looking statements included herein are based on information available to us as of the date hereof and speak only as of such date. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. The forward-looking statements contained in or incorporated by reference into this Quarterly Report on Form 10-Q reflect our views as of the date of this Quarterly Report on Form 10-Q about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause our actual results, performance or achievements to differ significantly from those expressed or implied in any forward-looking statement. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future events, results, performance or achievements.
We are subject to the information requirements of the Exchange Act, and we file or furnish reports, proxy statements and other information with the SEC. Such reports and other information are available free of charge on our website at www.senestech.com as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Information contained on, or accessible through, our website is not incorporated by reference into this Quarterly Report on Form 10-Q.
Overview
Over the past year, SenesTech has transformed from a research-focused organization into a revenue-driven company with a strategy focused on the commercialization of its proprietary pest management technologies for managing animal pest populations through fertility control. Our current product offerings are focused on rat and mouse population management and consist of Evolve Rat, Evolve Mouse (collectively, "Evolve"), and ContraPest.
Our strategy is centered on three priorities: (i) strengthening our e-commerce business to build the Evolve brand, educate the market, and establish credibility for a new category of pest management products; (ii) expanding our direct business-to-business ("B2B") operations through a professional sales organization focused on targeted vertical markets for both Evolve and ContraPest; and (iii) increasing our market opportunity through strategic partnerships, new products, and value-added services.
We continue to make meaningful progress in executing our commercialization strategy. Following the transition of our Amazon and Shopify operations to direct management, we are seeing continued growth through these sales channels. Gross margins remain favorable, supported by an increasing contribution from Evolve product sales to overall revenue growth. We have also continued to strengthen our commercial infrastructure across multiple sales channels. Collectively, these developments reflect continued execution of our commercialization strategy and position the Company to pursue future growth opportunities.
We initially prioritized our e-commerce business by bringing our Amazon and Shopify operations under direct management, providing greater control over pricing, merchandising, customer relationships, and the overall customer experience. We believe these capabilities not only improve margins but also generate valuable customer insights, strengthen brand loyalty, and enhance our ability to drive recurring revenue through subscriptions and repeat purchases. As consumer awareness and adoption continue to grow, we believe our expanding base of customer reviews, subscriptions, and brand recognition will also support broader commercial adoption of our products.
Building on this foundation, we are expanding our B2B business with a disciplined, vertical-market sales strategy that targets opportunities across commercial, government, pest management, agribusiness, retail, zoo and sanctuary, and international markets. Our ongoing commercialization investments are designed to accelerate customer acquisition, deepen customer relationships, and support revenue growth across multiple end markets. This investments include expanding our professional sales organization and developing industry-specific materials, value propositions and return-on-investment models.
These initiatives increased our operating expenses in the first nine months of 2026 and reflect our long-term commitment to building the foundation for future growth. We expect these investments, which are distinct from the one-time transition and leadership-related costs incurred during the year, to moderate during the fourth quarter.
We are also placing greater emphasis on our e-commerce channel, particularly Amazon. E-commerce allows us to sell at higher prices than our other channels, but those sales carry higher marketplace fees and related fulfillment and advertising costs. Unlike the commercialization investments described above, we do not expect these costs to moderate. Because they
are largely variable, we expect them to increase as e-commerce revenue grows. We believe this emphasis is warranted because our e-commerce presence also builds product awareness that benefits our other channels.
In addition to product sales, we are developing assessment and implementation services that leverage proprietary AI technology, field data, and professional expertise to help B2B customers evaluate pest populations, optimize product deployment, and measure treatment effectiveness. We believe these value-added services create incremental revenue opportunities, strengthen customer relationships, and further differentiate SenesTech in the marketplace by expanding our role beyond product sales to become a strategic pest management partner.
Management evaluates the progress of our commercialization strategy using several operating and financial indicators that we believe reflect the development of a scalable commercial business. These include growth in Evolve revenue, the mix of revenue generated through our direct-to-consumer channel, gross margin performance, repeat purchases and subscription activity, expansion of customer relationships across targeted commercial and government verticals, and adoption of our products and services by new customers. While these indicators may fluctuate from period to period, management believes that sustained improvement across these measures will lead to increasing market acceptance of our products and demonstrate continued execution of our commercialization strategy.
We believe our integrated strategy of building consumer awareness, expanding commercial sales, and offering differentiated products and services positions the Company for sustainable long-term growth. The operational progress achieved during the quarter, combined with our continued commercialization investments, reinforces our confidence that we are executing our strategy as planned while creating opportunities for future revenue growth and margin expansion.
Results of Operations
Comparison of the Three Months Ended September 30, 2026 and 2025
The following table summarizes our results of operations for the periods presented (dollars in thousands):
Three Months Ended September 30, Change
2026 2025 Amount Percent
Revenues, net $ 1,097 $ 690 $ 407 59 %
Cost of sales 301 257 44 17
Gross profit 796 433 363 84
Operating expenses:
Research and development 418 400 18 5
Sales and marketing 1,082 425 657 155
General and administrative 1,287 955 332 35
Total operating expenses 2,787 1,780 1,007 57
Loss from operations (1,991) (1,347) (644) 48
Interest income, net 35 49 (14) (29)
Net loss $ (1,956) $ (1,298) $ (658) 51
Revenues
Revenues for the periods presented consisted of the following (dollars in thousands):
Three Months Ended September 30, Change
2026 2025 Amount Percent
By product line:
Evolve $ 979 89 % $ 586 85 % $ 393 67 %
ContraPest 118 11 104 15 14 13
$ 1,097 100 % $ 690 100 % $ 407 59
By sales channel:
E-commerce $ 778 71 % $ 178 26 % $ 600 337
B2B 319 29 512 74 (193) (38)
$ 1,097 100 % $ 690 100 % $ 407 59
Sales, net of sales discounts and promotions, were $1.1 million for the third quarter of 2026, compared to $690,000 for the third quarter of 2025. The $407,000 increase was primarily driven by higher sales of our Evolve product offerings, reflecting continued growth in our e-commerce sales channels. Evolve represented approximately 89% of third quarter 2026 revenues, compared to 85% in the third quarter of 2025. With the sales and marketing organizations now established and continuing to mature and grow, the B2B sales have increased approximately 23% to $319,000 compared to $259,000 for the second quarter of 2026. B2B sales decreased $193,000, or 38%, compared to the third quarter of 2025, reflecting the impact of transitioning Amazon management in-house in February of 2026, which shifted sales from the B2B channel to the e-commerce channel.
Cost of Sales
Cost of sales consists of costs related to products sold, including scrap and any reserves for obsolescence, as well as shipping costs when charged to the customer. Cost of sales was $301,000, or 27.4% of net sales, for the third quarter of 2026, compared to $257,000, or 37.2%, for the third quarter of 2025.
Gross Profit
Gross profit for the third quarter of 2026 was $796,000, representing a margin of 72.6%, compared to $433,000, or 62.8% margin, in the third quarter of 2025. Gross profit improved primarily as a result of the continued ramp-up of sales through Amazon following the transition to selling directly on Amazon, which began in February 2026. Selling directly allows the Company to realize a higher selling price per unit than under the prior third-party distributor arrangement, and the resulting increase in gross profit is offset by the marketplace fees, commissions and other operating costs now recorded in sales and marketing expenses.
Research and Development Expenses
Research and development expenses consisted of the following (in thousands):
Three Months Ended September 30, Change
2026 2025 Amount Percent
Personnel related (including stock-based compensation) $ 244 $ 202 $ 42 21 %
Facility related 96 102 (6) (6)
Depreciation 31 24 7 29
Supplies, maintenance and other 47 72 (25) (35)
Total $ 418 $ 400 $ 18 5
Research and development expenses were $418,000 for the third quarter of 2026, compared to $400,000 for the third quarter of 2025, representing an increase of $18,000. The increase was primarily attributable to higher personnel-related costs, reflecting increased bonus expense associated with the progress towards the achievement of 2026 performance objectives. The increase was partially offset by lower supplies and maintenance expenses.
Sales and Marketing Expenses
Sales and marketing expenses consisted of the following (in thousands):
Three Months Ended September 30, Change
2026 2025 Amount Percent
Personnel related (including stock-based compensation) $ 270 $ 184 $ 86 47 %
Retailer and third party fees and commissions 282 - 282 *
Marketing and advertising 278 76 202 266
Professional fees 143 74 69 93
Other 109 91 18 20
Total $ 1,082 $ 425 $ 657 155
* - Not applicable.
Sales and marketing expenses were $1.1 million for the third quarter of 2026, compared to $425,000 for the third quarter of 2025, representing an increase of $657,000. The increase in personnel related expenses increased due to an increase in sales headcount and increased commissions and incentives. The increase in retailer and third party fees and commissions is due to the bringing the Company's Amazon business in-house. The increases in marketing and advertising and professional fees reflect the increased investment in brand and product awareness, and are expected to moderate as the Company reduces its reliance on consultants who supported personnel transitions within the sales and marketing organizations and completes its strategic initiatives.
Retailer and third-party fees and commissions of $282,000 for the third quarter of 2026 are the incremental operating costs associated with bringing third-party marketplace management, including Amazon, in-house. These costs, which were not incurred in the prior-year period, primarily reflect the economics of selling directly on Amazon rather than through a third-
party distributor. Selling directly enables the Company to realize a higher selling price and a higher gross profit per unit, which is offset by the marketplace fees, commissions and other operating costs the Company now bears directly. The transition to direct management of our Amazon business, which began in February 2026 and was completed during the second quarter, provides greater control over pricing, merchandising, customer relationships and the overall customer experience while positioning the Company to sustain healthy margins, strengthen customer engagement, and capture valuable customer insights that support future revenue growth.
Marketing and advertising expenses increased by $202,000, primarily reflecting the hiring of the marketing team, which has established the personnel infrastructure needed to support the Company's commercialization strategy, as well as increased spending on advertising initiatives to support the continued ramp-up of Amazon sales activity and drive growth through this channel.
Personnel costs increased by $86,000, reflecting changes in the composition of the sales team and higher compensation costs associated with the evolving sales organization, including increased bonus expense, sales commissions and stock-based compensation.
Professional fees increased by $69,000 to support the sales and marketing organizations during personnel transitions and to advance strategic sales and marketing initiatives, including product packaging redesign, marketing strategy development, and the transition to direct sales on Amazon. As the personnel transitions within the sales and marketing organizations and these strategic initiatives have largely been completed, we expect consulting costs to moderate in the coming quarters.
General and Administrative Expenses
General and administrative expenses consisted of the following (in thousands):
Three Months Ended September 30, Change
2026 2025 Amount Percent
Personnel related $ 493 $ 265 $ 228 86 %
Professional fees 384 465 (81) (17)
Stock-based compensation 257 43 214 498
Insurance 51 49 2 4
Other 102 133 (31) (23)
Total $ 1,287 $ 955 $ 332 35
General and administrative expenses were $1.3 million for the third quarter of 2026, compared to $1.0 million for the third quarter of 2025, representing an increase of $332,000. The overall increase was primarily attributable to higher personnel-related costs and stock-based compensation expense. Stock-based compensation expense increased $214,000, reflecting additional stock option grants to employees and members of the Board of Directors as part of the Company's overall compensation program.
Personnel-related costs increased $228,000, primarily due to higher bonus expense reflecting the Company's progress towards the achievement of 2026 performance objectives.
Professional fees decreased by $81,000, driven by $156,000 of lower legal expenses following the settlement of a legal matter earlier in 2026. This decrease was partially offset by $68,000 in strategic consulting fees incurred in 2025 and $25,000 in higher Board compensation resulting from an increase in the number of Board members and changes in director compensation rates, responsibilities, and committee assignments.
Interest Income, Net
For the third quarter of 2026, interest income, net was $35,000, consisting of $40,000 in interest income and $5,000 in interest expense. This compares to interest income, net of $49,000 in the third quarter of 2025, consisting of $55,000 in interest income and $6,000 in interest expense. The decrease in interest income in 2026 reflects a lower average balance of cash, cash equivalents and investments compared to the same period in 2025.
Comparison of the Nine Months Ended September 30, 2026 and 2025
The following table summarizes our results of operations for the periods presented (dollars in thousands):
Nine Months Ended September 30, Change
2026 2025 Amount Percent
Revenues, net $ 2,360 $ 1,800 $ 560 31 %
Cost of sales 659 645 14 2
Gross profit 1,701 1,155 546 47
Operating expenses:
Research and development 1,217 1,245 (28) (2)
Sales and marketing 2,218 1,277 941 74
General and administrative 4,238 3,257 981 30
Total operating expenses 7,673 5,779 1,894 33
Loss from operations (5,972) (4,624) (1,348) 29
Interest income, net 121 45 76 169
Net loss $ (5,851) $ (4,579) $ (1,272) 28
Revenues
Revenues for the periods presented consisted of the following (dollars in thousands):
Nine Months Ended September 30, Change
2026 2025 Amount Percent
By product line:
Evolve $ 2,058 87 % $ 1,489 83 % $ 569 38 %
ContraPest 302 13 311 17 (9) (3)
$ 2,360 100 % $ 1,800 100 % $ 560 31
By sales channel:
E-commerce $ 1,467 62 % $ 482 27 % $ 985 204
B2B 893 38 1,318 73 (425) (32)
$ 2,360 100 % $ 1,800 100 % $ 560 31
Sales, net of sales discounts and promotions, were $2.4 million for the nine months ended September 30, 2026, compared to $1.8 million for the same period of 2025. The $560,000 increase was driven by higher sales volume of Evolve, supported by continued growth in our e-commerce sales channel. Evolve represented approximately 87% of revenues for the nine months ended September 30, 2026, compared to 83% in the same period of 2025, reflecting the continued shift in our product mix toward Evolve. The increase in Evolve sales was partially offset by lower ContraPest sales, which primarily occur through our B2B sales channel, resulting in an overall shift in our revenue mix toward e-commerce during the period. With the sales and marketing organizations now established and continuing to evolve, we expect B2B sales to increase. B2B sales were also impacted by the transition of Amazon management in-house in February of 2026, which shifted sales from the B2B channel to the e-commerce channel.
Cost of Sales
Cost of sales consists of costs related to products sold, including scrap and any reserves for obsolescence, as well as shipping costs when charged to the customer. Cost of sales was $659,000, or 27.9% of net sales, for the nine months ended September 30, 2026, compared to $645,000, or 35.8%, for the same period of 2025.
Gross Profit
Gross profit for the nine months ended September 30, 2026 was $1.7 million, representing a margin of 72.1%, compared to $1.2 million, or 64.2% margin, for the same period of 2025. The improvement reflects the same factors affecting the quarterly comparison and demonstrates continued progress in the execution of our commercialization strategy.
Research and Development Expenses
Research and development expenses consisted of the following (in thousands):
Nine Months Ended September 30, Change
2026 2025 Amount Percent
Personnel related (including stock-based compensation) $ 706 $ 675 $ 31 5 %
Facility related 302 308 (6) (2)
Depreciation 91 85 6 7
Supplies, maintenance and other 118 177 (59) (33)
Total $ 1,217 $ 1,245 $ (28) (2)
Research and development expenses were $1.2 million for the nine months ended September 30, 2026, compared to $1.2 million for the same period of 2025, representing a decrease of $28,000. The decrease was primarily attributable to lower supplies and maintenance expenses and partially offset by higher personnel-related costs, reflecting increased bonus expense associated with the progress towards the achievement of 2026 performance objectives. Facility-related expenses were comparable between periods, as higher costs incurred in 2026 were offset by incremental expenses incurred in 2025 related to the transition between manufacturing facilities.
Sales and Marketing Expenses
Sales and marketing expenses consisted of the following (in thousands):
Nine Months Ended September 30, Change
2026 2025 Amount Percent
Personnel related (including stock-based compensation) $ 685 $ 532 $ 153 29 %
Professional fees 520 210 310 148
Marketing and advertising 388 203 185 91
Retailer and third party fees and commissions 358 74 284 384
Other 267 258 9 3
Total $ 2,218 $ 1,277 $ 941 74
Sales and marketing expenses were $2.2 million for the nine months ended September 30, 2026, compared to $1.3 million for the same period of 2025, representing an increase of $941,000. The increase in personnel related expense increased due to an increase in sales headcount and increased commissions and incentives. The increase in retailer and third party fees and commissions is due to bringing the Company's Amazon business in-house. The increases in marketing and advertising and professional fees reflect the increased investment in brand and product awareness, and are expected to moderate as the Company reduces its reliance on consultants who supported personnel transitions within the sales and marketing organizations and completes its strategic initiatives.
Personnel-related costs increased $153,000, primarily due to turnover within the sales organization early in 2026, which resulted in $196,000 of severance costs that are not expected to recur. During 2026, both the sales and marketing organizations underwent significant changes. By the third quarter of 2026, these organizations had become established, while continuing to evolve to drive the Company's commercial growth strategy.
Professional fees increased by $310,000, with higher consulting to support the sales and marketing organizations during personnel transitions and to advance strategic sales and marketing initiatives, including product packaging redesign, marketing strategy development, and the transition to direct sales on Amazon. As the personnel transitions within the sales and marketing organizations and these strategic initiatives have largely been completed, we expect consulting costs to moderate in the coming quarters.
Marketing and advertising increased $185,000, primarily reflecting the hiring and stabilization of the marketing team, which has established the personnel infrastructure needed to support the Company's commercialization strategy, as well as increased spending on advertising initiatives to support the continued ramp-up of Amazon sales activity and drive growth through our e-commerce sales channel.
Retailer and third party fees and commissions increased $284,000, primarily due to bringing third-party marketplace management, including Amazon, in-house, as discussed above, as well as continued growth in our e-commerce sales channel.
General and Administrative Expenses
General and administrative expenses consisted of the following (in thousands):
Nine Months Ended September 30, Change
2026 2025 Amount Percent
Personnel related $ 1,661 $ 1,072 $ 589 55 %
Professional fees 1,607 1,309 298 23
Stock-based compensation 453 213 240 113
Insurance 158 146 12 8
Other 359 517 (158) (31)
Total $ 4,238 $ 3,257 $ 981 30
General and administrative expenses were $4.2 million for the nine months ended September 30, 2026, compared to $3.3 million for the same period of 2025, representing an increase of $981,000. The overall increase reflects non-recurring costs associated with leadership transition and succession, as well as legal expenses related to a specific matter. These costs total approximately $788,000 and are not expected to recur.
Personnel-related costs increased $589,000, primarily due to leadership transition and succession activities which included $169,000 in 2026 related to the addition of an Interim Chief Operating Officer in November 2025 and $276,000 of severance costs in 2026, neither of which is expected to recur. In addition, the increase reflects higher bonus expense resulting from the Company's progress towards the achievement of 2026 performance objectives.
Professional fees increased by $298,000. Board cash compensation increased by $140,000, primarily due to an increase in the number of Board members ($26,000), changes in director responsibilities and committee assignments ($26,000), compensation paid to a Board member who previously received such compensation in stock options ($40,000), and an increase to base fees following a compensation review ($48,000).
Legal fees increased by $298,000, primarily reflecting costs associated with the leadership transition, employee-related matters, and changes in legal counsel, including differences in the nature and volume of legal services provided and hourly billing rates. In addition, compensation of $86,000 was incurred in connection with the appointment of an Interim Executive Chair during the early part of 2026, and executive search expenses increased by $60,000 in connection with the leadership succession. These increases were partially offset by a $139,000 decrease in legal expenses following the settlement of a legal matter earlier in 2026 and $68,000 in strategic consulting fees incurred in 2025.
Stock-based compensation was higher related to stock option grants to employees and members of the Board of Directors as part of the Company's overall compensation program.
Other general and administrative expenses decreased, primarily reflecting $111,000 in lower franchise fees and other operating costs as a result of ongoing cost-containment efforts.
Interest Income, Net
For the nine months ended September 30, 2026, interest income, net was $121,000, consisting of $135,000 in interest income and $14,000 in interest expense. This compares to interest income, net of $45,000, consisting of $62,000 in interest income and $17,000 in interest expense, for the same period of 2025. The increase in interest income in 2026 reflects a higher average balance of cash, cash equivalents and investments compared to the same period in 2025.
Liquidity and Capital Resources
Liquidity
Since our inception, we have incurred operating losses related to our research and development activities and commercialization efforts, with a net loss of $5.9 million for the nine months ended September 30, 2026, and we expect these losses to continue for the near future. Although sales of our products have increased in each of the last three years-20% in 2025, 56% in 2024, and 17% in 2023-we are not yet able to fund operations by product sales alone. We have primarily funded our operations through the sale of equity securities, including common stock and warrants to purchase common stock.
Through September 30, 2026, we received net proceeds of $117.2 million primarily from the sales of our equity securities, including warrant exercises, an aggregate of $10.1 million in product sales and an aggregate of $1.7 million from licensing fees. As of September 30, 2026, cash and cash equivalents were $4.0 million, compared to cash and cash equivalents and short-term investments of $8.6 million as of December 31, 2025.
Based on our current operating plan, we believe that our cash and cash equivalents as of November 12, 2026, together with anticipated revenue and current operating expense levels, will be sufficient to fund our operations for approximately nine months. This estimate assumes no material changes in working capital requirements. Increased revenues, reduced operating expenses, or additional financing, if obtained, would further extend our cash runway.
Our projected cash runway does not assume the receipt of additional capital from equity issuances, debt financings, strategic partnerships, or other external sources. While we have evaluated and continue to evaluate our operating expenses and have focused our resources on the successful commercialization of fertility control products in the United States, additional financing will be needed in order to fund our operating losses before achieving our revenue and margin targets and becoming profitable and generating positive cash flows. We may never achieve profitability or generate positive cash flows, and unless and until we do, we will continue to need to raise capital through equity or debt financing. If revenue growth does not occur at anticipated levels, or if expenses exceed current expectations, we may be required to seek additional financing sooner than currently anticipated.
We continue to evaluate various financing alternatives, including equity offerings under our existing ATM Facility, strategic partnerships, and other capital-raising transactions. There can be no assurance that additional capital will be available on acceptable terms, if at all. If equity or debt financing is not available at adequate levels or on acceptable terms, we may need to delay, limit or terminate our commercialization and development efforts, sell certain assets, or discontinue operations, or we may be required to take other measures that could impair our ability to be successful and operate as a going concern. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest could be diluted and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder. Debt financing may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, and may be secured by all or a portion of our assets. If we fail to obtain additional capital as and when required, such failure could have a material adverse effect on our business, results of operations and financial condition.
Additional Funding Requirements
Our expenses may continue to increase in connection with our ongoing activities, particularly as we focus on marketing and sales of fertility control products. In addition, we will continue to incur costs associated with operating as a public company.
In particular, we expect to incur increased expenses as we:
•work to maximize market acceptance for, and generate sales of, our products, including by conducting field demonstrations for potential lead customers;
•explore strategic partnerships to enable us to penetrate additional target markets and geographical locations;
•manage the infrastructure for sales, marketing and distribution of fertility control products and any other product candidates for which we may receive regulatory approval;
•seek additional regulatory approvals for fertility control products, including to more fully expand the market and use for fertility control products and, if we believe there is commercial viability, for our other product candidates;
•further develop our manufacturing processes to contain costs while being able to scale to meet future demand of fertility control products and any other product candidates for which we receive regulatory approval;
•continue product development of fertility control products and advance our research and development activities and, as our operating budget permits, advance the research and development programs for other product candidates;
•maintain and protect our intellectual property portfolio; and
•add operational, financial and management information systems and personnel, including personnel to support our product development and commercialization efforts and operations as a public company.
We will need additional financing to fund these continuing and additional expenses.
Capital Resources
The following table summarizes our sources and uses of cash for each of the periods presented (in thousands):
Nine Months Ended September 30,
2026 2025
Cash and cash equivalents, beginning of period $ 7,575 $ 1,307
Net cash provided by (used in):
Operating activities (4,960) (4,086)
Investing activities 982 (3,089)
Financing activities 354 13,146
Increase (decrease) in cash and cash equivalents (3,624) 5,971
Cash and cash equivalents, end of period $ 3,951 $ 7,278
Cash Flows from Operating Activities-Cash flows from operating activities are generally determined by the amount and timing of cash received from customers and payments made to vendors, as well as the nature and amount of non-cash items, including depreciation and amortization and stock-based compensation included in operating results during a given period.
During the nine months ended September 30, 2026, operating activities used $5.0 million of cash, resulting from our net loss of $5.9 million, partially offset by net non-cash charges of $591,000, consisting primarily of stock-based compensation, depreciation and amortization, and operating lease expenses, and a $300,000 net increase in cash resulting from changes in operating assets and liabilities. Our net loss was driven by costs related to our selling, marketing, general and administrative activities resulting from our continued efforts to commercialize our products, combined with research and development costs related to our continued efforts on formulations of new products and improvements to existing products. The net increase in cash from changes in operating assets and liabilities primarily resulted from an increase in accounts payable and accrued expenses of $406,000 and a decrease in inventory of $28,000. This increase was partially offset by a $101,000 increase in prepaid expenses and a $46,000 increase in accounts receivable.
During the nine months ended September 30, 2025, operating activities used $4.1 million of cash. This consisted of a net loss of $4.6 million, partially offset by $418,000 of non-cash charges, consisting primarily of stock-based compensation, depreciation and amortization, and operating lease expenses, and a $75,000 net increase in cash resulting from changes in operating assets and liabilities. The net loss was primarily attributable to selling, marketing, general and administrative expenses associated with our efforts to commercialize our products, as well as research and development expenses. The net increase in cash from changes in operating assets and liabilities primarily resulted from an increase in accounts payable and accrued expenses of $77,000 and decreases in prepaid expenses of $64,000, inventory of $27,000, and other assets related to the return of facility deposits of $22,000. This increase was partially offset by a $125,000 increase in accounts receivable.
Cash Flows from Investing Activities-Cash flows from investing activities consist of transactions involving held-to-maturity investments and purchases of property and equipment. For the nine months ended September 30, 2026, investing activities provided $1.0 million of cash, consisting of $1.0 million from the maturity of a held-to-maturity investment, partially offset by $18,000 of purchases of property and equipment. For the nine months ended September 30, 2025, investing activities used $3.1 million of cash, consisting of $3.0 million of purchases of held-to-maturity investments and $125,000 of purchases of property and equipment.
Cash Flows from Financing Activities-Financing activities provide cash for both day-to-day operations and capital requirements as needed. For the nine months ended September 30, 2026, net cash provided by financing activities consisted of $400,000 of net proceeds received from the issuance of common stock under our ATM Facility, partially offset by $46,000 of repayments on notes payable. For the nine months ended September 30, 2025, net cash provided by financing activities consisted of $10.5 million of net proceeds received from the exercise of warrants and $2.7 million of net proceeds from the issuance of common stock under our ATM Facility, partially offset by $42,000 of repayments on notes payable.
Critical Accounting Policies and Estimates
There have been no material changes to our critical accounting policies and estimates as previously disclosed in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 13, 2026.
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