We are offering up to 5,400,000 shares of our common stock and
warrants to purchase an aggregate of 4,050,000 shares of our common stock in a firm commitment public offering for a price equal
to $1.00 per share of common stock, including the warrant. Each share of common stock is being sold together with a warrant to
purchase up to 0.75 of a share of our common stock, at an exercise price of $1.50 per share. The warrants will be exercisable immediately
and will expire five years from the date of issuance. The shares of common stock and warrants can only be purchased together in
this offering but will be issued separately and will be immediately separable upon issuance.
Our common stock is listed on The NASDAQ Capital Market under
the symbol “SNES.” On November 17, 2017, the last reported sale price for our common stock on The NASDAQ Capital
Market was $0.86 per share. There is no established public trading market for the warrants, and we do not expect a market
to develop. In addition, we do not intend to apply for a listing of the warrants on any national securities exchange.
We are an “emerging growth company” as defined in
Section 2(a) of the Securities Act of 1933 and are subject to reduced public company reporting requirements. See “Prospectus
Summary — Implications of Being an Emerging Growth Company.”
(1) The public offering price is $1.00 per
share of common stock including the warrant to purchase 0.75 of a share of common stock.
(2) We refer you to “Underwriting”
beginning on page 20 for additional information regarding total underwriting compensation.
We granted the underwriters an option for 30 days to purchase
up to an additional 810,000 shares and warrants to purchase 607,500 shares of our common stock. If the underwriters exercise the
option in full, the total underwriting discounts and commissions payable by us will be $434,700, and the total proceeds to us,
before expenses, will be $5,775,300.
Delivery of the shares and warrants will be made on or about
November 21, 2017.
PROSPECTUS SUMMARY
This summary highlights information contained in other parts
of this prospectus or incorporated by reference into this prospectus from our filings with the Securities and Exchange Commission,
or the SEC as described later in the prospectus. Because it is only a summary, it does not contain all of the information that
you should consider before investing in shares of our common stock or warrants to purchase shares of our common stock and it is
qualified in its entirety by, and should be read in conjunction with, the more detailed information appearing elsewhere in this
prospectus, including the information incorporated by reference in this prospectus. You should read the entire prospectus and the
information incorporated by reference carefully, including the Sections titled “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and our audited financial statements and unaudited
condensed financial statements and the related notes, before deciding to buy shares of our common stock or warrants to purchase
shares of our common stock. Unless the context requires otherwise, references in this prospectus to “Registrant,” “SenesTech,”
“we,” “us” and “our” refer to SenesTech, Inc.
Overview
We have developed and are seeking to commercialize globally
a proprietary technology for managing animal pest populations through fertility control. We believe our innovative non-lethal approach,
targeting reproduction, is more humane, less harmful to the environment, and more effective in providing a sustainable solution
to pest infestations than traditional lethal pest management methods. Our approach is designed to promote food security and reduce
infrastructure damage, disease outbreaks, environmental contamination and other costs associated with rodent infestations. Our
first fertility control product candidate, ContraPest, is being marketed for use in controlling rat populations. We were granted
U.S. Environmental Protection Agency, or the EPA, registration approval for ContraPest effective August 2, 2016. Before we can
begin selling ContraPest in the United States, we must obtain registration from the various state regulatory agencies. To date,
we have received registration for ContraPest in 49 states and the District of Columbia, with applications in California pending.
We have commenced the manufacturing, marketing and sale of ContraPest.
Current Problem
Rodent populations cause significant harm by:
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Decreasing worldwide food supply
— rodents destroy crops through consumption and contamination, and
the Quality Assurance and Food Safety magazine estimated that in 2014, 20% of stored food was lost due to rodent activity.
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Damaging public infrastructure
— rodents cause significant damage to public
infrastructure, estimated by researchers at the National Wildlife Research Center in 2007 at over $27.0 billion in the United States
alone on an annual basis.
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Transmitting disease
— rodents transmit disease and deadly pathogens to
humans and other species. According to the Center for Disease Control, over 35 human diseases are transmitted by rodents.
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Current efforts to control rodent populations include the use
of lethal chemical agents, also referred to as rodenticides, the sale of which constituted a $900 million market worldwide in 2013
and is expected to exceed a $1 billion market worldwide in 2017. In the United States, there are currently 193 such products registered
by the EPA. These lethal rodenticides, however, have a number of serious shortcomings, including:
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Not a long-term solution
— the initial decline in rodent population exposed to rodenticides is typically
followed by a “population rebound” as the surviving rodents quickly reproduce and rodents from surrounding areas migrate
in at the affected area. Many rodent populations return to their original size within six to nine months.
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Ineffective delivery method
— due to their understanding of cause and
effect, rodents will generally not consume food that they have seen adversely affect other rodents nor will they select poor-tasting
rodenticides over other food sources.
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Unsafe
— rodenticides contain lethal chemicals that can be toxic to humans
and other animals, which has resulted in the EPA and similar authorities in other jurisdictions placing restrictions on the sale
and use of rodenticides.
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Harmful to the environment
— the poisons in rodenticides can accumulate
in the bodies of rodents, transfer to other animals and contaminate the area where the rodent dies.
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Inhumane
— lethal chemicals gradually culminate in the death of the rodent
exposed to rodenticides over five to ten days, marked by extreme discomfort and pain. This raises moral concerns, particularly
in regions such as India.
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Our Solution — Fertility
Control
Our fertility control product candidate, ContraPest, targets
the reproductive capabilities of rats by inducing the gradual loss of eggs in female rats and disruption of sperm in male rats,
resulting in contraception that can progress to sterility in both females and males. By targeting rat fertility, our solution is:
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Sustainably effective —
ContraPest causes rat populations to remain at a sustained low level, as demonstrated
by studies in which we have observed decreases in wild rat populations of more than 40% over a 12-week period. We believe this
decrease in population will continue and, based on studies conducted by third parties, will stabilize at an approximately 70% reduction
in 12 months without rebound (based on an initial population of approximately 10,000 rats). The “population rebound”
effect is reduced in a rat population treated with ContraPest because the non-reproductive rats continue to defend their territory
from invasion by other rats. Also, we have observed that the contraceptive effect of ContraPest in reducing rat population is present
regardless of the amount consumed by any particular rat in that population.
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Targeted delivery
— our proprietary bait delivery method appears to be
attractive to rats, can be placed in strategic feeding locations in our proprietary bait station, and delivers active ingredients
directly to targeted reproductive organs.
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Low Hazard
— studies of ContraPest have demonstrated that ContraPest is
not lethal to rats and when used as directed is not harmful to people or other animals, nor does it accumulate in rats or pose
a risk of secondary exposure to predators of rats.
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Environmentally friendly
— ContraPest does not contain poisons, breaks
down into inactive ingredients when it comes in contact with soil or water in the environment and utilizes a closed delivery system
designed to prevent exposure to non-target species and the environment.
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Humane
— our solution neither results in rat death nor causes physical
suffering in rats.
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Proprietary Technology
Our intellectual property portfolio supporting ContraPest and
other product candidates consists of nine U.S. and international patent filings addressing the ContraPest compound. Any issued
claims would have a patent term extending to 2033 or longer based on patent term determinations in each of the filing countries.
We have filed an international patent application covering our novel bait station device to effectively and efficiently deliver
our rodent bait at individual bait sites that would, if issued, offer patent term protection through at least 2036. In addition,
we utilize proprietary data and trade secrets to further protect our product candidates.
We have an exclusive patent license with the University of Arizona
for background intellectual property that we plan to employ for future product development in the domestic animal fertility control
market. The patent claims in the United States, Australia and New Zealand cover the use of the 4-vinylcyclohexene diepoxide to
deplete ovarian follicles in individual mammals and mammal populations. The license agreement, signed in 2005, will terminate with
the last to expire patent claims, which have a term extending to 2026.
Our Strategy
Our goal is to become a leader in fertility control technology
designed to promote food security and reduce infrastructure damage, disease outbreaks, environmental contamination and other costs
associated with pest infestations and poor animal health. Key elements of our strategy are:
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Obtain regulatory approval for our lead product candidate, ContraPest, throughout the United States, and in the EU and other
parts of the world.
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Continue to develop and establish third party relationships with manufacturing, marketing and
distribution partners in the United States and internationally.
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Educate our target markets on the long-term benefits our fertility control solution provides
over lethal approaches.
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Establish a secure supply of active ingredients, including triptolide, by cultivating a diverse
base of traditional agricultural suppliers and developing bio-synthetic or other alternative sources of triptolide.
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Leverage our scientific research and core technologies to develop and commercialize a broad suite
of products.
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Our Third Party Relationships
and Commercialization Plans
To date, we have entered into arrangements with the following
manufacturing, marketing and distributions partners:
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NeoVenta
— Pursuant to our agreement with NeoVenta Solutions, a sales and marketing company, we granted
to NeoVenta an exclusive license for up to 10 years to represent us in the marketing, sales and distribution of ContraPest in India
and certain surrounding Southeast Asian countries at such time, if any, that regulatory approval in these countries has been obtained.
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Bioceres
— Under our agency agreement with INMET, the research and development subsidiary of Bioceres,
Inc., a leading agricultural biotechnology company in Argentina, we have authorized INMET, which specializes in bacterial fermentation
solutions, to seek regulatory approval for and conduct pre-sales marketing of ContraPest in Argentina. We intend to create a joint
venture entity with INMET that would manage all sales and marketing of ContraPest in Argentina. We also have a services agreement
with INMET to provide research and development services to develop an efficient production method for a bio-synthetic version of
triptolide.
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To date, we have not generated any meaningful revenue from product
sales, but we currently are focused on commercializing ContraPest in the United States. We also intend to market ContraPest in
international jurisdictions directly and through our existing and future strategic relationships. Target segments for ContraPest
include government (e.g., subways, transit systems and public housing agencies); healthcare; agriculture (e.g., farms, storage
facilities and protein production facilities (including cattle, sheep, pig and poultry facilities)); food production (e.g., factories,
meat-packing facilities, dairy production plants and vegetable and fruit preparation facilities); animal care facilities (e.g.,
zoos, animal sanctuaries and conservation groups); and commercial facilities (e.g., major restaurant chains, retail locations,
casinos and hotels). In addition, we intend to approach large pest management companies to pursue potential partnerships for the
distribution and sale of ContraPest.
Regulatory Strategy
While the EPA has granted us exclusive-use status for ContraPest,
this approval was granted on a restricted-use basis, including indoor and limited outdoor use, and is based on a liquid formation.
We intend to diligently pursue additional related regulatory approvals from the EPA to support our product evolution, including
seeking approval for full outdoor use, removal of the restricted-use status, alternative formulations and for additional species
(utilizing approved active ingredients). In addition, we believe that the EPA will support us in facilitating regulatory reviews
outside of the United States. See “Business — Government Regulation and Product Approval” in our Annual
Report on Form 10-K/A for the year ended December 31, 2016 for additional information.
Risk Factors
Our business is subject to numerous risks and uncertainties,
including those highlighted in the section entitled “Risk Factors” in this prospectus and in the section entitled “Risk
Factors” in our most recent Annual Report on Form 10-K/A, as well as any amendment or update to our risk factors reflected
in subsequent filings under the Securities and Exchange Act of 1934, as amended, or the Exchange Act.
These risks include, among others, the following:
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We have incurred significant operating losses every quarter since our inception; specifically, for the year ended December
31, 2016, we reported a net loss of approximately $11.0 million, and for the nine months ended September 30, 2017, we reported
a net loss of approximately $10.0 million, and we anticipate that we will continue to incur significant operating losses in the
future.
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We have limited internal full-scale manufacturing capability and we may rely upon third parties
to manufacture our products or expand our own additional manufacturing capacity.
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We will require significant new revenue or additional capital to fund our operations. Failure
to obtain necessary capital when needed may force us to delay, limit, or terminate our product development efforts or our operations.
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Our future success is dependent on the regulatory approval and commercialization of ContraPest
and our other product candidates. We have had few sales to date, with revenue of approximately $17,000 in our quarter ended September
30, 2017.
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Regulatory approval processes are lengthy, time-consuming and unpredictable, and if we are ultimately
unable to obtain sufficient regulatory approval for ContraPest or our other product candidates, our business may fail.
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ContraPest and our other product candidates, if approved, may not achieve adequate market acceptance
necessary for commercial success.
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We are only beginning to market our products, and if we are unable to establish an effective
sales force and marketing and distribution infrastructures, or enter into and rely upon acceptable third party relationships, we
may be unable to generate any revenue.
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We depend on key personnel to operate our business. If we are unable to retain, attract, and
integrate qualified personnel, our ability to develop and successfully grow our business could be harmed.
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We are dependent on a key ingredient for ContraPest, triptolide, which has been expensive and
must be in a very refined condition.
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If we are unable to obtain or protect intellectual property rights, our competitive position
could be harmed.
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Implications of Being an Emerging
Growth Company
We are an “emerging growth company” as defined in
the Jumpstart Our Business Startups Act, or the JOBS Act, and therefore we have elected to comply with certain reduced disclosure
and regulatory requirements for this prospectus and future filings, including only presenting two years of audited financial statements
and related financial information, not having our internal control over financial reporting audited by our independent registered
public accounting firm pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, reduced disclosure
obligations regarding executive compensation and not holding a nonbinding advisory vote on executive compensation and any golden
parachute payments. We may take advantage of these reduced requirements until we are no longer an “emerging growth company.”
Under Section 107(b) of the JOBS Act, “emerging growth companies” may take advantage of an extended transition period
to comply with new or revised accounting standards applicable to public companies. We have irrevocably elected not to avail ourselves
of this extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates on
which adoption of such standards is required for other public companies.
Corporate and Other Information
We were incorporated in Nevada in July 2004 and reincorporated
in Delaware in November 2015. Our principal executive offices are located at 3140 N. Caden Court, Suite 1, Flagstaff, Arizona 86004,
and our telephone number is (928) 779-4143. Our corporate website address is
www.senestech.com
. Information contained on
or accessible through our website is not a part of this prospectus, and the inclusion of our website address in this prospectus
is an inactive textual reference only.
This prospectus contains references to our trademarks and to
trademarks belonging to other entities. Solely for convenience, trademarks and trade names referred to in this prospectus, including
logos, artwork and other visual displays, may appear without the ® or TM symbols, but such references are not intended to indicate,
in any way, that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. We
do not intend our use or display of other companies’ trade names or trademarks to imply a relationship with, or endorsement
or sponsorship of us by, any other companies.
THE OFFERING
Common stock offered by us
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5,400,000 shares of common stock
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Warrants offered by us in this offering
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Warrants to purchase up to 4,050,000 shares of common stock. Each share of our common stock is being sold together with a warrant to purchase 0.75 of a share of our common stock. Each warrant will have an exercise price of $1.50 per share, will be immediately exercisable and will expire on the fifth anniversary of the original issuance date. This prospectus also relates to the offering of the shares of common stock issuable upon exercise of the warrants.
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Common stock to be outstanding after this offering
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15,789,497 shares of common stock (assuming none of the warrants issued in this offering are exercised).
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Option to purchase additional shares and warrants
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The underwriters have an option for a period of 30 days to purchase up to 810,000
additional shares of common stock and warrants to purchase up to an additional 607,500 shares of common stock.
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Use of proceeds
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We intend to use the net proceeds of this offering for working capital and general corporate purposes, including those related to the commercialization of ContraPest.
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Risk Factors
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You should read the “Risk Factors” section of this prospectus for a discussion of certain of the factors to consider carefully before deciding to purchase any shares of our common stock and warrants in this offering.
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NASDAQ Capital Market symbol
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Our common stock is listed on the NASDAQ Capital Market under the symbol “SNES.” We do not intend to list the warrants on any national securities exchange or nationally recognized trading system.
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The number of shares of our common stock to be outstanding after
this offering is based on 10,389,497 shares of common stock outstanding as of November 7, 2017, which excludes:
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1,558,800 shares of common stock issuable upon the exercise of stock options outstanding as of November 7, 2017;
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344,982 shares of common stock issuable upon the vesting of restricted stock units outstanding
as of November 7, 2017;
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829,285 shares of common stock issuable upon the exercise of outstanding common stock warrants
as of November 7, 2017, at a weighted-average exercise price of $9.88 per share;
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Shares issuable upon the exercise of warrants to be issued in this offering, including the Underwriter’s
Warrant; and
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785,095 shares of common stock available for future issuance under our 2015 Equity Incentive
Plan, or the 2015 Plan, as of November 7, 2017.
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RISK FACTORS
Investing in our common stock and warrants involves a number
of risks. You should not invest unless you are able to bear the complete loss of your investment. You should carefully consider
the risks described below and discussed under the section entitled “Risk Factors” in our most recent Annual Report
on Form 10-K/A, as well as any amendment or updates to our risk factors reflected in subsequent filings under the Exchange Act,
including but not limited to our most recent Quarterly Report on Form 10-Q/A, which are incorporated herein by reference in their
entirety, together with other information in this prospectus and the information and documents incorporated by reference in this
prospectus. These risks and uncertainties described below or otherwise incorporated herein by reference are not the only risks
and uncertainties we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also
may impair our business operations. If any of the following risks actually occur, our business could be harmed. In such case, the
trading price of our common stock could decline and investors could lose all or a part of the money paid to buy our common stock
and warrants. Our actual results could differ materially from those anticipated in these forward-looking statements as a result
of these and other factors.
Risks Related to This Offering
and Owning Shares of Our Common Stock and Warrants
Purchasers in the offering will suffer immediate dilution.
If you purchase common stock in this offering, the value of
your shares based on our actual book value will immediately be less than the offering price you paid. This reduction in the value
of your equity is known as dilution. At the assumed public offering price of $1.00 per share and accompanying warrants, purchasers
of common stock in this offering will experience immediate dilution of approximately $0.46 per share. Based upon the as adjusted
net tangible book value of our common stock at September 30, 2017, your shares may be worth less per share than the price you paid
in the offering. If the options and warrants we previously granted are exercised, additional dilution will occur. As of November
7, 2017, options to purchase 1,558,800 shares of common stock at a weighted-average exercise price of $1.73 per share were outstanding,
344,982 shares of common stock issuable upon the vesting of restricted stock units were outstanding and warrants to purchase 829,285
shares of common stock at a weighted-average exercise price of $9.88 per share were outstanding. Furthermore, if the underwriters
exercise the warrants to be issued to them as compensation in connection with this offering or if we raise additional funding by
issuing additional equity securities, the newly-issued shares will further dilute your percentage ownership of our shares and may
also reduce the value of your investment.
There is no public market for the warrants being offered
in this offering.
There is no established public trading market for the warrants
being offered in this offering, and we do not expect a market to develop. In addition, we do not intend to apply to list the warrants
on any securities exchange or nationally recognized trading system, including The NASDAQ Capital Market. Without an active market,
the liquidity of the warrants will be limited.
Our share price may be volatile, which could subject us
to securities class action litigation and prevent you from being able to sell your shares at or above the offering price.
Our stock could be subject to wide fluctuation in response to
many risk factors listed in this section or incorporated by reference into this prospectus, and others beyond our control, including:
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Market acceptance and commercialization of our products;
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Our being able to timely demonstrate achievement of milestones, including those related to revenue
generation, cost control, cost effective source supply, and regulatory approvals;
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Results and timing of our submissions with the regulatory authorities;
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Failure or discontinuation of any of our development programs;
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Regulatory developments or enforcements in the United States and non-U.S. countries with respect
to our products or our competitors’ products;
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Failure to achieve pricing acceptable to the market;
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Actual or anticipated fluctuations in our financial condition and operating results, or our continuing
to sustain operating losses;
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Competition from existing products or new products that may emerge;
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Announcements by us or our competitors of significant acquisitions, strategic partnerships, joint
ventures, collaborations, or capital commitments;
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Issuance of new or updated research or reports by securities analysts;
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Announcement or expectation of additional financing efforts, particularly if our cash available
for operations significantly decreases;
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Fluctuations in the valuation of companies perceived by investors to be comparable to us;
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Share price and volume fluctuations attributable to inconsistent trading volume levels of our
shares;
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Additions or departures of key management or scientific personnel;
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Disputes or other developments related to proprietary rights, including patents, litigation matters,
and our ability to obtain patent protection for our technologies;
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Entry by us into any material litigation or other proceedings;
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Sales of our common stock by us, our insiders, or our other stockholders;
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Market conditions for stocks in general; and
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General economic and market conditions unrelated to our performance.
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Furthermore, the stock markets have experienced extreme price
and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These
fluctuations often have been unrelated or disproportionate to the operating performance of those companies. These broad market
and industry fluctuations, as well as general economic, political, and market conditions such as recessions, interest rate changes,
or international currency fluctuations, may negatively impact the market price of shares of our common stock. In addition, such
fluctuations could subject us to securities class action litigation, which could result in substantial costs and divert our management’s
attention from other business concerns, which could seriously harm our business. If the market price of shares of our common stock
after this offering does not exceed the initial public offering price, you may not realize any return on your investment in us
and may lose some or all of your investment.
If securities or industry analysts do not publish research
or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.
The trading market for our common stock is impacted by the research
and reports that securities or industry analysts publish about us or our business. We do not have any control over these analysts.
We cannot assure that analysts will continue to cover us or provide favorable coverage. If one or more of the analysts who cover
us downgrade our stock or change their opinion of our stock, our share price would likely decline. If one or more of these analysts
cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could
cause our stock price or trading volume to decline.
We have broad discretion in the use of the net proceeds
from this offering and may not use them effectively.
We currently intend to allocate the net proceeds that we will
receive from this offering as described in this prospectus under the “Use of Proceeds” section of this prospectus.
However, our management will have broad discretion in the actual application of the net proceeds, and we may elect to allocate
proceeds differently from that described herein if we believe it would be in the best interest of the Registrant to do so. Our
stockholders may not agree with the manner in which our management chooses to allocate and spend the net proceeds. The failure
by our management to apply these funds effectively could have a material adverse effect on our business. Pending their use, we
may invest the net proceeds from this offering in a manner that does not produce income or that loses value.
Future sales, or the possibility of future sales, of a
substantial number of our common shares could adversely affect the price of the shares and dilute stockholders.
Future sales of a substantial number of our common shares, or
the perception that such sales will occur, could cause a decline in the market price of our common shares. This is particularly
true if we sell our stock at a discount. In addition, in connection with this offering, our directors and executive officers entered
into lock-up agreements. If, after the end of such lock-up agreements, these stockholders sell substantial amounts of common shares
in the public market, or the market perceives that such sales may occur, the market price of our common shares and our ability
to raise capital through an issue of equity securities in the future could be adversely affected.
In addition, in the future, we may issue additional common shares
or other equity or debt securities convertible into common shares in connection with a financing, acquisition, litigation settlement,
employee arrangements, or otherwise. Any such issuance could result in substantial dilution to our existing stockholders and could
cause our common share price to decline.
Holders of warrants purchased in this offering will have
no rights as common stockholders until such holders exercise their warrants and acquire our common stock.
Until holders of warrants acquire shares of our common stock
upon exercise of the warrants, holders of warrants will have no rights with respect to the shares of our common stock underlying
such warrants. Upon exercise of the warrants, the holders will be entitled to exercise the rights of a common stockholder only
as to matters for which the record date occurs after the exercise date.
We are an “emerging growth company” as that
term is used in the JOBS Act, and we intend to continue to take advantage of reduced disclosure and governance requirements applicable
to emerging growth companies, which could result in our common stock being less attractive to investors and adversely affect the
market price of our common stock or make it more difficult to raise capital as and when we need it.
We are an “emerging growth company” as that term
is used in the JOBS Act, and we intend to continue to take advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required
to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding
executive compensation in our periodic reports and proxy statements, exemptions from the requirements of holding a nonbinding advisory
vote on executive compensation and stockholder approval of any golden parachute payments not previously approved, and exemptions
from any rules that the Public Company Accounting Oversight Board may adopt requiring mandatory audit firm rotation or a supplement
to the auditor’s report on the financial statements. We currently take advantage of some, but not all, of the reduced regulatory
and reporting requirements that are available to us under the JOBS Act, and intend to continue to do so as long as we qualify as
an “emerging growth company.” For example, so long as we qualify as an “emerging growth company,” we may
elect not to provide you with certain information, including certain financial information and certain information regarding compensation
of our executive officers, that we would have otherwise been required to provide in filings we make with the SEC, which may make
it more difficult for investors and securities analysts to evaluate us.
We cannot predict if investors will find our common stock less
attractive because we will rely on these exemptions. If some investors find our common stock less attractive as a result, there
may be a less active trading market for our common stock and our stock price may be more volatile. We may take advantage of these
reporting exemptions until we are no longer an emerging growth company, which in certain circumstances could be for up to five
years. See “Prospectus Summary-Implications of Being an Emerging Growth Company.”
Because of the exemptions from various reporting requirements
provided to us as an “emerging growth company,” we may be less attractive to investors and it may be difficult for
us to raise additional capital as and when we need it. Investors may be unable to compare our business with other companies in
our industry if they believe that our financial accounting is not as transparent as other companies in our industry. If we are
unable to raise additional capital as and when we need it, our business, results of operations, financial condition and cash flows,
and future prospects may be materially and adversely affected.
FORWARD-LOOKING STATEMENTS AND INDUSTRY
DATA
This prospectus and the documents incorporated by reference
herein contain forward-looking statements. These statements relate to future events or to our future financial performance and
involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements
to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
Forward-looking statements include, but are not limited to, statements about:
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The potential opportunities for commercializing our product candidates;
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The effectiveness of our solution and our strategy;
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Our ability to source key product ingredients and at commercially acceptable prices;
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The likelihood of regulatory approvals for our product candidates;
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The anticipated results and effects of our product candidates;
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Our expectations regarding the potential market size for our products candidates, if approved
for commercial use;
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Estimates of our expenses, capital requirements and need for additional financing and the ability
to fund operations;
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Our ability to enter into strategic partnership agreements and to achieve the expected results
from such arrangements;
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The initiation, timing, progress and results of future laboratory and field studies and our research
and development programs;
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Our ability to manufacture our product candidates in a commercially efficient manner;
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The scope of protection we are able to obtain and maintain for our intellectual property rights
covering our product candidates;
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Our use of proceeds from this offering;
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Our financial performance;
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Developments and projections relating to our competitors and our industry; and
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Our ability to sell our products at commercially reasonable values.
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In some cases, you can identify forward-looking statements by
terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,”
“could,” “intend,” “target,” “project,” “contemplate,” “believe,”
“estimate,” “predict,” “potential,” or “continue” or the negative of these terms
or other similar expressions. These statements are only current predictions and are subject to known and unknown risks, uncertainties
and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to
be materially different from those anticipated by the forward-looking statements. We discuss many of these risks in this prospectus
in greater detail under the heading “Risk Factors” and elsewhere in this prospectus. You should not rely upon forward-looking
statements as predictions of future events. New risk factors and uncertainties may emerge from time to time, and it is not possible
for management to predict all risks and uncertainties.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required
by law, after the date of this prospectus, we are under no duty to update or revise any of the forward-looking statements, whether
as a result of new information, future events or otherwise.
We obtained the industry, market and competitive position data
in this prospectus from our own internal estimates and research as well as from industry and general publications and research
surveys and studies conducted by third parties. While we believe that each of these studies and publications is reliable, we have
not independently verified market and industry data from third-party sources. While we believe our internal company research is
reliable and the market definitions we use are appropriate, neither such research nor these definitions have been verified by any
independent source.
USE OF PROCEEDS
We estimate that our net proceeds from the sale of shares of
our common stock and warrants in this offering will be approximately $4.7 million (or $5.5 million if the underwriters exercise
in full their option to purchase additional shares and warrants from us), based on the initial public offering price of $1.00 per
share and accompanying warrant, after deducting underwriting discounts and commissions and estimated offering expenses payable
by us, and excluding the proceeds, if any, from the exercise of the warrants issued in this offering. Each $0.25 increase (decrease)
in the assumed combined public offering price of $1.00 per share would increase (decrease) the net proceeds to us from this offering
by approximately $1.2 million, or approximately $1.4 million if the underwriters exercise their over-allotment option in full,
assuming the number of shares and warrants offered by us, as set forth on the cover page of this prospectus, remains the same,
after deducting the estimated underwriting discount and estimated offering expenses payable by us. We may also increase or decrease
the number of shares of our common stock and warrants we are offering. An increase (decrease) of 300,000 shares sold in this offering
would increase (decrease) the expected net proceeds of the offering to us by approximately $0.3 million, assuming that the assumed
combined public offering price per share and the related warrant coverage remains the same.
We intend to use the net proceeds of this offering for working
capital and general corporate purposes, including those related to commercialization of ContraPest. The expected use of the net
proceeds from this offering represents our intentions based upon our current plans and business conditions, which could change
in the future as our plans and business conditions evolve. The amounts and timing of our actual expenditures will depend on numerous
factors, including the progress of our product development efforts and market acceptance of our products. As a result, our management
will have broad discretion in applying the net proceeds from this offering. Pending the use of proceeds described above, we intend
to invest the net proceeds from this offering in interest-bearing, investment-grade securities.
DILUTION
If you invest in our common stock and warrants in this offering,
your ownership interest will be immediately diluted to the extent of the difference between the public offering price per share
and the as adjusted net tangible book value per share of our common stock after this offering.
Our historical net tangible book value (deficit) as of September
30, 2017 was approximately $3.7 million, or $0.36 per share of common stock. Our historical net tangible book value (deficit) is
the amount of our total tangible assets less our total liabilities. Historical net tangible book value (deficit) per share is our
historical net tangible book value (deficit) divided by the weighted average number of shares of common stock outstanding as of
September 30, 2017.
After giving effect to the sale of shares of common stock and
warrants in this offering, at an assumed public offering price of $1.00 per share and accompanying warrant, and after deducting
the estimated underwriting discounts and commissions and estimated offering expenses payable by us and excluding the proceeds,
if any, from the exercise of the warrants issued in this offering, our as adjusted net tangible book value as of September 30,
2017 would have been approximately $8.4 million, or $0.54 per share of common stock. This represents an immediate increase in net
tangible book value of $0.18 per share to existing stockholders and an immediate dilution in net tangible book value of $0.46 per
share to new investors purchasing shares of our common stock and accompanying warrants in this offering.
If the underwriters exercise in full their option to purchase
additional shares of our common stock and accompanying warrants from us, the net tangible book value per share, as adjusted to
give effect to the offering, would be $ 0.56 per share, and the dilution in net tangible book value per share to $ 0.44. The following
table illustrates this dilution on a per share basis:
Assumed combined public offering price per share and accompanying warrant
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$
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1.00
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Historical net tangible book value per share as of September 30, 2017
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0.36
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As adjusted increase in net tangible book value per share attributable to investors in this offering
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0.18
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As adjusted net tangible book value per share after this offering
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0.54
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Dilution per share to investors participating in this offering
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$
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0.46
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The foregoing tables and calculations as of September 30, 2017
exclude the following potentially dilutive shares of common stock:
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1,558,800 shares of common stock issuable upon the exercise of stock options outstanding as of November 7, 2017, at a weighted
average exercise price of $1.73 per share;
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344,982 shares of common stock issuable upon the vesting of restricted stock units outstanding as of November 7, 2017;
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829,285 shares of common stock issuable upon the exercise of outstanding common stock warrants as of November 7, 2017, at a
weighted-average exercise price of $9.88 per share;
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Shares issuable upon the exercise of warrants to be issued in connection with this offering; and
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785,095 shares of common stock available for future issuance under our 2015 Plan as of November 7, 2017.
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To the extent that any outstanding common stock options and
common stock warrants are exercised or there are additional issuances of common stock options, common stock warrants or shares
of our common stock in the future, there will be further dilution to investors participating in this offering.
DESCRIPTION OF SECURITIES TO BE REGISTERED
We are offering (i) 5,400,000 shares of our common stock and
(ii) warrants to purchase up to 4,050,000 shares of our common stock. The shares of common stock and warrants will be issued separately.
We are also registering the shares of common stock issuable from time to time upon exercise of the warrants offered hereby.
Common Stock
The material terms and provisions of our common stock are described
herein under the caption “Description of Capital Stock.”
Warrants
The following summary of certain terms and provisions of
warrants that are being offered hereby is not complete and is subject to, and qualified in its entirety by, the provisions of the
warrant, the form of which is filed as an exhibit to the registration statement of which this prospectus forms a part. Prospective
investors should carefully review the terms and provisions of the form of warrant for a complete description of the terms and conditions
of the warrants.
Form.
The warrants will be issued on individual warrant
agreements to investors.
Duration and Exercise Price
. Each warrant offered hereby
will have an exercise price per share equal to $1.50. The warrants will be immediately exercisable and will expire on the fifth
anniversary of the original issuance date. The exercise price and number of shares of common stock issuable upon exercise is subject
to appropriate adjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting our common
stock and the exercise price. The warrants will be issued separately from the common stock, and may be transferred separately immediately
thereafter. A warrant to purchase 0.75 shares of our common stock will be issued for every one share of common stock purchased
in this offering.
Exercisability
. The warrants will be exercisable, at
the option of each holder, in whole or in part, by delivering to us a duly executed exercise notice accompanied by payment in full
for the number of shares of our common stock purchased upon such exercise (except in the case of a cashless exercise as discussed
below). A holder (together with its affiliates) may not exercise any portion of the warrant to the extent that the holder would
own more than 4.99% of the outstanding common stock after exercise, except that upon at least 61 days’ prior notice from
the holder to us, the holder may increase the amount of ownership of outstanding stock after exercising the holder’s warrants
up to 9.99% of the number of shares of our common stock outstanding immediately after giving effect to the exercise, as such percentage
ownership is determined in accordance with the terms of the warrants. No fractional shares of common stock will be issued in connection
with the exercise of a warrant. In lieu of fractional shares, we will either pay the holder an amount in cash equal to the fractional
amount multiplied by the exercise price or round up to the next whole share.
Cashless Exercise
. If, at the time a holder exercises
its warrant, a registration statement registering the issuance of the shares of common stock underlying the warrants under the
Securities Act is not then effective or available and an exemption from registration under the Securities Act is not available
for the issuance of such shares, then in lieu of making the cash payment otherwise contemplated to be made to us upon such exercise
in payment of the aggregate exercise price, the holder may elect instead to receive upon such exercise (either in whole or in part)
the net number of shares of common stock determined according to a formula set forth in the warrant.
Fundamental Transactions
. In the event of a fundamental
transaction, as described in the warrants and generally including any reorganization, recapitalization or reclassification of our
common stock, the sale, transfer or other disposition of all or substantially all of our properties or assets, our consolidation
or merger with or into another person, the acquisition of more than 50% of our outstanding common stock, or any person or group
becoming the beneficial owner of 50% of the voting power represented by our outstanding common stock, the holders of the warrants
will be entitled to receive upon exercise of the warrants the kind and amount of securities, cash or other property that the holders
would have received had they exercised the warrants immediately prior to such fundamental transaction.
Transferability
. Subject to applicable laws and the restriction
on transfer set forth in the warrant, the warrant may be transferred at the option of the holder upon surrender of the warrant
to us together with the appropriate instruments of transfer.
Exchange Listing
. We do not intend to list the warrants
on any securities exchange or nationally recognized trading system.
Right as a Stockholder
. Except as otherwise provided
in the warrants or by virtue of such holder’s ownership of shares of our common stock, the holders of the warrants do not
have the rights or privileges of holders of our common stock, including any voting rights, unless and until they exercise their
warrants.
Waivers and Amendments
. Subject to certain exceptions,
any term of the warrants may be amended or waived with our written consent and the written consent of the holders of at least a
majority of the then-outstanding warrants.
DESCRIPTION OF CAPITAL STOCK
General
The descriptions of our capital stock and certain provisions
of our amended and restated certificate of incorporation and amended and restated bylaws are summaries and are qualified by reference
to the amended and restated certificate of incorporation and amended and restated bylaws that are currently in effect. Copies of
these documents have been filed with the SEC and are incorporated by reference herein by reference.
Our amended and restated certificate of incorporation provides
for common stock and undesignated preferred stock, the rights, preferences and privileges of which may be designated from time
to time by our board of directors.
Our authorized capital stock consists of 110,000,000 shares,
all with a par value of $0.001 per share, of which 100,000,000 shares are designated as common stock and 10,000,000 shares are
designated as preferred stock.
Our outstanding capital stock was held by approximately 772
stockholders of record as of November 7, 2017.
Common Stock
The holders of our common stock are entitled to one vote per
share on all matters submitted to a vote of our stockholders. Subject to preferences that may be applicable to any preferred stock
outstanding at the time, the holders of outstanding shares of common stock are entitled to receive ratably any dividends declared
by our board of directors out of assets legally available therefor. In the event that we liquidate, dissolve or wind up, holders
of our common stock are entitled to share ratably in all assets remaining after payment of liabilities and the liquidation preference
of any then outstanding shares of preferred stock. Holders of common stock have no preemptive or conversion rights or other subscription
rights. There are no redemption or sinking fund provisions applicable to the common stock. All outstanding shares of common stock
are, and all shares of common stock to be outstanding upon the closing of this offering will be, fully paid and non-assessable.
Except as otherwise required by Delaware law, all stockholder
action, other than the election of directors or certain amendments of our amended and restated certificate of incorporation, is
taken by the vote of a majority of the outstanding shares of common stock voting as a single class present at a meeting of stockholders
at which a quorum, consisting of a majority of the outstanding shares of common stock is present in person or proxy. The election
of directors by our stockholders is determined by a plurality of the votes cast by the stockholders entitled to vote at any meeting
held for such purposes at which a quorum, consisting of a majority of the outstanding shares of common stock, is present in person
or proxy. Certain amendments to our amended and restated certificate of incorporation require the approval of holders of at least
sixty-six and two-third percent (66 2/3%) of the voting power of all then-outstanding shares of our common stock entitled
to vote generally in the election of directors, voting together as a single class.
We have never declared or paid any cash dividends on our capital
stock. We currently intend to retain all available funds and any future earnings to support our operations and finance the growth
and development of our business. We do not intend to pay cash dividends on our common stock for the foreseeable future. Any future
determination related to our dividend policy will be made at the discretion of our board of directors and will depend upon, among
other factors, our results of operations, financial condition, capital requirements, contractual restrictions, business prospects
and other factors our board of directors may deem relevant.
Preferred Stock
Our amended and restated certificate of incorporation provide
that our board of directors may, without further action by our stockholders, fix the rights, preferences, privileges and restrictions
of up to an aggregate of 10,000,000 shares of preferred stock in one or more series and authorize their issuance. These rights,
preferences and privileges could include dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences,
sinking fund terms and the number of shares constituting any series or the designation of such series, any or all of which may
be greater than the rights of our common stock. The issuance of our preferred stock could adversely affect the voting power of
holders of our common stock and the likelihood that such holders will receive dividend payments and payments upon liquidation.
In addition, the issuance of preferred stock could have the effect of delaying, deferring or preventing a change of control or
other corporate action. Upon the closing of this offering, no shares of preferred stock will be outstanding, and we have no present
plan to issue any shares of preferred stock.
Options
As of November 7, 2017, options to purchase 1,558,800 shares
of our common stock issued pursuant to our 2015 Plan at a weighted-average exercise price of $1.73 per share were outstanding.
As of November 7, 2017, we had 344,982 shares of common stock
issuable upon the vesting of restricted stock units outstanding.
Warrants
As of November 7, 2017, we had the following outstanding warrants
to acquire shares of common stock:
Warrants automatically net exercised on second anniversary
of the closing of the initial public offering
Warrants to purchase 488,119 shares of common stock having a
weighted-average exercise price of $10.74 per share, are exercisable until the earlier of (i) December 13, 2018, the second anniversary
of the closing of the initial public offering, and (ii) the closing of our liquidation, dissolution or winding up. The warrants
have a net exercise provision pursuant to which the holder may, in lieu of payment of the exercise price in cash, surrender the
warrant and receive a net amount of shares based on the fair market value of our common stock, as applicable, at the time of exercise
of the warrant after deduction of the aggregate exercise price. If the warrants are not exercised prior to the second anniversary
of the closing of the initial public offering, they will be automatically exercised pursuant to this net exercise provision. The
warrant exercise price is subject to appropriate adjustment in the event of certain stock splits, stock dividends, reclassification
and certain other defined events.
Warrants automatically net exercised on third anniversary
of the closing of the initial public offering
Warrants to purchase 138,666 shares of common stock having a
weighted-average exercise price of $7.50 per share, are exercisable until the earlier of (i) December 13, 2019, the third anniversary
of the closing of the initial public offering, and (ii) the closing of our liquidation, dissolution or winding up. The warrants
have a net exercise provision pursuant to which the holder may, in lieu of payment of the exercise price in cash, surrender the
warrant and receive a net amount of shares based on the fair market value of our common stock, as applicable, at the time of exercise
of the warrant after deduction of the aggregate exercise price. If the warrants are not exercised prior to the third anniversary
of the closing of the initial public offering, they will be automatically exercised pursuant to this net exercise provision. The
warrant exercise price is subject to appropriate adjustment in the event of certain stock splits, stock dividends, reclassification
and certain other defined events.
Other Warrants
The University of Arizona, with whom we have a license agreement,
holds a warrant to acquire 15,000 shares of common stock at an exercise price of $7.50 per share. This warrant is exercisable until
the earlier of (i) June 2020, or (ii) the closing of our liquidation, dissolution or winding up. The warrant has a net exercise
provision pursuant to which the holder may, in lieu of payment of the exercise price in cash, surrender the warrant and receive
a net amount of shares based on the fair market value of our common stock, as applicable, at the time of exercise of the warrant
after deduction of the aggregate exercise price. The warrant exercise price is subject to appropriate adjustment in the event of
certain stock splits, stock dividends, reclassification and certain other defined events.
Underwriter’s Warrants
During December 2016, in connection with our initial public
offering, we issued warrants to purchase 187,500 shares of our common stock to Roth Capital Partners at an exercise price of $9.60
per share. The warrant was fully vested and exercisable on the date of grant, and is exercisable until five years from the date
of grant. The warrant exercise price is subject to appropriate adjustment in the event of certain stock splits, stock dividends,
reclassification and certain other defined events.
Please see “Underwriting — Underwriter’s
Warrant” on page 20 for a description of the warrants we have agreed to issue to the underwriters in this offering,
subject to completion of this offering.
For additional information about outstanding warrants to acquire
shares of our common stock, please see “Item 1. Financial Statements — Notes to Condensed Financial Statements —
Note 11. Common Stock Warrants and Common Stock Warrant Liability” in our Quarterly Report on Form 10-Q filed with the SEC
on November 8, 2017.
Registration Rights
We are not party to any agreements that provide our security
holders with registration rights.
Anti-Takeover Provisions
Certificate of Incorporation and Bylaws
Because our stockholders do not have cumulative voting rights,
our stockholders holding a majority of the outstanding shares of common stock outstanding will be able to elect all of our directors.
Our amended and restated certificate of incorporation and amended and restated bylaws provide that all stockholder actions must
be effected at a duly called meeting of stockholders and not by written consent. A special meeting of stockholders may be called
by a resolution adopted by a majority of our board, class, our chair of the board, our chief executive officer or the president.
Any power of the stockholders to call a special meeting is specifically denied by the terms of our amended and restated certificate
of incorporation.
As described above in “Management — Board
Composition,” in accordance with our amended and restated certificate of incorporation our board of directors is divided
into three classes with staggered three-year terms.
The foregoing provisions make it more difficult for our existing
stockholders to replace our board of directors as well as for another party to obtain control of us by replacing our board of directors.
Since our board of directors has the power to retain and discharge our officers, these provisions could also make it more difficult
for existing stockholders or another party to effect a change in management. In addition, the authorization of undesignated preferred
stock makes it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could
impede the success of any attempt to change our control.
These provisions are intended to enhance the likelihood of continued
stability in the composition of our board of directors and its policies and to discourage certain types of transactions that may
involve an actual or threatened acquisition of us. These provisions are also designed to reduce our vulnerability to an unsolicited
acquisition proposal and to discourage certain tactics that may be used in proxy fights. However, such provisions could have the
effect of discouraging others from making tender offers for our shares and may have the effect of deterring hostile takeovers or
delaying changes in our control or management. As a consequence, these provisions also may inhibit fluctuations in the market price
of our stock that could result from actual or rumored takeover attempts.
Section 203 of the Delaware General Corporation Law
We are subject to Section 203 of the Delaware General Corporation
Law, which prohibits a Delaware corporation from engaging in any business combination with any interested stockholder for a period
of three years after the date that such stockholder became an interested stockholder, with the following exceptions:
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Before such date, the board of directors of the corporation approved either the business combination or the transaction that
resulted in the stockholder becoming an interested stockholder;
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Upon closing of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder
owned at least 85% of the voting stock of the corporation outstanding at the time the transaction began, excluding for purposes
of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) those shares
owned by (i) persons who are directors and also officers and (ii) employee stock plans in which employee participants do not have
the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
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On or after such date, the business combination is approved by the board of directors and authorized at an annual or special
meeting of the stockholders, and not by written consent, by the affirmative vote of at least sixty-six and two-third percent (66 2/3%)
of the outstanding voting stock that is not owned by the interested stockholder.
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In general, Section 203 defines business combination to include
the following:
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Any merger or consolidation involving the corporation and the interested stockholder;
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Any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder;
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Subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of
the corporation to the interested stockholder;
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Any transaction involving the corporation that has the effect of increasing the proportionate share of the stock or any class
or series of the corporation beneficially owned by the interested stockholder; or
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The receipt by the interested stockholder of the benefit of any loss, advances, guarantees, pledges or other financial benefits
by or through the corporation.
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In general, Section 203 defines an “interested stockholder”
as an entity or person who, together with the person’s affiliates and associates, beneficially owns, or within three years
prior to the time of determination of interested stockholder status did own, 15% or more of the outstanding voting stock of the
corporation.
Choice of Forum
Our amended and restated certificate of incorporation provides
that the Court of Chancery of the State of Delaware is the exclusive forum for any derivative action or proceeding brought on our
behalf; any action asserting a breach of fiduciary duty; any action asserting a claim against us arising pursuant to the Delaware
General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws; or any action
asserting a claim against us that is governed by the internal affairs doctrine.
Listing
Our common stock is listed on the NASDAQ Capital Market under
the symbol “SNES.”
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is Transfer
Online, Inc. The transfer agent and registrar’s address is 512 SE Salmon Street, Portland, Oregon 97214.
UNDERWRITING
We have entered into an underwriting agreement with the several
underwriters listed in the table below. Roth Capital Partners, LLC is the representative of the underwriters. We refer to the several
underwriters listed in the table below as the ‘‘underwriters.’’ Subject to the terms and conditions of
the underwriting agreement, we have agreed to sell to the underwriters, and the underwriters have agreed to purchase from us, shares
of our common stock and warrants to purchase shares of our common stock. Our common stock trades on the NASDAQ Capital Market under
the symbol ‘‘SNES.’’
Pursuant to the terms and subject to the conditions contained
in the underwriting agreement, we have agreed to sell to the underwriters named below, and each underwriter severally has agreed
to purchase from us, the respective number of shares of common stock and warrants to purchase common stock set forth opposite its
name below:
Underwriter
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Number of Shares
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Number of Warrants
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Roth Capital Partners, LLC
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4,860,000
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3,645,000
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Craig-Hallum Capital Group LLC
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540,000
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405,000
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Total
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5,400,000
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4,050,000
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The underwriting agreement provides that the obligation of the
underwriters to purchase the shares of common stock offered and the warrants to purchase shares of common stock by this prospectus
is subject to certain conditions. The underwriters are obligated to purchase all of the shares of common stock and the warrants
to purchase shares of our common stock offered hereby if any of the securities are purchased.
We have granted the underwriters an option to buy up to an additional
810,000 shares of common stock and warrants to purchase 607,500 shares of common stock from us at the public offering price, less
the underwriting discounts and commissions, to cover over-allotments, if any. The underwriters may exercise this option at any
time, in whole or in part, during the 30-day period after the date of this prospectus; however, the underwriters may only exercise
the option once.
Discounts, Commissions and
Expenses
The underwriters propose to offer the shares of common stock
and accompanying warrants pursuant to the underwriting agreement to the public at the public offering price set forth on the cover
page of this prospectus and to certain dealers at that price less a concession not in excess of $0.035 per share. After this offering,
the public offering price and concession may be changed by the underwriters. No such change shall change the amount of proceeds
to be received by us as set forth on the cover page of this prospectus.
Commissions
. In connection with the sale of the common
stock and warrants to be purchased by the underwriters, the underwriters will be deemed to have received compensation in the form
of underwriting commissions and discounts. The underwriter’ commissions and discounts will be 7.0% of the gross proceeds
of this offering, or $0.07 per share of common stock and the accompanying warrant, based on the public offering price per share
and warrant set forth on the cover page of this prospectus.
Underwriter’s Warrant
.
We have agreed to issue to Roth Capital Partners a warrant initially exercisable for a combination consisting of up to 540,000
shares of the Company’s common stock (an amount equal to 10% of the shares issued in the offering, excluding the option
to purchase additional shares) and investor warrants identical to the warrants sold in this offering to purchase up to 405,000
shares of common stock (an amount equal to 10% of the investor warrants issued in the offering, excluding the option to purchase
additional warrants) (the “Underwriter’s Warrant”). The Underwriter’s Warrant will have an exercise price
equal to $1.50 per combination of shares and warrants, 150% of the offering price per share of the combination of shares and investor
warrants sold in this offering. The shares and investor warrants issuable upon exercise of the Underwriter’s Warrant are
identical to those offered by this prospectus. The Underwriter’s Warrant will be exercisable at any time, and from time
to time, in whole or in part, during the five-year period commencing on the effective date of this offering, which period shall
not extend further than five years from the effective date of this offering in compliance with FINRA Rule 5110(f)(2)(G)(i). The
Underwriter’s Warrant and the shares of common stock and investor warrants underlying the Underwriter’s Warrant have
been deemed compensation by FINRA and are therefore subject to a 180 day lock-up pursuant to Rule 5110(g)(1) of FINRA. The underwriters
(or permitted assignees under Rule 5100(g)(1)) will not sell, transfer, assign, pledge or hypothecate the Underwriter’s
Warrant or the underlying securities, nor will they engage in any hedging, short sale, derivative, put, or call transaction that
would result in the effective economic disposition of the Underwriter’s Warrant or the underlying securities for a period
of 180 days from the date of effectiveness of the registration statement. The exercise price and number of shares or investor
warrants issuable upon exercise of the Underwriter’s Warrant may be adjusted in certain circumstances, including in the
event of a stock dividend, extraordinary cash dividend or our recapitalization, reorganization, merger or consolidation.
Advisory Fee.
We have agreed to pay Roth Capital Partners
an advisory fee equal to 1% of the gross proceeds of this offering.
Expenses.
Roth Capital Partners has agreed to waive its right to reimbursement at closing for legal expenses of $50,000 incurred by
it in connection with the offering
.
The following table shows the underwriting discounts and commissions
payable to the underwriters by us in connection with this offering (assuming both the exercise and non-exercise of the over-allotment
option to purchase additional shares of common stock we have granted to the underwriters):
|
|
Per Combined Share
and Warrant
|
|
|
Total
|
|
|
|
Without
Over-
allotment
|
|
|
With
Over-
allotment
|
|
|
Without
Over-
allotment
|
|
|
With
Over-
allotment
|
|
Public offering price
|
|
$
|
1.00
|
|
|
$
|
1.00
|
|
|
$
|
5,400,000
|
|
|
$
|
6,210,000
|
|
Underwriting discounts and commissions paid by us
|
|
$
|
0.07
|
|
|
$
|
0.07
|
|
|
$
|
378,000
|
|
|
$
|
434,700
|
|
Indemnification
Pursuant to the underwriting agreement, we have agreed to indemnify
the underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments that
the underwriters or such other indemnified parties may be required to make in respect of those liabilities.
Lock-Up Agreements
We have agreed not to (i) offer, pledge, issue, sell, contract
to sell, purchase, contract to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any shares of our common
stock or any securities convertible into or exercisable or exchangeable for our common stock; (ii) enter into any swap or
other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of shares of common stock;
or (iii) file any registration statement with the SEC relating to the offering of any shares of our common stock or any securities
convertible into or exercisable or exchangeable for shares of our common stock, without the prior written consent of Roth Capital
Partners for a period of 90 days following the date of this prospectus (the “Lock-up Period”). This consent may
be given at any time without public notice. These restrictions on future issuances are subject to exceptions for (i) the issuance
of shares of our common stock sold in this offering, (ii) the issuance of shares of our common stock upon the exercise of
outstanding options or warrants and the vesting of restricted stock awards or units, (iii) the issuance of employee stock
options not exercisable during the Lock-up Period and the grant, redemption or forfeiture of restricted stock awards or restricted
stock units pursuant to our equity incentive plans or as new employee inducement grants and (iv) the issuance of common stock
or warrants to purchase common stock in connection with mergers or acquisitions of securities, businesses, property or other assets,
joint ventures, strategic alliances, equipment leasing arrangements or debt financing.
In addition, each of our directors and executive officers has
entered into a lock-up agreement with the underwriters. Under the lock-up agreements, the directors and executive officers may
not, directly or indirectly, sell, offer to sell, contract to sell, or grant any option for the sale (including any short sale),
grant any security interest in, pledge, hypothecate, hedge, establish an open “put equivalent position” (within the
meaning of Rule 16a-1(h) under the Exchange Act, or otherwise dispose of, or enter into any transaction which is designed
to or could be expected to result in the disposition of, any shares of our common stock or securities convertible into or exchangeable
for shares of our common stock, or publicly announce any intention to do any of the foregoing, without the prior written consent
of Roth Capital Partners, for a period of 90 days from the closing date of this offering. This consent may be given at any
time without public notice. These restrictions on future dispositions by our directors and executive officers are subject to exceptions
for (i) one or more bona fide gift transfers of securities to immediate family members who agree to be bound by these restrictions
(ii) transfers of securities to one or more trusts for bona fide estate planning purposes, (iii) transfers pursuant to 10b-5
trading programs and (iv) securities reacquired by us in satisfaction of tax withholding obligations.
Electronic Distribution
This prospectus may be made available in electronic format on
websites or through other online services maintained by the underwriters or by their affiliates. In those cases, prospective investors
may view offering terms online and prospective investors may be allowed to place orders online. Other than this prospectus in electronic
format, the information on the underwriters’ websites or our website and any information contained in any other websites
maintained by the underwriters or by us is not part of this prospectus or the registration statement of which this prospectus forms a
part, has not been approved and/or endorsed by us or the underwriter in its capacity as underwriter, and should not be relied upon
by investors.
Price Stabilization, Short
Positions and Penalty Bids
In connection with the offering, the underwriters may engage
in stabilizing transactions, over-allotment transactions, syndicate covering transactions and penalty bids in accordance with Regulation M
under the Exchange Act:
|
▪
|
Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified
maximum.
|
|
▪
|
Over-allotment involves sales by the underwriters of shares in excess of the number of shares the underwriters are obligated
to purchase, which creates a syndicate short position. The short position may be either a covered short position or a naked short
position. In a covered short position, the number of shares over-allotted by the underwriters is not greater than the number of
shares that they may purchase in the over-allotment option. In a naked short position, the number of shares involved is greater
than the number of shares in the over-allotment option. The underwriters may close out any covered short position by either exercising
their over-allotment option and/or purchasing shares in the open market.
|
|
▪
|
Syndicate covering transactions involve purchases of the common stock in the open market after the distribution has been completed
in order to cover syndicate short positions. In determining the source of shares to close out the short position, the underwriters
will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which
they may purchase shares through the over-allotment option. A naked short position occurs if the underwriters sell more shares
than could be covered by the over-allotment option. This position can only be closed out by buying shares in the open market. A
naked short position is more likely to be created if the underwriters are concerned that there could be downward pressure on the
price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering.
|
|
▪
|
Penalty bids permit the underwriters to reclaim a selling concession from a syndicate member when the common stock originally
sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.
|
These stabilizing transactions, syndicate covering transactions
and penalty bids may have the effect of raising or maintaining the market price of our common stock or preventing or retarding
a decline in the market price of the common stock. As a result, the price of our common stock may be higher than the price that
might otherwise exist in the open market. These transactions may be discontinued at any time.
Neither we nor the underwriters make any representation or prediction
as to the direction or magnitude of any effect that the transactions described above may have on the price of our shares of common
stock. In addition, neither we nor the underwriters make any representation that the underwriter will engage in these transactions
or that any transaction, if commenced, will not be discontinued without notice.
Determination of Offering
Price
Prior to this offering, there has been a public market for our
common stock. However, the low trading volumes for our stock has resulted in our stock having relatively low liquidity compared
to other publicly traded stocks. Therefore, the public offering price of the common stock and accompanying warrants offering by
this prospectus has been determined by negotiations between us and the underwriters. Among the factors considered in determining
the public offering price of the units were:
|
▪
|
Our history and our prospects;
|
|
▪
|
Our financial information and historical performance, including our historical and recent stock price;
|
|
▪
|
The industry in which we operate;
|
|
▪
|
The status and development prospects for our products and services; and
|
|
▪
|
The general conditions of the securities markets at the time of this offering.
|
Selling Restrictions
European Economic Area
This prospectus does not constitute an approved prospectus under
Directive 2003/71/EC and no such prospectus is intended to be prepared and approved in connection with this offering. Accordingly,
in relation to each Member State of the European Economic Area which has implemented Directive 2003/71/EC (each, a “Relevant
Member State”) an offer to the public of any shares of common stock which are the subject of the offering contemplated by
this prospectus may not be made in that Relevant Member State except that an offer to the public in that Relevant Member State
of any shares of common stock may be made at any time under the following exemptions under the Prospectus Directive, if and to
the extent that they have been implemented in that Relevant Member State:
|
▪
|
to any legal entity which is a qualified investor as defined in the Prospectus Directive;
|
|
▪
|
to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive,
150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), subject to obtaining the
prior consent of the representative of the underwriters for any such offer; or
|
|
▪
|
in any other circumstances which do not require any person to publish a prospectus pursuant to Article 3 of the Prospectus
Directive.
|
For the purposes of this provision, the expression an “offer
to the public” in relation to any shares of common stock in any Relevant Member State means the communication in any form
and by any means of sufficient information on the terms of the offer and any shares of common stock to be offered so as to enable
an investor to decide to purchase any shares of common stock, as the expression may be varied in that Member State by any measure
implementing the Prospectus Directive in that Member State and the expression “Prospectus Directive” means Directive
2003/71/EC (and any amendments thereto including the 2010 PD Amending Directive to the extent implemented in each Relevant Member
State) and includes any relevant implementing measure in each Relevant Member State and the expression “2010 PD Amending
Directive” means Directive 2010/73/EU.
United Kingdom
This prospectus is not an approved prospectus for purposes of
the UK Prospectus Rules, as implemented under the EU Prospectus Directive (2003/71/EC), and have not been approved under section 21
of the Financial Services and Markets Act 2000 (as amended) (the “FSMA”) by a person authorized under FSMA. The financial
promotions contained in this prospectus is directed at, and this prospectus is only being distributed to, (1) persons who
receive this prospectus outside of the United Kingdom, and (2) persons in the United Kingdom who fall within the exemptions
under articles 19 (investment professionals) and 49(2)(a) to (d) (high net worth companies, unincorporated associations,
etc.) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (all such persons together being referred
to as “Relevant Persons”). This prospectus must not be acted upon or relied upon by any person who is not a Relevant
Person. Any investment or investment activity to which this prospectus relate is available only to Relevant Persons and will be
engaged in only with Relevant Persons. This prospectus and its contents are confidential and should not be distributed, published
or reproduced (in whole or in part) or disclosed by recipients to any other person that is not a Relevant Person.
Each underwriter has represented, warranted and agreed that:
|
▪
|
it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation
or inducement to engage in investment activity (within the meaning of section 21 of the FSMA in connection with the issue
or sale of any of the shares of common stock in circumstances in which section 21(1) of the FSMA does not apply to the issuer;
and
|
|
▪
|
it has complied with and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation
to the shares of common stock in, from or otherwise involving the United Kingdom.
|
LEGAL MATTERS
The validity of the shares of common stock being offered hereby
will be passed upon for us by Perkins Coie LLP, Portland, Oregon. The underwriters are being represented by Dickinson Wright PLLC,
Troy, Michigan.
EXPERTS
The financial statements at December 31, 2016 and 2015, and
for the years then ended incorporated by reference in this prospectus have been so incorporated in reliance on the report of M&K
CPAS, PLLC, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on Form
S-1 under the Securities Act, with respect to the securities being offered by this prospectus. This prospectus does not contain
all of the information in the registration statement and its exhibits. For further information with respect to us and the common
stock offered by this prospectus, we refer you to the registration statement and its exhibits. Statements contained in this prospectus
as to the contents of any contract or any other document referred to are not necessarily complete, and in each instance, we refer
you to the copy of the contract or other document filed as an exhibit to the registration statement. Each of these statements is
qualified in all respects by this reference.
You can read our SEC filings, including the registration statement,
over the Internet at the SEC’s website at
www.sec.gov
. You may also read and copy any document we file with the SEC
at its public reference facilities at 100 F Street NE, Washington, D.C. 20549 on official business days during its business hours.
You may also obtain copies of these documents at prescribed rates by writing to the Public Reference Section of the SEC at 100
F Street NE, Washington, D.C. 20549. Please call the SEC at (800) SEC-0330 for further information on the operation of the public
reference facilities. You may also request a copy of these filings, at no cost, by writing us at 3140 N. Caden Court, Suite 1,
Flagstaff, Arizona 86004 or telephoning us at (928) 779-4143.
We are subject to periodic reporting requirements of the Exchange
Act, and we will file reports, proxy statements and other information with the SEC. These reports, proxy statements and other information
are available for inspection and copying at the public reference room and web site of the SEC referred to above. We also maintain
a website at
www.SenesTech.com.
You may access our annual reports on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act free
of charge at our website after such material is electronically filed with, or furnished to, the SEC. We have not incorporated by
reference into this prospectus the information contained in, or that can be accessed through, our website, and you should not consider
it to be part of this prospectus.
INCORPORATION OF CERTAIN INFORMATION
BY REFERENCE
We “incorporate by reference” certain information
into this prospectus, which means that we disclose important information to you by referring you to another document filed separately
with the SEC. The information incorporated by reference is deemed to be part of this prospectus, and relying on the Fixing America’s
Surface Transportation Act, or the FAST Act, as a smaller reporting company, subsequent information that we file with the SEC will
automatically update and supersede that information. Any statement contained in a previously filed document incorporated by reference
will be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in this prospectus
modifies or replaces that statement.
We incorporate by reference our documents listed below and any
future filings made by us with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, between the date of this prospectus
and the termination of the offering of the securities described in this prospectus. We are not, however, incorporating by reference
any documents or portions thereof, whether specifically listed below or filed in the future, that are not deemed “filed”
with the SEC, including any information furnished pursuant to Items 2.02 or 7.01 of Form 8-K or related exhibits furnished pursuant
to Item 9.01 of Form 8-K. This prospectus and any amendments or supplements thereto incorporate by reference the documents set
forth below that have previously been filed with the SEC:
|
▪
|
Our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2016, filed with the SEC on November 6, 2017;
|
|
▪
|
Our Quarterly Reports on Form 10-Q/A for the quarterly periods ended March 31, 2017 and June 30, 2017, filed with the SEC on
November 6, 2017 and November 7, 2017, respectively, and our Quarterly Report on Form 10-Q for the quarterly period ended September
30, 2017, filed with the SEC on November 8, 2017;
|
|
▪
|
The portions of our Definitive Proxy Statement on Schedule 14A filed with the SEC on April 20, 2017, that are incorporated
by reference into our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2016;
|
|
▪
|
Our Current Reports on Form 8-K filed with the SEC on May 24, 2017, June 2, 2017, June 19, 2017, October 26, 2017 and
November 11, 2017; and
|
|
▪
|
The description of our common stock, which is registered under Section 12 of the Exchange Act, contained in our registration
statement on Form 8-A filed with the SEC on November 7, 2016, including any amendments or reports filed for the purpose of updating
such description.
|
You may request a free copy of any or all of the reports or
documents incorporated by reference in this prospectus (other than exhibits, unless they are specifically incorporated by reference
in the documents) by writing or telephoning us at the following address:
SenesTech, Inc.
3140 N. Caden Court, Suite 1
Flagstaff, AZ 86004
Attn: Secretary
(928) 779-4143
We also maintain a website at
www.SenesTech.com
where
incorporated reports or other documents may be accessed. We have not incorporated by reference into this prospectus the information
contained in, or that can be accessed through, our website, and you should not consider it to be part of this prospectus.
SenesTech, Inc.
5,400,000 Shares of Common Stock
Warrants to Purchase 4,050,000 Shares
of Common Stock
PROSPECTUS
Sole Book-Running Manager
Roth Capital Partners
Co-Manager
Craig-Hallum Capital Group
November 20, 2017
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