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Good afternoon, and welcome to the SenesTech report's second quarter fiscal year 2026 financial results conference call. After today's presentation, there will be an opportunity to ask questions. To submit a question, you may type it into the Ask a Question box on the webcast screen. Please note this event is being recorded. I would now like to turn the conference over to Robert Blum with Lytham Partners. Please go ahead.

All right. Thank you very much, Megan, and thank you all for joining us today to discuss SenesTech's second quarter 2026 financial results. Again, this is for the period ended June 30th, 2026. With us on the call today are Michael Edell, the company's President Chief Executive Officer, and Tom Chesterman, the company's Chief Financial Officer. As the operator indicated, at the conclusion of today's prepared remarks, we will open the call for a question and answer session. Again, if you are listening through the webcast portal and would like to ask a question, you can submit it through the Ask a Question feature in the webcast player there. Before we begin with prepared remarks, we submit for the record the following statement.

Statements made by the management team of SenesTech during the course of this conference call may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements describe future expectations, plans, results, or strategies and are generally preceded by words such as may, future, plan or planned, will or should, expected, anticipates, draft, eventually, or projected.

Listeners are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including the risks that actual results may differ materially from those projected in the forward-looking statements as a result of various factors and other risks identified in our filings with the Securities and Exchange Commission. All forward-looking statements contained during this conference call speak only as of the date in which they were made and are based on management's assumptions and estimates as of such date. The company does not undertake any obligation to publicly update any forward-looking statements, whether as a result of the receipt of new information, the occurrence of future events, or otherwise." With that said, let me turn the call over to Michael Edell, President Chief Executive Officer. Michael, please proceed.

Thank you, Robert, good afternoon to everyone joining us today. I appreciate you taking the time. This is my second earnings call as President and Chief Executive Officer, the tone of today's discussion is meaningfully different from last quarter. In May, I described the strategy we had begun putting in place and the early indicators that gave us confidence in the direction. Today, we can point to a full quarter of measurable commercial results. The strategic changes are working, in several important areas, they are working faster than we had planned. Stepping back for a moment, the past year has been a transformation of this company from a primarily research-focused organization into a revenue-driven business with a clear strategy for sustainable long-term growth in a category that we are creating. The headline numbers are all very positive.

Revenue increased 56% sequentially to a company record of $770,000. E-commerce revenue increased 186% to another record of $511,000. Amazon revenues increased 473% to a record $349,000 in our first full quarter of having this being managed in-house. Direct-to-consumer subscription revenues increased 89% to another record of $104,000, gross margins reached another company record of 73.6%. First half revenue reached another record of $1.26 million, up 14% year-over-year. Each of those results is important, what excites me most is that they are connected. They reflect on a commercial model built around direct consumer relationships, data analytics, recurring revenue, stronger brand control, and just a disciplined channel strategy.

Q2 was the first full quarter in which we directly managed our Amazon and other e-commerce channels from beginning to end. During the quarter, Amazon established new records across major platform categories, performance categories including total orders, subscription revenue or non-subscription revenue, total revenue, and subscriber counts. Amazon revenue has now grown every single month since we assumed direct control middle of February, culminating in a record June of $148,000. June was also the strongest e-commerce month in the company's history, with a total e-commerce revenue of $206,000. We now control the customer experience, advertising strategy, pricing, promotions, subscription programs, and the data that comes from each of these transactions. We can see what's working, make changes quickly, test new messages and offers, and allocate marketing dollars with much greater precision. That is not simply a better Amazon model.

It is the ideal operating model that we need to rapidly scale. Importantly, the e-commerce momentum broadened beyond Amazon. Non-Amazon e-commerce, which is primarily our own senestech.com Shopify channel, saw revenues increase 31% sequentially to $155,000. We ended the quarter with a record number of Shopify recurring revenue subscribers. In July, we also completed the launch and redesign of the SenesTech website on the schedule we have previously communicated. The new site places Evolve and rodent birth control at the center of the customer experience. It is designed to make the product easier to understand, easier to purchase, easier to reorder, whilst also providing a strong platform for digital marketing and subscription growth, customer education, and commercial B2B lead generation. If you have not done so yet, please take a look at the new site. We think you'll be impressed.

Subsequent to the quarter end, July provided another encouraging data point for the e-commerce strategy. E-commerce revenues for July reached a record $245,000, up 19% from the $206,000 in June, and subscription revenue achieved a new record at $52,000, up 22% from the $43,000 in June. Subscription growth remains one of the most important components of the strategy. The Evolve product is not intended to be a one-time purchase. It is designed to become part of an ongoing rodent management program. Subscription revenue increased 89% to a record $104,000 in Q2 2026, compared to $55,000 in Q1 of 2026, and increased 142% compared to $43,000 in Q2 of 2025. Combined subscriber counts across Amazon and the company's e-commerce site increased 117% to new record levels, further strengthening the company's recurring revenue base and increasing revenue visibility.

That creates more predictable revenue, improves customer lifetime value, and provides evidence that customers are incorporating the product into a recurring program. We are still early on, but the direction is exactly what we want. More customers, greater retention, more repeat purchasing, and larger recurring revenue base. There is a bigger strategy beyond the e-commerce results. SenesTech is creating an entirely new category of rodent fertility control. Before we can meaningfully scale the B2B opportunities that we have available to us, we needed to build the awareness of the Evolve and ContraPest brands, educate the market further, establish credibility, and create demand. E-commerce is how we accelerate that process. Every customer review, educational campaign, digital advertisement, subscription, and repeat order does two jobs.

It generates consumer revenue today, and it makes the brand more recognizable, understood, and trusted when our sales organization engages with a pest management company, a municipality, commercial operator, agricultural customer, big retailers, or distributors. Our growth strategy is therefore built around three priorities that reinforce each other. First, you use the e-commerce to build the Evolve and ContraPest brands, establish the category, and create a growing recurring revenue base. Second, you grow B2B with both Evolve and ContraPest through a professional sales organization focused on targeted vertical markets. Third, expand our addressable opportunity through new products, new services, and separate initiatives. We design them to build one on the other with customer awareness and data supporting B2B growth and with services and partnerships deepening customer relationships across the platform. Turning to B2B. Reported revenue was $259,000 for the quarter.

The sequential comparison requires some context because the first quarter included an $81,000 international order carryover from 2025. If we actually exclude these one-time events, core B2B revenue actually increased by 11%. Tom will walk through the full comparisons in a moment. In June, we were proud to present that Jack Karabees is our new Executive Vice President of Sales and was brought in to lead the effort. Jack's mandate is to build a professional commercial organization with clear vertical ownership, qualified pipelines, better forecasting, stronger follow-up, and accountability for conversion. We're moving away from a broad approach, which in every prospect, it was treated the same. Each market now has different business challenges, buying criteria, decision-makers, and sales cycles. Our sales process needs to reflect those differences.

We have already begun adding to the team with a new regional sales manager and a director of marketing, both joining in July. To further support that strategy, we are developing dedicated sales presentations, ROI models for each vertical, case studies, technical support materials, and industry-specific messaging for each priority vertical. We do not want to lead only with product features or science. The science does matter, and it is a critical differentiator, but customers ultimately make purchasing decisions based on business outcomes and solving problems. Our objective is to demonstrate how Evolve and ContraPest can reduce damage, disruption, support sustainable objectives, improve pest management performance, and deliver measurable long-term value. We are concentrating our resources across eight strategic verticals: third-party e-commerce, pest management, commercial, agribusiness, zoos, sanctuaries, government, retail, and international markets.

Each represents a meaningful opportunity, but we will prioritize our efforts and resources based on the results we see in each vertical as we build out the new B2B organization. As we identify the greatest opportunities and strongest customer adoption, we will increase our investment and resources in those areas while continuing to build the foundation across the remaining markets. Third-party e-commerce partnerships with leading online retailers and marketplace extend the reach of the Evolve brand well beyond our own channels. In retail, the consumer demand we are proving through e-commerce is what supports potential expansion into national, regional, and specialty retail partners. Pest management is one of our highest priority verticals.

Evolve and ContraPest are designed to complement integrated pest management programs rather than trying to replace them, which lets pest management professionals expand their service offerings, generate recurring and greater revenues, and differentiate themselves in an increasingly competitive market. Commercial and agribusiness customers can use fertility control to protect facilities, infrastructure, stored commodities, and operating continuity. Zoos and sanctuaries require solutions that fit sensitive animal environments. In government, we are starting to see cities and municipalities where demand continues to grow for environmentally responsible approaches that align with integrated pest management initiatives and help communities address public health concerns. Over time, that opens the door to state and federal agencies, military installations, public housing authorities, and other public institutions. Internationally, we will continue to favor experienced local partners who can lead the regulatory approval process while we contribute to the scientific, technical, and commercial expertise.

That model lets us generate revenue supporting these partners through the approval process, and it establishes the commercial relationships that position us for launch once approval is attained. The value of a vertical approach is that it allows us to convert broad interest into very specific economic proof. The agriculture deployment we discussed in July is a good example. At a 400-acre Texas operation, on-site observations indicated an estimated 80% reduction in rodent activity, together with a substantial decline in damage to underground irrigation infrastructure. That is the kind of result that can support a compelling case study and ROI discussion. The customer is not simply buying a product. The customer is addressing damage, maintenance cost, and operational risk. Our job is to identify more opportunities with that profile and turn them into larger, repeatable commercial relationships.

We also launched our assessment services in July and have actually completed our first deployment. This is an important extension of the strategy because many customers simply don't have an objective baseline of data regarding the size, location, or severity of an infestation. These services are focused first on our B2B market verticals, where professional assessments deliver the most value, and over time, we will evaluate simplified versions for our direct-to-consumer business. Our program combines trained field personnel with track plates, track tunnels, and a proprietary AI technology that we have launched. We can conduct an on-site assessment, identify areas of activity, establish a measurable baseline, and provide reporting that helps the customer understand the severity of the problem before selecting a treatment program. From there, we can offer implementation support based on this assessment.

This can include a customized rodent management plan, recommendations for the placement of our Evolve and ContraPest products, assistance with deployment, and ongoing monitoring to measure progress and optimize results. These services will generate additional revenue with limited incremental infrastructure, improve product placement and efficacy, strengthen customer confidence, and help us build a proprietary database of customer and performance results over time. Strategically, they also move SenesTech from being viewed as only a product company toward becoming a trusted expert in rodent population with products and services. Partnerships and disciplined market expansion remain a third element of the strategy. Our direct e-commerce infrastructure gives us a much more efficient platform for launching related products and reaching new customers. Internationally, we expanded distribution into Bermuda through our partner, Animal & Garden House, adding to activity in the U.S. Virgin Islands and Belize.

Our approach is to work with capable local organizations that can support regulatory and commercial execution without requiring a disproportionate amount of capital from SenesTech. The quarter also demonstrated that growth can come with improved economics. Gross profit increased 68% sequentially to a record $560,000, while gross margins improved to 73.6%. Gross profit grew faster than revenue, reflecting the contribution of e-commerce and better channel economics, a much more disciplined approach to pricing, and favorable raw material purchasing conditions. The Adjusted EBITDA loss also improved sequentially. We need to continue expanding revenue, but we also must do it in a way that creates operating leverage and moves us toward profitability. When I think about the next phase, the priorities are very practical. We need to keep scaling e-commerce. We need to improve conversion, subscriptions, retention, and repeat purchasing.

We need to use the e-commerce awareness and brand building to help the B2B team close larger and more repeatable opportunities. We need to launch and continue with the assessment and implementation services model with a discipline. We need to develop the materials case studies and return on investment tools that support each of these verticals, and we need to protect gross margin and deploy capital only where we can measure a credible return. One quarter does not complete the transformation, and I do not want to suggest that it does, but Q2 is the clearest evidence that the strategic trajectory is right. Last quarter, we discussed moving from planning to execution. This quarter, we can point to results which get me excitement. The excitement is not based on a theory or a single announcement.

It is based on record revenue, record channel performance, accelerating subscriptions, a stronger brand platform, improved economics, and a commercial organization that's becoming more focused and accountable. The work is to repeat it, broaden it, and build a durable growth company around it. Let me turn the call over to Tom Chesterman to review the financial results in more detail. I will return with a few closing comments before we open the call for questions. Tom?

Thank you, Michael, and good afternoon, everyone. I will provide a brief review of our second quarter financial results and add context around the operating trends Michael discussed. Our Form 10-Q, which will be filed later today, provides a more detailed review of the quarter. The reconciliations of our non-GAAP measures are included in today's press release. Revenue for the second quarter was $770,000, an increase of 23% compared to the second quarter of 2025 and an increase of 56% compared with the first quarter of 2026. This sequential increase is driven primarily by record e-commerce performance during the first full quarter of direct in-house management of Amazon. E-commerce revenue was a record $511,000, increasing 206% from the prior year quarter and 186% from the first quarter.

The in-house Amazon revenue, part of e-commerce, increased 473% sequentially to $349,000 from $61,000. On our own e-commerce platform, revenue increased 31% sequentially to $155,000 from $118,000. DTC or subscription revenue increased 89% sequentially and 142% year-over-year. Amazon was externally managed during the year ago period, so the sequential comparison provides the clearest view of the momentum and benefit of bringing the channel in-house. B2B revenue was $259,000, compared with $350,000 in the first quarter and $460,000 in the second quarter of 2025. The first quarter amount included an $81,000 international order that carried over from 2025. Excluding that order, core B2B revenue increased 11% sequentially.

The prior year quarter included a $180,000 periodic bulk sale associated with the third-party management of Amazon at the time, as well as an initial stocking order from a large distributor. Excluding both of these items, what I would characterize as core B2B revenue increased 14% year-over-year. We believe that these adjusted comparisons provide a clearer view of the underlying B2B trend as the new sales leadership and vertical strategy take hold. By product, Evolve revenue was $662,000, an increase of 27% from the prior year quarter, and represented 86% of product revenue compared with 83% a year ago. ContraPest revenue was $107,000, up 2% year-over-year and up 43% from $75,000 in the first quarter. That sequential improvement is an early return on the targeted approach the sales team has taken to the customers and the markets where ContraPest continues to provide the most value.

Gross profit increased 39% year-over-year and 68% sequentially to a record $567,000. Gross margin improved to a company record 73.6%, compared with 68.5% in the first quarter and 65.5% in the prior year quarter. That represents an improvement of 510 basis points sequentially and 810 basis points year-over-year, reflects a more favorable channel mix, stronger direct channel economics, continued pricing discipline, and favorable raw material costs. Importantly, gross profit grew faster than revenue, which is a key indicator of the operating leverage we are working to build. Total operating expenses were $2.4 million, compared with $2 million in the prior year quarter. The current quarter included $270,000 of severance costs, as well as continued investment in e-commerce, brand development, sales capability, and other commercial initiatives.

The net loss improved sequentially to $1.8 million when compared to $2.1 million in the first quarter, decreased when compared to the $1.6 million in the second quarter of 2025. The sequential improvement was driven by an increase in revenue and record gross profit. Adjusted EBITDA loss, a non-GAAP measure, improved 15% sequentially to $1.4 million, compared with $1.6 million in the first quarter, increased when compared with $1.2 million in the prior year quarter. The reconciliation in today's press release adjusts for severance, one-time legal costs, stock-based compensation, depreciation interest, and non-cash operating lease expense. While the year-over-year Adjusted EBITDA comparison reflects the investments we are making in the growth platform, the sequential improvement shows the early benefit of higher gross profit and early returns on those investments. Turning to the balance sheet, we ended the quarter with $5.1 million of cash and cash equivalents.

The cash usage for the quarter was approximately $1.7 million, reflecting elevated raw material purchasing in May, as well as severance payments. With those items behind us, cash usage in June declined to $298,000 from $917,000 in May. Based on our current operating plan, we believe that our cash and cash equivalents as of June 30th, 2026, together with current revenue and operating expense levels, will be sufficient to fund our operations for at least the next nine months. We remain focused on disciplined capital deployment and careful expense management while funding the initiatives that have the clearest potential to generate scalable revenue and attractive contribution margins. Overall, the second quarter's financial results demonstrate meaningful progress in the quality of the revenue mix, gross margin performance, and sequential operating improvements.

The next step is to sustain that performance and translate the commercial momentum into continued improvement in Adjusted EBITDA and cash efficiency. With that financial overview, I will turn the call back to Michael for closing remarks.

Thank you, Tom. Last quarter, I asked investors to judge this team by execution. Q2 provides the first clear answer to how we're executing. The first full quarter of an in-house management produced record revenues. Gross profit and gross margins reached company records. The strategy, as we described, is beginning to show up in the financial statements. This is not a victory lap. Our responsibility is to turn a strong quarter into repeatable business model. E-commerce is more than an online sales channel. It builds our brand and educates the market. The foundation supports require professional B2B sales organization focused on specific verticals and larger customer relationships. Assessment and implementation services can deepen those relationships and make results more measurable. Together, all these elements create a more scalable and diversified commercial platform.

We will continue to measure progress with the operating data, not anecdotes, and we will allocate resources based on what the data supports. I'm very excited because we now have that evidence that the model and the strategy can work. We have differentiated products in Evolve and ContraPest brands, and a market that needs effective and sustainable options, direct channels that are scaling, and a clearer commercial strategy for converting awareness into long-term customer relationships, and more importantly, revenue. For investors seeking additional third-party perspective, Zacks recently published a research report on SenesTech that may be of interest. That report was produced under a sponsored research engagement paid for by the company. There's also a great deal of work ahead, but the organization is moving with speed, focus, and accountability.

Our objective is to build on the progress in Q2 and translate it into a sustained growth, improved operating leverage, and long-term shareholder value. Thank you to our employees for their hard work required to execute on this transition and strategy. Thank you to our customers, partners, and shareholders for your continued support. We are excited by the progress and focused on turning the momentum we're seeing into durable results. Robert, we are now ready to open the call for any questions.

Wonderful. Thank you very much, Michael and Tom, for your prepared remarks there. We'll now open the call for questions. As we mentioned at the beginning, if you would like to ask a question and are listening through the webcast portal, please type your question into the Ask a Question box on the player there. We've got a few questions that have been submitted thus far, so we'll begin. First off here, can you speak on more of the new avenues, the key verticals that you have and which ones you sort of tend to approach first?

We've outlined the key verticals. There are eight verticals, and one of the first things we did when I started in the position of COO and CEO was take each of the verticals and clearly define them, figure out which of the verticals we were actually driving revenues in and which we had the best opportunity to solve major problems in those verticals. We positioned the verticals first being third-party e-commerce, second being pest management, third being commercial, fourth being agribusiness, fifth would be zoos and sanctuaries, government would be sixth, retail is seventh, and international is number eight. I would also like to comment on some people have asked me why is retail in the seventh out of eighth in terms of verticals.

The reason is that big retailers, big box sellers need to see a clear demonstration of consumer acceptance of product before they want to take the risk and put that product on their shelf. As we solve that problem, we believe retail is going to be a bigger area of growth for us.

Very good. The next question here. Can you comment on the change in margins from selling via distributor and by direct sales? Do you think this has been financially successful?

It's been very successful. One of the first things I did when I came in as the COO is we stopped doing certain transactions and certain deals with partners that were just not didn't have the margins that I felt were reasonable. There was too much discounting, end of quarter promoting that I didn't feel was necessary. So it took about five months to eliminate a lot of those older transactions, older types of deals, and move into the new structure, which is much more straightforward. That's one of the main reasons you're seeing an increase in some of the margins.

Next question here. Can you elaborate on the B2B revenue increase of 14%, excluding the one-off $180,000 order in the previous period? The question is, did this achieve your internal targets?

The internal targets that we were going for as we moved into Q1 and through Q2, the very first thing was to put in place the methodology and the analytics to actually be tracking the pipeline and what was out there available in the B2B market. That took us pretty much through Q2 to get that in place. Now we have very clear visibility on the pipeline and time frames and close rates and other analytics that come as you implement these type of B2B methodologies and processes.

And maybe as a follow-on to that, what is the acceleration in revenue for B2B that we should expect going forward?

I'm not going to give forward guidance on that. But what I will say is, to keep in mind that Jack Karabees, who came in as our EVP, only started July 1st in a full-time capacity. It's only been two weeks. Prior to that, he was helping implement these changes in Q1 on a part-time basis. Just to give you an idea of how much we've been able to accomplish without even having all the resources in place to take advantage of the B2B market. In addition, we only just recently brought on a new director of marketing, and that happened just on July 15th. I only took over as CEO May 6th. It should give you some indication of really how fast things are moving in such a short timeframe.

Okay, very good. The next question here is, does the sales team have team members focused by vertical or generalists looking across the verticals that you've identified?

That's a great question. We are territory-based in our setup on the B2B sales side. What we've learned is that although there are inherent differences in each of the verticals, there's 80% of what you're doing in a particular vertical is consistent across all verticals. The other 20%, in terms of ROI that a vertical is going to achieve, needs to be tailored to that vertical. We're chopping up the country territory-based. Each rep will have, within their territory, the verticals that they're going to cover, but they're being provided materials now from marketing that they can switch between a municipality, an agribusiness, a farm, a sanctuary, and so on fairly easily and still be able to be effective in those verticals.

All right. We have a couple of questions, all sort of surrounding the thoughts on your timeline to profitability, or sort of the general quarterly revenue required to reach profitability.

Again, I can't really speak to forward guidance, but I can tell you that the focus is on driving the monthly run rate and maintaining the gross profit margins that we believe is moving us in the direction of achieving profitability. You have to be increasing the monthly run rates, and you've got to be driving revenues in order to be able to pull that off.

Okay, very good. Well, let me remind everybody here, if you would like to ask a question, please type that into the Ask a Question box on the webcast player. I have a couple of questions here relating to sort of New Zealand, Australia, India, and maybe elsewhere in Asia. Any updates that you can provide more broadly in those areas?

Well, we're deploying currently to New Zealand, and New Zealand is one of the countries that has some of the most sophisticated programs related to rodent and pest management. We're doing quite a bit in New Zealand. Australia, we're still going through regulatory process. We're not doing anything in India or elsewhere in Asia at this point.

Okay, very good. When will we know if Washington, D.C., will sort of take the ContraPest Evolve to further use beyond the pilot?

Well, there's different pilots that are going on, but really where we're focused is in Chicago and surrounding areas within Chicago. They're the most forward-thinking and advancing in terms of how they're deploying. I believe we're on our fifth deployment now within the Chicago area, and that's where we've been focusing a lot of our attentions, because they're the ones that are most forward-thinking and moving toward deployment and implementation.

Next question here is, do you feel the retail customer is gaining a better understanding of the product advantages post-repackaging efforts and sort of the early digital marketing that's been deployed?

Yeah. It became very clear to us that the customers, the consumers, were not really understanding how to use the product, and there wasn't the proper expectation on the timeframe that the product takes to be effective. Our solution is not one where you can deploy it and see results in two days by seeing rats caught in a trap, as an example. Ours takes time because you have to get through the cycle of birth for rodents. That's when you start to see the birth control kick in and the population decrease over time. For the consumers now, what we're seeing, because we've redone the packaging, reset the expectation, that's also what we're seeing as an effect with the explosive growth that we've had in the e-commerce side of the business. Consumers now are getting it.

Next question here is how and when will new capital be raised, as it looks very likely that the capital will be burned before profitability?

Right. Again, I can't give future guidance. What I will tell you is that we're aware of what the company's needs are going to be. What we wanted to do first was start to demonstrate the execution, which will make any other efforts that we have going forward much easier.

Okay. Next question here is, are there any large contracts which you expect to win in the second half of the year, whether it be municipalities, farms, et cetera?

As I've been mentioning and speaking to on the B2B parts of the business, the first thing we did in this transition that I've been describing, is really moving our focus on the large-scale projects. We no longer have the team focusing on $500 opportunities. It's not going to get us to where we need to be. The first thing was work with companies and organizations that have much larger scale to them. In terms of what the future holds, I will tell you that we've just brought on new team members into the B2B professional sales team. That team is growing, we're going to need another two quarters to really demonstrate some of this, of what I'm describing in terms of larger deals.

All right. Next question here is, the Caribbean seems a strong target market. Are there other international markets also characterized by strong potential?

Well, as we've been describing, there was a lot of focus put on international markets that just spent a lot of time and a lot of resource with no revenue in the near term. We've shifted that focus to finding the right partners in those international markets that are willing to step up and pay for the regulatory process required for that country. Instead of going in and trying to get regulations and regulatory within a particular international market, we don't even look at it unless the partners are willing to step up to the plate and fund that effort.

What looks to be our final question here is, since the National Park Service trials in D.C. and the New York City trials were reportedly successful, will orders likely be forthcoming?

The New York City trials and certain service trials that were in D.C., some of those trials were not run with our assistance. These were certain surveys and trials that were run independent of our efforts and our support within those. I don't anticipate anything coming from D.C. or New York City at this particular point in time. I believe that the other areas within Illinois, and specifically around Chicago, is really where the growth is going to come on the municipalities.

Very good. I'm showing no further questions. With that, Michael, I will turn the call back over to you for any closing remarks.

Well, again, I want to just thank everybody for your patience and your focus in working with us as we turn this company into a real market force in this category. We're just very excited about what we see in the future.

Please note today's event is being recorded. At this time, I'd like to turn the conference call over to Robert Blum with Lytham Partners. Please go ahead.

Thank you very much, Jamie, thank you all for joining us today to discuss SenesTech's Q1 2026 Financial Results. This for the period ended March 31, 2026. With us on the call today are Michael Edell, the company's newly appointed President and Chief Executive Officer, and Tom Chesterman, the company's Chief Financial Officer. At the conclusion of today's prepared remarks, we'll open the call for a question-and-answer session. As mentioned, if you are listening through the webcast portal and would like to ask a question, you can submit it, your question, through the Ask a Question feature in the webcast player. Before we begin with prepared remarks, we submit for the record the following statement.

Statements made by the management team of SenesTech during the course of this conference call may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended, and Section 21E of the Securities Exchange Act of 1934 as amended, and such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements describe future expectations, plans, results, or strategies and are generally preceded by words such as may, future, plan or planned, will or should, expected, anticipates, draft eventually, or projected.

Listeners are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including the risks that actual results may differ materially from those projected in the forward-looking statements as a result of various factors and other risks identified in the company's filings with the Securities and Exchange Commission. All forward-looking statements contained during this conference call speak only as of the date which they were made and are based on management's assumptions and estimates as of such date. The company does not undertake any obligation to publicly update any forward-looking statements, whether as a result of the receipt of new information, the occurrence of future events, or otherwise. With that said, let me turn the call over to Michael Edell, President and Chief Executive Officer. Michael, please proceed.

Thank you, Robert. Good afternoon to everyone joining us today. As this is my first earnings call with SenesTech investors as President and Chief Executive Officer, I wanted to start by saying how excited I am to be formally joining the company. I accepted this role as CEO with SenesTech because my conviction in the products and markets is strong. My conviction in our ability to dramatically scale this business is even stronger. The work now is to translate product strengths into commercial execution at scale. That is the central priority of this management team. Although I have just been appointed CEO, I'm not coming into this business cold. I began working closely with SenesTech mid-2025, initially in a consulting capacity to evaluate the business and build a strategic plan focused on commercial growth.

In October, I became the interim chief operating officer to lead implementation of that strategic plan. Over the past several months, we have been taking a hard look at the business and making practical changes designed to create a more scalable, more accountable, and more data-driven operating model. Those changes are not theoretical. We have streamlined operations. We have prioritized direct-to-consumer revenue as a core growth engine. We have moved to direct management of our Amazon account for the Evolve brand. We have restructured B2B processes and the sales organization to improve discipline, pipeline visibility, forecasting accountability, and focus. We have advanced work on packaging, digital marketing efforts, subscription, customer education, and our own e-commerce platform. The goal across all of these initiatives is quite simple: make the product easier to understand, easier to buy, easier to deploy, and easier to reorder. The direct-to-consumer channel is central to that strategy.

During the Q1, direct-to-consumer revenue increased 42% to a record $194,000, despite the disruption associated with moving the Amazon operations in-house. That is an important result because the Amazon transition was a deliberate strategic move. It was not just a channel change. It changed what we can see, what we can control, and how quickly we can respond. By managing Amazon directly, we gained better access to customer behavior, advanced advertising performance, subscription data, pricing visibility, media buying efficiency, and just overall channel economics. We can learn faster, we could test faster, and we can improve conversion faster. We can test new products and new packaging more quickly, and that is the type of operating model that we need.

We consider Amazon as a key pillar to our sales strategy. There was a short-term disruption as we transitioned away from third-party e-commerce management and as existing third-party inventory continued to move through the channel. That was to be expected. The early data after the transition are highly encouraging. April was the first full month following the completion of the Amazon transition. E-commerce sales increased 163% to a record $146,000 compared with approximately $55,000 in April of 2025. Amazon retail sales of the Evolve brand were approximately $96,000 in April, while sales through our own SenesTech website were approximately $50,000. We began taking control of advertising execution in mid-February, completed the broader transition in March. The early trend is exactly the kind of signal that we want to see.

We are now moving to improve our website sales platform as well, that being the second pillar in our strategy. A product like Evolve is not a one-time novelty purchase. It is intended to be part of an ongoing rodent management program. That is why recurring revenue is so important to our strategy, with subscription revenue being a core part of the new direct-to-consumer strategy. We are now seeing meaningful evidence that this was the right focus. In just the Q1, subscription revenue increased 44% to a new record at $56,000, compared with just $39,000 in the prior year period, and subscriber counts increased more than 50%. In April, subsequent to the quarter end, subscription-based revenue increased 198% year-over-year to approximately $36,000, another record. Subscription-based customers increased 109%.

Those are still early numbers, but they are important proof points. They indicate the product stickiness, the customer engagement, and the potential to build a more predictable, recurring revenue-based model. Now we need to build on that. We are tracking weekly sales, new-to-brand sales, subscription metrics, conversion metrics, media ad buying performance, and customer behavior. We have reactivated our Google advertising in April to begin collecting search data to support online revenue. We are continuing to redesign our e-commerce website at senestech.com with a focus on reducing friction, simplifying navigation, improving conversion, and supporting subscription growth. We are also refreshing our packaging to improve shelf visibility and simplifying the consumer message. The updating packaging prominently features rat birth control messaging because we want the customers to immediately understand what makes this product different. We do not want ambiguity at the point of a decision. We want clarity.

The same principle applies to our B2B business, the third pillar to our commercial strategy. We believe there are large opportunities across pest management, agriculture, municipalities, distributor, commercial customers, national retailers, and other professional channels. By capturing those opportunities requires focus and discipline. It is not enough to have a long list of prospects. We need a qualified pipeline, clear ownership, better forecasting, and a standardized sales process. Over the past several months, we have restructured the entire B2B team and processes around those objectives. We are concentrating resources on the largest and highest impact opportunities within each vertical while providing accountability around pipeline and forecast accuracy. Here again, we saw early proof in the quarter. B2B revenue increased 57% to $298,000 compared with approximately $190,000 in the Q1 of last year.

We continue to see municipal deployment activity across major urban markets, including Chicago, Boston, Washington, D.C., New York, and New York City. The previously announced 12-month New York City rat contraception pilot program is expected to conclude this month. We look forward to those results. We are also continuing to support distributors, pest management professionals, commercial customers, and agricultural opportunities where the product can fit into a broader integrated pest management program. We will remain selective and disciplined, de-emphasizing the smaller or longer-term opportunities. We believe the B2B opportunity is significant. In addition, the work that we are doing with our focus on direct to consumer will bring more brand awareness, which will support our continuing efforts in the B2B. We are already seeing an increase in inbound opportunities and leads from these efforts. Product expansion is another part of building a broader commercial platform.

We plan to expand the Evolve brand with additional rodent control products that can broaden our offering and strengthen our position in the category. We are also advancing launch readiness around potential related products, such as an attractant and repellent products. Now, the idea is not to dilute the mission. It is to strengthen the ecosystem around the core fertility control solutions, yet give customers more tools to deploy with a complete program. I would note again, full control over Amazon and our own e-commerce website now gives us a very efficient launch platform for these potential new products which had not been in place historically. We are also improving how field activity, sales support, regulatory, and product development work together. The field and sales teams have been reintegrated, generating higher quality B2B opportunities to drive near-term revenues.

Internationally, we're putting more structure around opportunity vetting to focus on opportunities that can produce near-term revenues. We shipped initial stocking orders to New Zealand and Bermuda during the quarter. We will continue to pursue international opportunities where the regulatory process can move efficiently with limited incremental cost. Where a market requires significant regulatory investment or long periods of time, we will generally require local partners to assist us or fund that process. That is a disciplined approach to expansion. The Q1 also demonstrated the importance of operating discipline. Gross margin improved to a company record 68.6%, compared with 64.5% in the prior year period. That reflects improved product production efficiency and reduced reliance on discounted sales activity. We need to grow revenue, but we also need to protect the economics of the business as we grow.

That is how we build a durable company, not just a bigger one. When I think about SenesTech's future in very practical terms. We need to sell more product. We need to improve conversion. We need to focus on subscriptions for recurring revenue. We need to build repeat purchasing behavior, and we need to win larger B2B opportunities. We need to make Amazon our own website at senestech.com, our distributors, the municipalities, pest management professionals, and commercial customers working together as a coherent growth strategy. We need to measure progress with real operating metrics, not anecdotes. That is the vision I want investors to understand. We are building a more scalable, data-driven, recurring revenue business around a differentiated product in a market that needs better solutions for overall pest management.

We have a lot of work ahead of us, and I do not want to overstate early results, but I am very encouraged by what we are seeing. The record April e-commerce momentum, the record subscription growth, the B2B improvement, the record gross margins, and the stronger operating infrastructure all point in the same direction. SenesTech is entering a new phase defined by commercial focus, execution discipline, and accountability, and my job is to drive that every single day. With that, let me turn it over to Tom Chesterman to review the financials in more detail, and then I will come back with a few closing comments before turning over the call to your questions. Tom?

Thank you, Michael, and good afternoon, everyone. I will provide a brief review of our Q1 of 2026 financial results and add context around the operating trends that Michael discussed as I can. Note that we will be filing our 10-Q later today for a more detailed look at our results to date. Revenue for the Q1 was $493,000, an increase of 2% compared with $485,000 in the Q1 of 2025. This result should be viewed in the context of our transition from third-party management to direct management of Amazon sales for the Evolve brand. That transition was substantially completed in mid-March.

While it created short-term channel disruption, as Michael mentioned, it gives us greater control over customer data, advertising performance, pricing visibility, subscriptions, and overall channel economics, which we believe will drive growth and profitability into the future. Direct-to-consumer revenue increased 42% to a record $194,000 compared with $137,000 in the prior year period. Of that, subscription revenue increased 44% to a record $56,000 compared to approximately $39,000 last year. While subscriber counts have increased more than 57%. These metrics support our view that recurring revenue can be a larger component of the business over time. Note that the year-ago metrics exclude the third-party e-commerce revenue as we want to provide a clear understanding of the growth we are seeing. Third-party e-commerce revenue in the year-ago period was $158,000.

We expect that third-party e-commerce revenue has strong potential for growth, and we expect future announcements about expansion in this area. B2B revenue increased 57% to $298,000, compared with $190,000 in the Q1 of 2025. We saw continued traction across distributor, municipal, professional, and commercial channels. We're also improving process discipline in the B2B organization with a greater focus on standardized sales processes, pipeline validation, forecasting accuracy, and larger dollar opportunities within the targeted verticals. Subsequent to the quarter end, April provided an encouraging early proof point for the e-commerce transition. E-commerce sales increased 163% year-over-year to approximately $146,000 and increased 47% compared to March. Amazon retail sales of Evolve products were approximately $96,000, and sales through the senestech.com website were approximately $50,000.

Subscription-based revenue also increased 198% year-over-year in April to approximately $36,000. While April is only one month, the early data supports the strategic rationale for direct management of our e-commerce channels. Gross profit increased 8% to $338,000 compared with $313,000 in the prior year period. Gross margin improved to 68.6%, another company record, compared with 64.5% in the Q1 of 2025. This margin improvement reflected improved production efficiency and a lower reliance on discounted sales activity. We view this as an important indicator of the underlying economics of the business as we scale. This becomes manifest when gross profit dollars are growing faster than top-line revenue.

Operating expenses reflected, among other factors, severance costs, one-time legal costs, and other extraordinary one-time items associated with the organizational transition and strategic restructuring currently underway. Q1 2026 results included approximately $443,000 of one-time expenses, as mentioned above. On a pro forma basis, adjusting for these items, adjusted EBITDA loss, a non-GAAP measure, was $1.6 million compared with $1.5 million in the prior year period. Reconciliations on these non-GAAP measures are included in today's press release.

Turning to the balance sheet, we ended the Q1 with $6.8 million of cash and cash equivalents. Based on our current operating plan, we believe this provides operating runway into the third quarter of 2027. We remain focused on managing expenses carefully while supporting the commercial initiatives that we believe can drive higher quality revenue growth over time. With that financial overview, I will turn the call back to Michael for closing remarks.

Thank you, Tom. I want to close by bringing the discussion back to the central point, which is our focus in driving revenues with product that we know works and how we can disrupt this category. We have a product we believe in, we have a market that needs better options, and we have clear evidence that customers are engaging with Evolve through the direct-to-consumer channels, that subscription behavior is building, that Amazon become a more effective channel under our direct management, and that B2B opportunities are beginning to move with more discipline. The company will not be defined by belief alone. It will be defined by execution. That means increasing revenue through channels where we can see the customer, understand performance, and control the economics. It means improving conversion on Amazon and our own e-commerce website. It means increasing the number of subscription customers and retaining them.

It means using the website redesign, packaging refresh, paid media, social efforts, and customer education to reduce friction. It means going after the largest and most attractive B2B opportunities with a validated pipeline and accountability to the sales process. It means supporting municipalities, pest management professionals, agricultural customers, distributors, and commercial accounts with a clear value proposition and better field support. It means expanding the Evolve platform in ways that make sense for the customer and for the company's economics. I'm very encouraged by the April data, but I view it as just the starting point. We need to convert early momentum into repeatable performance. We need to make every dollar of marketing, every customer interaction, every sales meeting, and every product initiative contribute to growth.

That is the standard I am setting for the organization. SenesTech's mission is to create cleaner cities, more efficient businesses, and healthier communities through effective and sustainable pest management solutions. That mission is powerful, but it must be matched with disciplined commercial execution. As CEO, my commitment is to bring that discipline to this business every day. We will focus resources on the highest impact commercial opportunities, improve sales execution, build scalable operating processes, and hold ourselves accountable to those metrics that matter. Thank you to our employees, our customers, our partners, and our shareholders for your continued support. We are very excited about the path ahead, and we are focused on turning the opportunity in front of us into measurable growth. Robert, we're now ready to open the call for questions.

Very good. Thank you very much, Michael and Tom, for your prepared remarks there. Again, to everyone listening through the webcast portal, if you would like to ask a question, you can type it into the Ask a Question there on your screen. I have a few questions already in the queue, so I will proceed here. First one is, given the early results from April, is it fair to expect Q-over-Q, quarter-over-quarter revenue growth and a reasonable chance at record revenue?

Thank you, Robert. I believe that from the results that we're already seeing and what we've talked about bringing in, and direct control over our D2C efforts, I do believe that we can see reasonable growth quarter-over-quarter, and I do believe that we will continue to break records.

All right. Very good. Next question here is, are you seeing any expansion internationally, especially with the hantavirus breakout?

Thank you, Robert. That's a very interesting question. The hantavirus really points out the potential risks involved with rodent or rat infestations. Obviously, our position is one to where we think we have a solution that can take care of rodent infestations long term. Related to the international parts of our business, as I mentioned before, we really wanna focus in international on those countries that we can make an impact short term. A lot of the regulatory requirements for certain parts of the world can take anywhere from two to three years to get through those processes. Unless we have a partner in place that's gonna support and bear some of those costs, we are going to focus only on those international opportunities that can bring in short-term, near-term revenues.

All right. Very good. Next question here, broadly relating to the New York City test or trial there. What announcements do you expect them to make relating to the results? Really anything more that you can add relating to New York City?

There's nothing I could really speak to today on the New York City tests or the trials at this point because we're getting prepared to announce some of the data and some of the results from the various areas that we've been testing. I would say that longer term, these types of solutions and these types of pilot programs require those partnerships in a city like New York that are willing to not only implement these types of pilots, but do all of the necessary work that is necessary beyond just the Evolve products. It's all about the environment that an area is creating for pests like rats. We want to make sure that it's a unified approach and an approach that is one where we have buy-in from the partners that we're working on at a trial or a test like New York City.

Okay, very good. Next question here is, can you please explain the rationale behind the Direct-to-Consumer focus?

Thank you. The direct-to-consumer focus, the company historically has led with B2B options. What the company found and learned very quickly is without brand awareness, it's very hard to drive partner business if the consumers are not aware of the product. That is especially true in large, brick-and-mortar retailers. Implementing the changes that we are leading with D2C is gonna create significant brand awareness. It's going to create significant success and exposure for the brand and the wins there, which then will carry over into the B2B efforts that we have going on right now.

All right. An extension of that, discuss the reviews regarding Amazon quality control the broader work that's being done to ensure customers understand how the product is utilized.

That's a great question, and it's been one of the main focus for us in our online presence is to really educate the consumers on how the product works, how it's going to be impactful, how long is it gonna take. It's not a matter of just simply putting our product out in the field. It really is a matter of deploying it in a manner that is gonna be successful for the environment that it's being used in. Education is a key part of that effort. Historically, we've not provided as much information, whereas now we're gonna be providing significantly more information and trying to set the proper expectations for a long-term solution to solve this problem.

Okay. Next question here is, were these changes that are being discussed already in effect under your prior role, or did they become more of a priority once Joel Fruendt retired?

It really was an early priority. As I had come in initially as consulting effort to really help understand what was driving the business and what the strategic focus and strategic plan should be, we started to implement those changes very, very quickly. A lot of those changes were started back in Q4 and really took final shape as we moved into Q1 of this year. That's why we've been able to see some of the incredible results of that you're seeing right now just in Q1. Very early, but pretty significant in terms of the results we're seeing.

Okay. Very good. Our next question here is SG&A remains high for the level of revenue this quarter, including the one-time severance and legal that were discussed there. Is there a plan to optimize SG&A to better match the levels of the business?

That's a great question, and I'm gonna let Tom take that question so he can speak more specifically to the amount of one-time out of the norm costs that we were dealing with as we were in this quarter.

Thanks, Michael. It's important to view these as part of the investment we're making in this strategic transition. We're bringing in, you know, new personnel to cover that have new skills, et cetera. We've taken out of the picture some litigation on other legal issues that were frankly just distracting to the business. There was a bit of what I would call investments in the SG&A in Q1. The focus here is now that we've gotten those things kind of out of the way, we're able to provide a more streamlined SG&A.

That's one of the reasons why we wanted to make sure that we put in as much detail about those one-time expenses and provide a more normalized view of what the burn rate would look as we move forward. Yeah, there is a plan to optimize SG&A. We needed to take these expenses in Q1 in order to make this transition and make it well and make it quickly, so we can then move on to all of the growth initiatives that Michael's been talking about.

Alright, our next question here. Again, just a reminder to everyone, if you'd like to ask a question and you're listening through the webcast portal there, go ahead and type that into the ask a question box there on your screen. Michael and Tom, there's a follow-up here pertaining to hantavirus. Has there been an uptick in incoming inquiries regarding the heightened hantavirus awareness?

Yes. There has been a significant uptick in search for options looking to solve rodent and pest-related problems. We have seen an increase in uptick.

All right. Very good. Next question here. Is there any update on the brick-and-mortar Home Depot, other brick-and-mortar companies, moving from online to in-store?

That's a great question, Robert. What I will say about Home Depot and other brick-and-mortar retailers is something I mentioned early on. The large retailers are not in the business of promoting a product. They're in the business of selling product. What they look for in a brand is the brand awareness and are consumers going to come into their store, understand that product, look for that product, ask for that product, and then purchase that product in store?

Historically, as I mentioned before, we didn't have the proper focus in creating brand awareness through our D2C and through Amazon, which is one of the main focuses that we have been talking about on this call and through this quarter. I do believe there is quite a bit of opportunity in the large brick-and-mortar retailers. We have to demonstrate clearly to them that these consumers are looking for this type of product and can expand their revenues in that category.

Alright. Very good. Again, just a quick reminder everyone, if you're listening to the webcast portal, final reminder here, please go ahead and type your question into the Ask a Question box there on your screen. Another question here, has there been any thoughts on capital structure and value in the company equity? Is there any update on when the company might get close to self-funding or being able to adjust the cap structure so it's not purely equity funded?

Yeah, Robert, thanks. This is also a great question. I'll take the first part of this and then turn it over to Tom. What I'd like to emphasize is the fact that we are extremely focused on driving revenue. Revenue solves a lot of problems. The type of revenue, such as recurring revenue, subscription, and so on, is even better. The goal is to reduce the burn so that we're incrementally, over time, moving closer and closer to that break-even point. If you have a focus on revenue, it solves a lot of problems. Tom, you could answer or add, chime in addition on this question.

Yeah. The two points I would make. I mean, one is to echo Michael's point, which is to say that what we're trying to provide here is as much information about our, the vector we're following in terms of the revenue growth and the profitability growth that allows us to move towards that. As we look at the capital structure, though, the second part, we are already looking at other options besides equity. We do use equipment financing for all of our capital equipment purchases, and we are getting closer and closer to the point at which we can utilize debt for more cash flow management purposes. This again gets back to the quality of the revenue.

As much as predictable as it can get, that provides the cash flow information that the lenders need in order to provide debt financing as opposed to solely relying on the shareholders.

Alright. Very good. Next question here is regarding subscriptions. You just touched a little bit on this, Michael, but, you know, really talk about why the subscriptions are an important part of the business going forward.

Thank you. That again is a great question, one we have been focused on. Since I got involved with the company as a consultant very early on, it became very clear to me that the product is a consumable product, that it is a repeatable product, and it was just absolutely perfect for establishing a recurring revenue. Recurring revenue and subscription business allows us to have a lower cost for customers. The customer acquisition on one-time purchases and bringing in new customers into the funnel is quite a bit more expensive than those customers that are on a regular subscription model or a subscription revenue. We think it's going to be absolutely critical to our business to really focus and grow that.

The side result of that is that the happier subscriber customers that you have and the more stickiness you create creates a very, like a flywheel effect, and it's creating a lot of momentum for the business. You can see that just through these results that we've been talking about on the D2C side of the business.

Alright. Thank you for that. This will be the last question, it appears. I'm showing no further questions after this in the queue. Congratulations on the quarter and the successful transition. Again, follow up on the hantavirus. Company seems to have a generational marketing opportunity to enter the conversation to build awareness around the product. Have you considered a different approach towards marketing and social to capitalize as one of the only pure rodent plays in the market?

Great question. I will tell you this. The historically, a lot of the efforts for social media, and being able to market to these types of opportunities has not really been focused. We're bringing in new teams like we brought in teams to manage and as we're managing the Amazon efforts and as we're doing on our own website. You'll be seeing quite a bit over the next quarter of all of the new path, the new approach to the social media and social markets that we're gonna be advertising on and posting to. Yes, we are going to be moving more in that direction to capitalize on those markets and those channels.

All right. Very good. Well, I'm showing no further questions. With that, Michael, I will turn it back over to you for any closing remarks.

Yeah. Thank you, Robert. Thank you, Tom. I wanna thank everybody for participating and taking the time out of your day to listen to what we have to say. We're very excited about the future, and we look forward to more updates as time marches on. Have a great day, and thank you.

The conference has now concluded. We thank you for attending today's presentation. You may now disconnect your lines.