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SenesTech Inc (SNES)
NASDAQ:SNES
Risk Overview Q4, 2024
Risk Distribution
36% Finance & Corporate
21% Legal & Regulatory
18% Tech & Innovation
9% Production
9% Ability to Sell
6% Macro & Political
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
This chart displays the stock's most recent risk distribution according to category. TipRanks has identified 6 major categories: Finance & corporate, legal & regulatory, macro & political, production, tech & innovation, and ability to sell.
Risk Change Over Time
S&P500 Average
Sector Average
Risks removed
Risks added
Risks changed
SenesTech Risk Factors
New Risk (0)
Risk Changed (0)
Risk Removed (0)
No changes from previous report
The chart shows the number of risks a company has disclosed. You can compare this to the sector average or S&P 500 average.
The quarters shown in the chart are according to the calendar year (January to December). Businesses set their own financial calendar, known as a fiscal year. For example, Walmart ends their financial year at the end of January to accommodate the holiday season.
The quarters shown in the chart are according to the calendar year (January to December). Businesses set their own financial calendar, known as a fiscal year. For example, Walmart ends their financial year at the end of January to accommodate the holiday season.
Risk Highlights Q4, 2024
Main Risk Category
Finance & Corporate
With 12 Risks
Finance & Corporate
With 12 Risks
Number of Disclosed Risks
33
-1
From last reportS&P 500 Average: 31
33
-1
From last reportS&P 500 Average: 31
Recent Changes
0Risks added
1Risks removed
3Risks changed
Since Dec 2024
0Risks added
1Risks removed
3Risks changed
Since Dec 2024
Number of Risk Changed
3
-6
From last reportS&P 500 Average: 3
3
-6
From last reportS&P 500 Average: 3
See the risk highlights of SenesTech in the last period.
Risk Word Cloud
The most common phrases about risk factors from the most recent report. Larger texts indicate more widely used phrases.
Risk Factors Full Breakdown - Total Risks 33
Finance & Corporate
Total Risks: 12/33 (36%)Above Sector Average
Share Price & Shareholder Rights9 | 27.3%
Share Price & Shareholder Rights - Risk 1
We may not be able to comply with all applicable listing requirements or standards of The Nasdaq, and Nasdaq could delist our common stock.Changed
Share Price & Shareholder Rights - Risk 2
If we are unable to continue as a going concern, our securities will have little or no value.We have incurred operating losses since our inception, and we expect to continue to incur significant expenses and operating losses for the foreseeable future. Our financial statements as of December 31, 2024 and 2023 have been prepared under the assumption that we will continue as a going concern. Our independent registered public accounting firm included in its opinion for the years ended December 31, 2024, and 2023 an explanatory paragraph referring to our net loss from operations and net capital deficiency and expressing substantial doubt in our ability to continue as a going concern without additional capital becoming available. If we encounter continued issues or delays in the commercialization of our products or greater than anticipated expenses, our prior losses and expected future losses could have an adverse effect on our financial condition and negatively impact our ability to fund continued operations, obtain additional financing in the future and continue as a going concern. There are no assurances that such financing, if necessary, will be available to us at all or will be available in sufficient amounts or on reasonable terms. Our financial statements do not include any adjustments that may result from the outcome of this uncertainty. If we are unable to generate additional funds in the future through financings, sales of our products, licensing fees, royalty payments or from other sources or transactions, we will exhaust our resources and will be unable to continue operations. If we cannot continue as a going concern, our stockholders would likely lose most or all of their investment in us.
Share Price & Shareholder Rights - Risk 3
Our reverse stock splits may decrease the liquidity of the shares of our common stock.On July 11, 2024, our stockholders approved a reverse stock split of our common stock, par value $0.001 per share, at a ratio of not less than 1-for-2 and not more than 1-for-20, with the actual ratio to be determined by our board of directors. On July 23, 2024, the Reverse Split Committee of our board of directors approved a final split ratio of 1-for-10 to regain compliance with the Nasdaq minimum bid price requirement. Prior to the July 2024 reverse stock split, we effected a reverse stock split in November 2023 with a ratio of 1-for-12 and in November 2022 with a ratio of 1-for-20. The liquidity of the shares of our common stock may be affected adversely by the reverse stock splits given the reduced number of shares that are outstanding following the reverse stock splits. In addition, the reverse stock splits increase the number of stockholders who own odd lots (less than 100 shares) of our common stock, creating the potential for such stockholders to experience an increase in the cost of selling their shares and greater difficulty effecting such sales.
Share Price & Shareholder Rights - Risk 4
Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.Until such time, if ever, as we can generate sufficient product revenues, we expect to finance our cash needs primarily through the sale of equity securities and debt financings, and possibly through credit facilities and government and foundation grants. We may also seek to raise capital through third party collaborations, strategic alliances and similar arrangements. We currently do not have any committed external source of funds.
Raising funds in the future may present additional challenges and future financing may not be available in sufficient amounts or on terms acceptable to us, if at all. The terms of any financing arrangements we enter into may adversely affect the holdings or the rights of our stockholders and the issuance of additional securities by us, or the possibility of such issuance, may cause the market price of our shares to decline. For example, during 2022 and 2020, we completed equity financings that resulted in the issuance of shares of common stock and warrants to purchase common stock, resulting in substantial dilution to the existing stockholders. Similarly, in the first quarter of 2021, we again issued shares of common stock and warrants to purchase common stock, resulting in additional substantial dilution to the existing stockholders. We generally have raised capital as the opportunity arises.
Certain of our agreements with investors and our outstanding warrants contain provisions that impose limitations on our ability to participate in certain variable rate transactions, which may limit our opportunities to obtain financing in sufficient amounts or on acceptable terms. The sale of additional equity or convertible debt securities would dilute all of our stockholders, and if such sales occur at a deemed issuance price that is lower than the current exercise price of our outstanding warrants sold to investors in November 2017, the exercise price for those warrants would adjust downward to the deemed issuance price pursuant to price adjustment protection contained within those warrants. Our various warrants contain other terms that may affect our fundraising. In connection with any future equity offering, we may agree to amend the terms of certain of our outstanding warrants held by certain significant purchasers in this offering. Any such amendments may, among other things, decrease the exercise prices or increase the term of exercise of those warrants.
The incurrence of indebtedness through credit facilities would result in increased fixed payment obligations and, potentially, the imposition of restrictive covenants. Those covenants may include limitations on our ability to incur additional debt, making capital expenditures or declaring dividends, and may impose limitations on our ability to acquire, sell, or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business.
If we raise additional funds through collaborations, strategic alliances, or licensing arrangements or other marketing or distribution arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to expand our operations or otherwise capitalize on our business opportunities, our business, financial condition and results of operations could be materially adversely affected.
If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or commercialization efforts, or grant others rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Share Price & Shareholder Rights - Risk 5
Our share price is volatile, which could subject us to securities class action litigation and your investment in our securities could decline in value.Our stock could be subject to wide fluctuation in response to many risk factors listed in this section, and others beyond our control, including the following:
- market acceptance and commercialization of our products;- our being able to timely demonstrate achievement of milestones, including those related to revenue generation, cost control, cost effective source supply, and regulatory approvals;- our ability to remain listed on Nasdaq;- results and timing of our submissions with the regulatory authorities;- failure or discontinuation of any of our development programs;- regulatory developments or enforcements in the United States and non-U.S. countries with respect to our products or our competitors' products;- failure to achieve pricing acceptable to the market;- regulatory actions with respect to our products or our competitors' products;- actual or anticipated fluctuations in our financial condition and operating results or our continuing to sustain operating losses;- competition from existing products or new products that may emerge;- announcements by us or our competitors of significant acquisitions, strategic arrangements, joint ventures, collaborations or capital commitments;- issuance of new or updated research or reports by securities analysts;- announcement or expectation of additional financing efforts, particularly if our cash available for operations significantly decreases or if the financing efforts result in a price adjustment to certain outstanding warrants;- fluctuations in the valuation of companies perceived by investors to be comparable to us;- share price and volume fluctuations attributable to inconsistent trading volume levels of our shares;- disputes or other developments related to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies;- entry by us into any material litigation or other proceedings;- sales of our common stock by us, our insiders, or our other stockholders;- exercise of outstanding warrants;- market conditions for equity securities; and - general economic and market conditions unrelated to our performance.
Furthermore, the capital markets can experience extreme price and volume fluctuations that may affect the market prices of equity securities of many 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. You may not realize any return on your investment in us and may lose some or all of your investment.
Share Price & Shareholder Rights - Risk 6
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 shares of our common stock, or the perception that such sales will occur, could cause a decline in the market price of our common stock. This is particularly true if we sell our stock at a discount. Any future issuance of common stock or securities convertible or exercisable into our common stock could cause a further downward adjustment of the exercise price of these warrants to the deemed issuance price if the issuance price is less than the exercise price of the warrants at the time of the new issuance.
Also, in the future, we may issue additional shares of our common stock or other equity or debt securities convertible into common stock 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.
Share Price & Shareholder Rights - Risk 7
An active market in the shares may not continue to develop in which investors can resell our common stock.We cannot predict the extent to which an active market for our common stock will continue to develop or be sustained, or how the development of such a market might affect the market price for our common stock. Market conditions in effect at the time you acquire our stock may not be indicative of the price at which our common stock will trade in the future. Investors may not be able to sell their common stock at or above the price they acquired it.
Share Price & Shareholder Rights - Risk 8
If securities or industry analysts, or other sources of information, do not publish research, or publish inaccurate or unfavorable research or other information about our business, our stock price and trading volume could decline.The trading market for our common stock may depend on the research, reports and other information that securities or industry analysts, or other third-party sources of information, publish about us or our business. We do not have any control over these analysts or other third-party sources of information. From time to time inaccurate or unfavorable research or other information about our business, financial condition, results of operations and stock ownership may be published. We cannot assure that analysts will 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 could 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. If incorrect or misleading information is disseminated publicly by third parties about us, our stock price could decline.
Share Price & Shareholder Rights - Risk 9
Our corporate documents, Delaware law and certain warrants contain provisions that could discourage, delay or prevent a change in control of our company.Provisions in our amended and restated certificate of incorporation and our amended and restated bylaws may discourage, delay or prevent a merger or acquisition involving us that our stockholders may consider favorable. For example, our amended and restated certificate of incorporation currently provides for a staggered board of directors, whereby directors serve for three-year terms, with approximately one-third of the directors coming up for reelection each year. Having a staggered board will make it more difficult for a third party to obtain control of our board of directors through a proxy contest, which may be a necessary step in an acquisition of us that is not favored by our board of directors. Additionally, most of our warrants provide a Black Scholes value-based payment to the warrant holders in connection with certain transactions that may discourage, delay or prevent a merger or acquisition.
We are also subject to the anti-takeover provisions of Section 203 of the Delaware General Corporation Law. Under these provisions, if anyone becomes an "interested stockholder," we may not enter into a "business combination" with that person for three years without special approval, which could discourage a third party from making a takeover offer and could delay or prevent a change of control. For purposes of Section 203, "interested stockholder" means, generally,someone owning 15% or more of our outstanding voting stock or an affiliate of ours that owned 15% or more of our outstanding voting stock during the past three years, subject to certain exceptions as described in Section 203.
Accounting & Financial Operations2 | 6.1%
Accounting & Financial Operations - Risk 1
We have not fully assessed our internal control over financial reporting. If we experience material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our common stock.Accounting & Financial Operations - Risk 2
We have incurred significant operating losses every quarter since our inception and anticipate that we will continue to incur significant operating losses in the future.Investment in product development is highly speculative because it entails substantial upfront capital expenditures and significant risk that any potential product candidate will fail to become commercially viable or gain regulatory approval. To date, we have financed our operations primarily through the sale of equity securities and debt financings as well as research grants. We have not generated sufficient revenue from product sales to date to achieve profitability. We continue to incur significant sales, marketing, research, development and other expenses related to our ongoing operations. As a result, we are not profitable and have incurred losses in every reporting period since our inception. For the years ended December 31, 2024 and 2023, we reported net losses of $6.2 million and $7.7 million, respectively. Thru December 31, 2024, we have accumulated deficits of $136.1 million since inception.
Since inception, we have dedicated a majority of our resources to the discovery and development and marketing of our proprietary product candidates. We expect to continue to incur significant expenses and operating losses for the foreseeable future. The size of our losses will depend, in part, on the rate of future expenditures and our ability to generate revenues. In particular, we expect to incur substantial and increased expenses as we perform the following:
- attempt to achieve market acceptance for our products;- continue to establish an infrastructure for the sales, marketing and distribution of our products and product candidates for which we may receive regulatory approval;- scale up manufacturing processes and quantities for the commercialization of our products and product candidates for which we receive regulatory approval;- continue the research and development of products and product candidates, including engaging in any necessary field studies;- seek regulatory approvals for our products and product candidates;- expand our research and development activities and advance the discovery and development programs for other product candidates;- maintain, expand and protect our intellectual property portfolio; and - add operational, financial and management information systems and personnel, including personnel to support our clinical development and commercialization efforts and operations as a public company.
We may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors that may adversely affect our financial condition. Our prior losses and expected future losses have had, and will continue to have, an adverse effect on our financial condition. If our products or product candidates do not gain or maintain sufficient regulatory approval, or if approved, fails to achieve market acceptance, we may never become profitable. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. Our failure to become and remain profitable would decrease the value of our company and could impair our ability to raise capital, expand our business, diversify our product offerings or continue our operations. A decline in the value of our company could cause you to lose all or part of your investment.
Debt & Financing1 | 3.0%
Debt & Financing - Risk 1
We will require additional capital to fund our operations. Failure to obtain this necessary capital if needed may force us to delay, limit, or terminate our product development efforts or other operations.Legal & Regulatory
Total Risks: 7/33 (21%)Above Sector Average
Regulation4 | 12.1%
Regulation - Risk 1
Regulatory approval processes of the EPA and comparable foreign regulatory authorities are lengthy, time-consuming and unpredictable, and if we are ultimately unable to obtain regulatory approval for our product candidates, our business may fail.Regulation - Risk 2
Even following receipt of any regulatory approval for ContraPest, Evolve, and our other product candidates, requiring regulatory approval, we will continue to face extensive regulatory requirements and our products may face future development and regulatory difficulties.Even following receipt of any regulatory approval for ContraPest, Evolve, or our product candidates, our products will be subject to ongoing requirements by the EPA and comparable state and foreign regulatory authorities governing the manufacture, quality control, further development, labeling, packaging, storage, distribution, safety surveillance, import, export, advertising, promotion, recordkeeping and reporting of safety and other post-market information.
The safety profile of any product will continue to be closely monitored by the EPA, state and comparable foreign regulatory authorities after approval. In addition, we may be required, from time to time, to provide further testing results and certifications to the EPA and state regulatory agencies for ContraPest or Evolve.
For instance, we have found it challenging to produce applicable stability test results for one of our active ingredients, due in part to the small quantity used in the final product and continue to work with the EPA to develop appropriate biological and/or chemical measurements for active ingredient stability. Because our data continues to demonstrate the long-term efficacy of ContraPest, we believe that the testing is a matter we will resolve.
If the EPA or comparable foreign regulatory authorities become aware of new information after approval of ContraPest, Evolve, or any other product candidate, or we are unable to adequately complete required testing and certification requirements, a number of potentially significant negative consequences could result, including the following:
- we may be forced to suspend marketing of such product;- regulatory authorities may withdraw their approvals of such product after certain procedural requirements have been met;- regulatory authorities may require additional warnings on the label that could diminish the usage or otherwise limit the commercial success of such product;- the EPA or other regulatory bodies may issue safety alerts, press releases or other communications containing warnings about such product;- the EPA may require the establishment or modification of restricted use, or a comparable foreign regulatory authority may require the establishment or modification of a similar strategy that may, for instance, restrict distribution of our product and impose burdensome implementation requirements on us;- we may be required to change the way the product is administered or conduct additional trials;- we could be sued and held liable for harm caused;- we may be subject to litigation or product liability claims; and - our reputation may suffer.
Any of these events could prevent us from achieving or maintaining market acceptance of the particular product candidate, if approved, and could significantly harm our business, results of operations and prospects.
Moreover, existing government regulations may change, and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of product candidates requiring such approval. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained and/or be subject to different marketing requirements or fines or enhanced government oversight and reporting obligations, which would adversely affect our business, prospects, and ability to achieve or sustain profitability.
Regulation - Risk 3
Even following receipt of any regulatory approval or introduction of products or product candidates, we will continue to be subject to regulation of our manufacturing processes and advertising practices.As a manufacturer of pest control products, we are subject to continual government oversight and periodic inspections by the EPA and other regulatory authorities. If we or a regulatory agency discover problems with a facility where our products are manufactured, a regulatory agency may impose restrictions on the manufacturing facility, including requiring recall or withdrawal of the product from the market or suspension of manufacturing until certain procedural requirements have been met. The occurrence of any such event or penalty could limit our ability to market ContraPest, Evolve, or any other product candidates and generate revenue.
In addition, the EPA strictly regulates the advertising and promotion of pest control products, and these pest control products may only be marketed or promoted for their EPA approved uses, consistent with the product's approved labeling. Advertising and promotion of any product candidate that obtains approval in the U.S. will be heavily scrutinized by the EPA, other applicable state regulatory agencies and the public. Violations, including promotion of our products for unapproved or off-label uses, are subject to enforcement actions, inquiries and investigations, and civil, criminal and/or administrative sanctions imposed by the EPA.
Regulation - Risk 4
Failure to obtain regulatory approval in foreign jurisdictions would prevent our products or product candidates from being marketed in those jurisdictions.To market and sell our products globally, we must obtain separate marketing approvals and comply with numerous and varying regulatory requirements. The approval procedure varies among countries and can involve additional testing. Obtaining foreign regulatory approvals and maintaining compliance with foreign regulatory requirements could result in significant delays, difficulties, and cost for us, and could delay or prevent the introduction of our products in certain countries. Approval by the EPA does not ensure approval by regulatory authorities in other countries or jurisdictions, but EPA approval may influence decisions by the foreign regulatory authority. If we are unable to obtain approval of our products or product candidates by regulatory authorities in the world market, the commercial prospects of that product candidate may be significantly diminished, and our business prospects could decline.
Litigation & Legal Liabilities3 | 9.1%
Litigation & Legal Liabilities - Risk 1
We may be subject to legal proceedings in the ordinary course of our business that could result in significant harm to our business, financial condition and operating results.Litigation & Legal Liabilities - Risk 2
Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products that we may develop.We face an inherent risk of product liability exposure related to the use of ContraPest and Evolve. If we cannot successfully defend ourselves against claims from our product users, we could incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in the following:
- decreased demand for any product that we may develop;- termination of field studies or other research and development efforts;- injury to our reputation and significant negative media attention;- significant costs to defend the related litigation;- substantial monetary awards to plaintiffs;- loss of revenue;- diversion of management and scientific resources from our business operations; and - the inability to commercialize our product candidates.
We may be unable to obtain commercially reasonable product liability insurance for any products approved for marketing. Large judgments have been awarded in class action lawsuits based on products that had unanticipated side effects, including, without limitation, any potential adverse effects of our products on humans or other species. A successful product liability claim or series of claims brought against us, particularly if judgments exceed our insurance coverage, could decrease our cash and adversely affect our business.
Litigation & Legal Liabilities - Risk 3
The misuse of our products may harm our reputation in the marketplace, result in injuries that lead to product liability suits or result in costly investigations, fines or sanctions by regulatory bodies if we are deemed to have engaged in the promotion of these uses, any of which could be costly to our business.Customers, technicians or service providers could use our products in a manner that is inconsistent with the products' intended use. We train our marketing personnel and sales representatives to not promote our products for uses outside of the intended use, however, we cannot otherwise prevent all instances of misuse. Further, the marketing and sales representatives that we have hired to help meet the demand for our products may not have received proper training or have the working knowledge needed to adequately advise our customers how to safely use our products. Misuse of our products may cause an increased risk of injury to customers, which could harm our reputation in the marketplace, as well as lead to potential product liability lawsuits.
Tech & Innovation
Total Risks: 6/33 (18%)Above Sector Average
Innovation / R&D1 | 3.0%
Innovation / R&D - Risk 1
If we cannot successfully commercialize our products, especially ContraPest and Evolve, we will not become profitable.Trade Secrets4 | 12.1%
Trade Secrets - Risk 1
If we fail to obtain or protect intellectual property rights, our competitive position could be harmed.Trade Secrets - Risk 2
Intellectual property rights do not necessarily address all potential threats to any competitive advantage we may have.The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect our business, or permit us to maintain our competitive advantage. The following examples are illustrative:
- others may be able to make compounds that are the same as or similar to our future products but that are not covered by the claims of the patents that we own or have exclusively licensed;- we might not have been the first to file patent applications covering certain of our inventions;- others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing on our intellectual property rights;- issued patents that we own or have exclusively licensed may not provide us with any competitive advantages, or may be held invalid or unenforceable, as a result of legal challenges by our competitors;- our competitors might conduct research and development activities in the U.S. and other countries that provide a safe harbor from patent infringement claims for certain research and development activities, as well as in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets;- we may not develop additional proprietary technologies that are patentable or otherwise protectable;- employees may violate confidentiality and proprietary invention assignment agreements and we may not have the resources to enforce those agreements or otherwise enforce our patent rights; and - the patents of others may have an adverse effect on our business.
Trade Secrets - Risk 3
Our technology may be found to infringe third party intellectual property rights.Third parties may in the future assert claims or initiate litigation related to their patent, copyright, trademark and other intellectual property rights in technology that is important to us. The asserted claims and/or litigation could include claims against us, our licensors, or our suppliers alleging infringement of intellectual property rights with respect to our product candidates or components of those products. Regardless of the merit of the claims, they could be time consuming, resulting in costly litigation and diversion of technical and management personnel, or require us to develop non-infringing technology or enter into license agreements. We cannot assure you that licenses will be available on acceptable terms, if at all. Furthermore, because of the potential for significant damage awards, which are not necessarily predictable, it is not unusual to find even arguably unmeritorious claims resulting in large settlements. If any infringement or other intellectual property claim made against us by any third party is successful, or if we fail to develop non-infringing technology or license the proprietary rights on commercially reasonable terms and conditions, our business, operating results and financial condition could be materially adversely affected.
If our product candidates, methods, processes and other technologies infringe the proprietary rights of other parties, we could incur substantial costs and we may have to take certain actions, including the following:
- obtain licenses, which may not be available on commercially reasonable terms, if at all;- redesign our product candidates or processes to avoid infringement;- stop using the subject matter claimed to be held by others;- pay damages; or - defend litigation or administrative proceedings which may be costly whether we win or lose, and which could result in a substantial diversion of our financial and management resources.
Trade Secrets - Risk 4
We may need to license intellectual property from third parties, and such licenses may not be available or may not be available on commercially reasonable terms.A third party may hold intellectual property, including patent rights that are important or necessary to the development of our product candidates. It may be necessary for us to use the patented or proprietary technology of a third party to manufacture or otherwise commercialize our own technology or products, in which case we would be required to obtain a license from such third party. Licensing such intellectual property may not be available or may not be available on commercially reasonable terms, which could have a material adverse effect on our business and financial condition.
Cyber Security1 | 3.0%
Cyber Security - Risk 1
Privacy breaches and other cyber security risks related to our business and vulnerabilities through the use of evolving tools such as Artificial Intelligence could negatively affect our reputation, credibility and business.Changed
Production
Total Risks: 3/33 (9%)Below Sector Average
Employment / Personnel1 | 3.0%
Employment / Personnel - Risk 1
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.Supply Chain2 | 6.1%
Supply Chain - Risk 1
Business or supply chain disruptions could seriously harm our future revenues and financial condition and increase our costs and expenses, particularly because we have limited suppliers and a critical ingredient for ContraPest is currently sourced from China.Supply Chain - Risk 2
We are dependent on triptolide, a key ingredient for ContraPest, which has limited sources and must be in a very refined condition.If we are unable to develop additional sources of or alternatives to triptolide, a key ingredient for ContraPest, our long-term ability to produce ContraPest at a cost-effective price could be in jeopardy. If market demand for triptolide causes the price to increase beyond our ability to market at a competitive price or causes the quality of the refined ingredient to be less than needed for our production, our ability to commercialize ContraPest could be limited or delayed, which would adversely affect our business, results of operations and financial condition.
Ability to Sell
Total Risks: 3/33 (9%)Below Sector Average
Sales & Marketing3 | 9.1%
Sales & Marketing - Risk 1
If we are unable to establish and maintain 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.Sales & Marketing - Risk 2
Our success is dependent on the successful commercialization of ContraPest and Evolve.The EPA granted registration approval for ContraPest effective August 2, 2016, and as of July 12, 2018, we have received registration for ContraPest in all 50 states, the District of Columbia, and two major U.S. territories, Puerto Rico and The U.S. Virgin Islands. Evolve, as a FIFRA 25(b) minimum risk pesticide, does not require federal registration with the EPA but is in the process of being registered in all 50 states, the District of Columbia, and five major U.S. territories. To date, we are authorized to sell Evolve in 48 states, and two major U.S. territories, Puerto Rico and The U.S. Virgin Islands. However, we have not yet had significant sales of ContraPest and Evolve, which are our only products to date that are available for commercialization and the generation of revenue.
Sales & Marketing - Risk 3
ContraPest, Evolve, and our other product candidates may not achieve adequate market acceptance necessary for commercial success.Market acceptance of any of our product candidates for which we receive approval depends on a number of factors, including the following:
- the potential and perceived advantages of product candidates over alternative or complementary products;- the effectiveness of our sales and marketing efforts and those of our collaborators;- the efficacy and safety of such product candidates as demonstrated in trials;- the uses, indications or limitations for which the product candidate is approved;- product labeling or product insert requirements of the EPA or other regulatory authorities;- the timing of market introduction of our products as well as future competitive or alternative products;- relative convenience and ease of use; and - unfavorable publicity relating to the product.
Macro & Political
Total Risks: 2/33 (6%)Below Sector Average
Economy & Political Environment1 | 3.0%
Economy & Political Environment - Risk 1
We are currently operating in a period of economic uncertainty, which has been significantly impacted by geopolitical instability, inflation, increases in interest rates, and other disruptions in credit and financial marktets.Changed
International Operations1 | 3.0%
International Operations - Risk 1
A variety of risks associated with marketing our product candidates internationally could materially adversely affect our business.See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.
FAQ
What are “Risk Factors”?
Risk factors are any situations or occurrences that could make investing in a company risky.
The Securities and Exchange Commission (SEC) requires that publicly traded companies disclose their most significant risk factors. This is so that potential investors can consider any risks before they make an investment.
They also offer companies protection, as a company can use risk factors as liability protection. This could happen if a company underperforms and investors take legal action as a result.
It is worth noting that smaller companies, that is those with a public float of under $75 million on the last business day, do not have to include risk factors in their 10-K and 10-Q forms, although some may choose to do so.
How do companies disclose their risk factors?
Publicly traded companies initially disclose their risk factors to the SEC through their S-1 filings as part of the IPO process.
Additionally, companies must provide a complete list of risk factors in their Annual Reports (Form 10-K) or (Form 20-F) for “foreign private issuers”.
Quarterly Reports also include a section on risk factors (Form 10-Q) where companies are only required to update any changes since the previous report.
According to the SEC, risk factors should be reported concisely, logically and in “plain English” so investors can understand them.
How can I use TipRanks risk factors in my stock research?
Use the Risk Factors tab to get data about the risk factors of any company in which you are considering investing.
You can easily see the most significant risks a company is facing. Additionally, you can find out which risk factors a company has added, removed or adjusted since its previous disclosure. You can also see how a company’s risk factors compare to others in its sector.
Without reading company reports or participating in conference calls, you would most likely not have access to this sort of information, which is usually not included in press releases or other public announcements.
A simplified analysis of risk factors is unique to TipRanks.
What are all the risk factor categories?
TipRanks has identified 6 major categories of risk factors and a number of subcategories for each. You can see how these categories are broken down in the list below.
1. Financial & Corporate
- Accounting & Financial Operations - risks related to accounting loss, value of intangible assets, financial statements, value of intangible assets, financial reporting, estimates, guidance, company profitability, dividends, fluctuating results.
- Share Price & Shareholder Rights – risks related to things that impact share prices and the rights of shareholders, including analyst ratings, major shareholder activity, trade volatility, liquidity of shares, anti-takeover provisions, international listing, dual listing.
- Debt & Financing – risks related to debt, funding, financing and interest rates, financial investments.
- Corporate Activity and Growth – risks related to restructuring, M&As, joint ventures, execution of corporate strategy, strategic alliances.
2. Legal & Regulatory
- Litigation and Legal Liabilities – risks related to litigation/ lawsuits against the company.
- Regulation – risks related to compliance, GDPR, and new legislation.
- Environmental / Social – risks related to environmental regulation and to data privacy.
- Taxation & Government Incentives – risks related to taxation and changes in government incentives.
3. Production
- Costs – risks related to costs of production including commodity prices, future contracts, inventory.
- Supply Chain – risks related to the company’s suppliers.
- Manufacturing – risks related to the company’s manufacturing process including product quality and product recalls.
- Human Capital – risks related to recruitment, training and retention of key employees, employee relationships & unions labor disputes, pension, and post retirement benefits, medical, health and welfare benefits, employee misconduct, employee litigation.
4. Technology & Innovation
- Innovation / R&D – risks related to innovation and new product development.
- Technology – risks related to the company’s reliance on technology.
- Cyber Security – risks related to securing the company’s digital assets and from cyber attacks.
- Trade Secrets & Patents – risks related to the company’s ability to protect its intellectual property and to infringement claims against the company as well as piracy and unlicensed copying.
5. Ability to Sell
- Demand – risks related to the demand of the company’s goods and services including seasonality, reliance on key customers.
- Competition – risks related to the company’s competition including substitutes.
- Sales & Marketing – risks related to sales, marketing, and distribution channels, pricing, and market penetration.
- Brand & Reputation – risks related to the company’s brand and reputation.
6. Macro & Political
- Economy & Political Environment – risks related to changes in economic and political conditions.
- Natural and Human Disruptions – risks related to catastrophes, floods, storms, terror, earthquakes, coronavirus pandemic/COVID-19.
- International Operations – risks related to the global nature of the company.
- Capital Markets – risks related to exchange rates and trade, cryptocurrency.