SenesTech (SNES) Risk Analysis

We collect sales, value added or similar indirect taxes in a number of jurisdictions. An increasing number of states have adopted laws that attempt to impose sales tax collection obligations on out-of-state companies. Similarly, many foreign jurisdictions have considered or adopted laws that impose taxes on companies despite not having a physical presence in the foreign jurisdiction. A successful assertion by one or more states, or foreign jurisdictions, requiring us to collect taxes where we presently do not do so, or to collect more taxes in a jurisdiction in which we currently do collect some taxes, could result in substantial tax liabilities, including taxes on past sales, as well as penalties and interest. This could also create additional administrative burdens for us, put us at a competitive disadvantage if they do not impose similar obligations on our competitors, and decrease our future sales, which could harm our business and results of operations.

If any of our products or future approved product candidates fail to achieve sufficient market acceptance, we will not be able to generate sufficient revenues to become profitable. The commercial success of ContraPest and Evolve will depend on a number of factors, including the following: - the execution of our commercial strategy and the successful expansion of our commercial organization;- our success in educating end users about the benefits, administration and use of ContraPest and/or Evolve;- the effectiveness of our own or our potential strategic partners' marketing, sales and distribution strategy and operations;- convincing customers to deploy ContraPest and Evolve in quantity as an enhancement to, or replacement of, their current strategy of rodenticide use;- continued refinement of our pricing strategy;- our ability to manufacture quantities of ContraPest and Evolve using commercially acceptable processes and at a scale sufficient to meet anticipated demand and enable us to reduce our cost of manufacturing; and - a continued acceptable safety profile of Evolve and ContraPest. Many of these factors are beyond our control. If we are unable to successfully commercialize ContraPest and Evolve, we may not be able to earn sufficient revenues or profits to continue our business.

We are making sales through e-Commerce tools, that depend on information technology systems and networks. We are also responsible for storing, processing, transmitting, and protecting data relating to our business, customers, and employees, including personal and other confidential or sensitive information. We also rely on third-party vendors for the storage, processing, and transmission of personal and confidential information. The legal and regulatory landscape is rapidly evolving and uncertain in the areas of consumer protection, intellectual property, Artificial Intelligence, cybersecurity, and privacy and data protection. Our data processing activities subject us to numerous data privacy and security obligations, such as various laws, regulations, guidance, industry standards, external and internal privacy and security policies, contractual requirements, and other obligations relating to data privacy and security. In the United States, federal, state, and local governments have enacted numerous data privacy and security laws, including data breach notification laws, personal data privacy laws, consumer protection laws (e.g. Section 5 of the Federal Trade Commission Act), comprehensive consumer data privacy laws (e.g., the California Consumer Privacy Act) and other similar laws. Outside the United States, an increasing number of laws, regulations, and industry standards govern data privacy and security. For example, the European Union's General Data Protection Regulation ("EU GDPR"), the United Kingdom's GDPR ("UK GDPR") (collectively, "GDPR"). Under the GDPR, companies may face temporary or definitive bans on data processing, other corrective actions, significant fines, or private litigation. Consumers, lawmakers and consumer advocates alike are increasingly concerned over the security of data transmitted over the Internet. Cyber-attacks, malicious internet-based activity, online and offline fraud, and other similar activities threaten the confidentiality, integrity, and availability of our sensitive information and information technology systems, and those of the third parties with whom we work. Such threats are prevalent and continue to rise, are increasingly difficult to detect, and come from a variety of sources. It may be difficult and/or costly to detect, investigate, mitigate, contain, and remediate a security incident. Our efforts to do so may not be successful. We do not control our third-party service providers and cannot guarantee that they have implemented reasonable security measures to protect our employees' and customers' data, identity and privacy, or that no security incidents will occur in the future. A breach of customer, employee or confidential data could damage our reputation and our relationship with customers, and could result in lost sales, sizable fines or penalties, significant breach-notification costs, investigations, and lawsuits, as well as adversely affect our results of operations. We may also incur additional costs in the future related to the implementation of additional security measures to protect against new or enhanced data security and privacy threats, or to comply with state, federal and international laws that may be enacted to address those threats.

We believe that our success is highly dependent on our ability to attract and retain highly skilled and experienced managerial, sales, research and development and other personnel. If one or more of our executive officers or key employees terminates employment or becomes disabled or experiences long-term illness, we may not be able to replace their expertise, fully integrate new personnel or replicate the prior working relationships, and the loss of their services might significantly delay or prevent the achievement of our research and development and business objectives. Qualified individuals with the breadth of skills and experience in our industry that we require are in high demand, and we may incur significant costs to attract them. Many of the other companies that we compete against for qualified personnel have greater financial and other resources, different risk profiles and a more established history in the industry. They also may provide more diverse opportunities and better chances for career advancement. Our failure to attract and/or retain key personnel could impede the achievement of our research and development and commercialization objectives. We believe that our existing internal manufacturing capabilities are sufficient to meet our current and near term forecasted demand for our products. However, to meet future demand, we may need to expand our manufacturing capability or rely upon third-party manufacturers. Expanding our internal facilities could require significant time and resources, and there can be no assurance that such efforts will be successful or timely. If we are unable to develop sufficient manufacturing capacity, reliance on third-party manufacturers may be necessary, which could disrupt operations or adversely affect our business, financial condition, or results of operations. In addition, our manufacturing operations are currently concentrated in a single location, making them vulnerable to potential disruptions. In addition, if our manufacturing operations fail or are disrupted for any reason, including because of labor, disasters, and/or equipment malfunctions, among others, our ability to produce our products in a timely manner may be adversely affected, which would harm our sales and reputation. We only operate in a single location, which means we do not have backup facilities to produce our products during a time when our manufacturing facility becomes unavailable. We will need to expand our operations and grow our organization, and we may experience difficulties in managing this growth. As of December 31, 2025, we had 23 full-time employees and one part-time employee. As our development and commercialization plans and strategies develop and progress, we will need additional managerial, operational, sales, marketing, scientific and financial headcount and other resources. Our management, personnel, and systems currently in place may not be adequate to support this future growth. Future growth would impose significant added responsibilities on members of management, including the following: - identifying, recruiting, maintaining, motivating and integrating additional employees with the expertise and experience we will require;- managing our internal development efforts effectively while complying with our contractual obligations to licensors, licensees, contractors and other third parties;- managing additional relationships with various strategic partners, suppliers and other third parties;- managing our trials effectively, which we anticipate being conducted at numerous field study sites;- improving our managerial, development, operational, marketing, production and finance reporting systems and procedures; and - expanding our facilities. Our failure to accomplish any of these tasks could prevent us from successfully growing our business.

Our operations could be subject to a variety of potential business disruptions, including power shortages, telecommunications failures, water shortages, floods, fires, earthquakes, extreme weather conditions, medical epidemics and other natural or man-made disasters or other interruptions, for which we are predominantly self-insured. We do not carry insurance for all categories of risk that our business may encounter. The occurrence of any of these business disruptions could seriously harm our operations and financial condition and increase our costs and expenses. Moreover, we rely on third parties to supply various ingredients and other items which are critical for producing our product candidates.

Economic downturns may adversely affect our customers. If consumers restrict their discretionary expenditures, due to inflation or other economic hardships, we may suffer a decline in revenue. Disruptions in credit or financial markets could make it more difficult for us to obtain, or increase the cost of obtaining, financing in the future. Increases in interest rates may cause a reduction in spending, which could result in a decrease in revenue. Our business may be impacted by geopolitical events, including military conflicts, threatened hostilities, conflicts or heightened tension among alliance countries and other geopolitical conflicts. In addition, materials sourced from suppliers located outside the U.S. have or may become subject to tariffs under U.S. trade policies. There can be no assurances that fuel prices, raw material costs, or other operating costs, all of which may be subject to inflationary pressures, will not materially increase in future years.

We have begun to market Evolve products internationally through distributors and we may seek regulatory approval of our product candidates outside of the United States. We expect that we will be subject to additional risks related to operating in foreign countries with respect to Evolve and any other approved products, including the following: - differing regulatory requirements in foreign countries;- unexpected changes in tariffs, trade barriers, price and exchange controls and other regulatory requirements;- economic weakness, including inflation or political instability in particular foreign economies and markets;- compliance with tax, employment, immigration and labor laws for employees living or traveling internationally;- potential liability under the U.S. Foreign Corrupt Practices Act of 1977, as amended, or comparable foreign regulations;- challenges enforcing our contractual and intellectual property rights, especially in those foreign countries that do not respect and protect intellectual property rights to the same extent as the United States;- production shortages resulting from any events affecting raw material supply or manufacturing capabilities internationally; and - business interruptions resulting from geopolitical actions, including war and terrorism. These and other risks associated with our international operations may materially adversely affect our ability to attain or maintain profitable operations.