SenesTech, Inc. (SNES) Q4 2018 Earnings Report, Transcript and Summary

Good afternoon, and welcome to the SenesTech, Inc. Fourth Quarter and Fiscal Year 2018 Financial Results Conference Call. [Operator Instructions]. 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.

Thank you very much, Phil, and thank all of you for joining us today to discuss SenesTech's year-end financial results for the period ended December 31, 2018, and corporate update conference call. With us on the call representing the company today are Dr. Loretta Mayer, Chair, Chief Executive Officer and Co-Founder of SenesTech; and Tom Chesterman, the company's Chief Financial Officer. At the conclusion of today’s prepared remarks, we will open the call for a question-and-answer session. [Operator Instructions]. 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 risk 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 on 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 Dr. Loretta Mayer, Chief Executive Officer and Co-founder of SenesTech. Loretta?

Thank you so much, Robert. Really appreciate everyone joining us for the call today. 2018 was, without a doubt, one of our major strategic growth years and is totally setting us up for our 2019 movements. What I'd like to do is I'd like to give a little background color and highlight some of the key accomplishments that we have achieved this last year, and what they -- cast them in light of where they add to our strategic plans. Probably the first one that everyone is thinking about is Washington, D.C. And at the end of 2018, we actually began shipping product for that project. Our colleague and professional pest manager distributor, Pestmaster, won the 2018 bid for the city of New York using ContraPest, and that's a 4-year project. And in that bid, they had asked us to start with 4 wards. There are actually 8 wards in Washington, D.C. We shipped our first stocking order of 5,000 units on December 18. That was a big win. It tested our successful manufacturing updates, our shipping processes and our ability to meet these large government contracts. That project have its predeployment site meeting on February 21, and we were a little bit surprised when they announced to us that they want to rapidly expand into all 8 wards instead of just the first 4. Their deployment schedule that they're working with our technical teams on is to begin the first ward deployment, which they did 2 Mondays ago, on March 18. As they deployed the product, we're keeping track of how long it takes them, any complications, what their successes are. And then very shortly, they will initiate the second ward. They're going to establish a periodic time frame for expanding into all 8 wards of Washington, D.C. We are thrilled with that and to have the expansion of the project bodes very well for how our product is doing in other cities. And I think that's another important part when you think about strategy for SenesTech. The other city that we've mentioned is St. Louis. St. Louis is a city that started under the guiding hands of Terry Hoselton at the Missouri Consulting Professionals. And what they did, they began very small, and he kept track of that. And then 2 weeks ago, he handed the keys to that park to the mayor as a rodent-free park. Well, that immediately stimulated the Gateway Arch Park Foundation to continue, and so the City of St. Louis to continue their expansion with Terry in the city buildings. So this is building on a momentum and an understanding amongst city governments as to how our particular strategy can add to their rodent control plans. We have also continued our work in Quincy in Massachusetts. And now that the winter has passed up there, they are accelerating their deployment. I will tease you just a bit. California, of course, there are two major cities, we'll be deploying in this next quarter with Aspen. We'll keep you up-to-date on that. What I'm trying to get at here, though, is when you invest with the cities and these governments as an end-user, what you learn is you learn to identify your sales cycle. And it depends upon the government organization. Washington, D.C. was so transparent and a wonderful partner for us. They allowed us to see how long it takes from approving a strategy, putting it into budget, getting the budget passed, getting it through the purchasing departments, going out for bids, paying attention to their local suppliers. And I will say, Pestmaster's supplier is right there in the district and it meant a great deal to the mayor. So you also -- it allows us then to look in each of these cities and focus on what are the groups that are really building the buying demand to try fertility control. Is it the building constituents? Is it the sanitation department? Does it come from inside? These are all vital things for us to learn so that we can shorten our sales cycle. And I cannot emphasize enough how relationships, and this is where big kudos out to Brandy Pyzyna and her technical team. They are always on the other end of their telephones to the city government officials. That then leads into our strategy of allowing us to prepare our objectives and key results can be easily measured if you know the process. I think the other thing, this last 2018 has really allowed us to do is form a strong relationship with Pestmaster. And I have thought a great deal about it, not only are they a fine company, but they're very aligned with how we think about the future of pest management and being on the cutting edge. Their approval for a large transit facility in Southern California did not come overnight. It took a lot of relationship building, it took a lot of work back and forth between Pestmaster and our technical services. Just as the expansion of the animal sanctuaries up in the Northeast, they are now one of our targeted submarkets as we have learned more and more about their needs. So building that into our strategies, just as with the cities, it allows us to understand more about the professional pest management companies and suppliers of that service. Self-selection is what has the shortest selling cycle for us. What I mean, by that is a pest management company who goes to a trade show, they find out more about their product. And then it becomes clear to them, I have a customer in that market segment. I've got a city that doesn't want to be the rattiest city in the United States. I have a city government that doesn't want to use pesticides that are poison, like one of the 16 counties of California that you're not allowed the sale and use of those pesticides. So these managers know their customers. They're environmentally focused, and they are the ones who are the most attentive to our education outreach. Yesterday, Brandy did a webinar for PCP, and there were over 150 attendees, 25 questions flying in from the web-based site, and the questions are so enlightening for us and they help us to learn more about their challenges and allow us to address our product and how it can solve those challenges. We also find that many of these pest managers are most anxious to do a trial first. We're happy to do that. We don't need confirmation of our product continuing to work. But they need the excitement of coming back and having a testimonial from a customer who says, "I just don't see any baby rats anymore. I actually see very few rats anymore." So again, it's that partnership, it's that working closely together. One of the other major submarkets within the animal facilities are zoos. And this is something where I'll spend just a moment talking about the Restricted Use product listing. This has something that actually has become one of those -- keep your eye on Twitter because every hour or so, you'll see another state listing the Restricted Use product requirement. Now what does that mean? That means that you have approval, we've been approved by the EPA at the federal level. As each one of these individual states come on board, I think as of the time I went to sleep, last night, it was 23 states. I see one more already today. And so what it means is you do not need to be licensed as a provider of Restricted Use products services. You don't have to be involved in the reporting process that is incumbent upon those services. You could be a zoo and you could have your own maintenance staff that's capable of putting out this product. You then can go ahead and move forward zoos, most all of them are nonprofit. They're very cost-conscious. There are about 416 zoos in the United States today, and we ended 2018 by penetrating that market to a level of 3%. And that is extraordinary. Our goal will be to move up to 5%, and then a slow increase. One thing about zoos, they have a very active chat board and intermanagement discussion. And so word-of-mouth between zoo managers goes very, very rapidly. They provide us with a voice of the customer. They let us know that they're so grateful to protect the exotic animals that they have the stewardship over. And I will tell you, we have been working on and will provide for them a nonprofit market affinity buying program. That will be where we can participate as good corporate citizens and help them with their price points. Animal sanctuaries are still in that same group. And as I mentioned before, they show that there is a response to animal issues. So when you place this market segment into our strategic outlook, what you'll find is that we are responding to a growing public demand to do no harm to animals; to reduce the use of poisons, which when consumed, when an animal eats poison and it's consumed by a beautiful raptor, that will transfer up the food chain and can poison the raptor. I think the State of California is probably the most aggressive in this market. But it allows us to understand the objective, all the demands that are coming from the customers. And in this case, they would be the people who go to the zoos, the people who support animal sanctuaries, the people who care about other animals beyond companion animals. Now I'd like to switch to another milestone from this past year, and that's food production. And again, using our same strategy that we have been using is addressing the customer's specific needs. The one that we recently shared with the public has been our expansion into the California egg production market. Now I do want you to understand, when we say feather facilities, we mean egg producers, which are layers; protein producers, which are broilers; and a growing segment, which are free range. Right now, approximately 16% of the feather facilities are moving towards free-range animal housing. This again, relates back to the demand of the customer, whether it's the customer in the supermarket or whether it's the customer that is going to be contributing to your animal sanctuaries. There is a growing concern now. Egg contamination, that's the one that comes up. I mean, some of the largest egg recalls have happened in this country. And if you think about the absolute specifics, as we drill down to the issues that this customer segment is interested in, they have a very high-quality grain, obviously. The quality grain you feed to the broiler goes right up the food chain into the human population. So you are increasing that delicious grain, not just for the chicken, but the rodents. So they have high nutrition. It favors their fertility. Rodent infestation in feather facilities are our enormous problem. Also, they frequently have 2 different species of rats. They'll have the brown rats, which is burrowing and scurrying along in the ground where all that grain is. And now also have the book rats, and that's the rats that's up in the rafters and dropping down into the chicken and from -- and grain areas to feed. And so bathing is something else that can be extremely specific in feather facilities. Now one last piece to this, as we met with the EPA in February, because we continue to have an evolving label, as most of you have noticed, we had discussions with them about these facilities. And we were able to ensure that the large producers that we're dealing with, the one in California, for example, is about 1 million eggs a day in production size. These are private facilities, they're closed to the public. They have different means, and they may have a demand for a different formulation. The EPA was very supportive of us moving forward to request waivers for different deployments, different formulations and allowing us an opportunity to continue to improve our product in a high-demand industry. So in the food production, it is vital that our objectives are very well tied to measuring what matters, what matters to the customer, what matters to the consumer of the customer's product. I think the last thing that I'll touch upon until we get into the numbers, so to speak, is I get a lot of questions about Hawaii. And I have to tell you that Hawaii, when you think about island, that was exactly the right choice for us to begin. Our work with the Army here on Oahu -- I say here. I'm coming to you from Hawaii today. Our work here with the Army has been extraordinary. We have not completed the final data set, but I can give you some glimpses. In that particular setting, which is outdoors, in a forest, in a guava forest, abundant food, plenty of water. Our consumption was higher than we saw in the New York City trash station. So to us, this tells us that we compete with the native foods. And as you all know, if a rat eats it, it will become infertile. The other thing that we tested was we were in a challenging weather region. And when you have a year-long study, these studies are long, it's a high investment and the analysis takes almost as long as it took to do the study. We had great stability of our product in this environment. And probably, one of the largest things that we have already seen from that study is an expanding impact into island ecology. And we'll be announcing some partnerships very soon, in the next quarter, where we are working with large international conservation groups preparing 2 high-impact projects on other islands. And then at the end of this year, 2019, we will be summing it all up at the international meeting in New Zealand on rodent control. You may remember, New Zealand has made the commitment to be invasive species-free by 2080, and we're very happy that they've asked for our help. The last piece about Hawaii is that it has opened another market segment, which is the homeowners association. Because clearly, in the populated regions of the island, there are many. And we have associated ourselves with Hawaiiana, which is one of the largest property management companies on the island. And they're expanding into Maui and Big Island, which is expanding the total addressable market for us. In this particular market, we have to deal with multiple property managers, on-site property managers, and we are still working out our distribution strategy to meet this demand. So I would be looking towards that in 2019. I could go on and on, but I will not. I think these are the most recent wins that we can discuss with you publicly right now. And a little bit later, I'll touch on what's new in the pipeline and our upcoming strategies. But Tom, I think it's time to hear about some numbers.

Thank you, Loretta. As most of you out there already have a copy of the earnings release, I will limit my comments to allow time for some additional perspective from Loretta as well as your questions. As you saw in today's press release, revenue for the year was $297,000, which is approximately 6x higher than last year's revenue. While we're obviously starting from a low base, we are making measurable progress in establishing our business, as you've heard from the number of new deployments that Loretta talked about. We continue to firmly control operating costs as our operating cost during the year ended December 31, 2018, were just $11,936,000, which is an improvement of almost $400,000 from the expenses during the same period in 2017. We also continue to be more efficient within our cost of goods sold, with gross margins of 18.9% for the 12 months ended December 31, 2018, compared to 13.5% for the same period in 2017. It should be noticed that the 18.9% for the year included an unusual scrap amount for the third quarter that we do not expect to be recurring. Thus, it is still our expectation that at scale, we should be able to drive gross margins in excess of 50%. For the year, we posted a net operating loss of $11,880,000 compared to a net operating loss of $12,316,000 in 2017. Adjusted EBITDA was $8.0 million compared to $8.2 million loss in 2017. As we talked about last quarter, during the third quarter, we completed the rights offering. The yielded net proceeds to the company of approximately $5.1 million. We ended the year with a cash position of $4.9 million and minimal long-term debt of approximately $261,000, which evidences our commitment to manage operating costs. As we enter the new year, we are in a solid position to continue to execute on our strategic business plan while retaining tight cost control. With that, let me turn the call back to you, Loretta, for any further comments.

Thank you, Tom. These last comments are really talking about activities that are the foundation of our strategic plans going forward. I've really spoken about the RUP in depth. The strategic impact of that is that it is increasing our total addressable market for us because it is increasing our outreach in sales beyond the professional pest management industry. Many users, and I will say again, I talk a lot about California because we have spent a great deal of time there and it is the fifth largest economy in the world. But in California, you have areas, say, in Ventura County, Malibu, where most of the pest management placement is done by landscapers. And so by listing this RUP, it completely allows us to go into the distribution markets, which provide landscaping products. The other thing you'll want to be looking for in this next year that we're focusing on is communications and messaging. Our goal is to increase the voice of the customer to us firsthand. We want to hear that mayor say, "I don't want to be a ratty city." We want to hear that city government official say, "I don't know what I'm going to do with this poor district." Because when we hear those kinds of comments, then they told us what they need, we can then go forward and customize for them. But most importantly, we can message to them exactly what their needs are. This opens up a lot of direct corporate and government customers for us. Our website is being upgraded, and I will tell you that's going to launch on April 1. And give you a little preview, we're adding pages. One of the things that we've heard from our investment community is they very much like to keep track with our projects, with our deployment success, with testimonials, so there will be a whole page dedicated to case studies. And that's where our goal, our objective is to have our customers picture themselves in each one of those case studies. We have added a page for our recent publication. Yes, we still do science. We have numerous collaborators all over the world, and we are starting to pull back that into our messaging strategy. And I'll go into that in just a moment. We're putting in a newsroom. You may have noticed our social media profile on Twitter, LinkedIn and Facebook has increased, and that seems to be a very useful conduit to get information out, not only to the investment community but to customers in general. We're adding another page because of the listing of the RUP, how to order. You don't have to wait for your PMP, you don't have to wait for a distributor. We can help you order directly and restock for that in home office as well. We are putting in details, another page of our submarkets. We have a total of 6 submarkets that we have identified and researched. We are leading with the first 3 structure, which includes cities and municipalities; our animal facilities, which includes zoos; and, of course, food production, which includes protein production facilities. I also think that this other page is probably my favorite. It's our corporate social responsibility page. Our product, just by its nature, is a more responsible product when it comes to animal health, welfare and the environment. And that's why we're aligning with very like-minded groups, groups that focus on conservation, that focus on ecology, raptors. I will say raptors are -- the solution in California is one of the most active organizations to protect raptors, the Peregrine Society. We'll be laying those out for you in a very objective key response measurement way in the upcoming quarters. The other thing is we have expanded our board. We've expanded our reach into different market segments. The addition of Ken Siegel to our Board of Directors from his position in the hospitality industry has just been extraordinary, and I would be looking for that market segment to grow. Our commercial approach is, first and foremost, the end users. And with that, comes education. We want to provide for a sales cycle in each unique market segment. We want our customers to have the parameters of expectations. Don't expect to see dead rat. This is not a rodenticide that just doesn't kill, it reduces the population. We want to work closely with them. If their issue is sanitation, then this might be something they'd want to use to reduce the number of rat bodies. And again, I cannot say it over and over, we want to listen to and partner with our entire commercial community, help us make it better. And I have to say to the city of Washington, D.C. and that very large egg producer in California, they are extraordinary hosts for us and good partners. We have the right team. I will be announcing a new Senior Vice President of Commercialization this next quarter. We brought them in to spend 90 days to get their feet on the ground, meet all of our customers and prepare their commercialization launch. It will be exciting and you'll want to stand by for that. Now I have saved probably one of the best items for last. What did we learn in 2018? We learned that some science and hard work pays off every time. It may not be the fastest approach, but it's the best foundation from which to build a business. And that's what we've been doing. We've been building SenesTech for a long and diverse future. The customers tell us what they want and need. It's our job to listen. And yes, they have said to us, we have mice, we need a solid formulation, we need reduced cost and we want a high corporate social responsibility profile. Another is we want you to be labeled as a responsible product. All of these things, we have listened to and we are moving forward on. And you will see those in 2019. And probably the last piece is something that we instituted just this month, and we have started a science speaker series. It's a webinar. Anyone can call in, and we launched it with Dr. Steve Shuster. Why? Because he's an evolutionary biologist. One of the questions we have had since the day we brought our product to market is -- well, how long is it going to take for the rats to become resistant your product? Dr. Shuster has taken all of that data in his first paper, which was published approximately 2 months ago, showed that resistant populations are rampant in Europe. We know that. It also showed quite clearly that resistance is driven by chemicals, poisons of the anticoagulant form. We can measure that resistance in rats, looking at different DNA markers. And what we now know is that the use of the secondary anticoagulants and new generation anticoagulants, these lethal forms drive resistance because it's quite simple, and if you'll listen to Dr. Shuster's seminar, you may say simple for you. But no, let me boil it down. When you kill rats, you will never kill them all. And the ones that don't die, the ones that take the bait and don't die, they breathe, so you have selected for the resistant animals. When you use a contraceptive, you reduce the total population breeding. So the number of potential resistant animals in your breeding pool is that of a normal population. You're not selecting for these resistant animals. The resistance in Europe is extraordinary. We are answering that call. The resistance has come to the United States, and we are working with those scientists to identify the DNA markers so you can get out ahead of resistant rat populations. Yes, and I will quote our new SVT, his question to Dr. Shuster was "So, could we reach a time when you would only have 2 rats, 2 choices if you have rat infestations? And those 2 choices are use ContraPest or nothing?" And the answer to that is yes, you could reach that time. We must understand the physiology of these animals, we must understand how they breathe. We must understand how we relate to them within our own communities and do the right thing for the animals and for us. Now let me turn this back to Robert because I know you probably have some questions. And with that, Robert, would you like to take over?

Yes. Thanks, Loretta. Phil, if you could instruct the listeners on the live line how to queue up?

[Operator Instructions]. The first question comes from Kevin Ellich with Craig-Hallum.

Loretta, just wanted to get an update on the number of states that have approved the label change. I think you made reference to another state even today. So are we currently at 24? And I guess, how long will it take to get the remaining states?

Good question. Yes, we are at 24. And that's accepting I'm in a different time zone and so I have no idea where you are. And what they're coming in is roughly 1 to 3 a week. And again, I think we'd be looking at having all states and, of course, the big one is Florida, has already come through. But looking at all states being in, probably by the end of Q2 this year.

Great. That's helpful. And then great progress on the Washington, D.C. deployment. And I appreciate the color you gave on second deployment. But wondering if you could give us a little bit more on potential size for the second deployment, will that be at least the same size as the first? And I guess, maybe a little bit more on the timing for that.

Well, you ask very good questions. Our first deployment was a guess, and so we looked with the city of Washington and said, all right, if we start in ward 1, you'll need maybe 5,000 units to get started. We don't know because we don't know how many rats you have. If they're like Dupont Circle who have their own Yelp site, then probably you're going to need a great deal more than that. The other thing is we can't predict because they are expanding more rapidly than we thought. What I can say is the next orders, the stocking orders, will continue to grow over the -- this first year of the four year contract. And I don't -- I just can't tell you, but that's why we're going to put that thought on our website so you can see how Washington is growing. As we learn, you learn.

Sure. That makes a lot of sense. And then just flipping over to Tom. I've got two quick one's for you. Gross margin, we saw a nice improvement this quarter. Maybe could you talk about your comment about gross margin in excess of 50%? Just wondering at what point you think you'll get there or is there a revenue number that you have in mind to achieve those types of margins?

Yes. I don't think it's -- I don't want to put a specific time line on it and it's not specifically tied to revenue, although that's part of it. We have instituted bulk pricing on some of the materials we bring in, some other things like that. So we are trending towards that. I'm pretty confident that we will make it there early enough in the year to make a difference. But I think it would be premature to put a specific time on that.

Got it, got it. and then just one quick one to Tom. So in the press release, you said $137,000 revenue this quarter versus $110,000 last quarter. Was there a restatement? I thought you guys had $105,000 last quarter. Not a big a deal, I just want to get it right.

I'm sorry, you broke up a little bit on that. Could you repeat?

Yes. In Q3, last quarter, you reported a $105,000 of revenue, and that sort of keeps us wondering if it still $105,000 or if there was a restatement to the $110,000 that was in this quarter's press release.

No. There was no restatement, must been a typo.

Okay. Great, great. And then just wondering, Loretta, great to see some trials in the poultry production in Central California. Can you give a little bit of expansion on when we could actually see that move forward? And I guess, how big of an opportunity that is?

Sure. The opportunity in poultry in the United States is approximately $88 billion. That's their production and that's the size of the market we're addressing. We will start expanding in California in late Q2. We're going to use some new strategies for [bidding] [ph] which is exciting for me. But in our broiler facilities located elsewhere in the United States, we're in our 6 month up there. So we will be expanding into poultry facilities. You also must remember that pig facilities, pork production is another very high market for us. So look for the end of Q2 to see this expansion in food production.

Now I would like to turn the call over to Robert for any email and webcast questions.

Thanks so much, Phil. We have a series of questions here, Loretta and Tom. We'll try to get to as many of these as we can. The first one here is, was the D.C. order booked in Q4 or will it be booked upon deployment, furthermore is D.C. expanding to all boroughs this year?

I'll take the revenue question. In terms of the -- because Pestmaster is acting as a distributor here, the revenue is booked as it leaves our dock and it gets shipped to them. So it was in the fourth quarter for that first order. There will be continuing orders, restocking orders, et cetera but -- and those will come in the first quarter and in the second quarter, et cetera. In terms of the deployment to the full year -- to the full city, that is what we understand they have a very aggressive plan. We'll be working our technical teams. We're working with them, as Loretta mentioned, to understand it better and we'll try and put as much of an update as we can onto the website.

All right. Next question here is with the recent rise in the share price, have any warrants been exercised?

Yes. We have seen some. We will be actually filing our 10-K probably tomorrow morning. And there will be some -- an update in there. But we do see that the activity has begun in terms of the warrant exercises, and we expect it to continue to increase as the stock price continues to increase.

All right. And our next question here is how long is the shelf life of ContraPest?

Well, I can tell you that the functional shelf life of ContraPest is in excess of one year. We will be providing our official shelf life to the EPA at the end of this year so we won't be putting that on our label until later.

Okay. Our next question here, this surrounds second-generation anticoagulant resistant rodents. This person indicated that they read many articles pertaining to rodenticides being ineffective to new generations of rats. Can you expand upon this and the role ContraPest would play in the scenario?

Sure. I think i touched upon that a little bit earlier but the new generations of rats, for those rats that are coming from breedings resistant animals, and so the ones clearly that were susceptible to the poison or death, they don't reproduce. We are also looking at how that breeding pool is favored, and we also will be looking at how our product impacts that. Right now, it's looking as if using contraception, we could actually get ahead of and maybe turn around these resistant pools as they're growing. I think the other thing is that the problem for these second generations is the best practices for the industry is to have their customers or PMPs rotate their products. The products, however, have the same active ingredient or similar active ingredients. So what you're doing is just expanding the resistant space. So yes, it is something we are extremely concerned with. I will tell you, our European colleagues are hard at work with us on that right now.

Okay. And the next question here is what is the approximate selling price of a ContraPest big unit?

So I think it's important understand, the ContraPest is a product that's typically bundled with a service, and so we don't always have visibility as to how the pest management professional is pricing it. We do know that the distributors offer a replacement tank for between $40 and $50 from their website. And we've heard anecdotally that some of the pest managers will market up 50% to 100% and might even add a special servicing fee. From our perspective, our base undiscounted selling price is $30 per tank for a 400-milliliter tank that fits in an EVO Express Bait Station. And $35 per tank for a 550 milliliter tank that fits in JT Eaton Fortress Bait Station. Each station holds 1 to 2 tanks and the label mandates that at least monthly servicing. So although actual consumption in the field could even require as often as weekly servicing, depending on the level of the infestation.

Okay, thanks, Tom. And the next question here again that around the warrants. If I assume the $1.15 warrants are well into the money, could the company force conversion? I know this can be done with convertibles but can it also be done with equity?

Yes. The $1.15 warrants actually have a whole provision that effectively forces exercise of the stock price rises to $2.87 for 5 days in a row. So we would anticipate that their warrants would probably all be exercised before that point.

Okay. And then the next question we have here is, obviously, the relationship with Pestmaster is going along well. This begs the question of how you're doing with Univar and Target, any thoughts?

That's yours, Tom.

Well, yes. So Univar and Target are both large nationwide distributors that take orders on and sell thousands of products. And they also sell lots of other products to pest managers. So there is no way they can provide the same level of expert and focused sales that we can to end users, particularly to corporates that are in focused right now. So it's really a question of pull. The distributors have their place in the industry, and we welcome their participation, but we really cannot rely on them to be the same kind of partner, the same kind of involved partner and dedicated, committed partner as Pestmaster and potentially others like Pestmaster as that develops.

All right. Our next question here, we'll try to get to a couple of more. Can you provide any details regarding possible global expansion efforts?

Yes, I can. So first and foremost, we are focusing on building our strong business here in the United States. As I've mentioned, however, we cannot turn at that year to our international colleagues, and so we will be expanding globally if we have partners that will carry the load. For example, many of you have probably seen the article on Bermuda, in which a very forward-thinking government official decided to bring ContraPest to the island and found it to be extraordinary. And then I believe his comment was something like, "I want to see this in every garden in the country." So they have a very lofty desire to expand this to the entire country of Bermuda, which is 27 square miles. But in this particular case, I want to point out, they were clearly allowed to do that as the government official has the ability to bring the product into the country. It's a British protectorate, but the country has sovereignty over these. And so I think these are the things you'll see. And clearly, many of our international projects with conservationists on other islands will include the hospitality and industry and many of those are separate governments. So yes, we will definitely be looking at global expansion. It has always been one of our objectives. But right now, we're doing it primarily with self-sufficient partners.

All right. Thank you, Loretta. And then the next question here, maybe time for just a couple more. What is the result of the November 13 meeting with the EPA on whether to add mice to the existing label or create a new mice EPA label? Is the end of your 2019 still a good target for the EPA to approve ContraPest for mice?

I would never answer for a government agency's approval in this climate. But what I can tell you is Cheryl was the lead on that meeting and she, of course, took the concept of adding mice to the label. There would be 2 suggestions. You could either add mice to the label or you could create a separate product just for mice. I can tell you, adding mice to the label is the easiest path to get out there to our customers. We'll be taking that path. And I'm very optimistic that will be a painless label amendment. Having said that, I'm sure I will eat those words. But we're looking good.

All right. And next question here, are we going to see ContraPest in the mainstream media more? The word gets out fast when people know we spread the word, but is awareness marketing a part of a plan?

Yes. That is what you'll call earned market share and the social media is drawing the light to that. Much of this comes from the individual consumers. For example, in Washington, D.C. on our last visit there, their communications officers met with us and let us know that they were planning their own release because, again, they're very proud of what they're doing and it's something new. In the city of St. Louis, they continue to have their own news releases. I can't say much about California because we're now just starting to complete some of those major relationships. But yes, I think you will see it state-by-state, and then of course, who couldn't pass a up a good rad story? My gosh. I'm sure it will expand.

All right. Looks like we're closing in on the 60-minute mark here. There was submitted web comment here that says, "This is not a question but a comment." Dr. Mero [ph], is an Investor. I would like to thank you sincerely for your diligence fiscal responsibility and leadership. You have not let us down yet. I feel your leadership will take us to amazing heights and I'm thankful to have you at the helm of this organization. So no, there's not a question there but maybe on that comment, I'll turn it over to you for any closing remarks that you might have.

Well, I'm absolutely stunned by that comment. Sometimes, your nose is to the grindstone and don't look up too much. But I think it confirms what we have always believed here at SenesTech, and that is it is our investors, our customers, our citizens and the entire global community that support us and keep us going everyday. And when you got that kind of support, you have no chance but success. And with that, I thank all of those people and SenesTech will continue to be dedicated to sell science and effective solutions. Thank you again, and have a wonderful evening.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.