1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Ballard Spahr L

LP

1 East Washington Street, Suite 2300

Phoenix, A

Z 85004-2555

David L. Axelrod (admitted pro hac vice)

axelrodd@ballardspahr.com 

Thomas F. Burke (admitted pro hac vice)

burket@ballardspahr.com 

Ballard Spahr LLP 

1735 Market Street, 51st Floor 

Philadelphia, PA 19103 

Telephone: 215-665-8500 

Facsimile: 215-864-8999 

Michael DiGiacomo (SBN 032251) 

digiacomom@ballardspahr.com 

1 East Washington Street, Suite 2300 

Phoenix, AZ 85004 

Tel.: 602.798.5400 

Fax: 602.798.5595 

Attorneys for New Enterprises Ltd. 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

New Enterprises, Ltd.,

Plaintiff, 

vs. 

Senestech, Inc. and Roth Capital Partners, 

LLC, 

Defendants. 

NO. CV-18-08033-PCT-JAT 

FIRST AMENDED COMPLAINT 

(Jury Trial Demanded) 

Plaintiff New Enterprises, Ltd. (“New Enterprises”), by and through its undersigned 

attorneys, brings this action against SenesTech, Inc. (“SenesTech” or the “Company”) and 

Roth Capital Partners, LLC (“Roth Capital”). 

NATURE OF THE CASE 

1. From 2015 to 2017, SenesTech—a start-up pest control company—

unlawfully defrauded New Enterprises, a privately held family investment trust, for the 

benefit of SenesTech’s insiders, including its founders, Dr. Loretta Mayer and Dr. Cheryl 

Dyer. 

Case 3:18-cv-08033-JAT Document 69 Filed 04/05/19 Page 1 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2 

Ballard Spahr L

LP

1 East Washington Street

Suite 2300

Phoenix, A

Z 85004-2555

2. First, SenesTech’s senior management induced New Enterprises to invest 

$500,000 in the Company at a share price of $1.50 per share (based on a purported 

valuation of approximately $55–$60 million), while concealing that the Company had just 

awarded millions of stock options to SenesTech insiders at a price of $0.10 per share, and 

had recently been valued by an independent professional appraiser at $0.06 per share. 

3. Second, SenesTech and its underwriter Roth Capital wrongfully prevented 

New Enterprises from taking advantage of the SenesTech IPO and the opportunity to sell 

its shares at favorable post-IPO prices by unjustifiably refusing to authorize the removal of 

restrictions on sale accompanying the book entries for New Enterprises’ shares of 

SenesTech stock. 

4. Later, Roth Capital—the underwriter of SenesTech’s IPO—breached a “lock 

up” agreement with New Enterprises by promising, and failing, to allow New Enterprises 

to sell a portion of its SenesTech stock immediately after the IPO. 

5. Through these wrongful actions, SenesTech and Roth Capital harmed New 

Enterprises by fraudulently inducing it to invest in SenesTech and then preventing New 

Enterprises from benefitting from its investment. New Enterprises brings this action to 

recover damages it suffered as a direct result of Defendants’ egregious actions. 

THE PARTIES 

6. Plaintiff New Enterprises Ltd. is a British Virgin Islands corporation with its 

principal place of business at 33 Moonbeam Walk, Singapore 277 243. Subbiah 

Subramanian (“Subramanian”) is an agent of New Enterprises. 

7. SenesTech, Inc. is a Delaware corporation with its principal place of business 

at 3140 N. Caden Court Suite 1, Flagstaff, AZ 86004. The Company’s common stock is 

traded on the NASDAQ Capital Market under the ticker symbol “SNES.” SenesTech was 

founded in July 2004 by Mayer and Dyer as a Nevada corporation, and reincorporated as 

a Delaware corporation in November 2015. SenesTech’s primary product, ContraPest, is 

a pest-control solution that causes infertility in rats. 

Case 3:18-cv-08033-JAT Document 69 Filed 04/05/19 Page 2 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3 

Ballard Spahr L

LP

1 East Washington Street

Suite 2300

Phoenix, A

Z 85004-2555

8. Roth Capital Partners, LLC is an investment banking firm registered as a 

domestic limited liability company in California and headquartered in Newport Beach, 

California. The members of Roth are (1) individuals who are residents of California, 

Massachusetts, New Jersey, and New York, and (2) a corporation organized under the laws 

of the state of California with its principal place of business in California. Roth Capital 

served as the underwriter and “Sole Book-Running Manager” for SenesTech’s 2017 IPO. 

As part of SenesTech’s IPO, Roth Capital prepared a prospectus for the investment, met 

with potential investors around the country to create excitement and interest in the IPO, 

and helped determine opening prices for the IPO and assess the level of interest expressed 

by potential investors. Further, Roth Capital was enlisted by SenesTech to limit 

SenesTech’s pre-IPO investors from selling their shares of SenesTech stock during the 

IPO. 

JURISDICTION AND VENUE 

9. This Court has jurisdiction over this action pursuant to 28 U.S.C. § 1332 

because there is diversity of citizenship between New Enterprises and all defendants and 

the amount in controversy exceeds $75,000; and pursuant to 28 U.S.C. § 1331 because the 

Amended Complaint alleges a violation of 15 U.S.C. § 78j(b). This Court has supplemental 

jurisdiction over New Enterprises’ state-law claims because they form part of the same 

case or controversy. See 28 U.S.C. § 1367(a). 

10. Venue is proper in this Court under 28 U.S.C. § 1391 and 18 U.S.C. § 1965 

because the Defendants conduct business in this District, and committed tortious acts in 

this District; a substantial part of the events or omissions giving rise to the claims occurred 

in this District; and Defendants have purposefully availed themselves of the laws of the 

State of Arizona. 

Case 3:18-cv-08033-JAT Document 69 Filed 04/05/19 Page 3 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4 

Ballard Spahr L

LP

1 East Washington Street

Suite 2300

Phoenix, A

Z 85004-2555

FACTUAL ALLEGATIONS 

Background 

11. In early 2015, SenesTech was on the verge of financial collapse. SenesTech 

had no products approved for sale by the United States Environmental Protection Agency 

(“EPA”), no revenue, and no source of financing apart from money raised from investors. 

12. Beginning in March 2015, SenesTech’s then-Chief Executive Officer, 

Thomas Ziemba, engaged in written and oral negotiations with New Enterprises, through 

its agent Subramanian, to induce New Enterprises to provide SenesTech much-needed 

capital. 

13. In or about mid-March 2015, at an in-person meeting at an office park in 

Fremont, California, Ziemba orally misrepresented to Subramanian that SenesTech was 

worth approximately $55 to $60 million, which would justify a fair market value for its 

common stock in excess of $1.50. Ziemba also told Subramanian that in consideration for 

a loan, SenesTech would give, among other things, a warrant for New Enterprises to 

purchase an equivalent amount of common stock at $1.50 per share, which Ziemba stated 

was the current value of SenesTech’s stock. Ziemba told Subramanian that SenesTech was 

preparing for an IPO that would allow New Enterprises to benefit financially from these 

warrants. 

14. Subramanian was entitled to rely on Ziemba’s statement concerning the 

corporate valuation of SenesTech. Ziemba, however, concealed from Subramanian that 

SenesTech had recently hired an independent professional appraiser to undertake a 

valuation of the Company, and that the resulting valuation placed the total value of the 

Company at less than $2 million, and the individual shares at $0.06 each. 

15. On April 18, 2015, in reasonable reliance on Ziemba’s misrepresentation of 

SenesTech’s corporate value, and while unaware of its falsity and the fact that SenesTech 

had received a valuation demonstrating a much lower value, New Enterprises made a 

secured loan of $500,000 to SenesTech (the “April 2015 Loan”), and in connection 

Case 3:18-cv-08033-JAT Document 69 Filed 04/05/19 Page 4 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

5 

Ballard Spahr L

LP

1 East Washington Street

Suite 2300

Phoenix, A

Z 85004-2555

therewith received a warrant permitting New Enterprises to purchase up to 346,667 shares 

of common stock at $1.50 per share. 

16. Between September 4, 2015 and December 15, 2015, at a time when 

SenesTech was unable to meet even its payroll obligations, Ziemba and others at 

SenesTech induced New Enterprises to make a series of four additional secured loans, 

totaling $500,000, to SenesTech (the “Late 2015 Loans”), all convertible by mutual 

agreement to common or Series B preferred SenesTech stock at $1.55 per share. As further 

consideration for the Late 2015 Loans, New Enterprise received warrants for an equivalent 

amount of SenesTech common stock at $1.50 per share, the price that Ziemba told 

Subramanian represented the current value of the Company. Without these loans, 

SenesTech would have been unable to remain in business. 

17. Ziemba repeated his assertion that SenesTech had a corporate valuation of 

approximately $55 to $60 million at other times to Subramanian, including at an in-person 

meeting in early to mid-October 2015 in San Jose, California. 

18. New Enterprises made all of the Late 2015 Loans in reasonable reliance on 

Ziemba’s misrepresentation of SenesTech’s corporate value, and while unaware of its 

falsity. 

19. In total, New Enterprises loaned $1,000,000 to SenesTech between April 18, 

2015 and December 15, 2015. 

SenesTech’s Undisclosed Valuation and Award of Substantial Stock Options to 

Insiders 

20. Before, while, and after soliciting these loans from New Enterprises, 

SenesTech was devising and executing a plan to award lucrative stock options to its 

founders and senior executives—options predicated on a valuation low enough to generate 

substantial profits for the option holders after the Company’s initial public offering. 

21. In March 2015, SenesTech commissioned Redwood Valuation Partners, an 

independent professional appraiser, to conduct a valuation analysis of the Company’s 

common stock to determine its fair market value per share. SenesTech commissioned that 

Case 3:18-cv-08033-JAT Document 69 Filed 04/05/19 Page 5 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

6 

Ballard Spahr L

LP

1 East Washington Street

Suite 2300

Phoenix, A

Z 85004-2555

analysis in an effort to comply with Sections 409A and 422 of the Internal Revenue Code 

of 1986, which require that the exercise price of incentive stock options be no less than the 

fair market value of the issuer’s underlying shares on the date of the grant in order to avoid 

immediate tax consequences for the recipient individual. 

22. Redwood Valuation Partners determined that as of March 9, 2015, the fair 

market value of the Company’s common stock was $0.06 per share, consistent with a total 

corporate valuation of less than $2 million (the “Redwood Valuation”). 

23. Ziemba, as SenesTech’s then-CEO, was aware of the Redwood Valuation 

when he first informed Subramanian that SenesTech had a corporate valuation of $55 

million to $60 million, and at all subsequent times he repeated that statement. 

24. On July 3, 2015, at a special meeting of the SenesTech Board of Directors 

(the “SenesTech Board”), the SenesTech Board concluded that no new information had 

become available since March 9, 2015 that would materially affect the value of the 

Company as determined in the Redwood Valuation. The SenesTech Board affirmed that 

as of that date, they still believed the Redwood Valuation was accurate. 

25. At that same meeting, on the basis of the still-valid Redwood Valuation, the 

Board approved an incentive plan awarding SenesTech’s founders—Mayer and Dyer—

1,500,000 options each, priced at an exercise price of $0.10 per share, all of which were 

fully vested on the date of the grant. The SenesTech Board further gave Ziemba 2,528,466 

options at an exercise price of $0.10 per share, of which 500,000 were fully vested on the 

date of the grant. 

26. On September 9, 2015, the SenesTech Board awarded 75,000 stock options 

to Thomas C. Chesterman (“Chesterman”), then a consultant for SenesTech and now its 

chief financial officer, at an exercise price of $0.10 per share. 

27. On October 15, 2015, the SenesTech Board awarded an additional total of 

200,000 options each to Mayer and Dyer again at an exercise price of $0.10 and again fully 

vested on the date of the grant. 

Case 3:18-cv-08033-JAT Document 69 Filed 04/05/19 Page 6 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

7 

Ballard Spahr L

LP

1 East Washington Street

Suite 2300

Phoenix, A

Z 85004-2555

28. On December 1, 2015, still affirming the ongoing validity of the Redwood 

Valuation, the SenesTech Board awarded an additional total of 600,000 options to 

Chesterman at an exercise price of $0.10 per share. 

29. SenesTech did not contemporaneously disclose the Redwood Valuation or 

the above-described stock option awards (collectively, the “2015 Option Awards”) to New 

Enterprises. 

30. New Enterprises was at all relevant times unaware of the Redwood Valuation 

and the 2015 Option Awards because SenesTech purposefully concealed these facts. 

31. The Redwood Valuation and the 2015 Stock Awards reveal the false and 

misleading nature of Ziemba’s representations that SenesTech was worth approximately 

$55 million to $60 million. Ziemba and others at SenesTech knew that if they had told 

New Enterprises the truth about the Redwood Valuation, New Enterprises would have 

known how little the Company was worth and how close it was to completely failing, and 

would not have loaned SenesTech any money. 

SenesTech Fraudulently Induces Equity Investments by New Enterprises 

32. In December 2015, Chesterman (by then SenesTech’s new Chief Financial 

Officer) and Grover Wickersham (the recently elected Vice-Chairman of the SenesTech 

Board) urged Subramanian by email and by telephone to cancel the April 2015 Loan in 

exchange for SenesTech stock under the April 2015 warrant, and convert the Late 2015 

Loans to SenesTech stock. Chesterman and Wickersham, like Ziemba, failed to disclose 

the Redwood Valuation and 2015 Stock Awards because they knew that if New Enterprises 

was aware of the Company’s true valuation, it would have elected to keep its secured loans 

rather than become an equity stakeholder in SenesTech. 

33. On December 31, 2015, while still unaware of the Redwood Valuation and 

the 2015 Stock Awards, New Enterprises exercised its contractual right to convert the Late 

2015 Loans to 333,255 shares of Series B preferred voting stock at $1.55 per share. 

34. Ziemba’s false and misleading April 2015 representation regarding 

SenesTech’s value and SenesTech’s failure to disclose the Redwood Valuation and the 

Case 3:18-cv-08033-JAT Document 69 Filed 04/05/19 Page 7 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

8 

Ballard Spahr L

LP

1 East Washington Street

Suite 2300

Phoenix, A

Z 85004-2555

2015 Option Awards were material to New Enterprises’ decisions both to loan SenesTech 

money in exchange for warrants and then to convert the Late 2015 Loans, because New 

Enterprises reasonably believed it was investing in a company worth $55 to $60 million. 

In fact, however, the Company was actually valued at between $0.06 per share (based on 

the Redwood Valuation) and $0.10 per share (based on its December 2015 stock option 

award to Chesterman). 

35. But for Ziemba’s representation that SenesTech was worth approximately 

$55 to $60 million, and his (and SenesTech’s) failure to disclose the Redwood Valuation 

and the 2015 Option Awards, New Enterprises—like any reasonable investor—would not 

have converted the Late 2015 Loans to SenesTech stock at $1.55 per share because that 

conversion rate was greatly in excess of the fair market value of SenesTech stock as 

determined by an independent professional appraiser and affirmed by the SenesTech 

Board’s issuance of options in December 2015 at that same price. 

36. Between April 8, 2016 and May 6, 2016, SenesTech offered holders of 

SenesTech stock the opportunity to purchase additional shares of common stock at $0.50 

per share (the “Rights Offering”). 

37. During that Rights Offering, while still unaware of the Redwood Valuation 

and the 2015 Option Awards, New Enterprises agreed to cancel the April 2015 Loan in 

exchange for approximately 1,021,800 shares of common stock at $0.50 per share. New 

Enterprises also purchased an additional 300,000 shares of common stock during the Rights 

Offering, bringing New Enterprises’ total holdings of SenesTech stock to approximately 

1,655,055 shares. 

38. Ziemba’s false and misleading April 2015 representation regarding 

SenesTech’s value and SenesTech’s failure to disclose the Redwood Valuation and the 

2015 Option Awards were material to New Enterprises’ decision to exchange the April 

Loan for equity because New Enterprises believed it was investing in a company worth 

$55 to $60 million. In fact, however, the company was actually valued at between $0.06 

Case 3:18-cv-08033-JAT Document 69 Filed 04/05/19 Page 8 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

9 

Ballard Spahr L

LP

1 East Washington Street

Suite 2300

Phoenix, A

Z 85004-2555

per share (based on the Redwood Valuation) and $0.10 per share (based on its December 

2015 stock option award to Chesterman). 

39. But for Ziemba’s representation that SenesTech was worth approximately 

$55 to $60 million, and his (and SenesTech’s) failure to disclose the Redwood Valuation 

and the 2015 Option Awards, New Enterprises—like any reasonable investor—would not 

have exchanged the April 2015 Loan for equity in SenesTech stock at $0.50 per share 

because that conversion rate was greatly in excess of the fair market value of SenesTech 

stock as determined by an independent professional appraiser and affirmed by the 

SenesTech Board’s issuance of options in December 2015 at that same price.. 

The Reverse Stock Split 

40. In September 2016, the SenesTech Board approved a reverse stock split at a 

ratio of 5 to 1, to take effect simultaneously with the Company’s contemplated initial public 

offering (IPO). 

41. The effect of the reverse stock split was that the approximately 1,655,055 

shares owned by New Enterprises, acquired at a weighted average basis of approximately 

$0.69 per share, were converted at the time of the IPO to approximately 331,011 shares, 

acquired at a weighted average basis of $3.45 per share. 

42. At all relevant times, all SenesTech stock owned by New Enterprises has 

been maintained in uncertificated “book entry” form, such that no physical stock 

certificates exist. 

43. Until at least May 2017, all of the book entries for New Enterprises’ 

uncertificated SenesTech stock were subject to a restriction stating the securities at issue 

had not been registered and could not be sold or otherwise transferred or assigned until 

either the securities became registered, or SenesTech received a satisfactory opinion of 

counsel stating that such registration is not required for sale or transfer. 

SenesTech and Roth Capital Block New Enterprises From Benefiting from the 

Case 3:18-cv-08033-JAT Document 69 Filed 04/05/19 Page 9 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

10 

Ballard Spahr L

LP

1 East Washington Street

Suite 2300

Phoenix, A

Z 85004-2555

SenesTech IPO 

44. In October 2016, SenesTech began preparations for an initial public offering 

(“IPO”), underwritten principally by Roth Capital. Pursuant to the IPO, SenesTech 

planned to issues shares of common stock at approximately $12 to $14 per share (postreverse split). 

45. New Enterprises sought to take advantage of the IPO and sell its shares of 

SenesTech stock on the open market. For a seller of restricted securities of a private issuer 

who is unaffiliated with the issuer, as New Enterprises was, applicable securities law 

typically require the seller to hold the securities for a period of one year before such shares 

would be eligible for sale. See 17 C.F.R. § 230.144(b)(1)(i) (also known as “Rule 144”). 

46. Rule 144(d)(3)(ii), however, allows a seller to satisfy the one-year holding 

requirement through a process known as “tacking”: “If the securities [at issue] were 

acquired from the issuer solely in exchange for other securities of the same issuer, the 

newly acquired securities shall be deemed to have been acquired at the same time as the 

securities surrendered for conversion or exchange, even if the securities surrendered were 

not convertible or exchangeable by their terms.” 17 C.F.R. § 230.144(d)(3)(ii). 

47. Beginning on November 1, 2017, counsel for New Enterprises, an 

experienced and reputable securities-law practitioner, communicated to counsel for 

SenesTech that New Enterprises wished to remove the restriction on sale or transfer from 

859,133 pre-reverse-split shares of SenesTech stock held by New Enterprises under book 

entry 1393. Subramanian communicated that desire to Chesterman, SenesTech’s CFO, 

under separate cover. 

48. On November 7, 2016, counsel for New Enterprises provided a signed 

opinion letter (the “November Opinion Letter”) to SenesTech and its transfer agent stating 

that 859,133 pre-reverse-split shares of SenesTech stock held by New Enterprises under 

book entry 1393 could be sold (or reissued without the aforementioned restriction) without 

registration because, among other things, New Enterprises “has been the beneficial owner 

Case 3:18-cv-08033-JAT Document 69 Filed 04/05/19 Page 10 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

11 

Ballard Spahr L

LP

1 East Washington Street

Suite 2300

Phoenix, A

Z 85004-2555

of the Shares for more than one year prior to the date hereof calculated in accordance with 

Rule 144(d).” 

49. The November Opinion Letter constituted an accurate statement of New 

Enterprises’ legal rights with respect to its ability to sell or transfer its SenesTech stock, as 

issued by an experienced and reputable securities-law practitioner. SenesTech was 

therefore obligated to conclude that the opinion letter was a “satisfactory opinion of 

counsel” for purposes of the restriction on SenesTech’s stock. 

50. Specifically, the 859,133 shares of SenesTech stock at issue were obtained 

by New Enterprises as a result of its cancellation of the April 2015 Loan in exchange for 

equity during the May 2016 Rights Offering. Under Rule 144(d), because the April 2015 

Loan was cancelled “solely in exchange for other securities of the same issuer,” such shares 

“shall be deemed to have been acquired” as of April 2015. Therefore, with the application 

of tacking, New Enterprises had held the securities at issue for in excess of the one-year 

holding requirement for sale or transfer. 

51. Later on November 7, 2016, counsel for SenesTech informed New 

Enterprises that “Roth has said they will not permit any delegending of shares at this late 

stage in the [IPO] process. Accordingly, the Company cannot process the delegending 

request at this time.” Thus, SenesTech was informing New Enterprises that the validity of 

New Enterprises’ opinion letter was irrelevant because Roth Capital—which had an 

interest in inhibiting pre-ICO investors from creating additional supply of SenesTech 

shares during the IPO—had categorically instructed SenesTech not to remove any 

restrictions on sale, and SenesTech intended to adhere to Roth Capital’s demand. 

52. In response, also that day, counsel for New Enterprises wrote to SenesTech: 

It is really not up to Roth as to whether the legend gets removed 

or not. . . . My client has a property right in the securities at 

issue and by refusing to take the restriction off the shares you 

are depriving my client of its property right and ability to 

transfer the shares even though he may do so legally. 

Case 3:18-cv-08033-JAT Document 69 Filed 04/05/19 Page 11 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

12 

Ballard Spahr L

LP

1 East Washington Street

Suite 2300

Phoenix, A

Z 85004-2555

53. SenesTech persisted in its refusal to provide an instruction letter to its 

transfer agent to remove the restriction based on the November Opinion Letter, and as a 

result blocked New Enterprises from benefiting from the SenesTech IPO. 

Roth Capital Induces New Enterprises to “Lock-Up” its SenesTech Stock 

54. Shortly after SenesTech refused to remove the restriction from New 

Enterprises’ shares, a managing director of Roth Capital contacted Subramanian and 

requested that New Enterprises, ostensibly along with other investors, agree to a 180-day 

post-IPO “lock-up” on the sale of its SenesTech shares. Roth Capital said that under this 

“lock-up,” New Enterprises would be prohibited from selling its SenesTech stock for 180 

days following the IPO without the prior written consent of Roth Capital. 

55. When Subramanian refused and told Roth Capital that New Enterprises 

intended to liquidate its SenesTech holdings at the earliest possible opportunity, Roth 

Capital responded that New Enterprises’ sale of its SenesTech stock would jeopardize the 

IPO and the current and future value of New Enterprises’ holdings. Roth Capital offered 

New Enterprises this deal: in exchange for New Enterprises’ agreement to a 180-day postIPO lock-up, Roth Capital would exempt 50,000 post-reverse-split shares held by New 

Enterprises from the lock-up, such that New Enterprises could sell those shares right after 

the IPO, well before the expiration of 180 days; and Roth Capital would permit New 

Enterprises to sell its remaining shares in late December 2016 or January 2017; and Roth 

Capital and SenesTech management would help New Enterprises find buyers for its shares. 

56. Roth Capital knew that its offer to “exempt” 50,000 shares from the lock-up 

meant that Roth Capital would allow the restriction on sale to be removed from those shares 

(an approval it had previously refused to give), such that New Enterprises could sell them 

immediately during the IPO. 

57. New Enterprises reasonably understood that Roth Capital had the authority 

to cause the restriction on sale to be removed because of its previous correspondence with 

SenesTech regarding removal of the restriction. 

Case 3:18-cv-08033-JAT Document 69 Filed 04/05/19 Page 12 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

13 

Ballard Spahr L

LP

1 East Washington Street

Suite 2300

Phoenix, A

Z 85004-2555

58. Further, the Form S-1 filed with the SEC by SenesTech in advance of its 

initial public offering stated: “Roth Capital Partners may, in its sole discretion, at any time 

or from time to time and without notice, release for sale in the public market all or any 

portion of the shares restricted by the terms of the lock-up agreements.” (emphasis added). 

59. Later in November 2016, Grover Wickersham, then Vice-Chair of the 

SenesTech Board, contacted Subramanian and urged him to agree to the lock-up, and told 

Subramanian that the SenesTech IPO would fail unless New Enterprises agreed to the lockup. 

60. On or about November 13, 2016, Subramanian, on behalf of New 

Enterprises, agreed to Roth Capital’s lock-up proposal (the “Lock-Up Agreement”). 

61. Afterward, Wickersham emailed Subramanian, copying Mayer and 

Chesterman, to state: “Once again, you’ve come through for the team when the chips were 

down. Don’t think for a second it isn’t greatly appreciated!” Mayer emailed Subramanian 

separately to state: “Thank you Subbiah. All I can say is live to fight another day.” New 

Enterprises thus had reason to reason to believe that SenesTech and Roth Capital would 

not continue to frustrate its efforts to sell its shares of SenesTech stock. 

The Initial Public Offering 

62. On December 8, 2016, SenesTech held an IPO of common stock at a price 

of $8 per share. 

63. In December 2016, Subramanian contacted Roth Capital, and then 

SenesTech, for purposes of securing removal of the restriction on sale for the 50,000 postreverse-split shares that had been carved out of the Lock-Up Agreement. 

64. Roth Capital refused to authorize SenesTech to remove the restriction on sale 

for the 50,000 shares, rendering impossible the short-term sale of any shares owned by 

New Enterprises. SenesTech likewise refused to remove the restriction on sale without a 

new opinion letter from counsel. 

65. On January 17, 2017, SenesTech’s shares traded at an all-time high of $10.68 

per share. 

Case 3:18-cv-08033-JAT Document 69 Filed 04/05/19 Page 13 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

14 

Ballard Spahr L

LP

1 East Washington Street

Suite 2300

Phoenix, A

Z 85004-2555

66. As of January 17, 2017, New Enterprises was unable to sell any of its 

approximately 331,011 post-reverse-split shares of SenesTech stock, which at that could 

have been sold for an all-time high of approximately $3.52 million. 

67. On April 18, 2017, New Enterprises presented SenesTech with a second final 

opinion letter stating that registration of the SenesTech securities held by New Enterprises 

was not required for sale or transfer. 

68. On May 4, 2017, SenesTech’s transfer agent finally reissued, without the 

aforementioned restriction, 50,000 shares of SenesTech held by New Enterprises. By that 

time, SenesTech’s stock price at closing had fallen to approximately $6.58. 

69. By June 13, 2017, when SenesTech authorized the removal of the legend 

from New Enterprises’ remaining 281,011 shares, the Company’s stock price at closing 

was $6.21. 

70. New Enterprises has since sold most of its shares of SenesTech stock at 

prices substantially below the post-IPO high and below its per-share acquisition cost, 

leading to a net loss as a result of its acquisition and sale of SenesTech stock. 

COUNT I 

Common Law Fraud 

(SenesTech) 

71. New Enterprises incorporates all of the above paragraphs as though fully set 

forth herein. 

72. Under Arizona law, a successful fraud claim requires proof of nine elements: 

(1) a representation; (2) its falsity; (3) its materiality; (4) the speaker’s 

knowledge of its falsity or ignorance of its truth; (5) the speaker’s intent 

that it be acted upon by the recipient in the manner reasonably 

contemplated; (6) the hearer’s ignorance of its falsity; (7) the hearer’s 

reliance on its truth; (8) the hearer’s right to rely on it; (9) the hearer’s 

consequent and proximate injury. 

Comerica Bank v. Mahmoodi, 229 P.3d 1031, 1033-34 (Ariz. Ct. App. 2010) (citation 

omitted). 

73. Thomas Ziemba, acting in his capacity as then-CEO of SenesTech, 

knowingly made material false misrepresentations concerning the corporate valuation of 

Case 3:18-cv-08033-JAT Document 69 Filed 04/05/19 Page 14 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

15 

Ballard Spahr L

LP

1 East Washington Street

Suite 2300

Phoenix, A

Z 85004-2555

SenesTech to Subbiah Subramanian, the agent of New Enterprises, with the intent that New 

Enterprises would rely on that misrepresentation for purposes of lending funds to 

SenesTech. 

74. New Enterprises was unaware of the falsity of Ziemba’s misrepresentations 

concerning the corporate valuation of SenesTech and reasonably relied on those 

misrepresentations when it made the April 2015 Loan and Late 2015 Loans to SenesTech, 

and when it exchanged and converted those loans into SenesTech stock. 

75. Further, at all relevant times, SenesTech knowingly failed to disclose the 

Redwood Valuation and the 2015 Option Awards with the intent that New Enterprises 

would initially rely, and continue to rely, on Ziemba’s misrepresentations as to 

SenesTech’s corporate value for purposes of lending funds to SenesTech and exchanging 

and converting its loans into SenesTech stock. Ziemba and others at SenesTech knew that 

had they told New Enterprises the truth about the Company’s valuation, New Enterprises 

would not have loaned the Company the money it needed to stay afloat. 

76. SenesTech’s intentional deception constitutes common-law fraud predicated 

upon outrageous bad-faith conduct for which New Enterprises is entitled to punitive 

damages. 

77. Accordingly, New Enterprises is entitled to damages in an amount to be 

determined at trial. 

COUNT II 

Securities Fraud – Federal Law 

(SenesTech) 

78. New Enterprises incorporates all of the above paragraphs as though fully set 

forth herein. 

79. Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), 

and Rule 10b-5 thereunder, 17 C.F.R. § 240.10b-5, makes it unlawful for any person, 

directly or indirectly, by the use of any means or instrumentality of interstate commerce, 

or of the mails or of any facility of any national securities exchange, 

Case 3:18-cv-08033-JAT Document 69 Filed 04/05/19 Page 15 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

16 

Ballard Spahr L

LP

1 East Washington Street

Suite 2300

Phoenix, A

Z 85004-2555

a) To employ any device, scheme, or artifice to defraud, 

b) To make any untrue statement of a material fact or to omit to 

state a material fact necessary in order to make the statements 

made, in the light of the circumstances under which they were 

made, not misleading, or 

c) To engage in any act, practice, or course of business which 

operates or would operate as a fraud or deceit upon any 

person, 

in connection with the purchase or sale of any security. 

80. Plaintiffs asserting a securities fraud claim under Rule 10b-5 must adequately 

allege six elements: (1) a material misrepresentation or omission by the defendants; (2) 

scienter; (3) a connection between the misrepresentation or omission and the purchase or 

sale of a security; (4) reliance upon the misrepresentation or omission; (5) economic loss; 

and (6) loss causation. Lloyd v. CVB Fin. Corp., 811 F.3d 1200, 1206 (9th Cir. 2016) (citing 

Erica P. John Fund, Inc. v. Halliburton Co., 563 U.S. 804 (2011)). 

81. SenesTech, acting with intent to defraud, made material misrepresentations 

and omitted material facts in connection with New Enterprises’ acquisition of securities 

issued by SenesTech. Specifically, SenesTech misrepresented that its corporate value as 

of April 2015 was $55 million to $60 million, and omitted from its disclosures the 

Redwood Valuation and the 2015 Option Awards. Ziemba and others at SenesTech knew 

that had they told New Enterprises the truth about the Company’s valuation, New 

Enterprises would not have loaned the Company the money it needed to stay afloat. 

82. New Enterprises reasonably relied on those misrepresentations and 

omissions when it exchanged and converted the April 2015 Loan and Late 2015 Loans into 

SenesTech stock. 

83. New Enterprises suffered an economic loss caused by SenesTech’s 

misrepresentations and omissions because in the absence of SenesTech’s 

misrepresentations and omissions, New Enterprises would not have made the April 2015 

Loan or Late 2015 Loans in exchange for warrants for SenesTech stock, and would not 

Case 3:18-cv-08033-JAT Document 69 Filed 04/05/19 Page 16 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

17 

Ballard Spahr L

LP

1 East Washington Street

Suite 2300

Phoenix, A

Z 85004-2555

have exchanged or converted those loans into SenesTech stock or later sold that stock at a 

loss. 

84. Accordingly, New Enterprises is entitled to damages in an amount to be 

determined at trial. 

COUNT III 

Securities Fraud – State Law 

(SenesTech) 

85. New Enterprises incorporates all of the above paragraphs as though fully set 

forth herein. 

86. A.R.S. § 44-1991 makes it a fraudulent and unlawful for any person, in 

connection with a transaction or transactions within or from Arizona involving an offer to 

sell or buy securities, or a sale or purchase of securities, directly or indirectly, to: 

a) Employ any device, scheme or artifice to defraud, 

b) Make any untrue statement of material fact, or omit to state 

any material fact necessary in order to make the statements 

made, in the light of the circumstances under which they were 

made, not misleading, or 

c) Engage in any transaction, practice or course of business 

which operates or would operate as a fraud or deceit 

87. The elements of a securities fraud claim under the Arizona Securities Act, 

Arizona Revised Statute § 44-1991(A), are “almost identical” to its federal counterpart. 

Ariz. Rev. Stat. § 44-1991(A)(2) (stating that it is a fraud to “[m]ake any untrue statement 

of material fact, or omit to state any material fact necessary in order to make the statements 

made, in the light of the circumstances under which they were made, not misleading”); 

Grand v. Nacchio, 236 P.3d 398, 400 (2010) (equating the federal and state law elements). 

88. SenesTech, acting with intent to defraud, made material misrepresentations 

and omitted material facts in connection with New Enterprises’ acquisition of securities 

issued by SenesTech. Specifically, SenesTech misrepresented that its corporate value as 

of April 2015 was $55 million to $60 million, and omitted from its disclosures the 

Redwood Valuation and the 2015 Option Awards. Ziemba and others at SenesTech knew 

Case 3:18-cv-08033-JAT Document 69 Filed 04/05/19 Page 17 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

18 

Ballard Spahr L

LP

1 East Washington Street

Suite 2300

Phoenix, A

Z 85004-2555

that had they told New Enterprises the truth about the Company’s valuation, New 

Enterprises would not have loaned the Company the money it needed to stay afloat. 

89. New Enterprises reasonably relied on those misrepresentations and 

omissions when it exchanged and converted the April 2015 Loan and Late 2015 Loans into 

SenesTech stock. 

90. New Enterprises suffered an economic loss caused by SenesTech’s 

misrepresentations and omissions because in the absence of SenesTech’s 

misrepresentations and omissions, New Enterprises would not have made the April 2015 

Loan or Late 2015 Loans in exchange for warrants for SenesTech stock, and would not 

have exchanged or converted those loans into SenesTech stock or later sold that stock at a 

loss. 

91. Accordingly, New Enterprises is entitled to damages in an amount to be 

determined at trial. 

COUNT IV 

Violation of Delaware Law 

(SenesTech) 

92. New Enterprises incorporates all of the above paragraphs as if set forth fully 

herein. 

93. Delaware Code § 8-401 provides that if “an instruction is presented to an 

issuer with a request to register transfer of an uncertificated security, the issuer shall 

register the transfer as requested if: 

(1) under the terms of the security the person seeking registration of 

transfer is eligible to have the security registered in its name; 

(2) the endorsement or instruction is made by the appropriate person or by 

an agent who has actual authority to act on behalf of the appropriate person; 

(3) reasonable assurance is given that the endorsement or instruction is 

genuine and authorized (Section 8-402); 

(4) any applicable law relating to the collection of taxes has been complied 

with; 

(5) the transfer does not violate any restriction on transfer imposed by the 

issuer in accordance with Section 8-204; 

(6) a demand that the issuer not register transfer has not become effective 

under Section 8-403, or the issuer has complied with Section 8-403(b) but 

Case 3:18-cv-08033-JAT Document 69 Filed 04/05/19 Page 18 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

19 

Ballard Spahr L

LP

1 East Washington Street

Suite 2300

Phoenix, A

Z 85004-2555

no legal process or indemnity bond is obtained as provided in Section 8-

403(d); and 

(7) the transfer is in fact rightful or is to a protected purchaser. 

Del. Code § 8-401(a). “If an issuer is under a duty to register a transfer of a security, the 

issuer is liable to a person presenting . . . an instruction for registration . . . for loss 

resulting from unreasonable delay in registration or failure or refusal to register the 

transfer.” Id. § 8-401(b). 

94. Beginning on November 1, 2017, counsel for New Enterprises 

communicated to counsel for SenesTech that New Enterprises wished to remove the 

restriction on sale or transfer from 859,133 pre-reverse-split shares of SenesTech stock 

held by New Enterprises under book entry 1393. Subramanian communicated that desire 

to Chesterman, SenesTech’s CFO, under separate cover. 

95. On November 7, 2016, counsel for New Enterprises provided the November 

Opinion Letter to SenesTech and its transfer agent stating that 859,133 pre-reverse-split 

shares of SenesTech stock held by New Enterprises under book entry 1393 could be sold 

(or reissued without the aforementioned restriction) without registration because, among 

other things, New Enterprises “has been the beneficial owner of the Shares for more than 

one year prior to the date hereof calculated in accordance with Rule 144(d).” 

96. The November Opinion Letter constituted an accurate statement of New 

Enterprises’ legal rights with respect to its ability to sell or transfer its SenesTech stock, as 

issued by an experienced and reputable securities-law practitioner. SenesTech therefore 

should have found the opinion letter to be a “satisfactory opinion of counsel” for purposes 

of the restriction on SenesTech’s stock. 

97. New Enterprises has satisfied all other prerequisites of Section 8-401(a), 

including that: 

a) Under the terms of the book entry for the SenesTech stock at 

issue, New Enterprises was eligible to have the stock 

registered in its name. 

Case 3:18-cv-08033-JAT Document 69 Filed 04/05/19 Page 19 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

20 

Ballard Spahr L

LP

1 East Washington Street

Suite 2300

Phoenix, A

Z 85004-2555

b) The instruction was made by an appropriate person, i.e., an 

agent of New Enterprises with actual authority to act on 

behalf of New Enterprises; 

c) Reasonable assurances were given that the instruction was 

genuine and authorized (Section 8-402); 

d) No applicable law required collection of taxes, and thus all 

applicable laws requiring collection of taxes were complied 

with; 

e) The transfer did not violate any restriction on transfer 

imposed by SenesTech in accordance with Section 8-204, 

because SenesTech had provided a satisfactory opinion of 

counsel as described above; 

f) No demand was made that SenesTech not register transfer 

under Section 8-403; and 

g) the transfer was in fact rightful because SenesTech had 

provided a satisfactory opinion of counsel as described above. 

98. As a result, SenesTech was under a duty to register transfer as instructed by 

New Enterprises. 

99. SenesTech breached its duty to register transfer by intentionally and 

unreasonably delaying in instructing its transfer agent to remove the restriction from the 

book entry pertaining to approximately 859,133 pre-reverse-split shares of SenesTech 

stock. 

100. SenesTech’s breach of its duty to register transfer caused a loss to New 

Enterprises because New Enterprises, rather than being able to sell its 859,133 shares of 

SenesTech stock at a post-IPO high of $10.68, was unable to sell those shares until June 

2017 or later, at which time SenesTech stock was trading at or substantially below $6.50. 

101. Accordingly, New Enterprises is entitled to damages in an amount to be 

determined at trial. 

COUNT V 

Breach of Contract 

(SenesTech) 

Case 3:18-cv-08033-JAT Document 69 Filed 04/05/19 Page 20 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

21 

Ballard Spahr L

LP

1 East Washington Street

Suite 2300

Phoenix, A

Z 85004-2555

102. New Enterprises incorporates all of the above paragraphs as if set forth fully 

herein. 

103. In order to state a claim for breach of contract under Arizona law, a plaintiff 

must allege: “(1) the existence of a contract; (2) breach; and (3) resulting damages.” First 

Am. Title Ins. Co. v. Johnson Bank, 372 P.3d 292, 297 (Ariz. 2016). 

104. The stock issued by SenesTech and owned by New Enterprises are valid and 

enforceable contracts. 

105. All of the uncertificated SenesTech stock owned by New Enterprises carried 

a restriction accompanying the relevant book entries stating the securities at issue had not 

been registered and could not be sold or otherwise transferred or assigned until either the 

securities became registered, or SenesTech received a satisfactory opinion of counsel 

stating that such registration is not required for sale or transfer. 

106. Beginning on November 1, 2017, counsel for New Enterprises 

communicated to counsel for SenesTech that New Enterprises wished to remove the 

restriction on sale or transfer from 859,133 pre-reverse-split shares of SenesTech stock 

held by New Enterprises under book entry 1393. Subramanian communicated that desire 

to Chesterman, SenesTech’s CFO, under separate cover. 

107. On November 7, 2016, counsel for New Enterprises provided the November 

Opinion Letter to SenesTech and its transfer agent stating that 859,133 pre-reverse-split 

shares of SenesTech stock held by New Enterprises under book entry 1393 could be sold 

(or reissued without the aforementioned restriction) without registration because, among 

other things, New Enterprises “has been the beneficial owner of the Shares for more than 

one year prior to the date hereof calculated in accordance with Rule 144(d).” 

108. The November Opinion Letter constituted an accurate statement of New 

Enterprises’ legal rights with respect to its ability to sell or transfer its SenesTech stock, as 

issued by an experienced and reputable securities-law practitioner. SenesTech therefore 

should have found the opinion letter to be a “satisfactory opinion of counsel” for purposes 

of the restriction on SenesTech’s stock. 

Case 3:18-cv-08033-JAT Document 69 Filed 04/05/19 Page 21 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

22 

Ballard Spahr L

LP

1 East Washington Street

Suite 2300

Phoenix, A

Z 85004-2555

109. SenesTech breached the terms of the stock restriction by failing to timely 

instruct its transfer agent to remove the restriction from the book entry pertaining to 

approximately 859,133 pre-reverse-split shares of SenesTech stock. 

110. New Enterprises has performed all of its obligations arising from its 

ownership of the stock. 

111. SenesTech’s breach of its contractual duty to timely instruct its transfer agent 

to remove the restriction caused a loss to New Enterprises because New Enterprises, rather 

than being able to sell its 859,133 shares of SenesTech stock at a post-IPO high of $10.68, 

was unable to sell those shares until June 2017 or later, at which time SenesTech stock was 

trading at or substantially below $6.50. 

COUNT VI 

Tortious Interference with Prospective Business Advantage 

(All Defendants) 

112. New Enterprises incorporates all of the above paragraphs as if set forth fully 

herein. 

113. In order to state a claim for tortious interference under Arizona law, a 

plaintiff must allege: “(1) the existence of a valid business expectancy; (2) the interferer’s 

knowledge of the business expectancy; (3) the interferer intentionally induced or caused 

termination of the business expectancy; and (4) damage suffered as a result of termination 

of the business expectancy.” Dube v. Likins, 167 P.3d 93, 99 (Ariz. Ct. App. 2007). 

114. New Enterprises had a valid business expectancy that it would be able to sell 

its shares of SenesTech stock upon removal of the restrictive legend because a reasonable 

and foreseeable result of SenesTech’s initial public offering in December 2017 was that an 

active market would exist for the purchase and sale of SenesTech stock. 

115. SenesTech and Roth Capital were aware that New Enterprises had a valid 

business expectancy in the sale of its SenesTech stock based on communications 

throughout November 2017 between Subramanian and SenesTech employees and a 

managing director of Roth Capital. 

Case 3:18-cv-08033-JAT Document 69 Filed 04/05/19 Page 22 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

23 

Ballard Spahr L

LP

1 East Washington Street

Suite 2300

Phoenix, A

Z 85004-2555

116. As detailed above, SenesTech, at Roth Capital’s instruction, intentionally 

and unreasonably delayed in instructing its transfer agent to remove the restriction 

accompanying the book entry of SenesTech stock owned by New Enterprises, which had 

the effect of terminating New Enterprises’ business expectancy. 

117. SenesTech’s intentional and unreasonable delay in that regard was wrongful 

because it constituted both a violation of Delaware law and a breach of contract. Roth 

Capital’s instruction for SenesTech to refuse New Enterprises’ request to remove the 

restriction on sale, which constituted a violation of Delaware law and a breach of contract, 

was likewise wrongful. 

118. Had SenesTech not intentionally and unreasonably delayed in instructing its 

transfer agent to remove the restriction, a reasonable probability exists that New 

Enterprises would have been able to sell its SenesTech stock at a higher share price than it 

ultimately received. 

119. As a result of these wrongful acts, SenesTech and Roth Capital tortiously 

interfered with New Enterprises’ prospective business advantage with respect to the sale 

of 859,133 shares of SenesTech stock. 

120. Accordingly, New Enterprises is entitled to damages in an amount to be 

determined at trial. 

COUNT VII 

Conversion 

(All Defendants) 

121. New Enterprises incorporates all of the above paragraphs as if set forth fully 

herein. 

122. Conversion under Arizona law is “the act of wrongful dominion or control 

over personal property in denial of or inconsistent with the rights of another.” Case Corp. 

v. Gehrke, 91 P.3d 362, 365 (Ariz. Ct. App. 2004) (citation omitted). “To maintain such an 

action, the plaintiff must have the right to immediate possession of the property at the time 

of the conversion.” Id.

Case 3:18-cv-08033-JAT Document 69 Filed 04/05/19 Page 23 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

24 

Ballard Spahr L

LP

1 East Washington Street

Suite 2300

Phoenix, A

Z 85004-2555

123. As detailed above, SenesTech, at Roth Capital’s instruction, intentionally 

and unreasonably delayed in instructing its transfer agent to remove the restriction 

accompanying the book entry of SenesTech stock owned by New Enterprises. 

124. SenesTech’s intentional and unreasonable delay, which constituted both a 

violation of Delaware law and a breach of contract, was an act of wrongful dominion or 

control over New Enterprises’ personal property, i.e., its shares of SenesTech stock. Roth 

Capital’s instruction for SenesTech to refuse New Enterprises’ request to remove the 

restriction on sale, which constituted a violation of Delaware law and a breach of contract, 

was likewise an act of wrongful dominion or control over New Enterprises’ personal 

property. 

125. As a result of these wrongful acts, SenesTech and Roth Capital converted 

approximately 859,133 pre-reverse-split shares of SenesTech stock that were the property 

of New Enterprises. 

126. Accordingly, New Enterprises is entitled to damages in an amount to be 

determined at trial. 

COUNT VIII 

Breach of Contract 

(Roth Capital) 

127. New Enterprises incorporates all of the above paragraphs as if set forth fully 

herein. 

128. Under California law, “[t]he standard elements of a claim for breach of 

contract are: (1) the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) 

defendant’s breach, and (4) damage to plaintiff therefrom.” Wall Street Network, Ltd. v. N. 

Y. Times Co., 80 Cal. Rptr. 3d 6, 12 (Cal. Ct. App. 2008); see also Cal. Civ. Code § 1550. 

129. On or about November 13, 2016, Roth Capital entered into an agreement 

with New Enterprises under which New Enterprises agreed to a 180-day post-IPO lock-up 

of its shares of SenesTech. 

130. In exchange, Roth Capital promised that it would exempt 50,000 postreverse-split shares held by New Enterprises from the lock-up, such that New Enterprises 

Case 3:18-cv-08033-JAT Document 69 Filed 04/05/19 Page 24 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

25 

Ballard Spahr L

LP

1 East Washington Street

Suite 2300

Phoenix, A

Z 85004-2555

could sell such shares in the weeks after the IPO and give its permission for New 

Enterprises to sell such shares in the weeks after the IPO, well before the expiration of 180 

days. 

131. Roth Capital further committed that it would give its permission for New 

Enterprises to sell its remaining shares by January 2017, and that Roth Capital and 

SenesTech management would help New Enterprises find buyers for such shares at that 

time. 

132. The November 13, 2016 Lock-Up Agreement between Roth Capital and New 

Enterprises is a valid and enforceable contract which provides that it “shall be governed” 

by California law. 

133. In December 2016, Subramanian contacted Roth Capital, and then 

SenesTech, for purposes of securing removal of the restriction on sale for the 50,000 postreverse-split shares that had been carved out of the Lock-Up Agreement. 

134. Roth Capital refused to authorize SenesTech to remove the restriction on sale 

for the 50,000 shares, rendering impossible the short-term sale of any shares owned by 

New Enterprises. 

135. As demonstrated by SenesTech’s email of November 7, 2016, Roth Capital 

had actual authority to instruct New Enterprises with respect to removal of the restriction 

on sale. 

136. Further, the Form S-1 filed with the SEC by SenesTech in advance of its 

initial public offering stated: “Roth Capital Partners may, in its sole discretion, at any time 

or from time to time and without notice, release for sale in the public market all or any 

portion of the shares restricted by the terms of the lock-up agreements.” (emphasis added). 

137. Roth Capital breached its contract with New Enterprises by failing to 

authorize SenesTech to remove the restriction on sale for the 50,000 shares, rendering 

impossible the short-term sale of any shares owned by New Enterprises. 

138. New Enterprises has performed all of its obligations under the November 13, 

2016 agreement. 

Case 3:18-cv-08033-JAT Document 69 Filed 04/05/19 Page 25 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

26 

Ballard Spahr L

LP

1 East Washington Street

Suite 2300

Phoenix, A

Z 85004-2555

139. As a result of the above-described breach, New Enterprises has suffered, and 

continues to suffer, injury. 

PRAYER FOR RELIEF 

WHEREFORE, New Enterprises respectfully demands judgment in its favor and 

against the defendants as follows: 

a) Awarding New Enterprises monetary damages, including 

compensatory damages, punitive damages, and attorney’s fees, in an amount 

to be determined at trial, as well as pre-judgment and post-judgment interest 

at the maximum rate allowed by law; and 

b) Awarding such other and further legal and equitable relief as this 

Court deems just and proper. 

JURY DEMAND 

New Enterprises demands a trial by jury on all claims so triable as a matter of right. 

RESPECTFULLY SUBMITTED this 25th day of January, 2019. 

BALLARD SPAHR LLP 

By: /s/ Michael DiGiacomo 

David L. Axelrod (admitted pro hac vice)

axelrodd@ballardspahr.com 

Thomas F. Burke (admitted pro hac vice)

burket@ballardspahr.com 

1735 Market Street, 51st Floor 

Philadelphia, PA 19103-7599 

Telephone: 215.665.8500 

Facsimile: 215.864.8999 

Michael DiGiacomo (SBN 032251) 

digiacomom@ballardspahr.com 

1 East Washington Street, Suite 2300 

Phoenix, AZ 85004 

Tel.: 602.798.5400 

Fax: 602.798.5595 

Attorneys for New Enterprises Ltd. 

Case 3:18-cv-08033-JAT Document 69 Filed 04/05/19 Page 26 of 26