ASPIRA WOMEN'S HEALTH INC., 10-Q filed on 10 Nov 22
v3.22.2.2
Document and Entity Information - shares
9 Months Ended
Sep. 30, 2022
Nov. 04, 2022
Document And Entity Information [Abstract]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Sep. 30, 2022  
Document Transition Report false  
Current Fiscal Year End Date --12-31  
Entity File Number 001-34810  
Entity Registrant Name Aspira Women’s Health Inc.  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 33-0595156  
Entity Address, Address Line One 12117 Bee Caves Road  
Entity Address, Address Line Two Building Three  
Entity Address, Address Line Three Suite 100  
Entity Address, City or Town Austin  
Entity Address, State or Province TX  
Entity Address, Postal Zip Code 78738  
City Area Code 512  
Local Phone Number 519-0400  
Title of 12(b) Security Common Stock, par value $0.001 per share  
Trading Symbol AWH  
Security Exchange Name NASDAQ  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   124,445,639
Document Fiscal Year Focus 2022  
Document Fiscal Period Focus Q3  
Entity Central Index Key 0000926617  
Amendment Flag false  
v3.22.2.2
Condensed Consolidated Balance Sheets - USD ($)
$ in Thousands
Sep. 30, 2022
Dec. 31, 2021
Current assets:    
Cash and cash equivalents $ 20,551 $ 37,180
Accounts receivable, net of allowance of $6 and $23, respectively 1,201 1,027
Prepaid expenses and other current assets 944 1,624
Inventories 280 174
Total current assets 22,976 40,005
Property and equipment, net 417 464
Right-of-use assets 299 346
Restricted cash 250 250
Other assets   14
Total assets 23,942 41,079
Current liabilities:    
Accounts payable 1,893 1,501
Accrued liabilities 4,988 5,299
Current portion of long-term debt 343 201
Short-term debt   779
Lease liability 73 60
Total current liabilities 7,297 7,840
Non-current liabilities:    
Long-term debt 2,426 2,718
Lease liability 293 349
Warrant liabilities 2,748  
Total liabilities 12,764 10,907
Commitments and contingencies (Note 2)
Stockholders' equity:    
Common stock, par value $0.001 per share, 150,000,000 shares authorized at September 30, 2022 and December 31, 2021; 124,445,639 and 112,138,741 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively 124 112
Additional paid-in capital 504,851 501,788
Accumulated deficit (493,797) (471,728)
Total stockholders' equity 11,178 30,172
Total liabilities and stockholders' equity $ 23,942 $ 41,079
v3.22.2.2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Thousands
Sep. 30, 2022
Dec. 31, 2021
Condensed Consolidated Balance Sheets [Abstract]    
Accounts receivable, allowance $ 6 $ 23
Common stock, par value $ 0.001 $ 0.001
Common stock, shares authorized 150,000,000 150,000,000
Common stock, shares issued 124,445,639 112,138,741
Common stock, shares outstanding 124,445,639 112,138,741
v3.22.2.2
Condensed Consolidated Statements Of Operations - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Sep. 30, 2022
Sep. 30, 2021
Revenue:        
Revenue $ 2,072 $ 1,666 $ 6,031 $ 4,961
Cost of revenue:        
Cost of revenue 916 917 2,948 2,913
Gross profit 1,156 749 3,083 2,048
Operating expenses:        
Research and development 2,157 1,518 4,915 3,861
Sales and marketing 3,950 5,083 12,027 12,209
General and administrative 4,746 3,839 13,305 9,627
Total operating expenses 10,853 10,440 30,247 25,697
Loss from operations (9,697) (9,691) (27,164) (23,649)
Change in fair value of warrant liabilities 5,004   5,004  
Interest income (expense), net 18 (14) (10) (35)
Other income (expense), net 117 (2) 101 983
Net loss $ (4,558) $ (9,707) $ (22,069) $ (22,701)
Net loss per share - basic $ (0.04) $ (0.09) $ (0.19) $ (0.20)
Net loss per share - diluted $ (0.04) $ (0.09) $ (0.19) $ (0.20)
Weighted average number of common shares used to compute basic net loss per common share 117,118,136 112,077,133 113,863,079 110,904,824
Weighted average number of common shares used to compute diluted net loss per common share 117,118,136 112,077,133 113,863,079 110,904,824
Product [Member]        
Revenue:        
Revenue $ 2,037 $ 1,617 $ 5,890 $ 4,753
Cost of revenue:        
Cost of revenue 875 715 2,768 2,209
Genetics [Member]        
Revenue:        
Revenue 35 49 141 208
Cost of revenue:        
Cost of revenue 41 202 180 704
Cost Of Revenue [Member]        
Operating expenses:        
Stock-based compensation expense (23) 49 64 137
Research And Development [Member]        
Operating expenses:        
Stock-based compensation expense 65 115 114 236
Sales And Marketing [Member]        
Operating expenses:        
Stock-based compensation expense 76 368 281 843
General And Administrative [Member]        
Operating expenses:        
Stock-based compensation expense $ 428 $ 646 $ 1,535 $ 1,733
v3.22.2.2
Consolidated Statements Of Changes In Stockholders' Equity - USD ($)
Common Stock
Additional Paid-In Capital
Accumulated Deficit
Total
Balance (in shares) at Dec. 31, 2020 104,619,876      
Balance at Dec. 31, 2020 $ 105,000 $ 449,680,000 $ (440,066,000) $ 9,719,000
Net loss     (5,920,000) $ (5,920,000)
Common stock issued in conjunction with exercise of stock options (in shares)   317,000   317,000
Common stock issued in conjunction with exercise of stock options $ 196,976      
Common stock issued in conjunction with public offering, net of issuance costs (in shares) 6,900,000      
Common stock issued in conjunction with public offering, net of issuance costs $ 7,000 $ 47,713,000   $ 47,720,000
Stock-based compensation expense   489,000   489,000
Balance (in shares) at Mar. 31, 2021 111,716,852      
Balance at Mar. 31, 2021 $ 112,000 498,199,000 (445,986,000) 52,325,000
Balance (in shares) at Dec. 31, 2020 104,619,876      
Balance at Dec. 31, 2020 $ 105,000 449,680,000 (440,066,000) 9,719,000
Net loss       (22,701,000)
Balance (in shares) at Sep. 30, 2021 112,100,049      
Balance at Sep. 30, 2021 $ 112,000 501,159,000 (462,767,000) 38,504,000
Balance (in shares) at Mar. 31, 2021 111,716,852      
Balance at Mar. 31, 2021 $ 112,000 498,199,000 (445,986,000) 52,325,000
Net loss     (7,074,000) (7,074,000)
Common stock issued in conjunction with exercise of stock options (in shares) 305,090      
Common stock issued in conjunction with exercise of stock options   304,000   304,000
Common stock issued for restricted stock awards (in shares) 36,092      
Common stock issued for restricted stock awards   267,000   267,000
Common stock issued in conjunction with public offering, net of issuance costs   1,000   1,000
Stock-based compensation expense   1,015,000   1,015,000
Balance (in shares) at Jun. 30, 2021 112,058,034      
Balance at Jun. 30, 2021 $ 112,000 499,786,000 (453,060,000) 46,838,000
Net loss     (9,707,000) (9,707,000)
Common stock issued in conjunction with exercise of stock options (in shares) 27,500      
Common stock issued in conjunction with exercise of stock options   58,000   58,000
Common stock issued for restricted stock awards (in shares) 14,515      
Common stock issued for restricted stock awards   108,000   108,000
Common stock issued in conjunction with public offering, net of issuance costs   137,000   137,000
Stock-based compensation expense   1,070,000   1,070,000
Balance (in shares) at Sep. 30, 2021 112,100,049      
Balance at Sep. 30, 2021 $ 112,000 501,159,000 (462,767,000) 38,504,000
Balance (in shares) at Dec. 31, 2021 112,138,741      
Balance at Dec. 31, 2021 $ 112,000 501,788,000 (471,728,000) 30,172,000
Net loss     (9,268,000) (9,268,000)
Common stock issued in conjunction with exercise of stock options (in shares) 3,000      
Common stock issued in conjunction with exercise of stock options   2,000   2,000
Stock-based compensation expense   838,000   838,000
Balance (in shares) at Mar. 31, 2022 112,141,741      
Balance at Mar. 31, 2022 $ 112,000 502,628,000 (480,996,000) 21,744,000
Balance (in shares) at Dec. 31, 2021 112,138,741      
Balance at Dec. 31, 2021 $ 112,000 501,788,000 (471,728,000) 30,172,000
Net loss       (22,069,000)
Balance (in shares) at Sep. 30, 2022 124,445,639      
Balance at Sep. 30, 2022 $ 124,000 504,851,000 (493,797,000) 11,178,000
Balance (in shares) at Mar. 31, 2022 112,141,741      
Balance at Mar. 31, 2022 $ 112,000 502,628,000 (480,996,000) 21,744,000
Net loss     (8,243,000) (8,243,000)
Common stock issued in conjunction with exercise of stock options (in shares) 20,000      
Common stock issued in conjunction with exercise of stock options   11,000   11,000
Common stock issued for restricted stock awards (in shares) 134,647      
Common stock issued for restricted stock awards   140,000   140,000
Stock-based compensation expense   470,000   470,000
Balance (in shares) at Jun. 30, 2022 112,296,388      
Balance at Jun. 30, 2022 $ 112,000 503,249,000 (489,239,000) 14,122,000
Net loss     (4,558,000) (4,558,000)
Common stock issued for restricted stock awards (in shares) 149,251      
Common stock issued for restricted stock awards   95,000   95,000
Common stock and warrants issued in conjunction with follow-on public offering, net of issuance costs (in shares) 12,000,000      
Common stock and warrants issued in conjunction with follow-on public offering, net of issuance costs $ 12,000 1,056,000   1,068,000
Stock-based compensation expense   451,000   451,000
Balance (in shares) at Sep. 30, 2022 124,445,639      
Balance at Sep. 30, 2022 $ 124,000 $ 504,851,000 $ (493,797,000) $ 11,178,000
v3.22.2.2
Condensed Consolidated Statements Of Cash Flows
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2022
USD ($)
Sep. 30, 2022
USD ($)
Sep. 30, 2021
USD ($)
Cash flows from operating activities:      
Net loss $ (4,558) $ (22,069) $ (22,701)
Adjustments to reconcile net loss to net cash used in operating activities:      
Non-cash lease expense   4 35
Depreciation and amortization   195 238
Stock-based compensation expense   1,994 2,949
Change in fair value of warrant liabilities (5,004) (5,004)  
Loss on sale and disposal of property and equipment   10 1
Forgiveness of PPP loan     (1,006)
Changes in operating assets and liabilities:      
Accounts receivable   (174) (238)
Prepaid expenses and other assets   694 262
Inventories   (106) (107)
Accounts payable, accrued liabilities and other liabilities   (653) 821
Net cash used in operating activities   (25,109) (19,746)
Cash flows from investing activities:      
Purchase of property and equipment   (158) (154)
Net cash used in investing activities   (158) (154)
Cash flows from financing activities:      
Principal repayment of DECD loan   (196) (148)
Proceeds from issuance of common stock from exercise of stock options   13 679
Proceeds from public offering   9,000 48,236
Payment of offering costs for public offering (179) (179) (378)
Net cash (used in) provided by financing activities   8,638 48,389
Net (decrease) increase in cash, cash equivalents and restricted cash   (16,629) 28,489
Cash, cash equivalents and restricted cash, beginning of period   37,430 16,631
Cash, cash equivalents and restricted cash, end of period 20,801 20,801 45,120
Reconciliation to Condensed Consolidated Balance Sheet:      
Cash and cash equivalents 20,551 20,551 44,870
Restricted cash 250 250 250
Unrestricted and restricted cash and cash equivalents $ 20,801 20,801 45,120
Supplemental disclosure of cash flow information:      
Cash paid during the period for interest   57 57
Supplemental disclosure of noncash investing and financing activities:      
Net decrease in right-of-use assets   (47) (45)
Forgiveness of PPP loan     $ (1,006)
Fair value of warrants issued in conjunction with common stock offering   $ 7,752  
v3.22.2.2
Organization, Basis Of Presentation And Significant Accounting And Reporting Policies
9 Months Ended
Sep. 30, 2022
Organization, Basis Of Presentation And Significant Accounting And Reporting Policies [Abstract]  
Organization, Basis Of Presentation And Significant Accounting And Reporting Policies 1.    ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING AND REPORTING POLICIES

Organization

Aspira Women’s Health Inc., formerly known as Vermillion, Inc. (“Aspira” and its wholly-owned subsidiaries are collectively referred to as the “Company”) is incorporated in the state of Delaware, and is engaged in the business of developing and commercializing diagnostic tests for gynecologic disease. The Company currently markets and sells the following products and related services: (1) Ova1, a blood test intended as an aid to further assess the likelihood of malignancy in women with an ovarian adnexal mass for which surgery is planned when the physician’s independent clinical and radiological evaluation does not indicate malignancy; (2) Overa, a second-generation biomarker reflex intended to maintain Ova1’s high sensitivity while improving specificity; (3) Ova1Plus, a reflex offering which uses Ova1 as the primary test and Overa as a confirmation for Ova1 intermediate range results; and (4) Aspira Synergy, the Company’s decentralized testing platform and cloud service for decentralized global access of protein biomarker testing. The Company continues to make Ova1, Overa, and Ova1Plus, and plans to make future technology available through Aspira Synergy. The Company’s Ova1 test received FDA de novo classification in September 2009. Ova1 comprises instruments, assays, reagents, and the OvaCalc software, which includes a proprietary algorithm that produces a risk score. The Company’s Overa test, which includes an updated version of OvaCalc, received FDA 510(k) clearance in March 2016. Ova1 and Overa each use the Roche Cobas 4000, 6000 and 8000 platforms for analysis of proteins. Revenue from these sources (in addition to revenue from Aspira GenetiX) is included in total revenue in the results of operations for the nine months ended September 30, 2022.

Liquidity

As of September 30, 2022, the Company had $20,551,000 of cash and cash equivalents (excluding restricted cash of $250,000), an accumulated deficit of approximately ($493,797,000), and working capital of $15,679,000. For the nine months ended September 30, 2022, the Company incurred a net loss of ($22,069,000) and used cash in operations of ($25,109,000). The Company has incurred significant net losses and negative cash flows from operations since inception and the Company also expects to continue to incur a net loss and negative cash flows from operations for 2022. There can be no assurance that the Company will achieve or sustain profitability or positive cash flow from operations.  Given the above conditions, there is substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements have been prepared on a going concern basis and do not include any adjustments that might result from these uncertainties.

The Company expects to raise capital through sources that may include public or private equity offerings, debt financings, the exercise of common stock warrants, collaborations, licensing arrangements, grants and government funding and strategic alliances. However, additional funding may not be available when needed or on terms acceptable to the Company. If the Company is unable to obtain additional capital, it may not be able to continue sales and marketing, research and development, or other operations on the scope or scale of current activity, and that could have a material adverse effect on the Company’s business, results of operations and financial condition.

On June 1, 2022, the Company received a deficiency letter from the Listing Qualifications Department of the Nasdaq Stock Market notifying the Company that, for the preceding 30 consecutive business days, the closing bid price for the Company’s common stock was below the minimum $1.00 per share requirement for continued inclusion on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Rule”). As provided in the Nasdaq rules, the Company has 180 calendar days, or until November 28, 2022, to regain compliance with the Minimum Bid Price Rule. The Company may achieve compliance during this period if the closing bid price of Aspira common stock is at least $1.00 per share for a minimum of 10 consecutive business

days. If the Company fails to regain compliance on or prior to November 28, 2022, the Company may be eligible for an additional 180-calendar day compliance period, which would extend the deadline until May 27, 2023. There is no assurance that the Company will be able to regain compliance by the November 28, 2022 deadline or the additional 180-calendar day extended deadline, and there is no assurance that the Company will otherwise maintain compliance with this or any of the other Nasdaq continued listing requirements.

The COVID-19 pandemic has severely impacted global economic activity, and many countries and many states in the United States reacted to it by instituting quarantines, mandating business and school closures and restricting travel periodically throughout the pandemic. Patient enrollment for the Company’s planned clinical research studies of serial draws of the Company’s OvaNex study has been slower than originally planned due to the impact of clinic closures and patients not seeking medical care in some states, which has led to delays in the completion of such studies. Given the uncertainties associated with potential resurgences of the COVID-19 pandemic, the Company is unable to estimate the extent of the impact of the COVID-19 pandemic on its operations or liquidity.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management of the Company, all adjustments, consisting of normal recurring adjustments necessary for the fair statement of results for the periods presented, have been included. The results of operations of any interim period are not necessarily indicative of the results of operations for the full year or any other interim period.

The unaudited condensed consolidated financial statements and related disclosures have been prepared with the presumption that users of the interim unaudited condensed consolidated financial statements have read or have access to the audited consolidated financial statements for the preceding fiscal year. The condensed consolidated balance sheet at December 31, 2021 included in this report has been derived from the audited consolidated financial statements at that date but does not include all the information and notes required by GAAP. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2021 included in Aspira’s Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on March 31, 2022.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimated results.

Significant Accounting Policies

Revenue Recognition

Product Revenue – Ova1, Overa and Ova1Plus: The Company recognizes product revenue in accordance with the provisions of ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). Product revenue is recognized upon completion of the Ova1, Overa or Ova1Plus test and delivery of results to the physician based on estimates of amounts that will ultimately be realized. In determining the amount of revenue to be recognized for a delivered test result, the Company considers factors such as payment history and amount, payer coverage, whether there is a reimbursement contract between the payer and the Company, and any developments or changes that could impact reimbursement. These estimates require significant judgment by management as the collection cycle on some accounts can be as long as one year. The effect of any change made to an estimated input component and, therefore revenue recognized, would be recorded as a change in estimate at the time of the change.

The Company also reviews its patient account population and determines an appropriate distribution of patient accounts by payer (i.e., Medicare, patient pay, other third-party payer, etc.) into portfolios with similar

collection experience. The Company has elected this practical expedient that, when evaluated for collectability, results in a materially consistent revenue amount for such portfolios as if each patient account were evaluated on an individual contract basis. During the period ended September 30, 2022, there were no adjustments to estimates of variable consideration to derecognize revenue for services provided in a prior period. There were no impairment losses on accounts receivable recorded during the periods ended September 30, 2022 and 2021.

Genetics Revenue – Aspira GenetiX: Under ASC 606, the Company’s genetics revenue is recognized upon completion of the Aspira GenetiX test and delivery of results to the physician based on estimates of amounts that will ultimately be realized. In determining the amount of revenue to be recognized for a delivered test result, the Company considers factors such as payment history and amount, payer coverage, whether there is a reimbursement contract between the payer and the Company, and any developments or changes that could impact reimbursement. These estimates require significant judgment by management.

In September 2022, the Company received a notice of cancellation from its only Aspira Synergy genetics carrier screening customer, Axia Women’s Health. As a result of this cancellation, along with the general deterioration of commercial opportunities in the genetics carrier screening market, has led the Company to cease providing Aspira GenetiX, including genetics carrier screening, on our Aspira Synergy platform, effective as of September 30, 2022. The Company did not incur any termination penalties nor did the Company accrue any expenses as a result of the cancellation. This is not expected to have a material impact on the Company’s revenues in 2022 or in any future periods.

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board issued Accounting Standard Update No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This update changes the impairment model from the currently used incurred loss methodology to an expected loss methodology, which will result in the more timely recognition of losses. This ASU 2016-13 is scheduled to be effective in 2023 for smaller reporting companies. While the Company is evaluating the effect of adopting this new accounting guidance, its effect will largely depend on the composition and credit quality of the Company’s portfolio of financial assets and the economic conditions at the time of adoption.

In August 2020, the Financial Accounting Standards Board issued Accounting Standard Update No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). This update was issued to assist in simplifying the accounting for convertible instruments. This ASU 2020-06 is scheduled to be effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is in the process of evaluating the impact of this standard on its condensed consolidated financial statements.

v3.22.2.2
Commitments And Contingencies
9 Months Ended
Sep. 30, 2022
Commitments And Contingencies [Abstract]  
Commitments And Contingencies 2.   COMMITMENTS AND CONTINGENCIES

Coronavirus Aid, Relief, and Economic Security (CARES) Act and Paycheck Protection Program Loan

On May 1, 2020, the Company obtained the Paycheck Protection Program loan (the “PPP Loan”) from BBVA USA in the aggregate amount of approximately $1,006,000. The Company applied for forgiveness of the PPP Loan in March 2021, and, effective May 27, 2021, the U.S. Small Business Administration confirmed the waiver of the Company’s repayment of the PPP Loan which was recognized as a gain in other income in 2021. The Company remains subject to an audit of the PPP loan. There is no assurance that the Company will not be required to repay all or a portion of the PPP Loan, as a result of any such audit.

Loan Agreement

 On March 22, 2016, the Company entered into a loan agreement (as amended, the “DECD Loan Agreement”) with the State of Connecticut Department of Economic and Community Development (the “DECD”), pursuant to which the Company may borrow up to $4,000,000 from the DECD. The loan bears interest

at a fixed rate of 2.0% per annum and requires equal monthly payments of principal and interest until maturity, which occurs on April 15, 2026. As security for the loan, the Company has granted the DECD a blanket security interest in the Company’s personal and intellectual property. The DECD’s security interest in the Company’s intellectual property may be subordinated to a qualified institutional lender. 

The loan may be prepaid at any time without premium or penalty. An initial disbursement of $2,000,000 was made to the Company on April 15, 2016 under the DECD Loan Agreement. On December 3, 2020, the Company received a disbursement of the remaining $2,000,000 under the DECD Loan Agreement, as the Company had achieved the target employment milestone necessary to receive an additional $1,000,000 under the DECD Loan Agreement and the DECD determined to fund the remaining $1,000,000 under the DECD Loan Agreement after concluding that the required revenue target would likely have been achieved in the first quarter of 2020 in the absence of the impacts of COVID-19.

Under the terms of the DECD Loan Agreement, the Company may be eligible for forgiveness of up to $1,500,000 of the principal amount of the loan if the Company achieves certain job creation and retention milestones by December 31, 2022. Conversely, if the Company is either unable to retain 25 full-time employees with a specified average annual salary for a consecutive two-year period or does not maintain the Company’s Connecticut operations through March 22, 2026, the DECD may require early repayment of a portion or all of the loan plus a penalty of 5% of the total funded loan. The carrying value approximates fair value, as the interest represents market prices for similar types of borrowing arrangements.

Long-term debt consisted of the following:

 

September 30,

December 31,

2022

2021

(in thousands)

DECD loan, net of issuance costs

$

2,769

$

2,919

Less: Current portion, net of issuance costs

(343)

(201)

Total long-term debt, net of issuance costs

$

2,426

$

2,718

As of September 30, 2022, the annual amounts of future minimum principal payments due under the Company’s contractual obligation are shown in the table below. Unamortized debt issuance costs for the DECD loan were $12,000

Payments Due by Period

(in thousands)

Total

2022

2023

2024

2025

2026

Thereafter

DECD Loan

$

2,781

$

52

$

406

$

452

$

461

$

341

$

1,069

Total

$

2,781

$

52

$

406

$

452

$

461

$

341

$

1,069


Accrued Liabilities

The following table describes the principal components of accrued liabilities on the Company’s condensed consolidated balance sheet as of:

 

September 30,

December 31,

(in thousands)

2022

2021

Payroll and benefits related expenses

$

3,405

$

2,652

Collaboration and research agreements expenses

349

382

Professional services

764

1,992

Other accrued liabilities

470

273

Total accrued liabilities

$

4,988

$

5,299

Insurance Notes

 

During 2021, the Company entered into an insurance promissory note for the payment of insurance premiums at an interest rate of 3.74%, with an aggregate principal amount outstanding of approximately $0 and $779,000 as of September 30, 2022 and December 31, 2021, respectively. This note was payable in ten monthly installments with a maturity date of October 1, 2022 and has no financial or operational covenants.

Operating Leases

The Company leases facilities to support its business. The Company’s principal facility, including the Clinical Laboratory Improvements Amendments of 1988 (“CLIA”) laboratory used by Aspira Labs, Inc., is located in Austin, Texas, and the CLIA laboratory and administrative offices are located in Trumbull, Connecticut. The Company’s Austin, Texas lease, which expires on January 31, 2023, has no automatic renewal or renewal option. The Company’s Texas lease has a term of 12 months. The Company recognizes the lease payments in profit and loss on a straight-line basis over the term of the lease, and variable lease payments in the period in which the obligation for the payments was incurred.

 

In October 2015, the Company entered into a lease agreement for the facility in Trumbull, Connecticut. The lease required initial payments for the buildout of leasehold improvements to the office space, which were approximately $596,000. In September 2020, the Company exercised the renewal option for its Trumbull, Connecticut lease. The Company’s renewed lease expires on June 30, 2026, with a five-year renewal option.  The Company is not reasonably certain that it will exercise the five-year renewal option beginning on July 1, 2026.

The expense associated with these operating leases for the three and nine months ended September 30, 2022 and 2021 is shown in the table below (in thousands).

Three Months Ended September 30,

Lease Cost

Classification

2022

2021

Operating rent expense

Cost of revenue

$

20

$

14

Research and development

6

13

Sales and marketing

9

8

General and administrative

16

16

Variable rent expense

Cost of revenue

$

10

$

8

Research and development

5

12

Sales and marketing

8

11

General and administrative

16

16

Nine Months Ended September 30,

Lease Cost

Classification

2022

2021

Operating rent expense

Cost of revenue

$

59

$

42

Research and development

20

35

Sales and marketing

28

25

General and administrative

49

51

Variable rent expense

Cost of revenue

$

30

$

23

Research and development

16

25

Sales and marketing

26

30

General and administrative

51

46

Based on the Company’s leases as of September 30, 2022, the table below sets forth the approximate future lease payments related to operating leases with initial terms of one year or more (in thousands).

2022

$

25

2023

106

2024

116

2025

124

2026

64

Total Operating Lease Payments

435

Less: Interest

(69)

Present Value of Lease Liabilities

$

366

Weighted-average lease term and discount rate were as follows:

Weighted-average remaining lease term (in years)

3.7

Weighted-average discount rate

9.31%

Non-cancellable Royalty Obligations

The Company is a party to an amended research collaboration agreement with The Johns Hopkins University School of Medicine under which the Company licenses certain of its intellectual property directed at the discovery and validation of biomarkers in human subjects, including but not limited to clinical application of biomarkers in the understanding, diagnosis and management of human disease. Under the terms of the amended research collaboration agreement, Aspira is required to pay the greater of 4% royalties on net sales of diagnostic tests using the assigned patents or annual minimum royalties of $57,500. Royalty expense for the three months ended September 30, 2022 and 2021 totaled $82,000 and $65,000, respectively, and royalty expense for the nine months ended September 30, 2022 and 2021 totaled $236,000 and $190,000, respectively, as recorded in cost of revenue in the condensed consolidated statements of operations.

Commercial Reorganization

During the three months ended March 31, 2022, the Company executed a commercial reorganization resulting in the separation of a number of employees. The organizational changes resulted in the recording within the condensed consolidated statement of operations in sales and marketing, research and development and general and administrative expenses of one-time severance, separation, and settlement charges of approximately $1,284,000. These amounts have been partially offset by insurance reimbursement of $523,000. All charges have been settled as of September 30, 2022.

Business Agreements

On August 8, 2022, the Company entered into a sponsored research agreement with Harvard’s Dana-Farber Cancer Institute, Brigham & Women’s Hospital, and Medical University of Lodz for the generation of a multi-omic, non-invasive diagnostic aid to identify endometriosis based on circulating microRNAs and proteins. This collaboration is expected to accelerate the Company’s development and commercialization of future endometriosis products, such as EndoCheck. Under the terms of and as further described in the agreement, payments of approximately $1,252,000 have or will become due from the Company to the counterparties upon successful completion of certain deliverables in 2022 and 2023 as follows: 68% was paid in August 2022, 15% will become payable upon completion of certain deliverables estimated to occur in the fourth quarter of 2022, and 17% will become payable upon completion of certain deliverables estimated to occur in the second quarter of 2023. As of September 30, 2022 approximately $852,000 has been recorded as expense for the project.

Contingent Liabilities

From time to time, the Company is involved in legal proceedings and regulatory proceedings arising from operations. The Company establishes reserves for specific liabilities in connection with legal actions that management deems to be probable and estimable. The Company is not currently a party to any proceeding, the adverse outcome of which would have a material adverse effect on the Company’s financial position or results of operations.

v3.22.2.2
Stockholders' Equity
9 Months Ended
Sep. 30, 2022
Stockholders' Equity [Abstract]  
Stockholders' Equity 3.    STOCKHOLDERS’ EQUITY

2022 Public Offering

On August 22, 2022, the Company, entered into an underwriting agreement (the “2022 Underwriting Agreement”) with William Blair & Company, L.L.C., as the sole underwriter (the “2022 Underwriter”). Pursuant to the 2022 Underwriting Agreement, the Company agreed to issue and sell, in an underwritten public offering (the “2022 Offering”), 12,000,000 shares of the Company’s common stock, par value $0.001 per share (“Common Stock”) and warrants to purchase up to 12,000,000 shares of Common Stock (the “Warrants”). Each share of Common Stock was sold together with one Warrant to purchase one share of Common Stock, at a price to the public of $0.75 per share and related Warrant.

The Warrants were issued pursuant to a common stock purchase warrant (the “Form of Warrant”). Each Warrant has an initial exercise price equal to $0.88 per share of Common Stock and are exercisable for five years

from the date of issuance. The exercise price and the number of shares of Common Stock issuable upon exercise of the Warrants are subject to adjustment in the event of certain subdivisions and combinations, including by any stock split or reverse stock split, stock dividend, recapitalization or otherwise. The exercise of the Warrants may be limited in certain circumstances if, after giving effect to such exercise, the holder or any of its affiliates would beneficially own (as determined in accordance with the terms of the Warrants) more than 4.99% (or, at the election of the holder, 9.99%) of the outstanding Common Stock immediately after giving effect to the exercise. There is no established trading market available for the Warrants on any securities exchange or nationally recognized trading system.

The Company accounts for common stock warrants as either equity-classified or liability-classified instruments based on an assessment of the specific terms of the warrants and applicable authoritative guidance in Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815-40, Contracts in Entity’s Own Equity (“ASC 815-40”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and meet all of the requirements for equity classification under ASC 815-40, including whether the warrants are indexed to the Company’s own stock and whether the events where holders of the warrants could potentially require net cash settlement are within the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. As further described in the Form of Warrant, if the Company consummates any merger, consolidation, sale or other reorganization event, including the sale of all or substantially all of the Company’s assets, in which its common stock is converted into or exchanged for securities, cash or other property (“Fundamental Transaction”), then the Company shall pay at the holder’s option, exercisable at any time commencing on the occurrence or the consummation of the Fundamental Transaction (or, if later, the date of public announcement) and continuing up to 30 days, an amount of cash equal to the value of the remaining unexercised portion of the Warrant as determined in accordance with the Black-Scholes option pricing model on the date of such Fundamental Transaction provided; however, that if the Fundamental Transaction is not within the Company’s control, including not approved by the Board of Directors, the holder of the Warrant shall only be entitled to receive the same type or form of consideration (and in the same proportion), at the Black Scholes Value of the unexercised portion of the Warrant, that is being offered and paid to the holder of the Common Stock of the Company in connection with the Fundamental Transaction. The Black-Scholes option pricing model, as defined in the Form of Warrant, includes as an input, the highest volume weighted average price (“VWAP”) for a period of one trading day preceding the consummation or announcement of a Fundamental Transaction up to 30 days after a Fundamental Transaction. The Company has determined that an adjustment based on this input is not limited to the effect that is attributable to the Fundamental Transaction and therefore causes the Warrants to fail the indexation guidance under ASC 815-40. As a result, the Company has determined that the Warrants must be recorded as derivative liabilities upon issuance and marked to market on a quarterly basis in the Company’s condensed consolidated statement of operations until their exercise or expiration.

The fair values of the Warrants as of August 22, 2022, the issuance date, and September 30, 2022 were $7,752,000 and $2,748,000, respectively. The fair value of the Warrants was estimated using Black-Scholes pricing model based on the following assumptions:

September 30, 2022

August 22, 2022

Dividend yield

-

%

-

%

Volatility

97.5

%

95.0

%

Risk-free interest rate

4.06

%

3.17

%

Expected lives (years)

4.89

5.00

Weighted average fair value

$

0.229

$

0.646

The fair value of the Warrants was deemed to be derivative instruments due to certain contingent put feature, was determined using the Black-Scholes option pricing model, deemed to be an appropriate model due to the terms of the Warrants issued, including a fixed term and exercise price.

 

The fair value of Warrants was affected by changes in inputs to the Black-Scholes option pricing model including the Company’s stock price, expected stock price volatility, the contractual term, and the risk-free interest rate. This model uses Level 2 inputs, including stock price volatility, in the fair value hierarchy established by ASC 820 Fair Value Measurement. At September 30, 2022, the fair value of all Warrants was $2,748,000, which are classified as a long-term Warrant liability on the Company’s balance sheet.

The 2022 Offering resulted in net proceeds to the Company of approximately $7,704,000, after deducting underwriting discounts and offering expenses of $1,296,000. Offering costs were allocated between liability expense and equity based on the fair value of the Warrants of $7,752,000 and the total gross proceeds of $9,000,000. $1,117,000 of offering costs were allocated to the Warrants and were expensed immediately and recorded as selling, general and administrative expense in the condensed unaudited consolidated statement of operations for the three months ended September 30, 2022, resulting in a net impact to the Company’s equity of $179,000.

2021 Public Offering

On February 4, 2021, the Company entered into an underwriting agreement (the “2021 Underwriting Agreement”) with William Blair & Company, L.L.C. and Truist Securities, Inc., as representatives of several underwriters (the “2021 Underwriters”), in connection with the underwritten public offering of 6,000,000 shares of Aspira common stock at a price to the public of $7.50 per share. The 2021 Underwriters purchased these 6,000,000 shares at the public offering price per share, less the underwriting discount of $0.4875 per share.

Under the 2021 Underwriting Agreement, the Company granted the 2021 Underwriters an option to purchase up to an additional 900,000 shares of Aspira common stock at the public offering price, less the underwriting discount of $0.4875 per share.  On February 5, 2021, the 2021 Underwriters notified the Company that they were exercising this option in connection with the closing of the 2021 Offering. The 2021 Offering, including the additional 900,000 shares of Aspira common stock, closed on February 8, 2021 and resulted in net proceeds to the Company of approximately $47,858,000, after deducting underwriting discounts and offering expenses of $378,000. There was a change in estimate in the third quarter of 2021 in the amount of $138,000 relating to an expense reversal of offering costs.

2019 Stock Incentive Plan

At the Company’s 2019 annual meeting of stockholders, the Company’s stockholders approved the Vermillion, Inc. 2019 Stock Incentive Plan, the name of which was subsequently changed to the Aspira Women’s Health Inc. 2019 Stock Incentive Plan (the “2019 Plan”). The purposes of the 2019 Plan are (i) to align the interests of the Company’s stockholders and recipients of awards under the 2019 Plan by increasing the proprietary interest of such recipients in the Company’s growth and success; (ii) to advance the interests of the Company by attracting and retaining non-employee directors, officers, other employees, consultants, independent contractors and agents; and (iii) to motivate such persons to act in the long-term best interests of the Company and its stockholders. The 2019 Plan allows the Company to grant stock options, stock appreciation rights, restricted stock, restricted stock units and performance awards to participants.

Subject to the terms and conditions of the 2019 Plan, the initial number of shares authorized for grants under the 2019 Plan is 10,492,283. To the extent an equity award granted under the 2019 Plan expires or otherwise terminates without having been exercised or paid in full, or is settled in cash, the shares of common stock subject to such award will become available for future grant under the 2019 Plan. As of September 30, 2022, 9,873,424 shares of Aspira common stock were subject to outstanding stock options, and 149,249 shares of Aspira common stock were subject to unvested restricted stock awards and a total of 3,531,486 shares of Aspira common stock were reserved for issuance under the 2019 Plan.


Stock-Based Compensation

During the three months ended March 31, 2022, the Company granted the following awards under the 2019 Plan. In addition, assumptions included in the fair value per share calculations were expected terms of one to four years, one- to five-year treasury interest rates of 1.38% to 3.28% and market close prices ranging from $1.04 to $1.08. The Company recorded $334,000 in forfeitures for the three months ended March 31, 2022.

Grant Date

Number of Shares

Type of Award

Exercise Price / Share

Fair Value / Share

1/28/2022

222,000

Options

$            1.08

$         0.70

3/1/2022

5,000

Options

$            1.05

$         0.31

3/31/2022

1,706,282

Options

$            1.04

$         0.51

3/31/2022

269,297

Restricted Stock Units

$                 -

$              -

2,202,579

During the three months ended June 30, 2022, the Company granted the following awards under the 2019 Plan. In addition, assumptions included in the fair value per share calculations were expected terms of one to two years, one- to five-year treasury interest rates of 1.72% to 3.13% and market close prices ranging from $0.52 to $1.05. The Company recorded $109,000 in forfeitures for the three months ended June 30, 2022.

Grant Date

Number of Shares

Type of Award

Exercise Price

Fair Value / Share

4/1/2022

5,000 

Options

$            1.05

$         0.33

5/2/2022

5,000 

Options

$            0.70

$         0.22

5/19/2022

60,000 

Options

$            0.55

$         0.28

6/1/2022

5,000 

Options

$            0.56

$         0.22

6/23/2022

15,000 

Options

$            0.52

$         0.21

6/23/2022

78,000 

Options

$            0.52

$         0.27

6/23/2022

83,799 

Options

$            0.52

$         0.36

6/23/2022

169,043 

Restricted Stock Units

$                 -

$              -

420,842 

During the three months ended September 30, 2022, the Company granted the following awards under the 2019 Plan. In addition, assumptions included in the fair value per share calculations were expected terms of one to two years, five-year treasury interest rates of 2.79% to 3.50% and market close prices ranging from $0.25 to $0.48. The Company recorded $119,000 in forfeitures for the three months ended September 30, 2022.

Grant Date

Number of Shares

Type of Award

Exercise Price

Fair Value / Share

7/1/2022

5,000 

Options

$            0.73

$         0.32

7/5/2022

200,000 

Options

$            0.77

$         0.40

8/1/2022

5,000 

Options

$            0.80

$         0.35

8/18/2022

122,000 

Options

$            0.92

$         0.48

9/1/2022

5,000 

Options

$            0.53

$         0.25

337,000 

The allocation of employee stock-based compensation expense, including expense reversals due to forfeitures, by functional area for the three and nine months ended September 30, 2022 and 2021 was as follows:

 

 

Three Months Ended

Nine Months Ended

September 30,

September 30,

(in thousands)

2022

2021

2022

2021

Cost of revenue

$

(27)

$

44

$

52

$

123

Research and development

31

113

21

231

Sales and marketing

76

350

281

814

General and administrative

428

445

1,445

1,236

Total

$

508

$

952

$

1,799

$

2,404

v3.22.2.2
Loss Per Share
9 Months Ended
Sep. 30, 2022
Loss Per Share [Abstract]  
Loss Per Share 4.    LOSS PER SHAREThe Company calculates basic loss per share using the weighted average number of shares of Aspira common stock outstanding during the period. Because the Company is in a net loss position, diluted loss per share is calculated using the weighted average number of shares of Aspira common stock outstanding and excludes the anti-dilutive effects of 10,022,672 and 10,529,341 potential shares of Aspira common stock as of September 30, 2022 and 2021, respectively, in addition to 12,000,000 shares of Aspira common stock issuable upon the exercise of the Warrants outstanding as of September 30, 2022. Potential shares of Aspira common stock and warrants include incremental shares of Aspira common stock issuable upon the exercise of stock options and warrants and the vesting of unvested restricted stock units.
v3.22.2.2
Organization, Basis Of Presentation And Summary Of Significant Accounting And Reporting Policies (Policy)
9 Months Ended
Sep. 30, 2022
Organization, Basis Of Presentation And Significant Accounting And Reporting Policies [Abstract]  
Organization Organization

Aspira Women’s Health Inc., formerly known as Vermillion, Inc. (“Aspira” and its wholly-owned subsidiaries are collectively referred to as the “Company”) is incorporated in the state of Delaware, and is engaged in the business of developing and commercializing diagnostic tests for gynecologic disease. The Company currently markets and sells the following products and related services: (1) Ova1, a blood test intended as an aid to further assess the likelihood of malignancy in women with an ovarian adnexal mass for which surgery is planned when the physician’s independent clinical and radiological evaluation does not indicate malignancy; (2) Overa, a second-generation biomarker reflex intended to maintain Ova1’s high sensitivity while improving specificity; (3) Ova1Plus, a reflex offering which uses Ova1 as the primary test and Overa as a confirmation for Ova1 intermediate range results; and (4) Aspira Synergy, the Company’s decentralized testing platform and cloud service for decentralized global access of protein biomarker testing. The Company continues to make Ova1, Overa, and Ova1Plus, and plans to make future technology available through Aspira Synergy. The Company’s Ova1 test received FDA de novo classification in September 2009. Ova1 comprises instruments, assays, reagents, and the OvaCalc software, which includes a proprietary algorithm that produces a risk score. The Company’s Overa test, which includes an updated version of OvaCalc, received FDA 510(k) clearance in March 2016. Ova1 and Overa each use the Roche Cobas 4000, 6000 and 8000 platforms for analysis of proteins. Revenue from these sources (in addition to revenue from Aspira GenetiX) is included in total revenue in the results of operations for the nine months ended September 30, 2022.

Liquidity Liquidity

As of September 30, 2022, the Company had $20,551,000 of cash and cash equivalents (excluding restricted cash of $250,000), an accumulated deficit of approximately ($493,797,000), and working capital of $15,679,000. For the nine months ended September 30, 2022, the Company incurred a net loss of ($22,069,000) and used cash in operations of ($25,109,000). The Company has incurred significant net losses and negative cash flows from operations since inception and the Company also expects to continue to incur a net loss and negative cash flows from operations for 2022. There can be no assurance that the Company will achieve or sustain profitability or positive cash flow from operations.  Given the above conditions, there is substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements have been prepared on a going concern basis and do not include any adjustments that might result from these uncertainties.

The Company expects to raise capital through sources that may include public or private equity offerings, debt financings, the exercise of common stock warrants, collaborations, licensing arrangements, grants and government funding and strategic alliances. However, additional funding may not be available when needed or on terms acceptable to the Company. If the Company is unable to obtain additional capital, it may not be able to continue sales and marketing, research and development, or other operations on the scope or scale of current activity, and that could have a material adverse effect on the Company’s business, results of operations and financial condition.

On June 1, 2022, the Company received a deficiency letter from the Listing Qualifications Department of the Nasdaq Stock Market notifying the Company that, for the preceding 30 consecutive business days, the closing bid price for the Company’s common stock was below the minimum $1.00 per share requirement for continued inclusion on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Rule”). As provided in the Nasdaq rules, the Company has 180 calendar days, or until November 28, 2022, to regain compliance with the Minimum Bid Price Rule. The Company may achieve compliance during this period if the closing bid price of Aspira common stock is at least $1.00 per share for a minimum of 10 consecutive business

days. If the Company fails to regain compliance on or prior to November 28, 2022, the Company may be eligible for an additional 180-calendar day compliance period, which would extend the deadline until May 27, 2023. There is no assurance that the Company will be able to regain compliance by the November 28, 2022 deadline or the additional 180-calendar day extended deadline, and there is no assurance that the Company will otherwise maintain compliance with this or any of the other Nasdaq continued listing requirements.