10-Q 1 awh-20240331.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 10-Q

 

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission File Number: 001-34810

 

 

Aspira Women’s Health Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

33-0595156

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

12117 Bee Caves Road, Building III, Suite 100, Austin, Texas

 

78738

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (512) 519-0400

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

AWH

The Nasdaq Capital Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☑

As of May 10, 2024, the registrant had 12,449,512 shares of common stock, par value $0.001 per share, outstanding.

 


 

ASPIRA WOMEN’S HEALTH INC.

 

FORM 10-Q

For the Quarter Ended March 31, 2024

Table of Contents

 

 

 

 

 

 

 

 

 

 

 

 

Page

PART I

Financial Information

1

Item 1

Financial Statements (unaudited)

1

 

Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023

1

 

Condensed Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023

2

 

Condensed Consolidated Statements of Changes in Stockholders’ (Deficit) Equity for the three months ended March 31, 2024 and 2023

3

 

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023

5

 

Notes to Condensed Consolidated Financial Statements

6

Item 2

Management's Discussion and Analysis of Financial Condition and Results of Operations

17

Item 3

Quantitative and Qualitative Disclosures About Market Risk

27

Item 4

Controls and Procedures

27

PART II

Other Information

29

Item 1

Legal Proceedings

29

Item 1A

Risk Factors

29

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

30

Item 3

Defaults Upon Senior Securities

30

Item 4

Mine Safety Disclosures

30

Item 5

Other Information

30

Item 6

Exhibits

31

SIGNATURES

32

 

The following are registered and unregistered trademarks and service marks of Aspira Women’s Health Inc.: VERMILLION SM, Aspira Women’s Health®, OVA1®, OVERA®, ASPiRA LABS ®, OvaCalc®, OVASUITESM, ASPiRA GenetiXSM, OVA1PLUS®, OVAWATCH®, EndoCheckSM, OVAInheritSM, Aspira Synergy®,, OVA360SM, ASPIRA IVDSM, and YOUR HEALTH, OUR PASSION®.

i


 

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Aspira Women’s Health Inc.

Condensed Consolidated Balance Sheets (unaudited)

(Amounts in Thousands, Except Share and Par Value Amounts)

 

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

3,413

 

 

$

2,597

 

Accounts receivable, net of reserves of $2 and $15, as of March 31, 2024 and December 31, 2023, respectively

 

 

1,531

 

 

 

1,459

 

Prepaid expenses and other current assets

 

 

942

 

 

 

997

 

Inventories

 

 

236

 

 

 

227

 

Total current assets

 

 

6,122

 

 

 

5,280

 

Property and equipment, net

 

 

131

 

 

 

165

 

Right-of-use assets

 

 

620

 

 

 

528

 

Restricted cash

 

 

260

 

 

 

258

 

Other assets

 

 

31

 

 

 

31

 

Total assets

 

$

7,164

 

 

$

6,262

 

Liabilities and Stockholders’ Deficit

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

1,643

 

 

$

1,261

 

Accrued liabilities

 

 

2,797

 

 

 

2,863

 

Current portion of long-term debt

 

 

249

 

 

 

166

 

Short-term debt

 

 

416

 

 

 

670

 

Current maturities of lease liabilities

 

 

188

 

 

 

159

 

Total current liabilities

 

 

5,293

 

 

 

5,119

 

Non-current liabilities:

 

 

 

 

 

 

Long-term debt

 

 

1,347

 

 

 

1,430

 

Non-current maturities of lease liabilities

 

 

487

 

 

 

427

 

Warrant liabilities

 

 

1,400

 

 

 

1,651

 

Total liabilities

 

 

8,527

 

 

 

8,627

 

Commitments and contingencies (Note 4)

 

 

 

 

 

 

Stockholders’ deficit:

 

 

 

 

 

 

Common stock, par value $0.001 per share, 200,000,000 and 150,000,000 shares authorized at March 31, 2024 and December 31, 2023, respectively; 12,344,104 and 10,645,049 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

 

 

12

 

 

 

11

 

Additional paid-in capital

 

 

521,557

 

 

 

515,927

 

Accumulated deficit

 

 

(522,932

)

 

 

(518,303

)

Total stockholders’ deficit

 

 

(1,363

)

 

 

(2,365

)

Total liabilities and stockholders’ deficit

 

$

7,164

 

 

$

6,262

 

 

 

 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

 

1


 

Aspira Women’s Health Inc.

Condensed Consolidated Statements of Operations (unaudited)

(Amounts in Thousands, Except Share and Per Share Amounts)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

Revenue:

 

 

 

 

 

 

Product

 

$

2,153

 

 

$

2,315

 

Genetics

 

 

 

 

 

1

 

Total revenue

 

 

2,153

 

 

 

2,316

 

Cost of revenue:

 

 

 

 

 

 

Product

 

 

939

 

 

 

1,130

 

Total cost of revenue

 

 

939

 

 

 

1,130

 

Gross profit

 

 

1,214

 

 

 

1,186

 

Operating expenses:

 

 

 

 

 

 

Research and development

 

 

906

 

 

 

1,267

 

Sales and marketing

 

 

1,889

 

 

 

2,595

 

General and administrative

 

 

3,129

 

 

 

3,604

 

Total operating expenses

 

 

5,924

 

 

 

7,466

 

Loss from operations

 

 

(4,710

)

 

 

(6,280

)

Other income (expense), net:

 

 

 

 

 

 

Change in fair value of warrant liabilities

 

 

251

 

 

 

(24

)

Interest (expense) income, net

 

 

(5

)

 

 

26

 

Other expense, net

 

 

(165

)

 

 

(300

)

Total other income (expense), net

 

 

81

 

 

 

(298

)

Net loss

 

$

(4,629

)

 

$

(6,578

)

Net loss per share - basic and diluted

 

$

(0.39

)

 

$

(0.79

)

Weighted average common shares used to compute basic and diluted net loss per common share

 

 

11,846,075

 

 

 

8,313,091

 

 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

2


 

Aspira Women’s Health Inc.

Condensed Consolidated Statements of Changes in Stockholders’ (Deficit) Equity (unaudited)

(Amounts in Thousands, Except Share Amounts)

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional Paid-In Capital

 

 

Accumulated Deficit

 

 

Total Stockholders’ Deficit

 

Balance at December 31, 2023

 

 

10,645,049

 

 

$

 

11

 

 

$

 

515,927

 

 

$

 

(518,303

)

 

$

 

(2,365

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,629

)

 

 

 

(4,629

)

Common stock issued under an equity line of credit agreement

 

 

111,369

 

 

 

 

 

 

 

 

400

 

 

 

 

 

 

 

 

400

 

Common stock issued under a registered direct offering, net of issuance costs

 

 

1,371,000

 

 

 

 

1

 

 

 

 

4,868

 

 

 

 

 

 

 

 

4,869

 

Warrant Exercise

 

 

200,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for vested restricted stock awards

 

 

16,686

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

362

 

 

 

 

 

 

 

 

362

 

Balance at March 31, 2024

 

 

12,344,104

 

 

$

 

12

 

 

$

 

521,557

 

 

$

 

(522,932

)

 

$

 

(1,363

)

 

 

3


 

Aspira Women’s Health Inc.

Condensed Consolidated Statements of Changes in Stockholders’ (Deficit) Equity (unaudited) (continued)

(Amounts in Thousands, Except Share Amounts)

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional Paid-In Capital

 

 

Accumulated Deficit

 

 

Total Stockholders’ Deficit

 

Balance at December 31, 2022

 

 

8,306,326

 

 

$

 

8

 

 

$

 

508,584

 

 

$

 

(501,613

)

 

$

 

6,979

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,578

)

 

 

 

(6,578

)

Common stock issued under an at the market offering agreement, net of issuance costs

 

 

23,217

 

 

 

 

 

 

 

 

30

 

 

 

 

 

 

 

 

30

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

396

 

 

 

 

 

 

 

 

396

 

Balance at March 31, 2023

 

 

8,329,543

 

 

$

 

8

 

 

$

 

509,010

 

 

$

 

(508,191

)

 

$

 

827

 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

4


 

Aspira Women’s Health Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)

(Amounts in Thousands)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(4,629

)

 

$

(6,578

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Non-cash lease expense

 

 

(3

)

 

 

1

 

Depreciation and amortization

 

 

29

 

 

 

70

 

Stock-based compensation expense

 

 

362

 

 

 

396

 

Change in fair value of warrant liabilities

 

 

(251

)

 

 

24

 

Loss on impairment and disposal of property and equipment

 

 

25

 

 

 

1

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(72

)

 

 

(309

)

Prepaid expenses and other assets

 

 

55

 

 

 

323

 

Inventories

 

 

(9

)

 

 

14

 

Accounts payable

 

 

382

 

 

 

(14

)

Accrued liabilities

 

 

(66

)

 

 

582

 

Other liabilities

 

 

(254

)

 

 

(216

)

Net cash used in operating activities

 

 

(4,431

)

 

 

(5,706

)

Cash flows from investing activities:

 

 

 

 

 

 

Purchase of property and equipment

 

 

(20

)

 

 

(8

)

Net cash used in investing activities

 

 

(20

)

 

 

(8

)

Cash flows from financing activities:

 

 

 

 

 

 

Principal repayment of DECD loan

 

 

 

 

 

(85

)

Proceeds from at the market offering

 

 

 

 

 

162

 

Payment of issuance costs for at the market offering

 

 

 

 

 

(132

)

Proceeds from equity line of credit

 

 

400

 

 

 

 

Proceeds from registered direct offering

 

 

5,563

 

 

 

 

Payment of issuance costs for registered direct offering

 

 

(694

)

 

 

 

Net cash provided by (used in) financing activities

 

 

5,269

 

 

 

(55

)

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

818

 

 

 

(5,769

)

Cash, cash equivalents and restricted cash, beginning of the period

 

 

2,855

 

 

 

13,557

 

Cash, cash equivalents and restricted cash, end of the period

 

$

3,673

 

 

$

7,788

 

Reconciliation to Consolidated Balance Sheet:

 

 

 

 

 

 

Cash and cash equivalents

 

$

3,413

 

 

$

7,535

 

Restricted cash

 

 

260

 

 

 

253

 

Unrestricted and restricted cash and cash equivalents

 

$

3,673

 

 

$

7,788

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Cash paid for interest

 

$

6

 

 

$

18

 

Supplemental disclosure of noncash investing and financing activities:

 

 

 

 

 

 

Net increase in right-of-use assets

 

$

169

 

 

$

 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

5


 

Aspira Women’s Health Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1.
ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING AND REPORTING POLICIES

Organization

Aspira Women’s Health 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) the Ova1Plus workflow, which uses Ova1 as the primary test and Overa as a reflex for Ova1 intermediate range results. Ova1 is a qualitative serum 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. Overa is a second-generation biomarker test intended to maintain Ova1’s high sensitivity while improving specificity. The Ova1 workflow leverages the strengths of Ova1’s (MIA) sensitivity and Overa’s (MIAG2G) specificity to reduce incorrectly elevated results; and

(2) OvaWatch, a Laboratory Developed Test (“LDT”) intended in the clinical assessment of malignancy risk in all women thought to have an indeterminate or benign adnexal mass.

Collectively, these tests are referred to and marketed as OvaSuite.

For the three months ended March 31, 2024 and 2023, the Company’s product and related revenue was limited to the products described above, as well as residual revenue from Aspira GenetiX, which was discontinued in the third quarter of 2022. The Company’s products are distributed through its own national sales force, including field sales, inside sales and a contracted sales team, through its proprietary decentralized testing platform and cloud service marketed as Aspira Synergy, and through marketing and distribution agreements with BioReference Health, LLC and ARUP Laboratories.

Overa is currently not offered commercially except as a reflex test performed as part of the Ova1Plus workflow.

Going Concern and Liquidity

As of March 31, 2024, the Company had approximately $3,413,000 of cash and cash equivalents (excluding restricted cash of $260,000), an accumulated deficit of approximately $522,932,000, and working capital of approximately $829,000. For the three months ended March 31, 2024, the Company incurred a net loss of $4,629,000, and used cash in operations of $4,431,000. The Company has incurred significant net losses and negative cash flows from operations since inception. The Company also expects to continue to incur a net loss and negative cash flows from operations for the remainder of 2024. In order to fund operations, meet its capital requirements or satisfy the anticipated obligations as they become due, the Company expects to take further action to protect its liquidity position, which include, but are not limited to:

Raising capital through equity or debt offerings either in the public markets or via private placement offering, to the extent that the Company raises additional funds by issuing equity securities, the Company’s stockholders may experience significant dilution. However, no assurance can be given that capital will be available on acceptable terms, or at all;
Securing debt, however, no assurance can be given that debt will be available on acceptable terms or at all;
Reducing executive bonuses or replacing cash compensation with equity grants;
Reducing professional services and consulting fees and eliminating non-critical projects;
Reducing travel and entertainment expenses; and
Reducing eliminating or deferring discretionary marketing programs.

The Company also has outstanding warrants to purchase shares of its common stock that may be exercised although there can be no assurance that the warrants will be exercised.

There can be no assurance that the Company will achieve or sustain profitability or positive cash flow from operations. Management expects cash from product sales and licensing to be the Company’s only material, recurring source of cash in 2024. Given the above conditions, there is substantial doubt about the Company’s ability to continue as a going concern within one year after the date these consolidated interim financial statements are filed. The unaudited condensed consolidated financial statements have been prepared on a going concern basis and do not include any adjustments that might result from these uncertainties.

 

6


 

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 unaudited condensed consolidated financial statements have read or have access to the audited consolidated financial statements for the preceding fiscal year. The consolidated balance sheet at December 31, 2023 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, 2023 included in the Company’s Annual Report on Form 10-K, filed with the SEC on April 1, 2024.

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 – OvaSuite: The Company recognizes product revenue in accordance with the provisions of Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). Product revenue is recognized upon completion of the OvaSuite 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 March 31, 2024, there were $8,000 of 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 three months ended March 31, 2024.

The Company has discontinued providing Aspira GenetiX, including genetics carrier screening, on the Aspira Synergy platform, effective September 30, 2022.

Accounts Receivable: Virtually all accounts receivable are derived from sales made to customers located in North America. The Company grants credit to customers in the normal course of business and the resulting trade receivables are stated at their net realizable value. The Company maintains an allowance for credit losses based upon the expected collectability of accounts receivable, including the historical collection cycle. Amounts are written off against the allowances for credit losses when the Company determines that a customer account is not collectable. The Company believes its exposure to concentrations of credit risk is limited due to the diversity of its payer base.

Warrants: 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. Warrants that meet all of the criteria for equity classification are recorded as a component of additional paid-in capital at the time of issuance and are not remeasured. Warrants that do not meet the required criteria for equity classification are classified as liabilities. The Company adjusts such warrants to fair value at each reporting period until the warrants are exercised or expire. Any change in fair value is recognized in the Company’s statement of operations.

 

 

7


 

Recent Accounting Pronouncements

In August 2020, the FASB issued ASU 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 is scheduled to be effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The Company adopted the new standard on January 1, 2024. The adoption of this standard did not have a material impact on its consolidated results of operations, financial position, or cash flows.

In June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”) to clarify guidance in Topic 820 on the fair value measurement of an equity security that is subject to a contractual sale restriction and also requires specific disclosures related to an equity security. ASU 2022-03 is scheduled to be effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. Early adoption is permitted. The Company does not expect a material impact as a result of this standard on its results of operations, financial position, or cash flows.

In October 2023, the FASB issued ASU No. 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative (“ASU 2023-06”). The amendments in this ASU are expected to clarify or improve disclosure and presentation requirements of a variety of ASC topics by aligning them with the SEC’s regulations. ASU 2023-06 will become effective for each amendment on the effective date of the SEC's corresponding disclosure rule changes. The Company does not expect ASU 2023-06 will have a material impact on its results of operations, financial position, or cash flows.

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”) to update reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance. This ASU requires disclosure of significant segment expenses that are regularly provided to the Company’s Chief Operating Decision Maker (“CODM”) and included within the reported measure of a segment’s profit or loss, requires interim disclosures about a reportable segment’s profit or loss and assets that are currently required annually, requires disclosure of the position and title of the CODM, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, and contains other disclosure requirements. ASU 2023-07 is scheduled to be effective for fiscal years beginning after December 15, 2023 and interim periods beginning after December 15, 2024. The adoption of this standard is not expected to have a material impact on its consolidated results of operations, financial position, or cash flows.

 

2.
FAIR VALUE MEASUREMENTS

Fair Value of Financial Instruments

Financial instruments of the Company consist primarily of cash and cash equivalents, restricted cash accounts, receivable, and accounts payable, and warrant liability. These items are considered Level 1 due to their short-term nature and their market interest rates. Warrant liability is considered Level 2 and is recorded at fair value at the end of each reporting period. Debt is considered Level 3, which the Company does not record at fair value.

 

The Company records warrants in connection with a public offering in 2022 (the “2022 Warrants”) as a liability. As discussed in Note 6 to the unaudited condensed consolidated financial statements, in connection with a registered direct offering in 2024, the Company amended certain of the 2022 Warrants to purchase up to an aggregate of 366,664 shares (the “Modified Warrants”). The terms of the remaining 433,321 of the 2022 Warrants were unchanged (the “Unmodified Warrants”).

The fair values of the Warrants as of March 31, 2024 and December 31, 2023 were approximately $1,400,000 and $1,651,000, respectively. The fair value of the 2022 Warrants was estimated using Black-Scholes pricing model based on the following assumptions:

 

 

March 31, 2024

 

December 31, 2023

 

Unmodified
Warrants

 

Modified
Warrants

 

 

 

 

 

 

Dividend yield

 

 

%

 

 

 

%

 

 

 

%

Volatility

 

104.9

 

%

 

 

101.7

 

%

 

 

105.1

 

%

Risk-free interest rate

 

4.31

 

%

 

 

4.21

 

%

 

 

3.93

 

%

Expected lives (years)

 

3.39

 

 

 

 

4.83

 

 

 

 

3.64

 

 

Weighted average fair value

$

1.329

 

 

 

$

2.247

 

 

 

$

2.064

 

 

 

The 2022 Warrants were deemed to be derivative instruments due to certain contingent put features. The fair value of the 2022 Warrants was determined using the Black-Scholes option pricing model, deemed to be an appropriate model due to the terms of the 2022 Warrants issued, including a fixed term and exercise price.

 

8


 

The fair value of the 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. The 2022 Warrants are classified as a long-term liability on the Company’s balance sheet.

The carrying value of the Company’s insurance promissory note approximates fair value as of March 31, 2024 and December 31, 2023, due to the short-term nature of the insurance note and is classified as Level 2 within the fair value hierarchy.

The DECD loan is classified within Level 3 of the fair value hierarchy. The following table presents the carrying value and fair value of the DECD loan. The fair value of the DECD loan is estimated based on discounted cash flows using the prevailing market interest rates.

 

 

 

 

March 31,

 

 

December 31,

 

 

 

 

2024

 

 

2023

 

(in thousands)

Fair Value Hierarchy

 

Carrying Value

 

 

Fair Value

 

 

Carrying Value

 

 

Fair Value

 

DECD loan

Level 3

 

$

1,604

 

 

$

1,287

 

 

$

1,604

 

 

$

1,255

 

 

3.
PREPAID AND OTHER CURRENT ASSETS

Prepaid and other current assets at March 31, 2024 and December 31, 2023 consist of the following:

 

 

 

March 31,

 

 

December 31,

 

(in thousands)

 

2024

 

 

2023

 

Prepaid insurance

 

$

479

 

 

$

684

 

Software licenses

 

 

173

 

 

 

103

 

Subscriptions

 

 

128

 

 

 

26

 

Other

 

 

162

 

 

 

184

 

Total prepaid and other current assets

 

$

942

 

 

$

997

 

 

4.
COMMITMENTS AND CONTINGENCIES

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 January 1, 2032. 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 was eligible for forgiveness of up to $1,500,000 of the principal amount of the loan if it was able to achieve certain job creation and retention milestones by December 31, 2022. On June 26, 2023, the Company was notified by the DECD that the Company satisfied all job creation and retention requirements under the loan agreement to receive forgiveness of $1,000,000. During the year ended December 31, 2023, the Company recorded the $1,000,000 as other income in the statement of operations. If the Company fails to maintain its Connecticut operations through March 22, 2026, the DECD may require early repayment of a portion or all of the remaining amount of the loan plus a penalty of 5% of the total funded loan.

On June 6, 2023, the Company was granted a deferral of interest and principal payments on a portion of the remaining outstanding balances through December 1, 2023. On January 30, 2024, the Company was granted an additional deferral of interest and principal payments on a portion of the remaining outstanding balances through June 1, 2024. The Company determined the loan deferrals met the definition of a troubled debt restructuring under ASC 470-60, Troubled Debt Restructurings by Debtors, as the Company was experiencing financial difficulties and the lenders granted a concession. The future undiscounted cash flows of the DECD loan after the loan deferrals exceeded the carrying value of the DECD loan prior to the loan deferrals. As such no gain was recognized as a result of the deferrals.

 

9


 

Long-term debt consisted of the following:

 

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

(in thousands)

 

 

 

 

 

 

DECD loan, net of issuance costs

 

$

1,596

 

 

$

1,596

 

Less: Current portion, net of issuance costs

 

 

(249

)

 

 

(166

)

Total long-term debt, net of issuance costs

 

$

1,347

 

 

$

1,430

 

 

As of March 31, 2024, 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 $8,000 for both the three months ended March 31, 2024 and December 31, 2023, respectively.

 

 

 

Payments Due by Period

 

(in thousands)

 

Total

 

 

2024

 

 

2025

 

 

2026

 

 

2027

 

 

2028

 

 

Thereafter

 

DECD Loan

 

$

1,604

 

 

$

170

 

 

$

335

 

 

$

342

 

 

$

215

 

 

$

129

 

 

$

413

 

Total

 

$

1,604

 

 

$

170

 

 

$

335

 

 

$

342

 

 

$

215

 

 

$

129

 

 

$

413

 

 

Insurance Notes

During 2023, the Company entered into an insurance promissory note for the payment of insurance premiums at an interest rate of 7.79%, with an aggregate principal amount outstanding of approximately $416,000 and $670,000 as of March 31, 2024 and December 31, 2023, respectively. Interest paid for the promissory note was $6,000 for each of the quarters ended March 31, 2024 and 2023. The amount outstanding in 2024 could be substantially offset by the cancellation of the related insurance coverage which is classified in prepaid insurance. This note is payable in nine monthly installments with a maturity date of October 1, 2024 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 administrative offices are located in Trumbull, Connecticut and Palo Alto, California.

In October 2015, the Company entered into a lease agreement for a facility in Trumbull, Connecticut, which was renewed in September 2020. In May 2023, the Company entered into an agreement with the owner of its Trumbull, Connecticut offices to move to a more economical location in Shelton, Connecticut and replacing the Trumbull, Connecticut office lease. The new lease term is for five years, and its commencement date was October 1, 2023. Beginning on October 1, 2023, the fixed lease payment was reduced from approximately $8,900 per month to $5,000 per month for the first year, and to $5,383 per month for years two through four and $5,768 per month for the fifth year. Continuation of the lease would be on a month-to-month basis.

In January 2023, the Company entered into a new sublease agreement for an administrative facility in Palo Alto, California. The Company’s sublease term commenced in April 2023 and terminates on May 31, 2024, with no option for renewal with the sublessor. The fixed lease payment was initially approximately $9,000 per month and increased to approximately $10,000 per month beginning in January 2024.

In July 2023, the Company extended the Austin, Texas lease for an additional 37 months. The Company’s renewed lease expires on February 28, 2027, with the option to extend the lease for an additional three years. Prior to the renewal, the Company’s Texas lease had a term of 12 months, and the Company has elected the policy of not recording leases on the balance sheet when the leases have terms of 12 months or less. Through June 30, 2023, the Company recognized 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. Variable lease costs represent the Company’s share of the landlord’s operating expenses. Beginning in the third quarter of 2023, the Company added the extended Austin, Texas lease to its balance sheet as a right-of-use asset. Beginning February 1, 2024, the fixed lease payment were reduced from approximately $9,490 per month to approximately $7,100 per month for the first year (except for August 2024, which will be $0), and will be approximately $8,600 per month for the second year, approximately $8,900 per month for the third year and approximately $9,100 for the final month. The Company is not reasonably certain that it will exercise the three-year renewal option beginning on March 1, 2027.

 

10


 

Effective October 31, 2023, the Company entered into a new lease agreement for freezer storage for its samples. The lease term is for 36 months with a twelve-month automatic renewal provision. The company leases 6 freezers at a total of $5,200 per month. The Company added the lease to its balance sheet as a right-of-use asset in the first quarter of 2024.

The expense associated with these operating leases for the three months ended March 31, 2024 and 2023 is shown in the table below (in thousands).

 

 

 

 

Three Months Ended
March 31,

 

Lease Cost

 

Classification

 

2024

 

 

2023

 

Operating rent expense

 

 

 

 

 

 

 

 

 

Cost of revenue

 

$

41

 

 

$

24

 

 

Research and development

 

 

17

 

 

 

6

 

 

Sales and marketing

 

 

1

 

 

 

2

 

 

General and administrative

 

 

10

 

 

 

21

 

Variable rent expense

 

 

 

 

 

 

 

 

 

Cost of revenue

 

 

5

 

 

 

15

 

 

Research and development

 

 

-

 

 

 

3

 

 

Sales and marketing

 

 

2

 

 

 

2

 

 

General and administrative

 

 

9

 

 

 

21

 

 

Based on the Company’s leases as of March 31, 2024, the table below sets forth the approximate future lease payments related to operating leases with initial terms of one year or more (in thousands).

 

Year

 

Payments

 

2024

 

$

172

 

2025

 

 

229

 

2026

 

 

223

 

2027

 

 

84

 

2028

 

 

52

 

Total Operating Lease Payments

 

 

760

 

Less: Imputed Interest

 

 

(85

)

Present Value of Lease Liabilities

 

 

675

 

Less: Operating Lease Liability, current portion

 

 

(188

)

Operating Lease Liability, non-current portion

 

$

487

 

 

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

 

 

 

 

 

Three Months Ended March 31,

 

 

 

 

 

2024

 

 

2023

 

Cash paid for amounts included in measurement of lease liabilities:

 

 

 

 

 

 

Operating cash outflows relating to operating leases

 

$

117

 

 

$

111

 

Weighted-average remaining lease term (in years)

 

 

3.3

 

 

 

3.2

 

Weighted-average discount rate

 

 

7.28

%

 

 

9.29

%

 

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 March 31, 2024 and 2023 totaled $72,000 and $90,000, respectively, and are recorded in cost of revenue in the unaudited condensed consolidated statements of operations.

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 (the “Dana-Farber, Brigham, Lodz Research Agreement”), for the

 

11


 

generation of a multi-omic, non-invasive diagnostic aid to identify endometriosis based on circulating microRNAs and proteins. The Dana-Farber, Brigham, Lodz Research Agreement requires payments to be made upon the achievement of certain milestones. Under the terms of and as further described in the Dana-Farber, Brigham, Lodz Research Agreement, payments of approximately $1,252,000 have or will become due from the Company to the counterparties upon successful completion of certain deliverables as follows: 68% was paid in 2022, 15% was paid in 2023, and the remaining 17% will become payable upon completion of certain deliverables estimated to occur in the first half of 2024. During the three months ended March 31, 2024 and 2023, approximately $34,000 and $23,000 has been recorded, respectively, as research and development expense in the unaudited condensed consolidated financial statement of operations for the project. From the inception of the Dana-Farber, Brigham, Lodz Research Agreement through March 31, 2024, research and development expenses in the cumulative amount of $1,117,000 have been recorded.

On March 20, 2023, the Company entered into a licensing agreement (“Dana-Farber, Brigham, Lodz License Agreement”) with Harvard’s Dana-Farber Cancer Institute, Brigham & Women’s Hospital, and Medical University of Lodz under which the Company will license certain of its intellectual property to be used in the Company’s OvaSuite product portfolio. Under the Dana-Farber, Brigham, Lodz License Agreement, the Company paid an initial license fee of $75,000 and pays an annual license maintenance fee of $50,000 on each anniversary of the date of the Dana-Farber, Brigham, Lodz License Agreement. The Company recorded $50,000 in annual license maintenance fees over the twelve month period ended March 20, 2024. The Dana-Farber, Brigham, Lodz License Agreement also requires non-refundable royalty payments of up to $1,350,000 based on certain regulatory approvals and commercialization milestones and further royalty payments based on the net sales of the Company’s products included under the Dana-Farber, Brigham, Lodz License Agreement. No milestones have been reached as of March 31, 2024.

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.

5.
ACCRUED LIABILITIES

The following table describes the principal components of accrued liabilities on the Company’s unaudited condensed consolidated balance sheet as of March 31, 2024 and December 31, 2023.

 

 

 

March 31,

 

 

December 31,

 

(in thousands)

 

2024

 

 

2023

 

Payroll and benefits related expenses

 

$

1,328

 

 

$

1,189

 

Collaboration and research agreements expenses

 

 

99

 

 

 

217

 

Professional services

 

 

911

 

 

 

951

 

Other accrued liabilities

 

 

459

 

 

 

506

 

Total accrued liabilities

 

$

2,797

 

 

$

2,863

 

 

6.
STOCKHOLDERS’ DEFICIT

2024 Registered Direct Offering

On January 24, 2024, the Company entered into a securities purchase agreement (the “2024 Direct Offering Agreement”), with several investors relating to the issuance and sale of 1,371,000 shares of its common stock, par value $0.001 per share, and pre-funded warrants to purchase 200,000 shares of Common Stock (the “Pre-Funded Warrants”), in a registered direct offering, together with accompanying warrants to purchase 1,571,000 shares of Common Stock (the “Purchase Warrants”, and together with the Pre-Funded Warrants, the “Warrants”) in a concurrent private placement (the “Concurrent Private Offering” and together with the registered direct offering, the “2024 Direct Offering”).

Pursuant to the 2024 Direct Offering Agreement, the Company issued 1,368,600 shares of common stock to certain investors at an offering price of $3.50 per share, and 2,400 shares of common stock to its Chief Executive Officer, Nicole Sandford, at an offering price of $4.2555 per share, which was the consolidated closing bid price of the Company’s common stock on The Nasdaq Capital Market on January 24, 2024 of $4.13 per share plus $0.125 per Purchase Warrant. The purchase price of each Pre-Funded Warrant is equal to the combined purchase price at which a share of Common Stock and the accompanying Purchase Warrant is sold in this 2024 Direct Offering, minus $0.0001. The gross proceeds to the Company from the 2024 Direct Offering were approximately $5,563,000, before deducting placement agent fees and other estimated expenses of $694,000 payable by the Company. The 2024 Direct Offering closed on January 26, 2024.

 

12


 

The Pre-Funded Warrants were exercisable at any time after the date of issuance and had an exercise price of $0.0001 per share. A holder of Pre-Funded Warrants could not exercise the warrant if the holder, together with its affiliates, would beneficially own more than 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to such exercise. A holder of Pre-Funded Warrants may increase or decrease this percentage to a percentage not in excess of 9.99% by providing at least 61 days’ prior notice to the Company. All of the Pre-Funded Warrants were exercised on February 6, 2024 for gross proceeds of $20.

The Purchase Warrants have an exercise price of $4.13 per share and will be exercisable beginning six months after issuance and will expire 5 years from the initial exercise date.

The Company engaged AGP to act as sole placement agent in the 2024 Direct Offering. The Company paid the placement agent a cash fee equal to 7.0% of the aggregate gross proceeds generated from the 2024 Direct Offering, except that, with respect to proceeds raised in this 2024 Direct Offering from certain designated persons, AGP’s cash fee is reduced to 3.5% of such proceeds, and to reimburse certain fees and expenses of the placement agent in connection with the 2024 Direct Offering. The Company also reimbursed the placement agent for its accountable offering-related legal expenses of $75,000 and a non-accountable expense allowance of $30,000. Costs related to the 2024 Direct Offering were recorded as an offset to additional paid-in capital on the Company's balance sheet as of March 31, 2024.

The Company evaluated the Pre-Funded Warrants and the Purchase Warrants and concluded that they met the criteria to be classified as equity within additional paid-in-capital.

The Pre-Funded Warrants are equity classified because they (1) are freestanding financial instruments that are legally detachable and separately exercisable from the common stock, (2) are immediately exercisable, (3) do not embody an obligation for the Company to repurchase its shares, (4) permit the holder to receive a fixed number of shares of common stock upon exercise, (5) are indexed to the Company's common stock and (6) meet the equity classification criteria.

The Purchase Warrants are equity classified because they (1) are freestanding financial instruments that are legally detachable and separately exercisable from the common stock, (2) do not embody an obligation for the Company to repurchase its shares, (3) permit the holder to receive a fixed number of shares of common stock upon exercise, (4) are indexed to the Company's common stock and (5) meet the equity classification criteria.

Effective upon the closing of the 2024 Direct Offering, the Company also amended certain existing warrants (the “2022 Warrants”), see Note 7 in our Annual Report on Form 10-K for the fiscal year-ended December 31, 2023, to purchase up to an aggregate of 366,664 shares at an exercise price of $13.20 per share and a termination date of August 25, 2027, so that the amended 2022 Warrants have a reduced exercise price of $4.13 per share and a new termination date of January 26, 2029. The other terms of the amended 2022 Warrants remain unchanged. The Company performed an analysis of the fair value of the 2022 Warrants immediately before and after the modification and the increase in fair value of the 2022 Warrants of $490 thousand was recorded as a change in fair value of warrant liabilities in the unaudited condensed statement of operations.

Approximately $106,000 of the costs related to the 2024 Direct Offering were allocated to the 2022 Warrants and were recorded as other expense in the unaudited condensed statement of operations.

2023 Registered Direct Offering

On July 20, 2023, the Company entered into a securities purchase agreement (the “Direct Offering Agreement”), with several investors relating to the issuance and sale of 1,694,820 shares of its common stock, par value $0.001 per share (the “Direct Offering”).

Pursuant to the Direct Offering Agreement, the Company issued 1,650,473 shares of common stock to certain investors at an offering price of $2.75 per share, and 44,347 shares of common stock to its directors and executive officers at an offering price of $3.98 per share, which was the consolidated closing bid price of the Company’s common stock on The Nasdaq Capital Market on July 19, 2023. The aggregate gross proceeds to the Company from the Direct Offering were approximately $4.7 million, before deducting placement agent fees and other estimated expenses of $597,000 payable by the Company.

The Company engaged Alliance Global Partners to act as sole placement agent in the Direct Offering. The Company paid the placement agent a cash fee equal to 7.0% of the aggregate gross proceeds generated from the Direct Offering, except that, with respect to proceeds from the sale of 182,447 shares of common stock to certain investors, including directors and executive officers of the Company, the placement agent’s cash fee was 3.5%. The Company also reimbursed the placement agent for its accountable offering-related legal expenses of $75,000 and a non-accountable expense allowance of $30,000.

2023 At the Market Offering

On February 10, 2023, the Company entered into a Controlled Equity Offering Sales Agreement, (the “Cantor Sales Agreement”), with Cantor Fitzgerald & Co., (“Cantor”), as agent, pursuant to which it may offer and sell, from time to time, through Cantor, shares of the Company’s common stock, par value $0.001 per share, having an aggregate offering price of up to $12.5 million, (the “Placement Shares”). The Placement Shares were issued and sold pursuant to the Company’s effective registration statement on

 

13


 

Form S-3 (Registration Statement No. 333-252267), as previously filed with, and declared effective by, the SEC. The Company filed a prospectus supplement, dated February 10, 2023, with the SEC in connection with the offer and sale of the Placement Shares.

In connection with the Direct Offering on July 24, 2023, the Company delivered written notice to Cantor on July 19, 2023 that it was suspending the prospectus supplement, dated February 10, 2023, related to the Company’s common stock issuable under the Cantor Sales Agreement. The Company will not make any sales of common stock pursuant to the Cantor Sales Agreement unless and until a new prospectus supplement is filed with the SEC. The Cantor Sales Agreement remains in full force and effect during the suspension.

During the three months ended March 31, 2024, the Company sold 0 Placement Shares and recorded no transaction related offering costs. Over the life of the Cantor Sales Agreement, the Company sold 35,552 shares of the Placement Shares for gross proceeds of approximately $211,000. The Company has recorded $134,000 as an offset to additional paid-in capital representing transaction-related offering costs of the Placement Shares over the life of the Cantor Sales Agreement.

2023 Equity Line of Credit

On March 28, 2023, the Company entered into a purchase agreement (the “LPC Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”) and a registration rights agreement (the “LPC Registration Rights Agreement”), pursuant to which the Company has the right, in its sole discretion, to sell to Lincoln Park shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), having an aggregate value of up to $10,000,000 (the “Purchase Shares”), subject to certain limitations and conditions set forth in the LPC Purchase Agreement. The Company will control the timing and amount of any sales of Purchase Shares to Lincoln Park pursuant to the LPC Purchase Agreement.

Under the LPC Purchase Agreement, on any business day after March 28, 2023 selected by the Company over the 36-month term of the LPC Purchase Agreement (each, a “Purchase Date”), the Company may direct Lincoln Park to purchase up to 6,667 shares of Common Stock on such Purchase Date (a “Regular Purchase”); provided, however, that (i) a Regular Purchase may be increased to up to 13,333 shares, if the closing sale price per share of the Common Stock on The Nasdaq Capital Market is not below $7.50 on the applicable Purchase Date; (ii) a Regular Purchase may be increased to up to 16,666 shares, if the closing sale price per share of the Common Stock on The Nasdaq Capital Market is not below $11.25 on the applicable Purchase Date; and (iii) a Regular Purchase may be increased to up to 20,000 shares, if the closing sale price per share of the Common Stock on The Nasdaq Capital Market is not below $15.00 on the applicable Purchase Date. In any case, Lincoln Park’s maximum obligation under any single Regular Purchase will not exceed $1,000,000. The above-referenced share amount limitations and closing sale price thresholds are subject to adjustment for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction as provided in the LPC Purchase Agreement. The purchase price per share for each such Regular Purchase will be equal to the lesser of:

1.
the lowest sale price for the Common Stock on The Nasdaq Capital Market on the date of sale; and
2.
the average of the three lowest closing sale prices for the Common Stock on The Nasdaq Capital Market during the 10 consecutive business days ending on the business day immediately preceding the purchase date.

The Company also has the right to direct Lincoln Park, on any business day on which the Company has properly submitted a Regular Purchase notice for the maximum amount the Company is then permitted to sell to Lincoln Park in such Regular Purchase, to purchase an additional amount of the Common Stock (an “Accelerated Purchase”) of additional shares based on criteria established in the LPC Purchase Agreement. An Accelerated Purchase, which is at the Company’s sole discretion, may be subject to additional requirements and discounts if certain conditions are met as defined in the LPC Purchase Agreement.

The issuance of the Purchase Shares had been previously registered pursuant to the Company’s effective shelf registration statement on Form S-3 (File No. 333-252267) (the “Old Registration Statement”), and the related base prospectus included in the Registration Statement, as supplemented by a prospectus supplement filed on March 28, 2023, that has expired. On April 22, 2024, the Company has filed a registration statement on Form S-3 (File No. 333-278867) (the “Registration Statement”), and the related base prospectus included in the Registration Statement, that was declared effective by the SEC on April 25, 2024.

The Company sold 472,312 shares of Common Stock under the LPC Purchase Agreement for gross proceeds of approximately $1,578,000 under the Old Registration Statement. In addition, 47,733 shares of Common Stock were issued to Lincoln Park as consideration for entering into the LPC Purchase Agreement. As of April 25, 2024, up to $8,422,000 of shares of Common Stock could be sold to Lincoln Park under the LPC Purchase Agreement, subject to the terms of the LPC Purchase Agreement.

During the three months ended March 31, 2024, the Company sold 111,369 shares under the LPC Purchase Agreement for gross proceeds of approximately $400,000. Over the life of the LPC Purchase Agreement through March 31, 2024, the Company sold 472,312 shares for gross proceeds of approximately $1,578,000. The Company incurred approximately $326,000 of costs related to the execution of the LPC Purchase Agreement, all of which are reflected in the unaudited condensed consolidated financial statements. Of the total costs incurred, approximately $258,000 was paid in common stock to Lincoln Park for a commitment fee and $30,000 was accrued for Lincoln Park expenses. These transaction costs were included in other expense in the statement of operations for the year ended December 31, 2023. Approximately $38,000 was incurred for legal fees during the year ended December 31, 2023, and were included in general and administrative expenses on the statement of operations. During the three months ended March 31, 2024 and 2023, the Company paid legal fees of $40,000 and none, respectively.

 

14


 

Subsequent to March 31, 2024, the Company sold 100,408 shares under the LPC Purchase Agreement for gross proceeds of approximately $300,000, as of May 10, 2024.

2010 Stock Incentive Plan

The Company’s employees, directors, and consultants were eligible to receive awards under the Vermillion, Inc. Second Amended and Restated 2010 Stock Incentive Plan (the “2010 Plan”), which was replaced by the 2019 Plan (as defined below) with respect to future equity grants. As of March 31, 2024, there were no shares of the Company’s common stock available for future grants under the 2010 Plan.

The following table summarizes stock option activity for the 2010 Plan during the three months ended March 31, 2024.

 

Options outstanding at December 31, 2023

 

 

245,154

 

Options forfeited or expired

 

 

(33,965

)

Options outstanding at March 31, 2024

 

 

211,189

 

 

 

The weighted average exercise price of outstanding options under the 2010 Plan was $24.05 and the weighted average remaining life was 0.70 years.

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 699,485. On May 9, 2023, the Company’s stockholders approved an increase of 333,333 shares to the number of shares available for issuance under the 2019 Plan. On May 13, 2024, the Company’s stockholders approved an increase of 1,000,000 shares in the number of shares available for issuance under the 2019 Plan for a total of 2,032,818 shares. 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 March 31, 2024, 614,087 shares of Aspira common stock were subject to outstanding stock options, and 42,777 shares of Aspira common stock were subject to unreleased restricted stock awards and a total of 66,542 shares of Aspira common stock were reserved for future issuance under the 2019 Plan.

The following table summarizes stock option activity for the 2019 Plan during the three months ended March 31, 2024.

 

Options outstanding at December 31, 2023

 

 

514,768

 

Options granted

 

 

140,124

 

Options forfeited or expired

 

 

(40,805

)

Options outstanding at March 31, 2024

 

 

614,087

 

 

The weighted average exercise price of outstanding options under the 2019 Plan was $11.77 and the weighted average remaining life was 1.92 years.

The following table summarizes RSU activity for the 2019 Plan during the three months ended March 31, 2024.

 

Options outstanding at December 31, 2023

 

 

59,463

 

RSUs vested and issued

 

 

(16,686

)

Options outstanding at March 31, 2024

 

 

42,777

 

 

 

 

 

RSUs vested and unissued at March 31, 2024

 

 

22,777

 

 

Stock-Based Compensation

 

15


 

During the three months ended March 31, 2024, the Company granted option awards under the 2019 Plan with a weighted average grant date fair value of $2.97 and a weighted average exercise price of $4.77.

Assumptions included in the fair value per share calculations were (i) expected terms of two to three years, (ii) two- to three-year treasury interest rates of 4.33% to 4.56% and (iii) market close prices ranging from $4.00 to $4.87. The Company recorded $12,000 in forfeitures for the three months ended March 31, 2024.

The allocation of non-cash stock-based compensation expense by functional area for the three months ended March 31, 2024 and 2023 was as follows.

 

 

 

Three Months Ended

 

 

 

March 31,

 

(in thousands)

 

2024

 

 

2023

 

Cost of revenue

 

$

18

 

 

$

17

 

Research and development

 

 

66

 

 

 

103

 

Sales and marketing

 

 

25

 

 

 

(15

)

General and administrative

 

 

253

 

 

 

291

 

Total

 

$

362

 

 

$

396

 

 

 

As of March 31,2024, total unrecognized compensation cost related to unvested stock option awards was approximately $696,000, and the related weighted average period over which it is expected to be recognized was 1.92 years. As of March 31,2024, there was $52,000 in unrecognized compensation costs related to restricted stock units, and the related weighted average period over which it is expected to be recognized is 0.25 years.

 

7.
LOSS PER SHARE

The 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 3,239,038 potential shares of Aspira common stock for the three months ended March 31, 2024 and 1,583,982 potential shares of Aspira common stock for the three months ended March 31, 2023, inclusive of 2,370,985 and 799,985 shares of Aspira common stock issuable upon the exercise of the warrants outstanding as of March 31, 2024 and 2023, respectively. 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.

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

Numerator:

 

 

 

 

 

 

Net Loss

 

$

(4,629

)

 

$

(6,578

)

Denominator:

 

 

 

 

 

 

Shares used in computing net loss per share, basic and diluted

 

 

11,846,075

 

 

 

8,313,091

 

Net loss per share, basic and diluted

 

$

(0.39

)

 

$

(0.79

)

 

 

 

16


 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995.

These statements involve a number of risks and uncertainties. Words such as “may,” “expects,” “intends,” “anticipates,” “believes,” “estimates,” “plans,” “seeks,” “could,” “should,” “continue,” “will,” “potential,” “targeted,” “projects,” “aim” and similar expressions are intended to identify such forward-looking statements. Readers are cautioned that these forward-looking statements speak only as of the date on which this Quarterly Report on Form 10-Q is filed with the Securities and Exchange Commission (the “SEC”), and, except as required by law, Aspira Women’s Health Inc. (“Aspira” and, together with its subsidiaries, the “Company,” “we,” “our,” or “us”) does not assume any obligation to update, amend or clarify them to reflect events, new information or circumstances occurring after such date.

Examples of forward-looking statements include, without limitation:

projections or expectations regarding our future test volumes, revenue, price, cost of revenue, operating expenses, research and development expenses, gross profit margin, cash flow, results of operations and financial condition;
the ability to maintain the listing of our common stock and public warrants on the Nasdaq Capital Market;
our plan to broaden our commercial focus from ovarian cancer to differential diagnosis of women with a range of gynecological diseases, including additional pelvic disease conditions such as endometriosis, adenomyosis fibroids and benign pelvic mass monitoring;
our planned business strategy and the anticipated effects thereof, including partnerships such as those based on our Aspira Synergy platform, specimen or research collaborations, licensing arrangements and distribution agreements;
plans to expand our current or future products to markets outside of the United States;
plans to develop new algorithms, molecular diagnostic tests, products and tools and otherwise expand our product offerings;
plans to develop, launch and establish payer coverage and secure contracts for current and new products, including EndoCheck, EndoMDx and OvaMDx;
expectations regarding local and/or national coverage under Novitas, our Medicare Administrative Carrier;
anticipated efficacy of our products, product development activities and product innovations, including our ability to improve sensitivity and specificity over traditional diagnostics;
expected competition in the markets in which we operate;
plans with respect to Aspira Labs, Inc. (“Aspira Labs”), including plans to expand or consolidate Aspira Labs’ testing capabilities, specifically molecular lab capabilities;
expectations regarding continuing future services provided by Quest Diagnostics Incorporated;
expectations regarding continuing future services provided by BioReference Health, LLC;
plans to develop informatics products as laboratory developed tests (“LDTs”) and potential Food and Drug Administration (“FDA”) oversight changes of LDTs;
expectations regarding existing and future collaborations and partnerships for our products, including plans to enter into decentralized arrangements for our Aspira Synergy platform and to provide and expand access to our risk assessment tests;
plans regarding future publications and presentations;
expectations regarding potential collaborations with governments, legislative bodies and advocacy groups to enhance awareness and drive policies to provide broader access to our tests;
our ability to continue to comply with applicable governmental regulations, including regulations applicable to the operation of our clinical lab, expectations regarding pending regulatory submissions and plans to seek regulatory approvals for our tests within the United States and internationally, as applicable;
our continued ability to expand and protect our intellectual property portfolio;
anticipated liquidity and capital requirements;