UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DCD.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 20172021

OR

☐o 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:File Number: 001-34810

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

(Registrant’s Telephone Number, Including Area Code)Securities registered pursuant to Section 12(b) of the Act:

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 ☑þNo ☐¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes ☑þNo ☐¨

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.  (Check one):

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 ☑þ

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.  Yes ☑ No ☐

As of October 31,  2017,November 8, 2021, the registrant had 59,998,748112,126,549 shares of common stock, par value $0.001 per share, outstanding.

VERMILLION,ASPIRA WOMEN’S HEALTH INC.

FORM 10-Q

For the Quarter Ended September 30, 2021

Table of Contents

Vermillion, OVA1 and OveraThe following are registered and unregistered trademarksand service marksof Vermillion, Aspira Women’s HealthInc.:VERMILLION®,ASPIRA WOMEN’S HEALTH™, OVA1®, OVERA®,ASPIRA LABS®,ASPIRAIVD®,OVACALC®,ASPIRA GENETIX^SM,  OVA1PLUS™,OVAWATCH™,  ENDOCHECK™,OVAINHERIT™,ASPIRA SYNERGY^SM,, and OVA360™.

PART I - FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS

Vermillion,Aspira Women’s Health Inc.

Condensed Consolidated Balance Sheets

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

(Unaudited)

Aspira Women’s Health Inc.

Vermillion, Inc.

Condensed Consolidated Statements of Operations

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

(Unaudited)

Vermillion,Aspira Women’s Health Inc.

Consolidated Statements of Changes in Stockholders’ Equity

(Amounts in Thousands, Except Share Amounts)

(Unaudited)

See accompanying notes to the unaudited condensed consolidated financial statements.

Aspira Women’s Health Inc.

Condensed Consolidated Statements of Cash Flows

(Amounts in Thousands)

(Unaudited)

Aspira Women’s Health Inc.

Vermillion, 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., formerly known as Vermillion, Inc. (“Vermillion”; VermillionAspira” and its wholly-owned subsidiaries are collectively referred to as the “Company,” “we” or “our”) 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 OVA1™the following products and Overa™related services: (1) OVA1, a blood test designed to, in addition to a physician’s clinical assessment of a woman with a pelvic mass, identify women who are at high-risk of having a malignant ovarian tumor prior to planned surgery; (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 and OVERA as a confirmation for OVA1 intermediate range results and leverages the strengths of OVA1’s Multivariate Index Assay (“MIA”) sensitivity and OVERA’s (MIA2G) specificity and as a result reduces false elevations by over 40%; (4) Aspira GenetiX, a genetic test for hereditary gynecological cancer risk, with a core focus on female cancers, including breast, ovarian, endometrial, uterine and cervical cancers; and (5) Aspira Synergy, the Company’s new decentralized wet-lab testing platform and cloud service technology. Through September 30, 2021, the Company’s product and related services revenue was limited to revenue generated by sales of malignancy tests for ovarian cancer (“OVA1”OVA1, OVA1plus and “Overa,” respectively)Aspira GenetiX.  The Company sells OVA1 and OVA1plus through Vermillion’sAspira’s wholly-owned Clinical Laboratory Improvement Amendments of 1988 (“CLIA”) certified clinical laboratory, ASPiRA LABS,Aspira Labs, Inc. (“ASPiRA LABS”).

In 2021, the Company began to enter into decentralized arrangements with large healthcare networks and large practices for its Aspira Synergy product. The Company also offers in-vitro diagnostic (“IVD”) trialhas entered into 4 technology transfer agreements since the launch of Aspira Synergy. NaN of the agreements are with two of the nation’s largest and leading independent women’s healthcare groups.  The other 2 agreements are with two independent laboratories providing services to third-party customers through its wholly-owned subsidiary, ASPiRA IVD, Inc. (“ASPiRA IVD”), which commenced operations in June 2016. ASPiRA IVD is a specialized, CLIA certified, laboratory provider dedicated to meeting the unique testing needs of IVD manufacturers seeking to commercialize high-complexity assays.across five states.

Going Concern

Liquidity

The Company has incurred significant net losses and negative cash flows from operations since inception, and as a result has an accumulated deficit of approximately $393,098,000 at September 30, 2017.$462,767,000. The Company also expects to incur a net loss and negative cash flows from operations for the remainder of 20172021. 

In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China. The novel coronavirus has since spread to over 100 countries, including every state in the United States. In March 2020, the World Health Organization declared COVID-19, the disease caused by the novel coronavirus, a pandemic, and the foreseeable future. The Company’s management believes that successful achievementUnited States declared a national emergency with respect to the coronavirus outbreak. This outbreak has severely impacted global economic activity, and many countries and many states in the United States have reacted to the outbreak by instituting quarantines, mandating business and school closures and restricting travel. In addition, many conventions and industry conferences have been canceled.

As a result of the Company’s business objectives will require additional financing. Given these conditions, there is substantial doubt aboutCOVID-19 pandemic and actions taken to contain it, the Company’s ability to continuetest volume, and resulting revenue, decreased significantly in late March and the full month of April 2020 as fewer patients visited their physicians and elective surgeries were postponed 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.

of closures. The Company expectssaw some increases in its test volume towards the latter half of the second quarter and in the third quarter of 2020, and test volume trended back to raise capitalpre-COVID-19 levels during the late third quarter 2020 through a varietythe first quarter 2021. We began exceeding pre-COVID-19 levels starting in the first half of sources, which may include the exercisesecond quarter of common stock warrants,  equity offerings, debt financing, collaborations, licensing arrangements, grants2021 but began trending down in the latter half of the second quarter of 2021 as physician offices had fewer patient visits. In addition, during the third quarter of 2021, the Company experienced additional restrictions to doctor offices in key states such as Michigan, Florida, New York and government funding and strategic alliances. However, additional funding may not be availableKentucky when needed or on terms acceptablecompared to the Company. Ifsecond quarter 2021. In order to reduce the impact of limitations on visiting physician offices due to closures and quarantines, the Company implemented other mechanisms for reaching physicians such as virtual sales representative meetings, Key Opinion Leader

presentations, and increased digital sales and marketing. Enrollment for clinical research studies has been slower than originally planned due to the impact of clinic closures and patients not seeking medical care in some states. The full impact of the COVID-19 pandemic continues to evolve as of the date of this filing. As a result, the Company is unable to obtain additional capital, it may not be able to continue sales and marketing, research and development,estimate the extent of the impact of the COVID-19 pandemic on its operations 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.liquidity.

As discussed in Note 4, on August 31, 2017, certain investors exercised outstanding warrants for common stock for net proceeds of approximately $3,577,000 after deducting offering expenses.

As discussed in Note 4, on February 17, 2017, the Company completed a private placement pursuant to which certain investors purchased Vermillion common stock and warrants to purchase shares of Vermillion common stock for net proceeds of approximately $5,127,000 after deducting offering expenses.

As discussed in Note 3, in March 2016, the Company entered into ana loan agreement (the “Loan(as amended on March 7, 2018 and April 3, 2020, the “DECD Loan Agreement”) pursuant to which it may borrow up to $4,000,000 fromwith the State of Connecticut Department of Economic and Community Development (the “DECD”)., pursuant to which it may borrow up to $4,000,000 from the DECD.  

The loan may be prepaid at any time without premium or penalty. An initial disbursement of $2,000,000 was made to the Company inon April 15, 2016 under the DECD Loan Agreement. The Loan Agreement provides thatOn December 3, 2020, the Company received a disbursement of the remaining $2,000,000 will be disbursed if and whenunder the DECD Loan Agreement, as the Company achieves certain future milestones. 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.

On April 10, 2020, the Company received a stimulus check of approximately $89,000 from the U.S. Department of Health and Human Services pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).

As discussed in Note 3, on May 1, 2020, the Company obtained a loan (the “PPP Loan”) from BBVA USA in the aggregate amount of $1,005,767, pursuant to the Paycheck Protection Program (the “PPP”), which was established under the CARES Act, as administered by the U.S. Small Business Administration (the “SBA”).

As discussed in Note 4, during June 2020, all of the warrants from the Company’s 2017 private placement were exercised.  The Company received $5,058,608 in aggregate proceeds from the exercise of the warrants.

As discussed in Note 4, on July 20, 2020, the Company completed a private placement of Aspira common stock, par value $0.001 per share, for net proceeds of $10,600,000, after deducting expenses related to the private placement.

As discussed in Note 4, on February 8, 2021, the Company completed a public offering (the “2021 Offering”) resulting in net proceeds of approximately $47,900,000, after deducting underwriting discounts and offering expenses. 

As discussed in Note 3, in March 2021, the Company applied for forgiveness of the PPP Loan, and, effective May 27, 2021, the SBA confirmed the waiver of the Company’s repayment of the PPP Loan. The Company remains subject to an audit of the PPP loan. The Company recognized a gain on forgiveness of debt of $1,005,767, which is included in other income in the condensed consolidated statements of operations, and reduced long- and short-term indebtedness by the same amount. 

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 footnotes 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, 20162020 included in this report has been derived from the audited consolidated financial statements at that date but does not include all the information and footnotes 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, 20162020 included in Vermillion’sAspira’s Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on March 31, 20172021 (the “2016“2020 Annual Report”).

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.

Reclassification

Certain prior period amounts have been reclassified to conform to the current period presentation with no material effect on the consolidated financial statements.

Significant Accounting and Reporting Policies

Revenue Recognition

Product Revenue

– OVA1, OVERA and OVA1plus: The Company has adopted ASC 954-605,Health Care Entities—Revenue Recognition, as revenue from laboratory services has become significant to the Company.The Company'srecognizes product revenue in accordance with the provisions of ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). Product revenue is generated by performing diagnostic services using itsrecognized upon completion of the OVA1, OVERA or OVA1plus test and Overa tests, and the service is completed upon the delivery of test results to the prescribing physician. The Company recognizes revenue related to billings for Medicare and commercial payersphysician based on an accrual basis, netestimates of contractual and other adjustments, when amounts that will ultimately be realized canrealized. In determining the amount of revenue to be estimated. Untilrecognized for a contract has been negotiated with a commercial payer or governmental program, the OVA1 and Overa tests may or may not be covered by these entities' existing reimbursement policies. In addition, patients do not enter into direct agreements withdelivered test result, the Company that commit them to pay any portion ofconsiders factors such as payment history and amount, payer coverage, whether there is a reimbursement contract between the cost of the tests in the event that their insurance declines to reimburse the Company. In the absence of an agreement with the patient or other clearly enforceable legal right to demand payment from the patient, the related revenue is only recognized upon cash receipt.

Estimates of amounts thatpayer and the Company, will ultimately realizeand any developments or changes that could impact reimbursement. These estimates require significant judgment by management. Some patients have out-of-pocket costs for amounts not covered by their insurance carrier, andmanagement as the Company may bill the patient directly for these amounts in the form of co-payments and co-insurance in accordance with the patient’s health plan. Some payers may not cover the OVA1 and Overa testscollection cycle on some accounts can be as ordered by the prescribing physician under their reimbursement policies. long as one year.

The Company pursues reimbursement from such patients on a case-by-case basis. In the absence of contracted reimbursement coverage or the ability to estimate the amount that will ultimately be realized for the Company's services, revenue is recognized when cash is received.

 See discussion of ASU No. 2014-09 (defined below) included in Recent Accounting Pronouncements below.  

Service Revenue

The Company’s service revenue is generated by performing IVD trial services for third-party customers. In accordance with SAB Topic 13, service revenue is recognized when the following revenue recognition criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured. 

See discussion of ASU No. 2014-09 included in Recent Accounting Pronouncements below.

The Company has made no other significant changes in its critical accounting policies and estimates from those disclosed in the 2016 Annual Report. 

Recent Accounting Pronouncements

In March 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (Topic 718), Compensation - Stock Compensation (“ASU 2016-09”). The new guidance simplifies several aspects of the accounting for share-based payments, including immediate recognition of all excess tax benefits and deficiencies in the income statement, changing the threshold to qualify for equity classification up to the employees' maximum statutory tax rates, allowing an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures as they occur, and clarifying the classification on the statement of cash flows for the excess tax benefit and employee taxes paid when an employer withholds shares for tax-withholding purposes. ASU 2016-09 is effective for annual reporting periods beginning after December 15, 2016 and interim periods within that reporting period. The adoption of this standard is not expected to have a material effect on our financial statements.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which removes inconsistencies and weaknesses in revenue requirements, provides a more robust framework for addressing revenue issues, improves comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets, provides more useful information to users of financial statements through improved disclosure requirements and simplifies the preparation of financial statements by reducing the number of requirements to which an entity must refer. This guidance requires that an entity depict the consideration by applying a five-step analysis in determining when and how revenue is recognized. The new model will require revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration a company expects to receive in exchange for those goods or services. On April 1, 2015, the FASB voted for a one-year deferral of the effective date of the new revenue recognition standard, ASU No. 2014-09. On July 15, 2015, the FASB affirmed these changes, which requires public entities to apply the amendments in ASU 2014-09 for annual reporting beginning after December 15, 2017. Early adoption is permitted beginning after December 31, 2016, the original effective date in ASU 2014-09.

The Company is in the early stages of its analysis of the effect ASU 2014-09 will have on its Service Revenue, but expects to complete its analysis during the fourth quarter of 2017.

The Company is also continuing its analysis of the effect ASU 2014-09 will have on its Product Revenue and also expects to complete this analysis in the fourth quarter of 2017. Revenue that is recognized upon the ultimate receipt of cash under the Company’s existing revenue recognition policy will have to be reassessed under the new standard. The Company’s implementation process is to reviewreviews its patient account population to determine theand determines an appropriate distribution of patient accounts by payer  (i.e. (i.e., Medicare, patient pay, other third-party payer, etc.etc.) into portfolios with similar collection experienceexperience. The Company has elected this practical expedient that, when evaluated for collectability, will resultresults 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, 2021, there were no adjustments to estimates of variable consideration to derecognize revenue for services provided in a contract-by-contract basis.prior period. There were 0 impairment losses on accounts receivable recorded during the periods ended September 30, 2021 and 2020.

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 as the Company has limited experience with such factors relating to Aspira GenetiX.  

Service Revenue - The Company’s service revenue was generated by performing in vitro diagnostic (“IVD”) trial services for third-party customers. Measurement of progress on contracts with customers was generally based on the input measurement of cost incurred relative to the total expected costs to satisfy the performance obligation. The Company hasdoes not yet determined ifexpect to have any significant service revenue going forward, as it plans to utilizelargely wound down performing the full retrospective or modified retrospective method of adoption, but anticipates adopting the new standardASPiRA IVD, Inc. (“ASPiRA IVD”) trial services in the firstfourth quarter of 2018.2019.  During 2020 and 2021, the Company’s service revenue was limited to the fulfillment of one legacy IVD contract.  

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. The ASU 2016-13 is scheduled to be effective in 2023 for smaller reporting companies. The Company is currently assessing the impact of this standard on its consolidated financial statements.

2.    AGREEMENTS WITH QUEST DIAGNOSTICS INCORPORATED

In March 2015, the Company entered into a commercialreached an agreement with Quest Diagnostics, IncorporatedInc. (“Quest Diagnostics”). Pursuant to this agreement, all OVA1 U.S. testing services for Quest Diagnostics customers were transferred toVermillion’s Aspira’s wholly-owned subsidiary, ASPiRA LABS,as of August 2015. Pursuant to this agreement, as amended as of March 11, 2017,2020, Quest Diagnostics has agreedcontinued to provide blood draw and logistics support by transporting specimens from its clients to ASPiRA LABS for testing through at least March 11, 2018 in exchange for a market value fee. PerThe purpose of the 2020 amendment was to extend the term of the Testing and Services Agreement from March 11, 2019 to March 11, 2023 and for the Company to pay an annual fee of $75,000 for the services of a part-time Quest Diagnostics project manager.

3.COMMITMENTS AND CONTINGENCIES

Coronavirus Aid, Relief, and Economic Security (CARES) Act and PPP Loan

On May 1, 2020, the Company obtained the PPP Loan from BBVA USA in the aggregate amount of $1,005,767. The application for these funds required the Company to, in good faith, certify that the described economic uncertainty at the time made the loan request necessary to support the ongoing operations of the Company. This certification further required the Company to consider its current business activity and its ability to access other sources of liquidity sufficient to support ongoing operations in a manner that was not significantly detrimental to the business. Under the terms of this agreement,the CARES Act and the PPP Loan, all or a portion of the principal amount of the PPP Loan was subject to forgiveness so long as, over the 24-week period following the Company’s receipt of the proceeds of the PPP Loan, the Company will not offerused those proceeds for payroll costs, rent, utility costs or the maintenance of employee and compensation levels. The PPP Loan, which was granted pursuant to existing or future Quest Diagnostics customers tests that Quest Diagnostics offers.a promissory note, was set to mature on May 1, 2022. The Company applied for forgiveness of the PPP Loan in March 2021, and, effective May 27, 2021, the SBA confirmed the waiver of the Company’s repayment of the PPP Loan. The Company recognized a gain on forgiveness of debt of $1,005,767, which is included in other income in the condensed consolidated statements of operations, and reduced long- and short-term indebtedness by the same amount. The Company remains subject to an audit of the PPP loan.

3.COMMITMENTS AND CONTINGENCIES

Development Loan

On March 22, 2016, the Company entered into the DECD Loan Agreement, pursuant to which the Company may borrow up to $4,000,000 from the DECD. Proceeds from the $2,000,000 April 2016 initial disbursement under the Loan Agreement were utilized primarily to fund the build-out, information technology infrastructure and other costs related to the Company’s Trumbull, Connecticut facility and operations. 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 $2,000,000$1,500,000 of the principal amount of the loan if the Company achieves certain job creation and retention milestones by March 1, 2018.December 31, 2022. Conversely, if the Company is either unable to meet these job creation milestones, namely, hiring 40retain 25 full-time employees with a specified average annual salary within the allotted timeframe and retaining those employees for a two-yearconsecutive two year period or does not maintain the Company’s Connecticut operations for a period of 10 years,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.

Long-term debt consisted of the following:

As discussed above, an initial disbursement of $2,000,000 was made toSeptember 30, 2021, 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 $16,000. 

Insurance Notes

During 2020 and 2019, the Company on April 15, 2016 underentered into insurance promissory notes for the Loan Agreement. The Loan Agreement provides that the remaining $2,000,000 will be disbursed ifpayment of insurance premiums at an interest rate of 3.88% and when the Company achieves certain future milestones. The loan may be prepaid at any time without premium or penalty.4.49% respectively, with an aggregate principal amount outstanding of approximately $0 and $611,000 as of September 30, 2021 and December 31, 2020, respectively. These notes were payable in 10 monthly installments with a maturity date of October 1, 2021.

Operating Leases

The Company leases facilities to support its business of discovering, developing and commercializing diagnostic tests in the fields of gynecologic disease. The Company’s principal facility, including the CLIA laboratory used by ASPiRA LABS, is located in Austin, Texas, and the CLIA laboratory used by ASPiRA IVDfor research and development services is located in Trumbull, Connecticut.  TheIn October 2020, the Company renewed the Austin, Texas lease includesfor an aggregate annual base rent of $85,000 and annual estimated common area charges, taxes and insurance of $46,000 andadditional one year.  The Company’s renewed lease expires on January 31, 2019.    2022, with no automatic renewal or renewal option.

In October 2015, the Company entered into a lease agreement for a 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 term ofCompany’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 lease is five yearsyear renewal option beginning after the initial date of occupancy in January on July 1, 2026.

2016 and a rent abatement period of five months. The lease includes an aggregate annual base rent of $32,000 and annual estimated common area charges, taxes and insurance of $95,000.  

Building rentexpense associated with these operating leases for the three months ended September 30, 2017 and 2016 totaled $66,000 and $71,000, respectively. Building rent for the nine months ended September 30, 20172021 and 2016 totaled $189,000 and $175,000, respectively.2020 is shown in the table below (in thousands).

Capital Lease