UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DCD.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended ~~September~~June 30, ~~2017~~2022

☐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

Aspira Women’s Health Inc.

(Exact name of registrant as specified in its charter)


~~Vermillion, Inc.~~Delaware		33-0595156
~~(Exact Name of Registrant as Specified in Its Charter)~~


~~Delaware~~		~~33-0595156~~
(State or ~~Other Jurisdiction~~other jurisdiction of ~~Incorporation~~incorporation or ~~Organization)~~organization)		(I.R.S. Employer Identification No.)
12117 Bee Caves Road, Building Three, Suite 100, Austin, Texas		78738
(Address of ~~Principal Executive Offices)~~principal executive offices)		(Zip Code)

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:


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 Stock 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 ☑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):~~


Large accelerated filer ☐¨	Accelerated filer ☐¨
Non-accelerated filer þ
~~Non-accelerated filer ☐~~	Smaller reporting company ☑þ 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 ☑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,~~August 5, 2022, the registrant had ~~59,998,748~~112,296,388 shares of common stock, par value $0.001 per share, outstanding.

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)~~


	September 30,		December 31,		June 30,		December 31,
	2017		2016		2022		2021
Assets						(Unaudited)
Current assets:
Cash and cash equivalents	$	7,752	$	5,242	$	20,480	$	37,180
Accounts receivable		221		275		1,112		1,027
Prepaid expenses and other current assets		175		498		1,173		1,624
Inventories		155		93		191		174
Total current assets		8,303		6,108		22,956		40,005
Property and equipment, net		1,364		1,911		438		464
Right-of-use assets						315		346
Restricted cash						250		250
Other assets		11		-		57		14
Total assets	$	9,678	$	8,019	$	24,016	$	41,079

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	514	$	881	$	1,374	$	1,501
Accrued liabilities		1,430		1,464		5,059		5,299
Deferred Revenue		62		-
Current portion of long-term debt						283		201
Short-term debt		191		182		260		779
Other current liabilities		32		34
Lease liability						68		60
Total current liabilities		2,229		2,561		7,044		7,840
Non-current liabilities:
Long-term debt		1,528		1,667		2,536		2,718
Other non-current liabilities		-		29
Lease liability						314		349
Total liabilities		3,757		4,257		9,894		10,907
Commitments and contingencies (Note 3)
Commitments and contingencies (Note 2)
Stockholders’ equity:
Common stock, par value $0.001 per share, 150,000,000 shares authorized at
September 30, 2017 and December 31, 2016; 59,998,748 and 52,328,492 shares
issued and outstanding at September 30, 2017 and December 31, 2016,
respectively		60		52
Common stock, par value $0.001 per share, 150,000,000 shares authorized at June 30, 2022 and December 31, 2021; 112,296,388 and 112,138,741 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively						112		112
Additional paid-in capital		398,959		389,266		503,249		501,788
Accumulated deficit		(393,098)		(385,556)		(489,239)		(471,728)
Total stockholders’ equity		5,921		3,762		14,122		30,172
Total liabilities and stockholders’ equity	$	9,678	$	8,019	$	24,016	$	41,079

See accompanying notes to the unaudited condensed consolidated financial statements.
‎

Aspira Women’s Health Inc.

~~Vermillion, Inc.~~

Condensed Consolidated Statements of Operations

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

(Unaudited)


									Three Months Ended				Six Months Ended
	Three Months Ended September 30,				Nine Months Ended September 30,				June 30,				June 30,
	2017		2016		2017		2016		2022		2021		2022		2021
Revenue:
Product	$	657	$	581	$	2,195	$	1,640	$	2,018	$	1,720	$	3,853	$	3,136
Service		42		42		128		197
Genetics										48		79		106		159
Total revenue		699		623		2,323		1,837		2,066		1,799		3,959		3,295
Cost of revenue:(1)
Cost of revenue⁽¹⁾:
Product		495		461		1,345		1,516		1,036		839		1,893		1,494
Service		284		356		855		416
Genetics										64		264		139		502
Total cost of revenue		779		817		2,200		1,932		1,100		1,103		2,032		1,996
Gross profit (loss)		(80)		(194)		123		(95)
Gross profit										966		696		1,927		1,299
Operating expenses:
Research and development(2)		192		370		685		1,868		1,410		1,471		2,758		2,343
Sales and marketing(3)		1,050		1,606		3,114		5,514		3,580		4,018		8,077		7,126
General and administrative(4)		1,177		1,295		3,825		4,645		4,196		3,279		8,559		5,788
Total operating expenses		2,419		3,271		7,624		12,027		9,186		8,768		19,394		15,257
Loss from operations		(2,499)		(3,465)		(7,501)		(12,122)		(8,220)		(8,072)		(17,467)		(13,958)
Interest income (expense), net		(10)		(11)		(32)		(16)
Other income (expense), net		-		-		(9)		16
Interest (expense) income, net										(10)		3		(28)		(21)
Other (expense) income, net										(13)		995		(16)		985
Net loss	$	(2,509)	$	(3,476)	$	(7,542)	$	(12,122)	$	(8,243)	$	(7,074)	$	(17,511)	$	(12,994)
Deemed dividend on warrant repricing		(942)		-		(942)		-
Net loss attributable to common stockholders	$	(3,451)	$	(3,476)	$	(8,484)	$	(12,122)
Net loss per share attributable to common stockholders - basic and diluted	$	(0.06)	$	(0.07)	$	(0.15)	$	(0.23)
Net loss per share - basic and diluted									$	(0.07)	$	(0.06)	$	(0.16)	$	(0.12)
Weighted average common shares used to compute basic and diluted net loss per common share		57,455,786		52,237,287		55,909,788		52,167,543		112,242,893		111,958,928		112,191,520		110,311,666

Non-cash stock-based compensation expense included in cost of revenue and operating expenses:
(1) Cost of revenue	$	29	$	27	$	108	$	73	$	35	$	54	$	87	$	88
(2) Research and development		2		10		7		63		53		95		49		121
(3) Sales and marketing		38		14		115		70		58		336		205		475
(4) General and administrative		257		210		767		655		464		797		1,107		1,087

See accompanying notes to the unaudited condensed consolidated financial statements.

~~Vermillion,~~Aspira Women’s Health Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(Amounts in Thousands, Except Share Amounts)

(Unaudited)


	Common Stock
	Shares	Amount		Additional Paid-In Capital		Accumulated Deficit		Total Stockholders’ Equity
Balance at December 31, 2021	112,138,741	$	112	$	501,788	$	(471,728)	$	30,172
Net loss	-		-		-		(9,268)		(9,268)
Common stock issued in conjunction with exercise of stock options	3,000		-		2		-		2
Stock-based compensation expense	-		-		838		-		838
Balance at March 31, 2022	112,141,741	$	112	$	502,628	$	(480,996)	$	21,744
Net loss	-		-		-		(8,243)		(8,243)
Common stock issued in conjunction with exercise of stock options	20,000		-		11		-		11
Common stock issued for restricted stock awards	134,647		-		140		-		140
Stock-based compensation expense	-		-		470		-		470
Balance at June 30, 2022	112,296,388	$	112	$	503,249	$	(489,239)	$	14,122



	Common Stock
	Shares	Amount		Additional Paid-In Capital		Accumulated Deficit		Total Stockholders’ Equity
Balance at December 31, 2020	104,619,876	$	105	$	449,680	$	(440,066)	$	9,719
Net loss	-		-		-		(5,920)		(5,920)
Common stock issued in conjunction with exercise of stock options	196,976		-		317		-		317
Common stock issued in conjunction with public offering, net of issuance costs	6,900,000		7		47,713		-		47,720
Stock-based compensation expense	-		-		489		-		489
Balance at March 31, 2021	111,716,852	$	112	$	498,199	$	(445,986)	$	52,325
Net loss	-		-		-		(7,074)		(7,074)
Common stock issued in conjunction with exercise of stock options	305,090		-		304		-		304
Common stock issued for restricted stock awards	36,092		-		267		-		267
Common stock issued in conjunction with public offering, net of issuance costs	-		-		1		-		1
Stock-based compensation expense	-		-		1,015		-		1,015
Balance at June 30, 2021	112,058,034	$	112	$	499,786	$	(453,060)	$	46,838

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)


	Nine Months Ended				Six Months Ended
	September 30,				June 30,
	2017		2016		2022		2021
Cash flows from operating activities:
Net loss	$	(7,542)	$	(12,122)	$	(17,511)	$	(12,994)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash lease expense						4		32
Depreciation and amortization		599		523		128		172
Stock-based compensation expense		997		861		1,448		1,771
Loss on sale and disposal of property and equipment		4		3		3		1
Forgiveness of PPP loan						-		(1,006)
Changes in operating assets and liabilities:
Accounts receivable		54		(44)		(85)		(208)
Prepaid expenses and other assets		312		354		408		350
Inventories		(62)		(5)		(17)		(71)
Accounts payable, accrued liabilities and other liabilities		(401)		(769)		(855)		208
Deferred revenue		62		-
Net cash used in operating activities		(5,977)		(11,199)		(16,477)		(11,745)
Cash flows from investing activities:
Purchase of property and equipment		(56)		(1,240)		(105)		(136)
Net cash used in investing activities		(56)		(1,240)		(105)		(136)
Cash flows from financing activities:
Proceeds from private placement offering of common stock, net of issuance costs		5,127		-
Proceeds from exercise of common stock warrants, net of issuance costs		3,577		-
Proceeds from issuance of DECD loan, net of issuance costs		-		1,967
Principal repayment of DECD loan		(136)		(73)		(131)		(99)
Repayment of capital lease obligations		(25)		(22)
Proceeds from issuance of common stock from exercise of stock options		-		5		13		621
Net cash provided by financing activities		8,543		1,877
Net increase (decrease) in cash and cash equivalents		2,510		(10,562)
Cash and cash equivalents, beginning of period		5,242		18,642
Cash and cash equivalents, end of period	$	7,752	$	8,080
Proceeds from public offering						-		48,236
Payment of offering costs for public offering						-		(515)
Net cash (used in) provided by financing activities						(118)		48,243
Net (decrease) increase in cash, cash equivalents and restricted cash						(16,700)		36,362
Cash, cash equivalents and restricted cash, beginning of period						37,430		16,631
Cash, cash equivalents and restricted cash, end of period					$	20,730	$	52,993
Reconciliation to Condensed Consolidated Balance Sheet:
Cash and cash equivalents					$	20,480	$	52,993
Restricted cash						250		-
Unrestricted and restricted cash and cash equivalents					$	20,730	$	52,993
Supplemental disclosure of cash flow information:
Cash paid during the period for interest		36		24		38		38
Supplemental disclosure of non-cash investing and financing activities:
Deemed dividend on warrant repricing		942		-
Supplemental disclosure of noncash investing and financing activities:
Net decrease in right-of-use assets						(31)		(30)
Forgiveness of PPP loan						-		(1,006)

See accompanying notes to the unaudited condensed consolidated financial statements.

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”; Vermillion~~Aspira” 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™ risk~~related services: (1) OVA1, a blood test intended as an aid to further assess the likelihood of malignancy ~~tests~~in women with an ovarian adnexal mass for which surgery is planned when the physician’s independent clinical and radiological evaluation does not indicate malignancy; (2) OVERA, a second-generation biomarker reflex intended to maintain OVA1’s high sensitivity while improving specificity; (3) OVA1plus, a reflex offering which uses OVA1 as the primary test and OVERA as a confirmation for OVA1 intermediate range results; (4) Aspira GenetiX, a genetic test for hereditary gynecologic cancer risk, with a core focus on hereditary female reproductive cancers, including breast, ovarian, ~~cancer (“OVA1”~~endometrial, uterine and ~~“Overa,” respectively) through Vermillion’s wholly-owned Clinical Laboratory Improvement Amendments of 1988 (“CLIA”) certified clinical laboratory, ASPiRA LABS, Inc. (“ASPiRA LABS”).~~

cervical cancers; and (5) Aspira Synergy, the Company’s testing platform and cloud service for testing. The Company ~~also offers in-vitro diagnostic (“IVD”) trial services~~plans to ~~third-party customers~~make OVA1, OVERA, OVA1plus and Aspira GenetiX and future technology available through Aspira Synergy. In 2021, the Company began entering into decentralized arrangements with large healthcare networks and large practices for its ~~wholly-owned subsidiary, ASPiRA IVD, Inc. (“ASPiRA IVD”), which commenced~~Aspira Synergy platform offering specialty and genetic testing solutions.Revenue from all of these sources is included in the results of operations in total revenue for the six months ended June ~~2016.~~ ~~ASPiRA IVD is~~30, 2022.

Liquidity

As of June 30, 2022, the Company had $20,480,000 of cash and cash equivalents (excluding restricted cash of $250,000), an accumulated deficit of approximately ($489,239,000), and working capital of $15,912,000. For the six months ended June 30, 2022, the Company incurred a ~~specialized, CLIA certified, laboratory provider dedicated to meeting the unique testing needs~~net loss of ~~IVD manufacturers seeking to commercialize high-complexity assays.~~

~~Going Concern~~

($17,511,000) and used cash in operations of ($16,477,000). 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. The~~the Company also expects to continue to incur a net loss and negative cash flows from operations for 2022. There can be no assurance that the ~~remainder of 2017 and~~Company will achieve or sustain profitability or positive cash flow from operations. Given the ~~foreseeable future. The Company’s management believes that successful achievement of the Company’s business objectives will require additional financing. Given these~~above conditions, there is substantial doubt about the Company’s ability to continue as a going concern. The ~~condensed~~ consolidated financial statements have been prepared on a going concern basis and do not include any adjustments that might result from these uncertainties.

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

~~As discussed in Note 4, on August 31, 2017, certain investors exercised outstanding warrants~~On June 1, 2022, the Company received a deficiency letter from the Listing Qualifications Department of the Nasdaq Stock Market notifying the Company that, for the preceding 30 consecutive business days, the closing bid price for the Company’s common stock was below the minimum $1.00 per share requirement for ~~net proceeds of approximately $3,577,000 after deducting offering expenses.~~

continued inclusion on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Rule”). As ~~discussed~~provided in ~~Note 4, on February 17, 2017,~~the Nasdaq rules, the Company ~~completed a private placement pursuant~~has 180 calendar days, or until November 28, 2022, to ~~which certain investors purchased Vermillion~~regain compliance with the Minimum Bid Price Rule. The Company may achieve compliance during this period if the closing bid price of Aspira common stock ~~and warrants to purchase shares~~is at least $1.00 per share for a minimum of ~~Vermillion common stock for net proceeds of approximately $5,127,000 after deducting offering expenses.~~

~~As discussed in Note 3, in March 2016,~~10 consecutive business days. If the Company ~~entered into~~fails to regain compliance on or prior to November 28, 2022, the Company may be eligible for an ~~agreement (the “Loan Agreement”) pursuant~~additional 180-calendar day compliance period. There is no assurance that the Company will be able to ~~which it may borrow up~~

regain compliance by the November 28, 2022 deadline or the additional 180-calendar day extended deadline, and there is no assurance that the Company will otherwise maintain compliance with this or any of the other Nasdaq continued listing requirements.

In December 2019, a novel strain of coronavirus was reported to ~~$4,000,000 from~~have surfaced in Wuhan, China. The novel coronavirus has since spread to over 100 countries, including every state in the ~~State of Connecticut Department of Economic~~United States. In March 2020, the World Health Organization declared COVID-19, the disease caused by the novel coronavirus, a pandemic, and ~~Community Development (the “DECD”). An initial disbursement of $2,000,000 was made~~the United States declared a national emergency with respect to the ~~Company~~coronavirus outbreak. This outbreak has severely impacted global economic activity, and many countries and many states in ~~April 2016 under~~ the ~~Loan Agreement. The Loan Agreement provides that~~United States have reacted to the ~~remaining $2,000,000 will be disbursed if~~outbreak by instituting quarantines, mandating business and ~~when~~school closures and restricting travel periodically throughout the pandemic. In order to reduce the impact of limitations on visiting physician offices due to closures and quarantines, the Company ~~achieves certain future milestones.~~ implemented other mechanisms for reaching physicians such as virtual sales representative meetings, Key Opinion Leader presentations, and increased digital sales and marketing. Patient enrollment for our planned 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, which has led to delays in the completion of such studies. Given the uncertainties associated with potential resurgences of the COVID-19 pandemic, the Company is unable to estimate the extent of the impact of the COVID-19 pandemic on its operations or liquidity.

Basis of Presentation

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

The unaudited condensed consolidated financial statements and related disclosures have been prepared with the presumption that users of the interim unaudited condensed consolidated financial statements have read or have access to the audited consolidated financial statements for the preceding fiscal year. The condensed consolidated balance sheet at December 31, ~~2016~~2021 included in this report has been derived from the audited consolidated financial statements at that date but does not include all the information and ~~footnotes~~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, ~~2016~~2021 included in ~~Vermillion’s~~Aspira’s Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on March 31, ~~2017 (the “2016 Annual Report”).~~2022.

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

Significant Accounting ~~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's~~recognizes 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 its~~recognized 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 payers~~physician based on ~~an accrual basis, net~~estimates of ~~contractual and other adjustments, when~~ amounts that will ultimately be ~~realized can~~realized. In determining the amount of revenue to be ~~estimated. Until~~recognized 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 of~~considers 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 that~~payer and the Company, ~~will ultimately realize~~and 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,~~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 ~~Company may bill~~time of 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 tests as ordered by the prescribing physician under their reimbursement policies. change.

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 the~~and 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 ~~experience~~experience. The Company has elected this practical expedient that, when evaluated for collectability, ~~will result~~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 June 30, 2022, 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 June 30, 2022 and 2021.

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

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board issued Accounting Standard Update No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This update changes the impairment model from the currently used incurred loss methodology to an expected loss methodology, which will result in the more timely recognition of losses. This ASU 2016-13 is scheduled to be effective in 2023 for smaller reporting companies. The Company ~~has not yet determined if it plans to utilize the full retrospective or modified retrospective method of adoption, but anticipates adopting the new standard~~is in the ~~first quarter~~process of ~~2018.~~evaluating the impact of this standard on its consolidated financial statements.

2.COMMITMENTS AND CONTINGENCIES

~~2. AGREEMENTS WITH QUEST DIAGNOSTICS INCORPORATED~~

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

~~In March 2015,~~

On May 1, 2020, the Company ~~entered into~~obtained the Paycheck Protection Program loan (the “PPP Loan”) from BBVA USA in the aggregate amount of approximately $1,006,000. The Company applied for forgiveness of the PPP Loan in March 2021, and, effective May 27, 2021, the U.S. Small Business Administration confirmed the waiver of the Company’s repayment of the PPP Loan which was recognized as a ~~commercial agreement with Quest Diagnostics,~~ ~~Incorporated (“Quest Diagnostics”). Pursuant~~gain in other income in 2021. The Company remains subject to ~~this agreement,~~ ~~all OVA1 U.S. testing services for Quest Diagnostics~~ ~~customers were transferred toVermillion’swholly-owned subsidiary, ASPiRA LABS,~~asan audit of August 2015. Pursuant to this agreement, as amended as of March 11, 2017, Quest Diagnostics has agreed 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. Per the ~~terms of this agreement,~~PPP loan. There is no assurance that the Company will not ~~offer~~be required to ~~existing~~repay all or ~~future Quest Diagnostics customers tests that Quest Diagnostics offers.~~a portion of the PPP Loan, as a result of any such audit.

3.~~COMMITMENTS AND CONTINGENCIES~~
‎

Loan Agreement

~~Development Loan~~

On March 22, 2016, the Company entered into a loan agreement (as amended, the “DECD Loan ~~Agreement,~~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. ~~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 40~~retain 25 full-time employees with a specified average annual salary ~~within the allotted timeframe and retaining those employees~~ for a consecutive 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. The carrying value approximates fair value, as the interest represents market prices for similar types of borrowing arrangements.

Long-term debt consisted of the following:


	June 30,		December 31,
	2022		2021
(in thousands)
DECD loan, net of issuance costs	$	2,819	$	2,919
Less: Current portion, net of issuance costs		(283)		(201)
Total long-term debt, net of issuance costs	$	2,536	$	2,718

As ~~discussed above, an initial disbursement~~ of ~~$2,000,000 was made~~June 30, 2022, the annual amounts of future minimum principal payments due under the Company’s contractual obligation are shown in the table below. Unamortized debt issuance costs for the DECD loan were $13,000. Debt related to the ~~Company~~insurance promissory note of $260,000, as described below, is not included in the following table due to the insurance promissory note being cancelable.


		Payments Due by Period
(in thousands)		Total		2022		2023		2024		2025		2026		Thereafter
DECD Loan	$	2,832	$	103	$	406	$	452	$	461	$	341	$	1,069
Total	$	2,832	$	103	$	406	$	452	$	461	$	341	$	1,069

‎

~~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 rent~~expense associated with these operating leases for the three and six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016 totaled $66,000 and $71,000, respectively. Building rent for~~2021 is shown in the ~~nine months ended September 30, 2017 and 2016 totaled $189,000 and $175,000, respectively.~~table below (in thousands).

~~Capital Lease~~


		Three Months Ended June 30,
Lease Cost	Classification	2022		2021
Operating rent expense
	Cost of revenue	$	19	$	15
	Research and development		7		13
	Sales and marketing		10		6
	General and administrative		17		17
Variable rent expense
	Cost of revenue	$	10	$	8
	Research and development		5		9
	Sales and marketing		9		7
	General and administrative		17		14

		Six Months Ended June 30,
Lease Cost	Classification	2022		2021
Operating rent expense
	Cost of revenue	$	39	$	28
	Research and development		14		22
	Sales and marketing		19		17
	General and administrative		33		35
Variable rent expense
	Cost of revenue	$	20	$	15
	Research and development		11		13
	Sales and marketing		18		19
	General and administrative		35		30

~~In April 2015,~~Based on the Company leased a laboratory instrument for a total initial payment of $125,000 and ongoing payments of approximately $3,500 per month for 36 months after delivery. The agreement also requires minimum annual purchases of reagents from the manufacturer of the equipment. The laboratory instrument was placed into service on July 1, 2015.

~~The accumulated amortization of assets under capital lease obligations was $174,000 and $97,000~~Company’s leases as of ~~September~~June 30, ~~2017~~2022, the table below sets forth the approximate future lease payments related to operating leases with initial terms of one year or more (in thousands).


2022	$	50
2023		106
2024		116
2025		124
2026		64
Total Operating Lease Payments		460
Less: Interest		(78)
Present Value of Lease Liabilities	$	382

Weighted-average lease term and ~~2016, respectively. The net book value of assets under capital lease obligations was $58,000 and $135,000~~discount rate were as of~~September 30, 2017 and 2016, respectively.~~ follows:


Weighted-average remaining lease term (in years)		4.0
Weighted-average discount rate		9.32%

Non-cancelable 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, ~~Vermillion~~Aspira is required to pay the greater of 4% royalties on net sales of diagnostic tests using the assigned patents or annual minimum royalties of $57,500. Royalty expense for the three months ended ~~September~~June 30, ~~2017~~2022 and ~~2016 totalled $30,000~~2021 totaled $81,000 and ~~$24,000, respectively. Royalty~~$69,000, respectively, and royalty expense for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016 totalled $94,000~~2021 totaled $154,000 and ~~$66,000, respectively.~~$126,000, respectively, as recorded in cost of revenue in the condensed consolidated statements of operations.

~~4. STOCKHOLDERS’ EQUITY~~Commercial Reorganization

~~2017 Warrant Repricing and Exercise~~

~~In December 2014,~~During the three months ended March 31, 2022, the Company ~~issued warrants~~executed a commercial reorganization resulting in the separation of a number of employees. The organizational changes resulted in the recording within the condensed consolidated statement of operations in sales and marketing, research and development and general and administrative expenses of one-time severance, separation, and settlement charges of approximately $1,284,000. These amounts have been partially offset by insurance reimbursement of $523,000, of which $433,000 has been received during the six months ended June 30, 2022 and $90,000 is included in Prepaid expenses and other current assets on the condensed consolidated balance sheet as of June 30, 2022. As of June 30, 2022, remaining unpaid estimated charges in the amount of $90,000 are included in Accrued liabilities on the condensed consolidated balance sheet. The Company paid the remaining charges in July 2022, and the Company expects to be reimbursed by the insurance company within 3 months of payment.

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.

3. STOCKHOLDERS’ EQUITY

2021 Public Offering

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

Under the 2021 Underwriting Agreement, the Company granted the 2021 Underwriters an option to purchase up to an ~~aggregate of 4,166,659~~additional 900,000 shares of ~~Vermillion~~Aspira common stock at ~~an exercise~~the public offering price, less the underwriting discount of ~~$2.00~~$0.4875 per ~~share~~share. On February 5, 2021, the 2021 Underwriters notified the Company that they were exercising this option in ~~conjunction~~connection with ~~a December 2014 private placement~~the closing of ~~Vermillion common stock.~~the 2021 Offering. The ~~warrants expire by their original terms on December 23, 2017.~~

~~On August 31, 2017, certain holders exercised warrants to purchase 3,796,818~~2021 Offering, including the additional 900,000 shares of ~~Vermillion~~Aspira common stock, closed on February 8, 2021 and resulted in ~~consideration for~~net proceeds to the Company ~~agreeing to reduce the exercise price to $1.00 per share of Vermillion common stock.~~

The Company issued 3,796,818 shares of Vermillion common stock and received $3,796,818 in aggregate gross proceeds (approximately $3,577,000 net of transaction costs). The incremental non-cash fair value of approximately ~~$942,000 from the modification~~$47,720,000, after deducting underwriting discounts and offering expenses of ~~the warrants~~$516,000. There was ~~calculated using the Black-Scholes model and recorded as~~ a ~~deemed dividend to the warrant holders within stockholders’ equity.~~

~~2017 Private Placement~~

~~On February 17, 2017, the Company completed a private placement pursuant to which certain investors purchased~~ ~~3,747,125~~ ~~shares of Vermillion common stock at a price of $1.40 per share. Vermillion also issued warrants to purchase shares of Vermillion common stock at a price of $0.125 per warrant share~~change in estimate in the ~~private placement. Net proceeds~~third quarter of 2021 in the ~~private placement were approximately $5,127,000 after deducting~~amount of $138,000 relating to an expense reversal of offering ~~expenses. The warrants are exercisable for~~ ~~2,810,338~~ ~~shares of Vermillion common stock at $1.80 per share.~~ ~~The warrants expire on the fifth anniversary of the date of issuance~~ or, if earlier, five business days after Vermillion delivers notice that the closing price per share of its common stock exceeded the exercise price for 20 consecutive trading days during the exercise period.costs.

The sale of common stock and issuance of warrants qualified for equity treatment under GAAP. The respective values of the warrants and common stock were calculated using their relative fair values and classified under common stock and additional paid-in capital. The value ascribed to the warrants is $804,000 and to the common stock is approximately $4,296,000.

~~2010~~2019 Stock Incentive Plan

~~The~~At the Company’s ~~employees, directors, and consultants are eligible to receive awards under~~2019 annual meeting of stockholders, the Company’s stockholders approved the Vermillion, Inc. ~~Second Amended and Restated 2010~~2019 Stock Incentive Plan, the name of which was subsequently changed to the Aspira Women’s Health Inc. 2019 Stock Incentive Plan (the ~~“2010~~“2019 Plan”). The ~~2010~~purposes of the 2019 Plan ~~permits~~are (i) to align the ~~granting~~

interests of ~~a variety~~the Company’s stockholders and recipients of awards ~~including~~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, ~~share~~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 ~~restricted share units, unrestricted shares, deferred share units, performance and cash-settled awards, and dividend equivalent rights. The 2010~~authorized for grants under the 2019 Plan ~~provides for issuance of up to 8,122,983~~is 10,492,283. To the extent an equity award granted under the 2019 Plan expires or otherwise terminates without having been exercised or paid in full, or is settled in cash, the shares of ~~Vermillion~~ common stock subject to ~~adjustment as provided in~~such award will become available for future grant under the ~~2010~~2019 Plan.

~~Stock-Based Compensation~~

~~During the nine months ended September~~ As of June 30, ~~2017, the Company awarded to Vermillion’s non-employee directors 131,250~~2022, 10,087,299 shares of Aspira common stock were subject to outstanding stock options, and 298,500 shares of Aspira common stock were subject to unvested restricted stock awards and a total of 3,336,361 shares of Aspira common stock were reserved for issuance under the 2010 Plan having a fair value of approximately $281,000 as payment for services to be rendered in 2017. These shares of restricted stock vested 50% on June 1, 2017 and 25% on September 1, 2017, and the remaining 25% will vest on December 1, 2017. The Company also issued to certain consultants 27,878 shares of restricted stock under the 2010 Plan having a fair value of approximately $48,000.2019 Plan.

Stock-Based Compensation

During the three months ended ~~September 30, 2017,~~March 31, 2022, the Company ~~issued to certain consultants 5,037 shares of restricted stock~~granted the following awards under the ~~2010 Plan having a~~2019 Plan. In addition, assumptions included in the fair value per share calculations were expected terms of ~~approximately $9,000.~~one to four years, one- to five-year treasury interest rates of 1.38% to 3.28% and market close prices ranging from $1.04 to $1.08. The Company ~~did not make any awards of restricted stock to non-employee directors during~~recorded $334,000 in forfeitures for the three months ended ~~September 30, 2017.~~ March 31, 2022.


Grant Date	Number of Shares	Type of Award	Exercise Price / Share	Fair Value / Share
1/28/2022	222,000	Options	$ 1.08	$ 0.70
3/1/2022	5,000	Options	$ 1.05	$ 0.31
3/31/2022	1,706,282	Options	$ 1.04	$ 0.51
3/31/2022	269,297	Restricted Stock Units	$ -	$ -
	2,202,579

During the nine months ended September 30, 2017, the Company also granted certain consultants options to purchase 70,000 shares of Vermillion common stock with an exercise price of $2.14 per share. The Company also granted certain officers and employees options to purchase approximately 916,000 shares of Vermillion common stock with an exercise price of $2.14 per share. In addition, the Company granted certain officers and employees options to purchase 14,500 shares of Vermillion common stock with an exercise price of $1.83 per share. These stock options generally vest 25% on each of the four anniversaries of the grant date.

During the nine months ended September 30, 2017, the Company also granted certain officers and employees options to purchase 250,000 shares of Vermillion common stock with an exercise price of approximately $2.14 per share with performance-based vesting based on certain metrics through December 31, 2017. These options vest 25% on each of the four anniversaries of the grant date if the performance-based metrics are met.

~~During~~ the three months ended ~~September~~June 30, ~~2017,~~2022, the Company granted ~~certain officers~~the following awards under the 2019 Plan. In addition, assumptions included in the fair value per share calculations were expected terms of one to two years, one- to five-year treasury interest rates of 1.72% to 3.13% and ~~employees options~~market close prices ranging from $0.52 to ~~purchase 22,500 shares of Vermillion common stock with an exercise price of $1.32 per share. These stock options vest 25% on each of the four anniversaries of the vesting commencement date~~$1.05. The Company recorded $109,000 in forfeitures for ~~each such stock option.~~

~~During~~ the three months ended ~~September~~June 30, 2017, the Company granted certain consultants of the Company options to purchase 120,000 shares of Vermillion common stock with an exercise price of $1.32 per share. These stock options vest in 24 equal monthly installments beginning on the vesting commencement date for each such stock option.2022.


Grant Date	Number of Shares	Type of Award	Exercise Price	Fair Value / Share
4/1/2022	5,000	Options	$ 1.05	$ 0.33
5/2/2022	5,000	Options	$ 0.70	$ 0.22
5/19/2022	60,000	Options	$ 0.55	$ 0.28
6/1/2022	5,000	Options	$ 0.56	$ 0.22
6/23/2022	15,000	Options	$ 0.52	$ 0.21
6/23/2022	78,000	Options	$ 0.52	$ 0.27
6/23/2022	83,799	Options	$ 0.52	$ 0.36
6/23/2022	169,043	Restricted Stock Units	$ -	$ -
	420,842

The Company calculates basic loss per share using the weighted average number of shares of ~~Vermillion~~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 ~~Vermillion~~Aspira common stock outstanding and excludes the effects of ~~7,971,860~~10,385,799 and ~~7,485,632~~10,272,785 potential shares of ~~Vermillion~~Aspira common stock as of ~~September~~June 30, ~~2017~~2022 and ~~2016,~~2021, respectively, that are anti-dilutive. Potential shares of ~~Vermillion~~Aspira common stock include incremental shares of ~~Vermillion~~Aspira common stock issuable upon the exercise of ~~outstanding warrants,~~ stock options and unvested restricted stock units.

On August 8, 2022, the Company entered into a sponsored research agreement with Harvard’s Dana-Farber Cancer Institute (“DFCI”), Brigham and Women’s Hospital (“BWH”), and Medical University of Lodz for the generation of a multi-omic, non-invasive diagnostic aid to identify endometriosis based on circulating microRNAs and proteins. This collaboration is expected to accelerate the Company’s development and commercialization of future endometriosis products, such as EndoCheck. Under the terms of the agreement, payments of approximately $1.2 million will become due from the Company to the counterparties upon the achievement of certain milestones in 2022 and 2023 as follows: 68% will become payable within seven days of the execution of the agreement, 15% will become payable upon completion of certain milestones estimated to occur in the fourth quarter of 2022, and 17% will become payable upon completion of certain milestones estimated to occur in the second quarter of 2023.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL ~~CONDITION~~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” 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 ~~(“SEC”~~(the “SEC”), and, except as required by law, ~~Vermillion,~~Aspira Women’s Health Inc. (“~~Vermillion”~~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~~forward-looking statements include, without limitation:

projections or expectations regarding our future test volumes, revenue, cost of revenue, operating expenses, research and development expenses, gross profit margin, cash flow, results of operations and financial condition;

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 and, benign pelvic mass monitoring in addition to genetics risk assessment, including breast and ovarian cancer hereditary risk assessment and carrier screening;

our planned business ~~include~~strategy and strategic business drivers and the ~~following:~~anticipated effects thereof, including partnerships such as those based on our Aspira Synergy product, as well as other strategies, specimen collaboration and licensing;

plans to expand our existing products OVA1, OVERA, OVA1plus, Aspira GenetiX and Aspira Synergy on a global level, and to launch and commercialize our new products, OVAWatch, EndoCheck and OVAInherit;

plans to develop new algorithms, molecular diagnostic tests, products and tools and otherwise expand our product offerings, including plans to develop a product using genetics, proteins and other modalities to assess the risk of developing cancer when carrying a pathogenic variant associated with hereditary breast and ovarian cancer that is difficult to detect through a diagnostic test;

plans to establish payer coverage and secure contracts for current and new products, including OVA1, OVERA, OVA1plus, Aspira GenetiX, OVAWatch, EndoCheck and OVAInherit separately and expand current coverage and secure contracts for OVA1;

plans that would address clinical questions related to early disease detection, treatment response, monitoring of disease progression, prognosis and other issues in the fields of oncology and women’s health;

anticipated efficacy of our products, product development activities and product innovations, including our ability to improve sensitivity and specificity over traditional diagnostic biomarkers;

expected competition in the markets in which we compete;

plans with respect to Aspira Labs, Inc. (“ASPiRA LABS”), including plans to expand or consolidate ASPiRA LABS’ testing capabilities;

expectations regarding continuing future services provided by Quest Diagnostics Incorporated;

plans to develop informatics products and develop and perform laboratory developed tests (“LDTs”);

FDA oversight changes of LDTs;

plans to develop a race or ethnicity-specific pelvic mass risk assessment;

~~projections or expectations regarding our future test volumes, revenue, cost of revenue, operating expenses, cash flow, results of operations and financial condition;~~

~~our plan to broaden our commercial focus from ovarian cancer to differential diagnosis of women with a range of gynecological disorders;~~

~~our planned business strategy and the anticipated timing of the implementation thereof;~~

~~plans with respect to our market expansion and growth, including plans to market Overa outside the United States;~~

~~plans to develop new algorithms and molecular diagnostic tests;~~

~~plans to develop a product or tool combining an OVA1 with results of a symptom index;~~

~~plans to establish our own payer coverage for OVA1 and Overa;~~

intentions to address clinical questions related to early disease detection, treatment response, monitoring of disease progression, prognosis and other issues in the fields of oncology and women’s health;

~~plans to leverage infrastructure and enhance our pipeline of future technologies by fostering relationships with in vitro diagnostic (“IVD”) companies;~~

~~plans with respect to ASPiRA IVD, Inc. (“ASPiRA IVD”);~~

~~expected service revenue growth based on ASPiRA IVD;~~

~~expected license revenue in future periods;~~

~~our planned focus~~ on the execution of five core strategic business drivers in ovarian cancer diagnostics and specialized laboratory services to address unmet medical needs for women faced with gynecologic disease and other conditions and the continued development of our business;

~~anticipated efficacy of our products, product development activities and product innovations;~~

~~expected competition in the markets in which we compete;~~

~~plans with respect to ASPiRA LABS, Inc. (“ASPiRA LABS”);~~

~~expectations regarding future services provided by Quest Diagnostics Incorporated (“Quest Diagnostics”);~~

~~plans to expand our ovarian cancer franchise beyond OVA1, including with respect to Overa and OvaX;~~

~~plans regarding the commercialization of Overa;~~

expectations regarding existing and future collaborations and partnerships for our products, including plans to enter into decentralized arrangements for our Aspira Synergy product and provide and expand access to our risk assessment tests;

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, 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;

expectations regarding raising capital and the amount of financing anticipated to be required to fund our planned operations;

expectations regarding the results of our clinical research studies and our ability to recruit patients to participate in such studies;

our ability to use our net operating loss carryforwards and anticipated future tax liability under U.S. federal and state income tax legislation;

expected market adoption of our diagnostic tests, including OVA1, OVERA, OVA1plus, as well as our offerings of Aspira GenetiX and Aspira Synergy platform;

expectations regarding our ability to launch new products we develop or license, co-market or acquire new products;

expectations regarding reimbursement for our products, and our ability to obtain such reimbursement, from third-party payers such as private insurance companies and government insurance plans;

plans to use each of AbbVie Inc. serum samples and ObsEva S.A. plasma samples in EndoCheck product validation studies;

potential plans to pursue clearance designation with the FDA with respect to EndoCheck;

expectations regarding compliance with federal and state laws and regulations relating to billing arrangements conducted in coordination with laboratories;

plans to advocate for legislation and professional society guidelines to broaden access to our products and services;

expectations regarding the impacts resulting from or attributable to the COVID-19 pandemic and actions taken to contain it; and

Forward-looking statements are subject to significant risks and uncertainties, including those discussed in Part I Item 1A, “Risk ~~Factors”~~Factors,” of our Annual Report on Form 10-K for the year ended December 31, ~~2016 (our “2016 Annual Report”) and Part II, Item 1A.~~2021, as supplemented by the section entitled “Risk Factors” ~~of our~~in this Quarterly Report on Form 10-Q, ~~for the three months ended March 31, 2017 (our “2017 First Quarterly Report”),~~ that could cause actual results to differ materially from those projected in such forward-looking statements due to various factors, including our ability to continue as a going concern; our ability to comply with Nasdaq’s continued listing requirements; impacts resulting from or relating to the COVID-19 pandemic and actions taken to contain it; anticipated use of capital and its effects; our ability to increase the volume of ~~OVA1 or Overa~~our product sales; ~~our ability to market our test through sales channels other than Quest Diagnostics including ASPiRA LABS;~~ failures by third-party payers to reimburse ~~OVA1 or Overa~~for our products and services or changes ~~or variances in~~to reimbursement rates; our ability to ~~secure additional capital on acceptable terms~~continue developing existing technologies and to ~~execute~~develop, protect and promote our ~~business plan;~~proprietary technologies; plans to develop and perform LDTs; our ability to comply with Food and Drug Administration (“FDA”) regulations that relate to our products and to obtain any FDA clearance or approval required to develop and commercialize OVA1 and/or Overa both within and outside the United States; in the event that we succeed in commercializing OVA1 and/or Overa outside the United States, the political, economic and other conditions affecting other countries (including foreign exchange rates);medical devices; our ability to develop and commercialize additional diagnostic products and achieve market acceptance with respect to these products; our ability to compete successfully; our ability to obtain any regulatory approval required for our future diagnostic products; ~~our~~ or our

suppliers’ ability to comply with ~~United States Food and Drug Administration (“FDA”)~~FDA requirements

for production, marketing and post-market monitoring of our products; ~~additional costs that may be required to make further improvements to our manufacturing operations;~~ our ability to maintain sufficient or acceptable supplies of immunoassay kits from our suppliers; in the event that we succeed in commercializing our ~~ability to continue to develop, protect~~products outside the United States, the political, economic and promote our proprietary technologies; future litigation against us, including infringement of intellectual property and product liability exposure; our ability to retain key employees; business interruptions; legislative actions resulting in higher compliance costs;other conditions affecting other countries; changes in healthcare policy; our ability to comply with environmental laws; ~~our ability to generate sufficient demand for ASPiRA LABS’ services to cover its operating costs;~~ our ability to comply with the additional laws and regulations that apply to us in connection with the operation of ASPiRA LABS; our ability to ~~comply with FDA regulations that relate to~~use our ~~products and to obtain any FDA clearance or approval required to develop and perform LDTs; ASPiRA IVD’s lack of~~net operating history; ASPiRA IVD’s ability to generate and maintain business; fluctuations over time with respect to ASPiRA IVD’s operating results; ASPiRA IVD’s ability to enter into profitable contracts; ASPiRA IVD’s ability to maintain effective information systems without significant interruption; ASPiRA IVD’s ability to perform its services in compliance with contractual requirements, regulatory standards and ethical considerations; andloss carryforwards; our ability to ~~continue as~~use intellectual property; our ability to successfully defend our proprietary technology against third parties; our ability to obtain licenses in the event a ~~going concern.~~ third party successfully asserts proprietary rights; the liquidity and trading volume of our common stock; the concentration of ownership of our common stock; our ability to retain key employees; our ability to secure additional capital on acceptable terms to execute our business plan; business interruptions; the effectiveness and availability of our information systems; our ability to integrate and achieve anticipated results from any acquisitions or strategic alliances; future litigation against us, including infringement of intellectual property and product liability exposure; and additional costs that may be required to make further improvements to our laboratory operations.

Company Overview

Corporate Vision

Our ~~vision~~core mission is to ~~drive~~transform the ~~advancement~~state of women’s health, ~~by providing innovative methods~~globally, starting with ovarian cancer. We aim to ~~detect, monitor~~eradicate late-stage detection of ovarian cancer and ~~manage~~to ensure that our solutions will meet the ~~treatment~~needs of ~~both benign~~women of all ages, races, ethnicities and ~~malignant gynecologic disease, with our primary focus being diseases~~stages of the ~~female pelvic cavity.~~disease. Our core patient goal is to develop a lifelong relationship with each patient, ensuring each woman has access to best-in-class risk assessment tools.

~~We have expanded our corporate strategy with the goal of transforming Vermillion from a technology license company to a diagnostic service and bio-analytic solutions provider.~~

Our plan is to broaden our commercial focus from ovarian cancer to differential diagnosis of women with a range of gynecological ~~disorders. Our strategy is being deployed~~ diseases. We plan to continue commercializing our new generation of technology as well as distribute our technology through our decentralized technology transfer service platform, known as “Aspira Synergy.” We also intend to raise public awareness regarding the diagnostic superiority of OVA1plus as compared to cancer antigen 125 (“CA125”) for all women, but especially for racially diverse women with adnexal masses, as well as the importance of machine learning algorithm development in ~~three phases. The three phases~~different racial and ethnic populations. We also plan to advocate for legislation and professional society guidelines to provide broad access to our products and services.

All of our products are focused on gynecologic diseases that cannot be assessed through a ~~rebuild phase, which was completed~~traditional biopsy, or can only be detected by invasive procedures in the ~~third quarter~~case of ~~2015, a transformation phase, which is now virtually complete except for continuing expansion of payer coverage,~~endometriosis, making our non-invasive blood biopsy more efficient and ~~a market expansion and growth phase, which we began in 2017.~~

~~During the first phase, we expanded our leadership team by hiring several new senior leaders including a chief executive officer. In addition, we expanded our commercial strategy, reestablished~~patient friendly. We maintain medical and advisory support ~~rebuilt our patient advocacy strategy and established a billing system~~ and a ~~payer strategy outside of~~Key Opinion Leader Network aligned with our ~~relationship with Quest Diagnostics. During the second phase,~~ ~~we completed the process of obtaining licensure of ASPiRA LABS~~ ~~in all of the states that require licenses, and are~~territories in the ~~process of establishing~~U.S. In addition to adding to our ~~own payer coverage for OVA1,~~ ~~Multivariate Index Assay~~ ~~(MIA), and our second-generation OVA1 test, trademarked Overa,~~ ~~Multivariate Index Assay, 2~~nd ~~Generation~~ ~~(MIA2G). Overa has been launched on a targeted basis. In the third phase,~~direct salesforce, in 2021, we ~~plan to fully commercialize~~added OVA1 and ~~Overa~~OVA1plus on our technology transfer platform, Aspira Synergy. In 2022, we have continued to commercialize OVA1plus by utilizing ~~the full national licensure of ASPiRA LABS,~~ select ~~laboratories~~partnerships for distribution, expanding our managed care coverage and contracts in select markets, growing our sales force, increasing adoption with our existing and new customers, and further deploying our Aspira Synergy technology transfer platform. We also plan to develop an LDT series of diagnostic algorithms. In 2021, we expanded access to our tests among Medicaid patients as part of our corporate mission to make the best care available to all women.

Throughout 2022, we have been focused on our three key initiatives: growth, innovation, and operational excellence:

Growth. In 2022, we have continued to grow the top line in terms of both product volume and revenue. Our focus has been on OVA1plus, and, in the second half of 2022, we plan to drive OVA1plus sales volume not only through our own commercial team but also through our collaboration with BioReference Health, LLC, formerly known as BioReference Laboratories, Inc. (“BRL”). We believe Aspira GenetiX and Aspira Synergy should also contribute to increased revenue. In addition, positive trends in the tenure of our sales professionals should lead to volume growth. As of June 30, 2022, 67% of our sales professionals had been with us for more than three months and 58% had been with us for more than six months. We aim not only to increase the number of physicians ordering for the first time but also to increase repeat orders from existing ~~customer base. Unlike~~physician customers.

agreements are with two of the nation’s largest and leading independent women’s healthcare groups which together include approximately 750 providers and serve approximately 950,000 patients annually. The other agreements are with independent regional laboratories. In the fourth quarter of 2021, we launched the Aspira Synergy product with a national women’s healthcare group.

We are developing three additional products and related services, including two diagnostic algorithms, OVAWatch and EndoCheck, as well as a high-risk diagnostic algorithm, OVAInherit. These products may be launched as LDTs or FDA-cleared tests.

OVAWatch has been developed and is validated for use in Aspira’s CLIA-certified high complexity lab as a non-invasive risk assessment test for use in conjunction with clinical assessment and imaging to determine ovarian cancer risk for patients with an adnexal mass who are not yet scheduled for surgery. The commercialization plan for OVAWatch will occur in two phases. Phase I is a single use, point-in-time risk assessment test and Phase II will allow for serial monitoring. We will focus on the commercial phase of the OVAWatch single use risk assessment test, including driving provider adoption, during the third and fourth quarter of 2022. The timing will depend on the results of a clinical validation study that we expect to complete this summer. We believe OVAWatch has the potential to significantly expand the addressable market over OVA1plus. The launch of the serial monitoring test is targeted for the second half of 2023 following the expected publication of data from the ongoing prospective serial monitoring clinical study.

EndoCheck, an in-development non-invasive blood test to be used in conjunction with other non-surgical modalities, is designed to be an aid in the detection of endometriosis and address the patient population of women who are experiencing moderate to severe pelvic pain to provide non-invasive confirmation that their symptoms are indicative of endometriosis. The goal of this test is to support an early diagnosis and direct appropriate medical management that potentially reduces the progression of disease. Current detection methods for endometriosis require surgery and a surgical biopsy diagnosis and/or visualization diagnosis. EndoCheck is intended to address this large patient population by using a non-invasive solution with comparable sensitivity and specificity when compared to surgical biopsy and/or visualization. We expect that our research collaboration agreement with Harvard’s Dana-Farber Cancer Institute, Brigham and Women’s Hospital, and Medical University of Lodz will bolster our research and development efforts and scientific resources to accelerate commercialization of EndoCheck. Our goal is to launch EndoCheck in the second half of 2023 as an LDT.

OVAInherit will be designed as a non-invasive high-risk diagnostic tool, intended for those patients with or without a pelvic mass who are genetically predisposed to ovarian cancer. It will use genetics, proteins and other modalities to assess the likelihood that a woman has an early-stage gynecological cancer that is not visible using traditional ultrasound methodologies, and thereby to aid in early diagnoses. Our OVAInherit related clinical studies, OVANex and OVA360, initiated in late 2019 and early 2020, respectively, are focused on developing data to support a diagnostic test for the early detection of ovarian cancer. Our collaboration work with Harvard's Dana-Farber Cancer Institute, Brigham and Women’s Hospital, and Medical University of Lodz resulted in a Phase 1 Proof of Concept evaluation, which surpassed all required metrics. Based on the outcome data, we have begun implementing Phase 2 of the study. In Phase 2, the team is evaluating the combined potential impact of our protein biomarker algorithms and the investigators’ miRNA technology in the development of this assay and platform.

We ultimately plan to commercialize each of OVA1, OVERA, OVA1plus, Aspira GenetiX, OVAWatch, EndoCheck, OVAInherit and Aspira Synergy on a global level. We currently hold CE marks for OVA1 and OVERA. In addition, each of OVA1 and OVERA, and the reflex offering, OVA1plus, will be offered on our global testing platform, which will allow ~~Overa~~both tests to be deployed ~~internationally. We initiated the targeted launch of Overa in October 2016 with two key accounts converting from OVA1 to Overa. In October 2015, we announced registration~~worldwide.

Outside of the ~~CE mark~~United States, we have studies in process to validate OVERA and OVA1 in specific populations. This includes active international distribution agreements for OVERA with Pro-Genetics LTD in Israel and ~~clearance to market Overa~~MacroHealth, Inc. in the ~~European Union. We also plan to develop an LDT~~ product series, which we refer to internally as OvaX. We anticipate that OvaX will include not only biomarkers, but also clinical risk factors, other diagnostics and patient history data in order to boost predictive value. Philippines. The MacroHealth, Inc. agreement was our first agreement regarding our decentralized technology, Aspira Synergy, for OVERA specimen testing.

We are dedicated to the discovery, development and commercialization of novel high-value diagnostic and bio-analytical solutions that help physicians diagnose, treat and improve outcomes for women. Our tests are intended to detect, characterize and stage disease, and to help guide decisions regarding patient treatment, which may include decisions to refer patients to specialists, to perform additional testing, or to assist in monitoring response to therapy. A distinctive feature of our approach is to combine multiple biomarkers, other modalities and diagnostics, clinical risk factors and patient data into a single, reportable index score that has higher diagnostic accuracy than its constituents. We concentrate on our development of novel diagnostic tests for gynecologic disease, with an initial focus on ovarian cancer. We also intend to address clinical questions related to early disease detection, treatment response, monitoring of disease progression, prognosis and others through collaborations with leading academic and research institutions.

~~Our initial product, OVA1,~~ ~~is an FDA cleared 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.~~ We have launched on a targeted basis a second-generation biomarker panel known as Overa, which is intended to maintain our product’s high sensitivity while improving specificity. We received FDA clearance for Overa in March 2016. Overa uses the Roche cobas 6000 platform.

~~In June 2014, Vermillion launched~~own and operate ASPiRA LABS, ~~a Clinical Laboratory Improvements Amendments of 1988 (“CLIA”) certified national laboratory~~ based in Austin, Texas, a Clinical Chemistry and Endocrinology Laboratory accredited by the College of American Pathologists, which specializes in applying biomarker-based technologies to address critical needs in the management of gynecologic cancers and disease. ASPiRA LABS provides expert diagnostic services using a state-of-the-art biomarker-based ~~diagnostic algorithm~~risk assessment to aid in clinical decision making and advance personalized treatment plans. The lab currently processes our OVA1 and ~~Overa~~OVERA tests, and we plan to expand the testing to other gynecologic conditions with high unmet need. We also plan to develop and perform LDTs at ASPiRA ~~LABS in the future.~~LABS. ASPiRA LABS holds a CLIA Certificate of ~~Registration~~Accreditation and a state laboratory license in California, ~~Florida,~~ Maryland, New York, Pennsylvania and Rhode Island. The Centers for Medicare & Medicaid Services (“CMS”) issued a ~~provider~~supplier number to ASPiRA LABS in ~~March~~ 2015.

In ~~2016, we created a new service within~~ the ~~ASPiRA channel strategy, “an ASPiRA IVD Services Program”. In April 2016, we formed ASPiRA IVD to offer IVD trial services to~~United States, revenue for diagnostic tests comes from several sources, including third-party ~~customers.~~ ASPiRA IVD is a specialized laboratory provider dedicated to meeting the unique testing needs of IVD manufacturers seeking to commercialize high-complexity assays. ASPiRA IVD was built around a core of laboratory expertisepayers such as insurance companies, government healthcare programs, such as Medicare and ~~an FDA-compliant quality system,~~Medicaid, client bill accounts and ~~strives to deliver accurate and reliable results to its third-party customers suitable for FDA submission. ASPiRA IVD~~ ~~received a CLIA laboratory license in June 2016 and commenced operations in the second quarter of 2016.~~

In this program, we also plan to leverage our existing infrastructure and enhance our pipeline of future technologies by fostering relationships with IVD companies who are developing new diagnostics including companion diagnostics platforms. We believe this plan will allow us to continue to be innovative in evaluating potential diagnostics. Our goal with the addition of this line of business is to invest in our short-term and long-term enterprise value while leveraging our specimen bank, database, FDA experience, laboratory informatics and operating efficiency.

~~Strategy:~~

~~We are focused on the execution of five core strategic business drivers in ovarian cancer diagnostics and specialized laboratory services to build long-term value for our investors:~~

~~Maximizing the existing OVA1 opportunity in the United States by taking the lead in payer coverage and commercialization of OVA1. This strategy included the launch of a~~ ~~CLIA certified clinical laboratory, ASPiRA LABS, in June 2014;~~

Expanding the distribution platform beyond the U.S. by launching Overa, a next generation biomarker panel, while building the clinical utility and health economics foundation of both OVA1 and Overa, which we believe may allow for better domestic market penetration and international expansion (FDA clearance for Overa was received in March 2016);

~~Leveraging our existing database and specimen bank while building the largest specimen and data repository of gynecologic pelvic mass patients worldwide;~~

Expanding our product offerings to additional pelvic disease conditions such as endometriosis and polycystic ovarian syndrome by adding additional gynecologic bio-analytic solutions involving biomarkers, other modalities (~~e.g., imaging), clinical risk factors and patient data to aid diagnosis and risk stratification of women presenting with a pelvic mass disease; and~~

~~Expanding our customer offerings with the launch of our ASPiRA IVD laboratory services.~~

We believe that these business drivers will contribute significantly to addressing unmet medical needs for women faced with gynecologic disease and other conditions and the continued development of our business.

OVA1 addresses a clear clinical need, namely the pre-surgical identification of women who are at risk of having a malignant ovarian tumor. Numerous studies have documented the benefit of referral of these women to gynecologic oncologists for their initial surgery. Prior to the clearance of OVA1, no blood test had been cleared by

the FDA for physicians to use in the pre-surgical management of ovarian adnexal masses. OVA1 is a qualitative serum test that utilizes five well-established biomarkers and proprietary software cleared as part of the OVA1 510(k) to determine the likelihood of malignancy in women over age 18, with a pelvic mass for whom surgery is planned. OVA1 should not be used without an independent clinical/radiological evaluation and is not intended to be a screening test or to determine whether a patient should proceed to surgery. Incorrect use of OVA1 carries the risk of unnecessary testing, surgery and delayed diagnosis. OVA1 was developed through large pre-clinical studies in collaboration with numerous academic medical centers encompassing over 2,500 clinical samples. OVA1 was fully validated in a prospective multi-center clinical trial encompassing 27 sites reflective of the diverse nature of the clinical centers at which ovarian adnexal masses are evaluated.

patients. Novitas Solutions, ~~the~~a Medicare contractor, covers and reimburses for ~~OVA1. This~~OVA1 tests performed in certain states, including Texas. Due to OVA1 tests being performed exclusively at ASPiRA LABS in Texas, the local coverage determination from Novitas Solutions essentially provides national coverage for patients enrolled in Medicare as well as Medicare Advantage health plans. ~~However,~~ ASPiRA LABS ~~initially experienced difficulty in obtaining payment from Novitas Solutions~~also bills third-party commercial and other government payers as well as client bill accounts and patients for most claims submitted due to Novitas Solutions’ administrative requirements. In October 2016, Novitas Solutions updated its administrative requirements for OVA1 reimbursement which has improved our ability to obtain reimbursement for OVA1 from Novitas Solutions.OVA1.

In October 2016, we launched our pelvic mass specimen and data repository and began the collection of Institutional Review Board patient consents for collection and cataloguing of serum samples for future research purposes.

In November 2016, ~~The~~the American College of Obstetricians and Gynecologists ("(“ACOG”) issued Practice Bulletin Number 174 which included OVA1, defined as athe “Multivariate Index Assay”~~. This bulletin outlines ACOG's “new”~~, outlining ACOG’s clinical management guidelines for adnexal mass management.

~~These new clinical management guidelines replace the July 2007 version,~~ Practice Bulletin 83. Practice Bulletins summarize current information on techniques and clinical management issues for the practice of obstetrics and gynecology. Practice Bulletins are evidence-based documents, and recommendations are based on the evidence. This is also the only clinical management tool used for adnexal masses. Guidelines do not exist for adnexal masses, only Practice Bulletins. Guidelines do exist, however, for ovarian cancer management.

~~The Practice Bulletin~~Number 174 recommends that obstetricians and gynecologists evaluating women with adnexal masses who do not meet Level A criteria of a low risk transvaginal ultrasound should proceed with Level B clinical guidelines. Level B guidelines state that the physician may use risk assessment tools such as existing CA125 technology or OVA1 (“Multivariate Index Assay”) as listed in the bulletin. Based on this, OVA1 ~~has now~~ achieved parity with CA125 as a Level B clinical recommendation for the management of adnexal masses.

~~In December 2016, we received an FDA Clarification Letter regarding OVA1~~

Practice Bulletins summarize current information on techniques and ~~Overa.~~clinical management issues for the practice of obstetrics and gynecology. Practice Bulletins are evidence-based documents, and recommendations are based on the evidence. This ~~letter was in reference~~is also the only clinical management tool used for adnexal masses. Although there are Practice Bulletins, guidelines do not exist for adnexal masses. ACOG guidelines do exist, however, for ovarian cancer management.

Recent Developments

Leadership Updates

On June 23, 2022, the Company’s stockholders elected Robert Auerbach, M.D. and Ruby Sharma to the ~~September 7, 2016 FDA Safety Communication advising women~~Company’s board of directors. The Company’s board of directors has appointed Dr. Robert Auerbach as a member of the Compensation Committee and ~~their physicians against~~Nominating and Corporate Governance Committee and has appointed Ruby Sharma as Audit Committee Chair, replacing James T. LaFrance, who stepped down as Audit Committee Chair, each effective June 23, 2022.

On July 5, 2022, Ryan Phan, Ph.D. joined the ~~use~~Company as Chief Operating and Scientific Officer. Dr. Phan previously worked for CareDx where he served as Senior Vice President of ~~ovarian cancer screening tests for asymptomatic women.~~Lab Services and Medical Director.

~~In order to avoid any confusion, as well as to document~~

Business and Listing Updates

On June 1, 2022, the ~~FDA position on OVA1 and Overa, Jeffrey Shuren, M.D., J.D., Director~~Company received a deficiency letter from the Listing Qualifications Department of the Nasdaq Stock Market notifying the Company that, for the ~~Center~~preceding 30 consecutive business days, the closing bid price for ~~Devices~~the Company’s common stock was below the minimum $1.00 per share requirement for continued inclusion on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Rule”). As provided in the Nasdaq rules, we have 180 calendar days, or until November 28, 2022, to regain compliance with the Minimum Bid Price Rule. We may achieve compliance during this period if the closing bid

price of Aspira common stock is at least $1.00 per share for a minimum of 10 consecutive business days. If we fail to regain compliance on or prior to November 28, 2022, we may be eligible for an additional 180-calendar day compliance period. There is no assurance that we will be able to regain compliance by the November 28, 2022 deadline or the additional 180-calendar day extended deadline, and ~~Radiological Health at the FDA, sent a letter to Vermillion, dated December 21, 2016. In the letter, Dr. Shuren stated:~~

~~We agree~~there is no assurance that we will otherwise maintain compliance with this ~~safety communication does not apply to Vermillion’s FDA-cleared tests, OVA1 (MIA) and Overa (MIA2G), which are not screening tests for ovarian cancer.~~

FDA cleared OVA1 (MIA) and Overa (MIA2G) as aids to further assess the likelihood that malignancy is present when the physician’s independent clinical and radiological evaluation does not indicate malignancy. The intended usesor any of the two assays are the same—to help physicians more reliably identify which patients would benefit from consultation with or referral to a gynecologic oncologist. OVA1 (MIA) and Overa (MIA2G) are indicated for women who present with an adnexal mass.other Nasdaq continued listing requirements.

~~In March 2015,~~

On June 4, 2022, we entered into a new, ~~commercial~~exclusive agreement with ~~Quest Diagnostics. Pursuant~~BioReference Health, LLC, formerly known as BioReference Laboratories, Inc. (“BRL”) whereby BRL will jointly sell OVA1plus along with our direct salesforce, thus expanding the scope, reach, and breadth of the combined geographic sales footprint.

On August 8, 2022, we entered into a sponsored research agreement with Harvard’s Dana-Farber Cancer Institute, Brigham and Women’s Hospital, and Medical University of Lodz for the generation of a multi-omic, non-invasive diagnostic aid to identify endometriosis based on circulating microRNAs and proteins. This collaboration aims to develop a technology to guide medical and clinical management of women without a pelvic mass presenting with symptoms of endometriosis and to limit surgical evaluation for those cases where non-invasive tests are equivocal or in patients for whom surgical excision of endometriosis is clinically indicated. This research collaboration agreement will build on our extensive prior research and development efforts and will expand our access to appropriate samples as well as scientific resources required to accelerate the commercialization of our EndoCheck diagnostic test. We believe this agreement ~~all OVA1 U.S. testing~~will help to ensure a launch of an endometriosis diagnostic test in the second half of 2023.

On June 29, 2022, we entered into a standalone agreement with Scarlet Health, an innovative mobile phlebotomy solution providing collections for Aspira’s patients from the comfort of their home.

Pipeline Expansion Strategy: We are focused on execution of the following core strategic business drivers in delivering state-of-the-art gynecologic health solutions starting with ovarian cancer diagnostics, and specialized laboratory services to build long-term value for ~~Quest Diagnostics customers were transferred~~our investors:

1)Maximizing the existing OVA1plus opportunity by actively pursuing broad physician adoption and payer coverage;

2)Leveraging our existing database and specimen bank while building our specimen and data repository of gynecologic pelvic mass patients;

3)Expanding our product offerings to ~~Vermillion’s wholly-owned subsidiary, ASPiRA LABS,~~aid in diagnostic and risk stratification for additional women’s health diseases with a focus on pelvic disease conditions such as pelvic mass monitoring and endometriosis by adding additional gynecologic bio-analytic solutions involving biomarkers, genetics, other modalities (e.g., imaging), clinical risk factors and patient data; this may occur via licensing or other business development and merger and acquisition opportunities that represent synergistic offerings in women’s health;

4)Coupling our OVA products with an individual’s hereditary genetic risk to refine ovarian cancer risk assessment for high-risk populations; and

5)Expanding our proprietary decentralization platform, Aspira Synergy, to allow more large healthcare networks and physician practices to access OVA and Aspira GenetiX algorithms as a technology transfer service, while also obtaining access to de-identified data through these arrangements to allow us to enhance our algorithm development on a cost-effective basis.

We believe that these business drivers will contribute significantly to addressing unmet medical needs for women facing gynecologic disease and conditions and the continued development of our business.

Recent Publications

In parallel to building our OVA platform offering and our commercial deployment, we have been working on several key publications and product extensions.

The OVAWatch manuscript, "Analytical Validation of a Deep Neural Network Algorithm for the Detection of Ovarian Cancer," has been published online in the Journal of Clinical Oncology Clinical Cancer Informatics. The Company has prepared an application for a Proprietary Laboratory Analyses code with the

American Medical Association for the OVAWatch test to distinguish it from OVA1plus with an expectation that Novitas and other payers will apply the OVA1plus Centers for Medicare & Medicaid Services fee to OVAWatch, ensuring consistent coverage and pricing for both OVA products.

COVID-19 Pandemic

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 United 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 periodically throughout the pandemic. In order to reduce the impact of limitations on visiting physician offices due to closures and quarantines, we implemented other mechanisms for reaching physicians such as virtual sales representative meetings, Key Opinion Leader presentations, and increased digital sales and marketing. Patient enrollment for our planned 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, which has led to delays in the completion of such studies.

Given the potential for future resurgences of COVID-19 cases and the variety of federal and state actions taken to contain them, we are unable to estimate the potential future impact of the COVID-19 pandemic on our business, results of operations or cash flows as of ~~August 10, 2015. Pursuant~~the date of the filing of this Form 10-Q.

In addition, as of the date of the filing of this Form 10-Q, we have approximately four months of reagents, one of our key testing supplies, in stock, depending on volume of tests performed, and we are working with the manufacturer to ~~this agreement, as amended~~ensure a consistent supply over the next six months. As previously disclosed, we have put in place staffing and reagent contingency plans to ensure there is no down time at our lab. We believe the lab could continue to operate in the event any isolated infection were to impact a portion of the workforce. The full impact of the COVID-19 pandemic continues to evolve as of March 11, 2017, Quest Diagnostics has agreed 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. Per the

~~terms~~ date of the filing of this ~~agreement, we will not offer to existing or future Quest Diagnostics customers CA 125-II or other tests that Quest Diagnostics offers.~~Form 10-Q

~~In 2016, we continued to make progress with increased payer positive medical polices and in network agreements for a total of over 80 million covered lives.~~

~~In the first half of 2017, ASPiRA IVD services landed two top pharmaceutical trial service agreements including one enrollment study.~~

~~In July 2017 ASPiRA LABS expanded its patient advocacy program nationally to assist patients with proactive benefit checks, with over 90% resulting in OVA1 utilization.~~

~~In September 2017, the~~ ~~preliminary Protecting Access to Medicare Act of 2014 (PAMA) price for OVA1 and Overa was published by the Center for Medicare and Medicaid Service (CMS).~~ ~~The preliminary OVA1 rate is based on the median of private payer payments submitted by Vermillion as part of the market-based payment reforms mandated through PAMA.~~ ~~The Overa price was benchmarked to the only proteomic test currently on the fee schedule, which uses biomarkers~~ ~~and an algorithm to produce a prognostic score~~. ~~The new rates, once finalized, are scheduled to become effective January 1, 2018.~~

~~In 2017, we continued to make progress with increased payer positive medical polices and in network agreements for a total of over 123 million covered lives, expected effective by February 2018.~~

Critical Accounting Policies and Estimates

~~There have been no material~~Our product revenue is generated by performing diagnostic services using our OVA1, OVERA, OVA1plus or Aspira GenetiX tests, and the service is completed upon the delivery of the test result to the prescribing physician.The entire transaction price is allocated to the single performance obligation contained in a contract with a patient. Under ASC Topic 606, Revenue from Contracts with Customers, all revenue is recognized upon completion of the OVA1, OVERA, OVA1plus or Aspira GenetiX test and delivery of test 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, we consider factors such as payment history and amount, payer coverage, whether there is a reimbursement contract between the payer and us, and any developments or changes tothat could impact reimbursement. These estimates require significant judgment by management. For OVA1, OVERA, OVA1plus and Aspira GenetiX tests, we also review our ~~critical accounting policies~~patient account population and ~~estimates from those disclosed~~determine an appropriate distribution of patient accounts by payer (i.e., Medicare, patient pay, other third-party payer, etc.) into portfolios with similar collection experience. When evaluated for collectability, this results in ~~Item 7 of our 2016 Annual Report.~~a materially consistent revenue amount for such portfolios as if each patient account were evaluated on an individual contract basis.

‎

Results of Operations - Three Months Ended ~~September~~June 30, ~~2017~~2022 Compared to Three Months Ended ~~September~~June 30, ~~2016~~2021

The selected summary financial and operating data of the Company for the three months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~ 2021 were as follows:


								Three Months Ended
	Three Months Ended September 30,				Increase (Decrease)			June 30,				Increase (Decrease)
(dollars in thousands)	2017		2016		Amount		%	2022		2021		Amount		%
Revenue:
Product	$	657	$	581	$	76	13	$	2,018	$	1,720	$	298	17
Service		42		42		-	-
Genetics									48		79		(31)	(39)
Total revenue		699		623		76	12		2,066		1,799		267	15
Cost of revenue:
Product		495		461		34	7		1,036		839		197	23
Service		284		356		(72)	(20)
Genetics									64		264		(200)	(76)
Total cost of revenue		779		817		(38)	(5)		1,100		1,103		(3)	(0)
Gross profit		(80)		(194)		114	(59)		966		696		270	39
Operating expenses:
Research and development		192		370		(178)	(48)		1,410		1,471		(61)	(4)
Sales and marketing		1,050		1,606		(556)	(35)		3,580		4,018		(438)	(11)
General and administrative		1,177		1,295		(118)	(9)		4,196		3,279		917	28
Total operating expenses		2,419		3,271		(852)	(26)		9,186		8,768		418	5
Loss from operations		(2,499)		(3,465)		966	(28)		(8,220)		(8,072)		(148)	2
Interest income (expense), net		(10)		(11)		1	(9)
Other income (expense), net		-		-		-	-
Interest (expense) income, net									(10)		3		(13)	433
Other (expense) income, net									(13)		995		(1,008)	101
Net loss		(2,509)		(3,476)		967	(28)	$	(8,243)	$	(7,074)	$	(1,169)	17

Product Revenue. Product revenue was ~~$657,000~~$2,018,000 for the three months ended ~~September~~June 30, ~~2017~~2022, compared to ~~$581,000~~$1,720,000 for the same period in ~~2016.~~2021. Revenue for ASPiRA LABS is ~~being~~ recognized when the OVA1, OVERA, or OVA1plus test is ~~being performed or~~ ~~when amounts that will~~completed based on estimates of what we expect to ultimately ~~be realized can be estimated. All other ASPiRA LABS revenue is being recognized on a cash basis and thus recognition of revenue lags the performance of some OVA1 tests.~~realize. The ~~13%~~17% product revenue ~~growth~~increase is due to ~~improvement~~an increase in OVA1 test volume compared to the prior year, partially offset by a lower revenue average unit price ~~received per test~~(“AUP”), which decreased from $378 in the second quarter of 2021 to $373 in the second quarter of 2022. The product revenue increase was also driven by an increased volume of tests performed for higher AUP payers, such as those for Medicare and insurance carriers.

Medicaid represents approximately 12.0% of volume in the three months ended June 30, 2022, at an AUP of $90. This is compared to 12.2% of volume in the same period in 2021, at an AUP of $92. Our OVA1plus AUP without Medicaid was $414 for the three months ended June 30, 2022, compared to $417 for the same period in 2021. Product revenue increased 10% sequentially for the second quarter of 2022 as compared to the ~~same~~first quarter ~~in the prior year. The increase in average unit price was driven by an increase in client bill contracts, expansion~~ of ~~positive medical policy and contracting with payers, and improved billing and collection practices.~~2022.

The number of ~~OVA1~~Product tests performed ~~decreased 13%~~increased 19% to ~~approximately 1,954 OVA1 tests~~5,411 during the three months ended ~~September~~June 30, ~~2017~~2022, compared to ~~approximately 2,257 OVA1~~4,553 Product tests for the same period in ~~2016.~~ 2021. The ~~volume decrease was primarily~~number of Product tests performed increased 12% sequentially during the second quarter 2022 as compared to the first quarter 2022. These increases are a result of increased access to provider offices and increased investment in our current commercial channel. We expect revenue to continue to increase in 2022 due to ~~the previously announced loss of a client bill customer~~our investment in ~~July 2017, which was concentrated in uncovered territories (territories not covered by an ASPiRA sales representative)~~key salesforce hires and to a lesser extent, the impact of hurricanes in two key areas (Texas and Florida). Partially affecting the volume decrease was modest year-over-year growth in covered territories (territories covered by an ASPiRA sales representative).~~We expect the test volume to improve in the fourth quarter relative to volume in the third quarter of 2017.~~ strategic product development.

Genetics Revenue. ~~Service~~Genetics revenue was ~~$42,000~~$48,000 for the three months ended ~~September~~June 30, ~~2017~~2022, compared to ~~$42,000~~$79,000 for the same period in ~~2016. Service revenue will vary from quarter to quarter~~2021. Revenue for Aspira GenetiX is recognized when the Aspira GenetiX test is completed based on ~~the size~~estimates of ~~ongoing customer projects. Revenue for ASPiRA IVD~~what we expect to ultimately realize. The 39% genetics revenue decrease is ~~being recognized once certain revenue recognition criteria has been met (see Note 1 to~~ ~~the financial statements included in Part I, Item I of this Form 10-Q). We expect service revenue to increase in the fourth quarter of 2017 relative to service revenue in the third quarter of 2017~~primarily due to decreased volumes and decreased AUP as compared to the ~~performance of certain anticipated projects.~~same period in 2021.

Results of Operations – ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2022 Compared to ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~2021

The selected summary financial and operating data of the Company for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021 were as follows:


								Six Months Ended
	Nine Months Ended September 30,				Increase (Decrease)			June 30,				Increase (Decrease)
(dollars in thousands)	2017		2016		Amount		%	2022		2021		Amount		%
Revenue:
Product	$	2,195	$	1,640	$	555	34	$	3,853	$	3,136	$	717	23
Service		128		197		(69)	(35)
Genetics									106		159		(53)	(33)
Total revenue		2,323		1,837		486	26		3,959		3,295		664	20
Cost of revenue:
Product		1,345		1,516		(171)	(11)		1,893		1,494		399	27
Service		855		416		439	106
Genetics									139		502		(363)	(72)
Total cost of revenue		2,200		1,932		268	14		2,032		1,996		36	2
Gross profit		123		(95)		218	(229)		1,927		1,299		628	48
Operating expenses:
Research and development		685		1,868		(1,183)	(63)		2,758		2,343		415	18
Sales and marketing		3,114		5,514		(2,400)	(44)		8,077		7,126		951	13
General and administrative		3,825		4,645		(820)	(18)		8,559		5,788		2,771	48
Total operating expenses		7,624		12,027		(4,403)	(37)		19,394		15,257		4,137	27
Loss from operations		(7,501)		(12,122)		4,621	(38)		(17,467)		(13,958)		(3,509)	25
Interest income (expense), net		(32)		(16)		(16)	100
Other income (expense), net		(9)		16		(25)	(156)
Interest (expense) income, net									(28)		(21)		(7)	33
Other (expense) income, net									(16)		985		(1,001)	(102)
Net loss		(7,542)		(12,122)		4,580	(38)	$	(17,511)	$	(12,994)	$	(4,517)	35

Product Revenue. Product revenue was ~~$2,195,000~~$3,853,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022, compared to ~~$1,640,000~~$3,136,000 for the same period in ~~2016.~~2021. Revenue for ASPiRA LABS is ~~being~~ recognized when the OVA1, OVERA, or OVA1plus test is ~~being performed or~~ ~~when amounts that will~~completed based on estimates of what we expect to ultimately ~~be realized can be estimated. All other ASPiRA LABS revenue is being recognized on a cash basis and thus recognition of revenue lags the performance of some OVA1 tests.~~realize. The ~~$555,000, or 34%,~~23% product revenue ~~growth~~increase is primarily due to ~~improvement~~an increase in OVA1 test volume compared to the prior year, partially offset by a modest decrease in AUP, which decreased from $377 in the ~~average unit price received per~~first half of 2021 to $376 in the first half of 2022.

Medicaid represents approximately 11.8% of volume in the six months ended June 30, 2022, at an AUP of $90. This is compared to 11.7% of volume in the first half of 2021, at an AUP of $90. Our OVA1plus AUP without Medicaid was $415 for the six months ended June 30, 2022, compared to $417 for the same period in 2021.

The number of Product tests performed increased 23% to 10,257 during the six months ended June 30, 2022, compared to 8,328 Product tests for the same period in 2021. This increase was due to increased access to provider offices and increased investment in our current commercial channel.

Genetics Revenue.Genetics revenue was $106,000 for the six months ended June 30, 2022, compared to $159,000 for the same period in 2021. Revenue for Aspira GenetiX is recognized when the Aspira GenetiX test is completed based on estimates of what we expect to ultimately realize. The 33% genetics revenue decrease is primarily due to decreased volumes as compared to the same period in 2021, in addition to the ~~prior year. The increase~~AUP decreasing to $424 from $483 from the same period in ~~average unit price~~2021.

Cost of Revenue – Product. Cost of product revenue was ~~driven by an increase in client bill contracts, expansion of positive medical policy and contracting with payers, and improved billing and collection practices.~~

~~The number of OVA1 tests performed decreased 3% to approximately 6,665 OVA1 tests during~~$1,893,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022, compared to ~~approximately 6,867 OVA1 tests~~$1,494,000 for the same period in ~~2016. The volume decrease was~~2021, representing an increase of $399,000, or 27%, due primarily ~~due~~to increased personnel costs, lab supply costs, and software license fees resulting from the increase in tests performed compared to the ~~previously announced loss~~prior year.

Cost of ~~a client bill customer in July 2017,~~Revenue – Genetics.Cost of genetics revenue, which consisted primarily of personnel costs and consulting expense after the launch of Aspira GenetiX, was ~~concentrated in uncovered territories (territories not covered by an ASPiRA sales representative) and, to a lesser extent, the impact of hurricanes in two key areas (Texas and Florida).~~

~~Service Revenue. Service revenue was $128,000~~$139,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022, compared to ~~$197,000~~$502,000 for the same period in ~~2016,~~2021. The decrease in cost was due to a decrease of ~~$69,000, or 35%. Service revenue will vary from quarter to quarter based on the size~~$219,000 in personnel costs and a decrease in volume of ~~ongoing customer projects. Revenue for ASPiRA IVD is being recognized once certain revenue recognition criteria has been met (see Note 1~~tests performed as compared to the ~~financial statements included~~same period in ~~Part I, Item I of this Form 10-Q).~~ 2021.

~~Cost of Revenue - Product.~~ ~~Cost of product revenue was $1,345,000~~

Gross Profit Margin. Gross profit margin for OVA1plus decreased slightly to 50.8% for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022, compared to ~~$1,516,000~~53.0% for the same period in ~~2016, representing a~~2021. This decrease ~~of $171,000, or 11%, due~~was primarily related to ~~operating efficiencies compared to the prior year.~~ increased personnel costs, lab supply costs, and software license fees.

~~Cost of Revenue - Service.~~ Cost of service revenue was $855,000 for the nine months ended September 30, 2017 compared to $416,000 for the same period in 2016. ASPiRA IVD did not commence operations until June 2016 and thus included only four months of expense compared to three full quarters of expense in 2017.

Research and Development ~~Expenses~~.Expenses. Research and development expenses represent costs incurred to develop our technology and carry out clinical studies, and include personnel-related expenses, regulatory costs, reagents and supplies used in research and development laboratory work, infrastructure expenses, contract services and other outside costs. Research and development expenses ~~through March 2016 also included costs related to activities performed under contracts with our collaborators and strategic partners. Research and development expenses~~ for the ~~nine~~six months ended ~~September~~June 30, ~~2017 decreased $1,183,000,~~2022 increased by $415,000, or ~~63%~~18%, compared to the same period in ~~2016.~~2021. This ~~decrease~~increase was primarily due to ~~the expiration of~~clinical validity and product development costs related to OVAWatch, our ~~collaboration agreement with The Johns Hopkins University School of Medicine in March 2016~~third-generation product, as well as ~~lower~~investments in Aspira Synergy, increased personnel expenses, associated with EndoCheck regulatory clearance and ~~personnel related~~severance paid in relation to our reorganization of $132,000. We expect research and development expenses ~~due~~ to ~~the clearance~~increase in 2022, sequentially as well as relative to 2021, as a result of ~~Overa in March 2016.~~increased projects and clinical studies.

Sales and Marketing ~~Expenses~~.Expenses. Our sales and marketing expenses consist primarily of personnel-related expenses, education and promotional ~~expenses, and infrastructure~~ expenses. These expenses include the costs of educating physicians ~~laboratory personnel~~ and other healthcare professionals regarding OVA1, OVERA, OVA1plus and ~~Overa.~~Aspira GenetiX. Sales and marketing expenses also include the costs of sponsoring continuing medical education, medical meeting participation, and dissemination of scientific and health economic publications. Sales and marketing expenses for the ~~nine~~six months ended ~~September~~June 30, ~~2017 decreased $2,400,000,~~2022 increased by $951,000, or ~~44%~~13%, compared to the same period in ~~2016.~~2021. This ~~decrease~~increase was primarily due to ~~a reduction~~increased personnel, severance paid in ~~personnel~~relation to our reorganization, commissions, marketing expenses, sales meetings and ~~personnel expenses~~travel and ~~decreases in consulting~~entertainment costs. We expect sales and marketing ~~services compared~~expenses to increase sequentially in 2022, due to investing in key strategic hires and product portfolio expansion.

During the ~~prior year period.~~first quarter of 2022, we executed a commercial reorganization resulting in the separation of a number of employees. The changes were aimed at enhancing our national sales force and driving the accelerated adoption of OVA1plus as the standard of care for early risk detection of ovarian cancer in women who have been planned for surgery. The organizational changes resulted in the recording of one-time severance, separation, and settlement payments in the first quarter of approximately $1,284,000 including estimated future payouts, of which $1,085,000 paid related to sales and marketing, partially offset by insurance reimbursement of $523,000, of which $503,000 related to sales and marketing.

General and Administrative ~~Expenses~~.Expenses. General and administrative expenses consist primarily of personnel-related expenses, professional fees and other costs, including legal, finance and accounting expenses and other infrastructure expenses. General and administrative expenses for the ~~nine~~six months ended ~~September~~June 30, ~~2017 decreased~~2022 increased by ~~$820,000,~~$2,771,000, or ~~18%~~48%, compared to the same period in ~~2016. The decrease~~2021. This increase was primarily due to ~~the reduction~~increased personnel expenses of ~~consulting services~~$2,311,000 and ~~ASPiRA IVD start-up~~legal fees of $322,000. Severance paid to general and administrative-related personnel was immaterial. We expect general and administrative expenses to remain relatively flat sequentially in ~~2016 not being repeated in 2017.~~ 2022.

‎

Liquidity and Capital Resources

We plan to continue to expend resources selling and marketing OVA1, OVERA, OVA1plus and ~~Overa, operating our IVD trial services business~~Aspira GenetiX and developing additional diagnostic tests and service capabilities. We plan to launch our next generation ovarian cancer risk assessment test, OVAWatch, in the second half of 2022.

We have incurred significant net losses and negative cash flows from operations since ~~inception. At September 30, 2017, we had~~inception, and as a result have an accumulated deficit of ~~$393,098,000 and stockholders’ equity~~approximately $489,239,000 as of ~~$5,921,000. As of September~~June 30, ~~2017, we had $7,752,000 of cash and cash equivalents and $2,229,000 of current liabilities. Working capital was $6,074,000 and $3,547,000 at September 30, 2017 and December 31, 2016, respectively.~~

In December 2014, the Company issued warrants to purchase up to an aggregate of 4,166,659 shares of Vermillion common stock at an exercise price of $2.00 per share in conjunction with a December 2014 private placement of Vermillion common stock. The warrants expire by their original terms on December 23, 2017.

On August 31, 2017, certain holders exercised warrants to purchase 3,796,818 shares of Vermillion common stock in consideration for the Company agreeing to reduce the exercise price to $1.00 per share of Vermillion common stock.

~~The Company issued 3,796,818 shares of Vermillion common stock and received $3,796,818 in aggregate gross proceeds (approximately $3,577,000 net of transaction costs).~~

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.

~~In March 2016, we entered into an agreement (the “Loan Agreement”) pursuant to which we may borrow up to $4,000,000 from the DECD.~~2022. We ~~received an initial disbursement of $2,000,000 in April 2016 under this~~

~~agreement. The remaining $2,000,000 will be disbursed if and when we achieve certain future milestones.~~ Under the terms of the Loan Agreement, the Company may be eligible for forgiveness of up to $2,000,000 of the principal amount of the loan if the Company achieves certain job creation and retention milestones by March 1, 2018 (the “Measurement Date”). Conversely, if the Company is unable to meet these job creation milestones, namely, hiring 40 full-time employees with a specified average annual salary within the allotted timeframe and retaining those employees for a two-year period or does not maintain the Company’s Connecticut operations for a period of 10 years, the DECD may require early repayment of a portion or all of the loan plus a penalty of 5%. The Company is continuing to monitor progress towards achieving the employment milestone noted above. See also ~~Note 3~~ ~~to the~~ ~~financial statements included in Part I, Item I of this Form 10-Q for further information regarding the Loan Agreement.~~

We expect to incur a net loss and negative cash flows from operations for 2022. Working capital levels may not be sufficient to fund operations as currently planned through the next twelve months, absent a significant increase in ~~the remainder of 2017 and the foreseeable future. Our management believes that successful achievement of our business objectives will require~~revenue over historic revenue or additional financing. Given ~~these~~the above conditions, there is substantial doubt about our ability to continue as a going concern. ~~The condensed consolidated financial statements have been prepared on a going concern basis and do not include any adjustments that might result from these uncertainties.~~

~~The Company expects~~

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

~~Net cash used~~

As discussed in ~~operating activities was $5,977,000 for~~Note 2 to the ~~nine months ended September 30, 2017, resulting primarily~~condensed consolidated financial statements, in March 2016, we entered into a loan agreement (as amended on March 7, 2018 and April 3, 2020, the “DECD Loan Agreement”) with the State of Connecticut Department of Economic and Community Development (the “DECD”), pursuant to which we 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 us on April 15, 2016 under the DECD Loan Agreement. On December 3, 2020, we received a disbursement of the remaining $2,000,000 under the DECD Loan Agreement, as we 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, we may be eligible for forgiveness of up to $1,500,000 of the principal amount of the loan if we achieve certain job creation and retention milestones by December 31, 2022. Conversely, if we are either unable to retain 25 full-time employees with a specified average annual salary for a consecutive two-year period or do not maintain our Connecticut operations through March 22, 2026, the DECD may require early repayment of a portion or all of the loan plus a penalty of 5% of the total funded loan. For additional information, see Note 2 of our consolidated financial statements.

As discussed in Note 2 to the condensed consolidated financial statements, on May 1, 2020, we obtained the Paycheck Protection Program loan (the “PPP Loan”) from BBVA USA in the aggregate amount of approximately $1,006,000. We applied for forgiveness of the PPP Loan in March 2021, and, effective May 27, 2021, the SBA confirmed the waiver of our repayment of the PPP Loan, which was recognized as a gain in other income in 2021. We remain subject to an audit of the PPP loan. There is no assurance that we will not be required to repay all or a portion of the PPP Loan as a result of any such audit.

As discussed in Note 3 to the condensed consolidated financial statements, on February 8, 2021, the Company completed a public offering (the “2021 Offering”) resulting in net ~~loss reported~~proceeds of ~~$7,542,000~~approximately $47,720,000, after deducting underwriting discounts and ~~changes~~offering expenses. There was a change in ~~accounts payable, accrued and other liabilities~~estimate in the third quarter of ~~$401,000, partially offset by stock compensation~~2021 in the amount of $138,000 relating to an expense reversal of ~~$997,000, depreciation and amortization of $599,000 and changes in prepaid expenses of $312,000.~~offering costs.

Net cash used in operating activities was $11,199,000 for the nine months ended September 30, 2016 resulting primarily from the net loss reported of $12,122,000 and changes in accounts payable, accrued and other liabilities of $769,000, partially offset by stock compensation expense of $861,000, depreciation and amortization of $523,000 and changes in prepaid expenses of $354,000.

Net cash used in investing activities was $56,000 and $1,240,000 for the nine months ended September 30, 2017 and 2016, respectively. The higher costs in 2016 resulted from purchases of property and equipment for the ASPiRA IVD laboratory.

Net cash provided by financing activities was $8,543,000 for the nine months ended September 30, 2017, which consisted primarily of proceeds from the sale of Vermillion common stock in our February 2017In connection with a private placement ~~net of issuance costs, as well proceeds from the exercise~~offering of common stock and warrants we completed in May 2013, we entered into a stockholders agreement which, among other things, gives two of the primary investors in that offering the right to participate in any future equity offerings by the Company on the same price and terms as

other investors. In addition, the stockholders agreement prohibits us from taking certain material actions without the consent of at least one of the two primary investors in that offering. These material actions include:

Making any acquisition with a value greater than $2 million;

Offering, selling or issuing any securities senior to Aspira’s common stock or any securities that are convertible into or exchangeable or exercisable for securities ranking senior to Aspira’s common stock;

Taking any action that would result in a change in control of the Company or an insolvency event; and

Paying or declaring dividends on any securities of the Company or distributing any assets of the Company other than in the ordinary course of business or repurchasing any outstanding securities of the Company.

The foregoing rights terminate for a primary investor when that investor ceases to beneficially own less than 50% of the shares and warrants (taking into account shares issued upon exercise of the warrants), in the aggregate, that were purchased at the closing of the 2013 private placement.

As mentioned, we have incurred significant net losses and negative cash flows from operations since inception, and we expect to continue to incur a net loss and negative cash flows from operations in 2022. At June 30, 2022 we had an accumulated deficit of ~~issuance costs.~~ ($489,239,000) and stockholders’ equity of $14,122,000. As of June 30, 2022, we had $20,480,000 of cash and cash equivalents (excluding restricted cash of $250,000), $7,044,000 of current liabilities, and working capital of $15,912,000.There can be no assurance that we will achieve or sustain profitability or positive cash flow from operations. While we expect to grow revenue through ASPiRA LABS, there is no assurance of our ability to generate substantial revenues and cash flows from ASPiRA LABS’ operations. We expect revenue from our products to be our only material, recurring source of cash in 2022. In addition, the impact of the COVID-19 pandemic and actions taken to contain it on our liquidity for 2022 cannot be estimated as of the date of the filing of this Form 10-Q.

~~Net cash provided by financing activities of $1,877,000 for the nine months ended September 30, 2016 consisted primarily of proceeds from the DECD loan.~~

Our future liquidity and capital requirements will depend upon many factors, including, among others:

resources devoted to sales, marketing and distribution capabilities;

the rate of OVA1, OVERA, OVA1plus and Aspira GenetiX product adoption by physicians and patients;

the rate of product adoption by healthcare systems and large physician practices of the decentralized distribution agreements for OVA1, OVERA and OVA1plus;

the insurance payer community’s acceptance of and reimbursement for our products;

our plans to acquire or invest in other products, technologies and businesses;

the potential need to add study sites to access additional patients to maintain clinical timelines; and

the impact of the COVID-19 pandemic and the actions taken to contain it, as discussed above.

We expect cash utilization in the second half of 2022 to decrease from the first half of 2022. Note that the first quarter of 2022 had personnel costs, including those associated with our commercial reorganization. In addition, we had our annual performance plan payout in the first quarter, a cost that will not be incurred in the remaining three quarters of 2022. In the second quarter of 2022, the impact of our operational excellence strategic initiatives began, most notably with respect to reduced consulting costs as we focused on innovation focused on OVAWatch and EndoCheck. We also enhanced our sales and marketing in preparation for the BRL collaboration and the launch of OVAWatch. We expect cash utilization to increase in the third quarter of 2022 in connection with our research and collaboration commitments. In addition, we expect increased costs in commercial and research and development during the third quarter of 2022, as we invest in talent to deliver on our goals. We expect to see sequential improvement in net cash utilization in the fourth quarter of 2022 as we do not plan to incur one-time research and collaboration costs, which may be incurred in the third quarter, and as we start to see the impact of our anticipated top line growth.

~~resources devoted to sales, marketing and distribution capabilities;~~

~~the rate of OVA1 and Overa product adoption by physicians and patients;~~

~~the insurance payer community’s acceptance of and reimbursement for OVA1 and Overa;~~

~~the successful targeted launch of Overa;~~

~~resources devoted to our IVD trials laboratory and services;~~

~~the revenue generated by our IVD trial services business;~~

Net cash used in operating activities was $16,477,000 for the six months ended June 30, 2022, resulting primarily from the net loss reported of $17,511,000, which includes non-cash expenses in the amount of $1,448,000 related to stock compensation expense and $128,000 related to depreciation and amortization, offset by changes in prepaid expense and other assets of $408,000 and changes in accounts payable, accrued liabilities and other liabilities of $855,000, consisting of a decrease in short-term debt of $519,000, partially offset by changes in accounts receivable of $85,000 and inventory of $17,000.

Net cash used in operating activities was $11,745,000 for the six months ended June 30, 2021, resulting primarily from the net loss reported of $12,994,000, which includes non-cash items such as stock compensation expense of $1,771,000, PPP loan forgiveness of $1,006,000 and depreciation and amortization of $172,000, offset by changes in prepaid expense and other assets of $350,000 and changes in accounts payable, accrued liabilities and other liabilities of $208,000, partially offset by changes in accounts receivable of $208,000 and inventory of $71,000.

Net cash used in investing activities was $105,000 and $136,000 for the six months ended June 30, 2022 and 2021, respectively, which consisted of property and equipment purchases.

Net cash used in financing activities was $118,000 for the six months ended June 30, 2022, which primarily included principal payments on the DECD loan. Net cash provided by financing activities was $48,236,000 for the six months ended June 30, 2021, which resulted primarily from the February 2021 public offering, resulting in net proceeds to the Company of approximately $47,721,000, after deducting underwriting discounts and offering expenses of $515,000. There was a change in estimate in the third quarter of 2021 in the amount of $137,000 relating to an expense reversal of offering costs.

We have significant ~~net operating loss (“NOL”)~~ NOL carryforwards as of ~~September~~June 30, ~~2017~~2022 for which a full valuation allowance has been provided due to our history of operating losses. Section 382 of the Internal Revenue Code of 1986, as amended (“Section 382”), as well as similar state provisions may restrict our ability to use our NOL credit carryforwards due to ownership change limitations occurring in the past or that could occur in the future. These ownership changes may also limit the amount of NOL credit carryforwards that can be utilized annually to offset future taxable income and tax, respectively.

Legislation commonly referred to as the Tax Cuts and Jobs Act was enacted in December 2017. As a result of the Tax Cuts and Jobs Act of 2017, federal NOLs arising before January 1, 2018, and federal NOLs arising after January 1, 2018, are subject to different rules. The Company's pre- 2018 federal NOLs will expire in varying amounts from 2022 through 2037, if not utilized; and can offset 100% of future taxable income for regular tax purposes. Any federal NOLs arising after January 1, 2018, can generally be carried forward indefinitely and can offset up to 80% of future taxable income. State NOLs will expire in varying amounts from 2022 through 2037 if not utilized. Our ability to use our NOLs during this period will be dependent on our ability to generate taxable income, and the NOLs could expire before the Company generates sufficient taxable income. The Company’s ability to use NOL carryforwards may be restricted due to ownership change limitations occurring in the past or that could occur in the future, as required by Section 382, as well as similar state specific provisions. These ownership changes may also limit the amount of NOL carryforwards that can be utilized annually to offset future taxable income and tax, respectively.

Our management believes that Section 382 ownership changes occurred as a result of our follow-on public offerings in 2011, 2013 and 2015. Any limitation may result in the expiration of a portion of the NOL carryforwards before utilization and any NOL carryforwards that expire prior to utilization as a result of such limitations will be removed from deferred tax assets with a corresponding reduction of our valuation allowance. Due to the existence of a valuation allowance, it is not expected that such limitations, if any, will have an impact on our results of operations or financial position.


		~~Page~~
~~PART I~~	~~Financial Information~~	4
		Page
PART I	Financial Information	3
Item 1	Financial Statements	43
	Condensed Consolidated Balance Sheets as of ~~September~~June 30, ~~2017~~2022 (unaudited) and December 31, ~~2016 (unaudited)~~2021	43
	Condensed Consolidated Statements of Operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021 (unaudited)	64
	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended June 30, 2022 and 2021 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021 (unaudited)	76
	Notes to Condensed Consolidated Financial Statements (unaudited)	7
Item 2	8
~~Item 2~~	Management's Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3	15
~~Item 3~~	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4	26Controls and Procedures	31
~~Item 4~~PART II	~~Controls and Procedures~~Other Information	31
Item 1	26Legal Proceedings	31
~~PART II~~Item 1A	~~Other Information~~Risk Factors	32
Item 6	27Exhibits	33
~~Item 1~~SIGNATURES		~~Legal Proceedings~~	27
~~Item 1A~~	~~Risk Factors~~	27
~~Item 6~~	~~Exhibits~~	28
~~SIGNATURES~~		2934


	June 30,		December 31,
(in thousands)	2022		2021
Payroll and benefits related expenses	$	2,786	$	2,652
Collaboration and research agreements expenses		429		382
Professional services		1,221		1,992
Other accrued liabilities		623		273
Total accrued liabilities	$	5,059	$	5,299


	~~Vermillion,~~Aspira Women’s Health Inc.
Date: ~~November 8, 2017~~August 10, 2022	/s/ ~~Valerie B. Palmieri~~Nicole Sandford
	~~Valerie B. Palmieri~~Nicole Sandford President and Chief Executive Officer (Principal Executive Officer) and Director
Date: ~~November 8, 2017~~August 10, 2022	/s/ ~~Eric J. Schoen~~Robert Beechey
	~~Eric J. Schoen~~Robert Beechey ~~Senior Vice President, Finance and~~ Chief ~~Accounting~~Financial Officer (Principal Financial Officer and Principal Accounting Officer)


~~ITEM 3.~~	~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~