UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.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 ~~March 31,~~September 30, 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: 001-34810

Aspira Women’s Health Inc.

(Exact name of registrant as specified in its charter)


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

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

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	AWH	The NASDAQ 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 þ No ¨

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

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

Large accelerated filer ¨

Accelerated filer ¨

Non-accelerated filer þ

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

As of ~~May 6,~~November 4, 2022, the registrant had ~~112,209,064~~124,445,639 shares of common stock, par value $0.001 per share, outstanding.

ASPIRA WOMEN’S HEALTH INC.

FORM 10-Q

For the Quarter Ended ~~March 31,~~September 30, 2022

Table of Contents




		Page
PART I	Financial Information	3
Item 1	Financial Statements	3
	Condensed Consolidated Balance Sheets as of ~~March 31,~~September 30, 2022 (unaudited) and December 31, 2021	3
	Condensed Consolidated Statements of Operations for the three and nine months ended ~~March 31,~~September 30, 2022 and 2021 (unaudited)	4
	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended ~~March 31,~~September 30, 2022 and 2021 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021 (unaudited)	67
	Notes to Condensed Consolidated Financial Statements (unaudited)	78
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	1419
Item 3	Quantitative and Qualitative Disclosures About Market Risk	2634
Item 4	Controls and Procedures	2634
PART II	Other Information	2635
Item 1	Legal Proceedings	2635
Item 1A	Risk Factors	2735
Item 5	Other Information	36
Item 6	Exhibits	2837
SIGNATURES		2938

The following are registered and unregistered trademarks and service marks of Aspira Women’s HealthInc.: ~~VERMILLION®~~VERMILLION^SM, Aspira Women’s Health™^SM, OVA1®, OVERA®, ASPiRA LABS®, OvaCalc®, ASPiRA GenetiX^SM, ~~OVA1PLUS™~~OVA1PLUS®, ~~OVAWATCH™,~~OVAWATCH^SM EndoCheck™, OVAInherit™, Aspira Synergy^SM,, and ~~OVA360™~~OVA360^SM, ASPIRA IVD® , OVASUITE^SM, and YOUR HEALTH, OUR PASSION®.

PART I - FINANCIAL INFORMATION

ITEM 1.~~FINANCIAL~~1.FINANCIAL STATEMENTS

Aspira Women’s Health Inc.

Condensed Consolidated Balance Sheets

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


	March 31,		December 31,		September 30,		December 31,
	2022		2021		2022		2021
Assets		(Unaudited)				(Unaudited)
Current assets:
Cash and cash equivalents	$	26,855	$	37,180	$	20,551	$	37,180
Accounts receivable		1,136		1,027
Accounts receivable, net of allowance of $6 and $23, respectively						1,201		1,027
Prepaid expenses and other current assets		1,620		1,624		944		1,624
Inventories		189		174		280		174
Total current assets		29,800		40,005		22,976		40,005
Property and equipment, net		480		464		417		464
Right-of-use assets		331		346		299		346
Restricted cash		250		250		250		250
Other assets		-		14		-		14
Total assets	$	30,861	$	41,079	$	23,942	$	41,079
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,298	$	1,501	$	1,893	$	1,501
Accrued liabilities		4,035		5,299		4,988		5,299
Current portion of long-term debt		223		201		343		201
Short-term debt		519		779		-		779
Lease liability		64		60		73		60
Total current liabilities		6,139		7,840		7,297		7,840
Non-current liabilities:
Long-term debt		2,646		2,718		2,426		2,718
Lease liability		332		349		293		349
Warrant liabilities						2,748		-
Total liabilities		9,117		10,907		12,764		10,907
Commitments and contingencies (Note 2)
Stockholders’ equity:
Common stock, par value $0.001 per share, 150,000,000 shares authorized at March 31, 2022 and December 31, 2021; 112,141,741 and 112,138,741 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively		112		112
Common stock, par value $0.001 per share, 150,000,000 shares authorized at September 30, 2022 and December 31, 2021; 124,445,639 and 112,138,741 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively						124		112
Additional paid-in capital		502,628		501,788		504,851		501,788
Accumulated deficit		(480,996)		(471,728)		(493,797)		(471,728)
Total stockholders’ equity		21,744		30,172		11,178		30,172
Total liabilities and stockholders’ equity	$	30,861	$	41,079	$	23,942	$	41,079

See accompanying notes to the unaudited condensed consolidated financial statements.
‎

Aspira Women’s Health Inc.

Condensed Consolidated Statements of Operations

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

(Unaudited)


	Three Months Ended				Three Months Ended				Nine Months Ended
	March 31,				September 30,				September 30,
	2022		2021		2022		2021		2022		2021
Revenue:
Product	$	1,835	$	1,416	$	2,037	$	1,617	$	5,890	$	4,753
Genetics		58		80		35		49		141		208
Total revenue		1,893		1,496		2,072		1,666		6,031		4,961
Cost of revenue⁽¹⁾:
Product		857		655		875		715		2,768		2,209
Genetics		75		238		41		202		180		704
Total cost of revenue		932		893		916		917		2,948		2,913
Gross profit		961		603		1,156		749		3,083		2,048
Operating expenses:
Research and development⁽²⁾		1,348		872		2,157		1,518		4,915		3,861
Sales and marketing⁽³⁾		4,497		3,108		3,950		5,083		12,027		12,209
General and administrative⁽⁴⁾		4,363		2,509		4,746		3,839		13,305		9,627
Total operating expenses		10,208		6,489		10,853		10,440		30,247		25,697
Loss from operations		(9,247)		(5,886)		(9,697)		(9,691)		(27,164)		(23,649)
Interest expense, net		(18)		(24)
Other expense, net		(3)		(10)
Change in fair value of warrant liabilities						5,004		-		5,004		-
Interest income (expense), net						18		(14)		(10)		(35)
Other income (expense), net						117		(2)		101		983
Net loss	$	(9,268)	$	(5,920)	$	(4,558)	$	(9,707)	$	(22,069)	$	(22,701)
Net loss per share - basic and diluted	$	(0.08)	$	(0.05)	$	(0.04)	$	(0.09)	$	(0.19)	$	(0.20)
Weighted average common shares used to compute basic and diluted net loss per common share		112,139,038		108,661,712		117,118,136		112,077,133		113,863,079		110,904,824
Non-cash stock-based compensation expense included in cost of revenue and operating expenses:
(1) Cost of revenue	$	52	$	34	$	(23)	$	49	$	64	$	137
(2) Research and development		(4)		26		65		115		114		236
(3) Sales and marketing		147		139		76		368		281		843
(4) General and administrative		643		290		428		646		1,535		1,733

See accompanying notes to the unaudited condensed consolidated financial statements.

Aspira Women’s Health Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(Amounts in Thousands, Except Share Amounts)

(Unaudited)


	Common Stock									Common Stock
	Shares	Amount		Additional Paid-In Capital		Accumulated Deficit		Total Stockholders’ Equity		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	112,138,741	$	112	$	501,788	$	(471,728)	$	30,172
Net loss	-		-		-		(9,268)		(9,268)	-		-		-		(9,268)		(9,268)
Common stock issued in conjunction with exercise of stock options	3,000		-		2		-		2	3,000		-		2		-		2
Stock-based compensation expense	-		-		838		-		838	-		-		838		-		838
Balance at March 31, 2022	112,141,741	$	112	$	502,628	$	(480,996)	$	21,744	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
Net loss										-		-		-		(4,558)		(4,558)
Common stock and warrants issued in conjunction with follow-on public offering, net of issuance costs										12,000,000		12		1,056		-		1,068
Common stock issued for restricted stock awards										149,251		-		95		-		95
Stock-based compensation expense										-		-		451		-		451
Balance at September 30, 2022										124,445,639	$	124	$	504,851	$	(493,797)	$	11,178

‎

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


	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
Net loss	-		-		-		(9,707)		(9,707)
Common stock issued in conjunction with exercise of stock options	27,500		-		58		-		58
Common stock issued for restricted stock awards	14,515		-		108		-		108
Common stock issued in conjunction with public offering, net of issuance costs	-		-		137		-		137
Stock-based compensation expense	-		-		1,070		-		1,070
Balance at September 30, 2021	112,100,049	$	112	$	501,159	$	(462,767)	$	38,504

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)


	Three Months Ended				Nine Months Ended
	March 31,				September 30,
	2022		2021		2022		2021
Cash flows from operating activities:
Net loss	$	(9,268)	$	(5,920)	$	(22,069)	$	(22,701)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash lease expense		2		16		4		35
Depreciation and amortization		64		90		195		238
Stock-based compensation expense		838		489		1,994		2,949
Change in fair value of warrant liabilities						(5,004)		-
Loss on sale and disposal of property and equipment		2		1		10		1
Forgiveness of PPP loan						-		(1,006)
Changes in operating assets and liabilities:
Accounts receivable		(109)		(87)		(174)		(238)
Prepaid expenses and other assets		18		(94)		694		262
Inventories		(15)		(41)		(106)		(107)
Accounts payable, accrued liabilities and other liabilities		(1,705)		291		(653)		821
Net cash used in operating activities		(10,173)		(5,255)		(25,109)		(19,746)
Cash flows from investing activities:
Purchase of property and equipment		(82)		(41)		(158)		(154)
Net cash used in investing activities		(82)		(41)		(158)		(154)
Cash flows from financing activities:
Principal repayment of DECD loan		(72)		(3)		(196)		(148)
Proceeds from issuance of common stock from exercise of stock options		2		317		13		679
Proceeds from public offering		-		48,236		9,000		48,236
Payment of offering costs for public offering		-		(516)
Net cash (used in) provided by financing activities		(70)		48,034
Payment of issuance costs for public offering						(179)		(378)
Net cash provided by financing activities						8,638		48,389
Net (decrease) increase in cash, cash equivalents and restricted cash		(10,325)		42,738		(16,629)		28,489
Cash, cash equivalents and restricted cash, beginning of period		37,430		16,631		37,430		16,631
Cash, cash equivalents and restricted cash, end of period	$	27,105	$	59,369	$	20,801	$	45,120
Reconciliation to Consolidated Balance Sheet:
Reconciliation to Condensed Consolidated Balance Sheet:
Cash and cash equivalents	$	26,855	$	59,369	$	20,551	$	44,870
Restricted cash		250		-		250		250
Unrestricted and restricted cash and cash equivalents	$	27,105	$	59,369	$	20,801	$	45,120
Supplemental disclosure of cash flow information:
Cash paid during the period for interest		20		29		57		57
Supplemental disclosure of noncash investing and financing activities:
Net decrease in right-of-use assets		(15)		(15)		(47)		(45)
Forgiveness of PPP loan						-		(1,006)
Fair value of warrants issued in conjunction with common stock offering						7,752		-

See accompanying notes to the unaudited condensed consolidated financial statements.

‎

Aspira Women’s Health Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

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

Organization

Aspira Women’s Health Inc., formerly known as Vermillion, Inc. (“Aspira” and its wholly-owned subsidiaries are collectively referred to as the “Company”) is incorporated in the state of Delaware, and is engaged in the business of developing and commercializing diagnostic tests for gynecologic disease. The Company currently markets and sells the following products and related services: (1) ~~OVA1,~~Ova1, a blood test intended as an aid to further assess the likelihood of malignancy in women with an ovarian adnexal mass for which surgery is planned when the physician’s independent clinical and radiological evaluation does not indicate malignancy; (2) ~~OVERA,~~Overa, a second-generation biomarker reflex intended to maintain ~~OVA1’s~~Ova1’s high sensitivity while improving specificity; (3) ~~OVA1plus,~~Ova1Plus, a reflex offering which uses ~~OVA1~~Ova1 as the primary test and ~~OVERA~~Overa as a confirmation for ~~OVA1~~Ova1 intermediate range ~~results~~results; and ~~leverages the strengths of OVA1’s Multivariate Index Assay (“MIA”) sensitivity and OVERA’s (MIA2G) specificity and as a result reduces false elevations by over 40%;~~ (4) Aspira GenetiX, a genetic test for hereditary gynecologic cancer risk, with a core focus on hereditary female reproductive cancers, including breast, ovarian, endometrial, uterine and cervical cancers; and (5) Aspira Synergy, the Company’s decentralized testing platform and cloud service for decentralized global access of ~~both~~ protein biomarker ~~and hereditary genetic~~ testing. The Company continues to make Ova1, Overa, and Ova1Plus, and plans to make ~~OVA1, OVERA, OVA1plus and Aspira GenetiX and~~ future technology available through Aspira Synergy. The Company’s ~~OVA1~~Ova1 test received FDA de novo classification in September 2009. ~~OVA1~~Ova1 comprises instruments, assays, reagents, and the ~~OVACALC~~OvaCalc software, which includes a proprietary algorithm that produces a risk score. The Company’s ~~OVERA~~Overa test, which includes an updated version of ~~OVACALC,~~OvaCalc, received FDA 510(k) clearance in March 2016. ~~OVA1~~Ova1 and ~~OVERA~~Overa each use the Roche ~~cobas~~Cobas 4000, 6000 and 8000 platforms for analysis of proteins. ~~Through March 31, 2022, the Company’s product and related services revenue has been limited~~Revenue from these sources (in addition to revenue ~~generated by sales~~from Aspira GenetiX) is included in total revenue in the results of ~~OVA1, OVA1plus and Aspira GenetiX. In 2021,~~operations for the Company entered into decentralized arrangements with large healthcare networks and large practices for its Aspira Synergy platform offering specialty and genetic testing solutions. The modules available under Aspira Synergy include the Company’s flagship OVA1plus risk assessment, Genetics Carrier Screening, and Genetics Hereditary Cancer solutions. The Company has entered into 4 technology transfer agreements since the launch of Aspira Synergy. The first 2 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 2 agreements are with independent laboratories providing services across 5 states. In the fourth quarter of 2021, the Company started receiving specimens for accessioning related to its OVA1 Aspira Synergy product.nine months ended September 30, 2022.

Liquidity

As of ~~March 31,~~September 30, 2022, the Company had ~~$26,855,000~~$20,551,000 of cash and cash equivalents (excluding restricted cash of $250,000), an accumulated deficit of approximately ($~~480,996,000)~~493,797,000), and working capital of ~~$23,661,000.~~$15,679,000. For the ~~three~~nine months ended ~~March 31,~~September 30, 2022, the Company incurred a net loss of ($~~9,268,000)~~22,069,000) and used cash in operations of ($~~10,173,000)~~25,109,000). The Company has incurred significant net losses and negative cash flows from operations since inception and the Company also expects to continue to incur a net loss and negative cash flows from operations for 2022. There can be no assurance that the Company will achieve or sustain profitability or positive cash flow from operations. ~~The Company’s management~~ ~~believes that~~Given the above conditions, there is substantial doubt about the Company’s ~~cash and cash equivalents will be sufficient~~ability to ~~fund its operations for the next twelve months from the issuance of the condensed consolidated financial statements. These~~continue as a going concern. The condensed consolidated financial statements have been prepared ~~under the assumption that the Company will continue as~~on a going ~~concern.~~concern basis and do not include any adjustments that might result from these uncertainties.

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

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

~~levels. The~~days. If the Company fails to regain compliance on or prior to November 28, 2022, the Company may ~~take further action to protect its liquidity position, including in~~be eligible for an additional 180-calendar day compliance period, which would extend the ~~event~~deadline until May 27, 2023. There is no assurance that the ~~Company’s existing cash on hand~~Company will be able to regain compliance by the November 28, 2022 deadline or the additional 180-calendar day extended deadline, and there is ~~not sufficient to fund its operations, meet its capital requirements~~no assurance that the Company will otherwise maintain compliance with this or ~~satisfy its anticipated obligations as they become due. Such actions may include, but are not limited to:~~any of the other Nasdaq continued listing requirements.

Raising capital through an equity offering either in the public markets or via a private placement offering (however, no assurance can be given that capital will be available on acceptable terms, or at all);

~~Reducing executive bonuses or replacing cash compensation with equity grants;~~

~~Reducing professional services and consulting fees and eliminating non-critical projects;~~

~~Reducing travel and entertainment expenses; and~~

~~Reducing, eliminating or deferring discretionary marketing programs.~~

~~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~~it by instituting quarantines, mandating business and school closures and restricting ~~travel. In order to reduce~~travel periodically throughout the impact of limitations on visiting physician offices due to closures and quarantines, the Company implemented other mechanisms for reaching physicians such as virtual sales representative meetings, Key Opinion Leader presentations, and increased digital sales and marketing.pandemic. Patient enrollment for ~~our~~the Company’s planned clinical research studies of serial draws of the Company’s OvaNex study has been slower than originally planned due to the impact of clinic closures and patients not seeking medical care in some states, which has led to delays in the completion of such studies. Given the uncertainties ~~of the resurgence~~associated with potential resurgences of the COVID-19 pandemic, the Company is unable to estimate the extent of the impact of the COVID-19 pandemic on its operations or liquidity.

Basis of Presentation

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

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

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

Significant Accounting Policies

Revenue Recognition

Product Revenue – ~~OVA1, OVERA~~Ova1, Overa and ~~OVA1plus:~~Ova1Plus: The Company recognizes product revenue in accordance with the provisions of ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). Product revenue is recognized upon completion of the ~~OVA1, OVERA~~Ova1, Overa or ~~OVA1plus~~Ova1Plus test and delivery of results to the physician based on estimates of amounts that will ultimately be realized. In determining the amount of revenue to be recognized for a delivered test result, the Company considers factors such as payment history and amount, payer coverage, whether there is a reimbursement contract between the payer and the Company, and any developments or changes that could impact reimbursement. These estimates require significant judgment by management as the collection cycle on some accounts can be as long as one year. The effect of any change made to an estimated input component and, therefore revenue recognized, would be recorded as a change in estimate at the time of the change.

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

collection experience. The Company has elected this practical expedient that, when evaluated for collectability, results in a materially consistent revenue amount for such portfolios as if each patient account were evaluated on an individual contract basis. During the period ended ~~March 31,~~September 30, 2022, there were no adjustments to estimates of variable consideration to derecognize revenue for services provided in a prior period. There were 0no impairment losses on accounts receivable recorded during the periods ended ~~March 31,~~September 30, 2022 and 2021.

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

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

Recent Accounting Pronouncements

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

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

2. COMMITMENTS AND CONTINGENCIES

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

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

‎

Loan Agreement

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

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

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

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

Long-term debt consisted of the following:


	March 31,				September 30,		December 31,
	2022		2021		2022		2021
(in thousands)
DECD loan, net of issuance costs	$	2,869	$	2,919	$	2,769	$	2,919
Less: Current portion, net of issuance costs		(223)		(201)		(343)		(201)
Total long-term debt, net of issuance costs	$	2,646	$	2,718	$	2,426	$	2,718

As of ~~March 31,~~September 30, 2022, the annual amounts of future minimum principal payments due under the Company’s contractual obligation are shown in the table below. Unamortized debt issuance costs for the DECD loan were ~~$14,000. Debt related to the insurance promissory note of $519,000, as described below, is not included in the following table due to the insurance promissory note being cancelable.~~$12,000.


		Payments Due by Period														Payments Due by Period
(in thousands)		Total		2022		2023		2024		2025		2026		Thereafter		Total		2022		2023		2024		2025		2026		Thereafter
DECD Loan	$	2,883	$	154	$	406	$	452	$	461	$	341	$	1,069	$	2,781	$	52	$	406	$	452	$	461	$	341	$	1,069
Total	$	2,883	$	154	$	406	$	452	$	461	$	341	$	1,069	$	2,781	$	52	$	406	$	452	$	461	$	341	$	1,069

‎

Accrued Liabilities

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


	September 30,		December 31,
(in thousands)	2022		2021
Payroll and benefits related expenses	$	3,405	$	2,652
Collaboration and research agreements expenses		349		382
Professional services		764		1,992
Other accrued liabilities		470		273
Total accrued liabilities	$	4,988	$	5,299

Insurance Notes

During 2021, the Company entered into an insurance promissory note for the payment of insurance premiums at an interest rate of 3.74%, with an aggregate principal amount outstanding of approximately ~~$519,000~~$0 and $779,000 as of ~~March 31,~~September 30, 2022 and December 31, 2021, respectively. This note iswas payable in ten monthly installments with a maturity date of October 1, 2022 and has no financial or operational covenants.

‎

Operating Leases

The Company leases facilities to support its ~~business of discovering, developing and commercializing diagnostic tests in the fields of gynecologic disease.~~business. The Company’s principal facility, including the Clinical Laboratory Improvements Amendments of 1988 (“CLIA”) laboratory used by Aspira Labs, Inc., is located in Austin, Texas, and the CLIA laboratory ~~used for research~~ and ~~development services is~~administrative offices are located in Trumbull, Connecticut. ~~In October 2021, the Company renewed the~~The Company’s Austin, Texas lease, ~~for~~ ~~one~~ ~~additional year. The Company’s renewed lease~~which expires on January 31, 2023, ~~with~~has no automatic renewal or renewal option. The Company’s Texas lease has a term of 12 months. The Company ~~recognized~~recognizes the lease payments in profit and loss on a straight-line basis over the term of the lease, and variable lease payments in the period in which the obligation for the payments was incurred.

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

The expense associated with these operating leases for the three and nine months ended ~~March 31,~~September 30, 2022 and 2021 is shown in the table below (in thousands).


		Three Months Ended March 31,					Three Months Ended September 30,
Lease Cost	Classification	2022		2021		Classification	2022		2021
Operating rent expense
	Cost of revenue	$	20	$	13	Cost of revenue	$	20	$	14
	Research and development		7		9	Research and development		6		13
	Sales and marketing		9		11	Sales and marketing		9		8
	General and administrative		16		18	General and administrative		16		16
Variable rent expense
	Cost of revenue	$	10	$	7	Cost of revenue	$	10	$	8
	Research and development		6		4	Research and development		5		12
	Sales and marketing		9		12	Sales and marketing		8		11
	General and administrative		18		16	General and administrative		16		16

							Nine Months Ended September 30,
Lease Cost						Classification	2022		2021
Operating rent expense
						Cost of revenue	$	59	$	42
						Research and development		20		35
						Sales and marketing		28		25
						General and administrative		49		51
Variable rent expense
						Cost of revenue	$	30	$	23
						Research and development		16		25
						Sales and marketing		26		30
						General and administrative		51		46

Based on the Company’s leases as of ~~March 31,~~September 30, 2022, the table below sets forth the approximate future lease payments related to operating leases with initial terms of one year or more (in thousands).


2022	$	73	$	25
2023		106		106
2024		116		116
2025		123		124
2026		64		64
Total Operating Lease Payments		482		435
Less: Interest		(86)		(69)
Present Value of Lease Liabilities	$	396	$	366

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


Weighted-average remaining lease term (in years)		~~4.2~~3.7
Weighted-average discount rate		~~9.33%~~9.31%

1113

~~Non-cancelable~~Non-cancellable Royalty Obligations

The Company is a party to an amended research collaboration agreement with The Johns Hopkins University School of Medicine under which the Company licenses certain of its intellectual property directed at the discovery and validation of biomarkers in human subjects, including but not limited to clinical application of biomarkers in the understanding, diagnosis and management of human disease. Under the terms of the amended research collaboration agreement, Aspira is required to pay the greater of 4% royalties on net sales of diagnostic tests using the assigned patents or annual minimum royalties of $57,500. Royalty expense for the three months ended ~~March 31,~~September 30, 2022 and 2021 totaled ~~$73,000~~$82,000 and ~~$57,000,~~$65,000, respectively, and royalty expense for the nine months ended September 30, 2022 and 2021 totaled $236,000 and $190,000, respectively, as recorded in cost of revenue in the condensed consolidated statements of operations.

Commercial Reorganization

During the three months ended March 31, 2022, the Company executed a commercial reorganization resulting in the separation of a number of employees. The organizational changes resulted in the recording within the condensed consolidated statement of operations in sales and marketing, research and development and general and administrative expenses of one-time severance, separation, and settlement charges of approximately $1,284,000. These amounts have been partially offset by insurance reimbursement of ~~$523,000,~~$523,000. All charges have been settled as of ~~which $162,000~~September 30, 2022.

Business Agreements

On August 8, 2022, the Company entered into a sponsored research agreement with Harvard’s Dana-Farber Cancer Institute, Brigham & Women’s Hospital, and Medical University of Lodz for the generation of a multi-omic, non-invasive diagnostic aid to identify endometriosis based on circulating microRNAs and proteins. This collaboration is expected to accelerate the Company’s development and commercialization of future endometriosis products, such as EndoCheck. Under the terms of and as further described in the agreement, payments of approximately $1,252,000 have or will become due from the Company to the counterparties upon successful completion of certain deliverables in 2022 and 2023 as follows: 68% was paid in August 2022, 15% will become payable upon completion of certain deliverables estimated to occur in the fourth quarter of 2022, and 17% will become payable upon completion of certain deliverables estimated to occur in the second quarter of 2023. As of September 30, 2022 approximately $852,000 has been ~~received during~~recorded as expense for the three months ended March 31, 2022 and $361,000 is included in Prepaid expenses and other current assets on the condensed consolidated balance sheet as of March 31, 2022. As of March 31, 2022, remaining unpaid estimated charges in the amount of $508,000 are included in Accrued liabilities on the condensed consolidated balance sheet and are expected to be paid within the next 12 months.project.

Contingent Liabilities

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

3. STOCKHOLDERS’ EQUITY

2022 Public Offering

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

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

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

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

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



	September 30, 2022			August 22, 2022
Dividend yield		-	%		-	%
Volatility		97.5	%		95.0	%
Risk-free interest rate		4.06	%		3.17	%
Expected lives (years)		4.89			5.00
Weighted average fair value	$	0.229		$	0.646

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

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

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

2021 Public Offering

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

Under the 2021 Underwriting Agreement, the Company granted the 2021 Underwriters an option to purchase up to an additional 900,000 shares of Aspira common stock at the public offering price, less the underwriting discount of $0.4875 per share. On February 5, 2021, the 2021 Underwriters notified the Company that they were exercising this option in connection with the closing of the 2021 Offering. The 2021 Offering, including the additional 900,000 shares of Aspira common stock, closed on February 8, 2021 and resulted in net proceeds to the Company of approximately ~~$47,720,000,~~$47,858,000, after deducting underwriting discounts and offering expenses of ~~$516,000.~~$378,000. There was a change in estimate in the third quarter of 2021 in the amount of $138,000 relating to an expense reversal of offering costs.

2019 Stock Incentive Plan

At the Company’s 2019 annual meeting of stockholders, the Company’s stockholders approved the Vermillion, Inc. 2019 Stock Incentive Plan, the name of which was subsequently changed to the Aspira Women’s Health Inc. 2019 Stock Incentive Plan (the “2019 Plan”). The purposes of the 2019 Plan are (i) to align the interests of the Company’s stockholders and recipients of awards under the 2019 Plan by increasing the proprietary interest of such recipients in the Company’s growth and success; (ii) to advance the interests of the Company by attracting and retaining non-employee directors, officers, other employees, consultants, independent

contractors and agents; and (iii) to motivate such persons to act in the long-term best interests of the Company and its stockholders. The 2019 Plan allows the Company to grant stock options, stock appreciation rights, restricted stock, restricted stock units and performance awards to participants.

Subject to the terms and conditions of the 2019 Plan, the initial number of shares authorized for grants under the 2019 Plan is 10,492,283. To the extent an equity award granted under the 2019 Plan expires or otherwise terminates without having been exercised or paid in full, or is settled in cash, the shares of common stock subject to such award will become available for future grant under the 2019 Plan. As of ~~March 31,~~September 30, 2022, ~~11,119,308~~9,873,424 shares of Aspira common stock were subject to outstanding stock options, and ~~269,297~~149,249 shares of Aspira common stock were subject to unvested restricted stock awards and a total of ~~2,589,507~~3,531,486 shares of Aspira common stock were reserved for issuance under the 2019 Plan.

‎

Stock-Based Compensation

During the three months ended March 31, 2022, the Company granted the following awards under the 2019 Plan. In addition, assumptions included in the fair value per share calculations were expected terms of one to four years, ~~one~~one- to ~~five year~~five-year treasury interest rates of 1.38% to ~~2.28%~~3.28% and market close prices ranging from $1.04 to $1.08. The Company recorded $334,000 in forfeitures for the three months ended March 31, 2022.


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

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


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

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


Grant Date	Number of Shares	Type of Award	Exercise Price	Fair Value / Share
7/1/2022	5,000	Options	$ 0.73	$ 0.32
7/5/2022	200,000	Options	$ 0.77	$ 0.40
8/1/2022	5,000	Options	$ 0.80	$ 0.35
8/18/2022	122,000	Options	$ 0.92	$ 0.48
9/1/2022	5,000	Options	$ 0.53	$ 0.25
	337,000

The allocation of employee stock-based compensation expense, including expense reversals due to forfeitures, by functional area for the three and nine months ended ~~March 31,~~September 30, 2022 and 2021 was as follows:


	Three Months Ended				Three Months Ended				Nine Months Ended
	March 31,				September 30,				September 30,
(in thousands)	2022		2021		2022		2021		2022		2021
Cost of revenue	$	46	$	31	$	(27)	$	44	$	52	$	123
Research and development		(30)		25		31		113		21		231
Sales and marketing		147		139		76		350		281		814
General and administrative		576		190		428		445		1,445		1,236
Total	$	739	$	385	$	508	$	952	$	1,799	$	2,404

4. LOSS PER SHARE

The Company calculates basic loss per share using the weighted average number of shares of Aspira common stock outstanding during the period. Because the Company is in a net loss position, diluted loss per share is calculated using the weighted average number of shares of Aspira common stock outstanding and excludes the anti-dilutive effects of ~~11,388,605~~10,022,672 and ~~10,514,070~~10,529,341 potential shares of Aspira common stock as of ~~March 31,~~September 30, 2022 and 2021, respectively, ~~that are anti-dilutive.~~in addition to 12,000,000 shares of Aspira common stock issuable upon the exercise of the Warrants outstanding as of September 30, 2022. Potential shares of Aspira common stock and warrants include incremental shares of Aspira common stock issuable upon the exercise of stock options and warrants and the vesting of unvested restricted stock units.

1318

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

Forward-Looking Statements

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

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

Examples of forward-looking statements include, without limitation:

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

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;~~monitoring;

our planned business strategy and strategic business drivers and the 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~~Ova1, Overa, Ova1Plus and Aspira Synergy on a global level, and to launch and commercialize our new products, ~~OVAWatch (previously OVASight),~~OvaWatch, EndoCheck and ~~OVAInherit;~~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 ~~Aspira GenetiX, OVAWatch,~~current and new products, including OvaWatch, EndoCheck and ~~OVAInherit~~OvaInherit separately and expand current coverage and secure additional contracts for ~~OVA1;~~Ova1, Overa and Ova1Plus;

expectations regarding coverage under Novitas, the Company’s Medicare Administrative Carrier 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;

expectations regarding continuing future services provided by BioReference Health, LLC;

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

~~FDA~~Food and Drug Administration (“FDA”) oversight changes of LDTs;

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

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

plans regarding future publications;

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;

anticipated liquidity and capital ~~requirements~~requirements;

anticipated future losses and ~~future losses;~~our ability to continue as a going concern;

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,~~Ova1, Overa, Ova1Plus, OvaWatch, 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 the size of the markets for our 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 as well as procure serum samples from other potential partnerships or studies;

potential plans to pursue clearance designation with the FDA with respect to EndoCheck ~~whether or not the FDA designates it a Breakthrough Device;~~and OvaWatch;

expected target launch timing for ~~OVAWatch~~OvaWatch and 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; ~~and~~

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

plans regarding discontinuing the Aspira GenetiX product and related genetics testing offerings; and

expectations regarding the results of our academic research agreements.

Forward-looking statements are subject to significant risks and uncertainties, including those discussed in Part I Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the year ended December 31, 2021, as supplemented by the section entitled “Risk Factors” in this Quarterly Report on Form 10-Q, 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 potential changes to coverage of Ova1 through our Medicare Administrative Carrier for Ova1; 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 our product sales; failures by third-party payers to reimburse for our products and services or changes to reimbursement rates; our ability to continue

developing existing technologies and to develop, protect and promote our proprietary technologies; plans to develop and perform LDTs; our ability to comply with ~~Food and Drug Administration (“FDA”)~~FDA regulations that relate to our products and to obtain any FDA clearance or approval required to develop and commercialize 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; or our suppliers’ ability to comply with FDA requirements for production, marketing and post-market monitoring of our products; our ability to maintain sufficient or acceptable supplies of immunoassay kits from our suppliers; in the event that we succeed in commercializing our products outside the United States, the political, economic and other conditions affecting other countries; changes in healthcare policy; our ability to comply with environmental laws; 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 use our net operating loss carryforwards; our ability to use intellectual property; our ability to successfully defend our proprietary technology against third parties; our ability to obtain licenses in the event a 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 core mission is to transform women’s gynecologic health through the ~~state~~development of ~~women’s health, globally,~~technology-enabled diagnostic tools, starting with ovarian cancer. We aim to eradicate late-stage detection of ovarian cancer and to ensure that our solutions will meet the needs of women of all ages, races, ethnicities and stages of the disease. ~~Our core patient goal is to develop a lifelong relationship with each patient, ensuring each woman has access to best-in-class diagnostics.~~

~~Our~~We plan is to broaden our ~~commercial~~ focus ~~from ovarian cancer~~ to the differential diagnosis of ~~women with a range of~~ ~~gynecological~~ ~~diseases.~~other gynecologic diseases that typically cannot be assessed through traditional non-invasive clinical procedures. We ~~plan~~expect to continue commercializing our existing and new ~~generation of~~ technology ~~as well as~~and to distribute our ~~technology~~tests through our decentralized technology transfer service platform, ~~known as “Aspira~~Aspira Synergy.” We also intend to continue to raise public awareness regarding the diagnostic superiority of ~~OVA1~~Ova1Plus as compared to cancer antigen 125 (“~~CA125”~~CA-125”) on its own for all women, but especially for ~~Black~~racially diverse women with adnexal masses, as well as the ~~importance~~superior performance of machine learning ~~algorithm development~~algorithms in detecting ovarian cancer in 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 traditional biopsy, or can only be detected by invasive procedures in the case of Endometriosis, making our non-invasive blood biopsy more efficient and patient friendly. In 2018 and early 2019, we established medical and advisory support and a Key Opinion Leader Network aligned with our territories in the U.S. In addition to adding to our direct salesforce, in 2021, we added OVA1 and OVA1plus on our technology transfer platform, Aspira Synergy. In 2022, we plan to continue ~~our efforts~~ to commercialize OVA1plus by utilizing select 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 expandedexpand access to our tests among Medicaid patients as part of our corporate mission to make the best care available to all ~~women.~~women, and we plan to advocate for legislation and the adoption of our technology in professional society guidelines to provide broad access to our products and services.

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

Growth. In 2022, we have continued to grow Ova1Plus product volume and revenue through our commercial team. In addition, in October 2022, we launched a co-marketing and distribution collaboration with BioReference Health, LLC (formerly known as BioReference Laboratories, Inc.), a subsidiary of OPKO Health, Inc. (“BRL”), as a new channel for volume growth. We aim not only to increase the number of physicians ordering for the first time but also to increase repeat orders from existing physician customers. Positive trends in the tenure of our sales professionals have led to year-over-year volume growth.

Innovation. Innovation is fundamental to the long-term success of any diagnostics company. For Aspira, it starts with the expansion of our ovarian cancer portfolio, which is now branded as OvaSuite. Our first ~~LDT algorithm, branded as OVAWatch, focuses on monitoring~~Lab Developed Test (“LDT”), OvaWatch,is a non-invasive ovarian cancer risk assessment for women with ~~pelvic masses.~~ adnexal masses with an initial clinical assessment that is either benign or indeterminate. This assay will significantly expand our patient population beyond the population that existed with our current Ova1Plus test. OvaWatch is expected to be launched in the fourth quarter of 2022. The ~~OVAWatch~~ OvaWatch

manuscript, "Analytical Validation of a Deep Neural Network Algorithm for the Detection of Ovarian Cancer," has been ~~accepted for~~published online ~~publication~~ in ~~JCO~~the Journal of Clinical Oncology Clinical Cancer Informatics. This study was a critical step towards the launch of OVAWatch and, as a result, we have shifted to finalizing the commercialization plan which will occur in two phases. Phase I is a single use point-in-time product and Phase II will allow for serial monitoring.

We plan to ~~focus on advancing~~accelerate the development of our endometriosis product portfolio, by partnering with Harvard’s Dana-Farber Cancer Institute (“DFCI”), Brigham & Women’s Hospital (“BWH”), and Medical University of Lodz through a sponsored research agreement that we entered into in the third quarter of 2022. We plan to ~~the commercial phase of the OVAWatch single use product, including driving provider adoption, during~~launch EndoCheck, our first non-invasive endometriosis diagnostic tool, in the second half of ~~2022. The timing will depend on the results of a clinical validation study that we~~2023.

Operational Excellence. We expect to ~~complete during~~achieve our cash utilization goals for 2022 by focusing on spending that fuels innovation and growth. Since March 1, 2022, we identified redundant or unnecessary roles in our workforce and eliminated approximately 19% of our headcount. The personnel actions we will have taken by the ~~summer of 2022. We believe the single-use product has the potential to significantly expand the addressable market over OVA1plus. The launch~~end of the ~~serial monitoring test remains targeted for 2023 upon publication of data from the ongoing prospective serial monitoring clinical study.~~year will reduce base salary costs by more than $3,000,000 in 2023. We plan, however, to continue to hire individuals to fill key roles, especially in commercial and research and development.

We expect that our second LDT diagnostic algorithm, EndoCheck, will aid in the diagnosis of endometriosis. We also plan to expand our portfolio of products to include OVAInherit, which aims to identify risk of malignancy in those patients who are genetically predisposed to ovarian cancer. This algorithm will include genetics, proteins and other modalities to assess such risk.

To continue our commercialization objectives and reach our financial and operational goals, we require skilled individuals with familiarity in our industry. We have from time to time experienced, including as a result of labor shortages during the COVID-19 pandemic, and may in the future experience, shortages of certain types of qualified employees.

‎

Our Business and Products

We currently market and sell the following products and related services: (1) ~~OVA1,~~Ova1, a blood test intended as an aid to further assess the likelihood of malignancy in women with an ovarian adnexal mass for which surgery is planned when the physician’s independent clinical and radiological evaluation does not indicate malignancy; (2) ~~OVERA,~~Overa, a second-generation biomarker reflex test intended to maintain ~~OVA1’s~~Ova1’s high sensitivity while improving specificity; (3) ~~OVA1plus,~~Ova1Plus, a reflex offering which uses ~~OVA1~~Ova1 as the primary test and ~~OVERA~~Overa as a confirmation for ~~OVA1~~Ova1 intermediate range results and leverages the strengths of ~~OVA1’s MIA~~Ova1’s multivariate index assay (“MIA”) sensitivity and ~~OVERA’s~~Overa’s (MIA2G) specificity and as a result reduces false elevations by over 40%; ~~(4) Aspira GenetiX, a genetic test for hereditary gynecologic cancer risk, with a core focus on hereditary female reproductive cancers, including breast, ovarian, endometrial, uterine~~ and ~~cervical cancers; and (5)~~(4) Aspira Synergy, our decentralized testing platform and cloud service for decentralized global access of ~~both~~ protein biomarker ~~and hereditary genetic~~ testing. We continue to make Ova1, Overa, and Ova1Plus, and plan to make ~~OVA1, OVERA, OVA1plus and Aspira GenetiX and~~ future technology available through Aspira Synergy. Our ~~OVA1~~Ova1 test received FDA de novo classification in September 2009. ~~OVA1~~Ova1 comprises instruments, assays, reagents, and the ~~OVACALC~~OvaCalc software, which includes a proprietary algorithm that produces a risk score. Our ~~OVERA~~Overa test, which includes an updated version of ~~OVACALC,~~OvaCalc, received FDA 510(k) clearance in March 2016. ~~OVA1~~Ova1 and ~~OVERA~~Overa each use the Roche ~~cobas~~Cobas 4000, 6000 and 8000 platforms for analysis of proteins. ~~Through March 31, 2022, our product and related services revenue has been limited~~Revenue from these sources (in addition to revenue ~~largely generated by sales~~from Aspira GenetiX) is included in the results of ~~OVA1, OVA1plus and Aspira GenetiX.~~operations in total revenue for the nine months ended September 30, 2022.

In 2021, we ~~entered~~began entering into decentralized arrangements with large healthcare networks and physician practices for our Aspira Synergy ~~platform offering specialty and genetic testing solutions.~~platform. The modules available under Aspira Synergy include our flagship ~~OVA1plus~~Ova1Plus risk assessment ~~Genetics Carrier Screening,~~ and ~~Genetics Hereditary Cancer solutions.~~genetics carrier screening. As described further below, as of September 2022, genetics carrier screening will no longer be available. The Company has entered into four technology transfer agreements since the launch of Aspira Synergy. ~~The first two~~Two of the agreements are with ~~two~~independent regional laboratories and are in the process of being launched and piloted. One of the agreements is with one of the nation’s largest and leading independent women’s healthcare groups which ~~together include approximately 750 providers~~has already launched and ~~serve approximately 950,000 patients annually.~~is contributing to our Ova1Plus volume. The ~~other two~~last of the four agreements ~~are~~ with ~~independent laboratories providing services across five states. In~~Axia Women’s Health, which had been intended to deliver genetics carrier screening, was cancelled by the ~~fourth~~customer in the third quarter of ~~2021, we started receiving specimens related~~2022. This cancellation, along with the general deterioration of commercial opportunities in the genetics carrier screening market, has led us to cease providing Aspira GenetiX, including genetics carrier screening, on our ~~OVA1~~ Aspira Synergy ~~product.~~platform, effective as of September 30, 2022. This is not expected to have a material impact on our revenues in 2022 or in any future periods.

We are developing three additional products and related services, including two diagnostic algorithms, ~~OVAWatch~~OvaWatch and EndoCheck, as well as a high-risk diagnostic algorithm, ~~OVAInherit, for patients with or~~ ~~without~~ ~~a pelvic mass who are genetically predisposed to ovarian cancer.~~OvaInherit. These products may be launched as LDTs or FDA-cleared tests.

~~OVAWatch~~OvaWatch has been developed and is validated for use in Aspira’s CLIA-certified ~~high complexity~~ lab as a non-invasive blood-based risk assessment test for use in conjunction with clinical assessment and imaging to determine ovarian cancer risk for patients with an adnexal ~~mass.~~mass who are not yet scheduled for surgery. The commercialization plan for ~~OVAWatch~~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 ~~advancing to~~ the commercial phase of the ~~OVAWatch~~OvaWatch single use risk assessment test, including driving provider adoption, during the ~~second half~~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 ~~the single-use product~~OvaWatch has the potential to significantly expand the addressable market ~~over OVA1plus.~~compared to Ova1Plus. The launch of the serial monitoring test ~~remains~~is targeted for the fourth quarter of 2023 ~~upon~~following the expected publication of data from the ongoing prospective serial monitoring clinical study.

We plan to continue to support research related to the impact of race and ethnicity on the detection of ovarian cancer. In June 2022, a manuscript arising from clinical research efforts in the Philippines, which we sponsored, was accepted for publication in the International Journal of Environmental Research and Public Health. The study was designed to validate the effectiveness of a multivariate index assay (“MIA2G”) Overa in the assessment of ovarian cancer in Filipino women. The resulting data indicated that MIA2G (Overa) exhibited better overall performance in detecting ovarian cancer, regardless of menopausal status, compared to CA-125 test measures. Notably, MIA2G (Overa) was shown to be more sensitive in detecting early-stage disease for this population than CA-125. The study also showed that MIA2G (Overa) had the best overall performance of all individual classifiers, including in some of the most difficult to detect cancers cohorts such as premenopausal women, and early-stage disease.

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 ~~both the~~comparable sensitivity and specificity ~~comparable~~when compared to surgical biopsy and/or visualization. We expect that our research collaboration agreement with DFCI, BWH, and Medical University of Lodz will bolster our research and development efforts and scientific resources to accelerate commercialization of our endometriosis product portfolio. Our goal is to launch EndoCheck ~~is being developed~~in the second half of 2023 as an LDT.

~~OVAInherit~~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 ~~gynecologic~~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~~OvaInherit related clinical studies, ~~OVANex~~OvaNex and ~~OVA360,~~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 Dana-Farber Cancer Institute and Medical University of Lodz Phase 1 Proof of Concept evaluation surpassed all required metrics and 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,~~OvaSuite and EndoCheck ~~OVAInherit and Aspira Synergy~~ on a global ~~level.~~scale. We currently hold CE marks for ~~OVA1~~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 both tests to be deployed worldwide.~~Overa.

Outside of the United States, ~~we have~~there are studies in process in both the Philippines and Israel, which are intended to validate ~~OVERA~~Overa and ~~OVA1~~Ova1 in specific populations. ~~This~~ ~~includes active international distribution agreements for OVERA with Pro-Genetics LTD in Israel and MacroHealth, Inc.~~The study occurring in the ~~Philippines. The MacroHealth, Inc. agreement was our~~Philippines includes Aspira’s first agreement regarding ~~our decentralized technology,~~ Aspira Synergy for ~~OVERA~~Overa specimen testing. The first paper from the Philippines study was published in the third quarter of 2022.

We own and operate ASPiRA LABS, 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 risk assessment to aid in clinical decision making and advance personalized treatment plans. The lab currently ~~processes~~performs our ~~OVA1~~Ova1, Overa and ~~OVERA~~additional tumour and hormone 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. ASPiRA LABS holds a CLIA

Certificate of Accreditation and a state laboratory license in California, Maryland, New York, Pennsylvania and Rhode Island. The Centers for Medicare & Medicaid Services (“CMS”) issued a supplier number to ASPiRA LABS in 2015.

In the United States, revenue for diagnostic tests comes from several sources, including third-party payers such as insurance companies, government healthcare programs, such as Medicare and Medicaid, client bill accounts and patients. Novitas Solutions, a Medicare contractor, covers and reimburses for ~~OVA1~~Ova1 tests performed in certain states, including Texas. Due to ~~OVA1~~Ova1 tests billed by the Company 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. ASPiRA LABS also bills third-party commercial and other government payers as well as client bill accounts and patients for ~~OVA1.~~Ova1.

In November 2016, the American College of Obstetricians and Gynecologists (“ACOG”) issued Practice Bulletin Number 174 which included ~~OVA1,~~Ova1, defined as the “Multivariate Index Assay”, outlining ACOG’s clinical management guidelines for adnexal mass management. 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~~CA-125 technology or ~~OVA1~~Ova1 (“Multivariate Index Assay”) as listed in the bulletin. Based on this, ~~OVA1~~Ova1 achieved parity with ~~CA125~~CA-125 as a Level B clinical recommendation for the management of adnexal masses.

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. Although there are Practice Bulletins, guidelines do not exist for adnexal masses. ACOG guidelines do exist, however, for ovarian cancer management.

In October 2018, ASPiRA LABS launched OVA1plus, a clinical pathway which combines the strengths of OVA1 and OVERA. This offering helps drive earlier ovarian cancer risk detection, which in turn lowers overall healthcare costs and reduces inefficiencies in the care path~~way.~~

Recent Developments

~~Leadership~~Business and Listing Updates

On ~~February 23,~~August 8, 2022, we entered into a sponsored research agreement with DFCI, BWH, and Medical University of Lodz for the ~~independent directors~~generation of a multi-omic, non-invasive diagnostic aid to identify endometriosis based on circulating microRNAs and proteins. This collaboration is expected to accelerate our development and commercialization of future endometriosis products, such as EndoCheck. Under the terms of the ~~Company’s board~~agreement, payments of ~~directors appointed James T. LaFrance~~approximately $1,252,000 have or will become due from us to the counterparties upon the successful completion of deliverables as ~~Lead Independent Director, effective as of March 1,~~defined in the agreement in 2022 and 2023 as follows: 68% was paid in August 2022, 15% will become payable upon completion of certain deliverables estimated to occur in the ~~Company’s board~~fourth quarter of ~~directors appointed Celeste Fralick, Ph.D.~~2022, and 17% will become payable upon completion of certain deliverables estimated to occur in the ~~Company’s board~~second quarter of ~~directors and its Audit Committee.~~2023. As of September 30, 2022 approximately $852,000 has been recorded as expense for the project.

~~Also, on February 23, 2022,~~We have prepared an application for a Proprietary Laboratory Analyses code with the ~~Company’s board of directors appointed Valerie B. Palmieri as its Executive Chair~~American Medical Association for OvaWatch to distinguish it from Ova1Plus with the expectation that Novitas and ~~appointed Nicole Sandford, a current director on~~other payers will apply the ~~board of directors, as the Company’s President~~Ova1Plus Centers for Medicare & Medicaid Services fee to OvaWatch, ensuring consistent coverage and ~~Chief Executive Officer, each effective as of March 1, 2022.~~pricing for both Ova products.

On ~~February 23,~~June 1, 2022, we received a deficiency letter from the ~~Company’s board~~Listing Qualifications Department of ~~directors appointed James T. LaFrance as Audit Committee Chair, effective as~~the Nasdaq Stock Market notifying us that, for the preceding 30 consecutive business days, the closing bid price for our 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 ~~March 1, 2022.~~our 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, which would extend the deadline until May 27, 2023. 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 there is no assurance that we will otherwise maintain compliance with this or any of the other Nasdaq continued listing requirements.

~~Business, Coverage and Collaboration Updates~~Recent Publications

As part of our support of research related to the impact of race and ethnicity on the detection of ovarian cancer, a manuscript arising from clinical research efforts in the Philippines, which we sponsored, was accepted for publication in the International Journal of Environmental Research and Public Health

~~On January 5, 2022, we announced~~ in June 2022. The resulting data indicated that ~~we entered into a commercial enterprise agreement with Axia Women’s Health, one~~Overa exhibited better overall performance in detecting ovarian cancer, regardless of menopausal status, compared to CA-125. The study also showed that Overa had the best overall performance of all individual classifiers, including in some of the ~~nation’s largest~~most difficult to detect cancer cohorts such as premenopausal women, and leading independent women’s healthcare groups. Axia Women’s Health is an innovative and progressive community of more than 400 providers and 150 women’s health centers across New Jersey, Pennsylvania, Indiana, Ohio, and Kentucky. Axia Women’s Health providers offer services across the care continuum including obstetrics, gynecology, mammography, urogynecology, fertility, and other sub-specialties.early-stage disease.

On January 31, 2022, we announced that we entered into agreements to provide testing services to Medicaid plan members in the state of New Hampshire and Washington, D.C equaling nearly a half million covered lives. The state of New Hampshire covers 200,000 lives and Washington D.C. covers 265,000 lives under their respective Medicaid programs. With the addition of these plans, Aspira is now credentialed to provide its OVA1 testing to nearly 80% of the Medicaid population in the U.S., totaling approximately 60 million lives. In addition, during the first quarter the Company has been credentialed with Medicaid for the States of Maryland and Maine, adding an additional 500,000 covered Medicaid lives.

During March 2022, in connection with our Strategic Research Collaboration Agreement for the development and commercialization of a Micro RNA high risk ovarian cancer early-detection test with Dana-Farber Cancer Institute, Brigham and Women’s Hospital and Medical University of Lodz, we exercised the option for an exclusive world-wide license of this cutting-edge miRNA technology and plans to continue development of a novel combined assay utilizing a new platform with our collaborators. We are obligated to pay for expenses as they are incurred.

During the 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, partially offset by insurance reimbursement of $523,000. See Note 2 to the condensed consolidated financial statements.

COVID-19 Pandemic

~~outbreak~~ has severely impacted global economic activity, and many countries and many states in the United States ~~have~~ reacted to ~~the outbreak~~it by instituting quarantines, mandating business and school closures and restricting ~~travel. In order to reduce~~travel periodically throughout 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.pandemic. 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.

~~In the first quarter of 2022, a resurgence of COVID-19 cases depressed our average daily test volume in January. Although our daily test volume recovered later in the quarter, we believe given~~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 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 two 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 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 the date of the filing of this Form 10-Q.

~~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 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 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)Establishing a proprietary decentralization platform, Aspira Synergy, to allow 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 accepted for publication in the Journal of Clinical Oncology Clinical Cancer Informatics. The Publication is forthcoming and will be on-line. 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.~~

Critical Accounting Policies and Estimates

Our product revenue is generated by performing diagnostic services using our ~~OVA1, OVERA, OVA1plus~~Ova1, Overa or ~~Aspira GenetiX~~Ova1Plus 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~~Ova1, Overa or ~~Aspira GenetiX~~Ova1Plus 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 that could impact reimbursement. These estimates require significant judgment by management. For ~~OVA1, OVERA, OVA1plus~~Ova1, Overa and ~~Aspira GenetiX~~Ova1Plus tests, we also review our patient account population and 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 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 ~~March 31,~~September 30, 2022 Compared to Three Months Ended ~~March 31,~~September 30, 2021

The selected summary financial and operating data of the Company for the three months ended ~~March 31,~~September 30, 2022 and 2021 were as follows:


	Three Months Ended							Three Months Ended
	March 31,				Increase (Decrease)			September 30,				Increase (Decrease)
(dollars in thousands)	2022		2021		Amount		%	2022		2021		Amount		%
Revenue:
Product	$	1,835	$	1,416	$	419	30	$	2,037	$	1,617	$	420	26
Genetics		58		80		(22)	(28)		35		49		(14)	(29)
Total revenue		1,893		1,496		397	27		2,072		1,666		406	24
Cost of revenue:
Product		857		655		202	31		875		715		160	22
Genetics		75		238		(163)	(68)		41		202		(161)	(80)
Total cost of revenue		932		893		39	4		916		917		(1)	(0)
Gross profit		961		603		358	59		1,156		749		407	54
Operating expenses:
Research and development		1,348		872		476	55		2,157		1,518		639	42
Sales and marketing		4,497		3,108		1,389	45		3,950		5,083		(1,133)	(22)
General and administrative		4,363		2,509		1,854	74		4,746		3,839		907	24
Total operating expenses		10,208		6,489		3,719	57		10,853		10,440		413	4
Loss from operations		(9,247)		(5,886)		(3,361)	57		(9,697)		(9,691)		(6)	0
Interest expense, net		(18)		(24)		6	25
Other expense, net		(3)		(10)		7	70
Change in fair value of warrant liabilities									5,004		-		5,004	-
Interest income (expense), net									18		(14)		32	229
Other (expense), net									117		(2)		119	5,950
Net loss	$	(9,268)	$	(5,920)	$	(3,348)	57	$	(4,558)	$	(9,707)	$	5,149	(53)

Product Revenue. Product revenue was ~~$1,835,000~~$2,037,000 for the three months ended ~~March 31,~~September 30, 2022, compared to $~~1,416,000~~1,617,000 for the same period in 2021. Revenue for ASPiRA LABS is recognized when the ~~OVA1, OVERA,~~Ova1, Overa, or ~~OVA1plus~~Ova1Plus test is completed based on estimates of what we expect to ultimately realize. The ~~30%~~26% product revenue increase is due to an increase in ~~OVA1~~Ova1 test volume compared to the prior year, ~~in addition to~~partially offset by a

~~higher~~ lower revenue average unit price (“AUP”), which ~~increased~~decreased from ~~$375~~$378 in the ~~first~~third quarter of 2021 to ~~$380~~$369 in the ~~first~~third quarter of 2022. This increase was primarily driven by an increased volume of tests performed for higher AUP payers, such as those for Medicare and insurance carriers, along with a decreased volume of tests performed for lower AUP payers, such as Medicaid and patient payers.

Medicaid represents approximately ~~11.6%~~13.6% of volume in the three months ended ~~March 31,~~September 30, 2022, at an AUP of ~~$89.~~$88. This is compared to 12.0% of volume in the same period in 2021, at an AUP of $94. Our ~~OVA1plus~~Ova1Plus AUP without Medicaid was ~~$418~~$415 for the three months ended ~~March 31,~~September 30, 2022, compared to ~~$411~~$410 for the same period in 2021. Product revenue increased 1% sequentially ~~during~~for the ~~first~~third quarter of 2022 as compared to the ~~fourth~~second quarter ~~2021.~~of 2022.

The number of ~~OVA1plus~~product tests performed increased ~~28%~~29% to ~~4,819~~5,524 during the three months ended ~~March 31,~~September 30, 2022, compared to ~~3,775 OVA1plus~~4,281 product tests for the same period in 2021. ~~This increase was due~~The number of product tests performed increased 2% sequentially during the third quarter 2022 as compared to the second quarter 2022. These increases are a result of increased access to provider offices ~~patients’ return to physician visits,~~ and increased investment in our current commercial channel. The number of OVA1plus tests performed only increased 1% sequentially during the first quarter 2022 as compared to the fourth quarter 2021 as a result of access restrictions due to the COVID-19 resurgence in January 2022. We expect revenue to continue to increase in 2022 due to ~~investing~~our investment in key salesforce hires and strategic product development.

Genetics Revenue. Genetics revenue was ~~$58,000~~$36,000 for the three months ended ~~March 31,~~September 30, 2022, compared to ~~$80,000~~$49,000 for the same period in ~~2021. Although there was a decrease as compared to the same period last year, Genetics revenue increased 61% as compared to the fourth quarter of~~ 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 ~~28%~~27% genetics revenue decrease is primarily due to decreased volumes and decreased AUP as compared to the same period in 2021. The ~~revenue per test performed remained flat at $456 from the same period in 2021.~~Company has discontinued offering genetics testing effective September 30, 2022.

Cost of Revenue – Product. Cost of product revenue was ~~$857,000~~$875,000 for the three months ended ~~March 31,~~September 30, 2022, compared to ~~$655,000~~$715,000 for the same period in 2021, representing an increase of ~~$202,000,~~$160,000, or ~~31%~~22%, due primarily to increased personnel costs, lab ~~supplies,~~supply costs, and ~~shipping costs due to~~software license fees resulting from the increase in tests performed compared to the prior year. The cost of revenue increased at a rate lower than the revenue percent increased as we leveraged our fixed laboratory costs.

Cost of Revenue – Genetics. Cost of genetics revenue, which consisted primarily of personnel costs and consulting expense ~~after~~related to the launch of Aspira GenetiX, was ~~$75,000~~$41,000 for the three months ended ~~March 31,~~September 30, 2022, compared to ~~$238,000~~$202,000 for the same period in 2021. The decrease in cost was due to a decrease of ~~$108,000~~$104,000 in personnel costs, ~~due to~~and a decrease in volume of tests performed as compared to the same period in 2021. The Company has discontinued the genetics testing offering effective September 30, 2022.

Gross Profit Margin. Gross profit margin for ~~OVA1plus~~Ova1Plus remained relatively flat at ~~53.3%~~57.0% for the three months ended ~~March 31,~~September 30, 2022, ~~compared to 54.2%~~and 56% for the same period in 2021.

Research and Development 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 for the three months ended ~~March 31,~~September 30, 2022 increased by ~~$476,000,~~$639,000, or ~~55%~~42%, compared to the same period in 2021. This increase was primarily due to clinical validity and product development costs related to ~~OVAWatch, our third-generation product, as well as investments~~OvaWatch in ~~Aspira Synergy, increased personnel expenses, consulting expenses associated with EndoCheck regulatory clearance and severance paid in relation~~addition to approximately $852,000 of costs related to our ~~reorganization~~collaboration with DFCI, BWH and Medical University of ~~$132,000.~~Lodz, which relates to our endometriosis product portfolio, partially offset by a decrease in clinical trial expenses of $134,000 and a decrease of recruiting expenses of $112,000. We expect research and development expenses to increase in 2022, sequentially as well as relative to 2021, as a result of increased projects, clinical studies and our research collaboration agreements.

Sales and Marketing Expenses. Our sales and marketing expenses consist primarily of personnel-related expenses, education and promotional expenses. These expenses include the costs of educating physicians and other healthcare professionals regarding Ova1, Overa and Ova1Plus. 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 three months ended September 30, 2022 decreased by $1,133,000, or 22%, compared to the same period in 2021. This decrease was primarily due to decreased personnel in the marketing area, decreases in recruiting expenses and decreases in external marketing expenses. We expect sales and marketing expenses to modestly increase sequentially in 2022 as we prepare to launch OvaWatch.

General and Administrative 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 three months ended September 30, 2022 increased by $907,000, or 24%, compared to the same period in 2021. This increase was primarily due to issuance costs associated with issuance of warrants of $1,117,000 (see Note 2 to the unaudited condensed consolidated financial statements), personnel expenses of $491,000, partially offset by decreased consulting and legal expenses of $571,000 and $102,000, respectively. We expect general and administrative expenses to remain relatively flat sequentially in 2022.

Change in fair value of warrant liabilities. The fair values of the warrants as of August 22, 2022, the issuance date, and September 30, 2022 were $7,752,000 and $2,748,000, respectively, for a net change in fair value of $5,004,000.

‎

Results of Operations – Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

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


	Nine Months Ended
	September 30,				Increase (Decrease)
(dollars in thousands)	2022		2021		Amount		%
Revenue:
Product	$	5,890	$	4,753	$	1,137	24
Genetics		141		208		(67)	(32)
Total revenue		6,031		4,961		1,070	22
Cost of revenue:
Product		2,768		2,209		559	25
Genetics		180		704		(524)	(74)
Total cost of revenue		2,948		2,913		35	1
Gross profit		3,083		2,048		1,035	51
Operating expenses:
Research and development		4,915		3,861		1,054	27
Sales and marketing		12,027		12,209		(182)	(1)
General and administrative		13,305		9,627		3,678	38
Total operating expenses		30,247		25,697		4,550	18
Loss from operations		(27,164)		(23,649)		(3,515)	15
Change in fair value of warrant liabilities		5,004		-		5,004	-
Interest (expense), net		(10)		(35)		25	(71)
Other income, net		101		983		(882)	(90)
Net loss	$	(22,069)	$	(22,701)	$	632	(3)

Product Revenue. Product revenue was $5,890,000 for the nine months ended September 30, 2022, compared to $4,753,000 for the same period in 2021. Revenue for ASPiRA LABS is recognized when the Ova1, Overa, or Ova1Plus test is completed based on estimates of what we expect to ultimately realize. The 24% product revenue increase is primarily due to an increase in Ova1 test volume compared to the prior year, partially offset by a decrease in AUP, which decreased from $377 for the nine months ended September 30, 2021 to $373 in the same period of 2022.

Medicaid represents approximately 12.4% of volume in the nine months ended September 30, 2022, at an AUP of $89. This is compared to 11.8% of volume for the same period in 2021, at an AUP of $91. Our Ova1Plus AUP without Medicaid was $416 for the nine months ended September 30, 2022, compared to $413 for the same period in 2021.

The number of product tests performed increased 25% to 15,781 during the nine months ended September 30, 2022, compared to 12,609 product tests for the same period in 2021. This increase was due to increased access to provider offices and focused investment in our current commercial channel.

Genetics Revenue.Genetics revenue was $142,000 for the nine months ended September 30, 2022, compared to $208,000 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 32% genetics revenue decrease is primarily due to decreased volumes as compared to the same period in 2021, in addition to the AUP decreased to $420 from $478 from the same period in 2021. The Company has discontinued the genetics testing offering effective September 30, 2022.

Cost of Revenue – Product. Cost of product revenue was $2,768,000 for the nine months ended September 30, 2022, compared to $2,209,000 for the same period in 2021, representing an increase of $559,000, or 25%, due primarily to proportionate increases in personnel costs, lab supply costs, and software license fees resulting from the increase in tests performed compared to the prior year.

Cost of Revenue – Genetics.Cost of genetics revenue, which consisted primarily of personnel costs and consulting expense after the launch of Aspira GenetiX, was $180,000 for the nine months ended September 30, 2022, compared to $704,000 for the same period in 2021. The decrease in cost was due to a decrease of $322,000 in personnel costs and a decrease in volume of tests performed as compared to the same period in 2021. The Company has discontinued the genetics testing offering effective September 30, 2022.

Gross Profit Margin. Gross profit margin for Ova1Plus decreased slightly to 52.9% for the nine months ended September 30, 2022, compared to 54.4% for the same period in 2021. This decrease was primarily related to increased personnel costs, lab supply costs, and software license fees.

Research and Development 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 for the nine months ended September 30, 2022 increased by $1,054,000, or 27%, compared to the same period in 2021. This increase was primarily due to clinical validity, product development costs related to OvaWatch, in addition to approximately $852,000 of costs related to our collaboration with DFCI, BWH and Medical University of Lodz, which relates to our endometriosis product portfolio, increases in employment related expenses of $283,000, partially offset by a decrease in clinical trial expenses of $118,000. In addition, there was severance paid in relation to our commercial reorganization and job eliminations of $152,000. We expect research and development expenses to increase in 2022, sequentially as well as relative to 2021, as a result of increased projects and clinical studies.

Sales and Marketing Expenses. Our sales and marketing expenses consist primarily of personnel-related expenses, education and promotional expenses. These expenses include the costs of educating physicians and other healthcare professionals regarding ~~OVA1, OVERA, OVA1plus~~Ova1, Overa and ~~Aspira GenetiX.~~Ova1Plus. 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 ~~three~~nine months ended ~~March 31,~~September 30, 2022 ~~increased~~decreased by ~~$1,389,000,~~$182,000, or ~~45%~~1%, compared to the same period in 2021. This ~~increase~~decrease was primarily due to decreased recruiting and marketing expense, partially offset by increased personnel, severance paid in relation to our reorganization,

commissions, sales meetings and travel and entertainment costs. We expect sales and marketing expenses to increase sequentially in 2022, ~~relative to 2021,~~ due to investing in key strategic hires and product portfolio expansion.

During the 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~~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 2022 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. 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 ~~three~~nine months ended ~~March 31,~~September 30, 2022 increased by ~~$1,854,000,~~$3,678,000, or ~~74%~~38%, compared to the same period in 2021. This increase was primarily due to issuance costs associated with issuance of warrants of $1,117,000 (see Note 2 to the unaudited condensed consolidated financial statements), increased personnel related expenses of ~~$984,000, consulting expenses~~$2,803,000 and legal fees of ~~$164,000, and stock compensation expenses of $353,000.~~$220,000. Severance paid to general and administrative-related personnel was immaterial. We expect general and administrative expenses to ~~increase~~remain relatively flat sequentially in 2022.

Change in fair value of warrant liabilities. The fair values of the warrants as of August 22, 2022, ~~relative to 2021.~~the issuance date, and September 30, 2022 were $7,752,000 and $2,748,000, respectively, for a net change in fair value of $5,004,000.

Liquidity and Capital Resources

We plan to continue to expend resources selling and marketing ~~OVA1, OVERA, OVA1plus~~Ova1, Overa and ~~Aspira GenetiX~~Ova1Plus and developing additional diagnostic tests and service capabilities. We plan to launch our next generation ovarian cancer risk assessment test, OvaWatch, in the fourth quarter of 2022.

~~The Company has~~We have incurred significant net losses and negative cash flows from operations since inception, and as a result ~~has~~have an accumulated deficit of approximately ~~$480,996,000~~$493,797,000 as of ~~March 31,~~September 30, 2022. ~~The Company~~We also ~~expects~~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 revenue over historic revenue or additional financing. Given the above conditions, there is substantial doubt about our ability to continue as a going concern.

We expect to raise capital through sources that may include public or private equity offerings, debt financings, the exercise of common stock warrants, collaborations, licensing arrangements, grants and government funding and strategic alliances. However, additional funding may not be available when needed or on terms acceptable to us. If we are unable to obtain additional capital, we 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 our business, results of operations and financial condition.

As discussed in Note 2 to the condensed consolidated financial statements, in March 2016, ~~the Company~~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 itwe may borrow up to $4,000,000 from the DECD.

The loan may be prepaid at any time without premium or penalty. An initial disbursement of $2,000,000 was made to ~~the Company~~us on April 15, 2016 under the DECD Loan Agreement. On December 3, 2020, ~~the Company~~we received a disbursement of the remaining $2,000,000 under the DECD Loan Agreement, as ~~the Company~~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 proceeds of approximately ~~$47,858,000,~~

$47,858,000, after deducting underwriting discounts and offering expenses. There was a change in estimate in the third quarter of 2021 in the amount of $138,000 relating to an expense reversal of offering costs.

As discussed in Note 3 to the condensed consolidated financial statements, on August 22, 2022, the Company completed a public offering (the “2022 Offering”) resulting in net proceeds of approximately $7,704,000, after deducting underwriting discounts and offering expenses of $1,296,000.

In connection with a private placement offering of common stock and warrants we completed in May 2013, we entered into a stockholders agreement which, among other things, ~~gives~~granted 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. We believe that the rights of one of the primary investors have so terminated.

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 ~~March 31,~~September 30, 2022 we had an accumulated deficit of ($~~480,996,000)~~493,797,000) and stockholders’ equity of ~~$21,744,000.~~$11,178,000. As of ~~March 31,~~September 30, 2022, we had ~~$26,855,000~~$20,551,000 of cash and cash equivalents (excluding restricted cash of $250,000), ~~$5,778,000~~$7,297,000 of current liabilities, and working capital of ~~$23,661,000.~~$15,679,000. 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. ~~However, we believe that our cash and cash equivalents will be sufficient to fund our operations for the next 12 months from the date of the filing of this Form 10-Q.~~

While we believe that we have sufficient capital to fund our operations for the next 12 months, we are currently evaluating our capital needs beyond the next 12 months, which may involve additional capital raises and/or other financing activities in order to continue to fund operations at current cash expenditure levels. We may take further action to protect our liquidity position, including in the event that our existing cash on hand is not sufficient to fund our operations, meet our capital requirements or satisfy our anticipated obligations as they become due. Such actions may include, but are not limited ~~to:~~

~~Raising capital through an equity offering either in the public markets or via a private placement offering~~ ~~(however, no assurance can be given that capital will be available on acceptable terms, or at all);~~

~~Reducing executive bonuses or replacing cash compensation with equity grants;~~

~~Reducing professional services and consulting fees and eliminating non-critical projects;~~

~~Reducing travel and entertainment expenses; and~~

~~Reducing, eliminating or deferring discretionary marketing programs.~~

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~~Ova1, Overa and ~~Aspira GenetiX~~Ova1Plus 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~~Ova1, Overa and ~~OVA1plus;~~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.

The first quarter of 2022 had higher, non-recurring costs, including personnel costs associated with our commercial reorganization, in addition to costs related to our annual performance plan payout. In the third 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, and specifically on OvaWatch and EndoCheck. We also enhanced our sales and marketing in preparation for the BRL collaboration and the launch of OvaWatch. We expect to see

sequential improvement in net cash utilization in the fourth quarter of 2022 compared to the third quarter as we do not plan to incur one-time research and collaboration costs, which was incurred in the third quarter of 2022, and as we start to see the impact of our anticipated top line growth.

Net cash used in operating activities was ~~$10,173,000~~$25,109,000 for the ~~three~~nine months ended ~~March 31,~~September 30, 2022, resulting primarily from the net loss reported of ~~$9,268,000,~~$22,069,000, which includes non-cash expenses in the amount of ~~$838,000~~$5,004,000 relating to a change in warrant fair value (see Note 2 to the unaudited condensed consolidated financial statements), $1,994,000 related to stock compensation expense and ~~$64,000~~$195,000 related to depreciation and amortization, offset by changes in prepaid expense and other assets of $694,000 and changes in accounts payable, accrued liabilities and other liabilities of ~~$1,705,000.~~$653,000, and changes in accounts receivable of $174,000 and inventory of $106,000.

Net cash used in operating activities was ~~$5,255,000~~$19,746,000 for the ~~three~~nine months ended ~~March 31,~~September 30, 2021, resulting primarily from the net loss reported of ~~$5,920,000,~~$22,701,000, which includes non-cash ~~expenses in the amount of $489,000 related to~~items such as stock compensation expense of $2,949,000, PPP loan forgiveness of $1,006,000 and ~~$90,000 related to~~ depreciation and amortization of $238,000, offset by changes in prepaid expense and other assets of $262,000 and changes in accounts payable, accrued liabilities and other liabilities of $821,000, partially offset by changes in accounts ~~payable, accrued~~receivable of $238,000 and ~~other liabilities~~inventory of ~~$291,000.~~$107,000.

Net cash used in investing activities was ~~$82,000~~$158,000 and ~~$41,000~~$154,000 for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021, respectively, which consisted of property and equipment purchases.

Net cash ~~used in~~provided by financing activities was ~~$70,000~~$8,638,000 for the ~~three~~nine months ended ~~March 31,~~September 30, 2022, ~~which~~stemming primarily ~~included~~from the 2022 Offering, resulting in net proceeds of $8,821,000, after deducting allocated underwriting discounts and offering expenses of $179,000, in addition to principal payments on the DECD loan. Net cash provided by financing activities was ~~$48,034,000~~$48,389,000 for the ~~three~~nine months ended ~~March 31,~~September 30, 2021, which resulted primarily from the ~~February~~ 2021 ~~public offering,~~Offering, resulting in net proceeds to the Company of approximately ~~$47,720,000,~~$47,858,000, after deducting underwriting discounts and offering expenses of ~~$516,000.~~$378,000. There was a change in estimate in the third quarter of 2021 in the amount of ~~$138,000~~$137,000 relating to an expense reversal of offering costs.

Based on the available objective evidence, we believe it is more likely than not that net deferred tax assets will not be fully realizable. Accordingly, we have ~~significant NOL carryforwards as of March 31, 2022 for which~~provided a full valuation allowance ~~has been provided due to our history of operating losses. Section 382 of~~against 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 inCompany’s net deferred tax assets. Therefore, there was no deferred income tax expense or benefit for 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.period.

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~~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~~income.

~~. The Company’s~~

Our ability to use ~~NOL~~the Company’s net operating loss and credit carryforwards ~~may be~~to offset future taxable income is restricted due to ownership change limitations ~~occurring~~that have occurred in the past, ~~or that could occur in the future,~~ as required by Section 382 of the Internal Revenue Code of 1986, as amended (“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~~Net operating losses which are limited from offsetting any future taxable income ~~and tax, respectively.~~

~~Our management believes that~~under Section 382 ~~ownership changes occurred as a result of our follow-on public offerings in 2011, 2013 and 2015. Any limitation may result~~are not included 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~~gross deferred tax ~~assets with a corresponding reduction of our valuation allowance.~~assets. 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.

Our unrecognized tax benefits attributable to research and development credits will increase during the period for tax positions taken during the year and will/ decrease for expiration of a portion of the carryforwards during the period.

Off-Balance Sheet Arrangements

As of ~~March 31,~~September 30, 2022, we had no off-balance sheet arrangements that are reasonably likely to have a current or future material effect on our condensed consolidated financial condition, results of operations, liquidity, capital expenditures or capital resources.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Per Item 305(e) of Regulation S-K, the information called for by this Item 3 is not required.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures.

Our senior management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Management, including our Chief Executive Officer and Chief Financial Officer, performed an evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of ~~March 31,~~September 30, 2022. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of ~~March 31,~~September 30, 2022, our disclosure controls and procedures were effective.

Changes in internal controls over financial reporting.

There was no change in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In the ordinary course of business, we may periodically become subject to legal proceedings and claims arising in connection with ongoing business activities. The results of litigation and claims cannot be predicted with certainty, and unfavorable resolutions are possible and could materially and adversely affect our results of operations, cash flows and financial position. In addition, regardless of the outcome, litigation could have an adverse impact on us because of defense costs, diversion of management resources and other factors. While the outcome of these proceedings and claims cannot be predicted with certainty, there are no matters, as of ~~March 31,~~September 30, 2022, that, in the opinion of management, will have a material adverse effect on our financial position, results of operations or cash flows.

‎

ITEM 1A. RISK FACTORS

~~There~~Except as set forth below, there have been no material changes to our risk factors from those disclosed under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K, filed with the SEC on March 31, 2022 (the “2021 Annual Report”). The risks and uncertainties described below and in our 2021 Annual Report are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also materially adversely affect our business, financial condition or results of operations.

Failure to meet Nasdaq’s continued listing requirements could result in the delisting of Aspira common stock, negatively impact the price of Aspira common stock and negatively impact our ability to raise additional capital.

On June 1, 2022, we received a deficiency letter from the Listing Qualifications Department of The Nasdaq Stock Market stating that, for the preceding 30 consecutive business days, the closing bid price for Aspira 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, which would extend the deadline until May 27, 2023. There is no assurance that we will be able to regain compliance by the November 28, 2022 initial deadline or any extension thereof, and there is no assurance that we will otherwise maintain compliance with any of the other Nasdaq listing requirements.

If we fail to comply with Nasdaq’s continued listing requirements, Aspira common stock will be subject to delisting. If that were to occur, Aspira common stock would be subject to rules that impose additional sales practice requirements on broker-dealers who sell Aspira securities. The additional burdens imposed upon broker-dealers by these requirements could discourage broker-dealers from effecting transactions in Aspira common stock. This would adversely affect the ability of investors to trade Aspira securities and would adversely affect the value and liquidity of Aspira common stock, as well as negatively impact our ability to raise additional capital. These factors could contribute to lower prices and larger spreads in the bid and ask prices for Aspira common stock. If we seek to implement a reverse stock split in order to remain listed on The Nasdaq Capital Market, the announcement or implementation of such a reverse stock split could negatively affect the price of Aspira common stock.

‎

There is substantial doubt about our ability to continue as a going concern, and this may adversely affect our stock price and our ability to raise capital.

We have incurred significant losses and negative cash flows from operations since inception and have an accumulated deficit of nearly $494 million as of the end of the period covered by this report. We also expect to incur a net loss and negative cash flows from operations in 2022. Given these conditions, there is a risk that this may adversely impact our stock price, and therefore substantial doubt about our ability to continue as a going concern.

We believe that successful achievement of the business objectives will require additional financing. We expect to raise capital through sources that may include public or private equity offerings, debt financings, collaborations, licensing arrangements, grants and government funding and strategic alliances. However, in part due to our low stock price, additional funding may not be available when needed or on terms acceptable to us. If we are unable to obtain additional capital, we may not be able to continue sales and marketing, research and development, distribution or other operations on the scope or scale of current activity and that could have a material adverse effect on our business, results of operations and financial condition.

Failure to continue coverage of Ova1 through the Company’s Medicare Administrative Carrier for Ova1 (Novitas).

Since 2013, Ova1 has been listed as a covered service in the Biomarkers for Oncology Local Coverage Determination (“LCD”) issued by Novitas, a Medicare Administrative Carrier. Earlier this year, Novitas issued a statement for public comment regarding the potential creation of a new LCD that could impact services previously included in the Biomarkers for Oncology LCD beginning in the second quarter of 2023. In related public statements, Novitas indicated a potential retirement of the Biomarkers for Oncology LCD. While we do not believe Novitas intends to eliminate Ova1 coverage, it has not provided additional information to allow us to assess the likelihood or potential impact, if any, that a change to the Biomarkers for Oncology LCD would have on the coverage and related revenue of Ova1, and such impact may be material to our business, results of operations and financial condition. We are monitoring developments closely and believe additional due process would be required if the activities contemplated by Novitas change the coverage determination for Ova1.

We may need to sell additional shares of our common stock or other securities in the future to meet our capital requirements, which could cause significant dilution.

Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of the issuance of common stock in public or private equity offerings, debt financings, exercise of common stock warrants, collaborations, licensing arrangements, grants and government funding and strategic alliances. As discussed in “Risks Related to our Business and Industry,” our management believes the successful achievement of our business objectives will require additional financing through one of these avenues. To the extent that we raise additional capital through the sale of equity or convertible debt, such financing may be dilutive to stockholders. Debt financing, if available, may involve restrictive covenants and potential dilution to stockholders. Furthermore, a perception that future sales of our common stock in the public market are likely to occur could affect prevailing trading prices of our common stock.

As of September 30, 2022, we had 124,445,639 shares of our common stock outstanding and 3,531,486 shares of our common stock reserved for future issuance to employees, directors and consultants pursuant to our employee stock plans, which excludes 9,873,424 shares of our common stock that were subject to outstanding options. In addition, as of September 30, 2022, warrants to purchase 12,000,000 shares of our common stock were outstanding. These warrants are exercisable at the election of the holders thereof, in accordance with the terms of the related Form of Warrant, at an average exercise price of $0.88 per share.

The exercise of all or a portion of our outstanding options and warrants will dilute the ownership interests of our stockholders.

‎

ITEM 5. OTHER INFORMATION

On November 5, 2022, Robert Beechey, the Chief Financial Officer, principal financial officer and principal accounting officer of the Company, notified the Company that he will resign from these roles with the Company effective November 30, 2022. Effective December 1, 2022, Mr. Beechey will transition to a consulting role at the Company, pursuant to the Consulting Agreement, dated November 10, 2022 (the “Consulting Agreement”), between Mr. Beechey and the Company.

Under the Consulting Agreement, Mr. Beechey will provide the Company with accounting and finance services, as needed, including, without limitation, assistance in connection with the transition of financial leadership. Under the Consulting Agreement, Mr. Beechey will be entitled to receive $20,000 per month for up to 40 hours of service per month through May 31, 2023. The Consulting Agreement also provides for a 12-month non-solicitation period following the termination or expiration of the Consulting Agreement. The Consulting Agreement expires on May 31, 2023.

In addition, Mr. Beechey and the Company entered into a Separation Agreement, dated November 10, 2022 (the “Separation Agreement”), that provides that, in consideration for the release of all claims against the Company, (i) options granted during Mr. Beechey’s service to the Company, including during the time period during which he is performing services for the Company under the Consulting Agreement, will accrue and vest through May 31, 2023 and (ii) Mr. Beechey will have until March 31, 2024 to exercise any vested options.

The foregoing description of terms of the Consulting Agreement and the Separation Agreement is qualified in its entirety by reference to the complete agreements, copies of which are attached as Exhibit 10.2 and Exhibit 10.3 to this Quarterly Report on Form 10-Q.
‎

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ITEM 6. EXHIBITS The following exhibits are filed or incorporated by reference with this report as indicated below:

Exhibit
Incorporated by Reference
Filed
Number
Exhibit Description
Form
File No.
Exhibit
Filing Date
Herewith
3.1
Fourth Amended and Restated Certificate of Incorporation of Vermillion, Inc. dated January 22, 2010
8-K
000-31617
3.1
January 25, 2010
3.2
Certificate of Amendment of Fourth Amended and Restated Certificate of Incorporation, effective June 19, 2014
10-Q
001-34810
3.2
August 14, 2014
3.3
Certificate of Amendment to Fourth Amended and Restated Certificate of Incorporation of Vermillion, Inc. dated June 11, 2020
8-K
001-34810
3.1
June 11, 2020
3.4
Certificate of Designations, Preferences and Rights of Series B Convertible Preferred Stock
8-K
001-34810
4.1
April 17, 2018
3.5
Amended and Restated Bylaws of Aspira Women's Health Inc., effective February 23, 2022
8-K
001-34810
3.1
February 28, 2022
10.1
Amended and Restated Employment Agreement between Aspira Women’s Health Inc. and Valerie B. Palmieri effective March 1, 2022*#
8-K
001-34810
10.1
February 28, 2022
10.2
Employment Agreement between Aspira Women’s Health Inc. and Nicole Sandford effective March 1, 2022*#
8-K
001-34810
10.2
February 28, 2022
31.1
Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
√
31.2
Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
√
32.1
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
√√
101
Interactive Data Files pursuant to Rule 405 of Regulation S-T formatted in Inline Extensible Business Reporting Language ("Inline XBRL")
√
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)
√
√
Filed herewith
√√
Furnished herewith
#
Management contract or compensatory plan or arrangement.
*
Portions of this exhibit have been omitted in accordance with SEC rules

‎

Exhibit

Incorporated by Reference

Filing

Filed

Number

Exhibit Description

Form

File No.

Exhibit

Date

Herewith

3.1

Fourth Amended and Restated Certificate of Incorporation of Vermillion, Inc. dated January 22, 2010

8-K

000-31617

3.1

January 25, 2010

3.2

Certificate of Amendment of Fourth Amended and Restated Certificate of Incorporation, effective June 19, 2014

10-Q

001-34810

3.2

August 14, 2014

3.3

Certificate of Amendment to Fourth Amended and Restated Certificate of Incorporation of Vermillion, Inc. dated June 11, 2020

8-K

001-34810

3.1

June 11, 2020

3.4

Certificate of Designations, Preferences and Rights of Series B Convertible Preferred Stock

8-K

001-34810

4.1

April 17, 2018

3.5

Amended and Restated Bylaws of Aspira Women's Health Inc., effective February 23, 2022

8-K

001-34810

3.1

February 28, 2022

4.1

Form of Warrant, issued on August 22, 2022

8-K

001-34810

4.1

August 22, 2022

10.1

First Amendment to Employment Agreement between Aspira Women’s Health Inc. and Robert Beechey dated September 20, 2022 #

√

10.2

Separation Agreement and Release between Aspira Women’s Health Inc. and Robert Beechey dated November 10, 2022 #

√

10.3

Consulting Agreement between Aspira Women’s Health Inc. and Robert Beechey dated November 10, 2022 #

√

31.1

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

√

31.2

Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

√

32.1

Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

√√

101

Interactive Data Files pursuant to Rule 405 of Regulation S-T formatted in Inline Extensible Business Reporting Language ("Inline XBRL")

√

104

Cover Page Interactive Data File (embedded within the Inline XBRL document)

√

Filed herewith

√√

Furnished herewith

Management contract or compensatory plan or arrangement.

2837

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	Aspira Women’s Health Inc.
Date: ~~May 11,~~November 10, 2022	/s/ Nicole Sandford
	Nicole Sandford President and Chief Executive Officer (Principal Executive Officer) and Director
Date: ~~May 11,~~November 10, 2022	/s/ Robert Beechey
	Robert Beechey Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

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