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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2024
OR
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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)
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Delaware |
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33-0595156 |
(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
12117 Bee Caves Road, Building III, Suite 100, Austin, Texas |
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78738 |
(Address of principal executive offices) |
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(Zip Code) |
Registrant’s telephone number, including area code: (512) 519-0400
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Common Stock, par value $0.001 per share |
AWH |
The Nasdaq Capital Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer |
Accelerated filer |
Non-accelerated filer |
Smaller reporting company Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
As of August 9, 2024, the registrant had 16,062,939 shares of common stock, par value $0.001 per share, outstanding.
ASPIRA WOMEN’S HEALTH INC.
FORM 10-Q
For the Quarter Ended June 30, 2024
Table of Contents
The following are registered and unregistered trademarks and service marks of Aspira Women’s Health Inc.: VERMILLION SM, Aspira Women’s Health®, OVA1®, OVERA®, ASPiRA LABS ®, OvaCalc®, OVASUITESM, ASPiRA GenetiXSM, OVA1PLUS®, OVAWATCH®, EndoCheckSM, OVAInheritSM, Aspira Synergy®, OVA360SM, ASPIRA IVDSM, and YOUR HEALTH, OUR PASSION®.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Aspira Women’s Health Inc.
Condensed Consolidated Balance Sheets (unaudited)
(Amounts in Thousands, Except Share and Par Value Amounts)
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June 30, |
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December 31, |
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2024 |
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2023 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
962 |
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$ |
2,597 |
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Accounts receivable, net of reserves of $0 and $15, as of June 30, 2024 and December 31, 2023, respectively |
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1,445 |
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1,459 |
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Prepaid expenses and other current assets |
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618 |
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997 |
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Inventories |
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226 |
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227 |
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Total current assets |
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3,251 |
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5,280 |
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Property and equipment, net |
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120 |
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165 |
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Right-of-use assets |
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559 |
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528 |
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Restricted cash |
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- |
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258 |
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Other assets |
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31 |
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31 |
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Total assets |
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$ |
3,961 |
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$ |
6,262 |
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Liabilities and Stockholders’ Deficit |
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Current liabilities: |
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Accounts payable |
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$ |
1,943 |
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$ |
1,261 |
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Accrued liabilities |
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2,856 |
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2,863 |
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Current portion of long-term debt |
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316 |
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166 |
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Short-term debt |
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166 |
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670 |
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Current maturities of lease liabilities |
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177 |
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159 |
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Total current liabilities |
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5,458 |
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5,119 |
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Non-current liabilities: |
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Long-term debt |
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1,264 |
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1,430 |
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Non-current maturities of lease liabilities |
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437 |
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427 |
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Warrant liabilities |
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511 |
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|
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1,651 |
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Total liabilities |
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7,670 |
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8,627 |
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Commitments and contingencies (Note 4) |
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Stockholders’ deficit: |
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|
|
Common stock, par value $0.001 per share, 200,000,000 and 150,000,000 shares authorized at June 30, 2024 and December 31, 2023, respectively; 12,825,090 and 10,645,049 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively |
|
|
13 |
|
|
|
11 |
|
Additional paid-in capital |
|
|
522,740 |
|
|
|
515,927 |
|
Accumulated deficit |
|
|
(526,462 |
) |
|
|
(518,303 |
) |
Total stockholders’ deficit |
|
|
(3,709 |
) |
|
|
(2,365 |
) |
Total liabilities and stockholders’ deficit |
|
$ |
3,961 |
|
|
$ |
6,262 |
|
See accompanying notes to the unaudited condensed consolidated financial statements.
Aspira Women’s Health Inc.
Condensed Consolidated Statements of Operations (unaudited)
(Amounts in Thousands, Except Share and Per Share Amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Product |
|
$ |
2,423 |
|
|
$ |
2,491 |
|
|
$ |
4,576 |
|
|
$ |
4,806 |
|
Genetics |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1 |
|
Total revenue |
|
|
2,423 |
|
|
|
2,491 |
|
|
|
4,576 |
|
|
|
4,807 |
|
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Product |
|
|
1,002 |
|
|
|
941 |
|
|
|
1,941 |
|
|
|
2,071 |
|
Total cost of revenue |
|
|
1,002 |
|
|
|
941 |
|
|
|
1,941 |
|
|
|
2,071 |
|
Gross profit |
|
|
1,421 |
|
|
|
1,550 |
|
|
|
2,635 |
|
|
|
2,736 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
952 |
|
|
|
693 |
|
|
|
1,858 |
|
|
|
1,960 |
|
Sales and marketing |
|
|
2,137 |
|
|
|
1,772 |
|
|
|
4,026 |
|
|
|
4,367 |
|
General and administrative |
|
|
2,725 |
|
|
|
3,406 |
|
|
|
5,854 |
|
|
|
7,010 |
|
Total operating expenses |
|
|
5,814 |
|
|
|
5,871 |
|
|
|
11,738 |
|
|
|
13,337 |
|
Loss from operations |
|
|
(4,393 |
) |
|
|
(4,321 |
) |
|
|
(9,103 |
) |
|
|
(10,601 |
) |
Other income (expense), net: |
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of warrant liabilities |
|
|
889 |
|
|
|
992 |
|
|
|
1,140 |
|
|
|
968 |
|
Interest (expense) income, net |
|
|
(10 |
) |
|
|
8 |
|
|
|
(15 |
) |
|
|
34 |
|
Forgiveness of DECD loan |
|
|
- |
|
|
|
1,000 |
|
|
|
- |
|
|
|
1,000 |
|
Other expense, net |
|
|
(16 |
) |
|
|
4 |
|
|
|
(181 |
) |
|
|
(296 |
) |
Total other income (expense), net |
|
|
863 |
|
|
|
2,004 |
|
|
|
944 |
|
|
|
1,706 |
|
Net loss |
|
$ |
(3,530 |
) |
|
$ |
(2,317 |
) |
|
$ |
(8,159 |
) |
|
$ |
(8,895 |
) |
Net loss per share - basic and diluted |
|
$ |
(0.28 |
) |
|
$ |
(0.28 |
) |
|
$ |
(0.67 |
) |
|
$ |
(1.06 |
) |
Weighted average common shares used to compute basic and diluted net loss per common share |
|
|
12,518,725 |
|
|
|
8,400,157 |
|
|
|
12,181,481 |
|
|
|
8,357,013 |
|
See accompanying notes to the unaudited condensed consolidated financial statements.
Aspira Women’s Health Inc.
Condensed Consolidated Statements of Changes in Stockholders’ (Deficit) Equity (unaudited)
(Amounts in Thousands, Except Share Amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
Shares |
|
|
Amount |
|
|
Additional Paid-In Capital |
|
|
Accumulated Deficit |
|
|
Total Stockholders’ Deficit |
|
Balance at December 31, 2023 |
|
|
10,645,049 |
|
|
$ |
11 |
|
|
$ |
515,927 |
|
|
$ |
(518,303 |
) |
|
$ |
(2,365 |
) |
Net loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(4,629 |
) |
|
|
(4,629 |
) |
Common stock issued under an equity line of credit agreement |
|
|
111,369 |
|
|
|
- |
|
|
|
400 |
|
|
|
- |
|
|
|
400 |
|
Common stock issued under a registered direct offering, net of issuance costs |
|
|
1,371,000 |
|
|
|
1 |
|
|
|
4,868 |
|
|
|
- |
|
|
|
4,869 |
|
Warrant Exercise |
|
|
200,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Common stock issued for vested restricted stock awards |
|
|
16,686 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Stock-based compensation expense |
|
|
- |
|
|
|
- |
|
|
|
362 |
|
|
|
- |
|
|
|
362 |
|
Balance at March 31, 2024 |
|
|
12,344,104 |
|
|
|
12 |
|
|
|
521,557 |
|
|
|
(522,932 |
) |
|
|
(1,363 |
) |
Net loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(3,530 |
) |
|
|
(3,530 |
) |
Issuance costs related to common stock issued under registered direct offering |
|
|
- |
|
|
|
- |
|
|
|
(39 |
) |
|
|
- |
|
|
|
(39 |
) |
Common stock issued under an equity line of credit agreement |
|
|
475,986 |
|
|
|
1 |
|
|
|
1,100 |
|
|
|
- |
|
|
|
1,101 |
|
Common stock issued for vested restricted stock awards |
|
|
5,000 |
|
|
|
- |
|
|
|
16 |
|
|
|
- |
|
|
|
16 |
|
Stock-based compensation expense |
|
|
- |
|
|
|
- |
|
|
|
106 |
|
|
|
- |
|
|
|
106 |
|
Balance at June 30, 2024 |
|
|
12,825,090 |
|
|
$ |
13 |
|
|
$ |
522,740 |
|
|
$ |
(526,462 |
) |
|
$ |
(3,709 |
) |
Aspira Women’s Health Inc.
Condensed Consolidated Statements of Changes in Stockholders’ (Deficit) Equity (unaudited) (continued)
(Amounts in Thousands, Except Share Amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
Shares |
|
|
Amount |
|
|
Additional Paid-In Capital |
|
|
Accumulated Deficit |
|
|
Total Stockholders’ Deficit |
|
Balance at December 31, 2022 |
|
|
8,306,326 |
|
|
$ |
8 |
|
|
$ |
508,584 |
|
|
$ |
(501,613 |
) |
|
$ |
6,979 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(6,578 |
) |
|
|
(6,578 |
) |
Common stock issued under an at the market offering agreement, net of issuance costs |
|
|
23,217 |
|
|
|
— |
|
|
|
30 |
|
|
|
— |
|
|
|
30 |
|
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
396 |
|
|
|
— |
|
|
|
396 |
|
Balance at March 31, 2023 |
|
|
8,329,543 |
|
|
|
8 |
|
|
|
509,010 |
|
|
|
(508,191 |
) |
|
|
827 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,317 |
) |
|
|
(2,317 |
) |
Common stock issued under an at the market offering agreement, net of issuance costs |
|
|
12,335 |
|
|
|
— |
|
|
|
38 |
|
|
|
— |
|
|
|
38 |
|
Common stock issued under an equity line of credit agreement, net of issuance costs |
|
|
53,335 |
|
|
|
— |
|
|
|
178 |
|
|
|
— |
|
|
|
178 |
|
Common stock issued for entering into equity line of credit |
|
|
47,733 |
|
|
|
— |
|
|
|
258 |
|
|
|
— |
|
|
|
258 |
|
Common stock issued for vested restricted stock awards |
|
|
30,441 |
|
|
|
1 |
|
|
|
263 |
|
|
|
— |
|
|
|
264 |
|
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
224 |
|
|
|
— |
|
|
|
224 |
|
Fractional shares adjustment related to reverse stock split |
|
|
(24 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Balance at June 30, 2023 |
|
|
8,473,363 |
|
|
$ |
9 |
|
|
$ |
509,971 |
|
|
$ |
(510,508 |
) |
|
$ |
(528 |
) |
See accompanying notes to the unaudited condensed consolidated financial statements.
Aspira Women’s Health Inc.
Condensed Consolidated Statements of Cash Flows (unaudited)
(Amounts in Thousands)
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
|
2024 |
|
|
2023 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
Net loss |
|
$ |
(8,159 |
) |
|
$ |
(8,895 |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
Non-cash lease expense |
|
|
(3 |
) |
|
|
7 |
|
Depreciation and amortization |
|
|
55 |
|
|
|
122 |
|
Stock-based compensation expense |
|
|
484 |
|
|
|
884 |
|
Change in fair value of warrant liabilities |
|
|
(1,140 |
) |
|
|
(968 |
) |
Loss on impairment and disposal of property and equipment |
|
|
25 |
|
|
|
(3 |
) |
Forgiveness of DECD loan |
|
|
- |
|
|
|
(1,000 |
) |
Financing expense for entering into equity line of credit with Lincoln Park |
|
|
- |
|
|
|
258 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Accounts receivable |
|
|
14 |
|
|
|
(393 |
) |
Prepaid expenses and other assets |
|
|
379 |
|
|
|
899 |
|
Inventories |
|
|
1 |
|
|
|
44 |
|
Accounts payable |
|
|
682 |
|
|
|
191 |
|
Accrued liabilities |
|
|
(7 |
) |
|
|
147 |
|
Other liabilities |
|
|
(503 |
) |
|
|
(416 |
) |
Net cash used in operating activities |
|
|
(8,172 |
) |
|
|
(9,123 |
) |
Cash flows from investing activities: |
|
|
|
|
|
|
Purchase of property and equipment |
|
|
(35 |
) |
|
|
(12 |
) |
Net cash used in investing activities |
|
|
(35 |
) |
|
|
(12 |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
Principal repayment of DECD loan |
|
|
(17 |
) |
|
|
(167 |
) |
Proceeds from at the market offering |
|
|
- |
|
|
|
202 |
|
Payment of issuance costs for at the market offering |
|
|
- |
|
|
|
(134 |
) |
Proceeds from equity line of credit |
|
|
1,501 |
|
|
|
178 |
|
Proceeds from registered direct offering |
|
|
5,563 |
|
|
|
— |
|
Payment of issuance costs for registered direct offering |
|
|
(733 |
) |
|
|
— |
|
Net cash provided by financing activities |
|
|
6,314 |
|
|
|
79 |
|
Net decrease in cash, cash equivalents and restricted cash |
|
|
(1,893 |
) |
|
|
(9,056 |
) |
Cash, cash equivalents and restricted cash, beginning of the period |
|
|
2,855 |
|
|
|
13,557 |
|
Cash, cash equivalents and restricted cash, end of the period |
|
$ |
962 |
|
|
$ |
4,501 |
|
Reconciliation to Consolidated Balance Sheet: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
962 |
|
|
$ |
4,246 |
|
Restricted cash |
|
|
- |
|
|
|
255 |
|
Cash and cash equivalents, and restricted cash |
|
$ |
962 |
|
|
$ |
4,501 |
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
Cash paid for interest |
|
$ |
24 |
|
|
$ |
33 |
|
Supplemental disclosure of noncash investing and financing activities: |
|
|
|
|
|
|
Forgiveness of DECD loan |
|
$ |
- |
|
|
$ |
(1,000 |
) |
Commitment shares for equity line of credit |
|
|
- |
|
|
|
258 |
|
Increase in right-of-use assets |
|
|
169 |
|
|
|
- |
|
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. (“Aspira” and its wholly-owned subsidiaries are collectively referred to as the “Company”) is incorporated in the state of Delaware, and is engaged in the business of developing and commercializing diagnostic tests for gynecologic disease. The Company currently markets and sells the following products and related services:
(1) the Ova1Plus workflow, which uses Ova1 as the primary test and Overa as a reflex for Ova1 intermediate range results. Ova1 is a qualitative serum test intended as an aid to further assess the likelihood of malignancy in women with an ovarian adnexal mass for which surgery is planned when the physician’s independent clinical and radiological evaluation does not indicate malignancy. Overa is a second-generation biomarker test intended to maintain Ova1’s high sensitivity while improving specificity. The Ova1 workflow leverages the strengths of Ova1’s (MIA) sensitivity and Overa’s (MIAG2G) specificity to reduce incorrectly elevated results; and
(2) OvaWatch, a Laboratory Developed Test (“LDT”) intended in the initial and periodic clinical assessment of malignancy risk in all women thought to have an indeterminate or benign adnexal mass.
Collectively, these tests are referred to and marketed as OvaSuite.
For the six months ended June 30, 2024 and 2023, the Company’s product and related revenue was limited to the products described above, as well as residual revenue from Aspira GenetiX, which was discontinued in the third quarter of 2022. The Company’s products are distributed through its own national sales force, including field sales, inside sales and a contracted sales team, through its proprietary decentralized testing platform and cloud service marketed as Aspira Synergy, and through marketing and distribution agreements with BioReference Health, LLC and ARUP Laboratories.
Overa is currently not offered commercially except as a reflex test performed as part of the Ova1Plus workflow.
Going Concern and Liquidity
The Company has incurred significant net losses and negative cash flows from operations since inception, and as a result has an accumulated deficit of approximately $526,462,000 and working capital deficit of approximately ($2,207,000) as of June 30, 2024. For the six months ended June 30, 2024, the Company incurred a net loss of $8,159,000 and used cash in operations of $8,172,000. The Company had a balance in cash and cash equivalents of $962,000 as of June 30, 2024. The Company also expects to continue to incur a net loss and negative cash flows from operations for the remainder of 2024. In order to fund operations, meet its capital requirements or satisfy the anticipated obligations as they become due, the Company expects to take further action to protect its liquidity position, which include, but are not limited to:
•Raising capital through equity or debt offerings either in the public markets or via private placement offering; to the extent that the Company raises additional funds by issuing equity securities, the Company’s stockholders may experience significant dilution. However, no assurance can be given that capital will be available on acceptable terms, or at all;
•Securing debt, however, no assurance can be given that debt will be available on acceptable terms or at all;
•Reducing executive bonuses or replacing cash compensation with equity grants;
•Reducing professional services and consulting fees and eliminating non-critical projects;
•Reducing travel and entertainment expenses; and
•Reducing eliminating or deferring discretionary marketing programs.
The Company also has outstanding warrants to purchase shares of its common stock that may be exercised although there can be no assurance that the warrants will be exercised.
There can be no assurance that the Company will achieve or sustain profitability or positive cash flow from operations. Management expects cash from product sales and licensing to be the Company’s only material, recurring source of cash in 2024. Given the above conditions, there is substantial doubt about the Company’s ability to continue as a going concern within one year after the date these consolidated interim financial statements are filed. The unaudited condensed consolidated financial statements have been prepared on a going concern basis and do not include any adjustments that might result from these uncertainties.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management of the Company, all adjustments, consisting of normal recurring adjustments necessary for the fair statement of results for the periods presented, have been included. The results of operations of any interim period are not necessarily indicative of the results of operations for the full year or any other interim period.
The unaudited condensed consolidated financial statements and related disclosures have been prepared with the presumption that users of the unaudited condensed consolidated financial statements have read or have access to the audited consolidated financial statements for the preceding fiscal year. The consolidated balance sheet at December 31, 2023 included in this report has been derived from the audited consolidated financial statements at that date, but does not include all the information and notes required by GAAP. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K, filed with the SEC on April 1, 2024.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimated results.
Significant Accounting Policies
Revenue Recognition
Product Revenue – OvaSuite: The Company recognizes product revenue in accordance with the provisions of Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). Product revenue is recognized upon completion of the OvaSuite test and delivery of results to the physician based on estimates of amounts that will ultimately be realized. In determining the amount of revenue to be recognized for a delivered test result, the Company considers factors such as payment history and amount, payer coverage, whether there is a reimbursement contract between the payer and the Company, and any developments or changes that could impact reimbursement. These estimates require significant judgment by management as the collection cycle on some accounts can be as long as one year. The effect of any change made to an estimated input component and, therefore revenue recognized, would be recorded as a change in estimate at the time of the change.
The Company also reviews its patient account population and determines an appropriate distribution of patient accounts by payer (i.e., Medicare, patient pay, other third-party payer, etc.) into portfolios with similar collection experience. The Company has elected this practical expedient that, when evaluated for collectability, results in a materially consistent revenue amount for such portfolios as if each patient account were evaluated on an individual contract basis. During the three and six months ended June 30, 2024, there were $4,000 and $6,000, respectively, of adjustments to estimates of variable consideration to derecognize revenue for services provided in a prior period. There were no impairment losses on accounts receivable recorded during the three and six months ended June 30, 2024.
The Company has discontinued providing Aspira GenetiX, including genetics carrier screening, on the Aspira Synergy platform, effective September 30, 2022.
Accounts Receivable: Virtually all accounts receivable are derived from sales made to customers located in North America. The Company grants credit to customers in the normal course of business and the resulting trade receivables are stated at their net realizable value. The Company maintains an allowance for credit losses based upon the expected collectability of accounts receivable, including the historical collection cycle. Amounts are written off against the allowances for credit losses when the Company determines that a customer account is not collectable. The Company believes its exposure to concentrations of credit risk is limited due to the diversity of its payer base.
Warrants: The Company accounts for common stock warrants as either equity-classified or liability-classified instruments based on an assessment of the specific terms of the warrants and applicable authoritative guidance in Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815-40, Contracts in Entity’s Own Equity (“ASC 815-40”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and meet all of the requirements for equity classification under ASC 815-40, including whether the warrants are indexed to the Company’s own stock and whether the events where holders of the warrants could potentially require net cash settlement are within the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance. Warrants that meet all of the criteria for equity classification are recorded as a component of additional paid-in capital at the time of issuance and are not remeasured. Warrants that do not meet the required criteria for equity classification are classified as liabilities. The Company adjusts such warrants to fair value at each reporting period until the warrants are exercised or expire. Any change in fair value is recognized in the Company’s statement of operations.
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). This update was issued to assist in simplifying the accounting for convertible instruments. This ASU is scheduled to be effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The Company adopted the new standard on January 1, 2024. The adoption of this standard did not have a material impact on its consolidated results of operations, financial position, or cash flows.
In June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”) to clarify guidance in Topic 820 on the fair value measurement of an equity security that is subject to a contractual sale restriction and also requires specific disclosures related to an equity security. ASU 2022-03 is scheduled to be effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. Early adoption is permitted. The Company does not expect a material impact as a result of this standard on its results of operations, financial position, or cash flows.
In October 2023, the FASB issued ASU No. 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative (“ASU 2023-06”). The amendments in this ASU are expected to clarify or improve disclosure and presentation requirements of a variety of ASC topics by aligning them with the SEC’s regulations. ASU 2023-06 will become effective for each amendment on the effective date of the SEC's corresponding disclosure rule changes. The Company does not expect ASU 2023-06 will have a material impact on its results of operations, financial position, or cash flows.
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”) to update reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance. This ASU requires disclosure of significant segment expenses that are regularly provided to the Company’s Chief Operating Decision Maker (“CODM”) and included within the reported measure of a segment’s profit or loss, requires interim disclosures about a reportable segment’s profit or loss and assets that are currently required annually, requires disclosure of the position and title of the CODM, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, and contains other disclosure requirements. ASU 2023-07 is scheduled to be effective for fiscal years beginning after December 15, 2023 and interim periods beginning after December 15, 2024. The adoption of this standard is not expected to have a material impact on its consolidated results of operations, financial position, or cash flows.
2.FAIR VALUE MEASUREMENTS
Fair Value of Financial Instruments
Financial instruments of the Company consist primarily of cash and cash equivalents, restricted cash accounts, receivable, and accounts payable, and warrant liability. These items are considered Level 1 due to their short-term nature and their market interest rates. Warrant liability is considered Level 2 and is recorded at fair value at the end of each reporting period. Debt is considered Level 3, which the Company does not record at fair value.
The Company records warrants in connection with a public offering in 2022 (the “2022 Warrants”) as a liability. As discussed in Note 6 to the unaudited condensed consolidated financial statements, in connection with a registered direct offering in 2024, the Company amended certain of the 2022 Warrants to purchase up to an aggregate of 366,664 shares (the “Modified Warrants”). The terms of the remaining 433,321 of the 2022 Warrants were unchanged (the “Unmodified Warrants”).
The fair values of the Modified Warrants as of June 30, 2024 and December 31, 2023 were approximately $331,000 and $757,000, respectively. The fair values of the Unmodified Warrants as of June 30, 2024 and December 31, 2023 were approximately $180,000 and $894,000, respectively.
The fair value of the 2022 Warrants was estimated using Black-Scholes pricing model based on the following assumptions:
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|
|
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|
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|
June 30, 2024 |
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|
|
December 31, 2023 |
|
|
|
|
Unmodified
Warrants |
|
|
|
Modified
Warrants |
|
|
|
|
|
|
Dividend yield |
|
|
— |
|
% |
|
|
— |
|
% |
|
|
— |
|
% |
Volatility |
|
|
106.5 |
|
% |
|
|
102.7 |
|
% |
|
|
105.1 |
|
% |
Risk-free interest rate |
|
|
4.46 |
|
% |
|
|
4.32 |
|
% |
|
|
3.93 |
|
% |
Expected lives (years) |
|
|
3.14 |
|
|
|
|
4.58 |
|
|
|
|
3.64 |
|
|
Weighted average fair value |
|
$ |
0.417 |
|
|
|
$ |
0.902 |
|
|
|
$ |
2.064 |
|
|
The 2022 Warrants were deemed to be derivative instruments due to certain contingent put features. The fair value of the 2022 Warrants was determined using the Black-Scholes option pricing model, deemed to be an appropriate model due to the terms of the 2022 Warrants issued, including a fixed term and exercise price.
The fair value of the Warrants was affected by changes in inputs to the Black-Scholes option pricing model including the Company’s stock price, expected stock price volatility, the contractual term, and the risk-free interest rate. This model uses Level 2 inputs, including stock price volatility, in the fair value hierarchy established by ASC 820, Fair Value Measurement. The 2022 Warrants are classified as a long-term liability on the Company’s balance sheet.
The carrying value of the Company’s insurance promissory note approximates fair value as of June 30, 2024 and December 31, 2023, due to the short-term nature of the insurance note and is classified as Level 2 within the fair value hierarchy.
The DECD loan is classified within Level 3 of the fair value hierarchy. The following table presents the carrying value and fair value of the DECD loan. The fair value of the DECD loan is estimated based on discounted cash flows using the prevailing market interest rates.
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|
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|
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|
|
|
June 30, |
|
|
December 31, |
|
|
|
|
2024 |
|
|
2023 |
|
(in thousands) |
Fair Value Hierarchy |
|
Carrying Value |
|
|
Fair Value |
|
|
Carrying Value |
|
|
Fair Value |
|
DECD loan |
Level 3 |
|
$ |
1,586 |
|
|
$ |
1,289 |
|
|
$ |
1,604 |
|
|
$ |
1,255 |
|
3.PREPAID AND OTHER CURRENT ASSETS
Prepaid and other current assets at June 30, 2024 and December 31, 2023 consist of the following:
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|
|
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
(in thousands) |
|
2024 |
|
|
2023 |
|
Prepaid insurance |
|
$ |
274 |
|
|
$ |
684 |
|
Software licenses |
|
|
99 |
|
|
|
103 |
|
Subscriptions |
|
|
61 |
|
|
|
26 |
|
Other |
|
|
184 |
|
|
|
184 |
|
Total prepaid and other current assets |
|
$ |
618 |
|
|
$ |
997 |
|
4.COMMITMENTS AND CONTINGENCIES
Loan Agreement
On March 22, 2016, the Company entered into a loan agreement (as amended, the “DECD Loan Agreement”) with the State of Connecticut Department of Economic and Community Development (the “DECD”), pursuant to which the Company may borrow up to $4,000,000 from the DECD. The loan bears interest at a fixed rate of 2.0% per annum and requires equal monthly payments of principal and interest until maturity, which occurs on January 1, 2032. As security for the loan, the Company has granted the DECD a blanket security interest in the Company’s personal and intellectual property. The DECD’s security interest in the Company’s intellectual property may be subordinated to a qualified institutional lender.
The loan may be prepaid at any time without premium or penalty. An initial disbursement of $2,000,000 was made to the Company on April 15, 2016 under the DECD Loan Agreement. On December 3, 2020, the Company received a disbursement of the remaining $2,000,000 under the DECD Loan Agreement, as the Company had achieved the target employment milestone necessary to receive an additional $1,000,000 under the DECD Loan Agreement and the DECD determined to fund the remaining $1,000,000 under the DECD Loan Agreement after concluding that the required revenue target would likely have been achieved in the first quarter of 2020 in the absence of the impacts of COVID-19.
Under the terms of the DECD Loan Agreement, the Company was eligible for forgiveness of up to $1,500,000 of the principal amount of the loan if it was able to achieve certain job creation and retention milestones by December 31, 2022. On June 26, 2023, the Company was notified by the DECD that the Company satisfied all job creation and retention requirements under the loan agreement to receive forgiveness of $1,000,000. During the year ended December 31, 2023, the Company recorded the $1,000,000 as other income in the statement of operations. If the Company fails to maintain its Connecticut operations through March 22, 2026, the DECD may require early repayment of a portion or all of the remaining amount of the loan plus a penalty of 5% of the total funded loan.
On June 6, 2023, the Company was granted a deferral of interest and principal payments on a portion of the remaining outstanding balances through December 1, 2023. On January 30, 2024, the Company was granted an additional deferral of interest and principal payments on a portion of the remaining outstanding balances through June 1, 2024. The Company determined the loan deferrals met the definition of a troubled debt restructuring under ASC 470-60, Troubled Debt Restructurings by Debtors, as the Company was experiencing financial difficulties and the lenders granted a concession. The future undiscounted cash flows of the DECD loan after the loan deferrals exceeded the carrying value of the DECD loan prior to the loan deferrals. As such no gain was recognized as a result of the deferrals.
Long-term debt consisted of the following:
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|
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|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
|
|
2024 |
|
|
2023 |
|
(in thousands) |
|
|
|
|
|
|
DECD loan, net of issuance costs |
|
$ |
1,580 |
|
|
$ |
1,596 |
|
Less: Current portion, net of issuance costs |
|
|
(316 |
) |
|
|
(166 |
) |
Total long-term debt, net of issuance costs |
|
$ |
1,264 |
|
|
$ |
1,430 |
|
As of June 30, 2024, the annual amounts of future minimum principal payments due under the Company’s contractual obligation are shown in the table below. Unamortized debt issuance costs for the DECD loan were $6,000 and $8,000 as of June 30, 2024 and December 31, 2023, respectively.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due by Period |
|
(in thousands) |
|
Total |
|
|
2024 |
|
|
2025 |
|
|
2026 |
|
|
2027 |
|
|
2028 |
|
|
Thereafter |
|
DECD Loan |
|
$ |
1,586 |
|
|
$ |
152 |
|
|
$ |
335 |
|
|
$ |
342 |
|
|
$ |
215 |
|
|
$ |
129 |
|
|
$ |
413 |
|
Total |
|
$ |
1,586 |
|
|
$ |
152 |
|
|
$ |
335 |
|
|
$ |
342 |
|
|
$ |
215 |
|
|
$ |
129 |
|
|
$ |
413 |
|
Insurance Notes
During 2023, the Company entered into an insurance promissory note for the payment of insurance premiums at an interest rate of 7.79%, with an aggregate principal amount outstanding of approximately $166,000 and $670,000 as of June 30, 2024 and December 31, 2023, respectively. Interest paid for the promissory note was $6,000 and $12,000 for three and six months ended June 30, 2024. Interest paid for the promissory note was $6,000 and $12,000 for three and six months ended June 30, 2023. The amount outstanding in 2024 could be substantially offset by the cancellation of the related insurance coverage which is classified in prepaid insurance. This note is payable in nine monthly installments with a maturity date of October 1, 2024 and has no financial or operational covenants.
Operating Leases
The Company leases facilities to support its business. The Company’s principal facility, including the Clinical Laboratory Improvements Amendments of 1988 (“CLIA”) laboratory used by Aspira Labs, Inc., is located in Austin, Texas, and an administrative office is located in Shelton, Connecticut. The Company also had an administrative office in Palo Alto, California through May 31, 2024.
The expense associated with these operating leases for the three and six months ended June 30, 2024 and 2023 is shown in the table below (in thousands).
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|
Three Months Ended
June 30, |
|
Lease Cost |
|
Classification |
|
2024 |
|
|
2023 |
|
Operating rent expense |
|
|
|
|
|
|
|
|
|
|
Cost of revenue |
|
$ |
21 |
|
|
$ |
24 |
|
|
|
Research and development |
|
|
14 |
|
|
|
18 |
|
|
|
Sales and marketing |
|
|
2 |
|
|
|
2 |
|
|
|
General and administrative |
|
|
18 |
|
|
|
34 |
|
Variable rent expense |
|
|
|
|
|
|
|
|
|
|
Cost of revenue |
|
|
17 |
|
|
|
15 |
|
|
|
Research and development |
|
|
5 |
|
|
|
3 |
|
|
|
Sales and marketing |
|
|
2 |
|
|
|
2 |
|
|
|
General and administrative |
|
|
9 |
|
|
|
22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
Lease Cost |
|
Classification |
|
2024 |
|
|
2023 |
|
Operating rent expense |
|
|
|
|
|
|
|
|
|
|
Cost of revenue |
$ |
|
48 |
|
|
|
48 |
|
|
|
Research and development |
|
|
31 |
|
|
|
24 |
|
|
|
Sales and marketing |
|
|
3 |
|
|
|
4 |
|
|
|
General and administrative |
|
|
42 |
|
|
|
55 |
|
Variable rent expense |
|
|
|
|
|
|
|
|
|
|
Cost of revenue |
$ |
|
22 |
|
|
|
30 |
|
|
|
Research and development |
|
|
5 |
|
|
|
6 |
|
|
|
Sales and marketing |
|
|
4 |
|
|
|
4 |
|
|
|
General and administrative |
|
|
18 |
|
|
|
43 |
|
Based on the Company’s leases as of June 30, 2024, the table below sets forth the approximate future lease payments related to operating leases with initial terms of one year or more (in thousands).
|
|
|
|
|
Year |
|
Payments |
|
2024 |
|
$ |
100 |
|
2025 |
|
|
229 |
|
2026 |
|
|
223 |
|
2027 |
|
|
84 |
|
2028 |
|
|
52 |
|
Total Operating Lease Payments |
|
|
688 |
|
Less: Imputed Interest |
|
|
(74 |
) |
Present Value of Lease Liabilities |
|
|
614 |
|
Less: Operating Lease Liability, current portion |
|
|
(177 |
) |
Operating Lease Liability, non-current portion |
|
$ |
437 |
|
Weighted-average lease term and discount rate were as follows.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
|
|
|
|
2024 |
|
|
2023 |
|
Cash paid for amounts included in measurement of lease liabilities: |