Organization, Basis Of Presentation And Significant Accounting And Reporting Policies (Policy) |
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Organization, Basis Of Presentation And Significant Accounting And Reporting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization | 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 discovering, developing and commercializing risk assessment and diagnostic tests for gynecologic diseases. The Company currently markets and distributes the following products and related services: (1) Ova1Plus, a non-invasive blood test that combines two FDA-cleared tests for women with pelvic masses who are planned for surgery: Ova1, leveraging its high sensitivity, and Overa, with its high specificity; and (2) OvaWatch, a non-invasive blood test used to assess the risk of ovarian cancer for women with adnexal masses, evaluated by initial clinical assessment as likely benign or indeterminant with a negative predictive value of 99%. Collectively, these tests are referred to and marketed as OvaSuite. Revenue from these sources is included in total revenue in the results of operations for the three and nine months ended September 30, 2023 and 2022, respectively. |
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Reverse Stock Split | Reverse Stock Split
On May 9, 2023, the Company’s board of directors approved a one-for-fifteen reverse stock split (the “Reverse Stock Split”) of the Company’s common stock without any change to its par value, which became effective on May 12, 2023. All references to share and per share amounts for all periods presented in these unaudited condensed consolidated financial statements have been retrospectively restated to reflect the Reverse Stock Split. Par values were not adjusted. |
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Liquidity | Liquidity As of September 30, 2023, the Company had approximately $5,100,000 of cash and cash equivalents (excluding restricted cash of $256,000), an accumulated deficit of approximately $515,214,000, and working capital of approximately $2,410,000. For the three and nine months ended September 30, 2023, the Company incurred a net loss of $4, 706,000 and $13,601,000, respectively, and used cash in operations of $3,321,000 and $12,444,000, respectively. The Company has incurred significant net losses and negative cash flows from operations since inception. The Company also expects to continue to incur a net loss and negative cash flows from operations for the remainder of 2023. In the event that the Company’s existing cash on hand is not sufficient 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, including through financing facilities described elsewhere in the financial statements; 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, eliminating or deferring discretionary marketing programs; and Reducing travel and entertainment expenses.
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. Given the above conditions, there is substantial doubt about the Company’s ability to continue as a going concern within one year after the consolidated interim financial statements are issued. 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. 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”). On November 29, 2022, the Company was granted an additional 180-calendar day compliance period, or until May 29, 2023, to regain compliance with the minimum bid price requirement. On May 26, 2023, the Company received notice from Nasdaq that it had regained compliance. On July 11, 2023, the Company received a second deficiency letter from the Listing Qualifications Department of the Nasdaq Stock Market notifying the Company that, for the 30 consecutive business days prior to the date of the deficiency letter, the Company’s Market Value of Listed Securities was below the minimum of $35 million requirement for continued inclusion on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(b)(2) (the “MVLS Requirement”). In accordance with Nasdaq Listing Rule 5810(c)(3)(C), Nasdaq provided the Company with 180 calendar days, or until January 8, 2024, to regain compliance with the MVLS Requirement. On September 12, 2023, the Company received notice from Nasdaq that it had regained compliance. There is no assurance that the Company will maintain compliance with the MVLS Requirement or any of the other Nasdaq continued listing requirements. |
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Basis Of Presentation | 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, 2022 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, 2022 included in the Company’s Annual Report on Amendment No. 1 to Annual Report on Form 10-K /A, filed with the SEC on October 26, 2023.
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. |
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Revenue Recognition | Revenue Recognition
Product Revenue – OvaSuite: The Company recognizes product revenue in accordance with the provisions of Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). Product revenue is recognized upon completion of the OvaSuite test and delivery of results to the physician based on estimates of amounts that will ultimately be realized. In determining the amount of revenue to be recognized for a delivered test result, the Company considers factors such as payment history and amount, payer coverage, whether there is a reimbursement contract between the payer and the Company, and any developments or changes that could impact reimbursement. These estimates require significant judgment by management as the collection cycle on some accounts can be as long as one year. The effect of any change made to an estimated input component and, therefore revenue recognized, would be recorded as a change in estimate at the time of the change.
The Company also reviews its patient account population and determines an appropriate distribution of patient accounts by payer (i.e., Medicare, patient pay, other third-party payer, etc.) into portfolios with similar collection experience. The Company has elected this practical expedient that, when evaluated for collectability, results in a materially consistent revenue amount for such portfolios as if each patient account were evaluated on an individual contract basis. During the period ended September 30, 2023, there were no adjustments to estimates of variable consideration to derecognize revenue for services provided in a prior period; however, additional revenue of approximately $5,000 and $115,000 was recognized for amounts collected in excess of revenue estimated for prior periods during the three and nine months ended September 30, 2023, respectively. There were no impairment losses on accounts receivable recorded during the three and nine months ended September 30, 2023 and 2022, respectively. Genetics Revenue – Aspira GenetiX: Under ASC 606, the Company’s genetics revenue was 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 considered factors such as payment history and amount, payer coverage, whether there was 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.
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, the Company has ceased providing Aspira GenetiX, including genetics carrier screening, on the Aspira Synergy platform, effective September 30, 2022. The Company had previously recognized genetics revenue under ASC 606 upon completion of the Aspira GenetiX test and delivery of results to the physician based on estimates of amounts that would ultimately have been realized. 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 any future periods.
Accounts Receivable: Virtually all accounts receivable are derived from sales made to customers located in North America. The Company performs ongoing credit evaluations of its customers’ financial condition and generally does not require collateral. The Company maintains an allowance for credit losses based upon the expected collectability of accounts receivable. In determining the amount of the allowance for credit losses, the Company considers historical collectability based on past due status and makes judgments about the creditworthiness of customers based on ongoing credit evaluations. The Company also considers customer-specific information, current market conditions, and reasonable and supportable forecasts of future economic conditions.
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Correction of Errors | Correction of Errors On October 13, 2023, the Audit Committee of the Board of Directors (the “Audit Committee”) of the Company and the Company’s management determined that its previously issued financial statements in its Annual Report on Form 10-K for the year ended December 31, 2022, as well as the previously filed Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2022 (collectively, the “Prior Period Financial Statements”), should be restated and should no longer be relied upon due to an error in the Company’s accounting for certain warrants issued in August 2022 as part of its underwritten offering with William Blair & Company, LLC. The Company identified material errors in its accounting for warrants (the “Warrants”) issued pursuant to the underwriting agreement with William Blair & Company LLC in August 2022 (the “2022 Underwriting Agreement”). Specifically, when calculating the issuance date fair value of the Warrants, the Company used assumptions in the Black Scholes Valuation calculation that were associated with the incorrect Warrant issuance date. The Company used the 2022 Underwriting Agreement date of August 22, 2022, instead of the Warrant issuance date per the Common Stock Purchase Warrant Agreement dated August 25, 2022. The incorrect warrant issuance date resulted in an inaccurate market closing price, risk free interest rate, and stock price volatility assumptions used in the Black Scholes Valuation calculation. The initial calculation based upon the August 22, 2022 assumptions calculated an issuance date fair value of the warrant liability of approximately $7,752,000, whereas the updated calculation with the August 25, 2022 assumptions calculated an issuance date fair value of the warrant liability of approximately $3,984,000, which results in a difference of approximately $3,768,000.
The change in the initial fair value of the warrant liability resulted in an adjustment of previously reported change in fair value of warrant liabilities in the amount of $3,768,000 on the consolidated statement of operations for the three and nine months ended September 30, 2022, with a corresponding adjustment in consolidated statement of cash flows for the nine months ended September 30, 2022.
Additionally, upon the initial recording of this transaction, total offering costs of $1,296,000 were allocated between expense included in the consolidated statements of operations and stockholders’ equity included in the consolidated balance sheets based on the percentage of the Warrant fair value of $7,752,000 and total gross proceeds of $9,000,000. $1,117,000 of offering costs were initially allocated to the Warrants and expensed immediately to general and administrative (“G&A”) expense instead of as a non-operating expense in the consolidated statements of operations and comprehensive loss, and the remaining offering costs had a net impact to stockholders’ equity of $179,000. The updated allocation using the August 25, 2022 issuance date fair value of $3,984,000 resulted in a reallocation of offering costs of $543,000 from G&A expense to equity, and an adjustment of $574,000 from G&A expense to non-operating expense; $574,000 of the offering costs are now expensed immediately as other income (expense) on the consolidated statements of operations for the year ended December 31, 2022, and offering costs of $543,000 are recorded in stockholders’ equity on the consolidated balance sheet as of December 31, 2022. As a result of the change there was an adjustment in the presentation of the offering costs related to the warrant liability of $1,117,000 from cash flows used in operating activities to cash flows provided by financing activities on the Company’s consolidated statement of cash flows.
As a result of the material error discussed above, the Company restated its financial statements for the year ended December 31, 2022 and the unaudited interim financial statements for the three and nine months ended September 30, 2022 to reflect the correction of the error.
In addition to the errors identified above, the restated consolidated financial statements for the year ended December 31, 2022 also included adjustments to correct certain other immaterial errors.
These errors, discussed below, both individually and in the aggregate, had no material impact on earnings per share for the year ended December 31, 2022.
The effects of the restatement on the unaudited interim financial statements as of and for the three and nine months ended September 30, 2022 are set forth as follows.
Aspira Women’s Health Inc. Condensed Consolidated Balance Sheets (Amounts in Thousands, Except Share and Par Value Amounts) (Unaudited)
Aspira Women’s Health Inc. Condensed Consolidated Statements of Operations (Amounts in Thousands, Except Share and Per Share Amounts) (Unaudited)
Aspira Women’s Health Inc. Condensed Consolidated Statements of Operations (Amounts in Thousands, Except Share and Per Share Amounts) (Unaudited)
Aspira Women’s Health Inc. Condensed Consolidated Statements of Changes in Stockholders’ Equity (Amounts in Thousands, Except Share Amounts) (Unaudited)
Aspira Women’s Health Inc. Condensed Consolidated Statements of Cash Flows (Amounts in Thousands) (Unaudited)
During the three months ended March 31, 2023, the Company identified an immaterial error related to the accounting for forfeitures in stock-based compensation that impacted previously issued 2022 consolidated financial statements. As a result, the Company corrected the error in its restated consolidated financial statements for the year ended December 31, 2022. The Company had initially recorded an out-of-period adjustment to reduce stock-based compensation in the amount of $262,000 during the three months ended March 31, 2023, which has been retrospectively reversed during the three months ended March 31, 2023. Management evaluated the impact on the 2022 and 2023 consolidated financial statements and concluded it was not material.
In addition, the Company identified an error in the recording of its accrued liability as of December 31, 2022 related to a reduction in force. Initially, the Company recorded an accrued liability of $248,000 as of December 31, 2022 for the reduction in force that took place on January 3, 2023. Since the affected employees were not notified until after December 31, 2022, the impact of the error was an overstatement of expense in the consolidated financial statements for the year ended December 31, 2022 of $248,000. The restated consolidated financial statements for the year ended December 31, 2022 included the correction of this immaterial error. As a result of the restatement, the Company has retrospectively recorded the expense of $248,000 in the three months ended March 31, 2023. Management evaluated the impact on the 2022 and 2023 consolidated financial statements and concluded that the error was not material. |
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Recent Accounting Pronouncements | 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”). ASU 2016-13 requires timelier recording of credit losses on loans and other financial instruments held. Instead of reserves based on a current probability analysis, ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. All organizations will now use forward-looking information to better inform their credit loss estimates. ASU 2016-13 requires enhanced disclosures regarding significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. These disclosures include qualitative and quantitative requirements that provide information about the amounts recorded in the financial statements. In addition, ASU 2016-13 amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326 Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments (“ASU 2019-05”), to introduce amendments which will affect the recognition and measurement of financial instruments, including derivatives and hedging. In May 2019, the FASB issued ASU No. 2019-05, Financial Instruments – Credit Losses (Topic 326); Targeted Transition Relief. The amendments in ASU 2019-05 provide entities that have certain instruments within the scope of Subtopic 326-20 with an option to irrevocably elect the fair value option in Subtopic 825-10, applied on an instrument-by-instrument basis for eligible instruments upon adoption of ASU 2016-13. This standard and related amendments were effective for the Company’s fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. ASU 2019-05 was effective January 1, 2023 for smaller reporting companies, which includes the Company. The adoption of ASU 2016-13 did not have a material impact on the Company’s results of operations, financial position, or cash flows.
In March 2020, FASB issued ASU No. 2020-03, Codification Improvements to Financial Instruments. This ASU improves and clarifies various financial instruments topics, including the current expected credit losses standard issued in 2016 (ASU No. 2016-13). The ASU includes seven different issues that describe the areas of improvement and the related amendments to GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. The amendments have different effective dates. The issues 1-5 are conforming amendments, which are effective upon issuance of this final update. The Company determined that issues 1-5 have no impact on its financials. The amendments related to issue 6 and 7 effect ASU No. 2016-13, Financial instruments – credit losses (Topic 326): measurement of credit losses on financial statements. Effective dates of issue 6 and 7 are the same as the effective date of ASU No. 2016-13. The Company has adopted the new standard in the first quarter of fiscal year 2023. The adoption of this standard by the Company did not have a material impact on the Company’s results of operations, financial position, or cash flows.
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. The Company is in the process of evaluating the impact of this standard on its consolidated financial statements. |