Forward-Looking Statements



This Quarterly Report on Form 10-Q contains forward-looking statements, as
defined in the Private Securities Litigation Reform Act of 1995.
These statements involve a number of risks and uncertainties. Words such as
"may," "expects," "intends," "anticipates," "believes," "estimates," "plans,"
"seeks," "could," "should," "continue," "will," "potential," "targeted,"
"projects," "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;
?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 and Aspira Synergy
on a global level, and to launch and commercialize our new products, OvaWatch,
EndoCheck and OvaInherit;
?plans to develop new algorithms, molecular diagnostic tests, products and tools
and otherwise expand our product offerings, including plans to develop a product
using genetics, proteins and other modalities to assess the risk of developing
cancer when carrying a pathogenic variant associated with hereditary ovarian
cancer that is difficult to detect through a diagnostic test;
?plans to establish payer coverage and secure contracts for current and new
products, including OvaWatch, EndoCheck and OvaInherit separately and expand
current coverage and secure additional contracts for 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");
?Food and Drug Administration ("FDA") oversight changes of LDTs;
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?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 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;
?anticipated future losses and 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, OvaWatch, as well as our 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 and OvaWatch;
?expected target launch timing for 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;
?expectations regarding the impacts resulting from or attributable to the
COVID-19 pandemic and actions taken to contain 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


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developing existing technologies and to develop, protect and promote our proprietary technologies; plans to develop and perform LDTs; our ability to comply with 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
development of 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.
We plan to broaden our focus to the differential diagnosis of other gynecologic
diseases that typically cannot be assessed through traditional non-invasive
clinical procedures. We expect to continue commercializing our existing and new
technology and to distribute our tests through our decentralized technology
transfer service platform, Aspira Synergy. We also intend to continue to raise
public awareness regarding the diagnostic superiority of Ova1Plus as compared to
cancer antigen 125 ("CA-125") on its own for all women, but especially for
racially diverse women with adnexal masses, as well as the superior performance
of machine learning algorithms in detecting ovarian cancer in different racial
and ethnic populations. We plan to continue to expand access to our tests among
Medicaid patients as part of our corporate mission to make the best care
available to all 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 Lab Developed Test ("LDT"), OvaWatch, is a non-invasive ovarian cancer risk assessment for women with 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



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manuscript, "Analytical Validation of a Deep Neural Network Algorithm for the Detection of Ovarian Cancer," has been published online in the Journal of Clinical Oncology Clinical Cancer Informatics.

We plan to 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 launch EndoCheck, our first non-invasive endometriosis diagnostic tool, in the second half of 2023.



?Operational Excellence. We expect to 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 end of the 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.
Our Business and Products
We currently market and sell the following products and related services:
(1) 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, a second-generation biomarker reflex test
intended to maintain Ova1's high sensitivity while improving specificity; (3)
Ova1Plus, a reflex offering which uses Ova1 as the primary test and Overa as a
confirmation for Ova1 intermediate range results 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%; and (4) Aspira
Synergy, our decentralized testing platform and cloud service for decentralized
global access of protein biomarker testing. We continue to make Ova1, Overa, and
Ova1Plus, and plan to make future technology available through Aspira Synergy.
Our Ova1 test received FDA de novo classification in September 2009. Ova1
comprises instruments, assays, reagents, and the OvaCalc software, which
includes a proprietary algorithm that produces a risk score. Our Overa test,
which includes an updated version of OvaCalc, received FDA 510(k) clearance in
March 2016. Ova1 and Overa each use the Roche Cobas 4000, 6000 and 8000
platforms for analysis of proteins.  Revenue from these sources (in addition to
revenue from Aspira GenetiX) is included in the results of operations in total
revenue for the nine months ended September 30, 2022.
In 2021, we began entering into decentralized arrangements with large healthcare
networks and physician practices for our Aspira Synergy platform.  The modules
available under Aspira Synergy include our flagship Ova1Plus risk assessment and
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. Two
of the agreements are with 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 has
already launched and is contributing to our Ova1Plus volume. The last of the
four agreements with Axia Women's Health, which had been intended to deliver
genetics carrier screening, was cancelled by the customer in the third quarter
of 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 Aspira
Synergy 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 and EndoCheck, as well as a high-risk diagnostic
algorithm, OvaInherit. These products may be launched as LDTs or FDA-cleared
tests.
?OvaWatch has been developed and is validated for use in Aspira's CLIA-certified
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 who are not yet scheduled for surgery. The
commercialization plan for OvaWatch will occur in two phases. Phase
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I is a single use, point-in-time risk assessment test and Phase II will allow
for serial monitoring. We will focus on the commercial phase of the OvaWatch
single use risk assessment test, including driving provider adoption, during the
fourth quarter of 2022. We believe OvaWatch has the potential to significantly
expand the addressable market compared to Ova1Plus. The launch of the serial
monitoring test is targeted for the fourth quarter of 2023 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 comparable sensitivity and specificity 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 in the second half of 2023 as an LDT.
?OvaInherit will be designed as a non-invasive, high-risk diagnostic tool,
intended for those patients with or without a pelvic mass who are genetically
predisposed to ovarian cancer. It will use genetics, proteins and other
modalities to assess the likelihood that a woman has an early-stage
gynecological cancer that is not visible using traditional ultrasound
methodologies, and thereby to aid in early diagnoses. Our OvaInherit related
clinical studies, OvaNex and Ova360, initiated in late 2019 and early 2020,
respectively, are focused on developing data to support a diagnostic test for
the early detection of ovarian cancer.
?We ultimately plan to commercialize OvaSuite and EndoCheck on a global
scale. We currently hold CE marks for Ova1 and Overa.
Outside of the United States, there are studies in process in both the
Philippines and Israel, which are intended to validate Overa and Ova1 in
specific populations. The study occurring in the Philippines includes Aspira's
first agreement regarding Aspira Synergy for 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 performs our Ova1, Overa and 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
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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 tests
performed in certain states, including Texas. Due to 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.
In November 2016, the American College of Obstetricians and Gynecologists
("ACOG") issued Practice Bulletin Number 174 which included 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 CA-125 technology or Ova1 ("Multivariate
Index Assay") as listed in the bulletin. Based on this, Ova1 achieved parity
with 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.
Recent Developments
Business and Listing Updates
On August 8, 2022, we entered into a sponsored research agreement with DFCI,
BWH, and Medical University of Lodz for the generation of a multi-omic,
non-invasive diagnostic aid to identify endometriosis based on circulating
microRNAs and proteins.  This collaboration is expected to accelerate our
development and commercialization of future endometriosis products, such as
EndoCheck. Under the terms of the agreement, payments of approximately
$1,252,000 have or will become due from us to the counterparties upon the
successful completion of deliverables as 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 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 recorded as expense for the project.
We have prepared an application for a Proprietary Laboratory Analyses code with
the American Medical Association for OvaWatch to distinguish it from Ova1Plus
with the 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.
On June 1, 2022, we received a deficiency letter from the Listing Qualifications
Department of 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 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
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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. 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 in June 2022. The resulting data indicated that 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 most difficult to detect cancer cohorts such as premenopausal women, and early-stage disease. COVID-19 Pandemic

The COVID-19 pandemic has severely impacted global economic activity, and many countries and many states in the United States reacted to it by instituting quarantines, mandating business and school closures and restricting travel periodically throughout the 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. 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. Critical Accounting Policies and Estimates

Our product revenue is generated by performing diagnostic services using our Ova1, Overa or 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 or 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 and 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.



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Results of Operations - Three Months Ended September 30, 2022 Compared to Three Months Ended September 30, 2021 The selected summary financial and operating data of the Company for the three months ended September 30, 2022 and 2021 were as follows:


                                           Three Months Ended
                                             September 30,                Increase (Decrease)
(dollars in thousands)                    2022            2021           Amount               %
Revenue:
Product                               $       2,037   $      1,617   $          420             26
Genetics                                         35             49             (14)           (29)
Total revenue                                 2,072          1,666              406             24
Cost of revenue:
Product                                         875            715              160             22
Genetics                                         41            202            (161)           (80)
Total cost of revenue                           916            917              (1)            (0)
Gross profit                                  1,156            749              407             54
Operating expenses:
Research and development                      2,157          1,518              639             42
Sales and marketing                           3,950          5,083          (1,133)           (22)
General and administrative                    4,746          3,839              907             24
Total operating expenses                     10,853         10,440              413              4
Loss from operations                        (9,697)        (9,691)              (6)              0
Change in fair value of warrant                                               5,004              -
liabilities                                   5,004              -
Interest income (expense), net                   18           (14)               32            229
Other (expense), net                            117            (2)              119          5,950
Net loss                              $     (4,558)   $    (9,707)   $        5,149           (53)


Product Revenue. Product revenue was $2,037,000 for the three months ended
September 30, 2022, compared to $1,617,000 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 26%
product revenue increase is due to an increase in Ova1 test volume compared to
the prior year, partially offset by a lower revenue average unit price ("AUP"),
which decreased from $378 in the third quarter of 2021 to $369 in the third
quarter of 2022.
Medicaid represents approximately 13.6% of volume in the three months ended
September 30, 2022, at an AUP of $88. This is compared to 12.0% of volume in the
same period in 2021, at an AUP of $94. Our Ova1Plus AUP without Medicaid was
$415 for the three months ended September 30, 2022, compared to $410 for the
same period in 2021. Product revenue increased 1% sequentially for the third
quarter of 2022 as compared to the second quarter of 2022.
The number of product tests performed increased 29% to 5,524 during the three
months ended September 30, 2022, compared to 4,281 product tests for the same
period in 2021. 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 and increased
investment in our current commercial channel. We expect revenue to continue to
increase in 2022 due to our investment in key salesforce hires and strategic
product development.
Genetics Revenue. Genetics revenue was $36,000 for the three months ended
September 30, 2022, compared to $49,000 for the same period in 2021. Revenue for
Aspira GenetiX is recognized when the Aspira
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GenetiX test is completed based on estimates of what we expect to ultimately
realize. The 27% genetics revenue decrease is primarily due to decreased volumes
and decreased AUP as compared to the same period in 2021. The Company has
discontinued offering genetics testing effective September 30, 2022.
Cost of Revenue - Product. Cost of product revenue was $875,000 for the three
months ended September 30, 2022, compared to $715,000 for the same period in
2021, representing an increase of $160,000, or 22%, due primarily to increased
personnel costs, lab supply costs, and 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 related to the launch of Aspira
GenetiX, was $41,000 for the three months ended September 30, 2022, compared to
$202,000 for the same period in 2021. The decrease in cost was due to a decrease
of $104,000 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 remained relatively flat
at 57.0% for the three months ended September 30, 2022, 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 September 30, 2022 increased by $639,000, or 42%, compared to
the same period in 2021. This increase was primarily due to clinical validity
and 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,
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.




?

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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                                               5,004         -
liabilities                                  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.
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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 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 nine months ended September
30, 2022 decreased by $182,000, or 1%, compared to the same period in 2021. This
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, 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 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 nine months ended September 30, 2022 increased by $3,678,000, or 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 $2,803,000 and legal fees of $220,000. Severance paid to general and administrative-related personnel was immaterial. We expect general and administrative expenses to remain relatively flat sequentially in 2022.


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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.

Liquidity and Capital Resources



We plan to continue to expend resources selling and marketing Ova1, Overa and
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.
We have incurred significant net losses and negative cash flows from operations
since inception, and as a result have an accumulated deficit of approximately
$493,797,000 as of September 30, 2022. We also 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, we entered into a loan agreement (as amended on March 7, 2018 and
April 3, 2020, the "DECD Loan Agreement") with the State of Connecticut
Department of Economic and Community Development (the "DECD"), pursuant to which
we may borrow up to $4,000,000 from the DECD.

The loan may be prepaid at any time without premium or penalty. An initial
disbursement of $2,000,000 was made to us on April 15, 2016 under the DECD Loan
Agreement. On December 3, 2020, we received a disbursement of the remaining
$2,000,000 under the DECD Loan Agreement, as we had achieved the target
employment milestone necessary to receive an additional $1,000,000 under the
DECD Loan Agreement and the DECD determined to fund the remaining $1,000,000
under the DECD Loan Agreement after concluding that the required revenue target
would likely have been achieved in the first quarter of 2020 in the absence of
the impacts of COVID-19.
Under the terms of the DECD Loan Agreement, we may be eligible for forgiveness
of up to $1,500,000 of the principal amount of the loan if we achieve certain
job creation and retention milestones by December 31, 2022. Conversely, if we
are either unable to retain 25 full-time employees with a specified average
annual salary for a consecutive two-year period or do not maintain our
Connecticut operations through March 22, 2026, the DECD may require early
repayment of a portion or all of the loan plus a penalty of 5% of the total
funded loan.  For additional information, see Note 2 of our consolidated
financial statements.
As discussed in Note 2 to the condensed consolidated financial statements, on
May 1, 2020, we obtained the Paycheck Protection Program loan (the "PPP Loan")
from BBVA USA in the aggregate amount of approximately $1,006,000. We applied
for forgiveness of the PPP Loan in March 2021, and, effective May 27, 2021, the
SBA confirmed the waiver of our repayment of the PPP Loan, which was recognized
as a gain in other income in 2021. We remain subject to an audit of the PPP
loan. There is no assurance that we will not be required to repay all or a
portion of the PPP Loan as a result of any such audit.

As discussed in Note 3 to the condensed consolidated financial statements, on February 8, 2021, the Company completed a public offering (the "2021 Offering") resulting in net proceeds of approximately


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$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, 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 September 30, 2022 we had an
accumulated deficit of ($493,797,000) and stockholders' equity of $11,178,000.
As of September 30, 2022, we had $20,551,000 of cash and cash equivalents
(excluding restricted cash of $250,000), $7,297,000 of current liabilities, and
working capital of $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.
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 and 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 and
Ova1Plus;
?the insurance payer community's acceptance of and reimbursement for our
products;
?our plans to acquire or invest in other products, technologies and businesses;
?the potential need to add study sites to access additional patients to maintain
clinical timelines; and
?the impact of the COVID-19 pandemic and the actions taken to contain it, as
discussed above.
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

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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 $25,109,000 for the nine months ended
September 30, 2022, resulting primarily from the net loss reported of
$22,069,000, which includes non-cash expenses in the amount of $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 $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 $653,000, and
changes in accounts receivable of $174,000 and inventory of $106,000.
Net cash used in operating activities was $19,746,000 for the nine months ended
September 30, 2021, resulting primarily from the net loss reported of
$22,701,000, which includes non-cash items such as stock compensation expense of
$2,949,000, PPP loan forgiveness of $1,006,000 and 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 receivable of $238,000 and
inventory of $107,000.
Net cash used in investing activities was $158,000 and $154,000 for the nine
months ended September 30, 2022 and 2021, respectively, which consisted of
property and equipment purchases.
Net cash provided by financing activities was $8,638,000 for the nine months
ended September 30, 2022, stemming primarily 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 $48,389,000 for the nine
months ended September 30, 2021, which resulted primarily from the 2021
Offering, resulting in net proceeds to the Company of approximately $47,858,000,
after deducting underwriting discounts and offering expenses of $378,000. There
was a change in estimate in the third quarter of 2021 in the amount of $137,000
relating to an expense reversal of offering costs.
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
provided a full valuation allowance against the Company's net deferred tax
assets. Therefore, there was no deferred income tax expense or benefit for the
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 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.
Our ability to use the Company's net operating loss and credit carryforwards to
offset future taxable income is restricted due to ownership change limitations
that have occurred in the past, as required by Section 382 of the Internal
Revenue Code of 1986, as amended ("Section 382"), as well as similar state
provisions. Net operating losses which are limited from offsetting any future
taxable income under Section 382 are not included in the gross deferred tax
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.
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Off-Balance Sheet Arrangements As of 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.

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