ASPIRA WOMEN’S HEALTH INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements, as
defined in the Private Securities Litigation Reform Act of 1995.
These statements involve a number of risks and uncertainties. Words such as
"may," "expects," "intends," "anticipates," "believes," "estimates," "plans,"
"seeks," "could," "should," "continue," "will," "potential," "projects" 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, cost of
revenue, operating expenses, research and development expenses, gross profit
margin, cash flow, results of operations and financial condition;
?our plan to broaden our commercial focus from ovarian cancer to differential
diagnosis of women with a range of gynecological diseases, including additional
pelvic disease conditions such as endometriosis and, benign pelvic mass
monitoring in addition to genetics risk assessment, including breast and ovarian
cancer hereditary risk assessment and carrier screening;
?our planned business strategy and strategic business drivers and the
anticipated effects thereof, including partnerships such as those based on our
Aspira Synergy product, as well as other strategies, specimen collaboration and
licensing;
?plans to expand our existing products OVA1, OVERA, OVA1plus, Aspira GenetiX and
Aspira Synergy on a global level, and to launch and commercialize our new
products, OVAWatch (previously OVASight), EndoCheck and OVAInherit;
?plans to develop new algorithms, molecular diagnostic tests, products and tools
and otherwise expand our product offerings, including plans to develop a product
using genetics, proteins and other modalities to assess the risk of developing
cancer when carrying a pathogenic variant associated with hereditary breast and
ovarian cancer that is difficult to detect through a diagnostic test;
?plans to establish payer coverage and secure contracts for Aspira GenetiX,
OVAWatch, EndoCheck and OVAInherit separately and expand current coverage and
secure contracts for OVA1;
?plans that would address clinical questions related to early disease detection,
treatment response, monitoring of disease progression, prognosis and other
issues in the fields of oncology and women's health;
?anticipated efficacy of our products, product development activities and
product innovations, including our ability to improve sensitivity and
specificity over traditional diagnostic biomarkers;
?expected competition in the markets in which we compete;
?plans with respect to Aspira Labs, Inc. ("ASPiRA LABS"), including plans to
expand or consolidate ASPiRA LABS' testing capabilities;
?expectations regarding continuing future services provided by Quest Diagnostics
Incorporated;
?plans to develop informatics products and develop and perform laboratory
developed tests ("LDTs");
?FDA oversight changes of LDTs;
?plans to develop a race or ethnicity-specific pelvic mass risk assessment;
?expectations regarding existing and future collaborations and partnerships for
our products, including plans to enter into decentralized arrangements for our
Aspira Synergy product;
?plans regarding future publications;
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?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, capital requirements and future losses;
?expectations regarding raising capital and the amount of financing anticipated
to be required to fund our planned operations;
?expectations regarding the results of our clinical research studies and our
ability to recruit patients to participate in such studies;
?our ability to use our net operating loss carryforwards and anticipated future
tax liability under U.S. federal and state income tax legislation;
?expected market adoption of our diagnostic tests, including OVA1, OVERA,
OVA1plus, as well as our offerings of Aspira GenetiX and Aspira Synergy
platform;
?expectations regarding our ability to launch new products we develop or
license, co-market or acquire new products;
?expectations regarding 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;
?plans with respect to EndoCheck whether or not the FDA designates it a
Breakthrough Device;
?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; and
?expectations regarding the impacts resulting from or attributable to the
COVID-19 pandemic and actions taken to contain it.

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, that could cause
actual results to differ materially from those projected in such forward-looking
statements due to various factors, including impacts resulting from or relating
to the COVID-19 pandemic and actions taken to contain it; anticipated use of
capital and its effects; our ability to increase the volume of our product
sales; failures by third-party payers to reimburse for our products and services
or changes to reimbursement rates; our ability to continue developing existing
technologies and to develop, protect and promote our proprietary technologies;
plans to develop and perform LDTs; our ability to comply with Food and Drug
Administration (“FDA”) 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

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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 the state of women's health, globally, starting
with ovarian cancer. We aim to eradicate late-stage detection of ovarian cancer
and to ensure that our solutions will meet the needs of women of all ages,
races, ethnicities and stages of the disease. Our core patient goal is to
develop a lifelong relationship with each patient, ensuring each woman has
access to best-in-class diagnostics.
Our plan is to broaden our commercial focus from ovarian cancer to differential
diagnosis of women with a range of gynecological diseases. We plan to continue
commercializing our new generation of technology as well as distribute our
technology through our decentralized technology transfer service platform, known
as "Aspira Synergy." We also intend to raise public awareness regarding the
diagnostic superiority of OVA1 as compared to cancer antigen 125 ("CA125") for
all women, but especially for Black women with adnexal masses, as well as the
importance of machine learning algorithm development in ethnic populations. We
also plan to advocate for legislation and professional society guidelines to
provide broad access to our products and services.
All of our products are focused on gynecologic diseases that cannot be assessed
through a traditional biopsy, or can only be detected by invasive procedures in
the case of Endometriosis, making our non-invasive blood biopsy more efficient
and patient friendly. In 2018 and early 2019, we established medical and
advisory support and a Key Opinion Leader Network aligned with our territories
in the U.S. In addition to adding to our direct salesforce, in 2021, we added
OVA1 and OVA1plus on our technology transfer platform, Aspira Synergy. In 2022,
we plan to continue our efforts to commercialize OVA1plus by utilizing select
partnerships for distribution, expanding our managed care coverage and contracts
in select markets, growing our sales force, increasing adoption with our
existing and new customers, and further deploying our Aspira Synergy technology
transfer platform. We also plan to develop an LDT series of diagnostic
algorithms. In 2021, we expanded access to our tests among Medicaid patients as
part of our corporate mission to make the best care available to all women.
Our first LDT algorithm, branded as OVAWatch, focuses on monitoring women with
pelvic masses. The OVAWatch manuscript, "Analytical Validation of a Deep Neural
Network Algorithm for the Detection of Ovarian Cancer," has been accepted for
online publication in JCO Clinical Cancer Informatics. This study was a critical
step towards the launch of OVAWatch and, as a result, we have shifted to
finalizing the commercialization plan which will occur in two phases. Phase I is
a single use point-in-time product and Phase II will allow for serial
monitoring. We plan to focus on advancing to the commercial phase of the
OVAWatch single use product, including driving provider adoption, during the
second half of 2022. The timing will depend on the results of a clinical
validation study that we expect to complete during the summer of 2022. We
believe the single-use product has the potential to significantly expand the
addressable market over OVA1plus. The launch of the serial monitoring test
remains targeted for 2023 upon publication of data from the ongoing prospective
serial monitoring clinical study.
We expect that our second LDT diagnostic algorithm, EndoCheck, will aid in the
diagnosis of endometriosis. We also plan to expand our portfolio of products to
include OVAInherit, which aims to identify risk of malignancy in those patients
who are genetically predisposed to ovarian cancer. This algorithm will include
genetics, proteins and other modalities to assess such risk.
To continue our commercialization objectives and reach our financial and
operational goals, we require skilled individuals with familiarity in our
industry. We have from time to time experienced, including as a result of labor
shortages during the COVID-19 pandemic, and may in the future experience,
shortages of certain types of qualified employees.

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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 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 MIA sensitivity and OVERA's (MIA2G) specificity and as a result reduces
false elevations by over 40%; (4) Aspira GenetiX, a genetic test for hereditary
gynecologic cancer risk, with a core focus on hereditary female reproductive
cancers, including breast, ovarian, endometrial, uterine and cervical cancers;
and (5) Aspira Synergy, our decentralized testing platform and cloud service for
decentralized global access of both protein biomarker and hereditary genetic
testing. We plan to make OVA1, OVERA, OVA1plus and Aspira GenetiX and 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. Through March 31,
2022, our product and related services revenue has been limited to revenue
largely generated by sales of OVA1, OVA1plus and Aspira GenetiX.
In 2021, we entered into decentralized arrangements with large healthcare
networks and physician practices for our Aspira Synergy platform offering
specialty and genetic testing solutions.  The modules available under Aspira
Synergy include our flagship OVA1plus risk assessment, Genetics Carrier
Screening, and Genetics Hereditary Cancer solutions. The Company has entered
into four technology transfer agreements since the launch of Aspira Synergy. The
first two agreements are with two of the nation's largest and leading
independent women's healthcare groups which together include approximately 750
providers and serve approximately 950,000 patients annually.  The other two
agreements are with independent laboratories providing services across five
states. In the fourth quarter of 2021, we started receiving specimens related to
our OVA1 Aspira Synergy product.
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, for patients with or without a pelvic mass who are
genetically predisposed to ovarian cancer. These products may be launched as
LDTs or FDA-cleared tests.
?OVAWatch has been developed and is validated for use in Aspira's CLIA-certified
high complexity lab as a non-invasive risk assessment test for use in
conjunction with clinical assessment and imaging to determine ovarian cancer
risk for patients with an adnexal mass. The commercialization plan for OVAWatch
will occur in two phases. Phase I is a single use, point-in-time risk assessment
test and Phase II will allow for serial monitoring. We will focus on advancing
to the commercial phase of the OVAWatch single use risk assessment test,
including driving provider adoption, during the second half of 2022. The timing
will depend on the results of a clinical validation study that we expect to
complete this summer. We believe the single-use product has the potential to
significantly expand the addressable market over OVA1plus. The launch of the
serial monitoring test remains targeted for 2023 upon publication of data from
the ongoing prospective serial monitoring clinical study.
?EndoCheck, an in-development non-invasive blood test to be used in conjunction
with other non-surgical modalities, is designed to be an aid in the detection of
endometriosis and address the patient population of women who are experiencing
moderate to severe pelvic pain to provide non-invasive confirmation that their
symptoms are indicative of endometriosis. The goal of this test is to support an
early diagnosis and direct appropriate medical management that potentially
reduces the progression of disease. Current detection methods for endometriosis
require surgery and a surgical biopsy diagnosis and/or visualization diagnosis.
EndoCheck is intended to address this large patient population by using a
non-invasive solution with both the sensitivity and specificity comparable to
surgical biopsy and/or visualization. EndoCheck is being developed as an LDT.
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?OVAInherit will be designed as a non-invasive high-risk diagnostic tool,
intended for those patients with or without a pelvic mass who are genetically
predisposed to gynecologic cancer. It will use genetics, proteins and other
modalities to assess the likelihood that a woman has an early-stage
gynecological cancer that is not visible using traditional ultrasound
methodologies, and thereby to aid in early diagnoses. Our OVAInherit related
clinical studies, OVANex and OVA360, initiated in late 2019 and early 2020,
respectively, are focused on developing data to support a diagnostic test for
the early detection of ovarian cancer. Our collaboration work with Harvard
Dana-Farber Cancer Institute and Medical University of Lodz Phase 1 Proof of
Concept evaluation surpassed all required metrics and based on the outcome data,
we have begun implementing Phase 2 of the study. In Phase 2, the team is
evaluating the combined potential impact of our protein biomarker algorithms and
the investigators' miRNA technology in the development of this assay and
platform.
?We ultimately plan to commercialize each of OVA1, OVERA, OVA1plus, Aspira
GenetiX, OVAWatch, EndoCheck, OVAInherit and Aspira Synergy on a global
level. We currently hold CE marks for OVA1 and OVERA. In addition, each of OVA1
and OVERA, and the reflex offering, OVA1plus, will be offered on our global
testing platform, which will allow both tests to be deployed worldwide.
Outside of the United States, we have studies in process to validate OVERA and
OVA1 in specific populations. This includes active international distribution
agreements for OVERA with Pro-Genetics LTD in Israel and MacroHealth, Inc. in
the Philippines. The MacroHealth, Inc. agreement was our first agreement
regarding our decentralized technology, Aspira Synergy, for OVERA specimen
testing.
We own and operate ASPiRA LABS, based in Austin, Texas, a Clinical Chemistry and
Endocrinology Laboratory accredited by the College of American Pathologists,
which specializes in applying biomarker-based technologies to address critical
needs in the management of gynecologic cancers and disease. ASPiRA LABS provides
expert diagnostic services using a state-of-the-art biomarker-based risk
assessment to aid in clinical decision making and advance personalized treatment
plans. The lab currently processes our OVA1 and OVERA tests, and we plan to
expand the testing to other gynecologic conditions with high unmet need. We also
plan to develop and perform LDTs at ASPiRA LABS. ASPiRA LABS holds a CLIA
Certificate of Accreditation and a state laboratory license in California,
Maryland, New York, Pennsylvania and Rhode Island. The Centers for Medicare &
Medicaid Services ("CMS") issued a supplier number to ASPiRA LABS in 2015.
In the United States, revenue for diagnostic tests comes from several sources,
including third-party payers such as insurance companies, government healthcare
programs, such as Medicare and Medicaid, client bill accounts and patients.
Novitas Solutions, a Medicare contractor, covers and reimburses for OVA1 tests
performed in certain states, including Texas. Due to OVA1 tests being performed
exclusively at ASPiRA LABS in Texas, the local coverage determination from
Novitas Solutions essentially provides national coverage for patients enrolled
in Medicare as well as Medicare Advantage health plans. 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 CA125 technology or OVA1 ("Multivariate
Index Assay") as listed in the bulletin. Based on this, OVA1 achieved parity
with CA125 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.
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In October 2018, ASPiRA LABS launched OVA1plus, a clinical pathway which
combines the strengths of OVA1 and OVERA. This offering helps drive earlier
ovarian cancer risk detection, which in turn lowers overall healthcare costs and
reduces inefficiencies in the care pathway.
Recent Developments
Leadership Updates
On February 23, 2022, the independent directors of the Company's board of
directors appointed James T. LaFrance as Lead Independent Director, effective as
of March 1, 2022, and the Company's board of directors appointed Celeste
Fralick, Ph.D. to the Company's board of directors and its Audit Committee.
Also, on February 23, 2022, the Company's board of directors appointed Valerie
B. Palmieri as its Executive Chair and appointed Nicole Sandford, a current
director on the board of directors, as the Company's President and Chief
Executive Officer, each effective as of March 1, 2022.
On February 23, 2022, the Company's board of directors appointed James T.
LaFrance as Audit Committee Chair, effective as of March 1, 2022.
Business, Coverage and Collaboration Updates
On January 5, 2022, we announced that we entered into a commercial enterprise
agreement with Axia Women's Health, one of the nation's largest and leading
independent women's healthcare groups.  Axia Women's Health is an innovative and
progressive community of more than 400 providers and 150 women's health centers
across New Jersey, Pennsylvania, Indiana, Ohio, and Kentucky.  Axia Women's
Health providers offer services across the care continuum including obstetrics,
gynecology, mammography, urogynecology, fertility, and other sub-specialties.
On January 31, 2022, we announced that we entered into agreements to provide
testing services to Medicaid plan members in the state of New Hampshire and
Washington, D.C equaling nearly a half million covered lives.  The state of New
Hampshire covers 200,000 lives and Washington D.C. covers 265,000 lives under
their respective Medicaid programs. With the addition of these plans, Aspira is
now credentialed to provide its OVA1 testing to nearly 80% of the Medicaid
population in the U.S., totaling approximately 60 million lives. In addition,
during the first quarter the Company has been credentialed with Medicaid for the
States of Maryland and Maine, adding an additional 500,000 covered Medicaid
lives.
During March 2022, in connection with our Strategic Research Collaboration
Agreement for the development and commercialization of a Micro RNA high risk
ovarian cancer early-detection test with Dana-Farber Cancer Institute, Brigham
and Women's Hospital and Medical University of Lodz, we exercised the option for
an exclusive world-wide license of this cutting-edge miRNA technology and plans
to continue development of a novel combined assay utilizing a new platform with
our collaborators. We are obligated to pay for expenses as they are incurred.
During the first quarter of 2022, we executed a commercial reorganization
resulting in the separation of a number of employees. The changes were aimed at
enhancing our national sales force and driving the accelerated adoption of
OVA1plus as the standard of care for early risk detection of ovarian cancer in
women who have been planned for surgery. The organizational changes resulted in
the recording of one-time severance, separation, and settlement payments in the
first quarter of approximately $1,284,000 including estimated future payouts,
partially offset by insurance reimbursement of $523,000. See Note 2 to the
condensed consolidated financial statements.
COVID-19 Pandemic

In December 2019, a novel strain of coronavirus was reported to have surfaced in
Wuhan, China. The novel coronavirus has since spread to over 100 countries,
including every state in the United States. In March 2020, the World Health
Organization declared COVID-19, the disease caused by the novel coronavirus, a
pandemic, and the United States declared a national emergency with respect to
the coronavirus outbreak. This

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outbreak has severely impacted global economic activity, and many countries and
many states in the United States have reacted to the outbreak by instituting
quarantines, mandating business and school closures and restricting travel. In
order to reduce the impact of limitations on visiting physician offices due to
closures and quarantines, we implemented other mechanisms for reaching
physicians such as virtual sales representative meetings, Key Opinion Leader
presentations, and increased digital sales and marketing. Patient enrollment for
our planned clinical research studies has been slower than originally planned
due to the impact of clinic closures and patients not seeking medical care in
some states, which has led to delays in the completion of such studies.
In the first quarter of 2022, a resurgence of COVID-19 cases depressed our
average daily test volume in January. Although our daily test volume recovered
later in the quarter, we believe given the potential for future resurgences of
COVID-19 cases and the variety of federal and state actions taken to contain
them, we are unable to estimate the potential future impact of the COVID-19
pandemic on our business, results of operations or cash flows as of the date of
the filing of this Form 10-Q.
In addition, as of the date of the filing of this Form 10-Q, we have
approximately two months of reagents, one of our key testing supplies, in stock,
depending on volume of tests performed, and we are working with the manufacturer
to ensure a consistent supply over the next six months. As previously disclosed,
we have put in place staffing and reagent contingency plans to ensure there is
no down time at our lab. We believe the lab could continue to operate in the
event any isolated infection were to impact a portion of the workforce. The full
impact of the COVID-19 pandemic continues to evolve as of the date of the filing
of this Form 10-Q.
Pipeline Expansion Strategy: We are focused on execution of the following core
strategic business drivers in delivering state-of-the-art gynecologic health
solutions starting with ovarian cancer diagnostics, and specialized laboratory
services to build long-term value for our investors:

1)Maximizing the existing OVA1plus opportunity by actively pursuing broad
physician adoption and payer coverage;
2)Leveraging our existing database and specimen bank while building our specimen
and data repository of gynecologic pelvic mass patients;
3)Expanding our product offerings to aid in diagnostic and risk stratification
for additional women's health diseases with a focus on pelvic disease conditions
such as pelvic mass monitoring and endometriosis by adding additional
gynecologic bio-analytic solutions involving biomarkers, genetics, other
modalities (e.g., imaging), clinical risk factors and patient data; this may
occur via licensing or other business development and merger and acquisition
opportunities that represent synergistic offerings in women's health;
4)Coupling our OVA products with an individual's hereditary genetic risk to
refine ovarian cancer risk assessment for high-risk populations; and
5)Establishing a proprietary decentralization platform, Aspira Synergy, to allow
large healthcare networks and physician practices to access OVA and Aspira
GenetiX algorithms as a technology transfer service, while also obtaining access
to de-identified data through these arrangements to allow us to enhance our
algorithm development on a cost-effective basis.
We believe that these business drivers will contribute significantly to
addressing unmet medical needs for women facing gynecologic disease and
conditions and the continued development of our business.
Recent Publications

In parallel to building our OVA platform offering and our commercial deployment,
we have been working on several key publications and product extensions.
The OVAWatch manuscript, “Analytical Validation of a Deep Neural Network
Algorithm for the Detection of Ovarian Cancer,” has been accepted for
publication in the Journal of Clinical Oncology Clinical Cancer Informatics. The
Publication is forthcoming and will be on-line. The Company has prepared an
application for a Proprietary Laboratory Analyses code with the American Medical
Association for the OVAWatch test to distinguish it from OVA1plus with an
expectation that Novitas and other payers will apply the OVA1plus Centers

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for Medicare & Medicaid Services fee to OVAWatch, ensuring consistent coverage
and pricing for both OVA products.
Critical Accounting Policies and Estimates

Our product revenue is generated by performing diagnostic services using our
OVA1, OVERA, OVA1plus or Aspira GenetiX tests, and the service is completed upon
the delivery of the test result to the prescribing physician. The entire
transaction price is allocated to the single performance obligation contained in
a contract with a patient. Under ASC Topic 606, Revenue from Contracts with
Customers, all revenue is recognized upon completion of the OVA1, OVERA,
OVA1plus or Aspira GenetiX test and delivery of test results to the physician
based on estimates of amounts that will ultimately be realized. In determining
the amount of revenue to be recognized for a delivered test result, we consider
factors such as payment history and amount, payer coverage, whether there is a
reimbursement contract between the payer and us, and any developments or changes
that could impact reimbursement. These estimates require significant judgment by
management. For OVA1, OVERA, OVA1plus and Aspira GenetiX tests, we also review
our patient account population and determine an appropriate distribution of
patient accounts by payer (i.e., Medicare, patient pay, other third-party payer,
etc.) into portfolios with similar collection experience. When evaluated for
collectability, this results in a materially consistent revenue amount for such
portfolios as if each patient account were evaluated on an individual contract
basis.

Results of Operations – Three Months Ended March 31, 2022 Compared to Three
Months Ended March 31, 2021
The selected summary financial and operating data of the Company for the three
months ended March 31, 2022 and 2021 were as follows:

                              Three Months Ended
                                  March 31,             Increase (Decrease)
(dollars in thousands)         2022        2021         Amount               %
Revenue:
Product                     $     1,835  $   1,416  $           419           30
Genetics                             58         80             (22)         (28)
Total revenue                     1,893      1,496              397           27
Cost of revenue:
Product                             857        655              202           31
Genetics                             75        238            (163)         (68)
Total cost of revenue               932        893               39            4
Gross profit                        961        603              358           59
Operating expenses:
Research and development          1,348        872              476           55
Sales and marketing               4,497      3,108            1,389           45

General and administrative        4,363      2,509            1,854           74
Total operating expenses         10,208      6,489            3,719           57

Loss from operations            (9,247)    (5,886)          (3,361)           57
Interest expense, net              (18)       (24)                6           25
Other expense, net                  (3)       (10)                7           70
Net loss                    $   (9,268)  $ (5,920)  $       (3,348)           57

Product Revenue. Product revenue was $1,835,000 for the three months ended March
31, 2022, compared to $1,416,000 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 30% product revenue
increase is due to an increase in OVA1 test volume compared to the prior year,
in addition to a

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higher revenue average unit price ("AUP"), which increased from $375 in the
first quarter of 2021 to $380 in the first quarter of 2022. This increase was
primarily driven by an increased volume of tests performed for higher AUP
payers, such as those for Medicare and insurance carriers, along with a
decreased volume of tests performed for lower AUP payers, such as Medicaid and
patient payers.
Medicaid represents approximately 11.6% of volume in the three months ended
March 31, 2022, at an AUP of $89. Our OVA1plus AUP without Medicaid was $418 for
the three months ended March 31, 2022, compared to $411 for the same period in
2021. Product revenue increased 1% sequentially during the first quarter 2022 as
compared to the fourth quarter 2021.
The number of OVA1plus tests performed increased 28% to 4,819 during the three
months ended March 31, 2022, compared to 3,775 OVA1plus tests for the same
period in 2021. This increase was due to increased access to provider offices,
patients' return to physician visits, and increased investment in our current
commercial channel. The number of OVA1plus tests performed only increased 1%
sequentially during the first quarter 2022 as compared to the fourth quarter
2021 as a result of access restrictions due to the COVID-19 resurgence in
January 2022. We expect revenue to increase in 2022 due to investing in key
salesforce hires and strategic product development.
Genetics Revenue. Genetics revenue was $58,000 for the three months ended March
31, 2022, compared to $80,000 for the same period in 2021. Although there was a
decrease as compared to the same period last year, Genetics revenue increased
61% as compared to the fourth quarter of 2021. Revenue for Aspira GenetiX is
recognized when the Aspira GenetiX test is completed based on estimates of what
we expect to ultimately realize. The 28% genetics revenue decrease is primarily
due to decreased volumes as compared to the same period in 2021. The revenue per
test performed remained flat at $456 from the same period in 2021.
Cost of Revenue - Product. Cost of product revenue was $857,000 for the three
months ended March 31, 2022, compared to $655,000 for the same period in 2021,
representing an increase of $202,000, or 31%, due primarily to increased
personnel costs, lab supplies, and shipping costs due to 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 $75,000 for the three months ended March 31, 2022, compared to $238,000 for
the same period in 2021. The decrease in cost was due to a decrease of $108,000
in personnel costs, due to a decrease in volume of tests performed as compared
to the same period in 2021.
Gross Profit Margin.  Gross profit margin for OVA1plus remained relatively flat
at 53.3% for the three months ended March 31, 2022, compared to 54.2% for the
same period in 2021.
Research and Development Expenses.  Research and development expenses represent
costs incurred to develop our technology and carry out clinical studies, and
include personnel-related expenses, regulatory costs, reagents and supplies used
in research and development laboratory work, infrastructure expenses, contract
services and other outside costs. Research and development expenses for the
three months ended March 31, 2022 increased by $476,000, or 55%, compared to the
same period in 2021. This increase was primarily due to clinical validity and
product development costs related to OVAWatch, our third-generation product, as
well as investments in Aspira Synergy, increased personnel expenses, consulting
expenses associated with EndoCheck regulatory clearance and severance paid in
relation to our reorganization of $132,000. We expect research and development
expenses to increase in 2022, relative to 2021, as a result of increased
projects and clinical studies.
Sales and Marketing Expenses.  Our sales and marketing expenses consist
primarily of personnel-related expenses, education and promotional expenses.
These expenses include the costs of educating physicians and other healthcare
professionals regarding OVA1, OVERA, OVA1plus and Aspira GenetiX. Sales and
marketing expenses also include the costs of sponsoring continuing medical
education, medical meeting participation, and dissemination of scientific and
health economic publications. Sales and marketing expenses for the three months
ended March 31, 2022 increased by $1,389,000, or 45%, compared to the same
period in 2021. This increase was primarily due to increased personnel,
severance paid in relation to our reorganization,
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commissions, and travel and entertainment costs. We expect sales and marketing
expenses to increase in 2022, relative to 2021, due to investing in key
strategic hires and product portfolio expansion.
During the first quarter of 2022, we executed a commercial reorganization
resulting in the separation of a number of employees. The changes were aimed at
enhancing our national sales force and driving the accelerated adoption of
OVA1plus as the standard of care for early risk detection of ovarian cancer in
women who have been planned for surgery. The organizational changes resulted in
the recording of one-time severance, separation, and settlement payments in the
first quarter of approximately $1,284,000 including estimated future payouts, of
which $1,085,000 paid related to sales and marketing, partially offset by
insurance reimbursement of $523,000, of which $503,000 related to sales and
marketing.
General and Administrative Expenses.  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 March
31, 2022 increased by $1,854,000, or 74%, compared to the same period in 2021.
This increase was primarily due to increased personnel expenses of $984,000,
consulting expenses of $164,000, and stock compensation expenses of $353,000.
Severance paid to general and administrative-related personnel was immaterial.
We expect general and administrative expenses to increase in 2022, relative to
2021.
Liquidity and Capital Resources
We plan to continue to expend resources selling and marketing OVA1, OVERA,
OVA1plus and Aspira GenetiX and developing additional diagnostic tests and
service capabilities.
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 $480,996,000 as of March 31, 2022. The Company also expects to
incur a net loss and negative cash flows from operations for 2022.
As discussed in Note 2 to the condensed consolidated financial statements, in
March 2016, the Company 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
it may borrow up to $4,000,000 from the DECD.

The loan may be prepaid at any time without premium or penalty. An initial
disbursement of $2,000,000 was made to the Company 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, 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.

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As discussed in Note 3 to the condensed consolidated financial statements, on
February 8, 2021, the Company completed a public offering (the “2021 Offering”)
resulting in net proceeds of approximately $47,858,000, 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.

In connection with a private placement offering of common stock and warrants we
completed in May 2013, we entered into a stockholders agreement which, among
other things, gives two of the primary investors in that offering the right to
participate in any future equity offerings by the Company on the same price and
terms as other investors. In addition, the stockholders agreement prohibits us
from taking certain material actions without the consent of at least one of the
two primary investors in that offering. These material actions include:
?Making any acquisition with a value greater than $2 million;
?Offering, selling or issuing any securities senior to Aspira's common stock or
any securities that are convertible into or exchangeable or exercisable for
securities ranking senior to Aspira's common stock;
?Taking any action that would result in a change in control of the Company or an
insolvency event; and
?Paying or declaring dividends on any securities of the Company or distributing
any assets of the Company other than in the ordinary course of business or
repurchasing any outstanding securities of the Company.
The foregoing rights terminate for a primary investor when that investor ceases
to beneficially own less than 50% of the shares and warrants (taking into
account shares issued upon exercise of the warrants), in the aggregate, that
were purchased at the closing of the 2013 private placement.
As mentioned, we have incurred significant net losses and negative cash flows
from operations since inception, and we expect to continue to incur a net loss
and negative cash flows from operations in 2022. At March 31, 2022 we had an
accumulated deficit of ($480,996,000) and stockholders' equity of $21,744,000.
As of March 31, 2022, we had $26,855,000 of cash and cash equivalents (excluding
restricted cash of $250,000), $5,778,000 of current liabilities, and working
capital of $23,661,000. There can be no assurance that we will achieve or
sustain profitability or positive cash flow from operations. While we expect to
grow revenue through ASPiRA LABS, there is no assurance of our ability to
generate substantial revenues and cash flows from ASPiRA LABS' operations. We
expect revenue from our products to be our only material, recurring source of
cash in 2022. In addition, the impact of the COVID-19 pandemic and actions taken
to contain it on our liquidity for 2022 cannot be estimated as of the date of
the filing of this Form 10-Q. However, we believe that our cash and cash
equivalents will be sufficient to fund our operations for the next 12 months
from the date of the filing of this Form 10-Q.
While we believe that we have sufficient capital to fund our operations for the
next 12 months, we are currently evaluating our capital needs beyond the next 12
months, which may involve additional capital raises and/or other financing
activities in order to continue to fund operations at current cash expenditure
levels. We may take further action to protect our liquidity position, including
in the event that our existing cash on hand is not sufficient to fund our
operations, meet our capital requirements or satisfy our anticipated obligations
as they become due. Such actions may include, but are not limited to:
?Raising capital through an equity offering either in the public markets or via
a private placement offering (however, no assurance can be given that capital
will be available on acceptable terms, or at all);
?Reducing executive bonuses or replacing cash compensation with equity grants;
?Reducing professional services and consulting fees and eliminating non-critical
projects;
?Reducing travel and entertainment expenses; and
?Reducing, eliminating or deferring discretionary marketing programs.
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Our future liquidity and capital requirements will depend upon many factors,
including, among others:
?resources devoted to sales, marketing and distribution capabilities;
?the rate of OVA1, OVERA, OVA1plus and Aspira GenetiX product adoption by
physicians and patients;
?the rate of product adoption by healthcare systems and large physician
practices of the decentralized distribution agreements for OVA1, OVERA and
OVA1plus;
?the insurance payer community's acceptance of and reimbursement for our
products;
?our plans to acquire or invest in other products, technologies and businesses;
?the potential need to add study sites to access additional patients to maintain
clinical timelines; and
?the impact of the COVID-19 pandemic and the actions taken to contain it, as
discussed above.
Net cash used in operating activities was $10,173,000 for the three months ended
March 31, 2022, resulting primarily from the net loss reported of $9,268,000,
which includes non-cash expenses in the amount of $838,000 related to stock
compensation expense and $64,000 related to depreciation and amortization, and
changes in accounts payable, accrued and other liabilities of $1,705,000.

Net cash used in operating activities was $5,255,000 for the three months ended
March 31, 2021, resulting primarily from the net loss reported of $5,920,000,
which includes non-cash expenses in the amount of $489,000 related to stock
compensation expense and $90,000 related to depreciation and amortization, and
offset by changes in accounts payable, accrued and other liabilities of
$291,000.

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

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

We have significant NOL carryforwards as of March 31, 2022 for which a full
valuation allowance has been provided due to our history of operating losses.
Section 382 of the Internal Revenue Code of 1986, as amended ("Section 382"), as
well as similar state provisions may restrict our ability to use our NOL credit
carryforwards due to ownership change limitations occurring in the past or that
could occur in the future. These ownership changes may also limit the amount of
NOL credit carryforwards that can be utilized annually to offset future taxable
income and tax, respectively.
Legislation commonly referred to as the Tax Cuts and Jobs Act was enacted in
December 2017. As a result of the Tax Cuts and Jobs Act of 2017, federal NOLs
arising before January 1, 2018, and federal NOLs arising after January 1, 2018,
are subject to different rules. The Company's pre- 2018 federal NOLs will
expire in varying amounts from 2022 through 2037, if not utilized? and can
offset 100% of future taxable income for regular tax purposes. Any federal NOLs
arising after January 1, 2018, can generally be carried forward indefinitely and
can offset up to 80% of future taxable income. State NOLs will expire in varying
amounts from 2022 through 2037 if not utilized. Our ability to use our NOLs
during this period will be dependent on our ability to generate taxable income,
and the NOLs could expire before the Company generates sufficient taxable
income. The Company's ability to use NOL carryforwards may be restricted due to
ownership change limitations occurring in the past or that could occur in the
future, as required by Section 382, as well as similar state specific
provisions. These ownership changes may also limit the amount of NOL
carryforwards that can be utilized annually to offset future taxable income and
tax, respectively.
Our management believes that Section 382 ownership changes occurred as a result
of our follow-on public offerings in 2011, 2013 and 2015. Any limitation may
result in the expiration of a portion of the NOL carryforwards before
utilization and any NOL carryforwards that expire prior to utilization as a
result of such
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limitations will be removed from deferred tax assets with a corresponding
reduction of our valuation allowance. Due to the existence of a valuation
allowance, it is not expected that such limitations, if any, will have an impact
on our results of operations or financial position.
Off-Balance Sheet Arrangements
As of March 31, 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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