ASPIRA WOMEN'S HEALTH INC. – 10-K – MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis in conjunction with our
Consolidated Financial Statements and related Notes thereto, included on pages
F-1 through F-21 of this Annual Report on Form 10-K, and "Risk Factors", which
are discussed in Item 1A. The statements below contain forward-looking
statements within the meaning of the Private Securities Litigation Reform Act.
See "Forward-Looking Statements" on page 1 of this Annual Report on Form 10-K.
Overview
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 "
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 for our products and services.
We are focused on commercializing our products both inside and outside the
Key Opinion Leader Network aligned with our territories in the
we added to our direct salesforce, and in 2021, we put OVA1 on our global
testing platform,
internationally as well as run by clients in
sites. In 2022, we plan to continue our efforts to commercialize OVA1plus by
utilizing select partnerships for distribution, expand our managed care coverage
and contracts in select markets, grow our sales force, increase adoption in our
existing customer base, and further deploy of our
transfer platform. We also plan to develop a LDT series of diagnostic algorithms
that will include not only biomarkers, but also genetics, clinical risk factors,
other diagnostics and patient history data in order to boost predictive value.
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.
We plan to launch the OVAWatch test as an LDT in two stages. Phase I will be a
single use point in time test, and Phase II will allow for serial monitoring. We
will focus on advancing to the commercial phase of the OVAWatch launch plan
including driving provider adoption during the second half of 2022. We believe
the single-use product has the potential to triple the addressable market over
OVA1plus our current ovarian cancer test. 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 diagnostic algorithm, EndoCheck, will be an 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
include genetics, proteins and other modalities to assess such risk. All of our
products are focused on gynecologic diseases that cannot be assessed through a
traditional biopsy, making our non-invasive blood biopsy more efficient and
patient friendly.
To continue our commercialization objectives and reach our financial and
operational goals, we require skilled sales 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.
Critical Accounting Policies and Estimates
Our significant accounting policies are described in Note 1, Basis for
Presentation and Summary of Significant Accounting and Reporting Policies, of
the Notes to the Consolidated Financial Statements included in this Annual
Report on Form 10-K. The Consolidated Financial Statements are prepared in
conformity with generally accepted accounting principles in
America
critical judgments, estimates, and assumptions that affect the amounts of assets
and liabilities in the financial statements and revenues and expenses during the
reporting periods (and related disclosures). We believe the policies discussed
below are the Company's critical accounting policies, as they include the more
significant, subjective, and complex judgments and estimates made when preparing
our consolidated financial statements.
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Revenue Recognition
We recognize product revenue in accordance with the provisions of ASC Topic 606,
Revenue from Contracts with Customers ("ASC 606"); all revenue is recognized
upon completion of the OVA1, OVERA, OVA1plus or Aspira GenetiX test based on
estimates of amounts that will ultimately be realized. In determining the amount
to accrue for a delivered test result, we consider factors such as historical
payment history and amount, payer coverage, whether there is a reimbursement
contract between the payer and us, and any current developments or changes that
could impact reimbursement. These estimates require significant judgment by
management. 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.
Stock-Based Compensation
We record the fair value of non-cash stock-based compensation costs for stock
options and stock purchase rights related to the 2010 and 2019 Plans. We
estimate the fair value of stock options using a Black-Scholes option valuation
model. This model requires the input of subjective assumptions including
expected stock price volatility, expected life and estimated forfeitures of each
award. We use the straight-line method to amortize the fair value over the
vesting period of the award. These assumptions consist of estimates of future
market conditions, which are inherently uncertain, and therefore are subject to
management's judgment.
The expected life of options is based on historical data of our actual
experience with the options we have granted and represents the period of time
that the options granted are expected to be outstanding. This data includes
employees' expected exercise and post-vesting employment termination behaviors.
The expected stock price volatility is estimated using our historical volatility
in deriving the expected volatility assumption. We made an assessment that our
historic volatility is most representative of future stock price trends. The
expected dividend yield is based on the estimated annual dividends that we
expect to pay over the expected life of the options as a percentage of the
market value of our common stock as of the grant date. The risk-free interest
rate for the expected life of the options granted is based on the United States
Treasury yield curve in effect as of the grant date.
Recent Accounting Pronouncements
The information set forth in Note 2 in our consolidated financial statements
contained in Part II, Item 8, "Financial Statements and Supplementary Data," of
this Annual Report on Form 10-K is hereby incorporated by reference.
Recent Developments Leadership Updates
On
board of directors, resigned from the Company's board of directors for personal
reasons.
Effective
directors appointed
of
Fralick
Also, on
appointed
2022
directors, as the Company's President and Chief Executive Officer, each
effective as of
On
LaFrance
Business, Product and Coverage Updates
Government Strategy Updates
In the first quarter of 2021, we presented at a Congressional Briefing
"Advancing Health Outcomes for Women and Minorities." We delivered a call to
action for OVA1 as the standard of care for ovarian cancer risk assessment for
Caucasian and non-Caucasian women and the need for funding large race and
ethnicity-based trials.
33
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In the first quarter of 2021, we submitted to the FDA a Breakthrough Device
designation request with respect to EndoCheck. The
Program provides patients and health care providers with timely access to
medical devices and device-led combination products that provide for more
effective treatment or diagnosis of life-threatening or irreversibly
debilitating diseases or conditions by speeding up their development, assessment
and review. We have been in communications with the FDA regarding our request,
and the FDA has demonstrated interest in continuing to work with us
on EndoCheck, and we plan to continue our discussions with the agency on
Breakthrough Device Program designation. There is no assurance that the FDA will
grant our request for EndoCheck to be designated as a Breakthrough Device. If
our device is granted a Breakthrough Device designation, we plan to move forward
with interacting with the FDA through a variety of options including sprint
discussions, a request for a discussion on a data development plan, and a
request for clinical protocol agreement, and any final submission will be a de
novo submission. As of late
Radiological Health
Submission for Software Contained in Medical Devices, specific to "
Intelligence/Machine Learnings-Based Software
Plan" which will provide a much-needed framework for our future EndoCheck
devices. We are currently working to ensure our EndoCheck development process is
aligned with the proposed framework. We plan to proceed on a parallel path with
the Breakthrough Device process as well as with the LDT development process.
This dual track approach pursues the commercialization of an EndoCheck LDT,
whereby real-world clinical validity data will be developed that also will
support the data needed for an FDA marketing authorization, subsequent to
Breakthrough designation decision.
On
the gaps in ovarian health diagnostics and treatments as well as solutions to
successfully address them. Immediate and innovative actions regarding education,
research investment, detection, and insurance coverage were highlighted, in
addition to the dire consequences of racial and ethnic disparities and
inequities endemic to this malignancy.
Coverage Updates
On
network provider for all
insurance products of Highmark.
On
larger Medicaid populations in the
in the state.
On
one of the largest women's health networks whereby the OVA1plus testing will be
performed in its laboratory with data interpretation by Aspira. The health
network employs over 300 physicians and is responsible for 500,000 patient
visits per year.
On
represents more than 50 million lives in
largest Laboratory Benefits Management firms owned by
Shield
necessary per the test's FDA-cleared label. This allows all Anthem and other
BCBS plans to modify their own OVA1 coverage policies to reflect this coverage.
On
testing services to Medicaid plan members in the state of
Hampshire
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
Abstract / Study Updates
On
Health
Health
credentialled physicians. The study will further support longitudinal studies
for the use of OVAWatch as a serial monitoring test for high-risk women
predisposed for hereditary ovarian cancer.
In
Oncology
validation for publication in the third quarter of 2021, which is currently
pending acceptance. We plan to publish the clinical validation in late 2022 or
early 2023, once the prospective clinical trial has closed and the data has been
analysed.
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Collaboration Updates
On
Dana-Farber Cancer Institute
University
in combination with current Aspira technologies, for the development of a highly
sensitive and specific early detection test for women with ovarian cancer.
On
provide certain serum samples to be used in clinical trials. The Company plans
to use the samples in its EndoCheck product validation trial.
On
largest community-driven genomic data platform, to develop solutions to advance
women's health with rapid results, diagnosis, and insights. Currently, the
majority of genetic sequencing information can be found across multiple
databases which can limit the ability for medical professionals to access and
analyze this important data. Without advanced data aggregation and analytics
that inform machine learning and artificial intelligence algorithms, it is more
difficult to detect early-stage diseases as well as monitor and treat patients
effectively. Genoox's global platform brings together onto a single platform
information available in the public domain, allowing for the complete analysis
of the data and better patient care. We plan to leverage this knowledge base to
expand on our proprietary algorithm development across multiple product lines.
We expect our collaboration work with
successful. The Phase 1 evaluation surpassed all required metrics and based on
the outcome data, the Aspira innovation team along with the collaborators from
the aforementioned institutions 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, which we refer to as OVAInherit.
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
Hospital
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.
During the first quarter of 2022, we executed a reorganization and strategic
refresh 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
result in the recording of one-time severance, separation, and settlement
payments as well as legal costs in the first quarter of approximately
including estimated future payouts, partially offset by insurance reimbursement
of
On
agreement with
independent women's healthcare groups.
progressive community of more than 400 providers and 150 women's health centers
across
Health
gynecology, mammography, urogynecology, fertility, and other sub-specialties.
COVID-19 Pandemic
On
caused by the novel coronavirus, a pandemic, and on
States
This outbreak has severely impacted global economic activity, and many countries
and many states in
quarantines, mandating business and school closures and restricting travel. Our
commercial efforts to enter into decentralized arrangements with large
healthcare networks and supergroups have continued to move forward.
Additionally, as a result of the COVID-19 pandemic and actions taken to contain
it, our test volume, and resulting revenue, decreased significantly through the
beginning of the third quarter of 2020. Volumes started trending back to
pre-COVID levels during the late third quarter of 2020. However as various
COVID-19 variants evolved, we experienced fluctuating testing volumes. 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.
35
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As a result of the COVID-19 pandemic and actions taken to contain it, the
majority of our non-laboratory employees had been working remotely since
2020
office on a hybrid schedule for two to three days per week. We expect to
continue to have a hybrid working schedule for non-laboratory employees. In
terms of business continuity, our lab operations require on site essential
employees. 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. In addition, as of the date of the filing of this Form
10-K, 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.
In the fourth quarter of 2021, our test volume increased by 10% compared to the
third quarter of 2021. Although we experienced an increase in volume, 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-K. The
full impact of the COVID-19 pandemic continues to evolve as of the date of the
filing of this Annual Report on Form 10-K.
Results of Operations - Year Ended
The Company's selected summary financial and operating data for the years ended
Year Ended
December 31, Increase (Decrease)
(dollars in thousands) 2021 2020 Amount %
Revenue:
Product $ 6,568 $ 4,543 $ 2,025 45
Genetics 244 108 136 126
Total revenue 6,812 4,651 2,161 46
Cost of revenue:
Product 3,016 2,517 499 20
Genetics 734 898 (164) (18)
Total cost of revenue 3,750 3,415 335 10
Gross profit 3,062 1,236 1,826 148
Operating expenses:
Research and development 5,314 2,104 3,210 153
Sales and marketing 17,086 8,843 8,243 93
General and administrative 13,257 8,270 4,987 60
Total operating expenses 35,657 19,217 16,440 86
Loss from operations (32,595) (17,981) (14,614) 81
Interest income (expense), net (48) 10 (58) (580)
Other income, net 981 66 915 1,386
Net loss $ (31,662) $ (17,905) $ (13,757) 77
Product Revenue. Product revenue was
2021
LABS is recognized when the OVA1, OVERA, or OVA1plus test is completed based on
estimates of what we expect to ultimately realize. The 45% product revenue
increase is due to an increase in OVA1 test volume compared to the prior year,
in addition to a higher average revenue per test, which increased from
2020 to
increasing from 26.6% in 2020 to 45.0% in 2021. We expect revenue to continue to
improve in 2022 due to test volumes exceeding pre COVID-19 levels, provided that
the COVID-19 pandemic does not further escalate and result in new quarantines
and state closures. The duration of the pandemic and efforts to contain it
remains uncertain.
The number of OVA1plus tests performed increased 28% to approximately 17,359
OVA1plus tests during the year ended
13,557 OVA1plus tests for the same period in 2020. The volume increase was
primarily due to our commercialization investment, partially offset by decreases
in test volume during certain periods of 2021 as a result of the COVID-19
pandemic and efforts to contain it.
36
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The revenue per OVA1plus test performed increased from approximately
2020 to approximately
increased volume of tests performed for higher revenue-per-test-performed
payers, such as those for Medicare and insurance carriers, along with decreased
volume of tests performed for lower revenue-per-test-performed payers, such as
patient payers. Through insourcing our billing function, which we completed in
expect that the broader economic impacts of the COVID-19 pandemic will continue
to have an effect on our collections from patient payers.
Genetics Revenue. Genetics revenue was$244,000 for the year endedDecember 31, 2021 , compared to$108,000 for the same period in 2020. Revenue for Aspira GenetiX is recognized when the Aspira GenetiX test is completed based on estimates of what we expect to ultimately realize. The 126% genetics revenue increase is primarily due to an increase in Aspira GenetiX test volume, as well as a higher revenue per test. We expect revenue to improve in 2022 due to continued commercialization investment for the Aspira GenetiX product, provided that the COVID-19 pandemic does not further escalate and result in new quarantines and state closures. The duration of the pandemic and efforts to contain it remains uncertain. The number of genetics tests performed increased 64% to approximately 505 Aspira GenetiX tests during the year endedDecember 31, 2021 compared to approximately 307 Aspira GenetiX tests for the same period in 2020. The volume increase was primarily due to our commercialization investment, partially offset by decreases in test volume during certain periods of 2021 as a result of the COVID-19 pandemic and efforts to contain it. Cost of Revenue - Product. Cost of product revenue was$3,016,000 for the year endedDecember 31, 2021 compared to$2,517,000 for the same period in 2020, representing an increase of$499,000 , or 20%, due primarily to increased lab supply and shipping costs due to the increase in tests performed compared to the prior year. Cost of Revenue - Genetics. Cost of Aspira GenetiX revenue, which consisted primarily of personnel costs, consulting and licensing expenses was$734,000 for the year endedDecember 31, 2021 compared to$898,000 for the same period in 2020, representing a decrease of$164,000 , or 18%, due primarily to one-time costs related to transitioning of outsourced genetics testing services in 2020 of$250,000 . 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 year endedDecember 31, 2021 increased by$3,210,000 , or 153%, compared to the same period in 2020. This increase was primarily due to clinical validity and product development costs related to OVAWatch, our third-generation product, as well as investments inAspira Synergy and consulting expenses associated with EndoCheck regulatory clearance. We expect research and development expenses to moderately increase in 2022, 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 year endedDecember 31, 2021 increased by$8,243,000 , or 93%, compared to the same period in 2020. This increase was primarily due to increased personnel, recruiting costs, consulting costs, commissions, and promotional marketing expense. We expect sales and marketing expenses to moderately increase in 2022, due to investing in key strategic hires and product portfolio expansion. 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 year endedDecember 31, 2021 increased by$4,987,000 , or 60%, compared to the same period in 2020. This increase was primarily due to increased personnel expenses of$1,725,000 , consulting expenses of$766,000 , legal expenses of$961,000 , recruiting expenses of$374,000 , stock compensation expenses of$750,000 , as well as director and officer insurance expenses of$288,000 . We expect general and administrative expenses to increase slightly in 2022. Interest Income (Expense, net). The Company had interest income of$10,000 for the year endedDecember 31, 2020 and$48,000 in interest expense for the year endedDecember 31, 2021 . The change in the net balance from interest income to interest expense was primarily due to an increase in the loan contemplated under the DECD Loan Agreement (as defined below) and corresponding additional interest expense. 37
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Other Income, net. Other income for the year endedDecember 31, 2021 increased by$915,000 , compared to the same period in 2020, which consists primarily of forgiveness during the second quarter of 2021 of the Paycheck Protection Program loan (the "PPP Loan"), which the company obtained fromBBVA USA in the aggregate amount of approximately$1,006,000 inMay 2020 . 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
incur a net loss and negative cash flows from operations for 2022.
As discussed in Note 6 to the consolidated financial statements, in
the Company entered into a loan agreement (as amended on
Department of Economic and Community Development
it may borrow up to
The loan may be prepaid at any time without premium or penalty. An initial
disbursement of
DECD Loan Agreement. On
the remaining
achieved the target employment milestone necessary to receive an additional
remaining
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
job creation and retention milestones by
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
repayment of a portion or all of the loan plus a penalty of 5% of the total
funded loan. For additional information, see Note 3 of our consolidated
financial statements.
On
Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act").
As discussed in Note 6 to the consolidated financial statements, on
the Company obtained the PPP Loan from
approximately
to certify, in good faith, that the described economic uncertainty at the time
made the loan request necessary to support the ongoing operations of the
Company. This certification further required the Company to consider its current
business activity and its ability to access other sources of liquidity
sufficient to support ongoing operations in a manner that was not significantly
detrimental to the business. Under the terms of the CARES Act and the PPP Loan,
all or a portion of the principal amount of the PPP Loan was subject to
forgiveness so long as, over the 24-week period following the Company's receipt
of the proceeds of the PPP Loan, the Company used those proceeds for payroll
costs, rent, utility costs or the maintenance of employee and compensation
levels. The PPP Loan, which was granted pursuant to a promissory note, was set
to mature on
Company's repayment of the PPP Loan. The Company recognized a gain on
forgiveness of debt of approximately
indebtedness by the same amount. The Company remains subject to an audit of the
PPP loan. There is no assurance that the Company will not be required to repay
all or a portion of the PPP Loan as a result of the audit.
As discussed in Note 7 to the consolidated financial statements, during
2020
were exercised. The Company received
exercise of the warrants.
As discussed in Note 7 to the consolidated financial statements, on
2020
stock, par value
deducting expenses related to the private placement.
As discussed in Note 7 to the consolidated financial statements, on
2021
net proceeds of approximately
discounts and offering expenses.
38
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In connection with a private placement offering of common stock and warrants we
completed in
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
?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, the Company has incurred significant net losses and negative cash
flows from operations since inception. At
accumulated deficit of
of
at
profitability or positive cash flow from operations. In addition, 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 the event that the Company's existing cash on hand is not
sufficient to fund operations, meet its capital requirements or satisfy the
anticipated obligations as they become due, the Company expects to take further
action to protect its liquidity position. 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.
We expect to incur a net loss and negative cash flows from operations in 2022.
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 this filing.
However, we believe that our cash and cash equivalents will be sufficient to
fund our operations for the next twelve months.
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
approximately
depreciation and amortization, and offset by changes in accounts payable,
accrued and other liabilities of
Net cash used in operating activities was
related to stock compensation
39
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expense and
by changes in accounts payable, accrued and other liabilities of
Net cash used in investing activities was
ended
property and equipment purchases.
Net cash provided by financing activities was
net proceeds to the Company of approximately
underwriting discounts and offering expenses. Net cash provided by financing
activities was
primarily from the proceeds from the PPP Loan of approximately
2020
2020
in
proceeds from the DECD loan of
We have significant NOL carryforwards as of
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
arising before
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
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 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.
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