Aspira Women’s Health (AWH) - 2024 Q1 - Quarterly Report

PART I Financial Information Item 1. Financial Statements The company reported a reduced net loss of $4.6 million for Q1 2024, improved by lower operating expenses, but faces a going concern warning Condensed Consolidated Balance Sheets Balance Sheet Summary (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $3,413 | $2,597 | | Total current assets | $6,122 | $5,280 | | Total assets | $7,164 | $6,262 | | Total current liabilities | $5,293 | $5,119 | | Total liabilities | $8,527 | $8,627 | | Total stockholders' deficit | $(1,363) | $(2,365) | - The company's cash and cash equivalents increased by approximately $0.8 million, while the total stockholders' deficit decreased from $(2.4) million to $(1.4) million during the first quarter of 2024[9] Condensed Consolidated Statements of Operations Q1 2024 vs. Q1 2023 Statement of Operations (in thousands, except per share data) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Total revenue | $2,153 | $2,316 | | Gross profit | $1,214 | $1,186 | | Total operating expenses | $5,924 | $7,466 | | Loss from operations | $(4,710) | $(6,280) | | Net loss | $(4,629) | $(6,578) | | Net loss per share | $(0.39) | $(0.79) | - Despite a 7% decrease in revenue, the company reduced its net loss by 30% year-over-year, primarily due to a 21% reduction in total operating expenses[11][85] Condensed Consolidated Statements of Cash Flows Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,431) | $(5,706) | | Net cash used in investing activities | $(20) | $(8) | | Net cash provided by (used in) financing activities | $5,269 | $(55) | - Financing activities provided $5.3 million in cash during Q1 2024, a significant shift from the prior year that more than offset the cash used in operations[20] Notes to Condensed Consolidated Financial Statements - The company has substantial doubt about its ability to continue as a going concern due to significant net losses, an accumulated deficit of $522.9 million, and negative cash flows from operations[25] - In January 2024, the company raised gross proceeds of approximately $5.6 million through a registered direct offering of common stock and warrants[51] - The company has an equity line of credit with Lincoln Park Capital, under which it sold 111,369 shares for gross proceeds of approximately $400,000 during Q1 2024[58] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses a 7% revenue decline due to lower test volumes, offset by a 21% reduction in operating expenses and progress in its product pipeline Q1 2024 vs. Q1 2023 Operating Results (in thousands) | Metric | Q1 2024 | Q1 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Product Revenue | $2,153 | $2,315 | (7%) | | Gross Profit | $1,214 | $1,186 | 2% | | Total Operating Expenses | $5,924 | $7,466 | (21%) | | Loss from Operations | $(4,710) | $(6,280) | (25%) | | Net Loss | $(4,629) | $(6,578) | (30%) | Product Volume and Average Unit Price (AUP) | Product | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | :--- | | Ova1Plus | Volume | 4,777 | 5,768 | | | AUP | $376 | $390 | | OvaWatch | Volume | 1,052 | 491 | | | AUP | $338 | $136 | | Total OvaSuite | Volume | 5,829 | 6,259 | | | AUP | $369 | $370 | - The company's key strategic initiatives are focused on growth, innovation, and operational excellence, with a "Commercial Refresh" strategy increasing average test volume per sales representative from 298 to 364 year-over-year[73] - The product pipeline includes OvaMDx for ovarian cancer and EndoCheck/EndoMDx for endometriosis, leveraging multi-marker approaches including proteins and miRNA[78][79] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is not required to provide disclosures for this item - Per Item 305(e) of Regulation S-K, the information for this item is not required[93] Item 4. Controls and Procedures Management concluded that disclosure controls were ineffective as of March 31, 2024, due to two material weaknesses in internal controls - Management concluded that as of March 31, 2024, the company's disclosure controls and procedures were not effective[94] - Two material weaknesses persist: one related to information technology general controls (ITGCs) and another related to the design and implementation of controls over the revenue process[95] - Remediation activities are in progress, including retaining an internal controls specialist, reviewing IT application controls, and enhancing the rigor of the review process for revenue[96] PART II Other Information Item 1. Legal Proceedings The company reports no material legal proceedings as of the end of the reporting period - The company states there are no legal matters as of March 31, 2024, that would have a material adverse effect on its financial position or results of operations[99] Item 1A. Risk Factors A new significant risk factor arises from the FDA's final rule on Laboratory Developed Tests (LDTs), potentially increasing future compliance costs - A new risk factor has emerged from the FDA's final rule, published May 6, 2024, which will phase out enforcement discretion for most Laboratory Developed Tests (LDTs) over four years[101] - The company's current commercially available tests are expected to be grandfathered in under an exception for IVDs marketed prior to May 6, 2024, as long as they are not significantly modified[101] - Future tests or significant modifications to existing tests will face increased regulatory burdens, including potential premarket authorization, which could be time-consuming, expensive, and negatively affect the company's operations and financial condition[101][102] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None[103]