atos20210930

atos20210930_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission file number: 001-35610

ATOSSA THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

Delaware	26-4753208
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

107 Spring Street	98104
Seattle, WA	(Zip Code)
(Address of principal executive offices)

Registrant’s telephone number, including area code: (206) 325-6086

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $0.18 par value	ATOS	The Nasdaq Capital Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐

Accelerated filer ☐

Non-accelerated filer ☒

Smaller reporting company ☒

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the registrant’s common stock, $0.18 par value per share, outstanding at November 11, 2021, was 126,624,110.

ATOSSA THERAPEUTICS, INC.

FORM 10-Q

QUARTERLY REPORT

INDEX

PART I. FINANCIAL INFORMATION		3

ITEM 1.	Condensed Consolidated Financial Statements – Unaudited	3

	Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020	3

	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2021 and 2020	4

	Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2021 and 2020	5

	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020	6

	Notes to Condensed Consolidated Financial Statements	7

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

ITEM 3	Quantitative and Qualitative Disclosures about Market Risk	23

ITEM 4.	Controls and Procedures	23

PART II. OTHER INFORMATION		25

ITEM 1.	Legal Proceedings	25

ITEM 1A.	Risk Factors	25

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39

ITEM 3.	Defaults upon Senior Securities	39

ITEM 4.	Mine Safety Disclosures	39

ITEM 5.	Other Information	39

ITEM 6.	Exhibits	40

SIGNATURES		41

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

ATOSSA THERAPEUTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


	*As of September 30, 2021*			*As of December 31,*
Assets	*(Unaudited)*			*2020*
Current assets
Cash and cash equivalents	$	140,040,955		$	39,553,671
Restricted cash		110,000			110,000
Prepaid expenses		1,883,197			1,813,902
Research and development tax rebate receivable		934,672			634,940
Other current assets		18,060			657,662
Total current assets		142,986,884			42,770,175

Furniture and equipment, net		22,138			20,632
Intangible assets, net		-			13,375
Right-of-use asset		1,217			18,053
Other assets		13,408			17,218
Total Assets	$	143,023,647		$	42,839,453

Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	667,988		$	1,588,613
Accrued expenses		75,695			93,367
Payroll liabilities		912,670			963,665
Common stock warrant liability		-			13,003,075
Lease liability		1,217			18,053
Other current liabilities		18,251			4,748
Total current liabilities		1,675,821			15,671,521

Total Liabilities		1,675,821			15,671,521

Commitments and contingencies (Note 13)

Stockholders' equity
Preferred stock - $0.001 par value; 10,000,000 shares authorized; 584 and 621 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		1			1
Additional paid-in capital - Series B convertible preferred stock		583,999			620,999
Common stock - $0.18 par value; 175,000,000 shares authorized; 126,623,541 and 47,548,835 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		22,792,225			8,558,778
Additional paid-in capital		242,373,694			129,887,146
Accumulated deficit		(124,402,093	)		(111,898,992	)
Total Stockholders' Equity		141,347,826			27,167,932
Total Liabilities and Stockholders' Equity	$	143,023,647		$	42,839,453

The accompanying notes are an integral part of these condensed consolidated financial statements.

ATOSSA THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	*For the Three Months Ended September 30,*						*For the Nine Months Ended September 30,*

	*2021*			*2020*			*2021*			*2020*
Operating expenses
Research and development	$	2,206,158		$	1,659,075		$	7,383,281		$	4,250,934
General and administrative		2,952,436			1,849,741			8,309,807			6,130,698
Total operating expenses		5,158,594			3,508,816			15,693,088			10,381,632
Operating loss		(5,158,594	)		(3,508,816	)		(15,693,088	)		(10,381,632	)
Other income (expense), net		(38,551	)		17,745			(81,374	)		36,999
Loss before income taxes		(5,197,145	)		(3,491,071	)		(15,774,462	)		(10,344,633	)
Income taxes		-			-			-			-
Net loss	$	(5,197,145	)	$	(3,491,071	)	$	(15,774,462	)	$	(10,344,633	)
Loss per common share - basic and diluted	$	(0.04	)	$	(0.34	)	$	(0.14	)	$	(1.09	)
Weighted average shares outstanding - basic and diluted		126,537,544			10,162,770			113,689,961			9,496,222

The accompanying notes are an integral part of these condensed consolidated financial statements.

ATOSSA THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

	*Series B Convertible Preferred Stock*								*Common Stock*
						*Additional*									*Additional*						*Total*
	*Shares*			*Amount*		*Paid-in Capital*			*Shares*			*Amount*			*Paid-in Capital*			*Accumulated Deficit*			*Stockholders' Equity*
Balance at December 31, 2019		671		$	1	$	670,999			9,130,984		$	1,643,565		$	104,912,480		$	(94,071,040	)	$	13,156,005
Compensation cost for stock options granted		-			-		-			-			-			687,752			-			687,752
Net loss		-			-		-			-			-			-			(2,947,420	)		(2,947,420	)
Balance at March 31, 2020		671		$	1	$	670,999			9,130,984		$	1,643,565		$	105,600,232		$	(97,018,460	)	$	10,896,337
Issuance of common stock, net of issuance costs of $178,544		-			-		-			160,108			28,820			318,807			-			347,627
Conversion of Series B convertible preferred stock to common stock		(45	)		-		(45,000	)		12,786			2,301			42,699			-			-
Compensation cost for stock options granted		-			-		-			-			-			1,036,484			-			1,036,484
Net loss		-			-		-			-			-			-			(3,906,142	)		(3,906,142	)
Balance at June 30, 2020		626		$	1	$	625,999			9,303,878		$	1,674,686		$	106,998,222		$	(100,924,602	)	$	8,374,306
Issuance of common stock, net of issuance costs of $133,157		-			-		-			1,083,531			195,036			4,143,635			-			4,338,671
Conversion of Series B convertible preferred stock to common stock		(3	)		-		(3,000	)		853			154			2,846			-			-
Common stock issued for option exercises		-			-		-			225,000			40,500			500,600			-			541,100
Shares withheld related to cashless exercise of options and taxes		-			-		-			(149,012	)		(26,823	)		(528,699	)		-			(555,522	)
Compensation cost for stock options granted		-			-		-			-			-			663,593			-			663,593
Net loss		-			-		-			-			-			-			(3,491,071	)		(3,491,071	)
Balance at September 30, 2020		623		$	1	$	622,999			10,464,250		$	1,883,553		$	111,780,197		$	(104,415,673	)	$	9,871,077

	*Series B Convertible Preferred Stock*								*Common Stock*
						*Additional*									*Additional*						*Total*
	*Shares*			*Amount*		*Paid-in Capital*			*Shares*			*Amount*			*Paid-in Capital*			*Accumulated Deficit*			*Stockholders' Equity*
Balance at December 31, 2020		621		$	1	$	620,999			47,548,835		$	8,558,778		$	129,887,146		$	(111,898,992	)	$	27,167,932
Cumulative effect of adopted accounting standard		-			-		-			-			-			9,731,714			3,271,361			13,003,075
Issuance of common stock and warrants, net of issuance costs of $5,493,310		-			-		-			41,211,100			7,417,998			62,250,410			-			69,668,408
Issuance of common stock upon warrant exercise		-			-		-			32,064,148			5,771,547			26,988,755			-			32,760,302
Conversion of Series B convertible preferred stock to common stock		(1	)		-		(1,000	)		285			51			949			-			-
Compensation cost for stock options granted		-			-		-			-			-			639,751			-			639,751
Net loss		-			-		-			-			-			-			(3,538,069	)		(3,538,069	)
Balance at March 31, 2021		620		$	1	$	619,999			120,824,368		$	21,748,374		$	229,498,725		$	(112,165,700	)	$	139,701,399
Issuance of common stock upon warrant exercise		-			-		-			5,091,351			916,443			9,279,198			-			10,195,641
Conversion of Series B convertible preferred stock to common stock		(33	)		-		(33,000	)		9,377			1,688			31,312			-			-
Compensation cost for stock options granted		-			-		-			-			-			1,214,110			-			1,214,110
Net loss		-			-		-			-			-			-			(7,039,248	)		(7,039,248	)
Balance at June 30, 2021		587		$	1	$	586,999			125,925,096		$	22,666,505		$	240,023,345		$	(119,204,948	)	$	144,071,902
Issuance of common stock upon warrant exercise		-			-		-			296,010			53,282			809,184			-			862,466
Conversion of Series B convertible preferred stock to common stock		(3	)		-		(3,000	)		854			154			2,846			-			-
Common stock issued for option exercise		-			-		-			699,410			125,894			1,596,679			-			1,722,573
Shares withheld related to cashless exercise of options and taxes		-			-		-			(297,829	)		(53,610	)		(1,852,498	)		-			(1,906,108	)
Compensation cost for stock options granted		-			-		-			-			-			1,794,138			-			1,794,138
Net loss		-			-		-			-			-			-			(5,197,145	)		(5,197,145	)
Balance at September 30, 2021		584		$	1	$	583,999			126,623,541		$	22,792,225		$	242,373,694		$	(124,402,093	)	$	141,347,826

The accompanying notes are an integral part of these condensed consolidated financial statements.

ATOSSA THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	*For the Nine Months Ended September 30,*
	*2021*			*2020*
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(15,774,462	)	$	(10,344,633	)
Adjustments to reconcile net loss to net cash used in operating activities
Compensation cost for stock options granted		3,647,999			2,387,829
Disposal of assets		-			4,149
Depreciation and amortization		21,265			37,265
Changes in operating assets and liabilities:
Prepaid expenses		(69,295	)		(621,907	)
Research and development tax rebate receivable		(299,732	)		300,451
Other assets		643,412			(152,781	)
Accounts payable		(920,625

SEC Form 10-Q filed by Atossa Therapeutics, Inc.