atos20230630

atos20230630_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 June 30, 2023

☐	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) 588-0256

Former name, former address and former fiscal year, if changed since last report: N/A

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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “a 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 as of August 10, 2023, was 125,785,200.

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ATOSSA THERAPEUTICS, INC.
QUARTERLY REPORT

FORM 10-Q

INDEX



PART I. FINANCIAL INFORMATION


ITEM 1.	Condensed Consolidated Financial Statements – Unaudited	3

	Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022	3

	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023 and 2022	4

	Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2023 and 2022	5

	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022	6

	Notes to Condensed Consolidated Financial Statements	7

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16

ITEM 3	Quantitative and Qualitative Disclosures about Market Risk	24

ITEM 4.	Controls and Procedures	24

PART II. OTHER INFORMATION

ITEM 1.	Legal Proceedings	25

ITEM 1A.	Risk Factors	25

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41

ITEM 3.	Defaults upon Senior Securities	41

ITEM 4.	Mine Safety Disclosures	41

ITEM 5.	Other Information	41

ITEM 6.	Exhibits	42

SIGNATURES		43

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PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

ATOSSA THERAPEUTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except for par value)

(Unaudited)


	*As of June 30,*			*As of December 31,*
	*2023*			*2022*
Assets
Current assets
Cash and cash equivalents	$	99,390		$	110,890
Restricted cash		110			110
Prepaid expenses		5,759			4,031
Research and development rebate receivable		737			743
Other current assets		7			2,423
Total current assets		106,003			118,197

Investment in equity securities		1,710			4,700
Other assets		642			635
Total Assets	$	108,355		$	123,532

Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	1,174		$	2,965
Accrued expenses		803			1,059
Payroll liabilities		1,455			1,525
Other current liabilities		46			19
Total current liabilities		3,478			5,568

Total Liabilities		3,478			5,568

Commitments and contingencies (Note 15)

Stockholders' equity
Series B convertible preferred stock - $0.001 par value; 10,000 shares authorized; 1 share issued and outstanding as of June 30, 2023 and December 31, 2022		-			-
Additional paid-in capital - Series B convertible preferred stock		582			582
Common stock - $0.18 par value; 175,000 shares authorized; 126,505 and 126,624 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively		22,792			22,792
Additional paid-in capital - common stock		253,960			250,784
Treasury stock, at cost; 119 and 0 shares of common stock at June 30, 2023 and December 31, 2022, respectively		(152	)		-
Accumulated deficit		(172,305	)		(156,194	)

Total Stockholders' Equity		104,877			117,964
Total Liabilities and Stockholders' Equity	$	108,355		$	123,532

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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ATOSSA THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands, except for per share amounts)

(Unaudited)

	*For the Three Months Ended June 30,*						*For the Six Months Ended June 30,*
	*2023*			*2022*			*2023*			*2022*

Operating expenses
Research and development	$	3,705		$	3,433		$	7,213		$	4,937
General and administrative		4,088			3,162			7,678			6,411
Total operating expenses		7,793			6,595			14,891			11,348
Operating loss		(7,793	)		(6,595	)		(14,891	)		(11,348	)
Impairment charge on investment in equity securities		(2,990	)		-			(2,990	)		-
Interest income		983			11			1,833			13
Other expense, net		(30	)		(88	)		(63	)		(122	)
Loss before income taxes		(9,830	)		(6,672	)		(16,111	)		(11,457	)
Income taxes		-			-			-			-
Net loss		(9,830	)		(6,672	)		(16,111	)		(11,457	)
Loss per share of common stock - basic and diluted	$	(0.08	)	$	(0.05	)	$	(0.13	)	$	(0.09	)
Weighted average shares outstanding - basic and diluted		126,623			126,624			126,623			126,624

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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ATOSSA THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(amounts in thousands)

(Unaudited)

	*Series B Convertible Preferred Stock*						*Common Stock*						*Treasury Stock*
					*Additional*						*Additional*							*Total*
	*Shares*		*Amount*		*Paid-in Capital*		*Shares*		*Amount*		*Paid-in Capital*		*Amount*		*Accumulated Deficit*			*Stockholders' Equity*
Balance at December 31, 2021		1	$	-	$	582		126,624	$	22,792	$	243,996	$	-	$	(129,234	)	$	138,136
Compensation cost for stock options granted		-		-		-		-		-		1,806		-		-			1,806
Net loss		-		-		-		-		-		-		-		(4,785	)		(4,785	)
Balance at March 31, 2022		1	$	-	$	582		126,624	$	22,792	$	245,802	$	-	$	(134,019	)	$	135,157
Compensation cost for stock options granted		-		-		-		-		-		1,771		-		-			1,771
Net loss		-		-		-		-		-		-		-		(6,672	)		(6,672	)
Balance at June 30, 2022		1	$	-	$	582		126,624	$	22,792	$	247,573	$	-	$	(140,691	)	$	130,256

	Series B Convertible Preferred Stock						Common Stock							Treasury Stock
					Additional							Additional								Total
	Shares		Amount		Paid-in Capital		Shares			Amount		Paid-in Capital		Amount			Accumulated Deficit			Stockholders' Equity
Balance at December 31, 2022		1	$	-	$	582		126,624		$	22,792	$	250,784	$	-		$	(156,194	)	$	117,964
Compensation cost for stock options granted		-		-		-		-			-		1,573		-			-			1,573
Net loss		-		-		-		-			-		-		-			(6,281	)		(6,281	)
Balance at March 31, 2023		1	$	-	$	582		126,624		$	22,792	$	252,357	$	-		$	(162,475	)	$	113,256
Common stock repurchased		-		-		-		(119	)		-		-		(152	)		-			(152	)
Compensation cost for stock options granted		-		-		-		-			-		1,603		-			-			1,603
Net loss		-		-		-		-			-		-		-			(9,830	)		(9,830	)
Balance at June 30, 2023		1	$	-	$	582		126,505		$	22,792	$	253,960	$	(152	)	$	(172,305	)	$	104,877

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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ATOSSA THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands)

(Unaudited)

	*For the Six Months Ended June 30,*
	*2023*			*2022*
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(16,111	)	$	(11,457	)
Adjustments to reconcile net loss to net cash used in operating activities
Compensation cost for stock options granted		3,176			3,577
Depreciation and amortization		6			4
Impairment charge on investment in equity securities		2,990			-
Disposal of assets		-			1
Changes in operating assets and liabilities:
Prepaid expenses		(1,728	)		(2,816	)
Research and development rebate receivable		6			172
Other current assets		2,416			(377	)
Other assets		-			(597	)
Accounts payable		(1,943	)		335
Accrued expenses		(256	)		630
Payroll liabilities		(70	)		(309	)
Other current liabilities		27			10
Net cash used in operating activities		(11,487	)		(10,827	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of furniture and equipment		(13	)		(13	)
Net cash used in investing activities		(13	)		(13	)

CASH FLOWS FROM FINANCING ACTIVITIES
Net cash used in financing activities		-			-

NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		(11,500	)		(10,840	)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING BALANCE		111,000			136,487
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, ENDING BALANCE	$	99,500		$	125,647

SUPPLEMENTAL DISCLOSURES
Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents	$	99,390		$	125,537
Restricted cash		110			110
Total cash, cash equivalents and restricted cash shown in the Condensed Consolidated Statements of Cash Flows	$	99,500		$	125,647

NONCASH INVESTING AND FINANCING ACTIVITIES
Unsettled trades for repurchase of common stock	$	152		$	-

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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ATOSSA THERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(amounts in thousands, except for per share amounts)

NOTE 1: NATURE OF OPERATIONS

Atossa Therapeutics, Inc. (the Company) was incorporated on April 30, 2009, in the State of Delaware to develop and market medical devices, laboratory tests and therapeutics to address breast health conditions. The Company is focused on developing proprietary innovative medicines in areas of significant unmet medical need in oncology, with a current focus on breast cancer and other breast conditions. The Company's fiscal year ends on December 31.

NOTE 2: LIQUIDITY AND CAPITAL RESOURCES

The Company has incurred net losses and negative operating cash flows since inception. For the six months ended June 30, 2023, the Company recorded a net loss of $16,111 and used $11,487 of cash in operating activities. As of June 30, 2023, the Company had $99,390 in unrestricted cash and cash equivalents and working capital of $102,525. The Company has not yet established an ongoing source of revenue sufficient to cover its operating costs, and it believes it will need to continue to raise substantial additional capital to accomplish its business plan over the next several years. Management believes its currently available cash and cash equivalents will be sufficient to finance the Company’s operations for at least one year from the date these Condensed Consolidated Financial Statements are issued. The Company plans to continue to fund its losses from operations and capital funding needs through a combination of public or private equity offerings, debt financings or other sources, including potential corporate collaborations, licenses and other similar arrangements. There can be no assurance as to the availability or terms upon which such financing and capital might be available in the future. If the Company is unable to secure additional funding, it may be forced to curtail or suspend its business plans.

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NOTE 3: SUMMARY OF ACCOUNTING POLICIES

Basis of Presentation

The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They do not include all information and notes required by GAAP for complete financial statements. However, except as disclosed herein, there has been no material changes in the information disclosed in the Notes to Consolidated Financial Statements included in the Annual Report on Form 10-K of the Company for the year ended December 31, 2022. The year-end Condensed Consolidated Balance Sheet presented in this report was derived from audited consolidated financial statements but does not include all disclosures required by GAAP. All amounts in the Condensed Consolidated Financial Statements and the notes thereto have been presented in thousands, except for par value and other per share data.

In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included and have been prepared on the same basis as the annual consolidated financial statements. Operating results for the six months ended June 30, 2023, are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

Reclassification

Interest income has been reclassified from prior period amounts to conform to the current year presentation.

Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

Segments

The Company operates as a single segment. Operating segments are identified as the components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision maker in making decisions regarding resource allocation and in assessing performance. To date, our chief operating decision maker has made such decisions and assessed performance at the Company-level as a single segment.

Cash and Cash Equivalents

Cash and cash equivalents include unrestricted cash and all highly liquid instruments with maturities of three months or less at the date of purchase.

Investments in Equity Securities

The Company currently has one investment in non-marketable securities. This investment does not have a readily determinable fair value, so the Company has elected to measure the investment at cost in accordance with Accounting Standards Codification ASC 321 – Equity. At each reporting period, the Company will perform an assessment to determine if it still qualifies for this measurement alternative. The Company considers qualitative impairment factors in determining if there are any signs of impairment.

Once a decline in fair value is determined, an impairment charge is recorded to Impairment charge on investment in equity securities in the Condensed Consolidated Statement of Operations and a new basis in the investment is established. If market, industry, and/or investee conditions deteriorate, we may incur future impairments. Refer to Note 4.

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Fair Value Measurements

The Company records financial assets and liabilities measured on a recurring and non-recurring basis, as well as all non-financial assets and liabilities subject to fair value measurement at the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

The accounting guidance establishes a hierarchy for inputs used in measuring fair value that minimizes the use of unobservable inputs by requiring the use of observable market data when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on active market data. Unobservable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances.

The fair value hierarchy is broken down into the three input levels summarized below:

● Level 1 —Valuations are based on quoted prices in active markets for identical assets or liabilities and readily accessible by us at the reporting date.

● Level 2 —Valuations based on inputs other than the quoted prices in active markets that are observable either directly or indirectly in active markets.

● Level 3 —Valuations based on unobservable inputs in which there are little or no market data, which require the Company to develop its own assumptions.

The carrying amounts reflected in the accompanying Condensed Consolidated Balance Sheets for cash and cash equivalents, restricted cash, prepaid expenses, research and development rebate receivable, other current assets, accounts payable, accrued expenses, payroll liabilities and other current liabilities approximate their fair values due to their short-term nature. Refer to Note 10.

Research and Development

Research and development (R&D) costs are generally expensed as incurred. R&D expenses include, for example, manufacturing expenses for the Company's drugs under development, expenses associated with preclinical studies, clinical trials and associated salaries, bonuses, stock-based compensation and benefits. The Company has entered into various research and development contracts with research institutions, clinical research organizations (CROs), clinical manufacturing organizations (CMOs) and other companies. Payments for these activities are based on the terms of the individual agreements, which may differ from the timing of costs incurred, and payments made in advance of performance are reflected in the Condensed Consolidated Balance Sheets as prepaid expenses. The Company records accruals for estimated costs incurred for ongoing research and development activities as reflected in the Condensed Consolidated Balance Sheets as accrued expenses. When evaluating the adequacy of the accrued expenses, the Company analyzes progress of the services, including the phase or completion of events, invoices received and contracted costs. Significant judgments and estimates may be used in determining the prepaid expense or accrued expense balances at the end of any reporting period. Actual results could differ from the Company’s estimates.

R&D expenses also include an allocation of the CEO's salary and related benefits, including bonus and non-cash stock-based compensation expense, based on an estimate of his total hours spent on R&D activities. The Company's CEO is involved in the development of the Company's drug candidates and oversight of the related clinical trial activity.

Stock-based Payments

The Company measures and recognizes compensation expense for all stock-based payment awards made to employees, officers, non-employee directors, and other key persons providing services to the Company, currently limited to stock options. Stock compensation expense is based on the estimated grant date fair value and is recognized as an expense over the requisite service period. The Company has made a policy election to recognize forfeitures when they occur.

The fair value of each stock option grant is estimated using the Black-Scholes option-pricing model, which requires assumptions regarding the expected volatility of the stock options, the expected life of the options, an expectation regarding future dividends on the Company’s common stock, and an estimate of the appropriate risk-free interest rate. The Company’s expected common stock price volatility assumption is based upon the historical volatility of its stock price. The Company has elected the simplified method for the expected life assumption for stock option grants, which averages the contractual term of the options of 10 years with the vesting term, typically one to four years, as the Company does not have sufficient history of option exercise experience. The dividend yield assumption of zero is based upon the fact that the Company has never paid cash dividends and presently has no intention of paying cash dividends in the future. The risk-free interest rate used for each grant was based upon prevailing short-term interest rates over the expected life of the options as of the grant date.

Foreign Currency Translation and Transactions

The majority of the Company's operations occur in entities that have the U.S. dollar as their functional currency. Subsidiary assets and liabilities translated into U.S. dollars at rates of exchange in effect at the end of the period. Expense amounts are translated using the average exchange rates for the period.

NOTE 4: INVESTMENT IN EQUITY SECURITIES

On December 23, 2022, the Company completed its investment in Dynamic Cell Therapies, Inc. (DCT) a U.S. private company that is in the pre-clinical stage of developing novel Chimeric Antigen Receptor (CAR) T-cell therapies based on technology licensed from a leading U.S. cancer treatment and research institution. In total, the Company paid $4,700 to DCT and received Series Seed Preferred Shares representing approximately 19% of the post-investment outstanding shares of DCT. The investment in DCT does not have readily determinable fair value and has been accounted for as an investment in equity securities on the Condensed Consolidated Balance Sheets at cost less impairment.

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The Company considered qualitative impairment factors in determining if there were any signs of impairment of this investment on the balance sheet dates. Specifically, the Company considered the additional adverse changes in the general market condition of the industry in which DCT operates and continued concerns about the investee’s ability to continue as a going concern, due to negative cash flows from operations during the three and six months ended June 30, 2023. Based on these impairment indicators, the Company performed a quantitative fair value measurement as of June 30, 2023. The impairment of the Company's investment in equity securities required the estimation of fair value using unobservable inputs (a level 3 fair value estimate). The Company used the dynamic options approach, which requires assumptions regarding the expected average volatility of comparable companies, the expected term of our investment, and an estimation of an appropriate risk-free interest rate over the term of our investment. The expected stock price volatility assumption is based upon the average historic volatility of comparable public clinical stage immunotherapy or CAR-T companies. The expected term of our investment is 3.5 years and the risk-free interest rate used is based upon prevailing short-term interest rates over the expected term of the investment. The dynamic options approach was weighted at a 50% outcome probability. An adjusted book value approach was also considered and also weighted at a 50% probability due to DCT's limited cash on hand, status of current fundraising efforts and the estimated timing of a deemed liquidation event occurring as of June 30, 2023. The resulting quantitative valuation concluded that the investment was impaired, accordingly, an impairment charge of $2,990 was recorded in the Condensed Consolidated Statements of Operations as of June 30, 2023.

The following table summaries the changes in the Company's Level 3 fair value estimate Investment in equity securities for the three and six months ended June 30, 2023:

Investment in equity securities:
Beginning balance January 1, 2023	$	4,700
Impairment charge on investment in equity securities		(2,990	)
Ending balance June 30, 2023	$	1,710

NOTE 5: RESTRICTED CASH

The Company's restricted cash balance of $110 as of June 30, 2023 and December 31, 2022, consisted entirely of cash pledged as security for the Company’s issued commercial credit cards.

NOTE 6: PREPAID EXPENSES

Prepaid expenses consisted of the following:

	*As of June 30,*		*As of December 31,*
	*2023*		*2022*
Prepaid research and development	$	4,918	$	3,480
Prepaid insurance		509		387
Professional services		191		130
Other		141		34
Total prepaid expenses	$	5,759	$	4,031

NOTE 7: RESEARCH AND DEVELOPMENT REBATE RECEIVABLE

On May 23, 2017, the Company formed a wholly owned subsidiary in Australia called Atossa Genetics AUS Pty Ltd. The purpose of this subsidiary is to perform R&D activities, including some of the Company's clinical trials. Australia offers an R&D cash rebate of $0.435 per dollar spent on qualified R&D activities incurred in the country. For entities with over 80% of revenue from passive sources, the rate increases to $0.485 per dollar. The Australian R&D tax incentive program is a self-assessment process, and as such, the Australian Government has the right to review the Company’s program and related expenditures for a period of four years. If such a review were to occur, and as a result of the review and failure of a related appeal, a qualified program and related expenditures could be disqualified, and the respective R&D rebates of $2,028 collected could be recalled with penalties and interest. The Company uses the grant accounting model by analogy to International Accounting Standards (IAS) 20 to account for the cash rebates received from the Australian government.

During the three and six months ended June 30, 2023, the Company incurred qualified R&D expenses in Australia of $34 and $86, respectively. Qualified R&D expenses incurred by the Company were $607 and $930 during the three and six months ended June 30, 2022, respectively. There were no collections of R&D cash rebates during the six months ended June 30, 2023. The Company collected R&D cash rebates of $629 during the six months ended June 30, 2022. At June 30, 2023 and December 31, 2022, the Company had total R&D rebate receivables of $737 and $743, respectively. The Company records the R&D rebate credit in the period in which it incurs the associated R&D cost. As such, the rebate reduced the Research and development expense line item in the Condensed Consolidated Statements of Operations by $10 and $37 for the three and six months ended June 30, 2023, respectively, and $264 and $404 for the same periods in 2022, respectively.

NOTE 8: ACCRUED EXPENSES

Accrued expenses consisted of the following:

	*As of June 30,*		*As of December 31,*
	*2023*		*2022*
Research and development	$	559	$	1,038
Professional Services		244		21
Total accrued liabilities	$	803	$	1,059

NOTE 9: PAYROLL LIABILITIES

Payroll liabilities consisted of the following:

	*As of June 30,*		*As of December 31,*
	*2023*		*2022*
Accrued bonuses	$	507	$	1,060
Accrued vacation		232		224
Accrued payroll		716		241
Total payroll liabilities	$	1,455	$	1,525

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NOTE 10: FAIR VALUE OF FINANCIAL INSTRUMENTS

The following tables present the Company’s fair value hierarchy for all of its financial assets and liabilities, by major security type, measured at fair value on a recurring basis:

June 30, 2023	Estimated Fair Value		Level 1		Level 2		Level 3

Assets:
Money market account	$	97,182	$	97,182	$	-	$	-

December 31, 2022	Estimated Fair Value		Level 1		Level 2		Level 3
Assets:
Money market account	$	102,681	$	102,681	$	-	$	-

There were no transfers between Level 1 and Level 3 for the three and six months ended June 30, 2023. The Company did not have any financial liabilities subject to fair value measurements on a recurring basis as of June 30, 2023 and December 31, 2022.

NOTE 11: STOCKHOLDERS’ EQUITY

Common Stock

The Company is authorized to issue a total of 185,000 shares of stock, consisting of 175,000 shares of common stock, par value $0.18 per share, and 10,000 shares of preferred stock, par value $0.001 per share.

On May 19, 2014, the Company adopted a stockholder rights agreement, pursuant to which all stockholders of record on May 26, 2014 received a non-taxable distribution of one preferred stock purchase right for each share of the Company’s common stock held by such stockholder. Each right is attached to and trades with the associated share of common stock. The rights will become exercisable only if one of the following occurs: (1) a person becomes an “Acquiring Person” by acquiring beneficial ownership of 15% or more of the Company’s common stock (or, in the case of a person who beneficially owned 15% or more of the Company’s common stock on the date the stockholder rights agreement was executed, by acquiring beneficial ownership of additional shares representing 2.0% of the Company’s common stock then outstanding (excluding compensatory arrangements)), or (2) a person commences a tender offer that, if consummated, would result in such person becoming an Acquiring Person. If a person becomes an Acquiring Person, each right will entitle the holder, other than the Acquiring Person and certain related parties, to purchase a number of shares of the Company’s common stock with a market value that equals twice the exercise price of the right. The initial exercise price of each right is $15.00, so each holder (other than the Acquiring Person and certain related parties) exercising a right would be entitled to receive $30.00 worth of the Company’s common stock. If the Company is acquired in a merger or similar business combination transaction at any time after a person has become an Acquiring Person, each holder of a right (other than the Acquiring Person and certain related parties) will be entitled to purchase a similar amount of stock of the acquiring entity.

Share Repurchases

On June 27, 2023, the Board of Directors (the Board) authorized a program to repurchase common stock, par value $0.18 per share, up to an aggregate market value of $10,000. The share repurchase program expires on December 31, 2023, but the Board may suspend, modify, or terminate the share repurchase program at any time. As of June 30, 2023, 119 shares were purchased for a cost of $152. Although the trade was not settled as of June 30, 2023, risk, benefits, and economic rewards of the purchased shares were conveyed at the trade date. The repurchased

SEC Form 10-Q filed by Atossa Therapeutics Inc.