Atossa Therapeutics第二季虧損850萬美元 現金不足恐難持續經營

10-Q
 
 
 
 12-310001488039Q2false0.067one 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

 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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, 2026
OR

 
 
 
 
 

 
 ☐

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

 

 For the transition period from XXXXXXXX XX, XXXX to XXXXXXXX XX, XXXX
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
incorporation or organization)

 (I.R.S. Employer
Identification No.)

 

 
 1448 NW Market Street, Suite 500
Seattle, WA 

  
98107

 

 
 (Address of principal executive offices)

 (Zip Code)

 

 Registrant’s telephone number, including area code: (206) 588-0256
 
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 (§232.405 of this chapter) 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 ☒
As of July 31, 2026, the registrant had 9,979,298 shares of common stock, $0.18 par value per share, outstanding.
 
 

 

  

 
 

 ATOSSA THERAPEUTICS, INC.
QUARTERLY REPORT
FORM 10-Q
 
TABLE OF CONTENTS
 

 
 
 
 
 
 

 
 

 

 Page

 

 
 

 

 

 

 
 PART I.

 FINANCIAL INFORMATION

 3 

 

 
 

 

 

 

 
 Item 1.

 Condensed Consolidated Financial Statements - Unaudited

 3

 

 
 

 Condensed Consolidated Balance Sheets

 3

 

 
 

 Condensed Consolidated Statements of Operations

 4

 

 
 

 Condensed Consolidated Statements of Stockholders' Equity

 5

 

 
 

 Condensed Consolidated Statements of Cash Flows

 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

 25

 

 
 Item 4.

 Controls and Procedures

 25

 

 
 

 

 

 

 
 PART II.

 OTHER INFORMATION

 27 

 

 
 

 

 

 

 
 Item 1.

 Legal Proceedings

 27

 

 
 Item 1A.

 Risk Factors

 27

 

 
 Item 2.

 Unregistered Sales of Equity Securities and Use of Proceeds

 49

 

 
 Item 3.

 Defaults Upon Senior Securities

 49

 

 
 Item 4.

 Mine Safety Disclosures

 49

 

 
 Item 5.

 Other Information

 49

 

 
 Item 6.

 Exhibits

 50

 

 
 Signatures

 51

 

  

 2

 
 

 PART I—FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
 
ATOSSA THERAPEUTICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share and per share data)
(Unaudited)
 

 
 
 
 
 
 
 
 
 
 
 
 

 
 

  

  

  

  

  

  

 

 
 

  

 June 30, 2026

  

  

 December 31, 2025

  

 

 
 Assets

  

  

  

  

  

  

 

 
 Current assets

  

  

  

  

  

  

 

 
 Cash and cash equivalents

  

 $

 26,094

  

  

 $

 41,299

  

 

 
 Restricted cash

  

  

 110

  

  

  

 110

  

 

 
 Prepaid materials

  

  

 3,013

  

  

  

 3,081

  

 

 
 Prepaid expenses and other current assets

  

  

 1,793

  

  

  

 1,128

  

 

 
 Total current assets

  

  

 31,010

  

  

  

 45,618

  

 

 
 Other assets

  

  

 1,271

  

  

  

 1,990

  

 

 
 Total assets

  

 $

 32,281

  

  

 $

 47,608

  

 

 
 Liabilities and stockholders' equity

  

  

  

  

  

  

 

 
 Current liabilities

  

  

  

  

  

  

 

 
 Accounts payable

  

 $

 1,976

  

  

 $

 4,293

  

 

 
 Accrued expenses

  

  

 1,380

  

  

  

 1,307

  

 

 
 Payroll liabilities

  

  

 972

  

  

  

 1,558

  

 

 
 Other current liabilities

  

  

 1,123

  

  

  

 1,097

  

 

 
 Total current liabilities

  

  

 5,451

  

  

  

 8,255

  

 

 
 Total liabilities

  

  

 5,451

  

  

  

 8,255

  

 

 
 Commitments and contingencies (Note 12)

  

  

 —

  

  

  

 —

  

 

 
 Stockholders' equity

  

  

  

  

  

  

 

 
 Convertible preferred stock - $0.001 par value; 10,000,000 shares authorized; 577 shares issued and outstanding as of June 30, 2026 and December 31, 2025

  

  

 —

  

  

  

 —

  

 

 
 Common stock - $0.18 par value; 350,000,000 shares authorized; 9,979,298 and 
   8,611,361 shares issued and outstanding as of June 30, 2026 and December 31, 
   2025, respectively

  

  

 1,796

  

  

  

 1,550

  

 

 
 Additional paid-in capital

  

  

 291,151

  

  

  

 285,840

  

 

 
 Treasury stock, at cost; 88,003 shares of common stock at June 30, 2026 and 
   December 31, 2025

  

  

 (1,475

 )

  

  

 (1,475

 )

 

 
 Accumulated deficit

  

  

 (264,642

 )

  

  

 (246,562

 )

 

 
 Total stockholders' equity

  

  

 26,830

  

  

  

 39,353

  

 

 
 Total liabilities and stockholders' equity

  

 $

 32,281

  

  

 $

 47,608

  

 

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

 3

 
 

 ATOSSA THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 
(amounts in thousands, except share and per share data)
(Unaudited)
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 

  

 For the Three Months Ended June 30,

  

  

  

 For the Six Months Ended June 30,

  

 

 
 

  

 2026

  

  

 2025

  

  

  

 2026

  

  

 2025

  

 

 
 Operating expenses

  

  

  

  

  

  

  

  

  

  

  

  

  

 

 
 Research and development

  

 $

 4,897

  

  

 $

 5,502

  

  

  

 $

 9,676

  

  

 $

 9,659

  

 

 
 General and administrative

  

  

 3,797

  

  

  

 3,538

  

  

  

  

 8,888

  

  

  

 6,795

  

 

 
 Total operating expenses

  

  

 8,694

  

  

  

 9,040

  

  

  

  

 18,564

  

  

  

 16,454

  

 

 
 Operating loss

  

  

 (8,694

 )

  

  

 (9,040

 )

  

  

  

 (18,564

 )

  

  

 (16,454

 )

 

 
 Interest income

  

  

 227

  

  

  

 645

  

  

  

  

 536

  

  

  

 1,365

  

 

 
 Other expense, net

  

  

 (24

 )

  

  

 (28

 )

  

  

  

 (52

 )

  

  

 (52

 )

 

 
 Loss before income taxes

  

  

 (8,491

 )

  

  

 (8,423

 )

  

  

  

 (18,080

 )

  

  

 (15,141

 )

 

 
 Income tax benefit

  

  

 —

  

  

  

 —

  

  

  

  

 —

  

  

  

 —

  

 

 
 Net loss

  

  

 (8,491

 )

  

  

 (8,423

 )

  

  

  

 (18,080

 )

  

  

 (15,141

 )

 

 
 Net loss per share of common stock - basic and diluted

  

 $

 (0.95

 )

  

 $

 (0.98

 )

  

  

 $

 (2.06

 )

  

 $

 (1.76

 )

 

 
 Weighted average shares outstanding used to compute net loss per share - basic and diluted

  

  

 8,908,511

  

  

  

 8,622,289

  

  

  

  

 8,766,191

  

  

  

 8,622,289

  

 

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

 4

 
 

 ATOSSA THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(amounts in thousands, except share data)
(Unaudited)
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

 

 
 

  

 Convertible Preferred Stock

  

  

 Common Stock

  

  

 Additional

  

  

 Treasury Stock

  

  

 Accumulated

  

  

 Total Stockholders'

  

 

 
 

  

 Shares

  

  

 Amount

  

  

 Shares

  

  

 Amount

  

  

 Paid-in Capital

  

  

 Amount

  

  

 Deficit

  

  

 Equity

  

 

 
 Balance at December 31, 2024

  

  

 582

  

  

 $

 —

  

  

  

 8,611,266

  

  

 $

 1,550

  

  

 $

 283,194

  

  

 $

 (1,475

 )

  

 $

 (211,792

 )

  

 $

 71,477

  

 

 
 Stock-based compensation

  

  

 —

  

  

  

 —

  

  

  

 —

  

  

  

 —

  

  

  

 563

  

  

  

 —

  

  

  

 —

  

  

  

 563

  

 

 
 Net loss

  

  

 —

  

  

  

 —

  

  

  

 —

  

  

  

 —

  

  

  

 —

  

  

  

 —

  

  

  

 (6,718

 )

  

  

 (6,718

 )

 

 
 Balance at March 31, 2025

  

  

 582

  

  

 $

 —

  

  

  

 8,611,266

  

  

 $

 1,550

  

  

 $

 283,757

  

  

 $

 (1,475

 )

  

 $

 (218,510

 )

  

 $

 65,322

  

 

 
 Issuance of common stock upon Series B preferred stock conversion

  

  

 (5

 )

  

  

 —

  

  

  

 95

  

  

  

 —

  

  

  

 —

  

  

  

 —

  

  

  

 —

  

  

  

 —

  

 

 
 Stock-based compensation

  

  

 —

  

  

  

 —

  

  

  

 —

  

  

  

 —

  

  

  

 796

  

  

  

 —

  

  

  

 —

  

  

  

 796

  

 

 
 Net loss

  

  

 —

  

  

  

 —

  

  

  

 —

  

  

  

 —

  

  

  

 —

  

  

  

 —

  

  

  

 (8,423

 )

  

  

 (8,423

 )

 

 
 Balance at June 30, 2025

  

  

 577

  

  

 $

 —

  

  

  

 8,611,361

  

  

 $

 1,550

  

  

 $

 284,553

  

  

 $

 (1,475

 )

  

 $

 (226,933

 )

  

 $

 57,695

  

 

 
  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

 

 
  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

 

 
 

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

 

 
 

  

 Convertible Preferred Stock

  

  

 Common Stock

  

  

 Additional

  

  

 Treasury Stock

  

  

 Accumulated

  

  

 Total Stockholders'

  

 

 
 

  

 Shares

  

  

 Amount

  

  

 Shares

  

  

 Amount

  

  

 Paid-in Capital

  

  

 Amount

  

  

 Deficit

  

  

 Equity

  

 

 
 Balance at December 31, 2025

  

  

 577

  

  

 $

 —

  

  

  

 8,611,361

  

  

 $

 1,550

  

  

 $

 285,840

  

  

 $

 (1,475

 )

  

 $

 (246,562

 )

  

 $

 39,353

  

 

 
 Stock-based compensation

  

  

 —

  

  

  

 —

  

  

  

 —

  

  

  

 —

  

  

  

 722

  

  

  

 —

  

  

  

 —

  

  

  

 722

  

 

 
 Net loss

  

  

 —

  

  

  

 —

  

  

  

 —

  

  

  

 —

  

  

  

 —

  

  

  

 —

  

  

  

 (9,589

 )

  

  

 (9,589

 )

 

 
 Balance at March 31, 2026

  

  

 577

  

  

 $

 —

  

  

  

 8,611,361

  

  

 $

 1,550

  

  

 $

 286,562

  

  

 $

 (1,475

 )

  

 $

 (256,151

 )

  

 $

 30,486

  

 

 
 Stock-based compensation

  

  

 —

  

  

  

 —

  

  

  

 —

  

  

  

 —

  

  

  

 815

  

  

  

 —

  

  

  

 —

  

  

  

 815

  

 

 
 Issuance of common stock under ATM program, net of issuance costs

  

  

 —

  

  

  

 —

  

  

  

 4,300

  

  

  

 1

  

  

  

 20

  

  

  

 —

  

  

  

 —

  

  

  

 21

  

 

 
 Registered direct offering

  

  

 —

  

  

  

 —

  

  

  

 1,363,637

  

  

  

 245

  

  

  

 4,255

  

  

  

 —

  

  

  

 —

  

  

  

 4,500

  

 

 
 Issuance costs relating to registered direct offering

  

  

 —

  

  

  

 —

  

  

  

 —

  

  

  

 —

  

  

  

 (501

 )

  

  

 —

  

  

  

 —

  

  

  

 (501

 )

 

 
 Net loss

  

  

 —

  

  

  

 —

  

  

  

 —

  

  

  

 —

  

  

  

 —

  

  

  

 —

  

  

  

 (8,491

 )

  

  

 (8,491

 )

 

 
 Balance at June 30, 2026

  

  

 577

  

  

 $

 —

  

  

  

 9,979,298

  

  

 $

 1,796

  

  

 $

 291,151

  

  

 $

 (1,475

 )

  

 $

 (264,642

 )

  

 $

 26,830

  

 

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

 5

 
 

 ATOSSA THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
(Unaudited)
 

 
 
 
 
 
 
 
 
 
 
 
 

 
 

  

 For the Six Months Ended June 30,

  

 

 
 

  

 2026

  

  

 2025

  

 

 
 CASH FLOWS FROM OPERATING ACTIVITIES

  

  

  

  

  

  

 

 
 Net loss

  

 $

 (18,080

 )

  

 $

 (15,141

 )

 

 
 Adjustments to reconcile net loss to net cash used in operating activities

  

  

  

  

  

  

 

 
 Stock-based compensation

  

  

 1,537

  

  

  

 1,359

  

 

 
 Depreciation

  

  

 8

  

  

  

 8

  

 

 
 Changes in operating assets and liabilities:

  

  

  

  

  

  

 

 
 Prepaid materials

  

  

 68

  

  

  

 (1,377

 )

 

 
 Prepaid expenses and other current assets

  

  

 (665

 )

  

  

 90

  

 

 
 Other assets

  

  

 711

  

  

  

 (10

 )

 

 
 Accounts payable

  

  

 (2,317

 )

  

  

 1,331

  

 

 
 Accrued expenses

  

  

 73

  

  

  

 1,281

  

 

 
 Payroll liabilities

  

  

 (586

 )

  

  

 (808

 )

 

 
 Other current liabilities

  

  

 26

  

  

  

 49

  

 

 
 Net cash used in operating activities

  

  

 (19,225

 )

  

  

 (13,218

 )

 

 
 

  

  

  

  

  

  

 

 
 CASH FLOWS FROM INVESTING ACTIVITIES

  

  

  

  

  

  

 

 
 Purchases of property and equipment

  

  

 —

  

  

  

 (9

 )

 

 
 Net cash used in investing activities

  

  

 —

  

  

  

 (9

 )

 

 
 

  

  

  

  

  

  

 

 
 CASH FLOWS FROM FINANCING ACTIVITIES

  

  

  

  

  

  

 

 
 Proceeds from issuance of common stock and warrants

  

  

 4,500

  

  

  

 —

  

 

 
 Offering costs for common stock and warrant issuance

  

  

 (501

 )

  

  

 —

  

 

 
 Proceeds from issuance of common stock under the ATM program, net of issuance costs

  

  

 21

  

  

  

 —

  

 

 
 Net cash provided by financing activities

  

  

 4,020

  

  

  

 —

  

 

 
 

  

  

  

  

  

  

 

 
 NET DECREASE IN CASH, CASH EQUIVALENTS AND
   RESTRICTED CASH

  

  

 (15,205

 )

  

  

 (13,227

 )

 

 
 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING
   BALANCE

  

  

 41,409

  

  

  

 71,194

  

 

 
 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, ENDING
   BALANCE

  

 $

 26,204

  

  

 $

 57,967

  

 

 
 

  

  

  

  

  

  

 

 
 RECONCILIATION OF CASH AND CASH EQUIVALENTS AND 
   RESTRICTED CASH

  

  

  

  

  

  

 

 
 Cash and cash equivalents

  

 $

 26,094

  

  

 $

 57,857

  

 

 
 Restricted cash

  

  

 110

  

  

  

 110

  

 

 
 Total cash, cash equivalents and restricted cash

  

 $

 26,204

  

  

 $

 57,967

  

 

 
 

  

  

  

  

  

  

 

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

 6

 
 

 ATOSSA THERAPEUTICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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 focus on breast cancer and other breast conditions, as well as other rare diseases. 

NOTE 2: GOING CONCERN
The Company's Condensed Consolidated Financial Statements are prepared under the going concern basis of accounting, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has incurred net losses and negative operating cash flows since inception. For the six months ended June 30, 2026, the Company recorded a net loss of $18.1 million and used $19.2 million of cash in operating activities. As of June 30, 2026, the Company had $26.1 million in unrestricted cash and cash equivalents and working capital of $25.6 million. The Company has not yet established an ongoing source of revenue sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. These conditions raise substantial doubt as to the Company's ability to continue as a going concern. The accompanying Condensed Consolidated Financial Statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities should the Company be unable to continue as a going concern.
In June 2026, the Company raised $4.0 million in net proceeds through a registered direct offering of shares of common stock and warrants. Refer to Note 9 to these Condensed Consolidated Financial Statements. Although the Company received this infusion of capital, management maintains that in order to alleviate the conditions that raise substantial doubt, the Company will need, among other things, additional capital resources. Management plans to obtain such resources for the Company include obtaining capital from the sale of its equity securities as well as short-term borrowings from banks, stockholders or other related parties if needed. However, management cannot provide any assurance that the Company will be successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraphs and eventually to secure other sources of financing and attain profitable operations. 

 
 
NOTE 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying Condensed Consolidated Financial Statements have been prepared pursuant to the rules of the Securities and Exchange Commission (the SEC) and 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 have been no material changes in the information disclosed in the Notes to the Consolidated Financial Statements included in the Annual Report on Form 10-K of the Company for the year ended December 31, 2025. The year-end Condensed Consolidated Balance Sheet presented in this report was derived from audited consolidated financial statements but does not include all annual disclosures required by GAAP. 
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 three and six months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026.

Use of 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. Significant estimates and assumptions reflected in these financial statements include stock-based compensation expense, and prepaid or accrued clinical trial balances at the end of any reporting period. Actual results could differ materially from the Company’s estimates. 

 7

 
 

 Reverse Stock Split
On February 2, 2026, the Company effected a 1-for-15 reverse stock split of its issued and outstanding common stock (the Reverse Stock Split). As a result of the Reverse Stock Split, each 15 shares of common stock issued and outstanding immediately prior to February 2, 2026 was automatically converted into one share of common stock. The Reverse Stock Split affected all common stockholders uniformly and did not alter any stockholders' percentage interest in the Company's equity, except to the extent that the Reverse Stock Split would result in a stockholder owning a fractional share. No fractional shares were issued in connection with the Reverse Stock Split. Stockholders who otherwise would be entitled to receive a fractional share instead were entitled to receive cash in lieu of such fractional share.
The Reverse Stock Split did not change the par value of the common stock or the authorized shares of common stock. The shares of common stock retain a par value of $0.18 per share. Accordingly, an amount equal to the par value of the decreased shares resulting from the reverse stock split was reclassified from “Common stock” to “Additional paid-in capital”.
All common stock and per-share amounts in this Form 10-Q have been retroactively restated to reflect the effect of the Reverse Stock Split.

Cash and Cash Equivalents
Cash and cash equivalents include unrestricted cash and all highly liquid instruments with original maturities of three months or less at the date of purchase. Cash equivalents consist primarily of amounts invested in money market accounts.

 Restricted Cash
The Company’s restricted cash balance as of June 30, 2026 and December 31, 2025, consisted entirely of cash pledged as security for the Company’s issued commercial credit cards.

Concentration of Credit Risk
Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of deposits of cash and cash equivalents, including those deposited in money market deposit accounts. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. The Company has not experienced any material losses in such accounts and believes it is not exposed to significant risk. The Company has invested its excess cash primarily in money market funds.

Clinical Trial and Preclinical Study Accruals
The Company makes estimates of its accrued expenses for clinical trial and preclinical study activities as of each balance sheet date in its financial statements based on the facts and circumstances known to the Company at that time. These accruals are based upon estimates of costs incurred and fees that may be associated with services provided by clinical trial investigational sites and Contract Research Organizations (CROs), and for other clinical trial-related activities. Payments under certain contracts with such parties depend on factors such as successful enrollment of patients, site initiation and progression through the various stages of the Company's clinical trials. In accruing for these services, the Company estimates the time period over which services will be performed and the level of effort to be expended in each period. If possible, the Company obtains information regarding unbilled services directly from these service providers. However, the Company may be required to estimate these services based on other information available to it. If the Company underestimates or overestimates the activities or fees associated with a study or service at a given point in time, adjustments to research and development expenses may be necessary in future periods. Historically, the Company's estimated accrued liabilities have approximated actual expense incurred. Subsequent changes in estimates may result in a material change in the Company's accruals.

Prepaid Materials
The Company capitalizes the purchase of certain raw materials, active pharmaceutical ingredients and related supplies for use in the manufacturing of drug products for use in its preclinical and clinical development programs, as it has determined that these materials have alternative future use. The Company can use these raw materials and related supplies in multiple clinical drug products, and therefore has future use independent of the development status of any particular drug program until it is utilized in the manufacturing process. The Company expenses the cost of materials when used. The Company periodically reviews these capitalized materials for continued alternative future use and writes down the asset to its net realizable value in 

 8

 
 

 the period in which an impairment is identified. Prepaid materials not expected to be used within 12 months of the balance sheet date are presented in Other assets on the Condensed Consolidated Balance Sheets.

Other Assets
Other assets consist of property and equipment, prepaid materials and clinical deposits.

Fair Value Measurements
The Company has certain financial assets and liabilities recorded at fair value which have been classified as Level 1, 2 or 3 within the fair value hierarchy as described in the accounting standards for fair value measurements. 
 The fair value hierarchy is broken down into the three input levels summarized below: 
•Level 1: Quoted market prices in active markets for identical assets or liabilities; 

•Level 2: Other observable market-based inputs or unobservable inputs that are corroborated by market data; and 

•Level 3: Unobservable inputs that cannot be corroborated by market data that reflects the reporting entity's own assumptions. 

The carrying amounts reflected in the accompanying Condensed Consolidated Balance Sheets for cash and cash equivalents, restricted cash, and accounts payable approximate their fair values due to their short-term nature. Refer to Note 8 to these Condensed Consolidated Financial Statements.

Research and Development
Research and development (R&D) costs are expensed as incurred and consist of costs associated with research activities. R&D expenses include, for example, manufacturing expenses for the Company's drugs under development, expenses associated with preclinical studies and clinical trials, as well as R&D employee salaries, bonuses, stock-based compensation and benefits. R&D expenses also include an allocation of the Chief Executive Officer'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 Chief Executive Officer is involved in the development of the Company's drug candidates and oversight of the related clinical trial activities and also acts as the Company's Chief Medical Officer.

Stock-based Compensation
The Company measures and recognizes compensation expense for all stock-based awards made to employees, officers, non-employee directors, and other key persons providing services to the Company, currently comprised of stock options and restricted stock units (RSUs). For both stock options and RSUs, stock-based compensation is measured using the estimated grant date fair value and is recognized as an expense over the requisite service period, generally the vesting 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 price of the Company's common stock, the expected life of the options, an expectation regarding future dividends on the Company’s common stock, and a 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 limited exercise history and 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. The Company uses a dividend yield assumption of zero based upon the fact that it has never paid cash dividends and presently has no intention of paying cash dividends in the future. The risk-free interest rate assumption is based upon prevailing short-term interest rates over the expected life of the options as of the grant date. RSUs are valued using the closing market price of the Company’s stock on the date of grant multiplied by the number of RSUs granted.

Income Taxes
The Company accounts for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered or settled. Realization of deferred tax assets is dependent upon future taxable income. A valuation allowance is recognized if it is more likely than not that some portion or all of a deferred tax asset will not be realized based on the weight of available evidence, including expected future earnings. The Company recognizes an uncertain tax position in its financial statements when it concludes that a tax position is more likely than not to be sustained upon examination based solely on its technical merits. Only after a tax position passes the first step of recognition will measurement be required. Under the measurement step, the tax benefit is measured as the largest amount of benefit that is more likely than not to be realized upon effective settlement. This is determined on a cumulative probability basis. The full impact of any change in recognition or measurement is reflected in the period in which such change occurs. The Company records any interest or penalties related to income taxes in income tax benefit in the Condensed Consolidated Statements of Operations.

 9

 
 

 Recently Issued Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board (the FASB) issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (Topic 220-40). This standard requires business entities to disclose in a tabular format, on an annual and interim basis, purchases of inventory, employee compensation, depreciation, intangible asset amortization and depletion for each income statement line item that contains those expenses. The guidance is effective for public business entities in annual reporting periods beginning after December 15, 2026, and in interim periods within annual reporting periods beginning after December 15, 2027. Entities may apply the guidance prospectively or retrospectively. The Company is currently assessing the potential impact of this ASU.

 

 10

 
 

 NOTE 4: PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets consisted of the following (in thousands):
 

 
 
 
 
 
 
 
 
 
 
 
 

 
 

  

 As of June 30,

  

  

 As of December 31,

  

 

 
 

  

 2026

  

  

 2025

  

 

 
 Prepaid pre-clinical and clinical trial deposits

  

 $

 1,225

  

  

 $

 410

  

 

 
 Prepaid insurance

  

  

 227

  

  

  

 517

  

 

 
 Prepaid professional services and other

  

  

 341

  

  

  

 201

  

 

 
 Total prepaid expenses and other current assets

  

 $

 1,793

  

  

 $

 1,128

  

 

 

 
NOTE 5: ACCRUED EXPENSES
Accrued expenses consisted of the following (in thousands):
 

 
 
 
 
 
 
 
 
 
 
 
 

 
 

  

 As of June 30,

  

  

 As of December 31,

  

 

 
 

  

 2026

  

  

 2025

  

 

 
 Accrued pre-clinical and clinical trial costs

  

 $

 1,109

  

  

 $

 661

  

 

 
 Accrued professional services and other

  

  

 271

  

  

  

 646

  

 

 
 Total accrued expenses

  

 $

 1,380

  

  

 $

 1,307

  

 

 

 
NOTE 6: PAYROLL LIABILITIES
Payroll liabilities consisted of the following (in thousands):
 
 

 
 
 
 
 
 
 
 
 
 
 
 

 
 

  

 As of June 30,

  

  

 As of December 31,

  

 

 
 

  

 2026

  

  

 2025

  

 

 
 Accrued bonuses

  

 $

 585

  

  

 $

 680

  

 

 
 Accrued vacation

  

  

 216

  

  

  

 213

  

 

 
 Accrued payroll and benefits

  

  

 171

  

  

  

 665

  

 

 
 Total payroll liabilities

  

 $

 972

  

  

 $

 1,558

  

 

  

 
 
NOTE 7: RESEARCH AND DEVELOPMENT TAX REBATE LIABILITY
In 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 conducting certain of the Company's clinical trials. Australia offers R&D cash rebates on qualified R&D activities incurred in the country. The Australian R&D tax incentive program is a self-assessment program, and as such, the Australian Taxation Office (ATO) has the right to review the Company’s program and related expenditures for a period of four years following the tax return filing date. If a review were to occur, a qualified program and related expenditures could be disqualified by the ATO with interest and penalties on the cash rebates previously received. Based on the Company's evaluation of the ATO's taxpayer alert in December 2023, the Company believes that it is not reasonably assured that the full tax position would be sustained under audit. Accordingly, as of both June 30, 2026 and December 31, 2025, a liability of $1.1 million was included in Other current liabilities in the Condensed Consolidated Balance Sheets. 

 
NOTE 8: FAIR VALUE OF FINANCIAL INSTRUMENTS
The following tables present the Company’s fair value hierarchy for all its financial assets and liabilities, by major security type, that are measured at fair value on a recurring basis (in thousands):
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 June 30, 2026

  

 Estimated Fair Value

  

  

 Level 1

  

  

 Level 2

  

  

 Level 3

  

 

 
 Assets:

  

  

  

  

  

  

  

  

  

  

  

  

 

 
 Money market fund

  

 $

 22,392

  

  

 $

 22,392

  

  

 $

 —

  

  

 $

 —

  

 

  

 11

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 December 31, 2025

  

 Estimated Fair Value

  

  

 Level 1

  

  

 Level 2

  

  

 Level 3

  

 

 
 Assets:

  

  

  

  

  

  

  

  

  

  

  

  

 

 
 Money market fund

  

 $

 40,367

  

  

 $

 40,367

  

  

 $

 —

  

  

 $

 —

  

 

  

 
NOTE 9: STOCKHOLDERS’ EQUITY
Common Stock
On June 27, 2024, the Company's stockholders approved an amendment of the Company's Amended and Restated Certificate of Incorporation to increase the number of authorized shares of the Company's common stock, par value $0.18 per share, from 175,000,000 to 350,000,000. 
June 2026 Registered Direct Offering
On June 10, 2026, the Company entered into a securities purchase agreement (the Purchase Agreement) with institutional investors, which provided for the issuance and sale by the Company, in a registered direct offering (the Offering), of (i) 1,363,637 shares (the Shares) of the Company’s common stock and (ii) Series A warrants to purchase up to 1,363,637 shares of common stock and short-term Series B warrants to purchase up to 1,363,637 shares of common stock (such warrants, collectively, the Series Warrants). Each Share was offered and sold together with the Series Warrants at a combined offering price of $3.30 per Share and Series Warrants. The Series Warrants are subject to certain ownership limitations and have an exercise price of $4.40 per share, exercisable six months following the date of issuance. The Series A warrants will expire on the five and one-half year anniversary of the date of issuance. The short-term Series B warrants will expire on the two year anniversary of the date of issuance. Additionally, 40,909 warrants to purchase shares of common stock were issued to Rodman & Renshaw, LLC (the Placement Agent) for services provided under the Offering. Upon cash exercise of the Series Warrants, the Company is required to issue to the Placement Agent, as compensation for services provided under the Offering, up to an additional 81,818 warrants. The Placement Agent’s warrants have an exercise price of $4.125 per share and will expire on the five year anniversary of the date of issuance. 
The Offering was made pursuant to a prospectus supplement dated June 10, 2026, and a base prospectus dated May 23, 2024, which is part of a registration statement on Form S-3 (File No. 333-279367) that was filed with the SEC on May 13, 2024, and became effective on May 23, 2024. The Series Warrants are not listed on any securities exchange.
The Offering closed on June 12, 2026. The Company received net proceeds from the Offering of $4.0 million after deducting placement agent fees and offering expenses of $0.5 million.
2026 At the Market Offering Facility
On February 20, 2026, the Company entered into an At the Market Offering Agreement, dated February 20, 2026 (the Sales Agreement), with Rodman & Renshaw LLC. Pursuant to the Sales Agreement, the Company may offer, from time to time, to sell, in an "at the market offering," shares of its common stock up to an aggregate offering price of $50.0 million. The Company sold a total of 4,300 shares of common stock and received net proceeds of $21 thousand during the six months ended June 30, 2026. 
Preferred Stock
The Company is authorized to issue a total of 10,000,000 shares of preferred stock, par value $0.001 per share. The Company has designated 750,000 shares of Series A junior participating preferred stock, par value $0.001 per share, 4,000 shares of Series A convertible preferred stock, par value $0.001 per share, 25,000 shares of Series B convertible preferred stock, par value $0.001 per share, and 20,000 shares of Series C convertible preferred stock, par value $0.001 per share, through the filings of certificates of designation with the Delaware Secretary of State. No shares of Series A junior participating preferred stock, Series A convertible preferred stock, or Series C convertible preferred stock were outstanding as of June 30, 2026 and December 31, 2025.
Series B Convertible Preferred Stock
Conversion. Each share of Series B convertible preferred stock is convertible at the Company's option at any time, or at the option of the holder at any time, into the number of shares of the Company's common stock determined by dividing the $1,000 stated value per share of the Series B convertible preferred stock by a conversion price of $52.80 per share. In addition, the conversion price per share is subject to adjustment for stock dividends, distributions, subdivisions, combinations, or reclassifications. Subject to limited exceptions, a holder of the Series B convertible preferred stock will not have the right to convert any portion of the Series B convertible preferred stock to the extent that, after giving effect to the conversion, the holder, together with its affiliates, would beneficially own in excess of 9.99% of the number of shares of the Company's common stock outstanding immediately after giving effect to its