PART I [Business](index=8&type=section&id=Item%201.%20Business) Atossa Therapeutics is a clinical-stage biopharmaceutical company developing oral (Z)-endoxifen for breast cancer and mammographic breast density, alongside immunotherapy programs - The company's lead drug candidate is oral (Z)-endoxifen, being developed for two primary indications: neoadjuvant treatment of breast cancer and reduction of mammographic breast density (MBD)[20](index=20&type=chunk) - In December **2022**, Atossa invested **$4.7 million** in Dynamic Cell Therapies, Inc. (DCT), a developer of CAR-T therapies, acquiring approximately **19%** of DCT's outstanding capital stock[30](index=30&type=chunk)[49](index=49&type=chunk) - The company is in the research and development phase and does not anticipate generating revenue until its pharmaceutical programs are successfully developed, approved, and commercialized[57](index=57&type=chunk) Patent Portfolio Status (as of Jan 31, 2023) | Program | Issued U.S. Patents | Issued International Patents | Pending U.S. Applications | Pending International Applications | Approximate Expiry Date | | :--- | :--- | :--- | :--- | :--- | :--- | | (Z)-endoxifen programs | 1 | 1 | 8 | 27 | 2038 - 2044 | | Respiratory and viral programs | - | - | 3 | 8 | 2041 - 2043 | | Immunotherapy/CAR-T program | - | - | 5 | 21 | 2037 - 2044 | | Other therapies programs | - | - | 3 | - | 2043 - 2044 | [Overview and Leading Programs](index=8&type=section&id=Overview) Atossa is a clinical-stage biopharmaceutical company focused on oncology, developing oral (Z)-endoxifen for breast cancer and mammographic breast density, prioritizing these programs in **2023** - The Karisma-(Z)-endoxifen study, a Phase 2 trial, is evaluating oral (Z)-endoxifen to reduce MBD in premenopausal women, with enrollment expected to be complete by the end of **2023**[23](index=23&type=chunk) - The EVANGELINE study, a Phase 2 trial authorized by the FDA in October **2022**, is investigating (Z)-endoxifen as a neoadjuvant treatment for premenopausal women with ER+/HER2- breast cancer. The first patient was enrolled in February **2023**[26](index=26&type=chunk)[27](index=27&type=chunk) - Development of AT-H201, originally for COVID-19 and later pivoted to lung injury from cancer treatments, will not be advanced in **2023** as the company focuses resources on its (Z)-endoxifen programs[28](index=28&type=chunk)[47](index=47&type=chunk) [Our Programs Under Development](index=10&type=section&id=Our%20Programs%20Under%20Development) The company primarily focuses on its (Z)-endoxifen programs, developing this active tamoxifen metabolite to overcome limitations, with key Phase 2 trials ongoing for breast cancer and mammographic breast density - The company believes its proprietary oral (Z)-endoxifen may overcome shortcomings of tamoxifen because it is not a pro-drug and does not require liver metabolism to become active[33](index=33&type=chunk) - The EVANGELINE Phase 2 study is investigating neoadjuvant (Z)-endoxifen in premenopausal women with ER+/HER2- breast cancer and is expected to enroll approximately **175 patients** in the U.S[40](index=40&type=chunk) - The Karisma-Endoxifen Phase 2 study is evaluating oral (Z)-endoxifen in women with elevated MBD in Stockholm, Sweden, and is expected to enroll approximately **240 participants**[42](index=42&type=chunk) [Other Programs; Immunotherapy/CAR-T Programs](index=14&type=section&id=Other%20Programs%3B%20Immunotherapy%2FCAR-T%20Programs) Atossa is exploring immunotherapy and CAR-T programs, including a **$4.7 million** investment in Dynamic Cell Therapies and patent filings for novel CAR-T delivery methods for breast cancer - The company has filed patent applications for a novel method to deliver CAR-T cells or other immunotherapies directly into breast milk ducts, the origin site for most breast cancers, potentially reducing systemic toxicity and improving efficacy[51](index=51&type=chunk) [Our Capital Resources](index=14&type=section&id=Our%20Capital%20Resources) The company, lacking sustainable revenue, relies on capital raising to fund operations, holding approximately **$111 million** in cash and equivalents as of December 31, **2022** Financial Position | Metric | Amount (as of Dec 31, 2022) | | :--- | :--- | | Cash and cash equivalents | ~$111 million | - The company's ability to continue as a going concern is dependent on obtaining adequate capital to fund operating losses until profitability is achieved[53](index=53&type=chunk) [Government Regulation](index=17&type=section&id=Government%20Regulation) Atossa is subject to extensive government regulation by the FDA and international agencies, requiring multi-phase clinical trials, stringent approval processes, and adherence to post-market compliance and data privacy laws - The drug development process in the U.S. requires extensive nonclinical testing, an Investigational New Drug (IND) application with the FDA, and a three-phase clinical trial process to establish safety and efficacy before an NDA can be submitted for marketing approval[71](index=71&type=chunk)[72](index=72&type=chunk)[75](index=75&type=chunk)[76](index=76&type=chunk) - In the European Union, marketing authorization can be obtained through centralized or decentralized procedures, with the European Medicines Agency (EMA) playing a key assessment role. All new applications must include a Risk Management Plan (RMP)[87](index=87&type=chunk)[91](index=91&type=chunk)[93](index=93&type=chunk) - The company is subject to data privacy and protection laws, including HIPAA in the U.S. and the General Data Protection Regulation (GDPR) in the E.U., which impose significant compliance obligations and penalties for non-compliance[111](index=111&type=chunk)[119](index=119&type=chunk) - Following Brexit, the company must comply with UK-specific regulations, including the Medicines and Medical Devices Act **2021** and the UK GDPR, creating a separate regulatory landscape from the E.U[115](index=115&type=chunk)[116](index=116&type=chunk)[118](index=118&type=chunk) [Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including limited operating history, lack of revenue, dependence on capital, clinical trial uncertainties, reliance on third parties, intellectual property challenges, and potential Nasdaq delisting - The company has a history of operating losses (**$27.0 million** net loss in **2022**) and an accumulated deficit of **$156.2 million**, with no established sources of ongoing revenue[149](index=149&type=chunk)[153](index=153&type=chunk) - Atossa is highly dependent on third-party service providers for critical activities, including manufacturing (cGMP), clinical trials (GCP), and supply chain operations. Any failure by these third parties could significantly harm the business[170](index=170&type=chunk)[171](index=171&type=chunk) - The company's common stock is at risk of being delisted from the Nasdaq Capital Market. On October 5, **2022**, Atossa received a notice of non-compliance for failing to maintain a minimum closing bid price of **$1.00 per share**[240](index=240&type=chunk) - There is a high degree of uncertainty in pharmaceutical development; promising early-stage compounds may fail in later stages due to lack of efficacy, safety issues, or manufacturing difficulties, and preliminary clinical data may differ from final results[162](index=162&type=chunk)[163](index=163&type=chunk) [Unresolved Staff Comments](index=60&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) Not applicable. The company has no unresolved staff comments from the SEC [Properties](index=60&type=section&id=Item%202.%20Properties) As of December 31, **2022**, the company leases approximately **202 square feet** of office space in Seattle, Washington. Management believes this facility is adequate for its needs for the next **12 months** - The company leases approximately **202 square feet** of office space in Seattle, Washington[252](index=252&type=chunk) [Legal Proceedings](index=60&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings, with no current litigation expected to have a material adverse effect [Mine Safety Disclosures](index=60&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable PART II [Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=61&type=section&id=Item%205.%20Market%20for%20the%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on the Nasdaq Capital Market under the symbol "ATOS", with approximately **40 stockholders** of record as of March 16, **2023**, and no cash dividends have been paid or are anticipated - The company's common stock is traded on the Nasdaq Capital Market under the symbol "ATOS"[256](index=256&type=chunk) - The company has never declared or paid cash dividends and intends to retain future earnings to finance business growth[257](index=257&type=chunk) [Reserved](index=61&type=section&id=Item%206.%20Reserved) This item is reserved [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=61&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) For **2022**, Atossa reported a net loss of **$27.0 million**, an increase from **2021**, driven by a **64%** rise in R&D expenses to **$15.1 million** and an **11%** increase in G&A expenses to **$12.6 million**, with **$110.9 million** in cash and equivalents at year-end Operating Expenses Comparison (in thousands) | Expense Category | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | **Research and Development** | **$15,083** | **$9,210** | **$5,873** | | Clinical trials | $10,225 | $4,656 | $5,569 | | Exclusivity agreements | ($700) | $1,000 | ($1,700) | | **General and Administrative** | **$12,608** | **$11,311** | **$1,297** | | Compensation | $3,034 | $2,371 | $663 | | Stock-based compensation | $4,395 | $3,676 | $719 | | Legal | $1,135 | $534 | $601 | | **Total Operating Expenses** | **$27,691** | **$20,521** | **$7,170** | Key Financial Metrics (Year Ended Dec 31, 2022) | Metric | Amount (in thousands) | | :--- | :--- | | Net Loss | $26,960 | | Net Cash Used in Operating Activities | $20,760 | | Cash and Cash Equivalents (End of Period) | $110,890 | | Working Capital (End of Period) | $112,629 | - The company believes its current cash position is sufficient to fund projected operating requirements for at least the next **12 months**[296](index=296&type=chunk) [Results of Operations](index=67&type=section&id=Results%20of%20Operations) Total operating expenses increased **35%** to **$27.7 million** in **2022**, with R&D expenses up **64%** to **$15.1 million** due to clinical trial costs, and G&A expenses rising **11%** to **$12.6 million** - R&D expenses increased by **$5.9 million (64%)** in **2022**, primarily due to a **$5.6 million** rise in clinical and non-clinical trial costs for the (Z)-endoxifen and AT-H201 programs[291](index=291&type=chunk) - G&A expenses increased by **$1.3 million (11%)** in **2022**, driven by higher compensation (**$0.7 million**), non-cash stock-based compensation (**$0.7 million**), and legal fees (**$0.6 million**), partially offset by lower professional fees[293](index=293&type=chunk) - A net decrease of **$1.7 million** in R&D expenses was attributed to exclusivity agreements, resulting from a **$1.0 million** refund received in **2022** compared to a **$1.0 million** fee paid in **2021**, and a new **$0.3 million** fee paid in **2022**[293](index=293&type=chunk) [Liquidity and Capital Resources](index=69&type=section&id=Liquidity%20and%20Capital%20Resources) The company used **$20.8 million** in cash from operations in **2022**, holding **$110.9 million** in cash and equivalents and **$112.6 million** in working capital as of December 31, **2022**, deemed sufficient for the next **12 months** Cash Flow Summary (Year Ended Dec 31, in thousands) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | ($20,760) | ($16,472) | | Net Cash Used in Investing Activities | ($4,727) | ($9) | | Net Cash Provided by Financing Activities | $0 | $113,304 | - The increase in cash used for investing activities in **2022** was primarily due to the **$4.7 million** investment in the equity securities of DCT[297](index=297&type=chunk) - The company did not engage in financing activities in **2022**, whereas in **2021** it raised **$113.3 million** net from the sale of common stock and exercise of warrants[298](index=298&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=72&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Atossa Therapeutics is not required to provide this information [Financial Statements and Supplementary Data](index=72&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) The company's audited consolidated financial statements and supplementary data are included in the report, beginning on page **42** [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=72&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) None [Controls and Procedures](index=73&type=section&id=Item%209A.%20Controls%20and%20Procedures) As of December 31, **2022**, management concluded that the company's disclosure controls and internal control over financial reporting were effective at a reasonable assurance level - Management concluded that as of December 31, **2022**, the company's disclosure controls and procedures were effective[312](index=312&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of December 31, **2022**[313](index=313&type=chunk) [Other Information](index=73&type=section&id=Item%209B.%20Other%20Information) None [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=73&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) Not applicable PART III [Directors, Executive Officers and Corporate Governance](index=74&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on executive officers is in Part I, Item 1, with other details incorporated by reference from the **2023** Proxy Statement, and the company has a Code of Business Conduct and Ethics [Executive Compensation](index=74&type=section&id=Item%2011.%20Executive%20Compensation) Information for this item is incorporated by reference from the "Executive Compensation" section of the company's **2023** Proxy Statement [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=74&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information for this item is incorporated by reference from the "Executive Compensation- Equity Compensation Plan Information" and "Beneficial Owners and Management" sections of the company's **2023** Proxy Statement [Certain Relationships and Related Transactions, and Director Independence](index=74&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information for this item is incorporated by reference from the "Certain Relationships and Related Party Transactions" and "Corporate Governance" sections of the company's **2023** Proxy Statement [Principal Accountant Fees and Services](index=74&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information for this item is incorporated by reference from the "Proposal No. 2 — Ratification of Selection of Independent Registered Public Accounting Firm" section of the company's **2023** Proxy Statement PART IV [Exhibits and Financial Statement Schedules](index=74&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists documents filed as part of the Annual Report, including financial statements and various exhibits, with all financial statement schedules omitted as not required or included elsewhere [Form 10-K Summary](index=75&type=section&id=Item%2016.%20Form%2010-K%20Summary) None Financial Statements [Report of Independent Registered Public Accounting Firm](index=77&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) BDO USA, LLP issued an unqualified opinion on Atossa Therapeutics' consolidated financial statements for **2022** and **2021**, identifying the accounting treatment of the equity investment as a critical audit matter - The auditor, BDO USA, LLP, issued an unqualified (clean) opinion on the company's consolidated financial statements[329](index=329&type=chunk) - The accounting treatment of the **$4.7 million** investment in equity securities (DCT) was identified as a Critical Audit Matter due to complexities in GAAP regarding the initial deposit and final investment[333](index=333&type=chunk)[334](index=334&type=chunk) [Consolidated Financial Statements](index=79&type=section&id=Consolidated%20Financial%20Statements) Consolidated financial statements show total assets decreased from **$141.3 million** in **2021** to **$123.5 million** in **2022**, total liabilities increased, and the company reported a net loss of **$27.0 million** for **2022**, with an accumulated deficit of **$156.2 million** Consolidated Balance Sheet Data (in thousands) | Account | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $110,890 | $136,377 | | Investment in equity securities | $4,700 | $0 | | Total Assets | $123,532 | $141,262 | | **Liabilities & Equity** | | | | Total Liabilities | $5,568 | $3,126 | | Total Stockholders' Equity | $117,964 | $138,136 | | Accumulated Deficit | ($156,194) | ($129,234) | Consolidated Statement of Operations Data (in thousands) | Account | Year Ended Dec 31, 2022 | Year Ended Dec 31, 2021 | | :--- | :--- | :--- | | Research and development | $15,083 | $9,210 | | General and administrative | $12,608 | $11,311 | | **Operating loss** | **($27,691)** | **($20,521)** | | **Net loss** | **($26,960)** | **($20,606)** | | Loss per share | ($0.21) | ($0.18) | Consolidated Statement of Cash Flows Data (in thousands) | Activity | Year Ended Dec 31, 2022 | Year Ended Dec 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | ($20,760) | ($16,472) | | Net cash used in investing activities | ($4,727) | ($9) | | Net cash provided by financing activities | $0 | $113,304 | | **Net (decrease) increase in cash** | **($25,487)** | **$96,823** | [Notes to Consolidated Financial Statements](index=83&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, confirm sufficient liquidity, explain the **$4.7 million** DCT investment, describe equity structure, and disclose a full valuation allowance against **$99.0 million** deferred tax assets due to historical losses, including **4.1 million** options granted in **2022** - Management believes currently available funding is sufficient to finance operations for at least one year from the financial statement issuance date[359](index=359&type=chunk) - The **$4.7 million** investment in Dynamic Cell Therapies, Inc. (DCT) is accounted for at cost less impairment. An impairment assessment as of December 31, **2022**, concluded that the investment was not impaired[379](index=379&type=chunk)[380](index=380&type=chunk)[381](index=381&type=chunk) - As of December 31, **2022**, the company had federal net operating loss carryforwards of **$99.0 million**, which are subject to limitation under IRC Section **382**. A full valuation allowance has been recorded against net deferred tax assets[421](index=421&type=chunk)[422](index=422&type=chunk) - The company granted **4.079 million options** in **2022** and recognized **$6.8 million** in total stock-based compensation expense for the year[431](index=431&type=chunk)[434](index=434&type=chunk)

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the company's unaudited Q1 2022 financial statements, management's analysis, and market risk disclosures [Item 1. Condensed Consolidated Financial Statements](index=4&type=section&id=ITEM%201.%20Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited Q1 2022 financial statements, showing a net loss of $4.8 million and key balance sheet changes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows total assets of $137.5 million and a decrease in cash and stockholders' equity as of March 31, 2022 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2022 (Unaudited) | December 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $131,486 | $136,377 | | Total current assets | $136,848 | $141,240 | | **Total Assets** | **$137,478** | **$141,262** | | **Liabilities & Equity** | | | | Total current liabilities | $2,322 | $3,126 | | **Total Liabilities** | **$2,322** | **$3,126** | | **Total Stockholders' Equity** | **$135,156** | **$138,136** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported a net loss of $4.8 million for Q1 2022, driven by a 34% increase in total operating expenses Condensed Consolidated Statements of Operations (Unaudited, in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Research and development | $1,499 | $1,379 | | General and administrative | $3,248 | $2,152 | | **Total operating expenses** | **$4,747** | **$3,531** | | **Operating loss** | **($4,747)** | **($3,531)** | | **Net loss** | **($4,786)** | **($3,538)** | | Loss per common share - basic and diluted | ($0.04) | ($0.04) | | Weighted average shares outstanding | 126,624 | 92,587 | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity decreased to $135.2 million, primarily due to the quarterly net loss offset by stock-based compensation - The primary drivers for the change in stockholders' equity during Q1 2022 were the **net loss of $4,786 thousand** and **stock-based compensation expense of $1,806 thousand**[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operations was $4.9 million, with no financing activities, resulting in an ending cash balance of $131.6 million Cash Flow Summary (Unaudited, in thousands) | Cash Flow Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | ($4,878) | ($4,408) | | Net cash used in investing activities | ($13) | $0 | | Net cash provided by financing activities | $0 | $102,428 | | **Net (decrease) increase in cash** | **($4,891)** | **$98,020** | | **Cash at end of period** | **$131,596** | **$137,684** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's focus, liquidity, R&D rebates, and stock-based compensation policies - The company is focused on developing pharmaceuticals for COVID-19, breast cancer, and other breast conditions[19](index=19&type=chunk) - Management believes its current funding of **$131.5 million in cash and cash equivalents is sufficient** to finance operations for at least one year[20](index=20&type=chunk) - The company receives a **43.5% R&D cash rebate** from Australia for qualified activities, which reduced Q1 2022 R&D expenses by $140 thousand[37](index=37&type=chunk) - **Stock-based compensation expense increased to $1,806 thousand** in Q1 2022 from $640 thousand in Q1 2021, with the majority allocated to G&A expenses[76](index=76&type=chunk)[77](index=77&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses its clinical programs, a 34% rise in operating expenses, and its current liquidity position - The company's leading programs are **Endoxifen for breast cancer**, **AT-301 nasal spray** for at-home COVID-19 treatment, and **AT-H201 inhalation therapy** for hospitalized patients[85](index=85&type=chunk)[87](index=87&type=chunk)[94](index=94&type=chunk) Comparison of Operating Expenses (in thousands) | Expense Category | Q1 2022 | Q1 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Research & Development | $1,499 | $1,379 | +9% | | General & Administrative | $3,248 | $2,152 | +51% | | **Total Operating Expenses** | **$4,747** | **$3,531** | **+34%** | - The increase in R&D expense was mainly due to drug manufacturing costs, while G&A expense rose due to **non-cash stock-based compensation of $734 thousand** and higher legal fees[111](index=111&type=chunk)[112](index=112&type=chunk) - As of March 31, 2022, the company had **$131.5 million in cash and cash equivalents** and believes it has sufficient funds for at least the next twelve months of operations[113](index=113&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=32&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risks are credit risk from its large cash balance and minor foreign currency exposure - The company holds **$131.5 million in cash and cash equivalents**, with the majority in a commercial money market account at one financial institution, exceeding FDIC insured limits[124](index=124&type=chunk) - The company is subject to foreign currency risk from its Australian subsidiary's cash and R&D rebate receivable, but did not recognize significant exchange rate losses[125](index=125&type=chunk) [Item 4. Controls and Procedures](index=32&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal controls over financial reporting were effective - The CEO and CFO concluded that the company's **disclosure controls and procedures were effective** as of March 31, 2022[128](index=128&type=chunk) - There were **no material changes in internal control** over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[129](index=129&type=chunk) [PART II. OTHER INFORMATION](index=33&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part covers legal proceedings, risk factors, and other required disclosures for the reporting period [Item 1. Legal Proceedings](index=33&type=section&id=ITEM%201.%20Legal%20Proceedings) The company believes current legal matters will not have a material effect on its financial position or operations - The company believes that current legal proceedings and claims **will not have a material effect** on its financial position, results of operations, or cash flows[131](index=131&type=chunk) [Item 1A. Risk Factors](index=33&type=section&id=ITEM%201A.%20Risk%20Factors) The company faces significant risks related to its operating history, capital needs, clinical development, and the COVID-19 pandemic - The company has a **limited operating history**, a history of operating losses, and will need to raise substantial additional capital to fund operations[133](index=133&type=chunk)[136](index=136&type=chunk)[140](index=140&type=chunk) - Development of pharmaceutical products is **highly uncertain**, with risks of regulatory failure, clinical trial delays, and compound failure in later stages[145](index=145&type=chunk)[147](index=147&type=chunk) - The business is **dependent on third-party service providers** for manufacturing, testing, and clinical trial activities, and failure by these parties could harm the business[153](index=153&type=chunk)[154](index=154&type=chunk) - The COVID-19 pandemic could **adversely impact operations**, while its end could make the company's COVID-19 programs obsolete[203](index=203&type=chunk)[204](index=204&type=chunk) - The company faces risks related to **protecting its intellectual property**, potential infringement claims, and changes in U.S. patent law[165](index=165&type=chunk)[173](index=173&type=chunk)[179](index=179&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=51&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no unregistered sales of equity securities or use of proceeds during the period - This item is **not applicable** for the reporting period[217](index=217&type=chunk) [Item 3. Defaults upon Senior Securities](index=51&type=section&id=ITEM%203.%20Defaults%20upon%20Senior%20Securities) The company reports no defaults upon senior securities occurred during the period - This item is **not applicable** for the reporting period[217](index=217&type=chunk) [Item 4. Mine Safety Disclosures](index=51&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) The company reports this item as not applicable as it is not involved in mining operations - This item is **not applicable** for the reporting period[217](index=217&type=chunk) [Item 5. Other Information](index=51&type=section&id=ITEM%205.%20Other%20Information) The company reports no other material information was required to be disclosed during the period - This item is **not applicable** for the reporting period[217](index=217&type=chunk) [Item 6. Exhibits](index=52&type=section&id=ITEM%206.%20Exhibits) This section lists the required CEO/CFO certifications and Inline XBRL financial data files filed with the report - The exhibits filed with this report include **CEO and CFO certifications** pursuant to Sarbanes-Oxley Sections 302 and 906, and various Inline XBRL documents[220](index=220&type=chunk)[221](index=221&type=chunk)[222](index=222&type=chunk)[223](index=223&type=chunk) [Signatures](index=53&type=section&id=SIGNATURES) The report was officially signed by the CEO and CFO on behalf of the company on May 9, 2022 - The report was **signed and authorized on May 9, 2022**, by the company's CEO and CFO[229](index=229&type=chunk)

Company Overview - Atossa Therapeutics is a clinical-stage biopharma company focused on oncology and infectious diseases, particularly breast cancer and COVID-19 [4] - As of March 31, 2021, Atossa Therapeutics had $137.6 million in cash and no debt [8] - As of May 14, 2021, the company's capital structure included 120.8 million shares of common stock [8] Drug Development Pipeline - AT-301 is a nasal spray for reducing COVID-19 symptoms, currently in Phase 2 [10] - AT-H201 is an inhalation therapy for improving lung function in COVID-19 patients, currently in Phase 1 [10] - Oral Endoxifen is in Phase 2 development for breast cancer, including a Window of Opportunity study in Australia and a Mammographic Breast Density study planned for Stockholm [10] Oral Endoxifen - Window of Opportunity (WOO) Study - Interim results from the Australian WOO study showed a 74% overall reduction in Ki-67 activity in the first 6 patients (P=.031) [22] - All patients in the WOO study had >50% reduction in Ki-67 activity and <25% Ki-67 at surgery [22] - The WOO study was halted early due to substantially positive interim results, saving time and money [21, 22] COVID-19 Therapeutics - AT-H201 is under development for moderate to severely ill COVID-19 patients to improve lung function [30] - AT-301 is a nasal spray targeting infections in the nasal passage for outpatient/home use [32] Market Opportunities - AT-H201 targets a market of >3.3 million worldwide deaths from COVID-19 [11] - AT-301 nasal spray targets a market of >163 million COVID-19 cases worldwide [11]