UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended ~~September 30, 2017~~March 31, 2023

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

For the transition period from _______ to _______

Commission file number: 001-35610

ATOSSA ~~GENETICS~~THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

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

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

Registrant’s telephone number, including area code: (206) ~~325-6086~~588-0256

Former name or former address, 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, ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files). Yes ☒ No ☐

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

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, ~~$0.015~~$0.18 par value per share, outstanding ~~at November 13, 2017~~as of May 10, 2023, was ~~26,522,741.~~126,624,110.

Table of Contents

The accompanying notes are an integral part of these ~~condensed consolidated financial statements.~~Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED ~~STATEMENT~~STATEMENTS OF ~~STOCKHOLDERS’~~STOCKHOLDERS’ EQUITY

	Series B Convertible Preferred Stock						Common Stock

					*Additional*						*Additional*					*Total*
	*Shares*		*Amount*		*Paid-in Capital*		*Shares*		*Amount*		*Paid-in Capital*		*Accumulated Deficit*			*Stockholders' Equity*
Balance at December 31, 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		-		-		-		-		-		-		(4,786	)		(4,786	)
Balance at March 31, 2022		1	$	-	$	582		126,624	$	22,792	$	245,802	$	(134,020	)	$	135,156

	Series B Convertible Preferred Stock						Common Stock

					*Additional*						*Additional*					*Total*
	*Shares*		*Amount*		*Paid-in Capital*		*Shares*		*Amount*		*Paid-in Capital*		*Accumulated Deficit*			*Stockholders' Equity*
Balance at December 31, 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

The accompanying notes are an integral part of these ~~condensed consolidated financial statements.~~Condensed Consolidated Financial Statements.

	*For the Three Months Ended March 31,*
	*2023*			*2022*
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(6,281	)	$	(4,786	)
Adjustments to reconcile net loss to net cash used in operating activities
Compensation cost for stock options granted		1,573			1,806
Depreciation and amortization		3			2
Changes in operating assets and liabilities:
Prepaid expenses		(1,264	)		(1,386	)
Research and development tax rebate receivable		5			404
Other current assets		1,565			(114	)
Other assets		1			-
Accounts payable		(1,521	)		(121	)
Accrued expenses		(446	)		(84	)
Payroll liabilities		(703	)		(591	)
Other current liabilities		46			(8	)
Net cash used in operating activities		(7,022	)		(4,878	)

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

CASH FLOWS FROM FINANCING ACTIVITIES
Net cash provided by financing activities		-			-

NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		(7,022	)		(4,891	)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING BALANCE		111,000			136,487
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, ENDING BALANCE	$	103,978		$	131,596

SUPPLEMENTAL DISCLOSURES
Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents	$	103,868		$	131,486
Restricted cash		110			110
Total cash, cash equivalents and restricted cash shown in the Condensed Consolidated Statements of Cash Flows	$	103,978		$	131,596

The accompanying notes are an integral part of these ~~condensed consolidated financial statements.~~Condensed Consolidated Financial Statements.

Atossa ~~Genetics~~Therapeutics, Inc. (the ~~“Company”)~~Company) was incorporated on April 30, 2009, in the State of ~~Delaware. The Company was formed~~Delaware to develop and market medical devices, laboratory tests and therapeutics to address breast health conditions. The ~~Company’s~~Company is currently 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. ~~The Company is focused on development of its pharmaceutical and drug delivery programs.~~

The Company’s consolidated financial statements are prepared using Generally Accepted Accounting Principles in the United States of America applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred net losses and negative operating cash flows since inception. For the ~~nine~~three months ended ~~September 30, 2017,~~ March 31, 2023, the Company recorded a net loss of ~~approximately $6.1 million~~$6,281 and used ~~approximately $4.9 million~~$7,022 of cash in operating activities. As of ~~September 30, 2017,~~ March 31, 2023, the Company had ~~approximately $2.7 million~~$103,868 in unrestricted cash and cash equivalents and working capital of ~~approximately $1.9 million.~~$107,925. The Company has not yet established an ongoing source of revenue sufficient to cover its operating costs, and ~~allow~~ it believes it will need to continue ~~as a going concern. The ability of the Company~~ to ~~continue as a going concern is dependent on the Company obtaining adequate~~raise substantial additional capital to ~~fund operating losses until it becomes profitable. The Company can give no assurances that any additional capital that it is able to obtain, if any,~~accomplish its business plan over the next several years. Management believes its currently available funding will be sufficient to ~~meet~~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 ~~that any~~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 ~~will~~might be ~~obtained on acceptable terms.~~available in the future. If the Company is unable to ~~obtain adequate capital,~~secure additional funding, it ~~could~~ may be forced to ~~cease operations~~curtail or ~~substantially curtail~~suspend its activities. These conditions raise substantial doubt as to the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classificationbusiness plans.

The accompanying ~~unaudited~~ Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States ~~(“GAAP”)~~(GAAP) for interim financial information and with the instructions to Form ~~10-Q~~10-Q and Rule ~~10-01~~10-01 of Regulation ~~S-X.~~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 change in the information disclosed in the Notes to Consolidated Financial Statements included in the Annual Report on Form ~~10-K~~10-K of the Company for the year ended December 31, ~~2016.~~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. Operating results for the three ~~and nine~~ months ended ~~September 30, 2017~~ March 31, 2023, are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2017.~~2023.

On August 26, 2016, the Company completed a 1-for-15 reverse stock split of the shares of the Company’s common stock (the “Reverse Stock Split”). As a result of the Reverse Stock Split, every 15 shares of issued and outstanding common stock were combined into one issued and outstanding share of Common Stock, and the par value per share was changed to $.015 per share. No fractional shares were issued because of the Reverse Stock Split and any fractional shares that would otherwise have resulted from the Reverse Stock Split were paid in cash. The number of authorized shares of common stock was not reduced as a result of the Reverse Stock Split. The Company’s common stock began trading on a reverse stock split-adjusted basis on August 26, 2016. All share and per share data included in this report

Interest income has been ~~retroactively restated~~reclassified from prior period amounts to ~~reflect~~conform to the ~~Reverse Stock Split.~~current year presentation.

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.

~~During~~The Company operates as a single segment. Operating segments are identified as the ~~nine~~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 include unrestricted cash and all highly liquid instruments with maturities of three months ~~ended September 30, 2017,~~or less at the date of purchase.

The Company currently has one investment in non-marketable securities. This investment does not have a readily determinable fair value, so the Company ~~issued certain financial instruments, consisting~~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 ~~warrants~~impairment.

The assumptions and estimates used to purchase common stock, which have characteristics of both liability and equity. Financial instruments such as warrants that are classified as liabilities are fair valued upon issuance and are remeasured at fair value at subsequent reporting periods withestimate the ~~resulting change in fair value recorded in “change in~~ fair value of ~~common~~investments may include, but not be limited to, the following information from the respective investee:

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. Examples of assets and liabilities utilizing Level 1 inputs are certain money market funds, U.S. Treasuries and trading securities with quoted prices on active markets.

● Level 2—Valuations based on inputs other than the quoted prices in active markets that are observable either directly or indirectly in active markets. Examples of assets and liabilities utilizing Level 2 inputs are U.S. government agency bonds, corporate bonds, commercial paper, certificates of deposit and over-the- counter derivatives.

● 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

Research and development (R&D) costs are generally expensed as incurred. R&D expenses include, for example, manufacturing expense 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, clinical manufacturing organizations and other companies. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and payments made in advance of performance are reflected in the accompanying condensed consolidated balance sheets as prepaid expenses. The Company records accruals for estimated costs incurred for ongoing research and development activities. 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 made 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.

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 ~~warrants”.~~ 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 ~~warrants~~each stock option grant is estimated using ~~valuation models that require~~ the ~~input~~Black-Scholes option-pricing model, which requires assumptions regarding the expected volatility of ~~subjective assumptions including~~the stock options, the expected life of the options, an expectation regarding future dividends on the Company’s common stock, and estimation of an 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 ~~probability~~future. The risk-free interest rate used for each grant was based upon prevailing short-term interest rates over the expected life of ~~future equity issuances and their impact to~~ the ~~price protection feature.~~options as of grant date.

~~In February 2016, Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02,~~~~Lease Accounting Topic 842.~~ ~~This ASU requires a lessee to recognize lease~~The majority of the Company's operations occur in entities that have the U.S. dollar as their functional currency. The one non-U.S. dollar denominated functional currency subsidiary has 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. Net unrealized gains and losses resulting from foreign currency translation are recorded in Other expense, net in the Condensed Consolidated Statements of Operations. The Company had realized losses on foreign currency exchange during the three months ended March 31, 2023 and March 31, 2022 of $29 and $28, respectively, which is included in Other expense, net in the Condensed Consolidated Statements of Operations.

The Company's restricted cash balance of $110as of March 31, 2023 and December 31, 2022, consists entirely of cash pledged as security for the lease term and a liability to make lease payments. The lease term is the non-cancellable period of the lease, and includes both periods covered by an option to extend the lease, if the lessee is reasonably certain to exercise that option, and periods covered by an option to terminate the lease, if the lessee is reasonably certain not to exercise that termination option. For leases with a lease term of 12 months or less, a practical expedient is available whereby a lessee may elect, by class of underlying asset, not to recognize an ROU asset or lease liability. A lessee making this accounting policy election would recognize lease expense over the term of the lease, generally in a straight-line pattern. The lessor accounting remains largely consistent with existing U.S. GAAP. The new standard takes effect in 2019 for public business entities. The Company has not adopted the provisions of ASU No. 2016-02. The Company is currently evaluating the impact of adopting ASU 2016-02 on its consolidated financial statements.

~~In April 2016, the FASB~~Company’s issued ~~ASU No. 2016-09,~~~~Compensation - Stock Compensation,~~simplifying the accounting for share-based payment transactions including the income tax consequences, classification of awards as either equity or liabilities and classification on the statements of cash flows. Under the new standard, all excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) should be recognized as income tax expense or benefit on the statements of income. We adopted ASU No. 2016-09 effective January 1, 2017. As a result of the adoption of this guidance, we made an accounting policy election to recognize the effect of forfeitures in compensation cost when they occur. There was an immaterial impact on results of operations and financial position and no impact on cash flows at adoption.

~~In November 2016, the FASB issued ASU No. 2016-18,~~~~Statement of Cash Flows~~, amending the presentation of restricted cash within the statement of cash flows. The new guidance requires that restricted cash be included within cash and cash equivalents on the statement of cash flows. The ASU is effective retrospectively for reporting periods beginning after December 15, 2017, with early adoption permitted. The Company has not yet adopted the provisions of ASU No. 2016-18 and does not expect it will have a material impact on the financial statements upon adoption.

~~In July 2017, the FASB issued ASU 2017-11,~~Accounting for Certain Financial Instruments with Down Round Features and Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. Part I of this ASU addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of future equity offerings. Current accounting guidance requires financial instruments with down round features to be accounted for at fair value. Part II of the Update applies only to nonpublic companies and is therefore not applicable to the Company. The amendments in Part I of the Update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity-classified financial instruments, the amendments require entities that present earnings per share (EPS) in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. This Update is effective for public entities for fiscal years beginning after December 15, 2018. Early adoption is permitted. The Company has not yet determined when it will adopt the provisions of this Update and has not yet determined the impact on its consolidated financial statements upon adoption.

NOTE ~~5: FURNITURE~~7: RESEARCH AND ~~EQUIPMENT~~DEVELOPMENT REBATE RECEIVABLE

~~Furniture and equipment consisted~~ 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 ~~following:~~

~~Depreciation expense~~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 qualifying programs 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 ~~three months ended September 30, 2017 and 2016 was $4,554 and $29,698, respectively, and $22,988, and $92,054, for~~cash rebates received from the ~~nine months ended September 30, 2017 and 2016, respectively.~~

~~NOTE 6: INTANGIBLE ASSETS~~During the three months ended March 31, 2023 and 2022, the Company incurred qualified R&D expenses in Australia of $52 and $354, respectively. There were no collections of R&D cash rebates during the three months ended March 31, 2023. The Company collected R&D cash rebates of $563, during the three months ended March 31, 2022. At March 31, 2023 and December 31, 2022 the Company had total R&D rebate receivables of $738 and $743, respectively. The Company records the R&D rebate credit in the period when 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 $15 and $140 for the three months ended March 31, 2023 and, 2022, respectively.

Software amounted to $113,540 as of September 30, 2017 and December 31, 2016. The amortization period for the purchased software is three years. Amortization expense related to software for the three months ended September 30, 2017 and 2016 was $6,759 and $7,857, respectively, and was $26,373 and $23,572, for the nine months ended September 30, 2017 and 2016, respectively.

Patents amounted to $639,000 as of September 30, 2017 and December 31, 2016, and mainly consisted of patents acquired from Acueity on September 30, 2012 in an asset purchase transaction. Patent assets are amortized based on their determined useful life, and tested annually for impairment. The amortization period is from 7 to 12 years. Amortization expense related to patents was $17,571 and $37,253 for the three months ended September 30, 2017 and 2016, respectively and was $52,713 and $111,761 for the nine months ended September 30, 2017 and 2016, respectively.

~~Future estimated amortization expenses as of September 30, 2017 for the five succeeding years is as follows:~~

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

The Company is authorized to issue a total of ~~85,000,000~~185,000 shares of stock consisting of ~~75,000,000~~175,000 shares of common stock, par value ~~$0.015~~$0.18 per share, and ~~10,000,000~~10,000 shares of preferred stock, par value $0.001 per share. The Company has designated ~~750,000~~750 shares of Series A ~~Junior Participating Preferred Stock,~~junior participating preferred stock, par value $0.001 per share, ~~and 4,000~~4 shares of Series A convertible preferred stock, par value $0.001 per share, 25 shares of Series B convertible preferred stock, par value $0.001 and 20 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, none~~State. No shares of ~~which are issued and~~Series A junior participating preferred stock, Series A convertible preferred stock or Series C convertible preferred stock were outstanding as of ~~September 30, 2017.~~March 31, 2023 and December 31,2022.

On May 19, 2014, the Company adopted a stockholder rights agreement which provides that 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)~~(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)~~(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.

~~2016 Issuances of Additional Shares to Aspire Capital~~Series B Convertible Preferred Stock

~~On November 11, 2015, we terminated our prior agreement with Aspire Capital Fund, LLC (“Aspire Capital”) and entered into a new common~~Conversion. Each share of Series B convertible preferred stock ~~purchase agreement. Concurrently with entering~~is convertible at the Company's option at any time on or after the first anniversary of the closing of this offering, or at the option of the holder at any time, into the ~~new purchase agreement, we also entered into a registration rights agreement with Aspire Capital in which we agreed to register 405,747 shares of our common stock.~~

During the first quarter of 2016, we sold a total of 405,747 shares of common stock to Aspire Capital under the stock purchase agreement dated November 11, 2015 with aggregate gross proceeds to the Company of $2,177,083, or net proceeds of $2,133,973 after deducting costs of the offering.

On May 25, 2016, the Company terminated the November 11, 2015 stock purchase agreement with Aspire Capital and entered into a new common stock purchase agreement with Aspire Capital which provided that, upon the terms and subject to the conditions and limitations set forth therein, Aspire Capital is committed to purchase up to an aggregate of $10.0 millionnumber of shares of our common stock ~~over~~determined by dividing the ~~30-month term~~$1,000 stated value per share of the ~~purchase agreement,~~Series B convertible preferred stock by a conversion price of $3.52 per share. In addition, the conversion price per share is subject to ~~the terms and conditions set forth therein. Concurrently with entering into the purchase agreement, the Company also entered into~~adjustment for stock dividends, distributions, subdivisions, combinations or reclassifications. Subject to limited exceptions, a registration rights agreement with Aspire Capital, in which the Company agreed to file one or more registration statements, as permissible and necessary to register under the Securities Act of 1933, registering the saleholder 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 our common stock ~~that~~outstanding immediately after giving effect to its conversion.

Fundamental Transactions. In the event the Company effects certain mergers, consolidations, sales of substantially all of its assets, tender or exchange offers, reclassifications or share exchanges in which its common stock is effectively converted into or exchanged for other securities, cash or property, the Company consummates a business combination in which another person acquires 50% of the outstanding shares of our common stock, or any person or group becomes the beneficial owner of 50% of the aggregate ordinary voting power represented by our issued and outstanding common stock, then, upon any subsequent conversion of the Series B convertible preferred stock, the holders of the Series B convertible preferred stock will have the right to receive any shares of the acquiring corporation or other consideration it would have been ~~and may be issued~~entitled to ~~Aspire Capital under the purchase agreement. As part~~receive if it had been a holder of the number of shares of common stock ~~purchase agreement we issued 49,736 common~~then issuable upon conversion in full of the Series B convertible preferred stock.

Dividends. Holders of Series B convertible preferred stock shall be entitled to receive dividends (on an as-if-converted-to-common-stock basis) in the same form as dividends actually paid on shares ~~as a commitment fee. The value~~ of the common stock when, as and if such dividends are paid on shares ~~issued~~of common stock.

Voting Rights. Except as otherwise provided in the certificate of designation or as otherwise required by law, the Series B convertible preferred stock has no voting rights.

Liquidation Preference. Upon the Company's liquidation, dissolution or winding-up, whether voluntary or involuntary, holders of Series B convertible preferred stock will be entitled to receive out of the Company's assets, whether capital or surplus, the same amount that a ~~commitment fee~~holder of ~~$198,523 has been reflected as an addition~~common stock would receive if the Series B convertible preferred stock were fully converted (disregarding for such purpose any conversion limitations under the certificate of designation) to common stock, which amounts shall be paid pari passu with all holders of common stock.

Redemption Rights. The Company is not obligated to redeem or repurchase any shares of Series B convertible preferred stock. Shares of Series B convertible preferred stock are not otherwise entitled to any redemption rights, or mandatory sinking fund or analogous provisions.

The terms and ~~$197,777, respectively, which is amortized over the life~~conditions of the ~~stock purchase agreement. As of~~warrants are as follows:

Exercisability. Each warrant is exercisable at any time and will expire between 4 and 4.5-years from the date of ~~filing this Quarterly Report with~~issuance. The warrants are exercisable, at the ~~SEC no~~option of each holder, in whole or in part by delivering to the Company a duly executed exercise notice and payment in full for the number of shares of our common stock ~~have been sold~~purchased upon such exercise, except in the case of a cashless exercise as discussed below. The number of shares of common stock issuable upon exercise of the warrants is subject to ~~Aspire Capital under~~adjustment in certain circumstances, including a stock split of, stock dividend on, or a subdivision, combination or recapitalization of the ~~May 25, 2016 purchase agreement. In connection with~~common stock. Upon the merger, consolidation, sale of substantially all of our ~~public offering that closed~~assets, or other similar transaction, the holders of warrants shall, at the option of the Company, be required to exercise the warrants immediately prior to the closing of the transaction, or such warrants shall automatically expire. Upon such exercise, the holders of warrants shall participate on ~~April 3, 2017, we agreed not to utilize~~ the ~~financing arrangement with Aspire Capital for 90 days after that financing and on June 30, 2017~~same basis as the holders of common stock in connection with the ~~temporary modification~~transaction.

Cashless Exercise. If at any time there is no effective registration statement registering, or the prospectus contained therein is not available for issuance of, ~~our~~the shares issuable upon exercise of the warrant, the holder may exercise the warrant on a cashless basis. When exercised on a cashless basis, a portion of the warrant is cancelled in payment of the purchase price payable in respect of the number of shares of the Company's common stock warrants to allow for the net exercise of those warrants we agreed to extend this stand still for an additional 45 days. As of September 30, 2017, 467,650 shares are available for sale to Aspire Capital under the May 25, 2016 purchase agreement.purchasable upon such exercise.

~~In August 2016,~~Exercise Price. Each warrant represents the Company completed an underwritten public offering of 1,150,000 shares of common stock at a price per share of $2.50, with gross proceeds of $2,875,000 to the Company, or net proceeds of $2,561,896 after deducting underwriter discounts, commissions, non-accountable expense allowance and expense reimbursement.

~~2017 Public Offering of Class A and Class B Units Consisting of Common Stock, Series A Convertible Preferred Stock and Warrants~~

On March 28, 2017, the Company entered into an underwriting agreement with Aegis Capital Corp. relating to a public offering which closed on April 3, 2017. The offering generated gross proceeds to the Company of approximately $4.4 million and net proceeds of approximately $3.9 million after deducting underwriting discounts and commissions and other offering expenses paid by the Company.

~~The offering included 664,000 Class A Units at a public offering price of $0.75 per Class A Unit, which consisted of 664,000 shares of common stock and warrants~~right to purchase 664,000 shares of common stock. The offering also included 3,502 Class B Units at a public offering price of $1,000 per Class B Unit, which consisted of 3,502 shares of Series A convertible preferred stock convertible into a total of 4,669,329 shares of common stock and warrants to purchase 4,669,329 sharesone share of common stock. In addition, the ~~underwriter exercised~~exercise price per share is subject to adjustment for stock dividends, distributions, subdivisions, combinations or reclassifications, and for certain dilutive issuances. Subject to limited exceptions, a holder of warrants will not have the ~~over-allotment~~right to ~~purchase an additional 530,000~~exercise any portion of the warrant to the extent that, after giving effect to the exercise, the holder, together with its affiliates, and any other person acting as a group together with the holder or any of its affiliates, would beneficially own in excess of 4.99% of the number of shares of our common stock ~~and warrants~~outstanding immediately after giving effect to ~~purchase 530,000~~its exercise. The holder, upon notice to the Company, may increase or decrease the beneficial ownership limitation provisions of the warrant, provided that in no event shall the limitation exceed 9.99% of the number of shares of the Company's common stock ~~which are included~~outstanding immediately after giving effect to the exercise of the warrant.

Transferability. Subject to applicable laws and restrictions, a holder may transfer a warrant upon surrender of the warrant to us with a completed and signed assignment in the ~~gross proceeds~~form attached to the warrant. The transferring holder will be responsible for any tax liability that may arise as a result of ~~$4.4 million.~~the transfer.

Exchange Listing. The Company does not intend to apply to list the warrants ~~had~~on any securities exchange or recognized trading system.

Rights as Stockholder. Except as set forth in the warrant, the holder of a ~~per share exercise price~~warrant, solely in such holder’s capacity as a holder of ~~$0.9375, were exercisable immediately and were scheduled~~a warrant, will not be entitled to ~~expire five years from~~vote, to receive dividends or to any of the ~~date~~other rights of ~~issuance.~~our stockholders.

As of September 30, 2017, all of the warrants issued in the April 3, 2017 offering have been exercised and are no longer outstanding and all of the shares of Series A convertible preferred stock have been converted into shares of common stock.

The Company allocated the proceeds from the sale of the Class A and Class B units to the separate securities issued. The Company determined that, on the date of issuance, the warrants were not considered indexed to its own stock because the underlying instruments were not “fixed-for-fixed” due to the price protection and fundamental transaction provisions and, therefore, the warrants should be accounted for as liabilities. At the end of each reporting period, the changes in fair value of the warrants during the period are recorded in non-operating income (expense) in the consolidated statement of operations.

The Company allocated the amount representing the fair value of the warrants at the date of issuance separately to the warrant liability and recorded the remaining proceeds as common stock, in the case of the Class A units, or as Series A convertible preferred stock, in the case of the Class B units. Due to the allocation of a portion of the proceeds to the warrants, the Series A convertible preferred stock contained a beneficial conversion feature upon issuance, which was recorded in the amount of $1,284,066 based on the intrinsic value of the beneficial conversion feature. The discount on the Series A convertible preferred stock of $1,284,066 caused by allocation of the proceeds to the warrant was recorded as a deemed dividend upon issuance of the Series A convertible preferred stock. As a result, total deemed dividends of $2,568,132 was recorded upon issuance of the Series A convertible preferred stock, which is reflected as an addition to net loss in the consolidated statement of operations to arrive at net loss applicable to common shareholders.

On June 29, 2017, the Company offered to modify the rights of the holders of the warrants issued in the public offering the Company completed on April 3, 2017. The temporary modification included (a) lowering the exercise price of the warrants to $0.26 per share, (b) setting the applicable volume-weighted average price (VWAP) at $0.52 per share, and (c) allowing for temporary cashless exercise of the warrants for all holders that accepted the temporary modification before 8:00 a.m. Eastern daylight time on June 30, 2017. Holders of March 31, 2023, warrants to purchase a total of approximately 3.0 million shares of Common Stock accepted the offer resulting in the cancellation of those warrants and the issuance by the Company of a total of approximately 1.5 million shares of Common Stock (including shares held in abeyance). The shares of Common Stock are registered under the Securities Act of 1933, as amended. If delivery of the shares of Common Stock pursuant to the foregoing would result in the holder exceeding the 4.99% “Beneficial Ownership Limitation” (as defined in the warrant) then the shares in excess of such 4.99% will be held in abeyance by the Company pending further instruction from the holder. In connection with the temporary modification, the Company agreed to extend the “Lock-up Period” of the underwriting agreement between the Company and Aegis Capital Corp., dated March 28, 2017, by 45 days and the Company agreed not to enter into any further amendments to the warrants during such extended Lock-up Period without the prior written consent of each holder. During the three months ended September 30, 2017, all remaining warrants were exercised for cash so that no warrants issued in the April 3, 2017 financing remain outstanding. Upon exercise of these warrants, the amount of the warrant liability at the date of exercise was reclassified from warrant liability to additional paid-in capital.

The Company estimated the fair value of the warrants using the Monte Carlo simulation (MCS) model, which is a type of income approach, where the current value of an asset is expressed as the sum of probable future cash flows across various scenarios and time frames discounted for risk and time. The significant assumptions include timing of future rounds of financing, timing and success rates of oncology clinical trials, and the probability of a merger and acquisition adjusted for a lack of marketability discount. The MCS model also includes a full term and an early conversion scenario that are each weighted at 50% in the final concluded fair value.

Inputs used in the valuation of the warrants at the issuance date of April 3, 2017 and June 30, 2017 are set forth below. All remaining warrants were exercised during the quarter and no warrants issued in the April 2017 financing remain outstanding at September 30, 2017.

~~As of September 30, 2017, warrants to purchase 380,561~~21,515 shares of common stock were outstanding, including:

There were no warrant exercises during the three months ended March 31, 2023 and 2022.

During the three months ended ~~September 30, 2017, certain holders of the Series A convertible preferred stock exercised their conversion option~~ March 31, 2023 and ~~converted an aggregate of 839 shares~~2022, there were no conversions of Series ~~A convertible preferred stock into 1,118,665 shares of the Company’s common stock based on the conversion ratio of 1,333.33 shares of common stock for each share of Series A~~B convertible preferred stock. During the nine months ended September 30, 2017, certain holders of the Series A convertible preferred stock exercised their conversion option and converted an aggregate of 3,502 shares of Series A convertible preferred stock into 4,669,329 shares of the Company’s common stock. As of September 30, 2017, no shares of Series A convertible preferred stock are outstanding.

Pursuant to the accounting guidance for fair value measurement and its subsequent updates, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. 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. Examples of assets and liabilities utilizing Level 1 inputs are certain money market funds, U.S. Treasuries and trading securities with quoted prices on active markets.

●~~Level 2~~—Valuations based on inputs other than the quoted prices in active markets that are observable either directly or indirectly in active markets. Examples of assets and liabilities utilizing Level 2 inputs are U.S. government agency bonds, corporate bonds, commercial paper, certificates of deposit and over-the- counter derivatives.

●~~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.~~

~~There were no financial assets outstanding that were required to be measured at fair value at September 30, 2017 or December 31, 2016.~~

Warrants issued in the April 3, 2017 offering contained provisions that could have required the Company to settle the warrants in cash in an event outside the Company’s control or had price protection rights and were therefore accounted for as liabilities while they were outstanding, with changes in the fair values included in net loss for the respective periods. Because some of the inputs to the valuation model were either not observable or were not derived principally from or corroborated by observable market data by correlation or other means, the warrant liability was classified as Level 3 in the fair value hierarchy.

~~The following table summarizes the changes in the Company’s Level 3 warrant liability for the nine months ended September 30, 2017:~~

~~There were no transfers between Level 1, Level 2 or Level 3 for the three and nine months ended September 30, 2017 or the year ended December 31, 2016.~~

The Company ~~accounts~~follows the two-class method when computing net loss per share as the Company has issued warrants and preferred stock that meet the definition of participating securities. The two-class method determines net loss per share for each class of common and ~~discloses net~~participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income ~~(loss) per~~available to common ~~share in accordance with FASB Accounting Standards Codification (“ASC”) Topic 260,~~~~Earnings Per Share~~. stockholders for the period to be allocated between common and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed.

Basic net ~~income (loss)~~loss per common share is computed by dividing net ~~income (loss)~~loss attributable to common stockholders by the weighted average number of common shares outstanding. In addition, in computing the dilutive effect of convertible securities, the numerator is adjusted to add back any convertible preferred dividends. Diluted net ~~income (loss)~~loss per common share is computed by dividing net ~~income (loss)~~loss attributable to common stockholders by the weighted average number of common shares that would have been outstanding during the period assuming the issuance of common shares for all potential dilutive common shares outstanding. Potential common shares consist of ~~shares issuable upon the conversion of Series A convertible preferred stock, and~~ potential future exercises of outstanding stock options and common stock warrants. Because the inclusion of potential common shares would be anti-dilutive for all periods presented, ~~except for~~they have been excluded from the ~~three months ended September 30, 2016,~~calculation.

The Company’s common stock warrants and preferred stock contractually entitle the holders of such securities to participate in dividends but do not contractually require the holders of such securities to participate in losses of the Company. Accordingly, in periods in which the Company reports a net loss, such losses are not allocated to such participating securities. In periods in which the Company reports a net loss attributable to common stockholders, diluted net loss per share attributable to common ~~share~~stockholders is the same as basic net loss per share attributable to common ~~share for those periods. Diluted~~stockholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. The Company reported a net ~~income per share was the same as basic net income per share~~loss attributable to common stockholders for the three months ~~end September 30, 2016 as the impact of potential common shares included in earnings per share was insignificant.~~ended March 31, 2023 and 2022.

The following table summarizes the Company’s calculation of net ~~income (loss)~~loss per common share:

The following table sets forth the weighted average number of potential common shares excluded from the calculation of net ~~income (loss)~~loss per diluted share, ~~for the three months and nine months ended September 30, 2017 and 2016~~ because ~~the effect of~~including them would be anti-dilutive:

Deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial reporting and tax bases of assets and liabilities and are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.

As a result of the Company’s cumulative losses, management has concluded that a full valuation allowance against the Company’s net deferred tax assets is appropriate. No income tax liabilities existed as of ~~September 30, 2017~~ March 31, 2023 and December 31, ~~2016~~ 2022 due to the Company’s continuing operating losses.

Financial instruments that potentially subject the Company to a concentration of credit risk consist ~~principally~~primarily of deposits of cash ~~deposits.~~and cash and cash equivalents including those deposited in money market deposit accounts. Accounts at each institution that contain specified types of deposits are insured by the Federal Deposit Insurance Corporation ~~(“FDIC”)~~(FDIC) for up to ~~$250,000. At September 30, 2017~~ $250. As of March 31, 2023 and December 31, ~~2016,~~ 2022, the Company had ~~$2,483,663~~deposits of $103,712 and ~~$2,777,962~~$110,647, respectively, of cash and cash equivalents in excess of the FDIC insured ~~limit, respectively.~~limit.

The ~~future minimum~~Company evaluates all contractual agreements at inception to determine if they contain a lease. Lease liabilities are measured at the present value of lease payments ~~due subsequent to September 30, 2017 under all non-cancelable~~not yet paid, using a discounted cash flow model that requires the use of a discount rate, or incremental borrowing rate. Leases with a term of 12 months or less are considered short-term operating leases and ~~capital leases for the next five years are as follows:~~

The total rent expense for the three months ended September 30, 2017 and 2016 was $7,395 and $87,315, respectively, and $25,775 and $238,565 for the nine months ended September 30, 2017 and 2016, respectively. Rent expense was included in general and administrative expenses for both years.no asset or liability is recognized.

The Company's operating lease consists of an office lease. On November 22, 2022, the Company entered into a new short-term operating lease for office space to pay monthly rent of $2 for a term of 12 months commencing January 1, 2023. The Company had lease expense under a short-term lease of $4 and $8 during the three months ended March 31, 2023 and 2022, respectively.

~~On October 10, 2013, a putative securities class action complaint, captioned~~~~Cook v. Atossa Genetics, Inc., et al.~~~~, No. 2:13-cv-01836-RSM, was filed~~The Company is subject to legal proceedings and claims that arise in the ~~United States District Court for~~normal course of business. The Company believes that these matters are either without merit or of a kind that should not have a material effect, individually or in aggregate, on its financial position, results of operations or cash flows.

Contractual obligations represent future cash commitments and liabilities under agreements with third party clinical research organizations (CROs) and clinical manufacturing organizations (CMOs). With the ~~Western District~~exception of ~~Washington against us, certain of our directors and officers and~~one CRO contract, such agreements are cancellable upon written notice by the ~~underwriters of our November 2012 initial public offering.~~Company. The ~~complaint alleged that all defendants violated Sections 11 and 12(a)(2), and that we and certain of our directors and officers violated Section 15,~~one non-cancellable contract expires upon completion of the ~~Securities Act by making material false~~study and ~~misleading statements and omissions in the offering’s registration statement, and that we and certain of our directors and officers violated Sections 10(b) and 20A~~release of the ~~Exchange Act~~final report, or the contract may be terminated by the CRO, or by the FDA or other governmental agency. As of March 31, 2023, the Company's non-cancellable commitment related to this contract are estimated to be $1,146 and ~~SEC Rule 10b-5 promulgated thereunder by making false and misleading statements and omissions~~$13 in ~~the registration statement and in certain~~2024. As of our subsequent press releases and SEC filings with respect to our NAF specimen collection process, our ForeCYTE Breast Health Test and our MASCT device. The complaint sought, on behalf of persons who purchased our common stock between November 8, 2012 and October 4, 2013, inclusive, damages of an unspecific amount.March 31, 2023, we have incurred $111 under this contract.

On February 14, 2014, the district court appointed plaintiffs Miko Levi, Bandar Almosa and Gregory Harrison (collectively, the “Levi Group”) as lead plaintiffs, and approved their selection of co-lead counsel and liaison counsel. The Court also amended the caption of the case to read~~In re Atossa Genetics, Inc. Securities Litigation~~ No. 2:13-cv-01836-RSM. An amended complaint was filed on April 15, 2014. The Company and other defendants filed motions to dismiss the amended complaint on May 30, 2014. On October 6, 2014 the Court granted defendants’ motion dismissing all claims against Atossa and all other defendants. On October 30, 2014, the Court entered a final order of dismissal. On November 3, 2014, plaintiffs filed a notice of appeal with the Court and appealed the Court’s dismissal order to the U.S. Court of Appeals for the Ninth Circuit. On August 18, 2017, the Ninth Circuit affirmed in part and reversed in part the district court’s judgment.NOTE 15: STOCK-BASED COMPENSATION

On September 11, 2017, the Ninth Circuit entered an order and mandate remanding the case to the United States District Court for the Western District of Washington. On October 19, 2017, plaintiffs filed an amended complaint that conforms to the ruling by the Ninth Circuit. Defendants’ answer to the amended complaint is due December 8, 2017. Since the claims under Sections 11, 12(a)(2) and 15 were dismissed by the district court and not appealed, the amended complaint only alleges violations of Section 10(b) and 20A of the Exchange Act and SEC Rule 10b-5 promulgated thereunder against the company and one officer. All other claims and defendants have been dismissed. The alleged class period in the amended complaint is December 20, 2012 through October 4, 2013.

The Company believes this lawsuit is without merit and plans to defend itself vigorously; however, failure by the Company to obtain a favorable resolution of the claims set forth in the complaint could have a material adverse effect on the Company’s business, results of operations and financial condition. Currently, the amount of such material adverse effect cannot be reasonably estimated, and no provision or liability has been recorded for these claims as of September 30, 2017. The costs associated with defending and resolving the lawsuit and ultimate outcome cannot be predicted. These matters are subject to inherent uncertainties and the actual cost, as well as the distraction from the conduct of the Company’s business, will depend upon many unknown factors and management’s view of these may change in the future.

~~On September 28, 2010,~~March 24,2020, the Board of Directors approved the adoption of the 2020 Stock Incentive Plan (the 2020 Plan) to provide for the grant of equity-based awards to employees, officers, non-employee directors and other key persons providing services to the Company. No awards may be granted under the 2020 Plan after the date that is 10 years from the date of stockholder approval. An aggregate of 3,000 shares of common stock were initially reserved for issuance in connection with awards granted under the 2020 Plan. On May 14, 2021, the stockholders approved an additional 15,000 shares available for issuance under the 2020 Plan. There were 5,790 shares available for future grants under the 2020 Plan as of March 31, 2023.

On September 28, 2010,the Board of Directors approved the adoption of the 2010 Stock Option and Incentive Plan (“(the 2010 ~~Plan”)~~ Plan) to provide for the grant of equity-based awards to employees, officers, non-employee directors and other key persons providing services to the Company. Awards of incentive stock options ~~may~~could be granted under the 2010 Plan until September 2020. ~~No other awards~~ Shares mayno longer be granted under the 2010 Plan after the date that is 10 years from the date of stockholder approval. An aggregate of 66,667 shares were initially reserved for issuance in connection with awards granted under the 2010 Plan and on May 18, 2016, an additional 133,333 shares were reserved for issuance under the 2010 Plan. On May 9, 2017, the stockholders approved an additional 1,500,000 shares for issuance under the 2010 Plan.this plan.

~~The following table presents the automatic additions to the 2010 Plan since inception pursuant to the “evergreen” terms of the 2010 Plan:~~

The Company granted 02,461 and ~~1,716,323~~2,722 options to purchase shares of common stock under the 2020 Plan to employees and directors during the three ~~and nine~~ months ended ~~September 30, 2017. No~~March 31, 2023 and 2022, respectively. The weighted average grant date fair value of options granted during the three months ended March 31, 2023 and 2022 was $.061 and $1.07, respectively. There were no stock options exercised during the three ~~or nine~~ months ended ~~September 30, 2017. There are 100,456 shares available for grant under the 2010 Plan as of September 30, 2017.~~March 31, 2023 and 2022.

~~Compensation costs associated with the Company’s stock options are recognized, based on the grant-date fair values~~

The fair value of stock options granted ~~for the nine months ended September 30, 2017 and 2016 was~~were calculated using the Black-Scholes option-pricing model applying the following assumptions:

Options issued and outstanding as of ~~September 30, 2017~~ March 31, 2023 and ~~their~~related activities during the ~~nine~~three months ~~then~~ ended ~~are~~March 31,2023 were as follows:

~~At September 30, 2017,~~ On March 31, 2023, there were ~~1,651,052~~5,137 unvested options outstanding, and the related unrecognized total compensation cost associated with these options was ~~approximately $1,203,000.~~$4,085. This expense is expected to be recognized over a weighted-average period of ~~2.0 years.~~1.31 years from March 31, 2023.

On October 26, 2017, the Company entered into an underwriting agreement with Maxim Group LLC relating to a public offering of common stock which closed on October 30, 2017. The offering generated gross proceeds to the Company of approximately $5.5 million and net proceeds of $5.1 million after deducting underwriting discounts and commission.Defined Contribution Plan

The ~~offering included 11,500,000 shares~~Company has a defined contribution plan to which employees of ~~common stock at~~the Company may defer contributions for income tax purposes. Participants are eligible to receive employer matching contributions up to 6% of deferrals. Employees may also be eligible for a ~~public offering price~~discretionary match over 6%. Defined contribution plan employer matching contributions for the three months ended March 31, 2023 and 2022, were $56 and $34, respectively.

ITEM 2. ~~MANAGEMENT’S~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of ~~the~~our financial condition and results of operations should be read in conjunction with the ~~financial statements~~Condensed Consolidated Financial Statements and the related notes included elsewhere in this report. This discussion contains forward-looking statements, which are based on assumptions about the future of the ~~Company’s~~Company’s business. The actual results could differ materially from those contained in the forward-looking statements. Please read ~~“Forward-Looking Statements”~~“Forward-Looking Statements” included below for additional information regarding forward-looking statements.

This report contains, in addition to historical information, certain information, assumptions and discussions that may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have made these statements in reliance on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are subject to certain risks and uncertainties which could cause actual results to differ materially from those projected or anticipated. Although we believe our assumptions underlying our forward-looking statements are reasonable as of the date of this report, we cannot assure you that the forward-looking statements set out in this report will prove to be accurate. We ~~typically~~may identify these forward-looking statements by the use of forward-looking words such as “expect,” “potential,” “continue,” “may,” “will,” “should,” “could,” “would,” “seek,” “intend,” “plan,” “estimate,” ~~“anticipate”~~“anticipate,” “believe,” “future,” or the negative ~~version~~versions of ~~those~~these words or other comparable words. All statements other than statements of historical fact, including statements regarding guidance, industry prospects, or future results of operations or financial position, made in this report are forward-looking. Forward-looking statements contained in this report include, but are not limited to, statements about:

These and other forward-looking statements made in this report are presented as of the date ~~on which~~of the ~~statements are made.~~filing of this report. We have ~~included~~discussed certain important factors, ~~in the cautionary statements included in this report, particularly~~risks and uncertainties in the section titled “ITEM 1A. RISK FACTORS,” that we believe could cause our actual results, events or ~~events~~outcomes to differ materially from ~~the~~our anticipated results, ~~as set forth in the forward-looking statements that we make.~~events or outcomes. Our forward-looking statements do not reflect the potential impact of any new information, future events or circumstances that may affect our business after the date of this report. Except as required by law, we do not intend to update any forward-looking statements after the date on which the statement is made, whether as a result of new information, future events or circumstances or otherwise.

We are a clinical-stage ~~pharmaceutical~~biopharmaceutical company ~~focused~~developing proprietary innovative medicines in areas of significant unmet medical need in oncology, with a current focus on ~~developing novel, proprietary therapeutics and delivery methods for the treatment of~~ breast cancer and other breast conditions. WeOur lead drug candidate under development is oral (Z)-endoxifen which we are developing ~~Endoxifen with~~in two ~~routes of delivery: a topical formulation, applied like a lotion, for~~settings: one to treat breast cancer by reducing tumor cell activity prior to surgery and another one to reduce dense breast tissue in women. More than 10 million women in the ~~treatment of a condition called mammographic~~U.S. and millions more worldwide have high breast density, ~~(or, MBD),~~which reduces the ability of mammograms to detect cancer and ~~an oral formulation~~increases the risk of breast cancer. There is no FDA-approved treatment for breast density. We believe there is also a significant unmet need for breast cancer ~~survivors who do not benefit from taking oral~~treatments in premenopausal women prior to surgery as the typical treatment for the majority of early-stage breast cancer patients currently involves ovarian suppression, which can induce premature menopause and dramatically impact a patient’s quality of life.

We have been granted two U.S. patents covering our proprietary (Z)-endoxifen and we have numerous applications pending in the U.S. and in other major countries. We have patent protection covering our proprietary (Z)-endoxifen through November 17, 2038.

Our business strategy is to advance our programs through clinical studies, including with partners, and opportunistically add programs in areas of high unmet medical need through acquisition, minority investment, collaboration or internal development.

The following is a summary of the current status of our major clinical development programs:

(Z)-endoxifen. (Z)-endoxifen is an active metabolite of tamoxifen, which is ~~the current~~an FDA-approved ~~standard of care. We are also developing our patented intraductal microcatheter technology~~drug to ~~potentially target the delivery of therapies, including fulvestrant and CAR-T cell therapies, directly to the site of breast cancer.~~

~~Oral tamoxifen has been widely used for over 30 years to both~~ treat and prevent breast cancer. Tamoxifen, however, has significant drawbacks: First, it can cause side effects including headaches, nausea and early menopausal symptoms as well as rare but serious side effects such as cataracts, strokes and cancer in high-risk women. We are developing a proprietary form of (Z)-endoxifen which is administered orally for the uterus. Second, tamoxifen is a “pro-drug,” meaning that it must be processed by the liver in order to produce therapeutic metabolites. The metabolite in tamoxifen that accounts for most of its therapeutic activity is called Endoxifen. Unfortunately, up to 50%potential treatment of breast cancer ~~survivors who are taking tamoxifen do not produce therapeutic levels~~and reduction of ~~Endoxifen (meaning they are “refractory”) for~~breast density. We have completed four Phase 1 clinical studies (including a ~~number of reasons including that they do not~~study in men) and two Phase 2 clinical studies with our proprietary (Z)-endoxifen (including oral and topical formulations). We have ~~the requisite liver enzymes. We are developing Endoxifen because of these drawbacks to tamoxifen.~~also completed significant pre-clinical development and have developed clinical manufacturing capabilities through qualified third-parties.

~~We are developing two different presentations of proprietary Endoxifen~~(Z)-endoxifen for ~~two different potential treatment settings:~~

~~First, we are developing topical Endoxifen for~~Women with Breast Density. Mammographic breast density (MBD) is an emerging public health issue affecting over 10 million women ~~with~~in the U.S. alone. Studies conducted by others have shown that MBD ~~for transdermal administration. Legislation that has been recently enacted in approximately 30 states (and that is now pending on~~increases the ~~federal level) currently requires that women be notified if they have MBD and those notifications typically state that women with MBD have a higher~~ risk of developing breast cancer and that ~~mammography~~reducing MBD may ~~not be as effective because~~reduce the incidence of ~~the MBD. We estimate that approximately ten million women in the Unites States have MBD, for which there is no FDA-approved treatment. Although oral tamoxifen is approved to prevent~~ breast cancer in “high-risk” women, it is used by less than 5% of women with an increased risk of developing breast cancer because of the actual or perceived side effects and risks of tamoxifen. We believe our topical Endoxifen may provide an effective treatment for MBD because, unlike an oral medication, it is applied directly to the breast and penetrates the skin; it does not require metabolism by the liver; and it may produce fewer side effects than tamoxifen.cancer.

~~Second,~~In December 2021, we are developing oral Endoxifen for breast cancer patients who are refractory to tamoxifen. Approximately one million breast cancer patients take tamoxifen to prevent recurrence and new breast cancer; however, up to 50% of those patients are refractory to tamoxifen. We believe our oral Endoxifen may provide an effective treatment supplement or option for these refractory patients because Endoxifen, unlike tamoxifen, does not require liver metabolism.

~~We recently completed~~commenced a ~~comprehensive~~ Phase 12 study ~~in 48 healthy women in Australia using both the topical and oral forms~~ of our proprietary ~~Endoxifen.~~oral (Z)-endoxifen. The ~~objectives of this double-blinded,~~study, known as the Karisma-(Z)-endoxifen study, is a Phase 2, randomized, double-blind, placebo-controlled, ~~Phase 1~~dose-response study ~~were to assess the pharmacokinetics~~ of our proprietary ~~Endoxifen dosage forms as single (oral) and repeat (oral and topical) doses, as well as~~oral (Z)-endoxifen in healthy premenopausal women with measurable breast density. The primary objective of the study is to determine the dose-response relationship of daily (Z)-endoxifen on breast density reduction. Secondary endpoints will assess safety and tolerability. The study ~~was~~also includes an exploratory endpoint to assess durability of the breast density changes. The study is being conducted in ~~two parts based on route~~Stockholm, Sweden and will include approximately 240 participants, at full enrollment, who will receive daily doses of ~~administration.~~oral (Z)-endoxifen or placebo for six months after they enroll.

~~In September 2017,~~Based on input from the FDA and Swedish Medical Products Agency, reduction in MBD may not be an approvable indication unless we ~~reported preliminary results for~~can demonstrate that our (Z)-endoxifen also reduces the ~~topical arm~~incidence of breast cancer. We may therefore conduct additional studies of (Z)-endoxifen to assess its correlation with the ~~study and in October 2017 we reported preliminary results for the oral arm~~risk of the study. We concluded that all objectives were successfully met in both arms of the study: there were no clinically significant safety signals and no clinically significant adverse events and both the oral and topical Endoxifen were well tolerated. In the topical arm of the study, there were low but measurable Endoxifen levels detectedbreast cancer and/or reduction in the ~~blood in a dose-dependent fashion and~~incidence of new breast cancers.

(Z)-endoxifen for Neoadjuvant Treatment of Breast Cancer. We are also developing (Z)-endoxifen to treat estrogen receptor positive (ER+)/human epidermal growth factor receptor 2 negative (HER2-) breast cancer in the neoadjuvant setting, which is the administration of a therapy before the main treatment, which is usually surgery. Although there are neoadjuvant treatments for breast cancers that are not ER+, there are few neoadjuvant treatments for ER+ breast cancer which comprises about 78% of all breast cancers and the treatments that are available typically for premenopausal women involve ovarian suppression which can induce premature menopause and significantly impact quality of life. We believe there is a compelling need for therapy with our (Z)-endoxifen in this setting.

In October 2022, we received authorization from the U.S. FDA for our Investigational New Drug (IND) application for oral ~~arm~~(Z)-endoxifen. The study, “A Randomized Phase 2 Noninferiority Trial of ~~the study participants exhibited dose-dependent Endoxifen levels~~(Z)-endoxifen and Exemestane + Goserelin as Neoadjuvant Treatment in ~~published reports of the therapeutic range. In September 2017, we contracted Stockholm South General Hospital in Sweden to conduct a~~Premenopausal Women with ER+/HER2- Breast Cancer,” also known as “EVANGELINE,” is an open-label, randomized, Phase 2 study designed to investigate (Z)-endoxifen for the neoadjuvant treatment of ~~our topical Endoxifen.~~premenopausal women ages 18 and older with early stage (Grade 1 or 2) ER+/HER2- breast cancer. Participants will receive neoadjuvant treatment for up to six months, followed by surgery. The study will be led by principal investigator Dr. Per Hall, MD, Ph.D., Head of the Department of Medical Epidemiology and Biostatistics at Karolinska Institutet. We have applied for approval from the Institutional Review Board and Swedish regulatory authority (Medical Products Agency) to begin enrollment. The placebo-controlled, double-blinded study is expected to enroll approximately 175 patients at up to ~~480 subjects.~~25 sites. EVANGELINE is a two part study consisting of a PK Run-in Cohort and a Treatment Cohort. The primary ~~endpoint~~objective of the Treatment Cohort is ~~MBD reduction,~~to evaluate the endocrine sensitive disease (ESD) rate, measured by Ki-67 (a proliferation marker prognostic for disease free survival), after four weeks of treatment with (Z)-endoxifen compared to treatment with current standard of care, exemestane plus goserelin. Exemestane is an aromatase inhibitor designed to block the synthesis of estrogen and slow the growth of ER+ cancers. Goserelin is a medication given to block the ovaries from making estrogen, also called ovarian function suppression (OFS). In premenopausal women, OFS is associated with significant morbidity and inadequate compliance, which ~~will be measured after six~~compromises efficacy and ~~twelve months~~increases the risk of ~~dosing, as well as safety and tolerability. We are planning to start enrollment~~mortality. In February 2023, we enrolled the first patient in this ~~study in the first quarter of 2018.~~study.

In ~~October 2017, we announced~~March 2023, a ~~new program using Chimeric Antigen Receptor Therapy, or CAR-T. We plan to use our proprietary intraductal microcatheter technology~~second Phase 2 trial investigating oral (Z)-endoxifen as a neoadjuvant treatment for ~~the potential transpapillary, or “TRAP,” delivery of T-cells that have been genetically modified to attack~~women diagnosed with locally advanced ER+ breast cancer cells. We believe this method has several potential advantages: reduced toxicity by limiting systemic exposure of the T-cells; improved efficacy by placing the T-cells in direct contact with the target ductal epithelial cells that are undergoing malignant transformation; and, lymphatic migration of the CAR-T cells along the same path taken by migrating cancer cells, potentially extending their cytotoxic actions into the regional lymph system, which could limit tumor cell dissemination. This program is in the research and development phase and has not been approved by the FDA or any other regulatory body. Pre-clinical studies, and clinical studies demonstrating safety and efficacy among other things, and regulatory approvals will be required before commercialization.

We have developed a foundational intellectual property position with respect to TRAP CAR-T, and we intend to continue research and development through partnership with leading investigators, institutions, and organizations around the world, bringing our technology and expertise in TRAP delivery together with experts in cancer immunology and T-cell biology.

~~We are currently conducting a Phase 2 study using our microcatheter technology to deliver fulvestrant at Montefiore Medical Center.~~was initiated. This trial is a ~~Phase~~study arm in the ongoing I-SPY 2 clinical trial. The I-SPY 2 TRIAL is a collaborative effort among academic investigators from major cancer research centers across the United States, Quantum Leap Healthcare Collaborative, the U.S. FDA, and the Foundation for the National Institutes of Health (FNIH) Cancer Biomarkers Consortium. Approximately 20 patients will be treated with (Z)-endoxifen for up to 24 weeks prior to surgery.

Inhaled HNAC(AT-H201). AT-H201 was under development as a potential treatment for COVID-19; however, due to the rapidly shifting treatment landscape and introduction of effective vaccines and treatments, in late 2022 we shifted our focus to the treatment of patients with compromised lung function due to the damaging effects of cancer treatment. We are scheduled to conclude our study in ~~women~~healthy volunteers with ~~ductal carcinoma~~AT-H201 in ~~situ (“DCIS”) or Stage 1 or 2 breast cancer (invasive ductal carcinoma) scheduled for mastectomy or lumpectomy within 30~~early 2023, but we do not expect to ~~45 days. This study~~advance the program further in 2023 as we focus on our (Z)-endoxifen programs.

On December 23, 2022, we closed our previously announced investment in Dynamic Cell Therapies, Inc. (DCT), a privately-held, venture capital-backed, developer of CAR-T therapies. DCT is ~~assessing~~in the pre-clinical phase of developing controllable CAR-T cells to address difficult-to-treat cancers. Its platform technology of dynamic control of engineered T-cells is designed to improve the safety, ~~tolerability, cellular activity~~efficacy, and ~~distribution~~durability of ~~fulvestrant when delivered directly into breast milk ducts~~CAR-T cell therapies. While its initial focus is hematologic malignancies, it's possible that its innovative approach could also have broad applicability in solid tumors and autoimmune diseases. Our investment in DCT, which totaled $4.7 million, resulted in our owning approximately 19% of ~~these patients compared to those who receive~~ the ~~same drug by injection. Of the 30 patients required for full enrollment, six will receive the standard intramuscular injection~~outstanding capital stock of ~~fulvestrant and 24 will receive fulvestrant with our microcatheter device.~~DCT.

The primary endpoint of the clinical trial is to compare the safety, tolerability and distribution of fulvestrant between the two routes of administration (intramuscular injection or through our microcatheters). The secondary endpoint of the study is to determine if there are changes in the expression of Ki67 (a measure of cellular proliferation that correlates with tumor growth) as well as estrogen and progesterone receptors between a pre-fulvestrant biopsy and post-fulvestrant surgical specimens. Digital breast imaging before and after drug administration in both groups will also be performed to determine the effect of fulvestrant on any lesions as well as breast density of the participant.

We are in the research and development phase and are not currently marketing any ~~products or services.~~products. We do not anticipate generating revenue unless and until we develop and launch our pharmaceutical programs.

On November 22, 2022, the Company entered into an operating lease with WW 107 Spring Street LLC to lease office space in Seattle Washington. The Company agreed to pay $1,560 in monthly rent for a term of 12 months beginning January 1, 2023.

InOur management’s discussion and analysis of our ~~Annual Report~~financial condition and results of operations is based on ~~Form 10-K/A~~our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, (U.S. GAAP). The preparation of these Condensed Consolidated Financial Statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses. We base our estimates on our historical experience, known trends and events, and on various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions.

We believe that the following accounting policies are the most critical to the judgments and estimates used in the preparation of our Condensed Consolidated Financial Statements.

Our investment in DCT Series Seed Preferred Stock does not have a readily determinable fair value, so we have elected to measure the investment at cost less any impairment. As part of preparing our Condensed Consolidated Financial Statements, we considered qualitative impairment factors in determining if an impairment analysis is required. Specifically, we considered the adverse change in the general market condition of the industry in which DCT operates and concerns about the investee’s ability to continue as a going concern, due to negative cash flows from operations. Based on these impairment indicators, we performed a fair value measurement using a Black-Scholes options pricing model. The model 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 eighteen comparable public clinical stage immunotherapy or CAR-T companies. The expected term of our investment is four years. The risk-free interest rate used is based upon prevailing short-term interest rates over the expected term of the investment.

The resulting valuation concluded that the investment was not impaired, thus, no impairment has been recorded. The assumptions and estimates used to estimate the fair value of the investment include the following information from DCT:

While assumptions used to calculate and account for the ~~year ended December 31, 2016, we disclosed our critical accounting policies~~investment in non-marketable equity securities represent management’s best estimates, these estimates involve inherent uncertainties and the application of management’s judgement. As a result, if underlying assumptions and estimates ~~upon which~~change, our ~~financial statements~~investment may be impaired in future periods.

As part of the process of preparing our Condensed Consolidated Financial Statements, we are ~~derived. There~~required to estimate our accrued research and development expenses. This process involves reviewing open contracts and work orders, communicating with our applicable personnel to identify services that have been ~~no changes to~~performed on our behalf, and estimating the associated cost incurred for the services, including, in some cases, when we have not yet been invoiced or otherwise notified of actual costs. R&D costs are generally expensed as incurred. R&D expenses include, for example, manufacturing expense for our drugs under development, expenses associated with preclinical studies, clinical trials and associated salaries, bonuses, stock-based compensation and benefits. 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 research and development activities.

We have entered into various research and development contracts with clinical research institutions, (CRO's), clinical manufacturing organizations (CMOs) and other companies. The majority of our service providers invoice us monthly for services performed, however, payments under some of these ~~policies since December 31, 2016, other than discussed~~contracts may be required in advance of the services being performed, for example when a contract requires an initial payment at the outset of the contract. Payments made in advance of performance of services are reflected in the ~~following paragraph. Readers are encouraged to review these disclosures in conjunction with the review of this report.~~accompanying condensed consolidated balance sheets as prepaid expenses.

We base our expenses related to preclinical studies and clinical trials on our estimates of the services received and efforts expended pursuant to quotes and contracts with CROs and other companies that conduct and manage preclinical studies and clinical trials on our behalf. The financial terms of these vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the expense. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, we adjust the accrual or prepaid expense accordingly. We make estimates of our accrued expenses as of each balance sheet date in the Condensed Consolidated Financial ~~Instruments with Characteristics~~Statements based on facts and circumstances known to us at that time. However, additional information may become available to us, which may allow us to make a more accurate estimate in future periods. If we do not identify costs that we have begun to incur or if we underestimate or overestimate the level of ~~Both Liabilities and Equity~~services performed or the costs of these services, our actual expenses could differ from our estimates.

We measure all stock option awards granted to employees, non-employee directors and consultants based on the nine months ended September 30, 2017, the Company issued certain financial instruments, consisting of warrants to purchase common stock, which have characteristics of both liability and equity. Financial instruments such as warrants that are classified as liabilities are fair valued upon issuance and are remeasured at fair value ~~at subsequent reporting periods~~on the date of grant, and we recognize compensation expense over the requisite service period, which is generally the vesting period of the respective award. The straight-line method of expense recognition is applied to all awards with ~~the resulting change in fair value recorded in other income/(expense).~~ service-only conditions. We account for forfeitures as they occur.

The fair value of ~~warrants~~each option grant is estimated using ~~valuation models that require~~ the ~~input~~Black-Scholes option-pricing model, which requires assumptions regarding the expected volatility of ~~subjective assumptions including~~the price of our common stock, the expected life of the options, an expectation regarding future dividends on our common stock, estimation of an appropriate risk-free interest rate and expected term. Our expected common stock price volatility assumption is based upon the historic volatility of our stock price. The expected life assumption for stock option grants is based on an average of the contractual term of the options of 10 years with the average vesting term of one to four years. The dividend yield assumption of zero is based upon the fact that we have never paid cash dividends and presently have no intention of paying cash dividends in the ~~probability~~future. The risk-free interest rate used for each grant is based upon prevailing short-term interest rates over the expected lives of ~~future equity issuances and their impact to~~ the ~~price protection feature.~~options.

While assumptions used to calculate and account for stock-based compensation awards represent management’s best estimates, these estimates involve inherent uncertainties and the application of management’s judgement. As a result, if revisions are made to our underlying assumptions and estimates, our stock-based compensation expense could vary significantly from period to period.

~~Three~~Comparison of the threemonths ended March 31, 2023 and ~~Nine Months Ended September 30, 2017 and 2016~~2022 (dollar amounts in thousands unless otherwise noted)

For the three months ended March 31, 2023 and 2022, we had no source of sustainable revenue and no associated cost of revenue.

Operating ~~Expenses:~~Expenses~~Total operating expenses were approximately $2.1 million~~:

The following table provides a breakdown of major categories within Research and ~~$5.6 million~~Development (R&D) and General and Administrative (G&A) expenses for the three ~~and nine~~ months ended ~~September 30, 2017, respectively, consisting of general~~March 31, 2023 and ~~administrative (G&A) expenses of approximately $1.3 million~~2022, together with the dollar and $3.5 million, respectively, and research and development (R&D) expenses of approximately $0.7 million and $2.1 million, respectively. Total operating expenses were approximately $1.6 million and $5.4 million for the three and nine months ended September 30, 2016, respectively, consisting of G&A expense of approximately $1.5 million and $5.0 million, respectively and R&D expenses of $0.1 million and $0.4 million, respectively.percentage change in those categories:

Total operating expenses were $7,098 for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2023, which was an increase of $2,351, or 50%, from the three months ended March 31, 2022. Operating expenses for the three months ended March 31, 2023 consisted of R&D expenses of $3,508 and G&A expenses of $3,590. Operating expenses for the three months ended March 31, 2022 consisted of R&D expenses of $1,499 and G&A expenses of $3,248. Factors contributing to the increased operating expenses for the three months ended March 31, 2023 are explained below.

Research and DevelopmentExpenses: R&D expenses for the three months ended March 31, 2023, were $3,508, an increase of $2,009, from total R&D expenses for the three months ended March 31, 2022 of $1,499. Key changes were as follows:

• The increase in R&D expense was attributed primarily to increased spending on clinical and non-clinical trials of $1,048 compared to the ~~same periods of 2016 increased approximately $0.5 million or 32.0%~~prior year period due to (Z)-endoxifen trial costs and increased ~~$0.2 million or 3.6%, respectively.~~spending on active pharmaceutical ingredients (API) and drug product formulation and development.

• In the first quarter of 2022, the Company received a refund of $1,000 from the research institution with which the Company had an exclusive right to negotiate for the acquisition of the worldwide rights to two oncology R&D programs. No exclusivity payments were made or refunded during the three months ended March 31, 2023.

~~General and Administrative~~G&A Expenses: G&A expenses for the three months ended ~~September 30, 2017~~March 31, 2023, were ~~approximately $1,314,000, a decrease~~$3,590, an increase of ~~$159,000 or 10.8%,~~$342, from ~~approximately $1,473,000, for the same period in 2016.~~total G&A expenses for quarter ended March 31, 2022 of $3,248. Key changes were as follows:

• The increase in G&A compensation expense for the ~~nine~~three months ended ~~September 30, 2017 were approximately $3,528,000, a decrease~~March 31, 2023 compared to the prior year quarter, was in part attributable to the increase in compensation expense of ~~$1,513,000~~$209, or ~~30.0%~~26%, ~~from approximately $5,041,000 for~~compared to the ~~same period~~prior year quarter due to an increase in ~~2016. G&A expenses consist primarily of personnel~~headcount, salaries and related benefit costs, facilities, professional services, insurance, and public company related expenses. The decrease in G&A expenses is mainly attributed to a reduction in payroll expenses resulting frombonus accruals that was partially offset by a decrease in ~~headcount, rent, and exit costs incurred~~non-cash stock-based compensation. Non-cash stock-based compensation decreased by $130, or 11%, compared to the prior year period as the weighted average fair value of options amortizing in ~~2016 that were not incurred in 2017.~~2023 was lower quarter over quarter.

~~Research~~• Legal and ~~Development Expenses~~~~: R&D expenses~~professional fees increased by $257 for the three ~~and nine~~ months ended ~~September 30, 2017 were approximately $743,000~~March 31, 2023, compared to the prior year period due primarily to higher patent activity for (Z)-endoxifen and ~~$2,111,000, respectively,~~our immunotherapy research.

Interest Income: Interest income was $850 for the three months ended March 31, 2023 an increase of ~~approximately $658,000, or 774.1% and $1,707,000 or 422.5%~~$849, from interest income of $1 for the three months ~~and nine months~~ ended ~~September 30, 2016, respectively.~~March 31, 2022. The increase in R&D expenses is attributed to salaries, manufacturing and clinical trial expenses associated with our Endoxifen program for which manufacturing commenced at the beginning of 2017 and the clinical studies which commenced in the second quarter of 2017. We expect our R&D expenses to increase throughout 2017 as we continue the clinical trial of fulvestrant administered via our microcatheters and as we continue the development of Endoxifen and potentially other indications and pharmaceuticals.

~~Other Income Expense:~~ ~~In August 2016, the Company received a termination payment of $1,762,931 pursuant~~was due to the ~~settlement agreement with Besins Healthcare Luxembourg SARL. There were no settlement payments received by the Company~~higher average balance of invested cash in a money market account and higher average interest rates for the three ~~and nine~~ months ended ~~September 30, 2017.~~March 31, 2023 compared to the prior year period.

Income Taxes: We have incurred net operating losses since inception. We did not record an income tax benefit for incurred losses for the quarters ended March 31, 2023 and 2022, due to uncertainty regarding utilization of our net operating loss carryforwards and due to our history of losses.

We have a history of operating losses as we have focused our efforts on raising capital and building our products and services in our pipeline. The Company’s consolidated financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred net losses and negative operating cash flows since inception. For the ~~nine~~three months ended ~~September 30, 2017, the Company~~March 31, 2023, we have recorded a net loss of ~~approximately $6.1 million,~~$6,281 and used ~~approximately $4.9 million~~$7,022 of cash in operating activities. As of ~~September 30, 2017, the Company~~March 31, 2023, we had ~~approximately $2.7 million~~$103,868 in unrestricted cash and cash equivalents and working capital of ~~approximately $1.9 million. The Company has not yet established an ongoing source of revenue~~$107,925. We believe we have sufficient ~~to cover its operating costs~~cash 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. The Company can give no assurances that any additional capital that it is able to obtain, if any, will be sufficient to meet its needs, or that any such financing will be obtainable on acceptable terms. If the Company is unable to obtain adequate capital, it could be forced to cease operations or substantially curtail is commercial activities. These conditions raise substantial doubt as to the Company’s ability to continue as a going concern. The accompanying 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.

~~As of the date of filing this quarterly report, we expect that our existing resources will be sufficient~~cash equivalents to fund our ~~planned operations~~projected operating requirements for at least the next ~~8-12 months; however, additional capital resources will be needed to fund operations longer-term.~~

Our ability to continue as a going concern is dependent on our obtaining additional adequate capital to fund additional operating losses until we become profitable. If we are unable to obtain adequate capital, we could be forced to cease operations.12 months.

As of ~~September 30, 2017 the Company~~March 31, 2023, we had cash, ~~and~~ cash equivalents and restricted cash of ~~$2.7 million.~~$103,978.

Net Cash Flows from Operating Activities: Net cash used in operating activities was ~~approximately $4.9 million~~$7,022 for the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2023, an increase of $2,144, or 44%, compared ~~with approximately $4.0 million~~to net cash used in operating activities for the ~~nine~~three months ended ~~September 30, 2016. We spent approximately $2.1 million on research and development for the nine month period ended September 30, 2017,~~March 31, 2022 of $4,878. The increase compared to ~~$400,000 for~~ the ~~same~~prior year period was primarily due to an increase in ~~2016; this increase was offset by reductions~~cash used in ~~compensation expense from reduced headcount, reduced occupancy expense, reduced consulting fees, and from severance payments in 2016 that were not incurred in 2017.~~clinical trial activity of $1,048.

Net Cash Flows from Investing Activities: ~~There~~Net cash used in investing activities was no$0 for the three months ended March 31, 2023, compared to net cash used in investing activities of $13 for the ~~nine~~three months ended ~~September 30, 2017, compared with approximately $5,000 for nine months ended Sept 30, 2016.~~March 31, 2022. The decrease ~~in 2017 was attributable~~compared to the ~~reduction in~~prior year period was primarily due to cash used for purchases of ~~fixed asset equipment in 2017 as compared to 2016.~~new computers.

Net Cash Flows from Financing Activities:~~Net~~There was no cash ~~provided by~~used for financing activities ~~generated proceeds of $4.6 million for~~during the ~~nine~~three months ended ~~September 30, 2017, as compared with $4.7 million for the nine months ended June 30, 2016. In both of the periods ended September 30, 2017~~March 31, 2023 and ~~2016 the Company completed public offerings.~~2022.

We expect to incur ongoing operating losses for the foreseeable future as we continue to develop our planned therapeutic programs, including related clinical studies and other programs in the pipeline. ~~We expect that as of the date of filing this quarterly report, our existing resources~~Our future funding requirements will ~~be sufficient to fund our planned operations for at least the next 8-12 months.~~depend on many factors, including:

•the cost of manufacturing drugs under development, the costs associated with clinical trials and associated salaries and benefits;

•the extent to which we enter into contracts or invest in third parties in order to further develop our drug candidates;

•the ~~Company entered into an underwriting agreement~~costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending other intellectual property-related claims; and

•the costs and fees associated with ~~Maxim Group LLC relating to a public offering~~the discovery, acquisition or in-license of common stock which closed on October 30, 2017. The offering generated gross proceeds to the Company of approximately $5.5 million and net proceeds of $5.1 million after deducting underwriting discounts and commission.

If we are unable to raise additional capital when needed, ~~however,~~ we could be forced to curtail or cease our operations. Our future capital uses and requirements will depend on the time and expenses needed to begin and continue clinical trials for our new drug developments. As discussed above, the coronavirus pandemic could adversely impact the timing and enrollment of our clinical trials.

Additional funding may not be available to us on acceptable terms or at all. The continued coronavirus pandemic and uncertain market and macroeconomic conditions, including due to inflationary pressures, rising interest rates, general economic slowdown or a recession, foreign exchange rate volatility, financial institution instability, changes in monetary policy and increasing geopolitical instability may limit our ability to access capital. In addition, the terms of any financing may adversely affect the holdings or the rights of our stockholders. For example, if we may raise additional funds by issuing equity securities or by selling debt securities, if convertible, further dilution to our existing stockholders would result. To the extent our capital resources are insufficient to meet our future capital requirements, we will need to finance our future cash needs through public or private equity offerings, collaboration agreements, debt financings or licensing arrangements.

If adequate funds are not available, we may be required to terminate, significantly modify or delay our development programs, reduce our planned commercialization efforts, or obtain funds through collaborators that may require us to relinquish rights to our technologies or product candidates that we might otherwise seek to develop or commercialize independently. Further, we may elect to raise additional funds even before we need them if we believe the conditions for raising capital are favorable.

Although we submitted a proposal to our stockholders to amend our amended and restated certificate of incorporation to increase the number of authorized shares of our common stock for various potential purposes, including potential capital raising transactions, our stockholders did not approve the proposal at our 2021 and 2022 annual meetings of stockholders nor did they approve it at a special meeting of stockholders held in September 2021. A lack of authorized shares may limit our ability to raise capital when needed.

We may not be able to satisfy the continued listing standards of The Nasdaq Capital Market (Nasdaq), including its $1.00 minimum bid price requirement. If we cannot satisfy the continued listing standards of Nasdaq, Nasdaq may commence delisting procedures against us, which could result in our common stock being removed from listing on Nasdaq. On October 5, 2022, we received a letter from Nasdaq stating that we were not in compliance with Listing Rule 5550(a)(2) because our common stock failed to maintain a minimum closing bid price of $1.00 per share for 30 consecutive business days. We had until April 3, 2023 to regain compliance or obtain an extension. We applied for such an extension, and on April 4, 2023, we were informed that our deadline for compliance was extended by 180 days, or until October 2, 2023. To regain compliance, the closing bid price of the Company’s common stock must be $1.00 per share or more for a minimum of 10 consecutive business days at any time prior to the expiration of the compliance period. The Company intends to actively monitor the closing bid price of its common stock and is committed to regaining compliance with the minimum closing bid price requirement prior to the expiration of the compliance period.

There can be no assurance that we will be able to regain compliance with the minimum bid price requirement. If we are unable to regain compliance with Nasdaq Listing Rule 5550(a)(2), and if our stock price continues to trade below the $1.00 minimum bid price requirement, or if we otherwise fail to satisfy other Nasdaq listing requirements, we may be delisted from Nasdaq, and we could face significant material adverse consequences, including adverse effects on our stock price, liquidity, and our ability to raise funding.

Contractual obligations represent future cash commitments and liabilities under agreements with third party clinical research organizations (CROs) and clinical manufacturing organizations (CMOs). With the exception of one CRO contract, such agreements are cancellable upon written notice by the Company. The one non-cancellable contract expires upon completion of the study and release of the final report, or the contract may be terminated by the CRO, or by the FDA or other governmental agency. At March 31, 2023, the Company's non-cancellable commitment related to this contract are estimated to be $1,146 and $13 in 2024. As of March 31, 2023, we have incurred $111 under this contract.

We do not currently have, nor have we ever had, any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. In addition, we do not engage in trading activities involving non-exchange traded contracts.

~~In February 2016, Financial Accounting Standards Board (“FASB”) issued Accounting Standards Updated (“ASU”) No. 2016-02,~~~~Lease Accounting Topic 842.~~ This ASU requires a lessee to recognize lease assets and liabilities on the balance sheet for all arrangements with terms longer than 12 months. The new standard applies a right-of-use (ROU) model that requires a lessee to record, for all leases with a lease term of more than 12 months, an asset representing its right to use the underlying asset for the lease term and a liability to make lease payments. The lease term is the non-cancellable period of the lease, and includes both periods covered by an option to extend the lease, if the lessee is reasonably certain to exercise that option, and periods covered by an option to terminate the lease, if the lessee is reasonably certain not to exercise that termination option. For leases with a lease term of 12 months or less, a practical expedient is available whereby a lessee may elect, by class of underlying asset, not to recognize an ROU asset or lease liability. A lessee making this accounting policy election would recognize lease expense over the term of the lease, generally in a straight-line pattern. The Lessor accounting remains largely consistent with existing U.S. GAAP. The new standard takes effect in 2019 for public business entities. The Company has not adopted the provisions of ASU No. 2016-02. We are currently evaluating the impact of our pending adoption of ASU 2016-02 on our consolidated financial statements.

~~In April 2016, the FASB issued ASU No. 2016-09,~~~~Compensation - Stock Compensation~~ simplifying the accounting for share-based payment transactions including the income tax consequences, classification of awards as either equity or liabilities and classification on the statements of cash flows. Under the new standard, all excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) should be recognized as income tax expense or benefit on the statements of income. We adopted ASU No. 2016-09 effective January 1, 2017. As a result of the adoption of this guidance, we made an accounting policy election to recognize the effect of forfeitures in compensation cost when they occur. There was an immaterial impact on results of operations and financial position and no impact on cash flows at adoption.

~~Not applicable.~~As a smaller reporting company, we are not required to provide the information required by this item pursuant to Item 305(e) of Regulation S-K.

Our management, with the participation of our ~~principal executive officer~~Chief Executive Officer and ~~principal financial officer, evaluated~~Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures as of ~~September 30, 2017. The term “disclosure controls and procedures,” as defined in~~March 31, 2023, pursuant to Rules 13a-15(e) and 15d-15(e) under the ~~Securities~~ Exchange ~~Act of 1934, as amended (“Exchange Act”), means~~Act.

Our disclosure controls and ~~other~~ procedures ~~of a company that~~ are designed to ensure that information required to be disclosed ~~by a company~~ in ~~the~~our reports that ~~it files~~are filed or ~~submits~~furnished under the Exchange Act isare recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange ~~Commission’s rules and forms.~~Commission (SEC). Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed ~~by a company~~ in ~~the~~our reports ~~that it files~~filed or ~~submits~~furnished under the Exchange Act is accumulated and communicated to the ~~company’s~~Company’s management, including ~~its principal executive~~our Chief Executive Officer and ~~principal financial officers,~~Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. ~~Our principal executive officer~~

Based on the evaluation of our disclosure controls and ~~principal financial officer~~procedures as of March 31, 2023, our Chief Executive Officer and Chief Financial Officer concluded that, as of ~~September 30, 2017, the Company’s~~such date, our disclosure controls and procedures were ~~not~~ effective at the reasonable assurance level.

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) ~~under~~of the Exchange Act) ~~occurred~~ during the quarter ended ~~September 30, 2017~~March 31, 2023, that ~~has~~have materially affected or isare reasonably likely to materially affect, our ~~disclosure controls and procedures.~~internal control over financial reporting.

~~For the year ended December 31, 2016, we identified a material weakness in that we did not design and maintain effective controls over the preparation~~

For the year ended December 31, 2016, we also identified a material weakness in that we did not design and maintain effective controls over the calculation of the weighted average number of shares outstanding and basic and diluted loss per share for the year ended December 31, 2016 because the calculation of weighted average shares outstanding did not include the shares of common stock we issued in August 2016. The preparation and review of the weighted average share calculation was not performed at an appropriately detailed level to prevent or detect this error, which led to a material error in our calculation of the weighted average number of shares outstanding and the net loss per share for the year ended December 31, 2016. During the first and second quarter of 2017, we began implementing a remediation plan to enhance the procedures performed to document our preparation of and to independently review the calculation of weighted average shares outstanding and income (loss) per share. Our enhanced review procedures and documentation standards were in place during the first, second and third quarter of 2017. The material weakness cannot be considered remediated until the control has operated for a sufficient period of time and until management has concluded that the control is operating effectively.

~~On October 10, 2013, a putative securities class action complaint, captioned~~~~Cook v. Atossa Genetics, Inc., et al.~~, No. 2:13-cv-01836-RSM, was filed in the United States District Court for the Western District of Washington against us, certain of our directors and officers and the underwriters of our November 2012 initial public offering. The complaint alleged that all defendants violated Sections 11 and 12(a)(2), and that we and certain of our directors and officers violated Section 15, of the Securities Act by making material false and misleading statements and omissions in the offering’s registration statement, and that we and certain of our directors and officers violated Sections 10(b) and 20A of the Exchange Act and SEC Rule 10b-5 promulgated thereunder by making false and misleading statements and omissions in the registration statement and in certain of our subsequent press releases and SEC filings with respect to our NAF specimen collection process, our ForeCYTE Breast Health Test and our MASCT device. The complaint sought, on behalf of persons who purchased our common stock between November 8, 2012 and October 4, 2013, inclusive, damages of an unspecific amount.

We are not currently a party to any material legal proceedings. From time to time, we may become involved in litigation relating to claims arising from the ordinary course of business. However, we believe ~~this complaint is without merit and plan to defend ourselves vigorously; however failure to obtain a favorable resolution~~that there are no claims or actions pending against us currently, the ultimate disposition of ~~the claims set forth in the complaint could~~which would have a material adverse effect on our ~~business,~~condensed consolidated results of operations, ~~and~~ financial ~~condition. Currently, the amount of such material adverse effect cannot be reasonably estimated, and no provision~~condition or liability has been recorded for these claims as of September 30, 2017. The costs associated with defending and resolving the complaint and ultimate outcome cannot be predicted. These matters are subject to inherent uncertainties and the actual cost, as well as the distraction from the conduct of our business, will depend upon many unknown factors and management’s view of these may change in the future.cash flows.

~~A purchase~~Our business is subject to a number of risks, including risks that may prevent us from achieving our business objectives or may adversely affect our business, clinical and commercialization activities, the manufacturing of our product candidates, intellectual property, third-party relationships, competitive environment, product and environmental liabilities, and our common stock. These risks are discussed more fully below and include, but are not limited to, risks related to:

Risks Related to the Securities Markets and Investment in ourSecurities.

Purchasing shares of ~~Common Stock~~common stock is an investment in our securities and involves a high degree of ~~risk.~~risk and uncertainty. You should carefully consider the following information about these risks and uncertainties, together with the other information contained in this ~~report,~~Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, before purchasing our securities. If any of the following risks and uncertainties actually occur, our business, financial condition and results of operations ~~would likely~~may suffer. In that case, the market price of ~~the Common Stock~~our common stock could decline, and you may lose part or all of your investment in our ~~company.~~Company. Additional risks and uncertainties of which we are not presently aware or that we currently believe are immaterial may also harm our business and results of operations.

We only have a history of operating losses, and, as such, an investor cannot assess our profitability or performance based on past results.

Since December 2015, our business has primarily focused on the development of novel therapeutics for the treatment of breast cancer and other breast conditions. Because of our limited operating history, particularly in the area of pharmaceutical development, our revenue and income potential is uncertain and cannot be based on prior results. Any evaluation of our business and prospects must be considered in light of these factors and the risks and uncertainties often encountered by companies in the development stage. Some of these risks and uncertainties include our ability to:

We have not established sources of ongoing revenue to cover operating costs and allow us to continue as a going concern.

Although we believe we have sufficient capital resources to fund our operations for at least the next 12 months based on our current business plan, our business plan may change and may require greater expenditures of capital than currently anticipated, in particular, due to expenditures relating to strategic transactions. We have not yet established an ongoing source of revenue sufficient to cover operating costs and allow us to continue as a going concern. Our ability to continue as a going concern is dependent on obtaining adequate capital to fund operating losses until we become profitable. If we are unable to obtain adequate capital on reasonable terms, if at all, including due to macroeconomic factors, such as the inflationary environment and recessionary fears, we may be unable to develop and commercialize our product offerings or increase our geographic reach and we could be forced to cease operations.

We will need to raise substantial additional capital in the future to fund our operations and we may be unable to raise such funds when needed and on acceptable terms.

For the quarter ended March 31, 2023, we incurred a net loss of approximately $6.3 million, and we have an accumulated deficit of approximately $162.5 million since inception. As of March 31, 2023, we had cash and cash equivalents of approximately $103.9 million. Because we have no current sources of revenue, we expect that we will need to raise capital again in the future to continue to fund our operations. When we elect to raise additional funds or when additional funds are required, we may raise such funds through public or private equity offerings, debt financings, corporate collaboration and licensing arrangements or other financing alternatives. These financing arrangements may not be available on acceptable terms, if at all. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may be prevented from developing our pharmaceutical candidates, pursuing acquisitions, and investing in other companies, including as a sponsor or investor in special purpose acquisition companies, licensing, development and commercialization efforts, and our ability to continue our operations, generate revenues, and achieve or sustain profitability may be substantially harmed. We currently have fewer than five million shares of common stock authorized that are not reserved for specific purposes. Although we proposed to our stockholders, at our 2021 and 2022 annual stockholders’ meetings and at a special meeting of stockholders held in September 2021, that our amended and restated certificate of incorporation, as amended, be further amended to add additional authorized shares for various potential purposes, including potential capital raising transactions, our stockholders did not approve such proposals and may not approve a similar proposal in the future. A lack of authorized shares may limit our ability to raise capital when needed.

If we raise additional funds by issuing equity securities, our stockholders will experience dilution. Debt financing, if available, would result in increased fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. Any debt financing or additional equity, including securities convertible into or exercisable for equity securities, that we raise may contain terms, such as liquidation, conversion and other preferences, that are not favorable to us or our stockholders. If we raise additional funds through collaboration and licensing arrangements with third-parties, it may be necessary for us to relinquish valuable rights to our technologies, future revenue streams or product candidates or to grant licenses on terms that may not be favorable to us. Should the financing we require to sustain our working capital needs be unavailable or prohibitively expensive when we require it, our business, operating results, financial condition and prospects could be materially and adversely affected, and we may be unable to continue our operations.

We may expend our capital resources in ways that you don't agree or that don't produce stockholdervalue.

We intend to use our capital resources to execute on our business plan, which may include acquiring or in-licensing programs and may also include the internal development of additional programs that may or may not be related to oncology. We may also use our capital resources to invest directly or indirectly in business opportunities in healthcare or other industries, including through purchases of equity in other companies, such as our investment in Dynamic Cell Therapies, Inc. (DCT). These investments may be in special purpose acquisition companies, including either as a sponsor or as an equity investor. Our business plan may evolve to require more capital resources than currently contemplated either because our existing programs progress more quickly or at a greater cost than currently anticipated or because we may add additional programs. Stockholders may not agree with the ways in which we expend our capital resources and our capital deployment activities may not lead to increases in stockholder value.

We have a history of operating losses, and we expect to continue to incur losses in the future.

We have a limited operating history and have incurred net losses each year. Our net operating loss for the three months ended March 31, 2023, was approximately $6.3 million. We will continue to incur further losses in connection with research and development costs for development of our programs, including ongoing and additional clinical studies.

Any products we may develop may never achieve significant commercial market acceptance.

We may not succeed in achieving commercial market acceptance of any of our products. In order to gain market acceptance for the drugs under development, we will need to demonstrate to physicians and other healthcare professionals the benefits of these therapies, including the clinical and economic application for their particular practice, the efficacy and safety and potential advantages compared to alternative therapies. Many physicians and healthcare professionals may be hesitant to introduce new services or techniques into their practice for many reasons, including lack of time and resources, the learning curve associated with the adoption of such new services or techniques into already established procedures, the product’s cost, convenience and ease of administration, the then-current standard of care, the strength of marketing and distribution support and the uncertainty of the applicability or reliability of the results of a new product. In addition, the availability of full or even partial payment for our products, whether by third-party payors (e.g., insurance companies), by government payors or the patients themselves, will likely heavily influence physicians’ decisions to recommend or use our products.

We may be unableto establish sales, marketing and commercial supply capabilities.

We do not currently have, nor have we ever had, commercial pharmaceutical sales and marketing capabilities. If any of our product candidates become approved, we would need to build these capabilities in order to commercialize our approved product candidates. The process of establishing commercial capabilities will be expensive and time consuming, and may not be successful. Even if we are successful in building these capabilities, we may not be successful in commercializing any of our product candidates.

The loss of the services of our Chief Executive Officer could adversely affect our business.

Our success is dependent in large part upon our ability to execute our business plan, manufacture our pharmaceutical drugs and attract and retain highly skilled professional personnel. In particular, due to the relatively early stage of our business, our future success is highly dependent on the services of Steven C. Quay, our Chief Executive Officer and founder, who provides much of the necessary experience to execute our business plan.

Our acquisitions of,collaborations with, licenses with and investments in, other businesses may not yield expected benefits and our inability to successfully integrate these transactions may negatively impact our business, financial condition, and results of operations.

We anticipate that we will make acquisitions of, collaborations with, licenses with or investments in businesses in the future. We may not realize the anticipated benefits, or any benefits, from these transactions. If we fail to properly evaluate, complete and execute acquisitions, our business may be seriously harmed and our stock price may decline. For us to realize the benefits of future transactions, we must successfully integrate the acquired businesses with ours. Some of the challenges to successful integration include:

Our failure to address these risks or other problems encountered in connection with our past or future acquisitions and other transactions could cause us to fail to realize the anticipated benefits of such acquisitions and transactions and negatively impact our business, financial condition, and results of operations.

We may experience difficulty in locating, attracting and retaining experienced and qualified personnel, which could adversely affect our business.

We will need to attract, retain, and motivate experienced clinical development and other personnel, particularly in the greater Seattle area as we expand our pharmaceutical development activities. Personnel with the required skills and experience may be scarce or may not be available at all in this geographic region. In addition, competition for these skilled personnel is intense and recruiting and retaining skilled employees is difficult, particularly for a development-stage Company such as ours. If we are unable to attract and retain qualified personnel, our development activities may be adversely affected. Even if we are successful in identifying and attracting qualified employees, recent market changes, including the labor shortage, and rising inflation have increased employee-related costs substantially. As a result, our operating expenses may continue to increase in the current market environment.

Compounds andmethods that appear promising in research and development may fail to reach later stages of development for a number of reasons, including, among others, that clinical trials may take longer to complete than expected or may not be completed at all, and interim, top-line or preliminary clinical trial data reports may ultimately differ from actual results once data are more fully evaluated.

Successful development of pharmaceutical products is highly uncertain and obtaining regulatory approval to market drugs is expensive, difficult, and speculative. Compounds that appear promising in research and development may fail to reach later stages of development for several reasons, including, but not limited to:

In addition, from time to time we expect to report interim, top-line or “preliminary” data for clinical trials, including for example the results reported in 2021 for our neoadjuvant or “window of opportunity” Phase 2 study of (Z)-endoxifen. Such data are based on a preliminary analysis of then-available efficacy and safety data, and such findings and conclusions are subject to change following a more comprehensive review of the data related to the particular study or trial. Interim, top-line or preliminary data are based on important assumptions, estimations, calculations and information then available to us to the extent we have had, at the time of such reporting, an opportunity to fully and carefully evaluate such information in light of all surrounding facts, circumstances, recommendations and analyses. As a result, interim, top-line or “preliminary” results may differ from future/final results, or different conclusions or considerations may qualify such results once existing data have been more fully evaluated. In addition, third-parties, including regulatory agencies, may not accept or agree with our assumptions, estimations, calculations or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular compound and our business generally.

If the development of our products is delayed or fails, or if top-line or preliminary clinical trial data reported differ from actual results, our development costs may increase and our ability to commercialize our products may be harmed, which could harm our business, financial condition, operating results or prospects.

We may not obtain or maintain the regulatory approvals required to develop or commercialize some or all of our products.

We are subject to rigorous and extensive regulation by the FDA in the U.S. and by comparable agencies in other jurisdictions, including the Europe Medicines Agency (EMA) in the European Union (E.U.), the United Kingdom’s Medicines and Healthcare products Regulatory Agency and the Therapeutic Goods Administration (TGA) in Australia.

Our product candidates are currently in research or development, and we have not received marketing approval for our products. Our products may not be marketed in the U.S. until they have been approved by the FDA and may not be marketed in other jurisdictions until they have received approval from the appropriate foreign regulatory agencies. Each product candidate requires significant research, development and pre-clinical testing and extensive clinical investigation before submission of any regulatory application for marketing approval. As a result, the regulatory pathway for these products may be more complex and obtaining regulatory approvals may be more difficult.

Obtaining regulatory approval requires substantial time, effort and financial resources, and we may not be able to obtain approval of any of our products on a timely basis, or at all. The number, size, design, and focus of pre-clinical and clinical trials that will be required for approval by the FDA, the EMA, or any other foreign regulatory agency varies depending on the compound, the disease or condition that the products are designed to address and the regulations applicable to any particular products. Pre-clinical and clinical data can be interpreted in different ways, which could delay, limit or preclude regulatory approval. The FDA, the EMA, and other foreign regulatory agencies can delay, limit, or deny approval of a product for many reasons, including, but not limited to:

If our products are not approved at all or quickly enough to provide net revenues to defray our operating expenses, our business, financial condition, operating results and prospects could be harmed.

We are developing our productsfor patients who are severelyill, and patient deaths that occur in our clinical trials could negatively impact our business even if such deaths are not shown to be related to our drugs.

We have enrolled patients in studies of our drug candidates who may die while enrolled in our studies. Patients in our clinical trials may also experience adverse outcomes following treatment with our drug candidates, including patient death. These adverse outcomes, even if unrelated to our drugs, could expose us to lawsuits and liabilities and could diminish our ability to obtain regulatory approval and/or achieve commercial acceptance for the related drug and our business could be materially harmed.

We are dependent on third-party service providers for a number of critical operational activities including, in particular, for the manufacture and testing of our products and associated supply chain operations, as well as for clinical trial activities. Any failure or delay in these undertakings by third parties could harm our business.

Our business is dependent on the performance by third-parties of their responsibilities under contractual relationships. In particular, we heavily rely on third-parties for the manufacture and testing of our products. We do not have an internal analytical laboratory or manufacturing facilities to allow the testing or production of products in compliance with Good Manufacturing Practices (cGMP). As a result, we rely on third-parties to supply us in a timely manner with manufactured product candidates. We may not be able to adequately manage and oversee the manufacturers we choose; they may not perform as agreed or they may terminate their agreements with us. In particular, we depend on third-party manufacturers to conduct their operations in compliance with current Good Laboratory Practices (GLP) or similar standards imposed by the U.S. and/or applicable foreign regulatory authorities, including the FDA and EMA. Any of these regulatory authorities may take action against a contract manufacturer who violates cGMP. Failure of our manufacturers to comply with FDA, EMA or other applicable regulations may cause us to curtail or stop the manufacture of such products until we obtain regulatory compliance.

We may not be able to obtain sufficient quantities of our products if we are unable to secure manufacturers when needed, or if our designated manufacturers do not have the capacity or otherwise fail to manufacture compounds according to our schedule and specifications or fail to comply with cGMP regulations. Furthermore, in order to ultimately obtain and maintain applicable regulatory approvals, any manufacturers we utilize are required to consistently produce the respective products in commercial quantities and of specified quality or execute fill-finish services on a repeated basis and document their ability to do so, which is referred to as process validation. In order to obtain and maintain regulatory approval of a compound, the applicable regulatory authority must consider the result of the applicable process validation to be satisfactory and must otherwise approve of the manufacturing process. Even if our compound manufacturing processes obtain regulatory approval and sufficient supply is available to complete clinical trials necessary for regulatory approval, there are no guarantees we will be able to supply the quantities necessary to affect a commercial launch of the applicable drug, or once launched, to satisfy ongoing demand. Any product shortage could also impair our ability to deliver contractually required supply quantities to applicable collaborators, as well as to complete any additional planned clinical trials.

We also rely on third-party service providers for certain warehousing and transportation. With regard to the distribution of our drugs, we depend on third-party distributors to act in accordance with Good Distribution Practice (GDP), and the distribution process and facilities are subject to continuing regulation by applicable regulatory authorities with respect to the distribution and storage of products.

In addition, we depend on medical institutions and CROs (together with their respective agents) to conduct clinical trials and associated activities in compliance with Good Clinical Practices (GCP) and data privacy standards such as defined under the Health Insurance Portability and Accountability Act (HIPAA), and General Data Protection Regulation (GDPR) and in accordance with our timelines, expectations and requirements. We are substantially dependent on the organizations conducting our clinical trials. To the extent any such third-parties are delayed in achieving or fail to meet our clinical trial enrollment expectations, fail to conduct our trials in accordance with GCP, patient and data privacy standards such as HIPAA or study protocol or otherwise take actions outside of our control or without our consent, our business may be harmed. Furthermore, we conduct clinical trials in foreign countries, subjecting us to additional risks and challenges, including, patient and data privacy standards such as GDPR and in particular, as a result of the engagement of foreign medical institutions and foreign CROs, who may be less experienced with regard to regulatory matters applicable to us and may have different standards of medical care.

With regard to certain of the foregoing clinical trial operations and stages in the manufacturing and distribution chain of our compounds, we rely on vendors. In most cases we use a primary vendor and have identified, in some cases, secondary vendors. In particular, our current business structure contemplates, at least in the foreseeable future, use of a primary commercial supplier for the (Z)-endoxifen drug substance. The use of primary vendors for core operational activities, such as, manufacturing, and the resulting lack of diversification, exposes us to the risk of a material interruption in service related to these primary, outside vendors. As a result, our exposure to this concentration risk could harm our business.

Although we monitor the compliance of our third-party service providers performing the aforementioned services, we cannot be certain that such service providers will consistently comply with applicable regulatory requirements or that they will otherwise timely satisfy their obligations to us. Any such failure and/or any failure by us to monitor their services or to plan for and manage our short- and long-term requirements underlying such services could result in shortage of the required compound, delays in or cessation of clinical trials, failure to obtain or revocation of product approvals or authorizations, product recalls, withdrawal or seizure of products, suspension of an applicable wholesale distribution authorization, and/or distribution of products, operating restrictions, injunctions, suspension of licenses, other administrative or judicial sanctions (including civil penalties and/or criminal prosecution), and/or unanticipated related expenditures to resolve shortcomings.

Such consequences could have a significant impact on our business, financial condition, operating results, or prospects.

We may encounter delays in our clinical trialsor may not be able to conduct our trials in a timely manner.

Clinical trials are expensive and subject to regulatory approvals. Potential trial delays may arise from, but are not limited to:

Ourclinical trials may fail to demonstrate adequately the efficacy and safety of our product candidates, which would prevent or delay regulatory approval and commercialization.

Even if our clinical trials are completed as planned, we cannot be certain that their results will support our product candidate claims or that the FDA or foreign authorities will agree with our conclusions. Success in pre-clinical studies and early clinical trials does not ensure that later clinical trials will be successful, and we cannot be sure that the later trials will replicate the results of prior trials and pre-clinical studies. The clinical trial process may fail to demonstrate that our product candidates are safe and effective for the proposed indicated uses. If the FDA concludes that our clinical trials have failed to demonstrate safety and effectiveness, we would not receive FDA approval to market that product candidate in the U.S. for the indications sought. In addition, it could cause us to abandon the product candidate and might delay development of other product candidates. Any delay or termination of our clinical trials would delay or preclude the filing of any submissions with the FDA and, ultimately, our ability to commercialize our product candidates and generate revenues. It is also possible that patients enrolled in clinical trials could experience adverse side effects that are not currently part of a product candidate’s profile.

Our products and services may expose us to possible litigation and product liability claims.

Our business may expose us to potential product liability risks inherent in the testing, marketing, and processing personalized medical products, particularly those products and services we offered prior to shifting our focus on pharmaceutical development. Product liability risks may arise from, but are not limited to:

A successful product liability claim, or the costs and time commitment involved in defending against a product liability claim, could have a material adverse effect on our business. Regardless of the merit or outcome of a claim, it may result in decreased demand for our product candidates, reputational harm, withdrawal of clinical trial participants, investigations by regulators, withdrawal of prior governmental approvals, substantial monetary awards to patients, loss of revenue and the inability to commercialize our product candidates. Although we currently carry clinical trial insurance and product liability insurance which we believe to be reasonable, it may not be adequate to cover all liability that we may incur. An inability to renew our policies or to obtain sufficient insurance at an acceptable cost and on commercially desirable or reasonable terms, if at all, including due to a successful product liability claim, could prevent or inhibit the commercialization of our products.

Businessdisruptions, including natural disasters and pandemics, could seriously harm our future revenue and financial condition and increase our costs and expenses.

Our operations are based primarily in Seattle, Washington. These operations could be subject to power shortages, telecommunications failures, water shortages, floods, earthquakes, fires, extreme weather conditions, pandemics or epidemics and other natural or man-made disasters or business interruptions, for which we maintain customary insurance policies that we believe are appropriate. In addition, outbreaks of viruses, infectious diseases or pandemics (including, COVID-19), terrorist acts or acts of war, or geopolitical tensions, could cause damage or cause disruptions to us, our employees, facilities, contractors and collaborators, which could have a material adverse effect on our business, financial condition and results of operations. The occurrence of any of these business disruptions could seriously harm our operations and financial condition and increase our costs and expenses. Our ability to manufacture clinical supplies of our product candidates could be disrupted if our suppliers are affected by any of the above events. We may have limited recourse against third parties if the non-compliance is due to factors outside of the manufacturer’s control.

We maintain our cash at financial institutions, often in balances that exceed federally-insured limits. The failure of financial institutions could adversely affect our ability to pay our operational expenses or make other payments.

Our cash is held at banking institutions in non-interest-bearing and interest-bearing accounts in amounts that exceed the Federal Deposit Insurance Corporation (FDIC) insurance limits. If such banking institutions were to fail, we could lose all or a portion of those amounts held in excess of such insurance limitations. For example, the FDIC took control of Silicon Valley Bank on March 10, 2023. Although we did not have cash, cash equivalents or investments at SVB and the Federal Reserve subsequently announced that account holders would be made whole, the FDIC may not make all account holders whole in the event of future bank failures. In addition, even if account holders are ultimately made whole with respect to a future bank failure, account holders’ access to their accounts and assets held in their accounts may be substantially delayed. Any material loss that we may experience in the future or inability for a material time period to access our cash and cash equivalents could have an adverse effect on our ability to pay our operational expenses or make other payments, which could adversely affect our business.

Our ability to usenet operating loss carryforwards and research tax creditsto reduce future tax payments may be limited or restricted.

We have generated significant net operating loss carryforwards (NOLs), and research and development tax credits (R&D credits) as a result of our incurrence of losses and our conduct of research activities since inception. We generally are able to carry NOLs and R&D credits forward to reduce our tax liability in future years. However, our ability to utilize the NOLs and R&D credits is subject to the rules of Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the Code), respectively. Those sections generally restrict the use of NOLs and R&D credits after an “ownership change.” An ownership change occurs if, among other things, the stockholders (or specified groups of stockholders) who own or have owned, directly or indirectly, 5% or more of a corporation’s common stock or are otherwise treated as 5% stockholders under Section 382 of the Code and the U.S. Treasury Department regulations promulgated thereunder increase their aggregate percentage ownership of that corporation’s stock by more than 50 percentage points over the lowest percentage of the stock owned by these stockholders over the applicable testing period. In the event of an ownership change, Section 382 of the Code imposes an annual limitation on the amount of taxable income a corporation may offset with NOL carry forwards and Section 383 of the Code imposes an annual limitation on the amount of tax a corporation may offset with business credit (including R&D credits) carryforwards.

We have experienced ownership changes in the past, and there can be no assurance that we will not experience ownership changes in the future. As a result, our NOLs and business credits (including R&D credits) may be subject to limitations, and we may be required to pay taxes earlier and in larger amounts than would be the case if our NOLs or R&D credits were freely usable.

If we are not able to protect our proprietary technology, others could compete against us more directly, which would harm our business.

Our commercial success will depend, in part, on our ability to obtain additional patents and licenses and to protect our existing patent position, both in the U.S. and in other countries, for therapeutics and related technologies, processes, methods, compositions, and other inventions that we believe are patentable, all of which provide limited protection and may not adequately protect our rights or permit us to gain or keep any competitive advantage. As of January 31, 2023, we own and are pursuing 75 pending provisional and non-provisional patent applications (19 U.S., including one allowed U.S. application, and 56 international applications, including two allowed international applications) and two issued patents. We continue to evaluate the full range of our technologies and file new patent applications.

Our ability to preserve our trade secrets, trademarks and other intellectual property rights is also important to our long-term success. Our success depends in part on obtaining patent protection for our products and processes, preserving trade secrets, patents, copyrights and trademarks, operating without infringing the proprietary rights of third-parties, and acquiring licenses for technology or products. If we do not adequately protect our intellectual property, competitors may be able to use our technologies and erode or negate any competitive advantage we may have, which could harm our business and ability to establish or maintain profitability. Patents may also be issued to third-parties, which could interfere with our ability to bring our therapeutics to market. As the patent landscape for products for breast disorders, including breast cancers, grows more crowded and becomes more complex we may find it more difficult to obtain patent protection for our products, including those related to (Z)-endoxifen.

The laws of some foreign countries do not protect our proprietary rights to the same extent as U.S. laws, and we may encounter significant problems in protecting our proprietary rights in these countries. Even in the U.S., the patent positions of diagnostic companies and pharmaceutical and biotechnology companies, including our patent position, are generally highly uncertain, particularly after the Supreme Court decisions Mayo Collaborative Services v. Prometheus Laboratories, 132 S. Ct. 1289 (2012), Association for Molecular Pathology v. Myriad Therapeutics, Inc., 133 S. Ct. 2107 (2013), and Alice Corp. v. CLS Bank International, 134 S. Ct. 2347 (2014), and the Federal Circuit Court decisions Athena Diagnostics, Inc. v. Mayo Collaborative Servs., LLC, 915 F.3d 743 (Fed. Cir. 2019) and Amgen Inc. v. Sanofi, 987 F.3d 1080 (Fed. Cir. 2021). Our patent positions also involve complex legal and factual questions, for which important legal principles remain unresolved. No consistent policy regarding the breadth of claims allowed in pharmaceutical and biotechnology companies’ patents has emerged to date in the U.S. Furthermore, in the biotechnology and pharmaceutical fields, courts frequently render opinions that may affect the patentability of certain inventions or discoveries, including opinions that may affect the patentability of methods for diagnostics, personalized medicine, and analysis and comparison of DNA and, therefore, any patents issued to us may be challenged and potentially invalidated or found ineligible. We will be able to protect our proprietary rights from unauthorized use by third- parties only to the extent that our proprietary technologies and any future tests and products are covered by valid and enforceable patents or are effectively maintained as trade secrets. In addition, our patent applications may never issue as patents, and the claims of any issued patents may not afford meaningful protection for our products, technology or tests.

The degree of future protection for our proprietary rights is uncertain, and we cannot ensure that:

If a third-party files a patent application with claims to a drug we have discovered or developed, a derivation proceeding may be initiated regarding competing patent applications. If a derivation proceeding is initiated, we may not prevail in the derivation proceeding. If the other party prevails in the derivation proceeding, we may be precluded from commercializing our products, or may be required to seek a license. A license may not be available to us on commercially acceptable terms, if at all.

Any litigation proceedings relating to our proprietary technology may fail and, even if successful, may result in substantial costs and distract our management and other employees. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. Finally, we may not be able to prevent, alone or with the support of our licensors, if any, misappropriation of our trade secrets or confidential information, particularly in countries where the laws may not protect those rights as fully as in the U.S.

Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.

United States Patent and Trademark Office (USPTO) and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent process. Periodic maintenance fees, renewal fees, annuity fees, and various other governmental fees on any issued patents and/or applications are due to be paid to the USPTO and foreign patent agencies in several stages over the lifetime of the patents and/or applications. We have systems in place to remind us to pay these fees, and we employ outside firms and rely on our outside counsel to pay these fees. While an inadvertent lapse may sometimes be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, our competitors might be able to enter the market earlier than should otherwise have been the case, which would have a material adverse effect on our business.

Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our products.

As is the case with other biotechnology and pharmaceutical companies, our success is heavily dependent on our intellectual property, particularly on obtaining and enforcing patents. Obtaining and enforcing patents in the biotechnology and pharmaceutical industries involve both technological and legal complexity, and is therefore costly, time-consuming and inherently uncertain. For the past several years, the U.S. has conducted proceedings involving post-issuance patent review procedures, such as inter partes review (IPR), and post-grant review and covered business methods. These proceedings are conducted before the Patent Trial and Appeal Board (PTAB), of the USPTO. Each proceeding has different eligibility criteria and different patentability challenges that can be raised. In this regard, the IPR process permits any person (except a party who has been litigating the patent for more than a year) to challenge the validity of a U.S. patent on the grounds that it was anticipated or made obvious by prior art consisting of patents or printed publications. As a result, non-practicing entities associated with hedge funds, pharmaceutical companies who may be our competitors and others have challenged certain valuable pharmaceutical U.S. patents based on prior art through the IPR process. A decision in such a proceeding adverse to our interests could result in the loss of valuable patent rights, which would have a material adverse effect on our business, financial condition, results of operations and growth prospects. Any potential future changes to the ~~risk factors described~~U.S. patent system could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business, financial condition, results of operations and growth prospects. Further, recent U.S. Supreme Court rulings have narrowed the scope of patent protection available in ~~our Annual Report on Form 10-K/A, as filed with~~certain circumstances and weakened the ~~SEC~~rights of patent owners in certain situations. In particular, on March ~~21, 2017 except~~20, 2012, the U.S. Supreme Court issued the Mayo Collaborative Services v. Prometheus Laboratories, Inc. decision, holding that several claims drawn to measuring drug metabolite levels from patient samples were not patentable subject matter. The full impact of the Mayo Collaborative Services v. Prometheus Laboratories, Inc. decision on diagnostic and certain method claims is uncertain. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents once obtained. Depending on decisions by the U.S. Congress, the federal courts, and the USPTO, the laws and regulations governing patents could change in unpredictable ways that could weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future. The standards that courts use to interpret patents are not always applied predictably or uniformly and may evolve, particularly as ~~follows:~~new technologies develop. In addition, changes to patent laws in the U.S. or other countries may be applied retroactively to affect the validity, enforceability, or term of our patent. For example, the U.S. Supreme Court has modified some legal standards applied by the USPTO in examination of U.S. patent applications, which may decrease the likelihood that we will be able to obtain patents and may increase the likelihood of challenges to patents we obtain or license.

We may not be able to protect our intellectual property rights throughout the world.

Filing, prosecuting and defending patents on our products in all countries throughout the world would be prohibitively expensive. In addition, the laws of some foreign countries do not protect intellectual property rights in the same manner and to the same extent as laws in the U.S. Consequently, we may not be able to prevent third-parties from practicing our inventions in all countries outside the U.S. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and further, may export otherwise infringing products to territories where we have patent protection, but enforcement of such patent protection is not as strong as that in the U.S. These products may compete with our products and services, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing with our products.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property protection, particularly those relating to biotechnology products, which could make it difficult for us to stop the infringement of our patents or marketing of competing products and services in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly, and could provoke third-parties to assert claims against us. We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop.

Our current patent portfolio may not include all patent rights needed for the full development and commercialization of our products. We cannot be sure that patent rights we may need in the future will be available for license on commercially reasonable terms, or at all.

We may be unable to obtain any licenses or other rights to patents, technology, or know-how from third-parties necessary to conduct our business and such licenses, if available at all, may not be available on commercially reasonable terms. Others may seek licenses from us for other technology we use or intend to use. Any failure to obtain such licenses could delay or prevent us from developing or commercializing our proposed products, which would harm our business. We may not be able to secure such a license on acceptable terms. Litigation or patent derivation proceedings may need to be brought against third-parties, as discussed below, to enforce any of our patents or other proprietary rights, or to determine the scope and validity or enforceability of the proprietary rights of such third-parties.

Third-party claims alleging intellectual property infringement may prevent or delay our drug discovery and development efforts.

Our commercial success depends in part on our avoiding infringement of the patents and proprietary rights of third-parties, including the intellectual property rights of competitors. There is a substantial amount of litigation, both within and outside the U.S., involving patents and other intellectual property rights in the medical device and pharmaceutical fields, as well as administrative proceedings for challenging patents, including inter partes review, post-grant review, derivation, and reexamination proceedings before the USPTO or oppositions and other comparable proceedings in various foreign jurisdictions. These procedures bring uncertainty to the possibility of challenges to our patents in the future, including those patents perceived by our competitors as blocking entry into the market for their products, and the outcome of such challenges. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third-parties, exist in the fields in which we are developing our products. As the medical device, biotechnology, and pharmaceutical industries expand and more patents are issued, the risk increases that our activities related to our products may give rise to claims of infringement of the patent rights of others.

We cannot assure you that our current or future products will not infringe on existing or future patents. We may not be aware of patents that have already been issued that a third-party might assert are infringed by one of our current or future products.

Third-parties may assert that we are employing their proprietary technology without authorization. There may be third-party patents of which we are currently unaware with claims to materials, formulations, methods of manufacture, or methods for treatment related to the use or manufacture of our products. Because patent applications can take many years to issue and may be confidential for eighteen months or more after filing, there may be currently pending third-party patent applications which may later result in issued patents that our products may infringe, or which such third-parties claim are infringed by our products and services.

Parties making claims against us for infringement or misappropriation of their intellectual property rights may seek and obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize our products. Defense of these claims, regardless of their merit, would involve substantial expenses and would be a substantial diversion of employee resources from our business. In the event of a successful claim of infringement against us by a third-party, we may have to (i) pay substantial damages, including treble damages and attorneys’ fees if we are found to have willfully infringed the third-party’s patents; (ii) obtain one or more licenses from the third-party; (iii) pay royalties to the third-party; or (iv) redesign any infringing products. Redesigning any infringing products may be impossible or require substantial time and monetary expenditure. Further, we cannot predict whether any required license would be available at all or whether it would be available on commercially reasonable terms. In the event that we could not obtain a license, we may be unable to further develop and commercialize our products, which could harm our business significantly. Even if we were able to obtain a license, the rights may be nonexclusive, which would give our competitors access to the same intellectual property.

In addition to infringement claims against us, if third-parties have prepared and filed patent applications in the U.S. that also claim technology related to our products, we may have to participate in derivation proceedings in the USPTO to determine the priority of invention. We may also become involved in similar proceedings in the patent offices in other jurisdictions regarding our intellectual property rights with respect to our products and technology.

We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties.

We have received confidential and proprietary information from third parties. In addition, we employ individuals who were previously employed at other diagnostic, medical device or pharmaceutical companies. We may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise improperly used or disclosed confidential information of these third parties or our employees’ former employers. Further, we may be subject to ownership disputes in the future arising, for example, from conflicting obligations of consultants or others who are involved in developing our products. We may also be subject to claims that former employees, consultants, independent contractors, collaborators or other third parties have an ownership interest in our patents or other intellectual property. Litigation may be necessary to defend against these and other claims challenging our right to and use of confidential and proprietary information. If we fail in defending any such claims, in addition to paying monetary damages, we may lose our rights therein. Such an outcome could have a material adverse effect on our business. Even if we are successful in defending against these claims, litigation could result in substantial cost and be a distraction to our management and employees.

We may be unable to adequately prevent disclosure of trade secrets and other proprietary information.

We rely on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable or that we elect not to patent, processes for which patents are difficult to enforce, and any other elements of our discovery and development processes that involve proprietary know-how, information or technology that is not covered by patents. However, trade secrets can be difficult to protect. We require all of our employees, consultants, advisors and any third parties who have access to our proprietary know-how, information or technology, to enter into confidentiality agreements. However, we cannot be certain that all such confidentiality agreements have been duly executed, that our trade secrets and other confidential proprietary information will not be disclosed or that competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques. Misappropriation or unauthorized disclosure of our trade secrets could impair our competitive position and may have a material adverse effect on our business. Additionally, if the steps taken to maintain our trade secrets are deemed inadequate, we may have insufficient recourse against third-parties for misappropriating the trade secret.

Legislative or regulatory reforms may make it more difficult and costly for us to obtain regulatory approval of our product candidates and to manufacture, market and distribute our products after approval is obtained.

From time to time, legislation is drafted and introduced in Congress that could significantly change the statutory provisions governing the regulatory approval, manufacture and marketing of regulated products or the reimbursement thereof. In addition, FDA regulations and guidance are often revised or reinterpreted by the FDA in ways that may significantly affect our business and our products. Any new regulations or revisions or reinterpretations of existing regulations may impose additional costs or lengthen review times of future products. In addition, FDA regulations and guidance are often revised or reinterpreted by the agency in ways that may significantly affect our business and our products. It is impossible to predict whether legislative changes will be enacted or FDA regulations, guidance or interpretations changed, and what the impact of such changes, if any, may be. Similar changes and revisions can also occur in foreign countries.

For example, the FDA may change its clearance and approval policies, adopt additional regulations or revise existing regulations, or take other actions which, may prevent or delay approval or clearance of our products under development or impact our ability to modify our currently cleared products on a timely basis. Any change in the laws or regulations that govern the clearance and approval processes relating to our current and future products could make it more difficult and costly to obtain clearance or approval for new products, or to produce, market and distribute existing products. Significant delays in receiving clearance or approval, or the failure to receive clearance or approval for our new products would have an adverse effect on our ability to expand our business.

Our inadvertent or unintentional failure to comply with the complex government regulations concerning patients'privacy, data subjects, and of medical records could subject us to fines and adversely affect our reputation.

Federal privacy regulations, among other things, restrict our ability to use or disclose protected health information in the form of patient-identifiable laboratory data, without written patient authorization, for purposes other than payment, treatment, or healthcare operations as defined under HIPAA, except for disclosures for various public policy purposes and other permitted purposes outlined in the privacy regulations. Applicable privacy regulations provide for significant fines and other penalties for wrongful use or disclosure of protected health information, including potential civil and criminal fines and penalties. Although HIPAA and its implementing regulations do not expressly provide for a private right of damages, we could incur damages under state laws, for example, the California Consumer Privacy Act, as amended by the California Privacy Rights Act to private parties for the wrongful use or disclosure of confidential health information or other personal information.

We intend to implement policies and practices that we believe will make us compliant with applicable privacy regulations. However, the documentation and process requirements of applicable privacy regulations are complex and subject to interpretation. Failure to comply with applicable privacy regulations could subject us to sanctions or penalties, loss of business, and negative publicity.

The HIPAA privacy regulations establish a “floor” of minimum protection for patients as to their medical information and do not supersede state laws that are more stringent. Therefore, we are required to comply with both HIPAA privacy regulations and various state privacy laws, which vary from state to state, are sometimes contradictory with one another, and are often more restrictive than HIPAA. Additionally, the documentation and process requirements of such laws are complex and subject to interpretation. The failure to comply with applicable privacy laws could subject us to regulatory actions, including significant fines or penalties, and to private actions by patients, as well as to adverse publicity and possible loss of business. In addition, federal and state laws and judicial decisions provide individuals with various rights for violation of the privacy of their medical information by healthcare providers such as us.

The collection and processing of personal data, including personal health data related to individuals in the E.U. regardless of citizenship or residence is governed by the provisions of the General Data Protection Regulation 2016/679 (GDPR) which provides for significant penalties for noncompliance. GDPR supersedes the Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995. The GDPR regulates (i) the processing of personal data carried out in the context of the activities of a company established in the E.U.; and (ii) the processing of personal data carried out by a company not established in the E.U. where such processing relates to (a) the offering of goods or services to data subjects who are in the E.U. or (b) the monitoring of the behavior of data subjects who are in the E.U. The GDPR imposes a number of requirements, including an obligation to rely on a legal basis (such as the consent of individuals to whom the personal data relates), the information that must be provided to the individuals, notification obligations to the competent national data protection authorities, and the security and confidentiality of the personal data. E.U. Member States may also impose additional requirements in relation to health, genetic and biometric data through their national implementing legislation.

Further, from January 1, 2021, companies have to comply with the GDPR and also the United Kingdom GDPR, or UK GDPR, which, together with the amended UK Data Protection Act 2018, retains the GDPR in UK national law. The UK GDPR mirrors the fines under the GDPR, i.e., fines up to the greater of £17.5 million or 4% of global turnover. The European Commission has adopted an adequacy decision in favor of the UK, enabling data transfers from E.U. member states to the UK without additional safeguards. However, the UK adequacy decision will automatically expire in June 2025 unless the European Commission re-assesses and renews/ extends that decision and remains under review (and may be modified or revoked) by the Commission during this period. The relationship between the UK and the E.U. in relation to certain aspects of data protection law remains unclear, and it is unclear how UK data protection laws and regulations will develop in the medium to longer term, and how data transfers to and from the UK will be regulated in the long term. These changes may lead to additional costs and increase our overall risk exposure.

Failure to comply with the requirements of GDPR and/or UK GDPR, and the related national data protection laws of the E.U. Member States or the UK may result in fines and other administrative penalties, litigation, government enforcement actions (which could include civil and/or criminal penalties), and harm our business. Moreover, patients about whom we or our partners obtain information, as well as the providers who share this information with us, may have contractual rights that may limit our ability to use this information. Claims that we have violated patient’s or any individual’s rights or breached our contractual obligations, even if ultimately we are not found liable, could be expensive and time-consuming to defend, and could result in adverse publicity and harm our business.

If we experience a significant disruption in our information technology systems or breaches of data security, our business could be adversely affected.

We rely on information technology systems to keep financial records, manage our manufacturing operations, fulfill customer orders, capture laboratory data, maintain corporate records, communicate with staff and external parties and operate other critical functions. Our information technology systems are potentially vulnerable to disruption due to breakdown, malicious intrusion and computer viruses or other disruptive events, including, but not limited to, natural disasters, terrorist attacks, utility outages, theft, viruses, phishing, malware, design defects, human error and complications encountered as existing systems are maintained, repaired, replace or upgraded. If we were to experience a prolonged system disruption in our information technology systems or those of certain of our vendors, it could negatively impact our ability to serve our customers, which could adversely impact our business. Although we maintain offsite back-ups of our data, if operations at our facilities were disrupted, it may cause a material disruption in our business if we are not capable of restoring function on an acceptable time frame. In addition, our information technology systems are potentially vulnerable to data security breaches — whether by employees or others — which may expose sensitive data to unauthorized persons. Such data security breaches could lead to the loss of trade secrets or other intellectual property or could lead to the public exposure of personal information (including sensitive personal information) of our employees, customers and others, any of which could have a material adverse effect on our business, reputation, financial condition and results of operations. In addition, any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, including state data protection regulations the E.U. GDPR and the UK GDPR, and other regulations, the violation of which could result in significant penalties. In addition, these breaches and other inappropriate access can be difficult to detect, and any delay in identifying them may lead to increased harm of the type described above.

Although we utilize various procedures and controls to mitigate our exposure to these risks, cyber attacks and other cyber events are evolving, unpredictable and increasing in sophistication. Moreover, we have no control over the information technology systems of our third-party partners, including suppliers, manufacturers, service providers and others with which our systems may connect and communicate. As a result, the occurrence of a cyber incident could go unnoticed for a period of time. We have cybersecurity insurance coverage in the event we become subject to various cyber attacks, however, we cannot ensure that it will be sufficient to cover any particular losses we may experience. Any cyber incident could have a material adverse effect on our business, financial condition and results of operations.

The failure to comply with complex federal and state laws and regulations related to submission of claims for services could result in significant monetary damages and penalties and exclusion from the Medicare and Medicaid programs.

We are subject to extensive federal and state laws and regulations relating to the submission of claims for payment for services, including those that relate to coverage of services under Medicare, Medicaid, and other governmental healthcare programs, the amounts that may be billed for services, and to whom claims for services may be submitted, such as billing Medicare as the secondary, rather than the primary, payor. The failure to comply with applicable laws and regulations, for example, enrollment in the Medicare Provider Enrollment, Chain and Ownership System, could result in our inability to receive payment for our services or attempts by third-party payors, such as Medicare and Medicaid, to recover payments from us that we have already received. Submission of claims in violation of certain statutory or regulatory requirements can result in penalties, including civil money penalties of up to $10,000 for each item or service billed to Medicare in violation of the legal requirement, and exclusion from participation in Medicare and Medicaid. Government authorities may also assert that violations of laws and regulations related to submission of claims violate the federal False Claims Act or other laws related to fraud and abuse, including submission of claims for services that were not medically necessary. The Company will be generally dependent on independent physicians to determine when its services are medically necessary for a particular patient. Nevertheless, we could be adversely affected if it were determined that the services we provided were not medically necessary and not reimbursable, particularly if it were asserted that we contributed to the physician’s referrals of unnecessary services. It is also possible that the government could attempt to hold us liable under fraud and abuse laws for improper claims submitted by us if it were found that we knowingly participated in the arrangement that resulted in submission of the improper claims.

In addition to the Patient Protection and Affordable Care Act (“PPACA”), the effect of which cannot presently be quantified, various healthcare reform proposals have also emerged from federal and state governments. Changes in healthcare policy could adversely affect our business.

We cannot predict whether future healthcare initiatives will be implemented at the federal or state level or in countries outside of the U.S. in which we may do business, or the effect any future legislation or regulation will have on us. The taxes imposed by any new federal legislation and the expansion in government’s effect on the U.S. healthcare industry, including the Inflation Reduction Act enacted in August 2022, may result in decreased profits to us, lower reimbursements by payors for our products or reduced medical procedure volumes, all of which may adversely affect our business, financial condition and results of operations.

We face significant competition from other biotechnology and pharmaceutical companies.

Our product candidates face, and will continue to face, intense competition from large pharmaceutical and biotechnology companies, as well as academic and research institutions. We compete in an industry that is characterized by (i) rapid technological change, (ii) evolving industry standards, (iii) emerging competition and (iv) new product introductions. Our competitors have existing products that compete with our product candidates and they may develop and commercialize additional products that will compete with our product candidates. Because competing companies and institutions may have greater financial resources than us, they may be able to provide broader services and product lines, make greater investments in research and development or carry on broader R&D initiatives. Our competitors also have greater development capabilities than we do and have substantially greater experience in undertaking preclinical and clinical testing of product candidates, obtaining regulatory approvals and manufacturing and marketing pharmaceutical products.

Even if we obtain regulatory approval for our products, we may not be the first to market and that may affect the price or demand for our potential products. Existing or future competing products may provide greater therapeutic convenience or clinical or other benefits for a specific indication, or fewer side effects, than our potential products or may offer comparable performance at a lower cost. Additionally, the availability and price of our competitors’ products could limit the demand and the price we are able to charge for our potential products thereby reducing or eliminating our commercial opportunity. We may not be able to implement our business plan if the acceptance of our potential products is inhibited by price competition or the reluctance of physicians to switch from existing methods of treatment to our potential products, or if physicians switch to other new products or choose to reserve our potential products. Additionally, a competitor could obtain orphan product exclusivity from the FDA with respect to such competitor’s product, which may prevent us from obtaining approval from the FDA for such potential products for the same indication for a period of time. If our potential products fail to capture and maintain market share, we may not achieve sufficient product revenues and our business will suffer.

Our employeesand third-party partners may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.

We are exposed to the risk of employees’ or our third-party partners’ fraud or other misconduct. Misconduct by our employees or partners could include intentional failures to comply with FDA regulations, provide accurate information to the FDA, comply with manufacturing standards, comply with federal and state healthcare fraud and abuse laws and regulations, report financial information or data accurately or disclose unauthorized activities to us. Employee and third-party misconduct could involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our business and our reputation. It is not always possible to identify and deter such misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us and we are not successful in defending ourselves or asserting our rights, those actions could have a material adverse effect on our business, financial condition and results of operations, and result in the imposition of significant fines or other sanctions against us.

Our businessinvolves risk associated with handling hazardous and other dangerous materials.

Our research and development activities involve the controlled use of hazardous materials, chemicals, human blood and tissue, animal blood and blood products, animal tissue, and biological waste. The risk of accidental contamination or injury from these materials cannot be completely eliminated. The failure to comply with current or future regulations could result in the imposition of substantial fines against the Company, suspension of production, alteration of our manufacturing processes or cessation of operations.

Our shares of ~~Common Stock~~common stock are listed on ~~The NASDAQ~~the Nasdaq Capital Market, but we cannot guarantee that we will be able to satisfy the continued listing standards going ~~forward.~~forward, which could make it more difficult for our stockholders to sell their shares.

Although our shares of ~~Common Stock~~common stock are listed on ~~The NASDAQ~~the Nasdaq Capital Market (Nasdaq), we cannot ensure that we will be able to satisfy the continued listing standards of ~~The NASDAQ Capital Market~~Nasdaq going ~~forward.~~forward, including its $1.00 minimum bid price requirement. If we cannot satisfy the continued listing standards going forward, ~~NASDAQ~~Nasdaq may commence delisting procedures against us, which could result in our stock being removed from listing on ~~The NASDAQ Capital Market.~~Nasdaq. On ~~May 11, 2017,~~October 5, 2022, we received a letter from ~~NASDAQ~~Nasdaq stating we ~~are~~were not in compliance with Listing Rule 5550(a)(2) because our common stock failed to maintain a minimum closing bid price of $1.00 per share for 30 consecutive business days. WeThe Company had until ~~November 7, 2017~~April 3, 2023 to ~~either~~ regain compliance or ~~request additional~~obtain an extension of the deadline to comply. The Company applied for such an extension and on April 4, 2023, the Company was informed that the deadline for compliance was extended by 180 days, or until October 2, 2023. To regain compliance, the closing bid price of the Company’s common stock must be $1.00 per share or more for a minimum of 10 consecutive business days at any time prior to the expiration of the compliance period. The Company intends to actively monitor the closing bid price of its common stock and is committed to regaining compliance with the minimum closing bid price requirement prior to the expiration of the compliance period.

There can be no assurance that we will be able to regain ~~compliance. On November 2, 2017,~~compliance with the minimum bid price requirement. If we ~~requested an additional 180 days~~are unable to regain ~~compliance.~~

Ifcompliance with Nasdaq Listing Rule 5550(a)(2), and if our stock price ~~does~~continues not to satisfy the $1.00 minimum bid price requirement or we otherwise fail to satisfy other continued listing requirements, we may be delisted from ~~NASDAQ,~~Nasdaq, and we could face significant material adverse consequences, including;

The sale of a substantial number of shares of our common stock into the market may cause substantial dilution to our existing stockholders and the sale, actual or anticipated, of a substantial number of shares of common stock could cause the price of our common stock to decline.

We have offered and sold a considerable amount of our common stock in past financings. Any additional or anticipated sales of shares by us, holders of our warrants to purchase common stock or other stockholders may cause the trading price of our common stock to decline. Additional issuances of shares by us may result in dilution to the interests of other holders of our common stock. The sale of a substantial number of shares of our common stock by us, our warrant holders or other stockholders or anticipation of such sales, could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales.

The trading price of our common stock has beenand is likely to continue to be volatile.

Our stock price is highly volatile. In addition to the factors discussed in this Quarterly Report, the trading price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control including:

In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many healthcare companies. Stock prices of many healthcare companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. As a result, an investment in our common stock may decrease in value.

The ownership of our common stock may becomeconcentrated among a small number of stockholders, and if our principal stockholders, directors and officers choose to act together, they may be able to significantly influence management and operations, which may prevent us from taking actions that may be favorable to stockholders.

Our ownership may become concentrated among a small number of stockholders. These stockholders, acting together, could have the ability to exert substantial influence over all matters requiring approval by our stockholders, including the election and removal of directors and any proposed merger, consolidation or sale of all or substantially all of our assets. This concentration of ownership could also have the effect of delaying, deferring, or preventing a change in control of the Company or impeding a merger or consolidation, takeover or other business combination that could be favorable to stockholders.

If we are unable to implement and maintain effective internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports and the trading price of our common stock may be negatively affected.

We are required to maintain internal controls over financial reporting and to report any material weaknesses in such internal controls. If we identify material weaknesses in our internal control over financial reporting, or if we are unable to comply with the requirements of the Sarbanes-Oxley Act in a timely manner or assert that our internal control over financial reporting is effective, investors may lose confidence in the accuracy and completeness of our financial reports and the trading price of our common stock could be negatively affected, and we could become subject to investigations by the stock exchange on which our securities are listed, the SEC, or other regulatory authorities, which could ~~adversely affect~~require additional financial and management resources.

Our Stockholder Rights Agreement, the anti-takeover provisions in our governingdocuments and Delaware law could delay or prevent a change in control which could reducethe market price of our common stock ~~price, liquidity,~~and could prevent or frustrate attempts by our stockholders to replace or remove our current management and the current Board of Directors.

Our Stockholder Rights Agreement, which we adopted in May 2014, our amended and restated certificate of incorporation, as amended, and our ~~ability~~amended and restated bylaws contain provisions that could delay or prevent a change in control or changes in our Board of Directors (our Board) that our stockholders might consider favorable. These provisions include a staggered Board, which divides the Board into three classes, with directors in each class serving staggered three-year terms. The existence of a staggered board can make it more difficult for a third-party to ~~raise funding.~~effect a takeover of our Company if the incumbent Board does not support the transaction. These and other provisions in our corporate documents, including our Shareholder Rights Plan and Delaware law might discourage, delay or prevent a change in control or changes in our Board. These provisions could also discourage proxy contests and make it more difficult for activist investors and other stockholders to elect directors not nominated by our Board. Furthermore, the existence of these provisions, together with certain provisions of Delaware law, might hinder or delay an attempted takeover other than through negotiations with our Board.

If securities or industry analystsdo not publish research or publish inaccurate or unfavorable research about our business, the priceof our common stock and trading volume could decline.

The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. Multiple securities and industry analysts currently cover us. If one or more of the analysts downgrade our common stock or publish inaccurate or unfavorable research about our business, the price of our common stock would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our common stock could decrease, which could cause the price of our common stock and trading volume to decline.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

~~PART I. FINANCIAL INFORMATION~~	3

~~ITEM 1.~~PART I. FINANCIAL INFORMATION	~~Condensed Consolidated Financial Statements – Unaudited~~	3


ITEM 1.	Condensed Consolidated ~~Balance Sheets as of September 30, 2017 and December 31, 2016~~Financial Statements – Unaudited	3

	Condensed Consolidated ~~Statements~~Balance Sheets as of ~~Operations for the three~~March 31, 2023 and ~~nine months ended September 30, 2017 and 2016~~December 31, 2022	4 3

	Condensed Consolidated ~~Statement~~Statements of ~~Stockholders’ Equity~~Operations for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 and 2022	5 4

	Condensed Consolidated Statements of ~~Cash Flows~~Stockholders’ Equity for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016~~2022	6 5

	~~Notes to~~Condensed Consolidated ~~Financial~~ Statements of Cash Flows for the three months ended March 31, 2023 and 2022	7 6

	Notes to Condensed Consolidated Financial Statements	7

ITEM 2.	~~Management’s~~Management’s Discussion and Analysis of Financial Condition and Results of Operations	22 16

ITEM 3	Quantitative and Qualitative Disclosures about Market Risk	29 23

ITEM 4.	Controls and Procedures	29 23

PART II. OTHER INFORMATION	30

ITEM 1.	Legal Proceedings	30 24

ITEM 1A.	Risk Factors	30 24

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31 40

ITEM 3.	Defaults upon Senior Securities	32 40

ITEM 4.	Mine Safety Disclosures	32 40

ITEM 5.	Other Information	32 40

ITEM 6.	Exhibits	32 41

SIGNATURES	33	42


	September 30,			December 31,			*As of March 31,*			*As of December 31,*
	2017			2016			*2023 (unaudited)*			*2022*
Assets
Current assets
Cash and cash equivalents	$	2,733,663		$	3,027,962		$	103,868		$	110,890
Restricted cash		55,000			55,000			110			110
Prepaid expenses		157,406			171,601			5,295			4,031
Other accounts receivable		4,040
Research and development tax rebate receivable								738			743
Other current assets								858			2,423
Total current assets		2,950,109			3,254,563			110,869			118,197

Furniture and equipment, net		14,435			55,119
Intangible assets, net		561,354			640,440
Investment in equity securities								4,700			4,700
Other assets		108,723			194,250			631			635
Total assets	$	3,634,621		$	4,144,372		$	116,200		$	123,532

Liabilities and Stockholders’ Equity

Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	380,399		$	254,320		$	1,444		$	2,965
Accrued expenses		50,542			16,964			613			1,059
Payroll liabilities		627,587			769,899			822			1,525
Other current liabilities		13,295			6,083			65			19
Total current liabilities		1,071,823			1,047,266			2,944			5,568

Commitments and contingencies (note 13)
Total liabilities								2,944			5,568

Stockholders’ equity
Preferred stock - $.001 par value; 10,000,000 shares authorized, no shares issued or outstanding
Common stock - $.015 par value; 75,000,000 shares authorized, 14,022,741 and 3,786,913 shares issued and outstanding, as of September 30, 2017 and December 31, 2016, respectively		210,341			56,804
Additional paid-in capital		65,785,758			60,344,050
Commitments and contingencies (Note 14)

Stockholders' equity
Series B convertible preferred stock - $0.001 par value; 10,000 shares authorized; 1 shares issued and outstanding as of March 31, 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; 126,624 shares issued and outstanding as of March 31, 2023 and December 31, 2022								22,792			22,792
Additional paid-in capital - common stock								252,357			250,784
Accumulated deficit		(63,433,301	)		(57,303,748	)		(162,475	)		(156,194	)
Total stockholders’ equity		2,562,798			3,097,106

Total liabilities and stockholders’ equity	$	3,634,621		$	4,144,372
Total stockholders' equity								113,256			117,964
Total liabilities and stockholders' equity							$	116,200		$	123,532

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

		2017			2016			2017			2016
Operating expenses:
Research and development	$	742,450		$	85,000		$	2,110,846		$	403,963
General and administrative		1,313,477			1,473,435			3,528,189			5,040,939
Total operating expenses		2,055,927			1,558,435			5,639,035			5,444,902
Operating loss		(2,055,927	)		(1,558,435	)		(5,639,035	)		(5,444,902	)
Change in fair value of common stock warrants		(128,300	)					(280,747	)
Warrant financing expense								(192,817	)
Other income (expense), net		(283	)		1,763,124			(16,954	)		1,599,667
Income (loss) before income taxes		(2,184,510	)		204,689			(6,129,553	)		(3,845,235	)
Income taxes
Net income (loss)	$	(2,184,510	)	$	204,689		$	(6,129,553	)	$	(3,845,235	)
Deemed dividends attributable to Series A Preferred Stock								(2,568,132	)
Net income (loss) applicable to common stockholders	$	(2,184,510	)	$	204,689		$	(8,697,685	)	$	(3,845,235	)
Income (loss) per common share - basic and diluted	$	(0.18	)	$	0.07		$	(1.10	)	$	(1.44	)
Weighted average shares outstanding, basic and diluted		12,411,145			3,024,393			7,886,210			2,665,904

	Series A Convertible Preferred Stock									Common Stock				Additional						Total
							Additional							Paid-in			Accumulated			Stockholders’
	Shares			Amount			Paid-in Capital			Shares		Amount		Capital			Deficit			Equity
Balance at December 31, 2016		—		$	—		$	—			3,786,913	$	56,804	$	60,344,050		$	(57,303,748	)	$	3,097,106

Issuance of common stock in Class A units, net of issuance costs of $65,816											1,194,000		17,910		811,774						829,684
Allocation of Class A unit proceeds to warrant liability															(328,350)						(328,350)
Issuance of Series A convertible preferred stock in Class B units, net of issuance costs of $267,231		3,502			4			3,234,769													3,234,773
Allocation of Series A convertible preferred stock to warrants and beneficial conversion feature								(2,568,132)							1,284,066						(1,284,066)
Deemed Dividends on Series A convertible preferred stock								2,568,132							(2,568,132	)
Conversion of Series A convertible preferred stock to common stock		(3,502	)		(4	)		(3,234,769	)		4,669,329		70,040		3,164,733
Reclassification of warrant liability upon exercise of common stock warrants											1,490,833		22,362		1,870,798						1,893,160
Issuance of common stock upon warrant exercise for cash											2,881,666		43,225		706,008						749,233
Amortization of commitment shares															(59,558	)					(59,558	)
Compensation cost for stock options granted to executives and employees															560,369						560,369
Net loss																		(6,129,553	)		(6,129,553	)
Balance at September 30, 2017				$			$				14,022,741	$	210,341	$	65,785,758		$	(63,433,301	)	$	2,562,798

	For the Nine Months Ended September 30,
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(6,129,553	)	$	(3,845,235	)
Compensation cost for stock options granted		560,369			650,053
Loss on disposal of intangible asset		17,695			163,333
Depreciation and amortization		102,074			227,387
Change in fair value of common stock warrants		280,747
Warrant financing expense		192,817
Changes in operating assets and liabilities:
Change in restricted cash					220,000
Prepaid expenses		14,195			72,542
Other assets		25,831			131,176
Accounts payable		126,079			(617,094	)
Payroll liabilities		(142,312	)		(524,288	)
Accrued expenses		33,578			(451,196	)
Other current liabilities		7,212			(45,242	)
Net cash used in operating activities		(4,911,268	)		(4,018,564	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of furniture and equipment					(5,023	)
Net cash used in investing activities					(5,023	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of Class A and Class B Units, net of issuance costs		3,871,636
Proceeds from exercise of warrants		745,333
Proceeds from issuance of common stock, net of issuance costs					4,695,869
Net cash provided by financing activities		4,616,969			4,695,869

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(294,299)			672,282
CASH AND CASH EQUIVALENTS, BEGINNING BALANCE		3,027,962			3,715,895
CASH AND CASH EQUIVALENTS, ENDING BALANCE	$	2,733,663		$	4,388,177

SUPPLEMENTAL DISCLOSURES:
Interest paid	$			$	1,304
NONCASH INVESTING AND FINANCING ACTIVITIES:
Reclassification of warrant liability upon exercise of common stock warrants	$	1,893,160		$
Amount receivable for warrant exercise		3,900
Allocation of Class A and Class B Unit proceeds to warrant liability		1,612,413
Common stock issued as commitment fee under stock purchase agreement					198,523
Amortization of commitment shares	$	59,558		$	26,470

	September 30, 2017		December 31, 2016
Prepaid insurance	$	39,132	$	121,333
Trade show				20,000
Retainer and security deposits		14,218		14,218
Professional services		81,250
Financial exchange fees		10,500
Other		12,306		16,050
Total prepaid expenses	$	157,406	$	171,601

	*March 31,*		*December 31,*
	*2023*		*2022*
Prepaid research and development	$	4,619	$	3,480
Prepaid insurance		520		387
Professional services		138		130
Other		18		34
Total prepaid expenses	$	5,295	$	4,031

	September 30, 2017			December 31, 2016
Furniture and equipment	$	170,917		$	210,528
Less: Accumulated depreciation		(156,482	)		(155,409	)
Total furniture and equipment, net	$	14,435		$	55,119

	September 30, 2017			December 31, 2016
Patents	$	639,000		$	639,000
Software		113,540			113,540
Total intangible assets		752,540			752,540
Less: Accumulated amortization		(191,186	)		(112,100	)
Total intangible assets, net	$	561,354		$	640,440

For the years ending December 31,	Amounts
2017 (includes the remainder of the year)	$	23,952
2018		73,433
2019		70,285
2020		70,285
2021		70,285
Thereafter		253,114
	$	561,354

March 31, 2023	Estimated Fair Value		Level 1		Level 2		Level 3
Assets:
Money market accounts	$	93,520	$	93,520	$	-	$	-

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

	Shares			Weighted Average Exercise Price
Outstanding as of December 31, 2016
Warrants granted		5,863,332		$	0.9375
Warrants exercised		(5,863,332	)		0.26
Outstanding as of September 30, 2017				$

Initial valuation
Common stock price	$	0.75
Exercise price	$	0.9375
Expected Volatility		50	%
Dividend Yield		0	%
Risk-Free Interest Rate		0.79% - 1.88	%
Expected Term (years)		0.24 - 5

June 30, 2017 valuation
Common stock price	$	0.50
Exercise price	$	0.26
Expected Volatility		50	%
Dividend Yield		0	%
Risk-Free Interest Rate		0.79-1.88	%
Expected Term (years)		0.08-4.76

	Outstanding Warrants to Purchase Shares		Exercise Price		Expiration Date

2011 private placement		283,470	$	18.75 - 24.00	May 8, 2018
2014 public offering		77,790		45.00	January 29, 2019
Placement agent fees for Company’s offerings		16,135		31.80 - 186.45	March - November, 2018
Outside consulting		3,166		63.60	January 14, 2018
		380,561

~~Warrant liability~~
~~Beginning balance~~	$
~~Issuances of warrants~~		~~1,612,413~~
~~Warrant exercises~~		~~(1,893,160~~	)
~~Change in fair value~~		~~280,747~~
~~Ending balance~~

	*Three Months Ended March 31,*
	*2023*		*2022*
Risk-free interest rate		3.87% - 4.25%		1.86% - 2.53%
Expected term (in years)		5.50 - 6.11		5.51 - 6.11
Dividend yield		-		-
Expected volatility		103% - 118%		117% - 128%

	Outstanding Warrants to Purchase Shares		Exercise Price Per Share		Expiration Date
December 2020 warrants		6,490	$	1.00	December 11, 2024-June 21, 2025
January 2021 warrants		4,500	$	1.055	July 8, 2025
March 2021 warrants		10,525	$	2.88	September 22, 2025
		21,515


	Three Months Ended September 30,					Nine Months Ended September 30,
	2017			2016		2017			2016
Net income (loss) Per share
Numerator
Net income (loss)	$	(2,184,510	)	$	204,689	$	(6,129,553	)	$	(3,845,235	)
Deemed dividend attributable to preferred stock							(2,568,132	)
Net income (loss) attributable to common shareholders	$	(2,184,510	)	$	204,689	$	(8,697,685	)	$	(3,845,235	)
Denominator
Weighted average common shares outstanding		12,411,145			3,024,393		7,886,210			2,665,904
Basic and diluted net income (loss) per share	$	(0.18	)	$	0.07	$	(1.10	)	$	(1.44	)

	Three Months Ended March 31,
	2023			2022
Numerator
Net loss attributable to common stockholders	$	(6,281	)	$	(4,786	)
Denominator
Weighted average common shares outstanding used to compute net loss per share, basic and diluted		126,624			126,624
Net loss per share of common stock, basic and diluted	$	(0.05	)	$	(0.04	)

Year Ending December 31,	Operating Leases Amount
2017 (remainder of year)	$	7,395
2018		22,185
Total minimum lease payments	$	29,580

January 1,	Number of shares
2012		30,018
2013		34,452
2014		49,532
2015		65,557
2016		220,419
2017		151,477
Total additional shares		551,455

	Period ended September 30,
	2017		2016

Risk free interest rate		1.86% - 2.04%		1.48% - 1.55%
Expected term		5.32- 6.36 years		5.58 - 6.06 years

Dividend yield		- %		- %
Expected volatility		112.86% - 114.19%		115.52% - 115.58%

	Number of Underlying Shares			Weighted- Average Exercise Price Per Share		Weighted- Average Contractual Life Remaining in Years		Aggregate Intrinsic Value		Number of Underlying Shares			Weighted-Average Exercise Price Per Share		Weighted-Average Contractual Life Remaining in Years		Aggregate Intrinsic Value
Outstanding as of January 1, 2017		378,924		$	26.25			$
Outstanding as of January 1, 2023											13,906		$	2.35				-
Granted		1,716,323			0.47						2,461		$	0.72
Exercised											-			-
Forfeited		(3,167	)		15.00						-			-
Expired		(19,081	)		25.05						(3	)	$	793.83
Outstanding as of September 30, 2017		2,072,999			4.10		9.29	$	102,679
Exercisable as of September 30, 2017		418,636			16.39		8.44	$	9,645
Outstanding as of March 31, 2023											16,364		$	1.95		7.93	$	44
Exercisable as of March 31, 2023											11,227		$	2.32		7.28
Vested and expected to vest		2,072,999		$	4.10		9.29	$	102,679		11,227		$	1.95		7.93	$	44

	●	the impact of the ongoing COVID-19 pandemic and the degree to which the pandemic negatively impacts our supply chain, clinical trial enrollment and timing and our ability to access capital markets;

	●	the impact of inflation, rising interest rates, general economic slowdown or a recession, foreign exchange rate volatility, financial institution instability, changes in monetary policy and increasing geopolitical instability on our business, our ability to access capital markets, our operating costs and our supply chain;

	●	whether we can obtain approval from the U.S. Food and Drug Administration ~~or FDA,~~(FDA), and foreign regulatory bodies, to continue our clinical trials, including our planned (Z)-endoxifen trials, and to sell, market and distribute our therapeutics ~~and devices~~ under development;

	●	our ability to ~~successfully complete clinical trials~~identify and partner with organizations to commercialize any of our ~~pharmaceutical candidates under development, including endoxifen and our intraductal microcatheters to administer therapeutics, including our study using fulvestrant;~~products once they are approved for marketing;

	●	our ability to successfully initiate and complete clinical trials of our products under development, including our proprietary (Z)-endoxifen (an active metabolite of Tamoxifen);

	●	the success, ~~cost~~costs and timing of our ~~product and drug~~ development activities, ~~and~~such as clinical trials, including whether ~~the ongoing clinical study~~our studies using our ~~intraductal microcatheters to administer fulvestrant~~(Z)-endoxifen therapies will enroll a sufficient number of subjects in a timely fashion or be completed in a timely fashion or at all;

	●	whether we will successfully complete our clinical trial of oral (Z)-endoxifen in women with mammographic breast density and our trials of (Z)-endoxifen in women with breast cancer, and whether the studies will meet their objectives;

	●	our ability to contract with third-party suppliers, manufacturers and service providers, including clinical research organizations, and their ability to perform adequately;

	●	our ability to successfully develop and commercialize new therapeutics currently in development, or new therapeutics that we might identify in the future, and inwithin the time frames we currently ~~expected;~~expect;

	●	our ability to successfully defend ~~ongoing~~ litigation ~~including the November 3, 2014 appeal of a dismissal of a securities class action law suit filed against us,~~ and other similar complaints that may be brought in the future, in a timely manner and within the coverage, scope and limits of our insurance policies;

	●	our ability to establish and maintain intellectual property rights covering our products;

	●	our increased risk of theft or misappropriation of our intellectual property and other proprietary technology outside of the U.S.;

	●	our expectations regarding, and our ability to satisfy, federal, state and foreign regulatory requirements;

	●	the accuracy of our estimates of the size and characteristics of the markets that our products and services may address;

	●
	●	our expectations as to future financial performance, expense levels and capital sources;

	●	our ability to attract and retain key personnel; and

	●	our ability to raise capital.

	March 31, 2023		March 31, 2022			Change			% Change
Research and Development
Clinical trials	$	2,336	$	1,288		$	1,048			81	%
Compensation		1,034		1,094			(60	)		-5	%
Professional fees		101		115			(14	)		-12	%
Exclusivity agreements		-		(1,000	)		1,000			-100	%
Other		37		2			35			*
Research and Development Total	$	3,508	$	1,499		$	2,009			134	%

General and Administrative
Compensation	$	2,084	$	2,005		$	79			4	%
Legal and professional fees		926		669			257			38	%
Insurance and other		580		574			6			1	%
General and Administrative Total	$	3,590	$	3,248		$	342			11	%

	●	Business disruptions, including natural disasters and pandemics, could seriously harm our future revenue and financial condition and increase our costs and expenses.
	●	We maintain our cash at financial institutions, often in balances that exceed federally-insured limits. The failure of financial institutions could adversely affect our ability to pay our operational expenses or make other payments.

	●	price and volume fluctuations in the overall stock market;
	●	changes in operating results and performance and stock market valuations of other biopharmaceutical companies generally;

		Incorporated by Reference Herein
Exhibit No.
~~Exhibit No.~~ Description	~~Description~~ Form	~~Form~~ Date
3.1	~~Date~~Amended & Restated Bylaws	Current Report on Form 8-K, as Exhibit 3.2	April 26, 2023

~~10.1~~31.1	~~Underwriting Agreement between Atossa Genetics Inc. and Maxim Corp. as representative~~Certification of Chief Executive Officer Pursuant to Section 302 of the ~~several underwriters, dated Oct 26, 2017~~Sarbanes-Oxley Act	~~Current Report on Form 8-K, as Exhibit 1.1~~	~~October 30, 2017~~
~~31.1~~	~~Certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 of Steven C. Quay~~	Filed herewith

31.2	Certification ~~pursuant~~Chief Financial Officer Pursuant to ~~Rule 13a-14(a) under~~Section 302 of the ~~Securities Exchange~~Sarbanes-Oxley Act ~~of 1934 of Kyle Guse~~	Filed herewith

32.1	Certification ~~pursuant~~of Chief Executive Officer Pursuant to ~~18 U.S.C.~~ Section ~~1350~~906 of ~~Steven C. Quay~~the Sarbanes-Oxley Act	~~Filed~~ Furnished herewith

32.2	Certification ~~pursuant~~of Chief Financial Officer Pursuant to ~~18 U.S.C.~~ Section ~~1350~~906 of ~~Kyle Guse~~the Sarbanes-Oxley Act	~~Filed~~ Furnished herewith

~~101~~ 101.INS	~~Interactive Data Files pursuant to Rule 405 of Regulation S-T~~ Inline XBRL Instance Document	~~Filed herewith~~

101.SCH	Inline XBRL Taxonomy Extension Schema Document

101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB	Inline XBRL Taxonomy Extension Labels Linkbase Document

101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document

104	Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101)

/s/ Steven C. Quay
President and Chief Executive Officer
(On behalf of the Registrant)