Atossa Genetics Reports 2012 Results and Operating Highlights

Atossa Genetics Reports 2012 Results and Operating Highlights 
Enters 2013 With Two Marketed Breast Health Tests; Two More Slated
for Launch This Year; National Launch of ForeCYTE Breast Health Test
Positions Atossa for Accelerated Revenue Growth in 2013 
SEATTLE, WA -- (Marketwire) -- 03/28/13 --  Atossa Genetics, Inc.
(NASDAQ: ATOS), a healthcare company focused on the prevention of
breast cancer through the commercialization of diagnostic medical
devices and laboratory developed tests that can detect precursors to
breast cancer, and through the research, development, and ultimate
commercialization of treatments for pre-cancerous lesions and ductal
carcinoma in situ, today announced its 2012 financial results and
corporate developments.  
Recent Accomplishments and Highlights 
"We continue to make steady progress in the national rollout of our
patented ForeCYTE Breast Health Test, advancing our ambition to arm
women and their physicians with information that will enable improved
breast health management and prevent breast cancer," stated Dr.
Steven Quay, chairman, CEO and president. "We are very encouraged by
the enthusiastic response we are seeing from doctors and their
patients for the ForeCYTE test during the early phases of our
national rollout. We believe that widespread adoption of the ForeCYTE
test could lead to a dramatic lowering of the incidence of breast
cancer, much as the Pap smear has led to a 75 percent reduction in
cervical cancer."  
Developments in 2012 and early 2013 include: 


 
--  In January 2013, the Company initiated the national rollout of the
    ForeCYTE Breast Health Test in partnership with Clarity Women's
    Health, a division of Diagnostic Test Group, LLC. Clarity distributes
    the Clarity-branded ForeCYTE product line with major national
    distributors. These distributors collectively have more than 5,000
    employee sales representatives and/or independent sales
    representatives selling their products to a target market of 33,000
    obstetric-gynecologists in the United States. Progress in the first
    quarter of 2013 includes:
    
    
    --  Conducted a teaching session in Florida with about 20
        representatives from Clarity Women's Health.
    --  Continued the national launch of the ForeCYTE test at the Pri-Med
        South 2013 meeting in Florida, which generated 275 office leads
        from primary care physicians and practices.
    --  Presented at the Pri-Med Southwest 2013 meeting in Texas, which
        resulted in 150 primary care physician leads. Product codes were
        established with the medical supply distributors Henry Schein, PSS
        World Medical (PSS), and McKesson, which together have a total of
        1,809 representatives nationwide. Establishing these product codes
        will enable physicians to purchase Atossa's ForeCYTE device and
        test kits from these distributors. Outreach and teaching also
        began with these medical supply distributors.
    --  Atossa also began its own sales program by recruiting and training
        independent sales representatives.
        
        
--  To help ensure that more doctors and their patients have access to the
    ForeCYTE and ArgusCYTE Breast Health Tests and that patients will
    receive insurance reimbursement for the laboratory costs associated
    with these tests, Atossa entered into two contracts with third parties
    to facilitate the reimbursement process from insurers, one with
    MultiPlan, Inc. in September 2012 and another with FedMed, Inc., in
    February 2013:
    
    
    --  MultiPlan is a leading provider of healthcare cost management
        solutions for diagnostic laboratory testing involving Atossa's
        tests. Approximately 20 percent of Americans are covered by
        MultiPlan. The agreement allows Atossa to participate in the
        MultiPlan, PHCS and PHCS Savility Networks.
    --  FedMed is one of the largest proprietary Preferred Provider
        Organization (PPO) networks in the U.S., for diagnostic laboratory
        testing. FedMed's network is comprised of over 550,000 total
        providers, including 4,000 hospitals and more than 60,000
        ancillary facilities, serving over 40 million Americans.
        
        
--  The Company obtained CLIA certification for the Company's National
    Reference Laboratory for Breast Health, a high-complexity molecular
    diagnostic laboratory where Nipple Aspirate Fluid (NAF) samples
    collected by the Company's medical device, the Mammary Aspirate
    Specimen Cytology Test System (MASCT System), are examined by
    microscopy for the presence of normal, pre-malignant, or malignant
    changes as determined by cytopathology and biomarkers that distinguish
    "usual" ductal hyperplasia, a benign condition, from atypical ductal
    hyperplasia, which may lead to cancer.
    
    
--  In September 2012, Atossa acquired assets of Acueity Healthcare, Inc.,
    including 35 issued patents (18 issued in the U.S. and 17 issued in
    foreign countries), 41 patent applications (32 in the U.S. and 9 in
    foreign countries), six 510(k) FDA marketing authorizations related to
    the manufacturing, use, and sale of the Viaduct Miniscope and
    accessories, the Manoa Breast Biopsy system, the Excisor Bioptome, the
    Acueity Medical Light Source, the Viaduct Microendoscope and
    accessories, and cash in the amount of $0.4 million. The
    microendoscopes are less than 0.9 mm outside diameter and permit a
    physician to pass a microendoscope into the milk duct system of the
    breast and view the duct system via fiberoptic video images.
    Abnormalities that are visualized can then be biopsied from inside the
    duct with the biopsy tools that are inserted adjacent to the
    microendoscope.
    
    
--  On March 13, 2013, Atossa responded to an FDA Warning Letter dated
    February 21, 2013, alleging, among other things, that following 510(k)
    clearance the Company changed the MASCT System in a manner that
    requires submission of an additional 510(k) notification. While Atossa
    believes that there was no evidence of safety- or efficacy-related
    issues, Atossa intends to submit a new 510(k) notification for the
    MASCT System and plans to continue to market its MASCT System.
    
    
--  Atossa strengthened the senior management team with the hiring of Kyle
    Guse, CFO and general counsel, Chris Destro, VP of sales and marketing
    and Michael Malafronte, VP operations.

  
Full-Year 2012 Financial Results  
Net loss for the year ended December 31, 2012 was $5.1 million, or
$(0.41) per share, compared with net loss of $3.4 million, or $(0.38)
per share, for the year ended December 31, 2011. The increase in net
loss was primarily attributable to an increase in general and
administrative expense of $1.8 million.   
Revenues for the twelve months ended December 31, 2012 were $481,842,
which included $6,440 of product revenue from the sale of MASCT
Systems and $475,402 of diagnostic testing service revenue from the
ForeCYTE and ArgusCYTE breast health tests. This compares with total
revenues of $1,500 for the year ended December 31, 2011. The
year-over-year increase in total revenues was driven by the launch of
the ForeCYTE test near the end of 2011 in a field experience trial
and sales of the ArgusCYTE test. 
Gross profit for the twelve months ended December 31, 2012 was
$416,213. This compares to gross loss of $95,690 for the year ended
December 31, 2011. Loss
 on reduction of inventory to lower of cost or
market was $29,884 for the twelve months ended December 31, 2012, and
$92,026 for the twelve months ended December 31, 2011, primarily due
to write-off of parts purchased during the year for the assembly of
MASCT System which was determined at zero net realizable value as a
result of lower of cost or market analysis at year end. The MASCT
System is currently sold at a price substantially lower than its cost
to encourage sales and because the MASCT System is currently
manufactured by Atossa's suppliers only in small quantities. For
these reasons, the manufacturing cost allocated to each inventory
unit is high. 
Total operating expenses were $5.5 million for the twelve months
ended December 31, 2012, consisting of G&A expenses of $5.0 million
and selling expenses of $0.5 million. This compares to total
operating expenses of $3.3 million for the twelve months ended
December 31, 2011, consisting of G&A expenses of $3.2 million and
selling expenses of $0.1 million. The increase in G&A expenses of
$1.8 million, or approximately 56%, from 2011 to 2012 is attributed
to the launch of the Company's MASCT System, ForeCYTE test and
ArgusCYTE test and the related growth in expenses to hire additional
staff, expand our operations, invest additional funds in research and
development and increased legal fees and other costs associated with
our initial public offering. Atossa expects that its G&A expenses
will continue to increase as it adds additional full time employees
and incurs additional costs as a publicly traded company.
Additionally, G&A costs are expected to rise as the Company increases
headcount to coordinate the production and manufacture of the MASCT
System, and the expected increase in service revenues.  
At December 31, 2012, Atossa had cash and cash equivalents of $1.7
million. 
About Atossa Genetics, Inc. 
Atossa Genetics, Inc. (NASDAQ: ATOS), The Breast Health Company(TM),
is based in Seattle, WA, and is focused on preventing breast cancer
through the commercialization of patented, FDA-designated Class II
diagnostic medical devices and patented, laboratory developed tests
(LDT) that can detect precursors to breast cancer up to eight years
before mammography, and through research and development that will
permit it to commercialize treatments for pre-cancerous lesions. 
The National Reference Laboratory for Breast Health (NRLBH), a wholly
owned subsidiary of Atossa Genetics, Inc., is a CLIA-certified
high-complexity molecular diagnostic laboratory located in Seattle,
WA, that provides the patented ForeCYTE Breast Health Test, a risk
assessment test for women 18 to 73 years of age akin to the Pap
Smear, and the ArgusCYTE Breast Health Test, a blood test for
recurrence in breast cancer survivors that provides a "liquid biopsy"
for circulating cancer cells and a tailored treatment plan for
patients and their caregivers. 
Forward-Looking Statements 
Forward-looking statements in this press release are subject to risks
and uncertainties that may cause actual results to differ materially
from the anticipated or estimated future results, including the risks
and uncertainties associated with actions by the FDA, regulatory
clearances, responses to regulatory matters, Atossa's ability to
continue to manufacture and sell its products, the efficacy of
Atossa's products and services, the market demand for and acceptance
of Atossa's products and services, performance of distributors and
other risks detailed from time to time in Atossa's filings with the
Securities and Exchange Commission, including without limitation its
registration statement on Form S-1 filed January 28, 2013, and
periodic reports on Form 10-K and 10-Q, each as amended and
supplemented from time to time. 


 
                                                                            
                           ATOSSA GENETICS, INC.                            
                       (A DEVELOPMENT STAGE COMPANY)                        
                        CONSOLIDATED BALANCE SHEETS                         
                                                                            
                                                      As of December 31,    
                                                   ------------------------ 
                                                       2012         2011    
                                                   -----------  ----------- 
                      Assets                                                
                                                                            
Current Assets                                                              
  Cash and cash equivalents                        $ 1,725,197  $ 1,910,821 
  Restricted cash                                            -    1,000,000 
  Accounts receivable                                  141,665        1,224 
  Prepaid expense                                      122,633       31,184 
  Rental deposits                                            -        2,200 
                                                   -----------  ----------- 
    Total Current Assets                             1,989,495    2,945,429 
                                                   -----------  ----------- 
                                                                            
Fixed Assets                                                                
  Furniture and Equipment, net                         159,967       80,467 
                                                   -----------  ----------- 
    Total Fixed Assets                                 159,967       80,467 
                                                   -----------  ----------- 
                                                                            
Other Assets                                                                
  Security deposit                                      36,446        5,157 
  Intangible assets, net                             4,640,224       40,841 
                                                   -----------  ----------- 
    Total Other Assets                               4,676,670       45,998 
                                                   -----------  ----------- 
                                                                            
    Total Assets                                   $ 6,826,133  $ 3,071,894 
                                                   ===========  =========== 
                                                                            
       Liabilities and Stockholders' Equity                                 
                                                                            
Current Liabilities                                                         
  Line of Credit                                   $         -  $ 1,000,000 
  Accounts payable                                      68,217       64,766 
  Accrued expenses                                   1,582,381      442,329 
  Note payable - related party                               -        5,078 
                                                   -----------  ----------- 
    Total Current Liabilities                        1,650,598    1,512,173 
                                                   -----------  ----------- 
  
                                                                          
Stockholders' Equity                                                        
  Preferred stock - $.001 par value; 10,000,000                             
   shares authorized, 0 shares issued and                                   
   outstanding                                               -            - 
  Common stock - $.001 par value; 75,000,000                                
   shares authorized, 12,919,367 and 11,256,867                             
   shares issued and outstanding                        12,919       11,257 
  Additional paid-in capital                        14,894,522    6,200,520 
  Accumulated deficit                               (9,731,906)  (4,652,056)
                                                   -----------  ----------- 
    Total Stockholders' Equity                       5,175,535    1,559,721 
                                                   -----------  ----------- 
                                                                            
    Total Liabilities and Stockholders' Equity     $ 6,826,133  $ 3,071,894 
                                                   ===========  =========== 
 
                                                                            
                           ATOSSA GENETICS, INC.                            
                       (A DEVELOPMENT STAGE COMPANY)                        
                   CONSOLIDATED STATEMENTS OF OPERATIONS                    
                                                                              
                                                               From April  
                                                                30, 2009   
                                      For the Years Ended      (Inception)
                                          December 31,           Through   
                                    ------------------------   December 31,     
                     
                                        2012         2011          2012      
                                    -----------  -----------  ------------- 
                                                                            
Revenue                                                                     
  Diagnostic Testing Service        $   475,402  $         -  $     475,402 
  Product Sales                           6,440        1,500          7,940 
                                    -----------  -----------  ------------- 
    Total Revenue                       481,842        1,500        483,342 
                                    -----------  -----------  ------------- 
                                                                            
Cost of Revenue                                                             
  Diagnostic Testing Service            (35,745)           -        (35,745)
  Product Sales                               -       (5,164)        (5,164)
                                    -----------  -----------  ------------- 
    Total Cost of Revenue               (35,745)      (5,164)       (40,909)
                                    -----------  -----------  ------------- 
                                                                            
Loss on Reduction of Inventory to                                           
 LCM                                    (29,884)     (92,026)      (121,910)
                                    -----------  -----------  ------------- 
                                                                            
    Gross Profit (Loss)                 416,213      (95,690)       320,523 
                                    -----------  -----------  ------------- 
                                                                            
Selling expenses                       (466,821)    (160,851)      (639,876)
General and Administrative expenses  (5,018,422)  (3,172,649)    (9,379,722)
                                    -----------  -----------  ------------- 
    Total operating expenses         (5,485,243)  (3,333,500)   (10,019,598)
                                    -----------  -----------  ------------- 
                                                                            
Operating Loss                       (5,069,030)  (3,429,190)    (9,699,073)
                                                                            
Interest Income                           1,219        4,914          6,588 
Interest Expense                        (12,040)     (17,992)       (39,171)
                                    -----------  -----------  ------------- 
                                                                            
Net Loss before Income Taxes         (5,079,851)  (3,442,269)    (9,731,656)
                                                                            
Income Taxes                                  -            -            250 
                                    -----------  -----------  ------------- 
                                                                            
Net Loss                            $(5,079,851) $(3,442,269) $  (9,731,906)
                                    ===========  ===========  ============= 
                                                                            
Loss per common share - basic and                                           
 diluted                            $     (0.41) $     (0.38) $       (1.27)
                                    ===========  ===========  ============= 
Weighted average shares                                                     
 outstanding, basic & diluted        12,452,929    9,117,746      7,657,400 
                                    ===========  ===========  ============= 

  
Contact: 
Atossa Genetics, Inc.
Kyle Guse
Chief Financial Officer and General Counsel
800-351-3902
Kyle.Guse@AtossaGenetics.com 
Matthew D. Haines (Investors)
Managing Director
MBS Value Partners
212-710-9686
Matt.Haines@mbsvalue.com