Atossa Genetics Reports First Quarter 2013 Results and Operating Highlights

SEATTLE, WA--(Marketwired - May 15, 2013) - Atossa Genetics, Inc. (NASDAQ: ATOS), the Breast Health Company™, today announced its first quarter 2013 financial results and corporate developments. 

"The national rollout of our ForeCYTE Breast Health Test is proceeding well and we are pleased with the response we are getting from the physician community and from patients," stated Dr. Steven Quay, chairman, CEO and president. "We were particularly pleased to have completed an agreement with Millennium HealthCare, Inc., which provides primary care physician practices, physician groups and healthcare facilities of all sizes with cutting edge medical devices focused primarily on preventive care through early detection. Millennium has initially submitted an order for 10,000 ForeCYTE Breast Health collection kits for distribution to its network of physicians' offices in the New York Metro area and Northern New Jersey. We anticipate signing up additional distributors this year and continuing to build our internal sales and marketing team."

Corporate Highlights

• Continued the national rollout of the ForeCYTE Breast Health Test, which the Company launched in January 2013.
• Completed a $30 million At-The-Market Common Stock Purchase Agreement with Aspire Capital Fund, LLC. Upon signing the agreement, Aspire purchased $1.0 million of Atossa's stock at $12.00 per share. Aspire has committed to purchase up to $29 million of Atossa's common stock over the next three years at prices based on prevailing market prices over a period preceding each sale.
• Signed a distribution agreement with Millennium HealthCare, Inc. Millennium placed an initial purchase order for 10,000 ForeCYTE collection kits, which it intends to distribute to its physician practices in the New York Metro Area and Northern New Jersey.
• Two leading breast centers in Texas, Aurora Breast Center in San Antonio and The Breast Center at Wellness Lubbock in Lubbock, will begin offering the ForeCYTE test to their patients. Three breast centers in Texas are now offering the ForeCYTE test.
• Launched a Nationwide Awareness Program including a new video to educate women and health care providers on the prevention of breast cancer by early testing for pre-cancerous breast conditions using the ForeCYTE Breast Health Test.
• Continued development of the FullCYTE test, which is designed to identify the particular duct that is undergoing pre-cancerous or cancerous changes, and the NextCYTE test, which uses genomic analysis to provide important insights to inform and improve the effectiveness of breast cancer treatment for women with early-stage breast cancer. Atossa intends to launch both of these tests in 2013.
• Atossa exhibited the ForeCYTE test at the 61^st Annual Clinical Meeting of the American Congress of Obstetrics and Gynecology in New Orleans, the largest gathering of OB/GYNs in the U.S.

First Quarter 2013 Financial Results

Revenues for the three months ended March 31, 2013, were $182,670, which included $13,440 of product revenue from the sale of MASCT Systems and $169,230 of diagnostic testing service revenue from the ForeCYTE breast health tests. This compares with total revenues of $54,713 for the first quarter ended March 31, 2012. The year-over-year increase in total revenue was driven by the national rollout of the ForeCYTE test in January 2013.

Gross profit for the three months ended March 31, 2013, was $116,206. This compares to gross profit of $27,709 for the quarter ended March 31, 2012.

Net loss for the quarter ended March 31, 2013, was $1.9 million, or $(0.14) per share, compared with net loss of $1.1 million, or $(0.09) per share, for the first quarter ended March 31, 2012. The increase in net loss was primarily attributable to an increase in general and administrative expense of $963,420, including increased expenses related to the national launch of the ForeCYTE test.

Total operating expenses were $2.1 million for the three months ended March 31, 2013, consisting of G&A expenses of $1.6 million, selling expenses of $272,575 and research and development expenses of $220,192. This compares to total operating expenses of $1.1 million for the three months ended March 31, 2012, consisting of G&A expenses of $601,452, selling expenses of $70,435 and research and development expenses of $417,990. The increase in G&A expenses of $963,420, from the first quarter of 2012 to the first quarter of 2013, 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 and expand the Company's operations. Atossa expects that its G&A expenses will continue to increase as it adds additional 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 revenue. Selling expenses increased $202,140 from the first quarter of 2012 to the first quarter of 2013 as a result of hiring additional sales and marketing personnel and incurring additional marketing expenses directly and to the Company's distributor for the national launch of the ForeCYTE test. Research and development expenses decreased by $197,798 from the first quarter of 2012 to the first quarter of 2013 as a result of completion of the development of the ForeCYTE test and ArgusCYTE test in 2012 and as a result of Atossa's focus in 2013 on the national launch of ForeCYTE.

At March 31, 2013, Atossa had cash and cash equivalents of $1.4 million.

About Atossa Genetics, Inc.

Atossa Genetics, Inc. (NASDAQ: ATOS), The Breast Health Company™, 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 April 5, 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
			March 31,			December 31,
			2013			2012
			(Unaudited)			(Audited)
Assets
Current Assets
	Cash and cash equivalents		$	1,385,199		$	1,725,197
	Accounts receivable			259,339			141,665
	Prepaid expense			2,521,098			122,633
		Total Current Assets		4,165,636			1,989,495
Fixed Assets
	Furniture and Equipment, net			150,421			159,967
		Total Fixed Assets		150,421			159,967
Other Assets
	Security deposit			36,446			36,446
	Intangible assets, net			4,559,326			4,640,224
		Total Other Assets		4,595,772			4,676,670
		Total Assets	$	8,911,829		$	6,826,133
Liabilities and Stockholders' Equity
Current Liabilities
	Accounts payable			34,591			68,217
	Accrued expenses			1,901,674			1,582,381
		Total Current Liabilities		1,936,265			1,650,598
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, 14,508,019 and 11,256,867 shares issued and outstanding			14,508			12,919
	Additional paid-in capital			18,634,404			14,894,522
	Accumulated deficit			(11,673,348	)		(9,731,906	)
		Total Stockholders' Equity		6,975,564			5,175,535
		Total Liabilities and Stockholders' Equity	$	8,911,829		$	6,826,133

ATOSSA GENETICS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
				For the Three Months Ended March 31,								From April 30, 2009 (Inception) Through
				2013				2012				March 31, 2013
Revenue
	Diagnostic Testing Service			$	169,230			$	52,713			$	644,632
	Product Sales				13,440				2,000				21,380
		Total Revenue			182,670				54,713				666,012
Cost of Revenue
	Diagnostic Testing Service				(47,599	)			(3,197	)			(83,344	)
	Product Sales				(18,865	)			-				(24,029	)
		Total Cost of Revenue			(66,464	)			(3,197	)			(107,373	)
Loss on Reduction of Inventory to LCM					-				(23,807	)			(121,910	)
		Gross Profit (Loss)			116,206				27,709				436,729
Selling expenses					(272,575	)			(70,435	)			(912,451	)
Research and Development expenses					(220,192	)			(417,990	)			(3,777,578	)
General and Administrative expenses					(1,564,872	)			(601,452	)			(7,387,209	)
		Total operating expenses			(2,057,639	)			(1,089,877	)			(12,077,238	)
Operating Loss					(1,941,433	)			(1,062,168	)			(11,640,507	)
Interest Income					-				863				6,588
Interest Expense					(7	)			(1,613	)			(39,178	)
Net Loss before Income Taxes					(1,941,440	)			(1,062,918	)			(11,673,097	)
Income Taxes					-				-				250
Net Loss				$	(1,941,440	)		$	(1,062,918	)		$	(11,673,347	)
Loss per common share - basic and diluted				$	(0.14	)		$	(0.09	)		$	(1.36	)
Weighted average shares outstanding, basic & diluted					13,421,119				11,256,867				8,594,390