Atossa Genetics Inc (NASDAQ:ATOS)
Atossa Genetics Inc (NASDAQ:ATOS) has just eight employees and an ability to go through funding like a hot knife through butter. Today shares are down just over 11% but that is one of the smaller declines in a company that used to be, taking dilution into account, worth over $100 per share. Yet today the shares are trading below $0.50 – a decline of over 99%. Back in August the company announced a public offering of over 1.15 million shares at $2.50. Expected gross proceeds were to be around $2.875 million. That news sent shares tumble over 25%. In March, Atossa Genetics Inc (NASDAQ:ATOS) had gone through that money and was in the market for more. Another offering was announced. This time the amount was for $4 million but the offering was not going to be common shares – Atossa issued convertible preferred stock with warrants attached. ATOS shares plummeted another 27.5%.
Seattle, WA-based Atossa Genetics Inc (NASDAQ:ATOS) develops drugs and medical devices that treat breast cancer and other breast disorders. People with industry knowledge hint that Atossa has the potential to launch products that could generate revenue but that ability is in question given their funding needs and unattractive capital structure. At issue is whether a successful product launch has the ability to provide new funding with required returns given the equity stake on offer. In this case, the dilutive effects of previous offerings mandate an almost record-breaking product revenue stream for returns that would be anything but record-breaking.
The single bright spot for Atossa Genetics Inc (NASDAQ:ATOS) is their earnings trend. Although EPS has registered losses every year the company has been public, the trend is in the right direction. In 2013, the EPS loss was (-$10.45), that was followed each year by narrower losses of (-$7.59), (-$6.73), and (-$2.16) in 2016. But it is the uptrend in the number of outstanding shares that is really at the core. In 2012, there were 0.83 million shares, but by 2016 that number had exploded to 2.95 million shares. Of course, that is not inclusive of the rights of the convertible shareholders who hold warrants.
I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. All information, or data, is provided with no guarantees of accuracy.
About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading.